Will Somali Pirates Return if EU Stops Patrolling Soon?

♠ Posted by Emmanuel in ,, at 10/30/2013 05:13:00 PM
Ahoy mateys, it's back to the Gulf of Aden for us in this post. The collapse of a functioning government in Somalia led to a period when many turned to piracy as a lucrative livelihood in the absence of other viable sources of income. Americans--people who top the global list of ignoramuses about what's going on in the world--even focused some attention on the issue with the kidnap of Captain Richard Phillips of the MV Maersk Alabama. They even made a movie about it (just don't ask them where Maersk is headquartered since the average Yank probably can't find Denmark on the map, let alone Somalia.) In any event, EU-led efforts...
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Colonial Mentality: Chinese Shun Their Own Brands

♠ Posted by Emmanuel in ,, at 10/29/2013 09:11:00 AM
Given the truckload of goods China makes for the rest of the world, it may seem odd that the Chinese are concerned with their inability to develop homegrown brands: Why should you develop your own brands when Apple/General Electric/Samsung and whoever else have you have done the heavy lifting of brand-building for you as a contract manufacturer? It's certainly not easy, either--none of the world's top 100 brands are mainland Chinese. The answer is as simple as it is clear: actually making consumer goods constitutes an ever-decreasing share of the profits--if any. The higher value-added activities come from branding,...
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Post-Crisis, What are the World's Safest Banks?

♠ Posted by Emmanuel in at 10/27/2013 04:49:00 PM
Your initial reaction will likely be the same as mine: Who are these guys?  After years dabbling in own-account speculation, derivatives and other get-rich-quick schemes, the stalwarts from days gone by are no longer on this list. Deutsche Bank? You must be joking. American money center banks? Get outta here! Instead, we have an interesting combination of European banks with government ownership and Singaporean banks with conservative practices. From the press blurb: The safest 10 banks in the world are all European, just as they were last year and the year before that. However, in all but one case, that safety...
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China's 'Maritime Silk Road' as a Hegemonic Project

♠ Posted by Emmanuel in ,,,, at 10/24/2013 10:12:00 AM
 The wrangling over both the US government shutdown and the debt ceiling caused Barack Obama to cancel his attendance at the annual Asia-Pacific Economic Cooperation (APEC) shindig being held this year in Bali, Indonesia. So he stayed at home to deal with a localized insurrection led by an angry, mostly whitebread crowd, "Tea Party" members, they call themselves. Just desserts, I say. His absence triggered yet another round of commentary about the existence of American hegemony in general and its alleged "pivot to Asia" in particular. Some say the absence does not matter; others think it's a culmination of US decline....
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Hong Kong, World's Freest Economy 42 Years Running

♠ Posted by Emmanuel in at 10/22/2013 02:18:00 PM
I guess some things in life are inevitable: Canada's Fraser Institute, watchdog of economic freedom the world over, has designated the special administrative region (formerly a crown colony) of Hong Kong the world's freest economy for a 42nd consecutive year.  This matter is of special interest given how HK's most famous businessman is warning that too much clamor for political freedom may dent this vaunted reputation for economic freedom. Think of the political free-for-all Stateside--a moronic version of political expression from all sides--and you catch his drift. Speaking of which, the United States is zooming...
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Contrarian Thoughts: Depopulation's Benefits

♠ Posted by Emmanuel in , at 10/21/2013 11:38:00 AM
The essence of dramatic tragedy is not unhappiness. It resides in the solemnity of the remorseless working of things - Alfred North Whitehead as quoted by Garrett Hardin in The Tragedy of the Commons While doing research on an environmentally-related issue, it occurred to me to re-read the famous article concerning the tragedy of the commons by Garrett Hardin. Unbeknownst to many, he was not only concerned with collective environmental abuse but also overpopulation--on which he voiced many politically incorrect opinions. However, questions of demography remain foremost as the world's population has zoomed past 7 billion and the consequences of anthropogenic activity on the environment capture the world's attention. In many recent posts, I have treated "Detroitification" as shorthand for demise. Fewer and fewer people implies lower and lower economic growth. But, what if we recognize the finitude of economic growth as a consequence of finite resources?...
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Why are the World's Best Central Bankers All Asian?

♠ Posted by Emmanuel in at 10/20/2013 11:09:00 AM
Ben Bernanke is the world's leading practitioner of what I call "Jive-A** Central Banking." It involves creating vast negative externalities for others. Easy money policies Stateside have not only led others to justifiably accuse the Fed of beggar-thy-neighbor policies via competitive devaluation (which he denies), but also cause further turmoil in the Hamlet-style drama of whether to end them or not. Suffice to say that these unconventional measures have done little to put the United States on a firm economic footing, let alone a sustainable path for growth. Recently, Global Finance released this year's list of the world's...
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Saudi Arabia, Probably the UN's Worst Crybaby

♠ Posted by Emmanuel in , at 10/18/2013 05:35:00 PM
This must take the cake for the worst tantrum in international relations for the year: Saudi Arabia's movers and shakers have, in recent years, been lobbying hard to become one of the ten rotating members of the UN Security Council. Then, having secured this berth just recently, the country pulls out: A decision of such magnitude would have to have been taken by King Abdullah or Crown Prince Salman, said a Saudi analyst who asked not to be named. "Saudi Arabia has been working on (getting onto the Security Council) for the last three years. They trained diplomats, male and female, the cream of the Foreign Ministry, our...
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Japan to Privatize Its Forex Reserve Management?

♠ Posted by Emmanuel in at 10/17/2013 10:24:00 AM
Here's an experiment in foreign exchange reserve management that looks interesting. We've heard of sovereign wealth funds (SWFs) that invest in non-traditional reserve assets, i.e. those other than sovereign debt of major currency-issuing countries or precious metals alike gold. These SWFs may place funds in equities and so forth. However, the innovation insofar as SWFs are concerned is on the portfolio side: they are diversifying placements of reserve assets in search of greater yield. In other words, SWFs are state-owned in their charter. Hence Japan purporting to allow non-governmental entities to allocate part of its $1.27 trillion stash looks unique insofar as the management side rather than the placement involves the private sector: Japan is looking to allow private sector funds and trust banks to manage a part of its $1.27-trillion pool of foreign exchange reserves in a drive to manage them better, a government source told Reuters on Sunday. Until now the government...
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Lame PRC Exports Can't Stop Ascendant Yuan

♠ Posted by Emmanuel at 10/15/2013 09:37:00 AM
It is fairly common knowledge by now that Chinese economic growth is slowing down from the double-digit to high single-digit range of years gone by. Among other things, weakness in demand in overseas markets has dented its vaunted export machine. The most recent external figures indicate that this trend is still continuing: The currency moves came hot on the heels of official data showing Chinese exports slid in September [2013] by 0.3 percent from a year earlier. The figures confounded expectations for a 6 percent rise and marked the worst performance in three month [...] In addition, the unexpected weakness in September's...
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Will the Eurozone/Euro Benefit From a US Dollar Crisis?

♠ Posted by Emmanuel in , at 10/14/2013 11:09:00 AM
With the US supposedly flirting with being the first Western country since 1933 Nazi Germany to default, attention needs to be paid on those other Westerners and their economic plight as a consequence. As a holder of euros myself and other non-junky stores of value--not gold, not Treasuries or any of that riffraff--I of course wish that the United States' self-inflicted crisis wallops their godforsaken currency. No ifs, not buts. However, the opinion of ECB policymakers is decidedly more guarded. Sure, it may increase the prestige of euro currency at a time when the Eurozone is just exiting a very long recession if its share of global currency reserves increases further. Then again, the bifurcation of Northern and Southern states' economic performance is worrying. Sure the likes of Austria and Germany can survive with the single currency at, say, $1.40. But the hobbling "Club Med" countries declared no mas a long time ago. So yes, (nominal) Austrian CB guv'nor Ewald Nowotny...
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IMF Returns; Will Pakistanis Hate US Even More?

♠ Posted by Emmanuel in , at 10/13/2013 01:28:00 PM
I entitled an earlier post about Pakistan, the US and the IMF "When Cash & Hate Collide." To underline that assertion, here's Exhibit A: In a recent Pew Global Attitudes poll, the country which assigned the lowest favorable opinion rating to the United States was--wait for it--Pakistan at a ridiculously low 11% [click for a larger image]. It even outdoes places where Amerihatred is keenest based on current events alike Egypt and the Palestinian territories. As for the cash part, in case you haven't read about it, Pakistan recently inked another IMF bailout for $6.6 billion. That's its eighth--that it not a typo--since...
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Central Banks and Gold: Buy High, Sell Low

♠ Posted by Emmanuel in at 10/10/2013 11:24:00 AM
Despite strides made by central banks worldwide in recent years to control inflation, they are hardly infallible. Take the case of gold: With developed country central banks printing money like there's no tomorrow in order to jump-start their moribund economies--especially after the global financial crisis--you would expect that gold would benefit as an inflation hedge. Indeed, gold prices have increased many time over in the new millennium. However, central bankers have not really benefited from the rising and now falling of gold prices since they are, after all, public financial managers of a sort rather than speculators. Owning nearly a fifth of all bullion extant, they are major market players. Yet, when it comes to trading gold, their timing tends to be off in the sense that they collectively buy high and sell low. Based on central bank gold holdings, Bloomberg calculates that their combined losses amount to $545 billion since the metal hit its peak in 2011: Policy makers,...
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Puerto Rico...Uncle Sam's Next Bailout Victim?

♠ Posted by Emmanuel in , at 10/09/2013 02:29:00 PM
They could use more tourists right about now  I don't wanna be your lover...I just wanna be your victim - Elvis Costello's "The Beat" The post title may strike you as unusual: How can someone be a "bailout victim" when a bailout is some sort of "rescue" from financial calamity? Well, read on. Recently I have been on a tear classifying episodes of economic stagnation combined with depopulation as "Detroitification." Unbeknownst to many, the American protectorate of Puerto Rico is in a major financial bind a la Detroit with increasingly unpayable debt and a declining population: Puerto Rico, with 3.7 million residents,...
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'Reshoring' Fad: Fed by 'Made in the USA' Fad?

♠ Posted by Emmanuel in at 10/07/2013 04:16:00 AM
I am in the minority over at Yahoo! News Country of origin remains a sticking point in IPE no matter what economic liberals say. Today, let us look at a possible 'multiplier effect' where inviting manufacturing back home to America may be complemented by retailers advertising that more of their products are made there. In case you missed it, there's a 'reshoring'  fad going on Stateside wherein manufacturers who once decided to go to China and coming back since the cost savings they expected did not materialize. Often, transaction costs in the from of chronographic, geographic or linguistic differences negated labor...
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Literally Dying for 2022 World Cup: Migrants in Qatar

♠ Posted by Emmanuel in ,,, at 10/06/2013 10:31:00 AM
Just when you thought Qatar's 2022 World Cup could not get any more controversial after continuing debates about the procedure used to select the tiny state and the difficulties associated with hosting the event during the peak of summer in the desert, there's more: It is common knowledge that the bulk of Qatar's workforce is composed of migrants who do the 3-D (dirty, dangerous, difficult) while its few citizens enjoy air-conditioned insulation from the harsh desert environment. However, recent reports have brought to light just exactly what the human cost is on migrant workers. The Guardian got--pardon the expression--the...
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The (Delayed) Ascent of PRC Rating Agencies

♠ Posted by Emmanuel in , at 10/04/2013 10:16:00 AM
There was another large controversy about Chinese firms operating Stateside three years ago when the PRC-based credit rating agency (privately-owned, mind you) Dagong was denied by the SEC from being granted Nationally Recognized Statistical Rating Organization (NRSRO) status. As IPE Zone readers know by now, NRSRO status is important insofar as gaining this recognition allows a credit rating agency to legitimately evaluate what is still the most liquid capital market of them all for dollar-denominated debt. Then, the SEC claimed that Dagong could not comply with the Feds' standards for tranparency if so required: [W]e find that we must deny Dagong's application because, irrespective of the jurisdictional question, it does not appear possible at this time for Dagong to comply with the recordkeeping, production, and examination requirements of the federal securities laws. The "jurisdictional question" concerns the Chinese SEC equivalent the China Securities Rating Commission...
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Japan 'Defeating' Deflation? Not Quite, My Friend

♠ Posted by Emmanuel in , at 10/03/2013 10:28:00 AM
There is much debate in Japan as to whether the Bank of Japan's efforts to pull the country out of a deflationary spiral are bearing fruit. True, Japan's consumer prince index is actually showing a positive trend, but this may be largely down to temporary factors and not to any structural change. What happens when the central bank spigots close? The questions facing the developed world are  similar in certain respects. Moreover, Japan's shuttering of nuclear reactors in the wake of the Fukushima incident has caused price rises that may soon be undone as more plants come back online: Japan’s core consumer price index, excluding volatile fresh food prices, rose 0.8% in August from the same month a year earlier. That prompted private economists to raise their forecasts closer to the central bank’s 0.6% rise on average for the current fiscal year ending March. People familiar with the central bank’s thinking say it sees the index going as high as 1.0% by the end of this...
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Vaporware 3.0? Shanghai Free Trade Zone

♠ Posted by Emmanuel in , at 10/01/2013 10:10:00 AM
In technology-related industries, the term "vaporware" is used for hardware or software that is all hype and no substance. Either the announced products do not even materialize, or if they do, their features are far less impressive than promised. For our purposes, consider them as "vaporware 1.0" and "vaporware 2.0" respectively. Today, let us consider yet another overhyped entity that is somewhat larger in scale. Try the largest city in the world's largest country--Shanghai, People's Republic of China--boasting a population of an astonishing 23 million. Just yesterday, a 29 square mile chunk of it formally became the Shanghai...
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