Posts of September 2010

Yuan Blood, You Got It: China Bill Passes 348-79

♠ Posted by Emmanuel in China,Currencies,Trade at 9/30/2010 12:02:00 AM

[Before reading on, I urge you to cue the appropriate song for this momentous occasion, AC/DC's "If You Want Blood (You Got It)".] Well I never thought I'd live to see the day: 2010 has been a most promising year in terms of long-anticipated events coming true. First Japan waded into forex markets to stem yen appreciation after six long years of standing pat. Now, an even bigger act of economic one-upmanship is well underway. As anticipated in previous posts [1, 2], today the US House of Representatives finally mustered sufficient huevos to vote in favour of a China currency bill. And overwhelmingly so, I must add:The House...

Out Now: Proposed EC Changes to Budget Rules

♠ Posted by Emmanuel in Europe,Labor at 9/29/2010 03:27:00 PM

Oh, this day has been very, very hectic on both sides of the Atlantic--and it's not over just yet. As labour demonstrations across Europe protest the current political mood for tightening--Yahoo! has a nifty set of photos--the EC literally intends to lay down the law.I just wanted to post the legislative proposals the European Commission has come up with regarding economic governance to (hopefully) prevent the recurrence of future Greek or Irish episodes. As they are just proposals to, among other things, tweak the stability and growth pact, we have to see if there are some not-so-conscientious objectors out there who did...

Sliding $ + Yuan Bill to Clear Congress Today?

♠ Posted by Emmanuel in China,Currencies at 9/29/2010 01:21:00 PM

Here's a midday--well midday GMT--update on currency matters. Proving once more that the United States is the world's top currency manipulator bar none in terms of the lengths it goes to to debase its currency, expectations of further Fed easing are making it slide. Even the troubles of Ireland in particular and the EU in general coming up with a workable agreement on punishing repeat offenders of financial pacts are apparently having little effect on the euro gaining against the dollar:The ailing dollar fell on Wednesday as sliding U.S. Treasury yields and below-forecast U.S. data fuelled expectations of further monetary easing. Mounting speculation the Federal Reserve could embark on a second round of quantitative easing, which would be negative for the dollar, drove the greenback to a five-month low against the euro and a two-year trough against the Australian dollar. "The market is jumping on QE expectations as it feels the U.S. data will force the Fed to do something, and...

Gravy Train: High Speed Rail's Economic Benefits

♠ Posted by Emmanuel in China,Travel at 9/29/2010 12:18:00 AM

Come in here dear boy, have a cigar. You're gonna go far if you've got the latest transportation must-have: high-speed rail. As you probably know, China is in the vanguard of high-speed rail technology almost alongside the Europeans and the Japanese after investing tonnes and tonnes of dough in this technology. Governator Arnold Schwarzenegger of California even dreams of groping--I mean, availing of--some high-speed trains from the PRC with what should be incredibly funky Chinese financing given the perpetually empty coffers of the, ahem, "Golden State" (so ironic, that).However, the purpose of today's post is not to heap...

China / Taiwan Love-In, Banking Edition

♠ Posted by Emmanuel in China,Trade at 9/29/2010 12:07:00 AM

And now for some very insightful news from a rather unlikely source. Something I do appreciate about reading official news agency articles is that they seldom fail to fall out out of line with official policy stances. And so it is that we have another interesting sign of detente between the People's Republic of China and the Republic of China. The Global Times usually features some of the more bellicose commentary from Chinese official media, but this time, it seems to be positively cottoning up to Taiwan. (There's even a cutesy photo feature on Taiwan's Hello Kitty children's hospital.) A few months ago, the PRC and ROC inked an Economic Cooperation Framework Agreement or ECFA--an arrangement similar to what the PRC has with its special administrative regions of Hong Kong and Macau.I suppose China can't bad mouth the US (currency, trade, Tibet, South China Sea); Japan (Senkaku islands, WWII grievances); and Taiwan at the same time. So, while the first two are in Beijing's doghouse,...

Eire, Eurozone & Ever After: Brussels Free for All

♠ Posted by Emmanuel in Credit Crisis,Europe at 9/28/2010 12:06:00 AM

Here's a selection of excerpts to keep us up to speed concerning the latest Eurozone trials and tribulations. Let's try to order them in a way that makes sense:(1) Massive credit downgrades by Moody's to unsecured debt of nationalized Irish lender Anglo Irish knocked stock markets in Europe back over fears of a Greek-style rehash. Massive bailout costs exacerbated by downgrades to near-junk are a fear:Moody's cut the nationalised bank's senior unsecured debt by three notches to Baa3- just one notch above junk status - citing a small risk the government would not continue to support that class of debt, the agency said on Monday. It slashed Anglo Irish's subordinated debt by six notches to Caa1...According to unnamed government sources cited by German business daily Handelsblatt on Monday, the European Central Bank gave serious consideration to activating the euro zone's bailout fund for Ireland but in the end decided not to [my emphasis; see more on this point in (2)]. Finance...

Brazil FinMin Declares 'International Currency War'

♠ Posted by Emmanuel in Currencies,Latin America at 9/28/2010 12:01:00 AM

I enjoy hyperbole as much as the next guy, but this one's got to be top of the pops for 2010 as far as verbal jabs are concerned. Although Brazilian authorities curiously threatened to use their new sovereign wealth fund to buy dollars sometime ago, they haven't done so (yet). And, while the central bank has waded in to buy dollars on a fairly regular basis these past few weeks, the article excerpted below notes this buying is in anticipation of the imminent floatation of Petrobras stock that's attracting many foreign investors. Still, the relatively higher yield of the real is drawing in the punters and causing headaches for export-minded authorities:An “international currency war” has broken out, according to Guido Mantega, Brazil’s finance minister, as governments around the globe compete to lower their exchange rates to boost competitiveness. [Really? That's a surprise.] Mr Mantega’s comments in São Paulo on Monday follow a series of recent interventions by central banks,...

Fat World: The Globalization of American Obesity?

♠ Posted by Emmanuel in Americana,Health at 9/27/2010 12:04:00 AM

Your butt is wide, well mine is too Just watch your mouth or I'll sit on you The word is out, better treat me rightCause I'm the king of celluliteAlthough they're arguably becoming a country of fatheads as well, Americans are better known worldwide for their astonishing girth. A new OECD study finds that over a third of these stupendously gluttonous people are clinically obese. Indeed, there's no stopping Yankee pavement pounding tonnage in the obesity league tables as the percentage of overweight folks is set to increase even more in the coming years:It seems exceedingly odd to me that other IPE people don't make more of...

How to Close WTO Doha (Nearly a Decade On)

♠ Posted by Emmanuel in China,Development,Trade at 9/27/2010 12:03:00 AM

Here's something that I just missed from the ever-interesting Foreign Affairs which always has something good to read (even if I disagree with the contributors once in a while). In case you're still counting--and even I tend to lose count for obvious reasons--we are nearing the tenth year of Doha Development Agenda negotiations with nary a sign of it nearing completion. Began in 2001 partly in sympathy for America after the 9/11 attacks, let's say the rest of the world hasn't given the red, white, and blue a free pass in the trade realm since then. Sometime ago, Aditya Mattoo and Arvind Subramanian offered their take on how the DDA should be, ah, structurally adjusted to bring about a greater chance of completion. Now, Gray Hufbauer and Robert Lawrence offer their thoughts on the same.What is interesting is how these two authors focus on the two big players who now arguably hold the cards in world trade. In particular, what should be done to make this a genuine development round?...

India Stumbling: The Commonwealth Games Fiasco

♠ Posted by Emmanuel in India,Sports,Travel at 9/25/2010 12:30:00 AM

One of the slogans used by Indian authorities to describe the economic ascent of their country has been "India Rising." However, another longstanding knock on the country has been its lacklustre infrastructure--ports, roads, sanitation and what else have you. Compared to the likes of China, which always prioritizes these things, let's say that India lags behind. Among the BASIC countries, China put up all sorts of dazzling stadiums to impress the foreigners during the 2008 Summer Olympics, while South Africa just hosted a very successful 2010 World Cup where international visitors were treated to a real showcase of African...

Obama Kisses Up to ASEAN

♠ Posted by Emmanuel in Security,Southeast Asia at 9/25/2010 12:22:00 AM

In case you missed it, President Obama met with ASEAN leaders in New York just yesterday. What are notable to me are that (1) in approaching ASEAN as a whole, the US is bashing Myanmar less and less on human rights grounds; (2) Obama didn't emphasize the South China Sea so much--though he maintained the hypocrisy of referring to "international law" it hasn't signed; and (3) he pledges to visit Indonesia again after failing to do so three times before. The read-out of his working lunch meeting with ASEAN bigwigs is posted on the White House website for what it's worth; what follow are the key bullet points...The United States acceded to the ASEAN Treaty of Amity and Cooperation in July 2009.At the invitation of the ASEAN states, the United States will participate in the East Asia Summit comprised of ASEAN and eight other prominent countries in the Asia Pacific region [ASEAN-10 + China, Japan, South Korea, Australia, New Zealand, India, Russia & USA] Secretary Clinton will...

Anti-China Legislation Heads to Vote in Congress

♠ Posted by Emmanuel in China,Trade at 9/25/2010 12:22:00 AM

Just as I was getting set for a restful weekend, the news intervened. H.R. 2378, better known as the "Currency Reform for Fair Trade Act," is now set for a vote in the House of Representatives this coming Wednesday, September 29 after successfully clearing the Ways and Means Committee. The immediate retort would be that there have been many currency bills in recent years aimed at punishing China over its alleged currency manipulation, none have ever gotten anywhere. With a moribund US economy. continued US-China jousting, limited yuan revaluation, and an important midterm election coming up, will these factors finally be enough for some real China bashing action?Legislation pressing China to raise the value of its currency is set for a vote in the U.S. House next week, as Republicans joined Democrats in expressing frustration that the yuan is appreciating too slowly. “We cannot wait any longer to level the playing field for U.S. businesses and protect American manufacturing jobs,”...

Vinashin: State Capitalism Undone in Vietnam?

♠ Posted by Emmanuel in Southeast Asia at 9/24/2010 12:04:00 AM

Vietnam has received much attention in recent years as a China mini-me. Their most obvious shared characteristic is being among the last few communist states (we too have the Lao People's Democratic Republic in ASEAN). One must remember, though, that these two states didn't get along well for a very long time over Vietnam invading Chinese client state Cambodia during its Khmer Rouge years. And, among ASEAN members, Vietnam most strenuously contests dominion over the South China Sea islands with China. So there's not much love lost here.In this day and age, I don't suppose there is anything exceptional about states wanting...

Time to Join the Fight Against Maritime Piracy

♠ Posted by Emmanuel in Africa,Labor,Middle East,Trade,Travel at 9/23/2010 01:07:00 AM

Later this morning I'll be off to the International Maritime Organization (IMO) headquarters here in London to participate in the launch of a new initiative called Seafarers' Rights International. In essence, it's a response by various stakeholder groups to the plight of seafarers travelling through the volatile Gulf of Aden where still-rampant piracy endangers not only crewmen but also world trade. While I'm not much of an activist, I'll make an exception here since my country sends somewhere between a fifth to a quarter of all seafarers worldwide. Not coincidentally, today (23 September) is also the UN-designated World Maritime...

PRC Tips for Understanding American Naivete

♠ Posted by Emmanuel in Americana,China,Economic History,Europe at 9/23/2010 12:05:00 AM

In Graham Greene's famous, twice-filmed novel The Quiet American, the titular character Alden Pyle represents blind faith in The Enduring Goodness of America despite harbouring much capacity for harm in trying to bring such naivete to life. That is, remaking the world in the image of American-style capitalist liberal democracy would supposedly deliver the rest of us primitives to a higher state of enlightenment.To be sure, there is a bland, whitebread sameness that pervades much of the Amerocentric blogosphere. While you get variations here and there, the end message inevitably converges on a similar idea: a combination of democracy and markets will deliver freedom 'n' growth to uplift even the most benighted.So it comes as no surprise that the Chinese have been at the receiving end of this shtick for the longest time from the Americans. However, China's relative ascent means it has become less and less willing to take rewarmed Alden Pyle-ish statements at face value. Recently,...

China, US Duke It Out Over Currency, S China Sea

♠ Posted by Emmanuel in China,Currencies,Southeast Asia,Trade at 9/22/2010 12:07:00 AM

What a difference a day makes! Only yesterday, Hillary Clinton and PRC Foreign Minister Yang Jiechi were allegedly having a heart-to-heart on currency matters at the United Nations. (Aww, ain't that sweet?) However, the former's boss has apparently annoyed the Chinese foreign ministry sufficiently to warrant a verbal intervention. (As an aside, can we really take this latest verbal exchange seriously when it's not the monetary authorities of China who've gone on the offensive here?) As yesterday's news noted, Obama wants a faster pace of yuan revaluation, while US Treasury Secretary Tim Geithner is rumoured to be rallying other countries ahead of the South Korea G20 to press China on currency matters. On to the fightback:China's foreign ministry told the United States on Tuesday to stop pointing its finger at Beijing and pushing for a stronger yuan, saying Washington should focus on spurring its fragile economy. The strong-worded statement by the ministry came as President Barack...