Unfree Markets & the Hong Kong Property Bubble

♠ Posted by Emmanuel in at 10/31/2012 08:43:00 AM
The late Milton Friedman once lauded Hong Kong as the archetypal success story in laissez-faire economics--especially when compared with its erstwhile colonial master the United Kingdom. With its low taxes, few penalties in opening and closing businesses and so on, it is no surprise that Hong Kong ranks second in the World Bank's Ease of Doing Business league table. However, there are now clouds over the horizon since Hong Kong may have actually become too attractive a destination for investment--particularly in real-estate. As China slows down and the Weest remains in the doldrums, it's only natural that more parked their...
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NOT Going to America? Japanese Baseball Protectionism

♠ Posted by Emmanuel in , at 10/29/2012 09:25:00 AM
Whoever wants to know the heart and mind of America had better learn baseball - Jacques Barzun [RIP] Those with even a passing knowledge of baseball know that the Japanese are the best in the world at this sport. Despite extending my congratulations to the 2012 US champions the San Francisco Giants--many of my relatives Stateside live in the Bay Area and are big fans--it is certainly a misnomer to call a sporting event between two US clubs the "World Series." It's another example of American narrow-mindedness in thinking their country represents the world, but the reality is that in truly international competition--the World...
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No Surprise: Asia is World's Wealthiest Region

♠ Posted by Emmanuel in at 10/28/2012 02:39:00 PM
Although Swiss bankers have lost some of their cachet in recent years as reputations for both banking secrecy and sound money management have taken a hit, all is not lost. Even the seemingly hapless UBS has been dinged mostly on their investment banking side and not their private banking side. For many years, UBS was the top dog in private banking, but it has since surrendered that distinction to its compatriot, Credit Suisse. And speaking of Credit Suisse, it has just come out with its new "Global Wealth 2012" report which indicates that, for the first time since it's been compiling this report, Asia is the world's wealthiest...
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Without You: Contemplating the UK-Free EU

♠ Posted by Emmanuel in at 10/25/2012 05:46:00 AM
Rest assured that it's not only the Chinese who have a habit of disowning Nobel laureates. For the longest time, the British have shown disdain for the European Union project over both their supposed loss of sovereignty and the waste of money going to Brussels (or was that Strasbourg?). To be sure, there are legitimate bases for complaint over these matters. However, there also comes a point when non-participation becomes so extreme as to question why the UK is in the EU at all. British Eurosceptics were thus among the loudest whingers when it was announced that the EU had won the Nobel Peace Prize for 2012. Which, if you...
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China's Growth Slowdown is Utterly Unsurprising

♠ Posted by Emmanuel in ,, at 10/23/2012 12:28:00 PM
Nobody is immune to economic slowdowns, and it was perhaps only a matter of China encountered such an episode. To paraphrase my erstwhile LSE IDEAS colleague Martin Jacques, when China rules the world may be set back a few years. Even the Associated Press via Yahoo! News has noticed that, gee, maybe the advice offered to China in recent times about transitioning to a sustainable form of growth not fuelled by mercantilist policy and presumptions of steadily expanding global economic growth was sound: The cost of inaction could be high. The World Bank says without change, annual growth could sink to 5 percent by 2015 — dangerously low by Chinese standards. Some private sector analysts give even gloomier warnings. The government's own advisers say it needs to promote service industries and consumer spending, shifting away from reliance on exports and investment. That will require opening more industries to entrepreneurs and forcing cosseted state companies to compete. State...
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Of Obama's 'Retreat Dividend' and Condi Rice

♠ Posted by Emmanuel in , at 10/22/2012 09:39:00 AM
Dear readers, something most commentators missed in observing that the United States has now had four consecutive years of trillion dollar-plus deficits is that something remarkable has transpired: For the first time since 1955, US government spending has gone down--from fiscal year 2011 to 2012. Sure, moving from nearly $3.6T to 'just' $3.54T is not really an amazing feat in absolute terms--especially after considering the aforementioned deficits--but it's an improvement nonetheless. Back during the last heyday of America during the Clinton administration, a number of commentators spoke of a 'peace dividend' emanating from...
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Fed, Asia & Bailing Heavily Indebted Rich Countries

♠ Posted by Emmanuel in ,, at 10/18/2012 10:55:00 AM
A recent speech by this rather deplorable character Ben "Choplifter" Bernanke defends US monetary policy from its international critics by shifting the blame on them as frustrating global rebalancing. Quoth he: In some emerging markets, policymakers have chosen to systematically resist currency appreciation as a means of promoting exports and domestic growth. However, the perceived benefits of currency management inevitably come with costs, including reduced monetary independence and the consequent susceptibility to imported inflation... Under a flexible exchange-rate regime, a fully independent monetary policy, together with fiscal policy as needed, would be available to help counteract any adverse effects of currency appreciation on growth. The resultant rebalancing from external to domestic demand would not only preserve near-term growth in the emerging market economies while supporting recovery in the advanced economies, it would redound to everyone's benefit...
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Unionization, Or Why American Carriers Stink

♠ Posted by Emmanuel in ,,,, at 10/16/2012 01:04:00 PM
[NOTE: This post won't win me any points with the Barack Obama / Dean Baker / union apologist crowd, but this blog couldn't care less about parochial US concerns. This is the international political economy zone, buddy.] Everyone knows that American carriers are among the worst in the world, and are certainly the worst in the developed world. Given that Americans came up with the concept of services marketing, it is galling that the most visible services those of us in the rest of the world experience firsthand when voyaging there are their el crappo airlines. The planes are ancient. The food is bad (if there's any at all)....
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Of Payday Lender Football Sponsorship and Islam

♠ Posted by Emmanuel in ,, at 10/15/2012 10:32:00 AM
Shirt sponsors obviously occupy the best camera-estate you can buy on football jerseys. In the past, there have been infamous companies occupying this space alike the late AIG with the world's most famous football club, Manchester United. Unfortunately for the Mancunians, they had to sport the disgraced firm's logo even after its spectacular implosion during the global financial crisis. That said, Manchester United too has its own share of American stinkers. Earlier on, I was rather dismayed that one of the top economics blogs in the blogosphere cataloguing the various follies of high finance had banner ads from, of all...
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Andy Xie and the End of the WTO's 'Golden Age'

♠ Posted by Emmanuel in at 10/12/2012 09:57:00 AM
[Remember the WTO? It's been so long since I have commented on it, so here's something for everyone.] Say what you will about Andy Xie, but he isn't one who refrains from speaking his mind. Remember, he famously left Morgan Stanley in 2006 for suggesting that erstwhile Asian tiger economy Singapore only got by in this world being a money laundering centre for corrupt Indonesian businesspersons [?!] And that's only the tip of the iceberg as far as Xie and controversy are concerned. While he has his fair share of detractors, others laud him as an economic clairvoyant, especially when predicting various financial crises. As...
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Get Lost Foreign Students: Today's United Kingdom

♠ Posted by Emmanuel in ,, at 10/10/2012 12:17:00 PM
Having been one at various points in life, I generally believe foreign students are harmless. While they are certainly easy targets for xenophobia--recall how the United States tightened student visas in the wake of 9/11 before universities that had become reliant on full-tuition paying foreign students complained--demagoguery aimed at them is usually unwarranted. Aside from generating services related to their stays, however, there remains the general suspicion that their motives are base. The UK has been having this debate for years now as immigration numbers have been elevated for quite a while, buoyed as they have been...
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'Security', Last Refuge of Yank Trade Scoundrels

♠ Posted by Emmanuel in , at 10/08/2012 10:56:00 AM
You've got to hand it to the Americans in the having your cake and eating it too department: While asking the rest of the world to economically open up, it has been far more guarded when it comes to accepting FDI from...certain other nations. I of course speak of China. With still-gargantuan trade balances in favour of China in the US-China bilateral relationship, all those trade proceeds gained by the PRC must go somewhere. In the past, the Chinese have been famously content to plow these proceeds into Treasuries, but their patience (and gullibility) is not infinite. First, returns on American sovereign debt are at record...
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FILTH No More: Expats 'Endangered' in Asia

♠ Posted by Emmanuel in ,, at 10/07/2012 03:05:00 PM
"Bye-bye, laowai!" (foreign devil) I kept hearing last year while playing the ultra-violent video game Deus Ex: Human Revolution which partly occurs in the fictional Chinese megacity of Hengsha. Set in the not-so-distant future where China has overtaken the United States as the world's dominant economy, I guess it is prescient in more than one respect. For, instead of Chinese gangbangers trying to get rid of the American video game protagonist in DX:HR, we have a similar real-life situation going on in terms of MNCs being reluctant to bring Yanks and Brits to work in Asia. I have previously discussed the FILTH phenomenon...
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PRC Inc. Boycotts World Bank-IMF Meet in Tokyo

♠ Posted by Emmanuel in , at 10/05/2012 11:01:00 AM
In case you missed it, there's been very interesting news these past few days over the mass boycott of Chinese banks, presenters and other participants who were originally scheduled to be at the upcoming World Bank-IMF meetings to be held in Tokyo starting this coming Tuesday. Those expressing uncertainty over attendance include the "big four" state-owned banks the Agricultural Bank of China, the Bank of China, China Construction Bank and the Industrial and Commercial Bank of China. What's more, other banks have also pulled out of a big financial services shindig in Osaka scheduled for month's end. From the WSJ: Japan's territorial dispute with China appears to be spilling onto the stage of global finance meetings. Several big Chinese banks say they've canceled participation in the high-profile annual meeting of the World Bank and International Monetary Fund to be held in Tokyo next week as well as in the constellation of events taking place alongside. Some of the banks say...
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Why Do Filipinos Trust N Korea More Than China?

♠ Posted by Emmanuel in , at 10/03/2012 09:19:00 AM
I was recently asked by my colleagues at LSE IDEAS to prepare a contribution on geopolitics in Southeast Asia, in particular the contest for regional influence between the United States and China. You would probably think that China has left the US for dead in winning over Southeast Asia since it has money to burn for winning over friends and influencing ASEAN members. But, the interesting thing is that China's territorial disputes with the likes of the Philippines and Vietnam over the South China Sea have left it in a far more precarious position than one would imagine after years of mounting charm offensives aimed at our...
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Perestroika 2012? Cuba's Zany Capitalist Transition

♠ Posted by Emmanuel in , at 10/01/2012 12:17:00 AM
The reforms that Mikhail Gorbachev introduced in the Soviet Union a quarter of a century ago or so ultimately put its demise into motion. Authoritarian regimes have thus been wary every since of following the USSR's fate. Certainly, China's more deliberate pace of adopting market reforms has succeeded in creating a form of market socialism that seems to be reasonably durable. Hence the familiar notion that market reforms should not happen faster than the political system's ability to cope with them for those keen on retaining a grip on power during this transition. When Raul Castro took the reins of power in Cuba due to...
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Hedonism in Retreat: FT 'How to Spend It' Now Free

♠ Posted by Emmanuel in , at 10/01/2012 12:01:00 AM
[After many months going without one, dear readers I bring you an honest-to-goodness weekend feature.] The Financial Times has always been regarded as an excellent source of business news, hence it struck many as odd that it would cater to the upscale demographic by expanding its "How to Spend It" feature from the weekend editions into a full-fledged website. While FT readers are wealthier than the average newspaper readers in the same way that Yogi is smarter than the average newspaper reader, this online feature seemed odd for a number of contextual reasons. First, the British have traditionally been far more circumspect...
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