From Reuters:
Factories in Japan and South Korea cut output in October, adding to evidence of an Asia-wide slowdown and boding ill for the rest of the world that has relied on the region to keep the global economy humming.
Japanese companies cut production for the fifth month and by the biggest margin since February 2009, while South Korea's industrial output fell for the third month in a row, disappointing markets which had bet on a rebound.
The fall in Japan's output was expected -- in fact a drop of 1.8 percent was smaller than the forecast 3.3 percent decline -- after a key stimulus measure, incentives for buyers of fuel-efficient cars, expired in September, and exports continued to cool.
The drop, however, cemented expectations that the world's third-largest economy after the United States and China would contract in the final quarter of the year after a stimulus-driven spurt in the third quarter.
South Korea, among the first economies to regain cruising speed after the global recession, is also losing steam, though Seoul still bets on solid export growth next year.
"The inventory rebuilding cycle after the recession has come to an end, and what we're left with is final domestic demand, which isn't doing that well across the globe," said Dariusz Kowalczyk, senior economist and strategist at Credit Agricole CIB in Hong Kong.
Economists had long expected Asia and the world economy would slow in the second half of this year and early in 2011 as the rebuilding of inventories that had been depleted during the recession was drawing to an end and the effects of stimulus packages were wearing off.
But the cool-down came sooner and turned out to be more pronounced than many economists had anticipated. The economies of the Philippines, Thailand and Singapore all contracted in the past quarter, while growth in South Korea, Taiwan and Indonesia slowed markedly.
That leaves China, which slowed only marginally to a 9.6 percent annual clip in the third quarter, and India, as the mainstays of growth in the region.
http://www.reuters.com/article/idUSTRE6AT0OV20101130
Tuesday, November 30, 2010
Monday, November 29, 2010
Is Irish Sovereignty under Threat, Or Already Finished?
From Zero Hedge:
Now that Ireland is a vassal state of the EU, and its democracy as its citizens know it, is finished, it was only a matter of time before the EU's Economic Affairs counsel started telling Ireland what and how to conduct its affairs. Sure enough, it took all of 24 hours between the "bailout" and the first order. RTE reports that Olli Rehn "says it would not be advisable for any new government to try to renegotiate key aspects of the IMF/EU deal." In other words, the EU is promptly realizing that the new Irish government is likely to reneg in part or all of the just struck deal and is therefore interjecting itself in the process. "In an interview with RTÉ News, Commissioner Rehn said it did not want to involve himself in democratic politics in Ireland, but he said: 'They are key parts of the programme so I would not advise re-opening these'."
http://www.zerohedge.com/article/goodbye-irish-sovereignty-eu-commissioner-olli-rehn-issues-his-first-directive-overlord-emer
Now that Ireland is a vassal state of the EU, and its democracy as its citizens know it, is finished, it was only a matter of time before the EU's Economic Affairs counsel started telling Ireland what and how to conduct its affairs. Sure enough, it took all of 24 hours between the "bailout" and the first order. RTE reports that Olli Rehn "says it would not be advisable for any new government to try to renegotiate key aspects of the IMF/EU deal." In other words, the EU is promptly realizing that the new Irish government is likely to reneg in part or all of the just struck deal and is therefore interjecting itself in the process. "In an interview with RTÉ News, Commissioner Rehn said it did not want to involve himself in democratic politics in Ireland, but he said: 'They are key parts of the programme so I would not advise re-opening these'."
http://www.zerohedge.com/article/goodbye-irish-sovereignty-eu-commissioner-olli-rehn-issues-his-first-directive-overlord-emer
China and Russia Quit the USD
It seems that the international currency regime is changing.
From China Daily:
China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm
From China Daily:
China and Russia have decided to renounce the US dollar and resort to using their own currencies for bilateral trade, Premier Wen Jiabao and his Russian counterpart Vladimir Putin announced late on Tuesday.
Chinese experts said the move reflected closer relations between Beijing and Moscow and is not aimed at challenging the dollar, but to protect their domestic economies.
"About trade settlement, we have decided to use our own currencies," Putin said at a joint news conference with Wen in St. Petersburg.
The two countries were accustomed to using other currencies, especially the dollar, for bilateral trade. Since the financial crisis, however, high-ranking officials on both sides began to explore other possibilities.
The yuan has now started trading against the Russian rouble in the Chinese interbank market, while the renminbi will soon be allowed to trade against the rouble in Russia, Putin said.
"That has forged an important step in bilateral trade and it is a result of the consolidated financial systems of world countries," he said.
http://www.chinadaily.com.cn/china/2010-11/24/content_11599087.htm
Saturday, November 27, 2010
하나님의 사랑과 새로 꾸는 꿈
미국 경제가 잘 못되고 있다는 글들을 2006년경부터 읽기 시작했다. 그러다 리먼 파산 이후 세계적으로 발생하고 있는 일련의 사태들을 관찰하고 분석하면서 그 원인과 앞으로의 향방에 대해서 그림의 퍼즐이 맞추어져 가고 있는 느낌이다. 이번 한반도 사태도 미국과 중국이 개입돼 있고 한반도가 전쟁을 할 경우 경제적으로 가장 이익을 볼 집단이 누구인가에 대해 의견이 분분하다는 것도 알고 있다.
이번 세계적 경제위기를 겪으면서 제일 염려하고 기도해 온 내용이 한반도의 평화에 관한 것이었다. 지난 4월에 부활절 즈음에 고 이태석 신부님께 쓴 글에서도 그 심정이 나타나 있다.
http://innovationandeconomicanalysis.blogspot.com/2010/04/easter-late-father-lee-and-gods-love.html
이태석 신부님께서 투병중일때도 대장암 3기는 매우 위중한 상태인 것을 알면서도 우리가 할 수 있는 일은 기도밖에 없다는 것을 잘 알고 있었다. 한편으론 인간인지라 섭섭한 마음이 왜 안들었겠냐만은 하늘이 그 훌륭한 일을 하셨던 분을 일찍 데려가신 것을 안타까워하면서도 하늘의 뜻에 순응했다. 고 김인수교수님이 두 달 동안 혼수 상태에 계시다 소천하셨을때도 그랬다.
그래도 하나님의 사랑을 믿고 기도의 힘을 믿는다. 온전히 당신께 맡겨야 한다는 것을…
오늘도 2주일에 한번씩 방문하여 한나절을 보내고 오는 중증 장애우 시설을 다녀왔다. 만약 한반도에 전시상황이 발생한다면 (한국 언론들도 서울의 방공호 시설을 점검하고 있다는 구체적인 얘기를 내보내고 있다.) 평상시에도 돌보기 힘든 이 아이들을 어떻게 할 것이라는 생각이 스쳐갔다. 가면 아이들과 키보드 치면서 노래하고 그 중 학습이 가능한 네 명을 이층에 데려가 공부를 가르친다. 동요와 가요를 부르고 나서 어린이 찬송가를 같이 부르면서 나는 속울음을 울었다.
하나님, 2주 후에, 아니 그 후에도 다시 제가 이 아이들을 일상처럼 보러 갈 수 있겠지요… 어떤 상황에서도 당신의 사랑이 지속된다는 것을 압니다.
이번 시설의 장애우 아이들은 장애정도가 매우 심하다. 여러 이유에서 나라에서 정식으로 인가받은 시설에도 못간 아이들이다. 머리는 23명 중에서 가장 좋은데 신체 장애가 심해 말을 제대로 못하고 (단어만을 간신히 알아들을 정도) 글씨 쓰는 것도 힘들고, 침을 계속 흘리고, 계단도 기어오르고 내려와야 하는 강현이는 오늘 공부를 가르쳐 주고 있는 나에게 얼굴에 침을 확 뱉었다. 재채기를 하고 싶었는데 스스로 조절이 되지 않은 것 같았다. 조금 놀랐지만 본인이 더 무안해 할 것 같아서 “너 선생님한테 일부러 그랬으면 죽~었는데 그런거 아닌줄 안다”라고 웃으며 말했더니 “마스크”라고 얘기하길래 “마스크하면 얘기할 수 없으니까 안돼”라고 얘기해 주었다. 그래도 강현이는 내가 나올 때 다음에 며칠날 몇시에 오는지 날짜와 시간을 확인하고 안심하는 눈치였다. 하민이는 심장에 심각한 결함이 있어 의사들이 예견했던 수명을 넘어서 살고 있는 아이인데 같이 노래하면 좋아서 웃다가 갑자기 막 몸을 저어가며 울곤 해서 놀라게 했다. 아이들은 자주 그러니 그냥 내버려두라고 하는데 한번은 너무 애가 경기를 일으키면서 심하게 울길래 키보드 치다가 “왜그래, 어디 아파오니?”라고 달래기 시작했는데 달래니 더 심하게 발작수준으로 나를 제대로 쓰지도 못하는 발로 차고 때리면서 난리를 치기 시작했다. 결국 이를 발견한 복지사 선생님이 달려와 야단을 치니 멈추었다. 아마도 그동안 애가 이러면 방치해 두거나 야단을 치다가 자기를 달래주는 사람이 있으니 더 심하게 어리광을 부린 것 같았다.
하반신이 마비이신 원장님 내외분께서 그곳에서 같이 생활하시는 줄 알았는데 근처에 집이 있어 저녁에는 퇴근하시고 사회복지사 선생님들이 번갈아 가면서 애들과 자고 있는 것 같았다. 오늘은 처음으로 아이들 저녁식사 하는 것을 봤는데 밥을 먹여주어야 하는 아이들이 아주 소박한 한그릇 밥을 먹고 난 후 상을 펴고 나머지 아이들이 식사를 했다. 찬도 너무 소박한데다가 원장님 내외분과 사회복지사, 식사준비하신 분들은 따로 주방에서 식사를 하고 아이들끼리 식사를 하고 있는 모습에 마음이 메어왔다. 지난번 장애우 시설에서 한가지 좋았던 점은 식당시설이 꽤 좋았고 식사가 아주 맛있고 훌륭해서 그점은 마음이 놓였었다. 휠체어를 타고라도 식당에 올 수 있는 아이들은 같이 모여, 사회복지사 선생님들, 다른 직원들과 함께 식사들을 했는데… 아이들은 나외에 어떤 방문자도 반가워하고 갈때는 항상 언제 오느냐, 또 오세요 라는 말을 빼먹지 않곤 한다. 물론 이들과 대부분의 시간을 보내는 원장님 내외분, 사회복지사 선생님들의 노고를 잘 알고 있다. 6개월 이상을 버티는 선생님들이 드문 채 선생님들이 계속 바뀌던 지난번 시설과는 달리 여기는 선생님들이 오래 근무하는 점도 안심이 되고 있다.
나는 아이들에게 배움이 줄 수 있는 즐거움과 기쁨을 조금이나마 안겨줬으면 한다. 특수교육에 대해서는 전혀 모른 채, 뇌성마비, 정신지체, 자폐아들을 처음 대해봤지만 두 시설에서 애들을 대해 오면서 가르치는 요령도 많이 생겼다. 아이들이 음악과 그림에 매우 민감하게 반응하고 좋아하는 것도 안다. 올해 들어와 내가 거의 매일 30분씩 피아노를 치고 있는 것도 내가 장애우들에게 쇼팽, 베토벤, 슈베르트, 모짜르트 등을 쳐 주었더니 너무 좋아했던 것을 체험한 영향도 있다. 그저 대형 벽걸이 TV 앞에서 대부분의 시간을 보내는 아이들에게 그래도 내 방식대로 그들의 한계 내에서 배움이 주는 기쁨을 조금씩 알아가기를 소망한다.
이세상을 떠나기 전에 경제적인 여건이 허락되어 기존의 장애인 학교도 다닐 수 없는 이들을 위한 배움과 생활의 터를 마련하고 가르쳐봤으면 하는 꿈을 새로이 꾸기 시작했다.
이번 세계적 경제위기를 겪으면서 제일 염려하고 기도해 온 내용이 한반도의 평화에 관한 것이었다. 지난 4월에 부활절 즈음에 고 이태석 신부님께 쓴 글에서도 그 심정이 나타나 있다.
http://innovationandeconomicanalysis.blogspot.com/2010/04/easter-late-father-lee-and-gods-love.html
이태석 신부님께서 투병중일때도 대장암 3기는 매우 위중한 상태인 것을 알면서도 우리가 할 수 있는 일은 기도밖에 없다는 것을 잘 알고 있었다. 한편으론 인간인지라 섭섭한 마음이 왜 안들었겠냐만은 하늘이 그 훌륭한 일을 하셨던 분을 일찍 데려가신 것을 안타까워하면서도 하늘의 뜻에 순응했다. 고 김인수교수님이 두 달 동안 혼수 상태에 계시다 소천하셨을때도 그랬다.
그래도 하나님의 사랑을 믿고 기도의 힘을 믿는다. 온전히 당신께 맡겨야 한다는 것을…
오늘도 2주일에 한번씩 방문하여 한나절을 보내고 오는 중증 장애우 시설을 다녀왔다. 만약 한반도에 전시상황이 발생한다면 (한국 언론들도 서울의 방공호 시설을 점검하고 있다는 구체적인 얘기를 내보내고 있다.) 평상시에도 돌보기 힘든 이 아이들을 어떻게 할 것이라는 생각이 스쳐갔다. 가면 아이들과 키보드 치면서 노래하고 그 중 학습이 가능한 네 명을 이층에 데려가 공부를 가르친다. 동요와 가요를 부르고 나서 어린이 찬송가를 같이 부르면서 나는 속울음을 울었다.
하나님, 2주 후에, 아니 그 후에도 다시 제가 이 아이들을 일상처럼 보러 갈 수 있겠지요… 어떤 상황에서도 당신의 사랑이 지속된다는 것을 압니다.
이번 시설의 장애우 아이들은 장애정도가 매우 심하다. 여러 이유에서 나라에서 정식으로 인가받은 시설에도 못간 아이들이다. 머리는 23명 중에서 가장 좋은데 신체 장애가 심해 말을 제대로 못하고 (단어만을 간신히 알아들을 정도) 글씨 쓰는 것도 힘들고, 침을 계속 흘리고, 계단도 기어오르고 내려와야 하는 강현이는 오늘 공부를 가르쳐 주고 있는 나에게 얼굴에 침을 확 뱉었다. 재채기를 하고 싶었는데 스스로 조절이 되지 않은 것 같았다. 조금 놀랐지만 본인이 더 무안해 할 것 같아서 “너 선생님한테 일부러 그랬으면 죽~었는데 그런거 아닌줄 안다”라고 웃으며 말했더니 “마스크”라고 얘기하길래 “마스크하면 얘기할 수 없으니까 안돼”라고 얘기해 주었다. 그래도 강현이는 내가 나올 때 다음에 며칠날 몇시에 오는지 날짜와 시간을 확인하고 안심하는 눈치였다. 하민이는 심장에 심각한 결함이 있어 의사들이 예견했던 수명을 넘어서 살고 있는 아이인데 같이 노래하면 좋아서 웃다가 갑자기 막 몸을 저어가며 울곤 해서 놀라게 했다. 아이들은 자주 그러니 그냥 내버려두라고 하는데 한번은 너무 애가 경기를 일으키면서 심하게 울길래 키보드 치다가 “왜그래, 어디 아파오니?”라고 달래기 시작했는데 달래니 더 심하게 발작수준으로 나를 제대로 쓰지도 못하는 발로 차고 때리면서 난리를 치기 시작했다. 결국 이를 발견한 복지사 선생님이 달려와 야단을 치니 멈추었다. 아마도 그동안 애가 이러면 방치해 두거나 야단을 치다가 자기를 달래주는 사람이 있으니 더 심하게 어리광을 부린 것 같았다.
하반신이 마비이신 원장님 내외분께서 그곳에서 같이 생활하시는 줄 알았는데 근처에 집이 있어 저녁에는 퇴근하시고 사회복지사 선생님들이 번갈아 가면서 애들과 자고 있는 것 같았다. 오늘은 처음으로 아이들 저녁식사 하는 것을 봤는데 밥을 먹여주어야 하는 아이들이 아주 소박한 한그릇 밥을 먹고 난 후 상을 펴고 나머지 아이들이 식사를 했다. 찬도 너무 소박한데다가 원장님 내외분과 사회복지사, 식사준비하신 분들은 따로 주방에서 식사를 하고 아이들끼리 식사를 하고 있는 모습에 마음이 메어왔다. 지난번 장애우 시설에서 한가지 좋았던 점은 식당시설이 꽤 좋았고 식사가 아주 맛있고 훌륭해서 그점은 마음이 놓였었다. 휠체어를 타고라도 식당에 올 수 있는 아이들은 같이 모여, 사회복지사 선생님들, 다른 직원들과 함께 식사들을 했는데… 아이들은 나외에 어떤 방문자도 반가워하고 갈때는 항상 언제 오느냐, 또 오세요 라는 말을 빼먹지 않곤 한다. 물론 이들과 대부분의 시간을 보내는 원장님 내외분, 사회복지사 선생님들의 노고를 잘 알고 있다. 6개월 이상을 버티는 선생님들이 드문 채 선생님들이 계속 바뀌던 지난번 시설과는 달리 여기는 선생님들이 오래 근무하는 점도 안심이 되고 있다.
나는 아이들에게 배움이 줄 수 있는 즐거움과 기쁨을 조금이나마 안겨줬으면 한다. 특수교육에 대해서는 전혀 모른 채, 뇌성마비, 정신지체, 자폐아들을 처음 대해봤지만 두 시설에서 애들을 대해 오면서 가르치는 요령도 많이 생겼다. 아이들이 음악과 그림에 매우 민감하게 반응하고 좋아하는 것도 안다. 올해 들어와 내가 거의 매일 30분씩 피아노를 치고 있는 것도 내가 장애우들에게 쇼팽, 베토벤, 슈베르트, 모짜르트 등을 쳐 주었더니 너무 좋아했던 것을 체험한 영향도 있다. 그저 대형 벽걸이 TV 앞에서 대부분의 시간을 보내는 아이들에게 그래도 내 방식대로 그들의 한계 내에서 배움이 주는 기쁨을 조금씩 알아가기를 소망한다.
이세상을 떠나기 전에 경제적인 여건이 허락되어 기존의 장애인 학교도 다닐 수 없는 이들을 위한 배움과 생활의 터를 마련하고 가르쳐봤으면 하는 꿈을 새로이 꾸기 시작했다.
China Warns U.S. Amidst Korea Tensions
From Wall Street Journal:
DANDONG, China—Beijing on Friday lodged its first official protest of a joint U.S.-South Korean military exercise planned for Sunday, even as the aircraft carrier USS George Washington steamed toward the region.
North Korea also responded angrily. "The situation on the Korean peninsula is inching closer to the brink of war," the state controlled Korean Central News Agency responded Friday to the maneuvers, which are set to take place in the Yellow Sea between the Koreas and northeastern China.
The strong talk was the latest fallout from North Korea's hour-long artillery attack of a South Korean island on Tuesday that killed four people. The next day, the U.S. and South Korea said planned joint exercises would go ahead over the weekend, heightening fears in some quarters that already-tense relations between North and South Korea—and their respective international protectors, China and the U.S.—could be heading for a showdown.
http://online.wsj.com/article/SB10001424052748704008704575638420698918004.html?mod=WSJ_hp_mostpop_read
DANDONG, China—Beijing on Friday lodged its first official protest of a joint U.S.-South Korean military exercise planned for Sunday, even as the aircraft carrier USS George Washington steamed toward the region.
North Korea also responded angrily. "The situation on the Korean peninsula is inching closer to the brink of war," the state controlled Korean Central News Agency responded Friday to the maneuvers, which are set to take place in the Yellow Sea between the Koreas and northeastern China.
The strong talk was the latest fallout from North Korea's hour-long artillery attack of a South Korean island on Tuesday that killed four people. The next day, the U.S. and South Korea said planned joint exercises would go ahead over the weekend, heightening fears in some quarters that already-tense relations between North and South Korea—and their respective international protectors, China and the U.S.—could be heading for a showdown.
http://online.wsj.com/article/SB10001424052748704008704575638420698918004.html?mod=WSJ_hp_mostpop_read
Thursday, November 25, 2010
Wednesday, November 24, 2010
In the Middle of a Finance War
We are in the middle of a huge finance war.
A country’s economy can be shorted just like corporations.
Many countries know this.
Countries are being played off against each other for jobs and investment.
One can’t help but wonder: Is there any global force behind countries’ foreign policy and economic policy?
What is the U.S. Fed’s role in unfolding events worldwide economically and politically?
A country’s economy can be shorted just like corporations.
Many countries know this.
Countries are being played off against each other for jobs and investment.
One can’t help but wonder: Is there any global force behind countries’ foreign policy and economic policy?
What is the U.S. Fed’s role in unfolding events worldwide economically and politically?
Tuesday, November 23, 2010
North Korea Attacks South Korea at Yeonpyeong Island (Part 3)
From Ynetnews:
North Korea is currently facing major domestic distress. The sanctions imposed on it and its agricultural difficulties have led to serious hunger, the UN reports. Yet instead of suspending its nuclear program and ballistic missiles and resuming talks with the US, China, Russia, Japan and South Korea (which promised generous aid in food and fuel,) Pyongyang is attempting to extort them via war threats and provocations. This, in essence, is the backdrop for the grave incident where the communist country shelled a South Korean island not too far from the two Koreas western border.
The latest incident is the fifth in a series of grave provocations initiated by North Korea in the past two years, ever since talks hit an impasse. Notwithstanding its pledges, North Korea held a (not particularly successful) nuclear experiment, and also undertook a series of ballistic missile tests, despite US warnings. In the wake of these tests, the United Nations imposed economic and diplomatic sanctions on Pyongyang, yet the Stalinist regime headed by ill Kim Jong-il was not deterred.
At the same time, North Korea constantly continues, with active Chinese diplomatic assistance, to invite the US to resume the talks on Pyongyang's nuclear and missile program, in exchange for economic benefits and lifting of the sanctions. It's easy to see what the North Korean leadership aims to achieve via this belligerent brinkmanship. The main target is to create a situation whereby the sanctions are lifted and Pyongyang receives an immediate and significant supply of food and fuel, before Pyongyang ever commits to curbing its military nuclear program, and before International Atomic Energy Agency inspectors are ever allowed to return to North Korea.
The other objective is domestic. Current leader Kim Jong-il suffered a stroke two years ago and is having trouble functioning. Hence, a few months ago he embarked on the process of handing over power to his son, Kim Jong-Un. However, the regime in Pyongyang is concerned that domestic and international rivals would take advantage of the sensitive period in order to destabilize the regime and extort political and military compromises. Through their provocations against South Korea, Kim Jong-il and his generals showcase their power, confidence, and hold on the country in a manner which they believe will deter their rivals.
This strategy leaves South Korea and the Obama Administration helpless. South Korea is well familiar with its own military inferiority vis-à-vis North Korea's million-man army, which is equipped with modern arms and ballistic missiles. While South Korea's arms and aircraft are more advanced than Pyongyang's, the quantitative inferiority vis-à-vis the North and the North Korea regime's willingness to sustain casualties and destruction decisively tilt the balance in the North's favor.
Moreover, despite its technological and industrial strength, South Korea does not possess substantial capability to intercept missiles and rockets. Seoul is currently in initial stages of acquiring such systems (including the "Green Pine" radar system made in Israel.)
Hence, even if it does not use the nuclear weapons it may or may not possesses, North Korea can literally raze Seoul in a matter of days and gravely undermine the flourishing South Korean industrial sector and economy. Should a war break out, the roughly 40,000 US troops deployed in South Korea ever since the 1950s are also at risk. These forces possess advanced Patriot missiles capable of intercepting ballistic missiles, yet in low numbers compared to the North's rocket and artillery arsenal.
The South Korean government is well aware of its situation, and also of the fact that the Obama Administration, which is entangled in Afghanistan and Iraq, would not rush into another war in the Korea Peninsula. Hence, Korean President Lee Myung-bak quickly declared that despite the North's blatant provocation, his country has no intention of being dragged into a conflict and would do everything it can to avoid escalation
http://www.ynetnews.com/articles/0,7340,L-3988906,00.html
From the Asia Times:
The United States and South Korea now have to face what has become more than an abstract question: What is more troubling, the specter of North Korea as a growing nuclear power with a brand new uranium-enrichment facility almost ready to go into operation, or a nasty assault by "conventional" weapons on land?
The question jumped into harsh reality on Tuesday when North Korean gunners pumped dozens of rounds of artillery shells onto the tiny island of Yeonpyeong off the Korean west coast just south of the line in the Yellow Sea below which the South insists on banning North Korean vessels.
The incident, like others, may go down in the long list of "isolated episodes" since the end of the Korean War in 1953, but the timing was particularly unnerving. It happened just as the US's nuclear envoy, Stephen Bosworth, was in Beijing after stopovers in Seoul and Tokyo, all of which were to "coordinate" policy on dealing with a North Korean threat of a very different kind - the uranium-enrichment plant at Yongbyon.
Bosworth talked in the usual diplomatic platitudes, saying the news of the uranium facility was "another in a series of provocations" but "this is not a crisis". He may be revising that estimate, though, as he beseeches Chinese officials to do what they have been most reluctant to consider, and that is to apply significant pressure on North Korea.
Kim Tae-woo, senior fellow at the Korea Institute of Defense Analyses, is pessimistic about getting China to persuade North Korea to back down from its nuclear activities in view of rising Chinese strength in the entire region.
"China is getting stronger and tougher," he says. "North Korea by increasing its capability is bringing all kinds of side effects to South Korea. They want to increase their leverage."
The real point is that North Korea, by holding out the threat of two very different types of warfare, may think that's the way to get negotiations going again - on North Korea's terms.
http://www.atimes.com/atimes/Korea/LK24Dg02.html
North Korea is currently facing major domestic distress. The sanctions imposed on it and its agricultural difficulties have led to serious hunger, the UN reports. Yet instead of suspending its nuclear program and ballistic missiles and resuming talks with the US, China, Russia, Japan and South Korea (which promised generous aid in food and fuel,) Pyongyang is attempting to extort them via war threats and provocations. This, in essence, is the backdrop for the grave incident where the communist country shelled a South Korean island not too far from the two Koreas western border.
The latest incident is the fifth in a series of grave provocations initiated by North Korea in the past two years, ever since talks hit an impasse. Notwithstanding its pledges, North Korea held a (not particularly successful) nuclear experiment, and also undertook a series of ballistic missile tests, despite US warnings. In the wake of these tests, the United Nations imposed economic and diplomatic sanctions on Pyongyang, yet the Stalinist regime headed by ill Kim Jong-il was not deterred.
At the same time, North Korea constantly continues, with active Chinese diplomatic assistance, to invite the US to resume the talks on Pyongyang's nuclear and missile program, in exchange for economic benefits and lifting of the sanctions. It's easy to see what the North Korean leadership aims to achieve via this belligerent brinkmanship. The main target is to create a situation whereby the sanctions are lifted and Pyongyang receives an immediate and significant supply of food and fuel, before Pyongyang ever commits to curbing its military nuclear program, and before International Atomic Energy Agency inspectors are ever allowed to return to North Korea.
The other objective is domestic. Current leader Kim Jong-il suffered a stroke two years ago and is having trouble functioning. Hence, a few months ago he embarked on the process of handing over power to his son, Kim Jong-Un. However, the regime in Pyongyang is concerned that domestic and international rivals would take advantage of the sensitive period in order to destabilize the regime and extort political and military compromises. Through their provocations against South Korea, Kim Jong-il and his generals showcase their power, confidence, and hold on the country in a manner which they believe will deter their rivals.
This strategy leaves South Korea and the Obama Administration helpless. South Korea is well familiar with its own military inferiority vis-à-vis North Korea's million-man army, which is equipped with modern arms and ballistic missiles. While South Korea's arms and aircraft are more advanced than Pyongyang's, the quantitative inferiority vis-à-vis the North and the North Korea regime's willingness to sustain casualties and destruction decisively tilt the balance in the North's favor.
Moreover, despite its technological and industrial strength, South Korea does not possess substantial capability to intercept missiles and rockets. Seoul is currently in initial stages of acquiring such systems (including the "Green Pine" radar system made in Israel.)
Hence, even if it does not use the nuclear weapons it may or may not possesses, North Korea can literally raze Seoul in a matter of days and gravely undermine the flourishing South Korean industrial sector and economy. Should a war break out, the roughly 40,000 US troops deployed in South Korea ever since the 1950s are also at risk. These forces possess advanced Patriot missiles capable of intercepting ballistic missiles, yet in low numbers compared to the North's rocket and artillery arsenal.
The South Korean government is well aware of its situation, and also of the fact that the Obama Administration, which is entangled in Afghanistan and Iraq, would not rush into another war in the Korea Peninsula. Hence, Korean President Lee Myung-bak quickly declared that despite the North's blatant provocation, his country has no intention of being dragged into a conflict and would do everything it can to avoid escalation
http://www.ynetnews.com/articles/0,7340,L-3988906,00.html
From the Asia Times:
The United States and South Korea now have to face what has become more than an abstract question: What is more troubling, the specter of North Korea as a growing nuclear power with a brand new uranium-enrichment facility almost ready to go into operation, or a nasty assault by "conventional" weapons on land?
The question jumped into harsh reality on Tuesday when North Korean gunners pumped dozens of rounds of artillery shells onto the tiny island of Yeonpyeong off the Korean west coast just south of the line in the Yellow Sea below which the South insists on banning North Korean vessels.
The incident, like others, may go down in the long list of "isolated episodes" since the end of the Korean War in 1953, but the timing was particularly unnerving. It happened just as the US's nuclear envoy, Stephen Bosworth, was in Beijing after stopovers in Seoul and Tokyo, all of which were to "coordinate" policy on dealing with a North Korean threat of a very different kind - the uranium-enrichment plant at Yongbyon.
Bosworth talked in the usual diplomatic platitudes, saying the news of the uranium facility was "another in a series of provocations" but "this is not a crisis". He may be revising that estimate, though, as he beseeches Chinese officials to do what they have been most reluctant to consider, and that is to apply significant pressure on North Korea.
Kim Tae-woo, senior fellow at the Korea Institute of Defense Analyses, is pessimistic about getting China to persuade North Korea to back down from its nuclear activities in view of rising Chinese strength in the entire region.
"China is getting stronger and tougher," he says. "North Korea by increasing its capability is bringing all kinds of side effects to South Korea. They want to increase their leverage."
The real point is that North Korea, by holding out the threat of two very different types of warfare, may think that's the way to get negotiations going again - on North Korea's terms.
http://www.atimes.com/atimes/Korea/LK24Dg02.html
North Korea Attacks South Korea at Yeonpyeong Island (Part 2)
From Comments in the Comment Section of Zero Hedge:
Chinaguy wrote,
This is NOT about north & south Korea. THIS IS ABOUT CHINA AND THE USA.
1.Korea is essentially a vassal state of China.
2. Pyongyang would never have made this move without some sort of "understanding" with the PRC.
3. The real question is: What does China hope to gain from this move...and are the idiots in the State Dept smart enough to recognize this for what it is & respond accordingly?
Suteibu wrote,
Riiiiight. US economic interests and political influence in Asia are based on military presence in Japan and S. Korea. The promise to the S Koreans and Japanese is security in return for hosting these bases.
Unfortunately, there is little the US can or will do without the approval of China...other than all out war. It's what happens when foreign policy is dictated by GOOG, MSFT, CAT, etc.
http://www.zerohedge.com/article/korean-update-which-we-learn-north-threatens-many-additional-attacks
Chinaguy wrote,
This is NOT about north & south Korea. THIS IS ABOUT CHINA AND THE USA.
1.Korea is essentially a vassal state of China.
2. Pyongyang would never have made this move without some sort of "understanding" with the PRC.
3. The real question is: What does China hope to gain from this move...and are the idiots in the State Dept smart enough to recognize this for what it is & respond accordingly?
Suteibu wrote,
Riiiiight. US economic interests and political influence in Asia are based on military presence in Japan and S. Korea. The promise to the S Koreans and Japanese is security in return for hosting these bases.
Unfortunately, there is little the US can or will do without the approval of China...other than all out war. It's what happens when foreign policy is dictated by GOOG, MSFT, CAT, etc.
http://www.zerohedge.com/article/korean-update-which-we-learn-north-threatens-many-additional-attacks
North Korea Attacks South Korea at Yeonpyeong Island (Part 1)
From the Wall Street Journal:
North Korea fired artillery rockets at South Korea's Yeonpyeong island near a disputed maritime border Tuesday, setting houses on fire in its small villages, and prompting the south to return fire and dispatch fighter jets to the area.
One South Korean Marine was killed in the skirmish and at least a dozen more were injured, military officials said.
Photos sent to South Korean TV stations by residents of nearby So-yeonpyeong island showed multiple plumes of smoke rising over its larger neighbor.
A spokesman for South Korea's Joint Chief of Staff said "scores of rounds" were fired by the North.
"The whole neighborhood is on fire," said Na Young-ok, a 46-year-old woman who has lived on the island for 20 years. She was at a bomb shelter when reached by The Wall Street Journal. "I think countless houses are on fire, but no fire truck is coming. We have a fire station but the shots are intermittently coming."
Ms. Na said a military base on the island was on fire. She said she was with about 50 people in the shelter and her child was in a similar shelter at the school on the island. She didn't know whether people were injured.
South Korean President Lee Myung-bak convened an emergency meeting of defense and security-related agencies. He ordered senior officials to "carefully manage the situation to prevent the escalation of the clash," a spokeswoman said.
The artillery—more than 50 rounds, according to island residents speaking on YTN—was fired from positions south of the North Korean city of Haeju.
The attack started at 2:34 p.m. local time, according to residents who were speaking on the TV network. There were no immediate reports of injuries.
About 1,200 people live on the island, which is 10 kilometers south of the tip of North Korea's south coast.
The attack is the second by North Korea this year against South Korea in the maritime border area of the Yellow Sea. In March, a North Korean submarine torpedoed and sank a South Korean warship near an island about 40 miles west of the island that was hit Tuesday.
http://online.wsj.com/article/SB10001424052748703904804575631763523837910.html?mod=wsj_share_twitter
From Stratfor:
North Korea and South Korea have reportedly traded artillery fire Nov. 23 across the disputed Northern Limit Line (NLL) in the Yellow Sea to the west of the peninsula. Though details are still sketchy, South Korean news reports indicate that around 2:30 p.m. local time, North Korean artillery shells began landing in the waters around Yeonpyeongdo, one of the South Korean-controlled islands just south of the NLL. North Korea has reportedly fired as many as 200 rounds, some of which struck the island, injuring at least 10 South Korean soldiers, damaging buildings and setting fire to a mountainside. South Korea responded by firing some 80 shells of its own toward North Korea, dispatching F-16 fighter jets to the area and raising the military alert to its highest level.
South Korean President Lee Myung Bak has convened an emergency Cabinet meeting, and Seoul is determining whether to evacuate South Koreans working at inter-Korean facilities in North Korea. The barrage from North Korea was continuing at 4 p.m. Military activity appears to be ongoing at this point, and the South Korean Joint Chiefs of Staff are meeting on the issue. No doubt North Korea’s leadership is also convening.
The North Korean attack comes as South Korea’s annual Hoguk military exercises are under way. The exercises — set to last nine days and including as many as 70,000 personnel from all branches of the South Korean military — span from sites in the Yellow Sea including Yeonpyeongdo to Seoul and other areas on the peninsula itself. The drills have focused in particular on cross-service coordination and cooperation in recent years.
Low-level border skirmishes across the demilitarized zone and particularly the NLL are not uncommon even at the scale of artillery fire. In March, the South Korean naval corvette ChonAn was sunk in the area by what is broadly suspected to have been a North Korean torpedo, taking tensions to a peak in recent years. Nov. 22 also saw South Korean rhetoric about accepting the return of U.S. tactical nuclear weapons to the peninsula, though the United States said it has no plans at present to support such a redeployment.
While the South Korean reprisals — both artillery fire in response by self-propelled K-9 artillery and the scrambling of aircraft — thus far appear perfectly consistent with South Korean standard operating procedures, the sustained shelling of a populated island by North Korea would mark a deliberate and noteworthy escalation.
The incident comes amid renewed talk of North Korea’s nuclear program, including revelations of an active uranium-enrichment program, and amid rumors of North Korean preparations for another nuclear test. But North Korea also on Nov. 22 sent a list of delegates to Seoul for Red Cross talks with South Korea, a move reciprocated by the South, ahead of planned talks in South Korea set for Thursday. The timing of the North’s firing at Yeonpyeongdo, then, seems to contradict the other actions currently under way in inter-Korean relations. With the ongoing leadership transition in North Korea, there have been rumors of discontent within the military, and the current actions may reflect miscommunications or worse within the North’s command-and-control structure, or disagreements within the North Korean leadership.
http://www.stratfor.com/analysis/20101123_north_korean_artillery_attack_southern_island?utm_source=RedAlert&utm_medium=email&utm_campaign=101123&utm_content=readmore&elq=b5b1e8a540704a8590d7b4e9c3fe293c
North Korea fired artillery rockets at South Korea's Yeonpyeong island near a disputed maritime border Tuesday, setting houses on fire in its small villages, and prompting the south to return fire and dispatch fighter jets to the area.
One South Korean Marine was killed in the skirmish and at least a dozen more were injured, military officials said.
Photos sent to South Korean TV stations by residents of nearby So-yeonpyeong island showed multiple plumes of smoke rising over its larger neighbor.
A spokesman for South Korea's Joint Chief of Staff said "scores of rounds" were fired by the North.
"The whole neighborhood is on fire," said Na Young-ok, a 46-year-old woman who has lived on the island for 20 years. She was at a bomb shelter when reached by The Wall Street Journal. "I think countless houses are on fire, but no fire truck is coming. We have a fire station but the shots are intermittently coming."
Ms. Na said a military base on the island was on fire. She said she was with about 50 people in the shelter and her child was in a similar shelter at the school on the island. She didn't know whether people were injured.
South Korean President Lee Myung-bak convened an emergency meeting of defense and security-related agencies. He ordered senior officials to "carefully manage the situation to prevent the escalation of the clash," a spokeswoman said.
The artillery—more than 50 rounds, according to island residents speaking on YTN—was fired from positions south of the North Korean city of Haeju.
The attack started at 2:34 p.m. local time, according to residents who were speaking on the TV network. There were no immediate reports of injuries.
About 1,200 people live on the island, which is 10 kilometers south of the tip of North Korea's south coast.
The attack is the second by North Korea this year against South Korea in the maritime border area of the Yellow Sea. In March, a North Korean submarine torpedoed and sank a South Korean warship near an island about 40 miles west of the island that was hit Tuesday.
http://online.wsj.com/article/SB10001424052748703904804575631763523837910.html?mod=wsj_share_twitter
From Stratfor:
North Korea and South Korea have reportedly traded artillery fire Nov. 23 across the disputed Northern Limit Line (NLL) in the Yellow Sea to the west of the peninsula. Though details are still sketchy, South Korean news reports indicate that around 2:30 p.m. local time, North Korean artillery shells began landing in the waters around Yeonpyeongdo, one of the South Korean-controlled islands just south of the NLL. North Korea has reportedly fired as many as 200 rounds, some of which struck the island, injuring at least 10 South Korean soldiers, damaging buildings and setting fire to a mountainside. South Korea responded by firing some 80 shells of its own toward North Korea, dispatching F-16 fighter jets to the area and raising the military alert to its highest level.
South Korean President Lee Myung Bak has convened an emergency Cabinet meeting, and Seoul is determining whether to evacuate South Koreans working at inter-Korean facilities in North Korea. The barrage from North Korea was continuing at 4 p.m. Military activity appears to be ongoing at this point, and the South Korean Joint Chiefs of Staff are meeting on the issue. No doubt North Korea’s leadership is also convening.
The North Korean attack comes as South Korea’s annual Hoguk military exercises are under way. The exercises — set to last nine days and including as many as 70,000 personnel from all branches of the South Korean military — span from sites in the Yellow Sea including Yeonpyeongdo to Seoul and other areas on the peninsula itself. The drills have focused in particular on cross-service coordination and cooperation in recent years.
Low-level border skirmishes across the demilitarized zone and particularly the NLL are not uncommon even at the scale of artillery fire. In March, the South Korean naval corvette ChonAn was sunk in the area by what is broadly suspected to have been a North Korean torpedo, taking tensions to a peak in recent years. Nov. 22 also saw South Korean rhetoric about accepting the return of U.S. tactical nuclear weapons to the peninsula, though the United States said it has no plans at present to support such a redeployment.
While the South Korean reprisals — both artillery fire in response by self-propelled K-9 artillery and the scrambling of aircraft — thus far appear perfectly consistent with South Korean standard operating procedures, the sustained shelling of a populated island by North Korea would mark a deliberate and noteworthy escalation.
The incident comes amid renewed talk of North Korea’s nuclear program, including revelations of an active uranium-enrichment program, and amid rumors of North Korean preparations for another nuclear test. But North Korea also on Nov. 22 sent a list of delegates to Seoul for Red Cross talks with South Korea, a move reciprocated by the South, ahead of planned talks in South Korea set for Thursday. The timing of the North’s firing at Yeonpyeongdo, then, seems to contradict the other actions currently under way in inter-Korean relations. With the ongoing leadership transition in North Korea, there have been rumors of discontent within the military, and the current actions may reflect miscommunications or worse within the North’s command-and-control structure, or disagreements within the North Korean leadership.
http://www.stratfor.com/analysis/20101123_north_korean_artillery_attack_southern_island?utm_source=RedAlert&utm_medium=email&utm_campaign=101123&utm_content=readmore&elq=b5b1e8a540704a8590d7b4e9c3fe293c
Monday, November 22, 2010
Nissan Is Poised to Shift Output to Dollar-Linked Economies
Currency concerns continue to prevail in manufacturing firms worldwide. Big Japanese companies are becoming more like the U.S. platform companies. So do big Korean firms.
From CNBC:
Nissan is planning to shift the balance of its production and support functions towards dollar-linked economies, including the U.S. and China, to protect itself against currency volatility, the Japanese carmaker’s chief executive has said.
Carlos Ghosn, CEO of Nissan and its French partner Renault, told the Financial Times that they wanted to correct a “big imbalance” in costs and revenues caused by producing cars in Japan to sell in the U.S. and dollar-linked economies in Asia.
“What we [want] to do is shift more of our cost from a yen base to a dollar base,” he said. That would not mean closing down facilities in Japan, he added, but that the company could not expand there.
His remarks may fuel concerns among other countries, and Japan in particular, about the effects of loose U.S. monetary policy and China’s currency link to the dollar.
The dollar has lost 10 percent of its value against the yen this year.
Mr Ghosn said exchange rate volatility of any kind was damaging to business, because it militated against long-term strategy. “The only way you can protect yourself is by making sure your currency footprint is balanced. If there is any imbalance, it should be small.”
http://www.cnbc.com/id/40305508/Nissan_to_Shift_Output_to_Dollar_Economies
From CNBC:
Nissan is planning to shift the balance of its production and support functions towards dollar-linked economies, including the U.S. and China, to protect itself against currency volatility, the Japanese carmaker’s chief executive has said.
Carlos Ghosn, CEO of Nissan and its French partner Renault, told the Financial Times that they wanted to correct a “big imbalance” in costs and revenues caused by producing cars in Japan to sell in the U.S. and dollar-linked economies in Asia.
“What we [want] to do is shift more of our cost from a yen base to a dollar base,” he said. That would not mean closing down facilities in Japan, he added, but that the company could not expand there.
His remarks may fuel concerns among other countries, and Japan in particular, about the effects of loose U.S. monetary policy and China’s currency link to the dollar.
The dollar has lost 10 percent of its value against the yen this year.
Mr Ghosn said exchange rate volatility of any kind was damaging to business, because it militated against long-term strategy. “The only way you can protect yourself is by making sure your currency footprint is balanced. If there is any imbalance, it should be small.”
http://www.cnbc.com/id/40305508/Nissan_to_Shift_Output_to_Dollar_Economies
Marc Faber: The U.S. and China Are On a Collision Course Economically and Politically
From Zero Hedge:
Marc Faber was on Bloomberg TV sharing his thoughts on China's 5th RRR tightening in 2010. While the man whose on the ground perspective affords him a good sense of what is really happening, does not anticipate major adverse developments out of the recent round of tightening posturing, he does warn that unless China manages to control commodity inflation, things could get ugly, essentially reiterating what Albert Edwards said yesterday.
"Inflation is a dangerous situation everywhere in the world. I think in general that Consumer Price Indices published by China and the US do not reflect the real cost of living that households in these countries have. In Emerging Economies it is worse in the sense that if you have a per capita income of $1000 per year, food accounts for 50% of our expenditures... Even if China tightened, interest rates are still far below the true rate of inflation, and I spoke to a lot of people in China - my view is that inflation in China is running at 10% per annum."
"I think that China and the US are on a collision course, both economically and politically."
http://www.zerohedge.com/article/marc-faber-china-and-us-are-collision-course-sees-10-real-inflation-china
Marc Faber was on Bloomberg TV sharing his thoughts on China's 5th RRR tightening in 2010. While the man whose on the ground perspective affords him a good sense of what is really happening, does not anticipate major adverse developments out of the recent round of tightening posturing, he does warn that unless China manages to control commodity inflation, things could get ugly, essentially reiterating what Albert Edwards said yesterday.
"Inflation is a dangerous situation everywhere in the world. I think in general that Consumer Price Indices published by China and the US do not reflect the real cost of living that households in these countries have. In Emerging Economies it is worse in the sense that if you have a per capita income of $1000 per year, food accounts for 50% of our expenditures... Even if China tightened, interest rates are still far below the true rate of inflation, and I spoke to a lot of people in China - my view is that inflation in China is running at 10% per annum."
"I think that China and the US are on a collision course, both economically and politically."
http://www.zerohedge.com/article/marc-faber-china-and-us-are-collision-course-sees-10-real-inflation-china
Sunday, November 21, 2010
The Higher Education Crisis in the U.S.
From a comment in the comment section of Naked Capitalism:
State university tuition has gone up for two basic reasons. First and foremost, the states reduced tax-based funding in order to pay for more prisons and tax cuts for the wealthy.
Second, university education remains largely handwork and therefore necessarily expensive. Like all handwork, its price must go up faster than inflation, since productivity increases will always be below average.
However, the most important reason it has become unaffordable for the middle class has nothing at all to do with the educational system. The main problem is that the middle class hasn’t gotten a pay increase in a generation — all the productivity increases since Reagan have gone to the upper, and lately the upper upper, income brackets while we have simultaneously shifted taxation from the wealthy to the middle class, using social security taxes, for example, to finance tax cuts for the rich, and refusing to pay state taxes necessary to finance education and other services that can only be provided by government.
Struggling to cope with the massive cut-backs in state funding, universities and their students have looked for any salvation possible, and they found the same solution that the middle class has found in every sphere — borrowing.
The borrowing solution is nearing its end. Our educational system is in serious crisis. To be sure, we can squeeze it a little longer, as one can always cut R&D a little more. But in the end, if we continue to refuse to fund it through government, we will have an educational system in as good shape as our railroad system — i.e., nonexistent — or our medical care system — excellent for the rich and disastrous for the nation.
And then we’ll be able to complain even more about government failure as our economy collapses around us.
http://www.nakedcapitalism.com/2010/11/is-student-debt-the-next-front-in-the-consumer-debt-crisis.html
State university tuition has gone up for two basic reasons. First and foremost, the states reduced tax-based funding in order to pay for more prisons and tax cuts for the wealthy.
Second, university education remains largely handwork and therefore necessarily expensive. Like all handwork, its price must go up faster than inflation, since productivity increases will always be below average.
However, the most important reason it has become unaffordable for the middle class has nothing at all to do with the educational system. The main problem is that the middle class hasn’t gotten a pay increase in a generation — all the productivity increases since Reagan have gone to the upper, and lately the upper upper, income brackets while we have simultaneously shifted taxation from the wealthy to the middle class, using social security taxes, for example, to finance tax cuts for the rich, and refusing to pay state taxes necessary to finance education and other services that can only be provided by government.
Struggling to cope with the massive cut-backs in state funding, universities and their students have looked for any salvation possible, and they found the same solution that the middle class has found in every sphere — borrowing.
The borrowing solution is nearing its end. Our educational system is in serious crisis. To be sure, we can squeeze it a little longer, as one can always cut R&D a little more. But in the end, if we continue to refuse to fund it through government, we will have an educational system in as good shape as our railroad system — i.e., nonexistent — or our medical care system — excellent for the rich and disastrous for the nation.
And then we’ll be able to complain even more about government failure as our economy collapses around us.
http://www.nakedcapitalism.com/2010/11/is-student-debt-the-next-front-in-the-consumer-debt-crisis.html
Saturday, November 20, 2010
“A good life with contentment is itself a great wealth. For we brought nothing with us into this world, and we can take nothing out of it. So if we have enough of what we need, let us be content with that. But people who long to be rich fall into temptation and are trapped by many foolish desires and schemes that plunge them into ruin and destruction. For love of money is the root of all of evil, and some, having pursued its power, fall from faith, and end in sorrow.” 1 Tomothy 6: 6-10
Thursday, November 18, 2010
The Ramification of the QE Policy for Ordinary Folks
Many point out that the U.S. Quantitative Easing policy is intended to stoke another series of asset bubbles and there would be another round of QE.
Many also claim that the U.S. QE policy is devaluing the USD. It is inflating the market up, along with PM prices and commodity currencies.
What would be the ramification of the QE policy for ordinary people?
Many contend that it will impoverish many ordinary folks through skyrocketing commodity prices. Will the U.S. QE2 make basic necessities more expensive? Some argue that basic necessities will take up a bigger portion of household incomes, thereby reducing consumption.
Some like Denninger argue that rising input costs due to the QE policy would force companies to squeeze their profits, thereby causing mass layoffs.
This may be on a long time line. In any case, history has shown that it never ends well for ordinary folks.
Many also claim that the U.S. QE policy is devaluing the USD. It is inflating the market up, along with PM prices and commodity currencies.
What would be the ramification of the QE policy for ordinary people?
Many contend that it will impoverish many ordinary folks through skyrocketing commodity prices. Will the U.S. QE2 make basic necessities more expensive? Some argue that basic necessities will take up a bigger portion of household incomes, thereby reducing consumption.
Some like Denninger argue that rising input costs due to the QE policy would force companies to squeeze their profits, thereby causing mass layoffs.
This may be on a long time line. In any case, history has shown that it never ends well for ordinary folks.
Wednesday, November 17, 2010
Unfolding QE Wars
The U.S. has initiated the QE war.
China, Japan, the U.K, some euro-zone countries and Korea may join the QE crowd.
The bubbles and industrial competitiveness are the major culprit behind the currency devaluation.
Resorting to QE to hold down their currencies may be the only option for some countries, if the U.S. continues on the QE path.
It’s not just the financial/economic war. It has to do with national sovereignty.
One has to look into each country’s political economy, along with global financial institutions and MNCs to understand the state of the world economy.
China, Japan, the U.K, some euro-zone countries and Korea may join the QE crowd.
The bubbles and industrial competitiveness are the major culprit behind the currency devaluation.
Resorting to QE to hold down their currencies may be the only option for some countries, if the U.S. continues on the QE path.
It’s not just the financial/economic war. It has to do with national sovereignty.
One has to look into each country’s political economy, along with global financial institutions and MNCs to understand the state of the world economy.
Tuesday, November 16, 2010
Why the Cisco Announcement May Scare the Hell Out of You
From a Forbes’ blog:
Here’s why Cisco Systems’ bad financial news last week should (maybe) scare the hell out of you.
First, in case you missed it, here are the details of the announcement. On Thursday, Cisco stunned both the tech world and the stock market when it cut its sales forecast for the second quarter in a row. Worse, chairman and CEO John Chambers said that the company’s current situation is the result of outside forces beyond the company’s control – in particular, declining orders from cable companies and government agencies.
The market responded quickly and strongly to such depressing news from one of the linchpins of the U.S. economy: the Dow fell nearly 74 points, or 0.7 percent to close at 11,283.10. It could have been a lot worse – at one point in the day trading was down as much as 126 points.
We now know, as John himself has subsequently admitted, that he had returned from the holiday break to discover that Cisco’s enormous backlog of orders had essentially. . .evaporated. In the course of a single day, Chambers had gone from believing Cisco was atop the business world to fearing that the company might already be doomed. Looking back, it was the moment that the dot.com bubble began to pop.
Needless to say, Cisco survived and went on to even greater success – not least because Chambers ran the company in such a way that he would never again be surprised as he had that day in early 2001. Indeed, one can even make a pretty strong case that Chambers is today one of the world’s best CEOs.
And that’s what made Cisco’s announcement last week so troubling. After all, IBM and Motorola had already announced that were optimistic about further growth in sales to government in the fourth quarter. Were they deluding themselves and their shareholders? Or was something wrong at Cisco?
We still don’t know the answer. But it seems to me that are three possible scenarios, none of them good. Let’s look at them from least scary to most terrifying.
1. Cisco’s got problems – Over the last few years, Cisco has undergone a major organizational transformation from what can best be described as a traditional, monolithic $30+ billion corporation into a radically knew ‘matrix’ organization of more than thirty largely independent operating units empowered with their own profit/loss responsibilities. Chambers admitted at the time that this was a risky move, with little precedent. So, perhaps the challenges of decentralization and coordination are proving more difficult that Chambers and his executive staff ever imagined. After all, it wouldn’t take more than a couple incompetent unit executives to damage the company’s bottom line. This is bad news for Cisco shareholders if those business units have to be fixed – and really bad news if the Cisco organizational model is a failure . . .especially as Cisco is facing a lot of big and small competitors these days. But it means little to the larger economy.
2. The other guys are wrong – This is a whole lot more scary. Chambers really is one of the best business leaders alive, he’s got a decade more experience since the crash of 2001, and, approaching retirement, he is very focused on his legacy. It’s hard to believe he got caught flat-footed – by the economy, by surging competitors or by an organizational breakdown. So, if he says the problems are external and beyond Cisco’s control, a betting man should probably believe him. But if you do, what that means is that: a) IBM, Motorola and others are flat-out deluding themselves – which may explain the commensurate drop in Big Blue’s stock on Cisco’s announcement; and b) What little momentum the U.S. economic recovery had is now fading away . . .and we face the prospect, at best, of sitting dead in the water for yet another year.
3. Chamber’s ghost is back – This is the one that should really scare the hell out of you. The simple fact is that John Chambers has not had to make an announcement like the one he did last week since that day in 2001. He didn’t look as frightened this time – but then, he’s already been through it once, and he’s had nine years to become a better actor. If the hidden message of this new announcement is the same as the hidden message of that historic announcement, then we are looling at the prospect of a double-dip crash . . .and given the state we are already in, with massive debt and high unemployment, the prospects for the U.S. – and world – are almost unthinkable.
I’d say that’s three good reasons why we should pay a whole lot more attention to what’s going on at Cisco Systems right now, and not treat it as More of the Same. Right now, John Chambers is sitting on information that may decide the near-term fate of the economy. We should stick around and listen.
http://blogs.forbes.com/mikemalone/2010/11/15/the-cisco-in-the-coal-mine/
Here’s why Cisco Systems’ bad financial news last week should (maybe) scare the hell out of you.
First, in case you missed it, here are the details of the announcement. On Thursday, Cisco stunned both the tech world and the stock market when it cut its sales forecast for the second quarter in a row. Worse, chairman and CEO John Chambers said that the company’s current situation is the result of outside forces beyond the company’s control – in particular, declining orders from cable companies and government agencies.
The market responded quickly and strongly to such depressing news from one of the linchpins of the U.S. economy: the Dow fell nearly 74 points, or 0.7 percent to close at 11,283.10. It could have been a lot worse – at one point in the day trading was down as much as 126 points.
We now know, as John himself has subsequently admitted, that he had returned from the holiday break to discover that Cisco’s enormous backlog of orders had essentially. . .evaporated. In the course of a single day, Chambers had gone from believing Cisco was atop the business world to fearing that the company might already be doomed. Looking back, it was the moment that the dot.com bubble began to pop.
Needless to say, Cisco survived and went on to even greater success – not least because Chambers ran the company in such a way that he would never again be surprised as he had that day in early 2001. Indeed, one can even make a pretty strong case that Chambers is today one of the world’s best CEOs.
And that’s what made Cisco’s announcement last week so troubling. After all, IBM and Motorola had already announced that were optimistic about further growth in sales to government in the fourth quarter. Were they deluding themselves and their shareholders? Or was something wrong at Cisco?
We still don’t know the answer. But it seems to me that are three possible scenarios, none of them good. Let’s look at them from least scary to most terrifying.
1. Cisco’s got problems – Over the last few years, Cisco has undergone a major organizational transformation from what can best be described as a traditional, monolithic $30+ billion corporation into a radically knew ‘matrix’ organization of more than thirty largely independent operating units empowered with their own profit/loss responsibilities. Chambers admitted at the time that this was a risky move, with little precedent. So, perhaps the challenges of decentralization and coordination are proving more difficult that Chambers and his executive staff ever imagined. After all, it wouldn’t take more than a couple incompetent unit executives to damage the company’s bottom line. This is bad news for Cisco shareholders if those business units have to be fixed – and really bad news if the Cisco organizational model is a failure . . .especially as Cisco is facing a lot of big and small competitors these days. But it means little to the larger economy.
2. The other guys are wrong – This is a whole lot more scary. Chambers really is one of the best business leaders alive, he’s got a decade more experience since the crash of 2001, and, approaching retirement, he is very focused on his legacy. It’s hard to believe he got caught flat-footed – by the economy, by surging competitors or by an organizational breakdown. So, if he says the problems are external and beyond Cisco’s control, a betting man should probably believe him. But if you do, what that means is that: a) IBM, Motorola and others are flat-out deluding themselves – which may explain the commensurate drop in Big Blue’s stock on Cisco’s announcement; and b) What little momentum the U.S. economic recovery had is now fading away . . .and we face the prospect, at best, of sitting dead in the water for yet another year.
3. Chamber’s ghost is back – This is the one that should really scare the hell out of you. The simple fact is that John Chambers has not had to make an announcement like the one he did last week since that day in 2001. He didn’t look as frightened this time – but then, he’s already been through it once, and he’s had nine years to become a better actor. If the hidden message of this new announcement is the same as the hidden message of that historic announcement, then we are looling at the prospect of a double-dip crash . . .and given the state we are already in, with massive debt and high unemployment, the prospects for the U.S. – and world – are almost unthinkable.
I’d say that’s three good reasons why we should pay a whole lot more attention to what’s going on at Cisco Systems right now, and not treat it as More of the Same. Right now, John Chambers is sitting on information that may decide the near-term fate of the economy. We should stick around and listen.
http://blogs.forbes.com/mikemalone/2010/11/15/the-cisco-in-the-coal-mine/
Monday, November 15, 2010
China Knows What Has Happened to Japan after the 1985 Plaza Accord.
The U.S. has pressed China to appreciate its currency. Yet China is fully aware what has happened to Japan after the Plaza Accord. Its resulting strong currency against the U.S. Dollar tanked the Japanese economy. The U.S. rebalanced by 51% so that the U.S. could pay Japan back at 49 cents on the dollar. The Japanese economy has never recovered since then. Some argue that the U.S. rode its own recovery from the oil shock recession on the backs of the Japanese.
On the other hand, has the Plaza Accord helped the U.S. strengthen its productive capacity? Nope.
Of course we all know that China faces its own problems. Their bubbles will implode at some point down the road. The Chinese has to realize that basing its wealth on the USD wouldn’t be sustainable in the longer term.
It is true that China has trade and current account surpluses and engages in currency manipulation. Yet, if China appreciates its currency, that would force American firms to ship their operations back to the U.S.?
The bottom line is: it is not China’s fault that the U.S. economy is doomed and the USD is toast. Getting China to raise its currency wouldn’t solve the U.S. conundrums.
On the other hand, has the Plaza Accord helped the U.S. strengthen its productive capacity? Nope.
Of course we all know that China faces its own problems. Their bubbles will implode at some point down the road. The Chinese has to realize that basing its wealth on the USD wouldn’t be sustainable in the longer term.
It is true that China has trade and current account surpluses and engages in currency manipulation. Yet, if China appreciates its currency, that would force American firms to ship their operations back to the U.S.?
The bottom line is: it is not China’s fault that the U.S. economy is doomed and the USD is toast. Getting China to raise its currency wouldn’t solve the U.S. conundrums.
Sunday, November 14, 2010
The Failed G20 Meetings: G-20 Agrees to Postpone Agreement
From Zero Hedge:
The long awaited G20 meeting finally came with a disappointing statement even compared to our own expectation for very slow and gradual progress in global economic coordination. The prospect of capital controls emerging post the G20 meeting, added to the overall uncertainty underpinning a volatile week for risky assets. After weeks of rumours and speculation, the Bank of Korea could possibly announce some capital account measures at the policy meeting on Tuesday.
http://www.zerohedge.com/article/weekly-recap-and-upcoming-calendar-light-domestic-econ-data-all-eyes-pomo-europe-and-china
From Bloomberg:
Group of 20 nations’ efforts to tackle currency and trade imbalances floundered as China rejected policy prescriptions that fault its exchange rate regime and directed criticism at monetary easing in the U.S.
“Don’t make other people take the medicine for your disease,” Yu Jianhua, a director general at China’s Ministry of Commerce, told reporters in Seoul late yesterday. “Quantitative easing will have a very big impact on developing countries including China.”
At stake for the global economy is averting a repeat of the currency and trade tensions that erupted in the 1930s and were blamed for worsening the Great Depression. The pivotal roles China and the U.S. must play to get a breakthrough at the G-20 was underscored by an 80-minute meeting between Presidents Barack Obama and Hu Jintao dominated by exchange rates.
“The Chinese can’t help but think this is just a way of continuing to point the finger at China,” said Neil Mackinnon, an economist at VTB Capital Inc. in London and a former Treasury official. “It doesn’t look as if we’re going to see anything specific or substantive that will address global imbalances.”
http://www.bloomberg.com/news/2010-11-11/g-20-nations-at-odds-over-currency-stance-push-to-avoid-trade-imbalances.html
The long awaited G20 meeting finally came with a disappointing statement even compared to our own expectation for very slow and gradual progress in global economic coordination. The prospect of capital controls emerging post the G20 meeting, added to the overall uncertainty underpinning a volatile week for risky assets. After weeks of rumours and speculation, the Bank of Korea could possibly announce some capital account measures at the policy meeting on Tuesday.
http://www.zerohedge.com/article/weekly-recap-and-upcoming-calendar-light-domestic-econ-data-all-eyes-pomo-europe-and-china
From Bloomberg:
Group of 20 nations’ efforts to tackle currency and trade imbalances floundered as China rejected policy prescriptions that fault its exchange rate regime and directed criticism at monetary easing in the U.S.
“Don’t make other people take the medicine for your disease,” Yu Jianhua, a director general at China’s Ministry of Commerce, told reporters in Seoul late yesterday. “Quantitative easing will have a very big impact on developing countries including China.”
At stake for the global economy is averting a repeat of the currency and trade tensions that erupted in the 1930s and were blamed for worsening the Great Depression. The pivotal roles China and the U.S. must play to get a breakthrough at the G-20 was underscored by an 80-minute meeting between Presidents Barack Obama and Hu Jintao dominated by exchange rates.
“The Chinese can’t help but think this is just a way of continuing to point the finger at China,” said Neil Mackinnon, an economist at VTB Capital Inc. in London and a former Treasury official. “It doesn’t look as if we’re going to see anything specific or substantive that will address global imbalances.”
http://www.bloomberg.com/news/2010-11-11/g-20-nations-at-odds-over-currency-stance-push-to-avoid-trade-imbalances.html
Wednesday, November 10, 2010
Japan Would Have Taken a Different Path
Japan has maintained positive trade balance while internalizing fiscal deficits. How is that working out? By doing so, the Japanese government has hollowed out the future wealth of the country and is screwing over its own people.
Yes, the 1985 Plaza Accord has had significant impacts on the Japanese economy, yet its own failed policies have led Japan to where they are now: shrinking middle class, widening income inequality, and mounting debt (about 200% debt to GDP), etc.
The Japanese would have taken a different path instead of pursuing the extend and pretend solutions like QE, stimulus and other measures to artificially prop up the market.
The Japanese stock market would have crashed 70 percent in 2 years instead of 20 years. (The Nikkei was once over 30,000, but today it’s around 9,400). Then their economy would have rebounded and wouldn’t be in a dire situation they are now.
BOJ’ quantitative easing succeeded in stoking asset inflation, yet when it unwound its QE, deflation returned. Japan’s stock market rose up from about 2003 to 2007, and then declined after QE was unwound. Meanwhile, BOJ has been heavily monetizing its own debt.
Why has Japan taken the wrong path? For whom has this extend and pretend worked?
One has to comprehend the political economy of Japan and international relations to answer this question.
The same goes for the U.S. and Korea.
Are we seeing the similar pattern both in the U.S. and Korea?
I sincerely hope that both Korea and China will learn from Japanese experiences. (Some argue that China is already in a Japanese style bubble and Korea is not immune from this issue) As I mentioned many times, global forces are no excuse for policy failure.
Yes, the 1985 Plaza Accord has had significant impacts on the Japanese economy, yet its own failed policies have led Japan to where they are now: shrinking middle class, widening income inequality, and mounting debt (about 200% debt to GDP), etc.
The Japanese would have taken a different path instead of pursuing the extend and pretend solutions like QE, stimulus and other measures to artificially prop up the market.
The Japanese stock market would have crashed 70 percent in 2 years instead of 20 years. (The Nikkei was once over 30,000, but today it’s around 9,400). Then their economy would have rebounded and wouldn’t be in a dire situation they are now.
BOJ’ quantitative easing succeeded in stoking asset inflation, yet when it unwound its QE, deflation returned. Japan’s stock market rose up from about 2003 to 2007, and then declined after QE was unwound. Meanwhile, BOJ has been heavily monetizing its own debt.
Why has Japan taken the wrong path? For whom has this extend and pretend worked?
One has to comprehend the political economy of Japan and international relations to answer this question.
The same goes for the U.S. and Korea.
Are we seeing the similar pattern both in the U.S. and Korea?
I sincerely hope that both Korea and China will learn from Japanese experiences. (Some argue that China is already in a Japanese style bubble and Korea is not immune from this issue) As I mentioned many times, global forces are no excuse for policy failure.
Monday, November 8, 2010
Andy Xie: The World Heading for Another Crisis in 2012
From China International Business:
It seems that nobody wants to appreciate. Most major economies will do something to keep their currencies down. That is checkmate for the US. Without the devaluation benefit on rising exports, QE just leads to inflation, first through rising oil prices. The American people are suffering from declining housing prices and high unemployment. If the gasoline price doubles, the country may not be stable. How would the elite react? Probably more of the same.
The world is heading towards high inflation and political instability. It's only a matter of time before there is another global crisis. The first sign would be a collapsing treasury market. The Fed is controlling the yield curve through its QE program. But, it is irrational for other investors to play this game. The only reason to stay in is that the Fed won't let the market fall. But, the underlying value is evaporating with rising money supply and the inflationary consequences. When all the investors realize this, they will run for the exits and the Fed won't be able to stop the stampede. If it prints enough money to take over the whole market, the people with freshly minted dollars would surely want to convert their money into other assets. The dollar would collapse too.
The world seems on course for another crisis in 2012. The same people who caused the last crisis are still in charge. They'll get us into another. Iceland is sending its former prime minister to court for causing the banking crisis. A worse fate awaits the people who are causing the next crisis.
http://www.cibmagazine.com.cn/Columnists/Andy_Xie.asp?id=1442&to_hell_through_qe.html
It seems that nobody wants to appreciate. Most major economies will do something to keep their currencies down. That is checkmate for the US. Without the devaluation benefit on rising exports, QE just leads to inflation, first through rising oil prices. The American people are suffering from declining housing prices and high unemployment. If the gasoline price doubles, the country may not be stable. How would the elite react? Probably more of the same.
The world is heading towards high inflation and political instability. It's only a matter of time before there is another global crisis. The first sign would be a collapsing treasury market. The Fed is controlling the yield curve through its QE program. But, it is irrational for other investors to play this game. The only reason to stay in is that the Fed won't let the market fall. But, the underlying value is evaporating with rising money supply and the inflationary consequences. When all the investors realize this, they will run for the exits and the Fed won't be able to stop the stampede. If it prints enough money to take over the whole market, the people with freshly minted dollars would surely want to convert their money into other assets. The dollar would collapse too.
The world seems on course for another crisis in 2012. The same people who caused the last crisis are still in charge. They'll get us into another. Iceland is sending its former prime minister to court for causing the banking crisis. A worse fate awaits the people who are causing the next crisis.
http://www.cibmagazine.com.cn/Columnists/Andy_Xie.asp?id=1442&to_hell_through_qe.html
Sunday, November 7, 2010
The G20 Seoul Summit Showdown with China; German Finance Minister Calls the U.S. QE Clueless
From the FT:
China has curtly dismissed a US proposal to address global economic imbalances, setting the stage for a potential showdown at next week’s G20 meeting in Seoul.
Cui Tiankai, a deputy foreign minister and one of China’s lead negotiators at the G20, said on Friday that the US plan for limiting current account surpluses and deficits to 4 per cent of gross domestic product harked back “to the days of planned economies”.
“We believe a discussion about a current account target misses the whole point,” he added, in the first official comment by a senior Chinese official on the subject. “If you look at the global economy, there are many issues that merit more attention – for example, the question of quantitative easing.”
China’s opposition to the proposal, which had made some progress at a G20 finance ministers’ meeting last month, came amid a continuing rumble of protest from around the world at the US Federal Reserve’s plan to pump an extra $600bn into financial markets.
Officials from China, Germany and South Africa on Friday added their voices to a chorus of complaint that the Fed’s return to so-called quantitative easing would create instability and worsen imbalances by triggering surges of capital into other currencies.
Tim Geithner, the US Treasury secretary, has proposed using what the US refers to as current account “guidelines” to accelerate global rebalancing, partly as a way of changing the debate away from simply pressing China to allow faster appreciation in the renminbi.
But on Thursday and Friday, governments focused instead on the global impact of the Fed’s action. “With all due respect, US policy is clueless,” Wolfgang Schäuble, German finance minister, told reporters. “It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.”
Pravin Gordhan, finance minister of South Africa, a key member of the emerging market bloc, said the decision “undermines the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain during the current crisis”, and ran counter to the pledge made by G20 finance ministers to refrain from uncoordinated responses.
Experts say the mood has soured since the G20 Toronto summit in June and worry that unless the summit can patch up differences on trade imbalances and exchange rates, the outlook for international economic agreement is poor.
http://www.ft.com/cms/s/0/03567a28-e8a3-11df-a383-00144feab49a.html#axzz14e1EFQ1Z
China has curtly dismissed a US proposal to address global economic imbalances, setting the stage for a potential showdown at next week’s G20 meeting in Seoul.
Cui Tiankai, a deputy foreign minister and one of China’s lead negotiators at the G20, said on Friday that the US plan for limiting current account surpluses and deficits to 4 per cent of gross domestic product harked back “to the days of planned economies”.
“We believe a discussion about a current account target misses the whole point,” he added, in the first official comment by a senior Chinese official on the subject. “If you look at the global economy, there are many issues that merit more attention – for example, the question of quantitative easing.”
China’s opposition to the proposal, which had made some progress at a G20 finance ministers’ meeting last month, came amid a continuing rumble of protest from around the world at the US Federal Reserve’s plan to pump an extra $600bn into financial markets.
Officials from China, Germany and South Africa on Friday added their voices to a chorus of complaint that the Fed’s return to so-called quantitative easing would create instability and worsen imbalances by triggering surges of capital into other currencies.
Tim Geithner, the US Treasury secretary, has proposed using what the US refers to as current account “guidelines” to accelerate global rebalancing, partly as a way of changing the debate away from simply pressing China to allow faster appreciation in the renminbi.
But on Thursday and Friday, governments focused instead on the global impact of the Fed’s action. “With all due respect, US policy is clueless,” Wolfgang Schäuble, German finance minister, told reporters. “It’s not that the Americans haven’t pumped enough liquidity into the market,” he said. “Now to say let’s pump more into the market is not going to solve their problems.”
Pravin Gordhan, finance minister of South Africa, a key member of the emerging market bloc, said the decision “undermines the spirit of multilateral co-operation that G20 leaders have fought so hard to maintain during the current crisis”, and ran counter to the pledge made by G20 finance ministers to refrain from uncoordinated responses.
Experts say the mood has soured since the G20 Toronto summit in June and worry that unless the summit can patch up differences on trade imbalances and exchange rates, the outlook for international economic agreement is poor.
http://www.ft.com/cms/s/0/03567a28-e8a3-11df-a383-00144feab49a.html#axzz14e1EFQ1Z
Friday, November 5, 2010
Korea Would Aggressively Consider Curbing Capital Inflows
Korea strongly reacted to the U.S. QE2 hours after the U.S. Fed’s announcement of Quantitative Easing policy. Korea is hosting the G20 summit next week.
From CNBC:
South Korea on Thursday issued its strongest warning in months that it was close to taking steps aimed at curbing fund inflows, saying it would "aggressively" consider taking such measures.
The statement came a day after the U.S. Federal Reserve said it would buy back $600 billion of government bonds, a move that economists say will likely unleash further substantial capital flows into emerging markets like South Korea.
"The government believes it needs to turn away from the perception that controlling capital flows is always bad and consider introducing measures to improve the macroeconomic prudence," the Ministry of Strategy and Finance said in a statement.
Policymakers including Finance Minister Yoon Jeung-hyun have repeatedly said that South Korea was studying steps to curb fund inflows but the country is hosting the Group of 20 summit next week and analysts say it will likely refrain from imposing strong controls at a time when it is urging not to manipulate markets.
http://www.cnbc.com/id/39998421
From CNBC:
South Korea on Thursday issued its strongest warning in months that it was close to taking steps aimed at curbing fund inflows, saying it would "aggressively" consider taking such measures.
The statement came a day after the U.S. Federal Reserve said it would buy back $600 billion of government bonds, a move that economists say will likely unleash further substantial capital flows into emerging markets like South Korea.
"The government believes it needs to turn away from the perception that controlling capital flows is always bad and consider introducing measures to improve the macroeconomic prudence," the Ministry of Strategy and Finance said in a statement.
Policymakers including Finance Minister Yoon Jeung-hyun have repeatedly said that South Korea was studying steps to curb fund inflows but the country is hosting the Group of 20 summit next week and analysts say it will likely refrain from imposing strong controls at a time when it is urging not to manipulate markets.
http://www.cnbc.com/id/39998421
Thursday, November 4, 2010
Zero Hedge: The Day After QE2
From Zero Hedge:
And while more and more try to educate a hypnotized, strategically defaulting US society what QE2 means to their future, the rest of the world is already rising in a tidal wave of disapproval aimed at the Federal Reserve. As the FT reports, Brazil, China, German, and Thailand, and soon everyone else, have already voiced thighest criticism and their condemnation of this escalation in FX wars.
China, Brazil and Germany on Thursday criticised the Fed’s action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows.
Guido Mantega, the Brazilian finance minister who was the first to warn of a “currency war”, said: “Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter.”
Mr Mantega added: “You have to combine that with fiscal policy. You have to stimulate consumption.” Germany also expressed concern.
An adviser to the Chinese central bank called unbridled printing of dollars the biggest risk to the global economy and said China should use currency policy and capital controls to cushion itself from external shocks.
“As long as the world exercises no restraint in issuing global currencies such as the dollar – and this is not easy – then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” Xia Bin wrote in a newspaper under the Chinese central bank.
Korn Chatikavanij, Thailand’s finance minister, said the Thai central bank had told him it was “in close talks” with regional central banks over measures “to prevent excessive speculation.”
The renewed tension is likely to complicate US efforts to get leaders of the world’s leading economies countries meeting in Seoul next week to press China to sign up to a new accord promising to limit current account balances.
Everyone now realizes that the most benign outcome of this act is the symbolic isolation of the US by the rest of the world. The outright isolation will come the second China, Germany and Russia announces they have come up with their own, commodity-backed currency.
Dan Price, partner at the law firm Sidley Austin and formerly George W. Bush’s White House representative at the G20, said: “The US may find it increasingly difficult to galvanize countries to push China on [renminbi] appreciation when many think the Fed’s quantitative easing policy is itself a major contributor to currency misalignment and imbalances.”
Neither the Federal Reserve nor the US Treasury commented on Thursday. The tension over exchange rates has created fears of a wave of protectionist trade and investment actions in response, a reaction that so far has been markedly absent from the global economy during the recession and recovery.
The World Trade Organisation, in association with other international institutions, released a regular report which said that new restrictions on trade, direct investment and capital flows had remained subdued.
At some point all Americans, no matter how engrossed with their facebook profile, will have to ask themselves: is preventing a few multibillionaires from suffering debt writedown losses a sufficient compensation for the trillions in incremental debt, for the conversion of America to the laughing stock of the world and its subsequent insolvency, and to the collapse of the standard of living of those 81% of Americans who barely have any stock market holdings, and thus benefit exactly zero from this action.
http://www.zerohedge.com/article/qe2-day-after-entire-world-blasts-deranged-madmans-uncheckable-insanity
And while more and more try to educate a hypnotized, strategically defaulting US society what QE2 means to their future, the rest of the world is already rising in a tidal wave of disapproval aimed at the Federal Reserve. As the FT reports, Brazil, China, German, and Thailand, and soon everyone else, have already voiced thighest criticism and their condemnation of this escalation in FX wars.
China, Brazil and Germany on Thursday criticised the Fed’s action a day earlier, and a string of east Asian central banks said they were preparing measures to defend their economies against large capital inflows.
Guido Mantega, the Brazilian finance minister who was the first to warn of a “currency war”, said: “Everybody wants the US economy to recover, but it does no good at all to just throw dollars from a helicopter.”
Mr Mantega added: “You have to combine that with fiscal policy. You have to stimulate consumption.” Germany also expressed concern.
An adviser to the Chinese central bank called unbridled printing of dollars the biggest risk to the global economy and said China should use currency policy and capital controls to cushion itself from external shocks.
“As long as the world exercises no restraint in issuing global currencies such as the dollar – and this is not easy – then the occurrence of another crisis is inevitable, as quite a few wise Westerners lament,” Xia Bin wrote in a newspaper under the Chinese central bank.
Korn Chatikavanij, Thailand’s finance minister, said the Thai central bank had told him it was “in close talks” with regional central banks over measures “to prevent excessive speculation.”
The renewed tension is likely to complicate US efforts to get leaders of the world’s leading economies countries meeting in Seoul next week to press China to sign up to a new accord promising to limit current account balances.
Everyone now realizes that the most benign outcome of this act is the symbolic isolation of the US by the rest of the world. The outright isolation will come the second China, Germany and Russia announces they have come up with their own, commodity-backed currency.
Dan Price, partner at the law firm Sidley Austin and formerly George W. Bush’s White House representative at the G20, said: “The US may find it increasingly difficult to galvanize countries to push China on [renminbi] appreciation when many think the Fed’s quantitative easing policy is itself a major contributor to currency misalignment and imbalances.”
Neither the Federal Reserve nor the US Treasury commented on Thursday. The tension over exchange rates has created fears of a wave of protectionist trade and investment actions in response, a reaction that so far has been markedly absent from the global economy during the recession and recovery.
The World Trade Organisation, in association with other international institutions, released a regular report which said that new restrictions on trade, direct investment and capital flows had remained subdued.
At some point all Americans, no matter how engrossed with their facebook profile, will have to ask themselves: is preventing a few multibillionaires from suffering debt writedown losses a sufficient compensation for the trillions in incremental debt, for the conversion of America to the laughing stock of the world and its subsequent insolvency, and to the collapse of the standard of living of those 81% of Americans who barely have any stock market holdings, and thus benefit exactly zero from this action.
http://www.zerohedge.com/article/qe2-day-after-entire-world-blasts-deranged-madmans-uncheckable-insanity
Bernanke: QE2 Is Intended to Boost Stock Prices
From Bloomberg:
Federal Reserve Chairman Ben S. Bernanke said resuming large-scale asset purchases should boost economic growth through lower borrowing costs and higher stock prices and that concerns about the strategy are “overstated.”
“This approach eased financial conditions in the past and, so far, looks to be effective again,” Bernanke said today in an opinion article for the Washington Post released hours after the Fed announced the $600 billion of Treasury buying through June in a second round of unconventional monetary stimulus.
“Stock prices rose and long-term interest rates fell when investors began to anticipate this additional action,” Bernanke said. “Easier financial conditions will promote economic growth.”
Bernanke said that low and falling inflation indicates that the economy has many idle resources and that further monetary policy efforts will not cause the economy to overheat.
http://www.bloomberg.com/news/2010-11-03/bernanke-says-new-purchases-should-aid-economic-growth-with-lower-rates.html
Federal Reserve Chairman Ben S. Bernanke said resuming large-scale asset purchases should boost economic growth through lower borrowing costs and higher stock prices and that concerns about the strategy are “overstated.”
“This approach eased financial conditions in the past and, so far, looks to be effective again,” Bernanke said today in an opinion article for the Washington Post released hours after the Fed announced the $600 billion of Treasury buying through June in a second round of unconventional monetary stimulus.
“Stock prices rose and long-term interest rates fell when investors began to anticipate this additional action,” Bernanke said. “Easier financial conditions will promote economic growth.”
Bernanke said that low and falling inflation indicates that the economy has many idle resources and that further monetary policy efforts will not cause the economy to overheat.
http://www.bloomberg.com/news/2010-11-03/bernanke-says-new-purchases-should-aid-economic-growth-with-lower-rates.html
Wednesday, November 3, 2010
The U.S. Fed Announces QE2: The Fed Poised to Buy $600 Billion in Bonds
The U.S. seems to learn nothing from Japan which has engaged in QE for the last 20 years.
We all know that this is not the end of QE; there will be further QE by the Fed.
From Market Watch:
The Federal Open Market Committee of the central bank said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, including about $75 billion this month, in a strategy called quantitative easing. It also indicated it would spend roughly $35 billion a month reinvesting the proceeds of maturing mortgage-backed securities into government bonds.
This is the second time the Fed has engaged in quantitative easing, as it snapped up $1.7 trillion in mostly housing-related assets between December 2008 and March 2010.
The Fed purchases are designed to bring down yields on government bonds believing that lower rates could always give the recovery a boost.
More broadly, the Federal Reserve wants to prompt private businesses and investors to begin to act with more confidence and help get the economy’s juices flowing.
Doubts persist about whether the plan will work, but many feel the Fed had little choice but to act.
The Fed’s favorite policy tool, the target federal funds rate for interbank lending, has been about as low as it can go, in a range between zero and 0.25%, since December 2008.
http://www.marketwatch.com/story/fed-to-buy-600-billion-in-government-bonds-2010-11-03
We all know that this is not the end of QE; there will be further QE by the Fed.
From Market Watch:
The Federal Open Market Committee of the central bank said it would buy up to $600 billion in long-term Treasurys until the end of June 2011, including about $75 billion this month, in a strategy called quantitative easing. It also indicated it would spend roughly $35 billion a month reinvesting the proceeds of maturing mortgage-backed securities into government bonds.
This is the second time the Fed has engaged in quantitative easing, as it snapped up $1.7 trillion in mostly housing-related assets between December 2008 and March 2010.
The Fed purchases are designed to bring down yields on government bonds believing that lower rates could always give the recovery a boost.
More broadly, the Federal Reserve wants to prompt private businesses and investors to begin to act with more confidence and help get the economy’s juices flowing.
Doubts persist about whether the plan will work, but many feel the Fed had little choice but to act.
The Fed’s favorite policy tool, the target federal funds rate for interbank lending, has been about as low as it can go, in a range between zero and 0.25%, since December 2008.
http://www.marketwatch.com/story/fed-to-buy-600-billion-in-government-bonds-2010-11-03
Monday, November 1, 2010
Samsung and Sony Face New Contention over Pricing
Of course one has to understand this news in the context of the U.S. QE2 and export economies’ FX interventions.
From Bloomberg:
Sony Corp. gave up yesterday on a goal to profit from televisions this fiscal year and Panasonic Corp. forecast price drops will deepen this quarter. Earlier, Samsung Electronics Co. predicted “severe” competition for the year-end season, echoing comments from LG Electronics Inc. a day earlier.
Projections from the world’s four largest TV makers signal the industry will fail to capitalize on the biggest sales quarter of the year, with some analysts predicting price declines of as much as 25 percent in 2010. Companies from Microsoft Corp. to Intel Corp. are increasingly counting on corporate demand as consumers are reluctant to shop.
“There’s going to be a price war this Christmas season and there’s no way around that,” said Tsutomu Yamada, a market analyst at kabu.com Securities Co. in Tokyo. “The whole strategy this year is ‘sell earlier and sell for less.’ That makes life miserable for the manufacturers.”
TV makers were betting earlier this year that pricier LED TVs with brighter screens or 3-D sets would keep prices from falling the typical 20 percent to 25 percent annually, according to Atul Goyal, a senior research analyst at CLSA Asia-Pacific Markets in Singapore. That bet hasn’t materialized as pessimism has increased recently and shoppers in the U.S. aren’t willing to pay extra for higher quality sets.
U.S. retailers such as Target Corp. and Wal-Mart Stores Inc. are sweetening discounts ahead of the holiday season to move merchandise as joblessness hovers near a 26-year high. Target, the second-biggest discount retailer behind Wal-Mart, said this month it would lower prices on more than 1,000 toys to attract shoppers. Wal-Mart responded with its own discounts.
Sony Chief Financial Officer Masaru Kato said yesterday the maker of Bravia TVs is forecasting a loss from the business this fiscal year and the company is bracing for “harsh” competition. Sales of 3-D sets, projected to account for 10 percent of the 25 million annual TV target, are trailing Sony’s previous expectations, he said.
Panasonic, the world’s biggest maker of plasma TVs, said yesterday falling prices, the stronger yen and more expensive raw materials prevented the maker of Viera TVs from raising its full-year profit forecast even though earnings during the first half exceeded the company’s projections. The yen trading near a 15-year high against the dollar isn’t helping.
“The strong yen will be a major hurdle in the TV business in the second half,” Hideaki Kawai, the executive officer in charge of finance and accounting at Panasonic, said in Osaka yesterday. “It’s an extremely severe situation.”
South Korea’s Samsung and LG, the world’s two-biggest TV makers, have voiced similar concerns after the advantage of having a weaker won, the worst-performing major Asian currency from April to June, dissipated. The won’s 5.3 percent gain against the dollar since September makes it the region’s best performer during the period.
Samsung yesterday forecast earnings are poised to fall from their record high in the three months ended Sept. 30 and said competition in the TV market will be “severe” during the fourth quarter.
“We expect increased oversupply and price declines in the memory market, as well we possible further declines in LCD panels,” said Robert Yi, vice president of investor relations at Samsung. “Combining these with a possible appreciation of the won, we expect the overall fourth-quarter business conditions to be difficult.”
Fourth-quarter prices of LG sets will probably fall as much as 8 percent from the preceding three-month period, as TV makers clear mounting inventory, Chief Financial Officer David Jung said on Oct. 28.
“The Christmas season makes or breaks you and this year you’ve got unemployment and deflation,” said Yamada of kabu.com Securities.
http://www.bloomberg.com/news/2010-10-29/sony-samsung-brace-for-miserable-christmas-sales-as-tv-price-war-looms.html
From Bloomberg:
Sony Corp. gave up yesterday on a goal to profit from televisions this fiscal year and Panasonic Corp. forecast price drops will deepen this quarter. Earlier, Samsung Electronics Co. predicted “severe” competition for the year-end season, echoing comments from LG Electronics Inc. a day earlier.
Projections from the world’s four largest TV makers signal the industry will fail to capitalize on the biggest sales quarter of the year, with some analysts predicting price declines of as much as 25 percent in 2010. Companies from Microsoft Corp. to Intel Corp. are increasingly counting on corporate demand as consumers are reluctant to shop.
“There’s going to be a price war this Christmas season and there’s no way around that,” said Tsutomu Yamada, a market analyst at kabu.com Securities Co. in Tokyo. “The whole strategy this year is ‘sell earlier and sell for less.’ That makes life miserable for the manufacturers.”
TV makers were betting earlier this year that pricier LED TVs with brighter screens or 3-D sets would keep prices from falling the typical 20 percent to 25 percent annually, according to Atul Goyal, a senior research analyst at CLSA Asia-Pacific Markets in Singapore. That bet hasn’t materialized as pessimism has increased recently and shoppers in the U.S. aren’t willing to pay extra for higher quality sets.
U.S. retailers such as Target Corp. and Wal-Mart Stores Inc. are sweetening discounts ahead of the holiday season to move merchandise as joblessness hovers near a 26-year high. Target, the second-biggest discount retailer behind Wal-Mart, said this month it would lower prices on more than 1,000 toys to attract shoppers. Wal-Mart responded with its own discounts.
Sony Chief Financial Officer Masaru Kato said yesterday the maker of Bravia TVs is forecasting a loss from the business this fiscal year and the company is bracing for “harsh” competition. Sales of 3-D sets, projected to account for 10 percent of the 25 million annual TV target, are trailing Sony’s previous expectations, he said.
Panasonic, the world’s biggest maker of plasma TVs, said yesterday falling prices, the stronger yen and more expensive raw materials prevented the maker of Viera TVs from raising its full-year profit forecast even though earnings during the first half exceeded the company’s projections. The yen trading near a 15-year high against the dollar isn’t helping.
“The strong yen will be a major hurdle in the TV business in the second half,” Hideaki Kawai, the executive officer in charge of finance and accounting at Panasonic, said in Osaka yesterday. “It’s an extremely severe situation.”
South Korea’s Samsung and LG, the world’s two-biggest TV makers, have voiced similar concerns after the advantage of having a weaker won, the worst-performing major Asian currency from April to June, dissipated. The won’s 5.3 percent gain against the dollar since September makes it the region’s best performer during the period.
Samsung yesterday forecast earnings are poised to fall from their record high in the three months ended Sept. 30 and said competition in the TV market will be “severe” during the fourth quarter.
“We expect increased oversupply and price declines in the memory market, as well we possible further declines in LCD panels,” said Robert Yi, vice president of investor relations at Samsung. “Combining these with a possible appreciation of the won, we expect the overall fourth-quarter business conditions to be difficult.”
Fourth-quarter prices of LG sets will probably fall as much as 8 percent from the preceding three-month period, as TV makers clear mounting inventory, Chief Financial Officer David Jung said on Oct. 28.
“The Christmas season makes or breaks you and this year you’ve got unemployment and deflation,” said Yamada of kabu.com Securities.
http://www.bloomberg.com/news/2010-10-29/sony-samsung-brace-for-miserable-christmas-sales-as-tv-price-war-looms.html
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