Pol Eco of Japan's Prisons Turned Nursing Homes

♠ Posted by Emmanuel in , at 4/20/2015 01:30:00 AM
Elderly doing crime for prison's food, shelter, and--indeed--companionship.
There's a heartbreaking story that's received much airtime in US media concerning the notes a third-grade teacher received after she asked her often underprivileged students to complete the phrase "I wish my teacher knew..." Not to be outdone, an arguably even sadder story appeared in Bloomberg (of all places) concerning the aging of Japanese society that had me reaching for the handkerchief. Having a keen research interest in dealing with aging societies--I have written a short commentary on the migration of health care workers to Japan that should soon be followed by a lengthier article[s]--this one was keenly read.

Japan's depopulation is well and truly underway, with population having declined to turn-of-the-millennium levels as reported recently. With a general population that is rapidly greying, it should be no surprise that the prison population is also greying despite Japan being a law-abiding nation by and large. In fact, with a rising proportion of elderly prisoners, these facilities increasingly act as nursing homes instead of corrective facilities. What is quite sad is that many released prisoners commit petty crimes to get back into prison. After all, homelessness and hunger do not look like attractive propositions in societies where family members are distant or non-existent:
Most prisons spend a lot of time and effort keeping inmates from escaping. In Japan, the greater challenge is persuading convicts to leave. Among developed economies, Japan has one of the highest proportions of elderly prisoners. Crimes committed by senior citizens have quadrupled over the past two decades. Today, almost one in five convicts is over 60. The soaring costs of caring for these graying jailbirds are an added pressure on Prime Minister Shinzo Abe’s government, which is already burdened by a world-class debt load equal to roughly 240 percent of gross domestic product. To reduce repeat offenses, Japan aims to slash the number of convicts who are homeless at the time of their release by more than 30 percent by 2020...

Hitting such targets will be tough, particularly given the surge over the past decade in elderly prisoners, who often prefer a government-subsidized life behind bars to an isolated, destitute one on the outside.
If you think Japan's prisons are cushy Pablo Escobar-like outfits, you are grossly mistaken. However, compared to a life of destitution on the mean streets of Japan, prison life looks relatively attractive, hence the high rates of recidivism among elderly prisoners:
“Japan’s prisons are in poor condition, mostly without heating or air-conditioning,” says Koichi Hamai, a professor of criminology at Ryukoku University’s law school. “But they still prefer to be there, rather than outside. They have mates and food and are well cared for...”

Elderly criminals recycle in and out of the system because they lack family and financial support. They are often disabled and treated like outcasts in their local community. “Some prisons have become like nursing homes,” said Ryotaro Sugi, who was given the honorary title of special corrections officer by the Justice Ministry in 2008 to advocate for prisoners’ welfare after visiting jails over almost five decades. “Many need assistance for walking, bathing and eating...

Criminal offenses by those age 60 and over have quadrupled to 46,243 cases over the two decades that ended in 2014, according to Japan’s Ministry of Justice.
Efforts to reform the system are underway since welfare is actually cheaper than incarceration:
Japan budgeted 230 billion yen ($1.91 billion) for running its jails in the year ended March 2015. It costs about 3.2 million yen [about USD26,900 at present exchange rates] to keep someone locked up for a year, according to the Justice Ministry. That’s about double what a person on standard welfare can get. Under Japanese sentencing guidelines, repeat offenders of petty crimes, such as shoplifting, can spend as long as five years behind bars. In theory, someone stealing a 1,000 yen ($8.30) bento lunch box could end up costing the state 16 million yen to imprison for a maximum sentence.
What makes this story sadder than that of the American third-graders is that these are folks whose lives are near the end and accept a fairly miserable plight as repeat offenders in the absence of any real alternatives. I cannot imagine a loneliness worse than that which haunts these folks. It again raises questions about closed societies and migration: Who will care for the elderly? Who will pay for societal institutions? Make no mistake: like the United States, Japan is another developed society whose accelerated development portends issues the rest of the world will have to confront a couple of years into the future.

It makes me very, very sad indeed, but hopefully the research I am performing can help the plight of developed and developing countries alike deal with the consequences of aging societies. Extreme policies don't count. Make no mistake: these are today's pressing issues -

 I wish my teacher knew how sad the elderly people are in Japan.

Latin Left Loses at Summit of the Americas

♠ Posted by Emmanuel in at 4/17/2015 01:30:00 AM
The only real question is: What took you guys so long?
The first-time-ever participation of Cuba at the recently-concluded Summit of the Americas will probably be remembered for helping end insensibly prolonged Cold War mentalities and being a massive photo-op for Raul Castro and Barack Obama besides [see above picture]. That said, Venezuelan President Nicolas Maduro tried his best to make it another America-bashing festival that it's usually been in years past. Not that he was alone: Ecuadorean President Rafael Correa foretold the imminent American invasion of Venezuela:
“We were all very pleased to see the reconciliation of the U.S. with Cuba” Correa explained, though he criticized ongoing policies saying the U.S. “blockade is completely illegal. Guantanamo is an occupation”. However, he added that “after receiving that good news” on Cuba “we have the executive order declaring Venezuela a danger for the United States, which is a prelude to invasions.”

“They pulled the same thing with the invasions here in Panama, a tremendous injustice, tremendous interventionism. This summit should be celebratory, Obama should be received as the historic president who repaired relations with Latin America. But for that historical error, that absurd, arrogant, imperialist order, everything was lost,” Correa explained. 
Not to be left behind in America-bashing sweepstakes, Maduro tried to get into the action...only to be laughed at for his stupid comments. What do you expect from a guy whose main qualification was to be a bus driver?
[G]ringos attending the Summit of the Americas this past weekend considered it eminently fair to chuckle at Venezuelan President Nicolás Maduro – who in his U.S.-bashing speech remarked that he does enjoy American rock guitar icons like Jimi Hendrix and…Eric Clapton. Clapton, unfortunately, is British.

It was that kind of weekend for Maduro. The leader of Venezuela’s left-wing Bolivarian Revolution had come to Panama hoping to turn the summit into yet another anti-Washington fiesta. And on the eve of the gathering it seemed he might have his way.

Then, just before Maduro was set to speak on Saturday, Latin America’s lead leftist – Cuban President Raúl Castro, marking the first time his communist country had ever been invited to the summit – all but short-circuited Venezuela’s agenda. Halfway through his speech, Castro turned to U.S. President Barack Obama, thanked him for his recent efforts to normalize U.S.-Cuba relations and called him “an honest man.” Castro even apologized to Obama, stressing that he’s “not responsible” for what Havana considers U.S. injustices against Cuba, like the 53-year-old trade embargo.
There was no shortage of other leftist Latin leaders at the event, but they shut up for the most part. I may be wrong, but I think it shows the region is moving to a more centrist position:
Many of the heads of state who came to Panama noted that the country with a canal through it lies in the hemisphere’s geographical center. But as the summit concluded Saturday night, thanks to the rare U.S.-Cuba display of common sense, the isthmus seemed situated in the political center as well. So, at least for the moment, did the leaders gathered there, most of whom were applauding the Washington-Havana thaw and the prospect of post-ideological interaction for once from Alaska to Argentina.
As much as the US is responsible for all sorts of wrongheaded actions in Latin America, it is unlikely that everything that has gone wrong there can be laid on the United States' doorstep. Because the US likes to keep butting into others' affairs, however, there is always a convenient pretext for Blaming the US for All Latin American Failings. Oftentimes, the frailties of these countries are attributable to themselves more than anyone else. I guess more leaders are just recognizing this and are trying to move on, even if some would prefer to dwell in a past characterized by misgivings, mistrust, and grudges that refuse to go away.

More PRC Zaniness: HK Market Cap Surpasses Japan's

♠ Posted by Emmanuel in , at 4/16/2015 01:30:00 AM
Is Hong Kong now in thrall to China's stock market bubble?
Let me reconstruct this bubble-tastic story for you that's transferred from China to Hong Kong now: With China's economic growth slowing down relatively speaking to 7% in Q1 2015 and exports down 15% year-on-year in March, you'd expect stock markets there to cool down, too. But no, PRC stock markets are hitting highs day after day nowadays as a mania is taking hold. The "bubble" term is being aptly deployed as unsophisticated PRC retail investors pile in amid a clear economic downturn:
Chinese stocks and economic growth have long had little to do with each other. Between 2010 and early 2014, when China boasted the world’s fastest-growing economy, its stockmarket was consistently among the world’s worst performers. Since July of last year, this relationship has flipped. Whereas China’s growth has drifted steadily lower, its share indices have doubled in value. Does this mean that China’s previously beleaguered markets are now veering into bubble territory?

For those with a cautious bent, there is no shortage of warning signs. Three are especially noteworthy. First, valuations are beginning to look stretched and, in some cases, plainly absurd. ChiNext, China’s small-cap board, has a trailing price-earnings (PE) ratio of 90, more than double that of internet stocks at the peak of America’s dotcom bubble in 2000. Second, leverage has soared over the course of the rally. Outstanding loans to stock investors reached a record 1.67 trillion yuan ($269 billion) as of April 13th, up some 300% from a year earlier. Finally, many of those rushing to snap up stocks are small-time day traders with little understanding of what they are buying. Chinese investors opened nearly 5m trading accounts in March, a stampede that has continued into April. A survey by China’s Southwestern University of Finance and Economics found that two-thirds of new investors last year did not complete high school.
So there are signs that there's a speculative bubble being inflated in the mainland. Now, though, this mania is spreading to Hong Kong, which is still considered as a gateway to China. Some say it's just a better reflection of China's status as the world's second-largest economy, but I doubt it:
Advances in China have swelled the value of its shares to more than $7 trillion and are spreading to Hong Kong, which just eclipsed Japan as the world’s third-largest market. “It’s the reality of the stock market catching up with the reality of the economy’s footprint,” Xavier Smith, who oversees international equities at Centre Asset Management in New York, said by phone. The firm oversees about $1.1 billion. “For the world’s second-largest economy, you’d expect to see some of its stocks in the top 10 list. It’s more bizarre that they weren’t there before.”
Actually, the real reason why Hong Kong stocks are soaring is that previous restrictions on mutual fund investors have been significantly relaxed. Before, institutional investors had to be fairly well-capitalized to buy stocks in Hong Kong, but not anymore. So, the Shanghai-Hong Kong Stock Connect [exchange link] allowing mainland investors to buy HK-listed stocks and vice-versa has been dominated by "southbound" traffic as of late. Those piling into the China bourses in Shanghai and Shenzen can now go to Hong Kong as well to get their fill. From a Bloomberg article late last week on why Hong Kong was set to eclipse Japan in market capitalization:
The value of equities listed in Hong Kong rose to $4.9 trillion on Thursday, catching up to the $5 trillion total for Japanese stocks. The broadest measure of Hong Kong shares soared 1.3 percent Friday as the Topix index slid 0.3 percent. The world’s two largest markets are the U.S. at $24.7 trillion and mainland China’s $6.9 trillion, according to data compiled by Bloomberg that updates daily after the New York close.

The stock mania that pushed the Shanghai Composite Index up 89 percent in the past 12 months is spreading to Hong Kong, where turnover surpassed Japan each day since Wednesday. Chinese authorities last month allowed more domestic funds to access the city’s shares through a cross-border bourse link, spurring inflows that narrowed the discount on Hong Kong stocks compared with mainland shares. Baring Asset Management Ltd. says the rally in Hong Kong has room to run.
So it happened this week. That the Japanese stock market has been rallying as well given easy money policies there makes you appreciate the astronomic rise of Hong Kong stocks since it's been overtaken while on the upswing. I don't mean to sound alarming, but it seems to me that PRC authorities have inflated stock markets not only in Shanghai and Shenzen but now also in Hong Kong. Make no mistake: they are goading Jian Average on. For what reason I am not entirely clear about since they will bear the brunt of the fallout: If this bubble pops, they will have a lot to answer for as ill-informed Chinese investors lose their shirts.

Vietnam's Casinos Welcome All (Except Vietnamese)

♠ Posted by Emmanuel in , at 4/15/2015 01:00:00 AM
Macau-Upon-Mekong: Champagne wishes and caviar dreams in Vietnam.
As a longtime supporter of legalizing online gambling Stateside and a follower of the global industry, I am clearly not one of those who disavow the activity over dubious "moral" grounds. It's in human nature to take a wager, and who am I to stop others from doing so when I am not negatively affected? Pretty much the same logic has been adopted by governments all over the world: Why don't we legalize gambling and bolster government revenues in the process? It sounded like a perfectly good strategy--way back when there were still taboos in most places on gambling. The problem, though, is when nearly every government is trying to make money off casinos--it may not work since legalized gambling no longer constitutes an advantage when everywhere lets you do the same..

An interesting (semi-)outlier in this regard is Vietnam. Like its other regional peers, Vietnam has allowed gambling for a number of years now. I guess the last hurdle fell when antiseptic Singapore opened up its casinos. So there a few places left like China where gambling is confined like Macau in the PRC and entry can be limited among, say, Communist Party officials betting using state funds. But, instead of geographic discrimination, Vietnam is, interestingly enough, discriminating by nationality. More interestingly, it is not allowing its own citizens to gamble in Vietnamese casinos. From late last year:
Vietnam is drawing closer to allowing its citizens to gamble in the nation’s casinos as the government tries to boost revenue and compete for regional gaming investment.The finance ministry plans to submit the final draft of a new casino decree to Prime Minister Nguyen Tan Dung as soon as October, Ngo Van Tuan, head of the department for banking and finance at the ministry, said by telephone in Hanoi yesterday. Approval is likely before the end of the year, he said. The decree is modeled on Singapore’s gaming regulations and would permit Vietnamese to enter local casinos
.
“There are many Vietnamese who gamble at casinos in Singapore and Cambodia, and it’s obvious that we’ve lost some state revenue here,” said Phan Thi Thu Hien, deputy head of the banking and finance department. “We’ve studied what regional countries have done and think we should do the same. These changes would help increase government income.”

Vietnamese policy makers are seeking to replicate the success of Singapore and Macau in attracting gaming resorts and tourism. Vietnam’s government is grappling with the challenge of spurring an economy that risks missing this year’s growth target of 5.8 percent. The government collected about 250 billion dong ($12 million) of taxes from the five casinos operating in 2012, on gaming revenue of 900 billion dong, state radio reported on its website last week. There are six casinos in operation, with another licensed one yet to start. Only foreign passport holders are permitted to enter and gamble in the casinos.
The new rules will be Singapore-esque in allowing residents entry--but only relatively well-off ones:
Under the draft proposal, Vietnamese who are at least 21 years old, and have “sufficient financial ability” will need to pay an entrance fee to gamble in casinos, according to Hien. The financial-assessment criteria and entrance fees will be specified by the prime minister in separate regulations after the decree’s approval, Hien said. In Singapore, citizens and permanent residents must pay a S$100 ($80) daily levy to enter the casinos, or S$2,000 for an annual pass, in a government effort to deter those who can’t afford to gamble.
Suffice to say that has not happened yet as locals are still restricted from entering casinos in Vietnam, oddly enough. (But some get in by paying off security, but that's not as intended.) I suppose the Communist leadership doesn't want the reckless hedonism of this bourgeois capitalist pastime to pollute the minds of the people. Then again, money may talk louder soon as larger casinos hence larger revenues can be generated--but only by allowing more Vietnamese punters in:
Vietnam’s Prime Minister Nguyen Tan Dung has approved a casino project for the country largest island, prompting mixed reactions from industry observers and economists, some of whom are calling on the government to legally allow Vietnamese to gamble in such venues to keep more revenue inside the developing country.

The casino will be located on Phu Quoc Island, a special administrative economic zone and resort in Kien Giang province in the Gulf of Thailand, and be part of a larger investment project consisting of a tourism and entertainment complex/ It will join a handful of casinos already operating in the country that only allow foreign passport holders to legally gamble in them.

Bui Long Quan, a Vietnamese tourism industry expert who says he has seen many groups of Vietnamese tourists in casinos abroad, believes that the project’s planner should take the Vietnamese people into account. “The first benefit of this project is we don’t lose money—not letting the money out of the country, because if we let the Vietnamese go to casinos in Cambodia, Macau or Malaysia or other places, we let the money flow out.”

He said it would be impossible to stop Vietnamese from gambling in casinos in their own country. “Casinos for foreigners mean nothing,” he said, adding that wealthy Vietnamese manage to gamble in the country’s casinos by paying off guards. “So the ban is impossible.” 
I believe it's only a matter of time before these restrictions are limited, and I further believe that the ultimate spur will be the arrival of high-profile foreign-invested casinos. To make the most revenues out of them, they will need to have local patrons.

Air India, From Losing Money to Pilot Fisticuffs

♠ Posted by Emmanuel in , at 4/14/2015 01:30:00 AM
Captain said knock you out: aboard not-so-amazing Air India.
Oh dear, these national carriers keep coming to our attention with their unprofitability and headline-grabbing incidents. After Malaysia Airlines and Lufthansa, we now have India's flag-bearer, Air India. Like the two others mentioned earlier, Air India is saddled with "legacy" costs being the flag carrier. Moreover, militant unions will oppose any sort of rationalization or, indeed, privatization. Still, plans were mooted late last year to do just that in the face of expected opposition from vested interests despite the money-losing airline hemorrhaging cash that the government needs to keep replenishing:
The government will form a committee within the next fortnight comprising bankers, aviation experts and technocrats to help turn around and look at privatizing money-losing national airline Air India, two government officials aware of the matter said on Thursday...

It’s the latest effort by the central government to turn around Air India, which made a loss estimated at Rs.5,389 crore in the year ended 31 March and has accumulated losses of $5 billion in addition to total debt of Rs.40,000 crore. The government, in 2012, promised an equity infusion of Rs.30,000 crore till 2021 to bail out the airline. Of this, it has already infused nearly 18,000 crore.
Air India’s woes date back to a failed merger with Indian Airlines, another state-owned airline (the latter flew domestic routes and a few international ones in the neighbourhood; the old Air India flew only international routes) in 2007 and laxity on the part of India’s aviation ministry that effectively allowed international airlines to expand their presence in India without any reciprocal benefit for Air India. “Air India is bleeding the country. Every year we have to pump in Rs.6000 crore,” one of the two government officials cited above said on condition of anonymity, adding that the mandate of the committee would be to “look at making the airline better—cut costs and increase revenues, before privatization”.
Fortunately for Air India, its headline-grabbing event is not a spectacular air crash or a flight disappearance. Then again, the event hardly paints a flattering portrait of the carrier as pilots on a flight had a fistfight [!] before taking off:
Struggling state-run carrier Air India has grounded two of its pilots after a fight erupted between the pair just before takeoff, reports said Monday. The co-pilot allegedly assaulted the captain inside the cockpit as they were preparing the passenger plane for takeoff from the Indian tourist city of Jaipur to New Delhi on Sunday night, the Hindustan Times newspaper said.

The co-pilot was irritated by his superior's request to write down critical information for the flight, such as the number of passengers on board, take off weight and fuel uptake, the Times Of India reported." The co-pilot took offence at this and reportedly beat up the captain," the newspaper said, quoting unnamed sources...

Air India -- which has not reported an annual profit since 2007 -- has been hit by a string of technical glitches and other embarrassing incidents, including staff turning up late for flights.
The unprofessionalism is beyond belief. It's been a long series of hijinks that give Air India a bad image, and the latest incident certainly doesn't help. Given keep competition on international routes from Middle East-based carriers having the advantage of straddling Euroep and Asia, comic episodes aren't bound to inspire consumer confidence.

Larry Summers, 'Gross Hypocrisy' and PRC's AIIB

♠ Posted by Emmanuel in ,,, at 4/13/2015 01:30:00 AM
Zzzzz...Barack yaps too much...will set things straight in WaPo...zzzzz...
I am utterly perplexed by this recent, bizarre op-ed by former US Treasury Secretary Larry Summers in the Washington Post. In many respects, he embodies negative stereotypes others (justifiably) have of Americans in general: fat, loud, self-important--and crucial for this post--hypocritical. After all, this is the same guy who turned from grand architect of financial deregulation not only in the US but also worldwide using the American bully pulpit to financial regulator in the wake of the global financial crisis. Having played a part in bringing the latter on, he sought to downplay its proximate causes leading to, well, him. To no one's real surprise, Summers is at it again while voicing his superior American insights to us unenlightened colored folks on How To Fix the World.

The historical reinvention he is attempting to make this time around concerns what I've mentioned above--use of the American bully pulpit. In decades past, American influence in international finance usually involved the Bretton Woods institutions--the World Bank and IMF--serving this purpose as the world's largest development lender and lender of last resort, respectively. Very oddly, he claims that the United States' loss of face as a result of so-called allies rushing to be charter members of China's newfangled Asian Infrastructure Investment Bank (AIIB) was avoidable:
But I can think of no event since Bretton Woods comparable to the combination of China's effort to establish a major new institution and the failure of the United States to persuade dozens of its traditional allies, starting with Britain, to stay out.

This failure of strategy and tactics was a long time coming, and it should lead to a comprehensive review of the U.S. approach to global economics. With China's economic size rivaling that of the United States and emerging markets accounting for at least half of world output, the global economic architecture needs substantial adjustment. Political pressures from all sides in the United States have rendered the architecture increasingly dysfunctional.

Largely because of resistance from the right, the United States stands alone in the world in failing to approve International Monetary Fund governance reforms that Washington itself pushed for in 2009. By supplementing IMF resources, this change would have bolstered confidence in the global economy. More important, it would come closer to giving countries such as China and India a share of IMF votes commensurate with their increased economic heft.

At the same time, pressures from the left have led to pervasive restrictions on the infrastructure projects financed through the existing development banks — which consequently have receded as infrastructure funders, even as many developing countries have come to see infrastructure finance as their principal external funding need.
Actually, I am in agreement with the above: the United States should not only say that it welcomes the participation of other countries in global economic governance as they have become major economies in their own right, but also take the necessary steps to reform the World Bank and IMF. What's more, I agree that global economic governance should not be held hostage to domestic US politics:
First, U.S. leadership must have a bipartisan foundation, be free from gross hypocrisy and be restrained in the pursuit of our self-interest. As long as one of our major parties is opposed to essentially all trade agreements and the other is resistant to funding international organizations, the United States will not be in a position to shape the global economic system.
Other countries are legitimately frustrated when U.S. officials ask them to adjust their policies — only to then insist that state-level regulators, independent agencies and far-reaching judicial actions are beyond their control. This is especially true when many foreign businesses assert that U.S. actions raise real rule-of-law problems.
The legitimacy of U.S. leadership depends on our resisting the temptation to abuse it in pursuit of parochial interest even when that interest appears compelling [my emphasis]. We cannot expect to maintain the dollar's primary role in the international system if we are too aggressive about limiting its use in pursuit of particular security objectives.
Wow, this Larry Summers guy really sounds like a statesman...at least on par with Lee Kuan Yew! The only problem is that this "dysfunction" and "gross hypocrisy" can again be traced to, er, him. The AIIB is but the latest manifestation of other countries wishing to address their financial challenges...but the US trying to frustrate them. During the Asian financial crisis, Summers was the American official tasked with dissuading others from creating international financial institutions not dominated by the US. From yours truly in a handbook on international monetary relations:
Just as James Baker vigorously sought to kill the East Asia Economic Caucus behind the scenes for excluding America, so did Clinton-era officials seek to undermine plans for an “Asian Monetary Fund” (AMF) when they caught wind of its proposed existence [during the Asian financial crisis]. For instance, US Deputy Treasury Secretary Larry Summers called Vice Minister for Finance Eisuke Sakakibara—better known as “Mr. Yen” in trading circles—at his home at night, starting a testy conversation opening with “I thought you were my friend”. Seven days later on 21 September 1997, Japan tabled the formation of a $100 billion AMF at the annual World Bank-IMF meetings held that year in Hong Kong, but it proved to be a stillborn gesture due to entrenched opposition. Despite concessions such as statements to the effect that the AMF would supplement rather than bypass the IMF by increasing the monetary firepower available in dealing with monetary crises, objections were made on the lines of moral hazard and duplication of efforts vis-à-vis the IMF.
For another source, see Paul Blustein:
The phone rang on Saturday night, September 14, 1997, at the Tokyo home of Eisuke Sakakibara, the Japanese vice minister of financial for international affairs. The caller was Larry Summers, obviosly angry and apparently in no mood for conversational niceties. "I thought you were my friend," he sputtered.
Bottom line: the "failure of strategy and tactics" Summers faults the Obama administration with regarding AIIB can be traced to himself and other American predecessors. Nobody's changed them yet. They've always been haughty and smugly self-important like Summers, but the difference is that, unlike say Japan in 1997, the likes of China now have enough influence to sway others to ignore American pleas to stick with US-dominated institutions like the World Bank and IMF. That's all, Larry, and there's no need to come up with some alternative US economic history in which others are to blame insofar as you exemplified exactly this sort of attitude way back when.

It was not so long ago. I remember and do not forget.

Greece and Russia's Fruit 'n' Veg-for-Gas Deal (Sort Of)

♠ Posted by Emmanuel in ,,, at 4/10/2015 01:30:00 AM
Not quite the Commanding Heights: Citrus for the Putin.
A lack of export diversity characterizes any number of economically troubled nations, and that holds for Greece and Russia. On Tuesday, Greek PM Alexis Tsipras took his neo-communist stylings to Russia to meet with President Vladimir Putin who openly wishes that the Soviet Union were still around. Actually, what transpired was not the Marxist-Leninist love-in some Western commentators were expecting, but both protagonists making limited moves to thumb their noses at Western (European) powers-that-be: Russia cannot splurge on foreign aid for Greece with energy prices this low, while Greece cannot cut off its EU lifeline absent any other major creditors.

On the part of Russia, it said it would consider lifting sanctions on Greece's fruit and vegetable exports in exchange for more cooperation on energy matters:
Russia was among Greece's leading trade partners before sanctions on its energy industry and Greece's own economic difficulties reduced trade between the two countries by 40%.  Mr Putin called for trade relations to be restored, and said the two leaders had discussed "various ways of co-operating, including major projects in energy".

"Under these plans, we could provide loans for certain projects," he said, adding that it was not a question of aid. One of those plans is for a pipeline called "Turkish Stream", to channel natural gas from the Turkish-Greek border into Greece.
So there were many vague, unspecified mutterings about future cooperation. Big deal. Actually--and this is why the post has the "sort of" qualifier--the mooted pipeline is something of a pipe dream at present with the EU unwilling and the Russians unable to fund it. Moreover, its capacity would be well in excess of what the downstream countries could use:
The Budapest communique underlines that it's a statement of “political intent only, and that further exchange of views and dialogue is needed”. The Turkish minister, Bozkir, told Hungarian media that “after the project’s feasibility studies are over, we’ll be able to give it a more qualitative estimate”.
The caveats come amid Turkish scepticism that Turkish Stream will be built because Russia lacks money and because its capacity exceeds the region's requirements. “Frankly, nobody in Turkey is taking it very seriously,” a Turkish source told EUobserver shortly after Putin unveiled Turkish Stream in Ankara last year.
So it's a lot of bluster in the meantime meant to create a wedge between wealthier EU states and those that are harder up like Greece to possibly get some breathing space for Russia when sanctions against it come up for deliberation again:
Russian leader Vladimir Putin last year in Ankara said he'll build Turkish Stream, a pipeline under the Black Sea to Turkey, after the EU blocked construction of South Stream, a pipeline under the Black Sea to Bulgaria, Serbia, and Hungary. He said Turkish Stream will terminate at a new gas trading hub on the Greek-Turkish border...

Russia is courting Cyprus, Greece, Hungary, and Italy as potential veto-wielders on EU plans to extend economic sanctions before they expire in July. The Greek PM, Alexis Tsipras, is to meet Putin in Moscow on Wednesday, following earlier Putin meetings with Cypriot, Hungarian, and Italian leaders.

Dmitry Peskov, Putin’s spokesman, told the Tass news agency on Tuesday that Russia might exempt Greece from Russian sanctions on EU food exports. “We co-operate in agriculture, and we can fix a decline in trade in this sphere linked to the forced introduction [by Russia] of retaliatory measures”, he said. Nikolay Fyodorov, Russia’s agriculture minister, told Tass that Cyprus and Hungary might also get exemptions.
And before I forget... to the vegatapolitics [sorry]. Trade figures indicate that Greece's exports of agricultural products have fallen significantly at a time it can least afford them due to Russia imposing counter-sanctions on EU members like Greece. From Eurofruit [!]:
In the January-to-October period last year [2014], Greek exports of fresh fruit and vegetables fell by 4 per cent in value terms to €765m compared with the same period in 2013. This despite an increase of around 8 per cent in overall volumes exported. Unable to enter the Russian market, Greek produce has instead been shipped to countries including Serbia, Macedonia and Albania, at considerably reduced prices.

According to Freshmarket.eu, exports of Greek fruit and vegetables to Russia during the January-to-October period last year fell by 31.1 per cent in volume terms and 35.1 per cent in value terms. According to Moscow, although the country is keen to soften the ban’s impact on Greece, a full Greek exemption could be impossible due to global trade rules.
All things considered, the Tsipras-Putin was much ado about not much of anything. At most, we will see a partial lifting of limits placed by Russia on agricultural exports from Greece in exchange for the gas flowing slightly more freely to Greece. That's all, really.

'Furious 7' Box Office Success Banks on US Diversity

♠ Posted by Emmanuel in ,, at 4/09/2015 01:30:00 AM
New box office formula: fewer gringo actors = more moviegoers.
I am not much of a follower of the US film industry, but this story caught my interest for a number of reasons. To be honest, I haven't watched much of the Fast and Furious film franchise which now stretches to seven films. Still, they wouldn't be producing so many sequels  if there's no one to watch, right? Earlier on, there were doubts as to whether the latest installment would produce box office gold. First, it does not feature the late Paul Walker who has become synonymous with the franchise after his untimely early death in--unfortunately apropos--a car accident. Second, satiety was bound to set in sooner or later. How much can you do with the same formula of cars, speed and a dollop of criminality?

So many were surprised when the tally of Furious 7 was very impressive. Do people ever get tired of same old, same old? As it turns out, the correct answer is that the folks watching may be different from the ones before. In an increasingly diverse America where projections are for a white minority by mid-century, the producers of this film (Universal Studios) correctly bet on having a diverse cast to appeal to non-white American audiences. The end result is that 75% of viewers were non-whites. From the Hollywood Reporter:
An ethnically diverse cast is paying off in a big way for Furious 7. The Universal movie opened to a franchise-best $384 million over the weekend at the global box office, including $143.6 million domestically — the biggest debut since The Hunger Games: Catching Fire in November 2013 ($158 million). More impressive, its global bow was the fourth-best of all time.

According to Universal, 75 percent of the audience in North America was non-Caucasian, generally in line with previous installments. Hispanics, the most frequent moviegoers in the U.S., made up the majority of ticket buyers (37 percent), followed by Caucasians (25 percent), African-Americans (24 percent), Asians (10 percent) and other (4 percent).
The importance of on-screen diversity matching that off-screen cannot be understated:
"The importance of diversity of the ensemble cast in the Fast and Furious franchise has been an integral part of the success of the brand," said Rentrak box office analyst Paul Dergarabedian. "There is literally someone within the cast that is relatable on some level to nearly every moviegoer around the world, and this has paid big dividends at the box office and also in terms of how casting decisions will be made in the future for these types of large-scale action epics."

Dergarabedian and other box office pundits are hard-pressed to think of another franchise that is as ethnically diverse, even as Hollywood in general is criticized for a lack of diversity both behind and in front of the camera.

Furious 7's ensemble cast includes Vin Diesel, Michelle Rodriguez, Tyrese Gibson, Jason Statham, Dwayne Johnson and, of course, the late Paul Walker. Christopher "Ludacris" Bridges, martial artist Tony Jaa and Djimon Hounsou also star. "Someone that I admire quite a lot recently said this is a franchise that really looks like America, and there are characters that everyone can relate to. I think that's a big plus," said Universal president of domestic distribution Nicholas Carpou.
Quite possibly, the same electorate that chose Obama twice on the trot is also powering Furious 7 at the box office. Hollywood has not exactly been a paragon of diversity, so this phenomenon is a welcome one even if this movie genre isn't quite to my liking.

First World Migration: Franck Ribery Turns German?

♠ Posted by Emmanuel in , at 4/08/2015 01:30:00 AM
Having won everything for Germans, Frank Ribery ponders becoming one himself.
We often think of migration as a South-North issue: folks from developing countries heading to developed countries in search of a better life for themselves and their children. However, even at the most elite level of migration--football players moving between first-world nations--there are differences. Given longstanding economic stagnation in France, probably its most famous footballer after the retirement of Zinedine Zidane is Bayern Munich winger Franck Ribery. He is very much an outspoken figure, and recently blasted the French national team for leaving him out of the 2014 World Cup squad despite contributing a lot to its qualification:
Franck Ribery has slammed the French football hierarchy - and says he is 'finished' with his country. The Bayern Munich man retired from international football in August, after he was forced to miss the World Cup with a back injury. He asked the French authorities if he could have his back checked out by the Bayern club doctor, but the request was rejected and he is still having problems with the issue.

Ribery said: "With France - I'm finished. For two years I did everything to play at the World Cup - in qualifying I was the one with the most goals and most assists. "France were in Brazil thanks to me. But all that is in the past. I'm really disappointed with what happened."
So Ribery is fed up with his home country. Where to go, then? Why not Germany, where he has been plying his trade for the last eight years or so for Bayern Munich. As it turns out, that is the amount of time it takes to apply for citizenship. Mon dieu! Can the world's most famous French footballer ditch France in favor of Germany? This being Ribery, he's unsurprisingly voiced this sentiment:
Bayern Munich's French winger Franck Ribery has revealed he is considering taking German citizenship in an interview with daily newspaper Bild on Thursday. The ex-France international has played for Bayern since 2007 and when asked whether he wanted to apply for German citizenship, he replied: "Why not? I can imagine staying in Munich after the end of my career.

"I have bought a very nice house, I feel good here and I like the mentality. "My children are doing well at school, they have German friends. "My son Saif was born here, he may even one day play for Germany." Ribery, who turns 32 in April, says his decision whether or not to apply for German citizenship will be because of his family and "the future". "My eldest daughter Hiziya always makes fun of my German, and I laugh with her," said Ribery, who was voted German player of the year in 2008. "I did not learn the language in school, but in my daily life, from other people."

Ribery is one of the few foreign players comfortable with being interviewed in German live on air after Bundesliga matches and has a reputation for being the joker in the Bayern squad. In Germany, a citizen from another European Union country can apply for German citizenship after eight years of residency, by proving you can speak the language and passing a naturalisation test, while retaining their original nationality. Ribery won the Champions League title with Bayern in 2013 and has won both the German Cup and Bundesliga title four times, with Munich on course to claim a fifth German league title. 
In footballing terms, Ribery taking up German citizenship won't matter that much since he's said he will no longer play for the French national team and is nearing retirement age besides. In terms of national prestige, though, it will do France no favors. Can you imagine Babar the Elephant ditching France for Germany? Like Ribery leaving, it would be a huge blow to French pride. 

Admittedly, though, Munich is an undoubtedly great place to live, especially for those with a cultural interest.

Euro and Overuse of the "Currency War" Term

♠ Posted by Emmanuel in , at 4/07/2015 01:30:00 AM
Is the one at the bottom center on the offensive?
Currencies...we must always return to talking about currencies. With the euro approaching parity with the US dollar recently, the "currency war" term coined by former Brazilian FinMin Guido Mantega has been resurrected for the umpteenth time. While catchy at first, it has since become somewhat tiresome for me through repetition. Moreover, there is a whole range of considerations to foreign exchange dynamics that a two-word term can possibly  encompass. Among other things that come to mind are the following:

1. Wasn't "beggar-thy-neighbor" more accurate in describing competitive devaluation (if that's really what's happening)?
2. So the US is now complaining about the effects of its economy being on a money-tightening schedule while others do the opposite. Who's to blame--the initiator or the latecomers?
3. How exactly do we know when a country is engaging in "currency war"?

And so on and so forth. Fortunately, Agence France-Presse has a surprisingly nuanced and wide-ranging discussion of the alleged European offshoot of currency war:
"The currency weapon is rarely the official objective," said Patrick Jacq, a bonds specialist at BNP Paribas bank. Led by Brazil, developing countries charged that the US QE programme was a first shot in a currency war because their economies suffered as exports slumped thanks to the weak dollar. Those complaints were brushed aside with commitments by the leading economies to "market determined exchange rates".
But public comments from elected officials about currency values often muddy the waters about policy objectives, even if central banks in most major economies are independent. Lowering a currency's value may not be the stated policy objective "but they are thinking it so loudly all the world hears it," said Rene Desfossez, a bonds specialist at Natixis investment bank.

The reason is clear as "the exchange rate is one of the principle levers on which they can use to make monetary policy as favourable as possible for economic recovery". A weak currency can provide a boost to exports, and thus contribute to a wider economic recovery if companies raise wages and create new jobs.
So, in effect, it's what can be done but not said. There is also this idea circulating that central banks are less willing to consider the international effects of their actions and concentrate on their own:
And UniCredit's global chief economist, Erik Nielsen, observed recently that days of "gentlemanly" cooperation between central banks is long gone. "I am not in the 'currency war' camp, but it is important to note that the world's leading central bankers are now making it explicitly clear that they run monetary policy for their own country only," he said in a note to clients. "And while the currency is not an explicit objective in their policy set-up, the FX is seen -- and explicitly referred to -- as an integral part of creating the desired financial conditions for the domestic economies."

More countries have been joining on the easing bandwagon, either on their own initiative or in response to others. The Organisation for Economic Cooperation and Development noted recently that monetary policy in countries accounting for roughly half of global output had been eased in the past few months.
Yet, there are those who defend the actions of central banks currently engaged in loose monetary policy. This despite quite frankly dubious currency manipulation criteria identified by the IMF at the United States' behest to bash developing countries. After all, why would Europe--like the United States--need to hoard foreign exchange as large issuers of currencies that global reserves are accumulated in? 
The eurozone, Japan and China all have ample justification for monetary stimulus, they noted. One way of uncovering unfair currency manipulation, Bloomberg editors said, is to look at foreign reserves, which should increase if a country is deliberately buying foreign currency to keep the value of its currency low.

But no major country has been massively hoarding foreign reserves, according to Bloomberg data. The massive swings in currencies in recent months -- the dollar has appreciated by a quarter against a basket of major currencies since August -- may be due more to monetary and economic dissonance.
I will have more to say about reserve accumulation soon--but not concerning the Eurozone. In the meantime, take attempts to characterize European actions as "currency war" with a grain of salt. Not only is the term increasingly non-informative, but the ECB's actions are more nuanced than simply tarring it with this brush