Posts of May 2015

American Imperialism & Blatter's Last Stand

♠ Posted by Emmanuel in CSR,Governance,Sports at 5/29/2015 01:30:00 AM

A match made in hell: Gazprom & FIFA.

One good post on battle over futbol mundial deserves another: I am constantly surprised by the amount of global attention the governance of FIFA has received these past few days. On the surface, the politics of an international sporting organization headquartered in Europe should be of limited interest to the rest of the world. For the most part, we watch the World Cup every four years and that's that. Dig below the surface, however, and there is much, much more at stake: the West versus the rest, the corrupting influence of big money, and the governance of global institutions. Let us examine each of these in turn.

(1) To no one's surprise, Russian President Vladimir Putin sees the United States' move to prosecute FIFA officials on corruption charges as an effort to scotch the 2018 World Cup in Sochi. As with most Putin narratives, there's a whiff of conspiracy theory, but read for yourselves:

Russian President Vladimir Putin accused the United States of meddling in FIFA's affairs and hinted that it was part of an attempt to take the 2018 World Cup away from his country. Putin said in televised comments Thursday that he found it "odd" that the probe was launched at the request of U.S. officials for crimes which do not involve its citizens and did not happen in the United States...

Putin said even if "someone has done something wrong," Russia "has nothing to do with it." He then tried to portray the probe as a U.S. attempt to go after dissenters, likening the case to the persecution of whistleblowers Julian Assange and Edward Snowden. "Our American counterparts, unfortunately, are using the same methods to reach their goals and illegally persecute people. I don't rule out that this is the case in relation to FIFA," Putin said. "I have no doubt that this is yet another evident attempt to derail Mr. Blatter's re-election as FIFA president. We are aware of the pressure that he was subjected to in relation to Russia holding the 2018 World Cup."

Just as I predicted in the earlier post, the losers will portray this action as American imperialism in cowing Swiss authorities to follow suit. The long arm of America is not yet gone, evidently.

(2) Actually, Blatter seems to have perceived American resentment at him before the arrests. Earlier this month, he wanted to hold the next few games outside of Europe (UEFA), making the US obviously the front-runner for another American event:

FIFA President Sepp Blatter wants to implement a rule that would prevent Europe from bidding for the 2026 World Cup, improving the chances of the United States to host the tournament. The FIFA executive committee could agree this month to block continental confederations from bidding for the following two World Cups after hosting. ''It should be this way,'' Blatter said Friday, adding that the proposal is ''more than an option.''

(3) On the CSR end, perhaps the United States will ultimately undermine Blatter's leadership most by hitting FIFA where hurts most--the millions in sponsorship money it rakes in each year from corporate sponsors. Some of these sponsors are real stinkers who couldn't care less like Putin's toadies at Gazprom. Obviously, American companies will be more sensitive to their home government's actions. What's most interesting are the neither here nor there firms in Europe like Adidas. At any rate, sponsors apper to be reassessing their options:

Visa Inc., a leading FIFA partner since 2007, said that the twin U.S. and Swiss investigations into alleged corruption that resulted in the arrest of seven soccer officials here Wednesday could prompt the company to end its agreement. Visa’s current deal runs until 2022.

Urging the organization to make sweeping change, Visa said overnight that FIFA needed to rebuild “a culture with strong ethical practices to restore the reputation of the games for fans everywhere.” “Should FIFA fail to do so, we have informed them that we will reassess our sponsorship,” it added.

Other top sponsors such as Adidas AG, Coca-Cola Co. and McDonald’s Corp. all said they were monitoring the situation, while Hyundai Motor Co. Ltd. said it was “deeply concerned” about the allegations. FIFA earns $177 million a year from its marketing partners, according to its 2014 financial results.

See here for other sponsors' thoughts on FIFA/Blatter. Being a firm believer in the notion that money talks, I ultimately believe that Blatter's fate lies in the hands of FIFA's sponsors. I am convinced that the US making a big stink about arresting FIFA officials in an international extradition was partly designed to draw attention to governance issues among the sponsors.

It's very interesting stuff, and let's see in a few moments whether Blatter's previously assumed rubber-stamping as president will actually happen.

5/30 UPDATE: Blatter wins a fifth term, to no one's real surprise. Having spread FIFA largesse to small member nations, it was inevitable since votes are weighted according to, say, revenues.

'Teflon' Sepp Blatter & FIFA 'Crime Syndicate'

♠ Posted by Emmanuel in Governance,Sports at 5/28/2015 01:30:00 AM

Can the US Justice Department take down Sepp Blatter, 'evil genius'?

Criminal organizations come in all sorts of shapes and sizes these days. Just last week, American financial giants Citigroup and JP Morgan did not contest criminal charges filed by the US Justice Department for rigging foreign exchange markets. Despite the trouble these banks found themselves in with all their multi-billion dollar fines, rest assured that there are even more nefarious organizations out there we're nevertheless familiar with...and I ain't talking about ISIS. Consider FIFA. In two days' time, it will vote on a new president, widely expected to be Sepp Blatter for a fifth consecutive term. Despite Europeans dominating world football--the last three World Cup winners are Italy, Spain and Germany--the truth of the matter is that the moneybags are more evenly stretched throughout the world. Given the global distribution of football associations voting on where to hold these events, Sepp Blatter knows better than most how the world works:

Sepp Blatter, from Switzerland’s touristic Valais canton, is a born Portier. That’s why on Friday he will be re-elected to his fifth term as president of Fifa, the corrupt global football authority. Western countries rightly decry Blatter. However, we ought to recognise his genius. This 79-year-old understood very early that there’s a new world order in which westerners don’t matter much...

It turned out that Fifa cared only about naked power and money. Vladimir Putin twisted voters’ arms. Long-legged Russian ladies stalked football conferences. Qatar funded football projects everywhere. In addition, more than a third of Exco’s 24 members were accused of corruption linked to the vote. Several resigned from football. Jérôme Valcke, Fifa’s secretary-general, wrote in a leaked memo that Qatar “bought” the World Cup. (He later said he’d been misinterpreted.) Last year The Sunday Times alleged that a Qatari, Mohamed bin Hammam, made payments totalling $5m to win support for Qatar’s bid...

Many non-western football officials admire the efficient Portier. Blatter is good at organising World Cups, admits Michael van Praag, a Dutchman who tried to run against him. And the Portier handles people well. “He is charming,” says Van Praag. “He knows the name of every national association’s chairman, even his wife’s name.” Better, Blatter dishes out perfectly legal gifts to national associations. True, he cannot charm western media. But, though their attacks wound his vanity, he knows that media scarcely matter in the new world order...

Western countries are powerless to change Fifa. They could boycott the World Cup but, characteristically, they won’t make sacrifices for their principles, says Roger Pielke Jr, political scientist at the University of Colorado.

Or maybe not: Simon Kuper wrote the above piece on May 22. Just today, however, the footballing world has been rocked as the US Justice Department and Swiss authorities seem to have cracked down on FIFA in retaliation for repeated slights of Westerners wishing to hold the World Cup only to be outdone by the likes of Russia and Qatar. The pipsqueaks. So a bunch of FIFA officials were arrested over the designation of the 2018 and 2022 World Cup venues--but surprise, surprise--Sepp Blatter wasn't among them:

Several hours after the soccer officials were apprehended at the hotel, Swiss authorities said they had opened criminal cases related to the bids for the 2018 and 2022 World Cups — incidents that, more than any others, encapsulated FIFA’s unusual power dynamic. “In the course of said proceedings,” the Swiss officials said, “electronic data and documents were seized today at FIFA’s head office in Zurich.”

The arrests were a startling blow to FIFA, a multibillion-dollar organization that governs the world’s most popular sport but has been plagued by accusations of bribery for decades. The inquiry is also a major threat to Sepp Blatter, FIFA’s longtime president who is generally recognized as the most powerful person in sports, though he was not charged. Blatter has for years acted as a de facto head of state. Politicians, star players, national soccer officials and global corporations that want their brands attached to the sport have long genuflected before him.

The mighty Sepp is still as cagey as ever:

An election, seemingly pre-ordained to give Mr. Blatter a fifth term as president, is scheduled for Friday. A FIFA spokesman insisted at the news conference that Mr. Blatter was not involved in any alleged wrongdoing and that the election would go ahead as planned.

The Department of Justice indictment names 14 people on charges including racketeering, wire fraud and money laundering conspiracy. In addition to senior soccer officials, the indictment also named sports-marketing executives from the United States and South America who are accused of paying more than $150 million in bribes and kickbacks in exchange for media deals associated with major soccer tournaments.

The soccer officials charged are Mr. Li, Jeffrey Webb, Eugenio Figueredo, Jack Warner, Julio Rocha, Costas Takkas, Rafael Esquivel, José Maria Marin and Nicolás Leoz.

I would love it if a clean, appealing candidate like soccer legend Luis Figo could have remained in the race to be FIFA president, but the truth of the matter is that international football is all about global power politics. Further, I do not doubt that FIFA's is a dirty, dirty game as a reflection of those aforementioned global power politics. That said, the United States' Justice Department's inability to make anything stick to the mastermind of the whole show, Sepp Blatter, makes you wonder if anyone can take him down at this stage in the game.

Soccer remains a famously minor sport in the US, and I doubt whether FIFA voters will be swayed by these outsider Yanks trying to persecute some of their own. Unless something major happens, another Blatter term is in the offing that's just as predictable as the Chinese Communist Party chooses its predetermined leaders. I further believe that the fight will increasingly take this sort of framing: developing countries fending off "American imperialism" over good governance practices.

It's game on, and smart money wouldn't bet against Sepp even now. Nothing personal, but it's all about the money.

UPDATE: See CNN for reasons why the US is taking on FIFA.

Economic Chaos & Venezuela's Inevitable Dollarization

♠ Posted by Emmanuel in Currencies,Latin America at 5/26/2015 01:30:00 AM

To paraphrase Henry Ford, you can have any car you like as long as you pay in US dollars.

The ultimate insult to any socialist Latin American banana republic is to mismanage the economy to the point that it effectively becomes a "dollarized" one. That is, the "official" currency is regarded as practically worthless by the vast majority of the nation's citizens. As a result, the almighty US dollar becomes the de facto tender in the country. Of course, we must distinguish between sponsored dollarization when a state provides official sanction to dollarization and unsponsored dollarization in which a state does not provide official sanction but it nevertheless happens. For the former, think of Ecuador whose socialist nutter president Rafael Correa is (surprise!) nevertheless attempting to introduce a national currency years after the country adopted the US dollar as its own. Call it the sucre punch.

For the latter, well, we have modern-day Venezuela--economic hell on earth:

It's still possible to buy a gleaming Ford truck in Venezuela, rent a chic apartment in Caracas, and snag an American Airlines flight to Miami. Just not in the country's official currency. As the South American nation spirals into economic chaos, an increasing number of products are not only figuratively out of the reach of average consumers, but literally cannot be purchased in Venezuelan bolivars, which fell into a tailspin on the black market last week.

Businesses and individuals are turning to dollars even as the anti-American rhetoric of the socialist administration grows more strident. It's a shift that's allowing parts of the economy to limp along despite a cash crunch and the world's highest inflation. But it could put some goods further out of reach of the working class, whose well-being has been the focal point of the country's 16-year-old socialist revolution.

The latest sign of an emerging dual-currency system came earlier this month when Ford Motor Co. union officials said the company had reached a deal with officials to sell trucks and sports utility vehicles in dollars only.

A few weeks earlier, American Airlines announced that it had stopped accepting bolivars for any of its 19 weekly flights out of Venezuela. Customers must now use a foreign credit card to buy the tickets online. Virtually all other foreign carriers have made the same switch with the government's consent, according to the Venezuela Airlines Association.

The obvious raison d'etre behind this shift is the increasing worthlessness of the Venezuelan bolivar. Despite the constant anti-American rhetoric, what's interesting is the unspoken acceptance of dollarization to help defuse popular grievances against Maduro's economic mismanagement:

Driving the shift is the crumbling value of the bolivar, which has lost more than half its value this year, plunging to 400 per dollar on the free market as Venezuelans scramble to convert their savings into a more stable currency. Desperate, people are selling bolivars for a rate 60 times weaker than the strongest of country's three official exchange rates.

It's a politically uncomfortable situation for President Nicolas Maduro, who regularly leads chants of "gringo go home" and says currency speculation is one of the main tools used by enemies to try to sow chaos and force him from power.

It's not just businesses chasing greenbacks. Real estate contracts are still drafted in bolivars to satisfy a requirement imposed by late President Hugo Chavez, but in upscale neighborhoods most owners operate outside the law and sell and rent in dollars only. A group of realtors in tony eastern Caracas has established a password-protected website for listings in dollar prices.

Analysts say the administration likely sees a limited dollarization as the only way to prevent multinationals from leaving the county altogether, as Clorox did last year, citing problems brought about by decade-old currency controls, supply shortages and inflation that hit 68 percent last year, and economists believe is now well into the triple digits.

The Yanquis have won, Maduro. The ultimate humiliation is of your own doing.

Mfg Costs: Leave PRC for Cambodia, Laos & Myanmar

♠ Posted by Emmanuel in Southeast Asia,Supply Chain at 5/25/2015 01:30:00 AM

Cheap, cheaper, cheapest: in search of low wages in Southeast Asia's CLMV.

The previous post on how China aspires to be Asia's Germany in producing high value-added manufactures jogged my memory about the this earlier article. Vietnam becoming the Republic of Samsung has already been discussed in an earlier post. However, there are also other low-cost destinations in Southeast Asia. Collectively, the latecomers to joining the Association of Southeast nations (ASEAN )are known as the CLMV countries with Cambodia joining in 1999, Laos and Myanmar in 1997, and Vietnam in 1995. Ever on the lookout for relatively skilled workers and dirt-cheap labor costs, CLMV are becoming attractive together with other Southeast Asian countries:

The cheap, young labor and strategic location of Myanmar, Cambodia and Laos are set to draw increasing numbers of manufacturers to Southeast Asia, which will eventually displace China for the title of "world's factory.'' The transformation will be part of the rise of the Association of Southeast Asian Nations to become the "third pillar'' of regional growth after China and India, ANZ Bank economists led by Glenn Maguire reckon. By 2030, more than half of 650 million people in Southeast Asia will be under the age of 30, part of an emerging middle class with high rates of consumption.

So ANZ actually believes that, collectively, Southeast Asia will surpass China as the "workshop to the world" given the advantages its various nations have aside from simply low cost:

"We also believe Southeast Asia will take up China’s mantle of the ‘world’s factory’ over the next 10-15 years as companies move to take advantage of cheap and abundant labor in areas such as the Mekong,'' ANZ said. What will likely assist this shift is the connection between low-cost labor in places like Myanmar, Cambodia and Laos, cost-effective manufacturers in Thailand, Vietnam, Indonesia and the Philippines, and sophisticated producers in Singapore and Malaysia.

Southeast Asian nations have resolved to establish the Asean Economic Community by the end of 2015 to enable the free movement of goods, services, capital and labor between the 10 member states. Together, the Southeast Asian nations could lift intra-regional trade to $1 trillion by 2025, ANZ estimates. Foreign direct investment into Asean from the major economies could climb to $106 billion in 2025, having already eclipsed investment into China for the first time in 2013.

"Most of Asean's member countries lie at the junction of the Pacific and Indian Oceans," ANZ noted. "The land-based members of Asean sit between the two most populous countries in the world – China and India. Access to these land and maritime routes allows Asean to participate in Asia’s expanding production network.''

Even for an ASEAN booster like yours truly, I think it's not going to be as easy as ANZ makes it sound. Still, the coming into effect of the ASEAN Economic Community at year-end 2015 is an awaited event that promises to bring Southeast Asia's advantages to wider global attention.

Is it no longer just a Vietnam story? We'll soon find out.

Adios Sweatshop: PRC's Mfg Plan to be Asia's Germany

♠ Posted by Emmanuel in China,Supply Chain at 5/22/2015 10:44:00 AM

Is the sweatshopped China of today soon going to be its past?

A few days ago I featured a post on how low-cost manufacturing is migrating to even lower-cost locations than China such as Vietnam. So, even authoritarian China is not immune to upward pressures on wages as firms keen on the cheapest manufacturing possible head elsewhere. Now we receive news that even China is aware of these pressures and is adjusting accordingly. Instead of trying to remain the lowest-cost producer in perpetuity, which is impossible, it too is seeking value-added industries where productivity gains from capital and labor can help ensure that it remains the world's largest producer. From Caixin Online:

China’s State Council has unveiled a 10-year plan for upgrading the nation’s manufacturing capacity so it can catch up with production powerhouses like Germany and fend off competition from other developing countries. The Ministry of Industry and Telecommunication Technology (MIIT), which led the creation of the “Made in China 2025” plan, said the strategy is intended to give China an edge in innovation, green development and quality goods.

The MIIT put the focus on 10 sectors, including high-end computerized machinery and robotics, aerospace equipment, renewable-energy cars and biological medicine. Sha Nansheng, vice director of the MIIT’s Department of Science and Technology, said the country’s manufacturing industries are facing pressure on two fronts: competition from other developing countries where labor costs are lower, and a renewed push by developed nations of the West seeking an advantage in industrial manufacturing.

“If we cannot make products with good quality and brands, China cannot become a manufacturing powerhouse as we hope,” he said. “China might have also to cede its title as a large manufacturer due to competition from other (developing) countries.”

The model for this upgrading, as you may suspect, is Germany:

Germany has been pioneering smart manufacturing, which utilizes information technologies. This so-called fourth industrial revolution — after steam, electricity and information — connects machines to a network where production processes and speeds are automatically adjusted to minimize problems and costs.

Upgrading of manufacturing industries has become urgent in China, as its status as “the world’s factory” is undermined by developing countries, and it seeks a new engine of growth amid a slowing economy. The “Made in China 2025” plan will embrace the fourth industrial revolution concept — what some call Industry 4.0 — while opening itself to advanced ideas from countries such as the United States and Britain, the MIIT said.

Li Beiguang, vice director of the MIIT’s Department of Planning, recently told journalists that the government will lead the plan but leave implementation primarily to the market by protecting equal access and competition.

You wish China luck, but you do have to wonder if government fiat is the right way to encourage the sort of innovation necessary to bring China to the manufacturing frontier.

PRC Infrastructure Battle: Japan Pledges $100B for Asia

♠ Posted by Emmanuel in China,Infrastructure,Japan at 5/21/2015 01:30:00 AM

Will the Japanese International Cooperation Agency of all institutions sink the ADB?

There is utterly fascinating news coming out of Tokyo that the Japanese are preparing to provide a hundred billion dollars in funding to Asian countries in need of infrastructure. Especially smarting from being overtaken as Asia's largest and the world's second-largest economy, Japan does not enjoy playing second fiddle to the Chinese (usurpers). I recently made a series of posts on the upcoming formation of the so-called Asian Infrastructure Investment Bank (AIIB)[1, 2, 3]. Notably, the US tried to persuade all and sundry of its allies not to join the AIIB. However, only Japan actually heeded the jealous Americans' call to stay out.

Now, however, we may have the latest round in Japan-China one-upmanship. For the AIIB, China is pledging a $50B initial contribution to be matched by the other members. Not to be outdone, the Japanese are saying they will pony up $100B for Asian countries to improve their infrastructure by themselves:

Japan will announce a $100 billion plan to invest in roads, bridges, railways and other building projects in Asia, a report said Tuesday, weeks after China outlined its vision for a new infrastructure development bank in the region. In the latest twist of a tussle for influence in the fast-growing region, Prime Minister Shinzo Abe is set to unveil the five-year public-private partnership this week, Jiji Press reported. The sum is in line with the expected $100 billion capital of the Asian Infrastructure Investment Bank (AIIB) that Beijing and more than 50 founding member states are establishing.

"The envisioned assistance is aimed at demonstrating Japan's stance to contribute to building up high-quality infrastructure in Asia through human resource development and technological transfers and showing the difference from the AIIB, so that Japan can keep a high profile in the region," Jiji said, without naming its sources.

The report comes after Japan's Finance Minister Taro Aso said earlier this month at an event hosted by the Asian Development Bank (ADB), a long-established body in which Tokyo plays a key role, that Japan was drafting a plan to boost investment in Asian infrastructure.

Aside from going one better than China all by itself, the Japanese may also want to show the rest of the world that its capabilities in building infrastructure exceed those of China. Which, of course, is entirely plausible. That said, Japan may also be following the lead of China in putting capacity for, well, infrastructure to good use outside of the home nation:

“The AIIB is motivated by multiple factors, one is geopolitical and one is purely economic Twitter , because once this bank exists, combined with the Silk Road Fund, it will begin to finance a lot of infrastructure, particularly railway infrastructure, in Central Asia, Western Asia and South Asia and even in the Middle East,” says Pieter P. Bottelier, a former senior World Bank official. “If that works, it will enable the Chinese to export excess capacity of large industry, such as the state-owned railway manufacturing industry.”

So Japan may have been reluctant to be second to anyone--especially to China--in addition to being more sensitive about US concerns. Still, I will be most interested in following if and how this $100B pot is disbursed. After all, the ADB is a multilateral institution, and the Japanese may choose to funnel money instead through its aid agencies:

The money reported Tuesday would come through government-affiliated bodies, such as the Japan International Cooperation Agency (JICA) and the Japan Bank for International Cooperation (JBIC), as well as the Asian Development Bank, Jiji said.

What happens to the ADB now if its largest shareholder undercuts it by funneling money bilaterally? Ironically, the AIIB may undermine the ADB not directly but by making Japan use it less in its goodwill efforts in Asia.

UPDATE 1: Japan Times notes that a majority of JICA's annual budget is already for infrastructure. Watch out ADB?

In the initiative, the government will extend yen loans to Asian countries through the Japan International Cooperation Agency and lend through the government-affiliated Japan Bank for International Cooperation. The government is also mulling greater financial assistance by the Asian Development Bank, to which it is the largest contributor.

The government hopes to encourage private-sector investments in Asia by reducing risks with the use of public funds. At present, Asia-bound yen loans through JICA total some ¥600 billion a year, of which 60 to 70 percent is related to infrastructure.

UPDATE 2 [5/22]: Somewhat anticlimactically, Japanese PM Shinzo Abe made the announcement public today, filling in a few more details and upping the stakes to $110 billion. Take that, China:

Japan unveiled a plan on Thursday to provide $110 billion in aid for Asian infrastructure projects, as China prepares to launch a new institutional lender that is seen as encroaching on the regional financial clout of Tokyo and its ally Washington. The amount of Japanese funds, to be invested over 5 years, tops the expected $100 billion capitalisation of the Asian Infrastructure Investment Bank (AIIB), the Beijing-sponsored lender scheduled to begin operations next year.

Japanese officials said the plan, announced by Prime Minister Shinzo Abe at a symposium of Asian officials and experts, represents a 30 percent increase over Tokyo's past infrastructure funding. Japan said it wants to focus on "high quality" aid, for example, by helping recipients tap its expertise in reducing pollution while building roads and railways. That's an implicit contrast with the AIIB, whose projects Washington has said may not adequately safeguard the environment.

"We intend to actively make use of such funds in order to spread high-quality and innovative infrastructure throughout Asia, taking a long-term view," Abe said in a speech announcing the plan. About half the funds will be extended by state affiliated agencies in charge of aid and loans and the rest in collaboration with the Asian Development Bank (ADB).

Eurovision, Migration, Romanian Kids & Workaway Parents

♠ Posted by Emmanuel in Entertainment,Europe,Migration at 5/20/2015 01:30:00 AM

Cherishing those rare time mum is home in Romania.

It's that time of the year again when that quintessential display of European unity (really) and sheer weirdness comes around. Yes, it is time for Eurovision 2015. In recent years, winners have included Finnish Klingons in Lordi and a bearded Austrian transgender, er, performer in Conchita Wurst. Like most entertainment, it is larger than life and over the top--but not always. This year, we have performers tackling the rather more serious but quite common issue of transnational families within the European Union separated by economic migration.

Given that the Romanian economy has never really taken off in quite the same way as, say, Poland, outmigration continues apace. Hence, the phenomenon of transnational families where the parent(s) work abroad and the children stay at home has become a prevalent social issue. As it so happens, Romania's entry tackles just this issue since there are some 3 million Romanians working elsewhere out of a population of 20 million. That's a lot of economic migrants:

With just days to go before they perform at the Eurovision song contest, the Romanian pop-rock group Voltaj are rehearsing their hearts out. For them, the competition is not just about representing their country but also about giving voice to thousands of children who grow up alone in Romania, with parents forced to go West to find work. The five-member band is well established in the ex-communist state, now the European Union's second-poorest after Bulgaria, and home to some 20 million people.

They are hoping their performance will touch viewers elsewhere in Europe--including countries of destination:

Their ballad "All Over Again" draws attention to an oft-ignored flipside of European migration -- the youngsters left behind. The problem affects "whole generations of children" who face "severe, long-term trauma" because they are forced to make it through their formative years without parents' support, Voltaj singer Calin Goia told AFP. "I've been asked whether I think the subject matter will interest a foreign audience. And I think it will, because the topic of child-parent relationships is universal," he said.

Transnational families are actually a fairly widespread phenomenon in new EU member states like Romania and Bulgaria:

Some 350,000 Romanian children -- almost 10 percent of the country's total child population -- have at least one parent living abroad, according to Save the Children and Alternative Sociale, another NGO. The government puts the figure much lower at 82,339. In neighbouring Bulgaria, 267,000 children share their lot, according to a recent study by the Partners Bulgaria foundation. The children are cared for by grandparents or aunts and uncles, though some live in state-run households as they wait for their parents to return.

The performance by Voltaj is quite good, actually, but you have to wonder if a rather less flamboyant, smaller-gestured song can win at a competition where the incredibly oddball have higher visibility. Maybe if they performed the song as cross-gendered, bearded Klingon women they'd have a better chance if winning? At any rate, I wish Voltaj the best in bringing to light social issues faced in the former Eastern Europe partly resulting from regional integration.

Is Asian 'Currency Manipulation' Behind US Jokeonomy?

♠ Posted by Emmanuel in Currencies at 5/19/2015 08:41:00 AM

Much ridicule has been heaped upon the American economy for its moribund nature as of late. Bill Gross, formerly of PIMCO, famously coined the term the "new normal" to denote US and more broadly developed world growth rates that were subpar; generally in the 0-to-low-2-point-something range. Not to be outdone, the IMF has called it the "new mediocre" because (a) that's what it is based on historical trends and (b) all sorts of [market liberalizing] reforms can be undertaken to encourage more impressive growth. Me? Being no slouch in front of the computer keyboard--or at least I'd like to think so as a blogger--I call it the "American Jokeonomy." Its hilarity stems from the US telling the world that its brand of capitalism is the way to economic salvation. However, when the rest of the world looks at it, all we see are stagnation, inequality, and yes, mediocrity.

So all sorts of explanations and remedies have been offered for this phenomenon. The IMF thinks it's a lack of openness:

Countries can realize significant payoffs with product market reforms. If Italy were to reduce its services sector regulations to bring them in line with those of the Netherlands, for example, the average total factor productivity growth gain across all industries could amount to about 0.1 percentage point a year, and about 0.4 percentage point in the services sector.

On the other hand, there are also the dyed-in-wool protectionist/isolationists. Of the stark raving mad variety, my favorite is Peter Morici, who favors the US hitting all and sundry trade partners--especially those of the dastardly Asian variety--with all sorts of sanctions over currency manipulation. What's somewhat new in Morici's harangue is that he relates a lack of resolve in confronting currency manipulators with confronting security challenges:

Other Asian nations, including U.S. free trade partner South Korea, have mimicked China’s currency policy and in the bargain, the U.S. international competitiveness and growth appear permanently crippled. Since 2000, the U.S. economy has grown a scant 1.8 percent a year, and one of the biggest challenges facing the next president will be finding the money to maintain an adequate Navy to secure the Pacific while maintaining an essential presence in the Mediterranean and Persian Gulf.

What is remarkable, though, is how fatalistically Obama has doubled down on the failed Clinton and younger-Bush policies. Prominent economists on the left, right and in between have suggested policies to get the dollar fairly valued against the yuan and other Asia currencies but the president steadfastly rejects even considering those.

Call it the "economic appeasement" theory of American stagnation. Actually, I'd rather like to see what happens if dyed-in-wool protectionists like Morici had a chance. Did it ever occur to Morici that these same "currency manipulators" do so by helping fund the US government by buying its debt? Like most of the fantasists, he clings to this idea that devaluing the dollar is all that it takes to set things right. I, on the other hand, believe it's due to a whole host of factors that a country in decline cannot really arrest.

One of these days, I suspect we'll get to actually test the Morici theory.

Xiaomi's Lei Jun & Overrating English Language Skills

♠ Posted by Emmanuel in China,India,Technology at 5/18/2015 01:30:00 AM

Xiaomi's Lei Jun: Zen and the art of smart phone launches in overseas markets.

One of the greatest conceits English-speaking Western nations have is that comprehension of the language is "developmental." In other words, if you can speak English, your chances of successfully integrating into global markets are increased since it is the language of business. Despite being a native English speaker--the Philippines has two official languages, English and Filipino--I have always doubted this idea. If English speaking gave countries such a leg up, why is it that the Chinese, Japanese, Koreans who have been the most successful in the region instead of, say, the Filipinos or the Indians? Fluency in English may play a part in the development story, but it is neither a necessary or sufficient condition for development, obviously.

This idea was brought to mind by Xiaomi founder Lei Jun recently unveiling his company's new smart phone range in India--an obviously large market which considerable potential. This necessitated speaking in English, and to put it mildly, let's say his language skills were not quite as sharp as they could have been. Jokes were made on the Internet at his expense as he kept repeating "Are you OK?" when he meant "Are we doing alright?":

When the charismatic CEO of Chinese smartphone maker Xiaomi took the stage in New Delhi to launch its first product for the international market, he stumbled over his few set lines in English. “Hello, how are you?” Lei Jun asked the Indian audience last Thursday, his first time using English in a product launch. “India Mi fans, I’m very happy to be in China,” he said, then corrected himself: “to be in India.”

The crowd of Indian Xiaomi fans laughed, but ultimately roared its welcome. Next, Mr. Lei announced a free Xiaomi smart wristband for each audience member. He sought to gauge the enthusiasm by shouting, with escalating volume, “Are you OK? Are you OK?” That “Are you OK?” has turned into an overnight meme on Chinese social media. It’s also set off a discussion in China about the hurdles Chinese executives face in the English-speaking global marketplace.

While some grammar snobs may have cringed, to me it seems utterly immaterial that the head of a Chinese firm trying to sell me cell phones has trouble expressing himself in English. Publicly speaking before a foreign audience is hard enough, but doing so in a language you don't use everyday is more so. Really, who cares if Lei Jun is not a master thespian in his English delivery? He seems enthusiastic enough, and the Indian crowd seemed to appreciate the effort he made in communicating with them. Most importantly in this case, the foreign language skills of Lei Jun have no bearing whatsoever on the functionality of Xiaomi phones. And, ultimately, I believe that's what consumers in India and elsewhere will have foremost in mind while evaluating smart phone purchases.

Following this line of reasoning, I would not even be in the least concerned if the company's head spoke no English whatsoever. Just as Apple's millions of Chinese customers don't know or care if Tim Cook speaks conversational Mandarin, I do not see why Xiaomi's overseas customers would care if Lei Jun speaks conversational English. There is a certain cultural expectation that makes the latter seem more "important" or "natural" when in fact Mandarin, not English, is the world's most widely-spoken language.

Xiaomi phones run mostly on Google Android, so there are no "localization" issues for models targeted at English-speaking markets. There are more important things to consider. Indeed, one could argue that a reason why many developing countries which have many English speakers have not done as well as they could is because they bought all this guff about English comprehension being "developmental." As with Lei Jun, perhaps the reality is different: non-native English speakers succeed because they try harder to make up for a perceived lack of English language skills.

To me, though, speaking "straight" English ranks rather low on developmental priorities. Again, see the pecking order here in Asia.

Coming Soon? US Navy vs PRC Landgrabbers

♠ Posted by Emmanuel in China,Security,Southeast Asia at 5/14/2015 01:30:00 AM

Wassup, Chinese landgrabbers? Guess who looks like visiting you soon..

When even the hyper-tabloidal UK Daily Mail features aerial photographs of China's efforts to create artificial islands in the South China Sea--the Philippines now calls it the West Philippine Sea--you know an international relations issue has made it to the prime time. The grievances of China's neighbors--especially the Philippines and Vietnam--are well-known: the PRC is busy constructing these artificial islands to dubiously claim that they generate a 200 nautical mile EEZ around them that is, well, Chinese territory as per maritime law. Since the start of the year, these efforts have gone into overdrive, allegedly condemning even pristine coral reefs to environmental destruction as the Chinese dump tons of sand on ecologically sensitive sites. But hey, whoever said Chinese officialdom ever gave a fig about the environment in pursuit of its interests?

It seems like the day of reckoning in the South China Sea may be getting closer as a result. With US regional allies clamoring for support, the time nears when US Navy warships may be paying China's reclamation efforts a visit, raising the likelihood of armed clashes:

After repeated and unheeded warnings to China to halt its massive reclamation works in the South China Sea, the U.S. is contemplating an option fraught with danger: limited, but direct, military action.

By sending U.S. warplanes over artificial islands that China is building, and sailing naval vessels close by—an option now under consideration, according to U.S. officials in Washington—America could end up being sucked more deeply into an increasingly heated territorial dispute between China and its neighbors, say regional security experts.

If such action fails to deter China, America will face a hard choice: back down and damage its credibility with friends and allies in the region, or escalate with the risk of being drawn into open conflict with China.

PRC officialdom is not fond of the idea, naturally:

China immediately suggested that America would be crossing a line if it goes ahead with the plan. “Do you think we would support that move?” asked Foreign Ministry spokeswoman Hua Chunying. “Freedom of navigation definitely does not mean the military vessel or aircraft of a foreign country can willfully enter the territorial waters or airspace of another country.”

Her comments reinforced a view that America and China may be on a collision course. There’s very little prospect that China will stop ballooning the specks of territory it controls in the Spratly Islands. Much of the work has already been completed, but there is still more to do.

If I were a Marxist, I'd say it's a contest playing out in Southeast Asia among rival imperialists--the United States and China. When dealing with them, I'd say Southeast Asians cannot possibly have friends among these two, only interests. And, the problem for so very long is that Southeast Asian nations have differing interests with regard to both, allowing China especially to capitalize on the regional discord.

Sending American warships to China's assorted landgrabs should be informative at the very least. The PRC's subsequent actions will be "revealed preferences" in the tradeoff between economy and security. While US naval might is still supreme, a show of force may be just the ticket.

UPDATE: US Foreign Secretary visiting Chinese President Xi Jinping in Beijing did not do much to reduce tensions over this matter. It remains entirely possible that the United States' Seventh Fleet will be paying China's land-grabbing activities a visit real soon.

Fast-Track Authority Fails: Is TPP a Goner?

♠ Posted by Emmanuel in Americana,Trade at 5/13/2015 01:30:00 AM

Mission accomplished for trade-bashers; will Obama's congressional foes successfully derail TPP again?

While trade has been a moribund topic Stateside for quite a long time, the US Congress voting on whether to grant President Obama fast-track authority--or that which enables him to secure trade deals like the Trans-Pacific Partnership currently being negotiated and have them voted on a yea/nay basis instead of being amended or filibustered--was bound to generate some interest. Unfortunately for Obama, he has just failed to secure the 60 votes needed in the Senate. With fast-track authority stalled, is the TPP too? (The House votes on fast-track authority soon as well.)

Senate Democrats on Tuesday blocked a bill that would give President Barack Obama fast-track authority to expedite trade agreements through Congress, a major defeat for the president and his allies who say the measure is necessary to complete a 12-nation Pacific trade deal that is a centerpiece of the administration’s economic agenda.The vote was 52-45, with supporters short of the 60 votes necessary to clear a procedural hurdle to advance the bill.

The Senate action almost certainly won’t be the last word on the issue. Most observers believe a majority of senators support the fast-track measure as well as the Trans-Pacific Partnership, the big trade deal whose path would be smoothed by fast-track. But the procedural setback means Senate Majority Leader Mitch McConnell (R., Ky.) must regroup in an effort to assemble the support necessary to advance the measure past the chamber’s 60-vote threshold.

Who voted against fast-track authority? Mostly Democrats--for the most part anti-trade--and more so nowadays after years and years of moribund incomes in the US which they usually blame on trade liberalization. Senate Democrats asked fast-track authority to be bundled with all sorts of other things like retraining for those who lose their jobs due to trade liberalization and the ever-popular currency manipulation chestnut. In the absence of most of these, well, they just turned their own president down:

“This issue’s not over,” Mr. McConnell told reporters shortly before the vote, which he expected to lose. “I’m hopeful we’ll put this in the win column for the country sometime soon.”

Tuesday’s vote reflected a number of objections, on substance, politics and Senate procedure. The bulk of the no votes came from Democrats, led by Senate Minority Leader Harry Reid, of Nevada, who demanded that the fast-track measure be packaged with three other measures: one providing assistance to workers hurt by trade; a customs bill that includes worker protections and language to push the administration to do more to combat currency manipulation; and one extending an expiring program that provides trade preferences to sub-Saharan African countries.

Earlier in the day, Mr. McConnell had agreed to combine the bill with the workers’ aid measure, known as Trade Adjustment Assistance. That program would provide $450 million a year through 2021 for job training for workers displaced by trade deals. Some Republicans argue including that provision could further complicate the trade measure’s chances for approval by the Senate, but it was seen as helpful to winning the support of some Democrats who felt strongly about the effect of trade on workers.

The other two measures were left out, including the customs bill, which angered Democrats who wanted its provisions aimed at ensuring greater enforcement of the terms of trade deals. They were concerned that if enforcement measures were voted on separately, they would be left behind as the basic fast-track package moves ahead through Congress. The customs bill also included measures to combat currency manipulation, which they see as an unfair trading practice.

So Obama and the Republicans--well, those who are not knee-jerk anti-Obama sorts--will try to regroup and gain the necessary 60 votes for a filibuster-proof majority. Based on the Senate vote, the House vote may not be so promising, either. This story is not over yet since they will try again. You get the feeling though that a "clean" fast-track authority is not possible and that granting this authority will only happen if all sorts of doodads are added on to it to make Democrats happy. In the meantime, the other TPP participants are probably quite displeased. After all, why negotiate a trade deal that won't even pass muster in its main proponent's legislature? Time is obviously running out for Obama since he has but one year left in office.

Also see the FT's backgrounder on fast-track authority if you want more specifics on its nuances.

Building Roads: PRC Plot to Buy Off Pakistan?

♠ Posted by Emmanuel in China,Infrastructure,South Asia at 5/12/2015 01:30:00 AM

Follow the money trail on the mooted China-Pakistan superhighway.

The Chinese way to winning friends by buying off nations is formulaic by now: The first pillar of this diplomatic outreach effort involves unconditional lending of vast sums of money. To this end, the Chinese like to contrast their "mutual benefit" and "mutual respect" against the laundry list of conditionalities imposed by the likes of the World Bank, IMF or regional development banks. The second pillar consists of infrastructure: If the Chinese have gained experience in any particular area over the past few decades, it's in building structures. You name it--airports, power stations, roads, railways, seaports, even football stadiums--and the Chinese have accumulated vast experience constructing it. In particular, connecting to other countries enables either the smoother process of extracting raw materials necessary for China's massive manufacturing machine and the export of finished goods in the opposite direction.

Governance? Human rights? Quite frankly, China doesn't give a &*^% about any of those things. Hence the Chinese reading of the principle of "non-interference" in others' affairs.

In terms of being chronically hard-up, few countries in the Asia-Pacific come close to Pakistan. This repeat borrower from the IMF certainly chafes at the conditionalities imposed upon it time and again. And for what? The monies provided are not especially large. Into this picture comes China attempting to win friends and buy off nations. You don't need a PhD in economics or political science to figure out how to win the hearts of the Pakistanis after years of having to deal with the loathsome, self-important Yanquis and their assorted minions: shovel wads of cash with few to no strings attached. Build infrastructure while you're at it, too.

To no one's surprise, China is using both pillars in attempting to win over its neighbor:

The focus of spending is on building a China-Pakistan Economic Corridor (CPEC) - a network of roads, railway and pipelines between the long-time allies. They will run some 3,000km (1,800 miles) from Gwadar in Pakistan to China's western Xinjiang region. The projects will give China direct access to the Indian Ocean and beyond. This marks a major advance in China's plans to boost its influence in Central and South Asia, correspondents say, and far exceeds US spending in Pakistan.

Once more, Big Things are planned for Pakistani development:

Is Pakistan on the verge of becoming the Asian Tiger Prime Minister Nawaz Sharif said it would become when he was last in power in 1997? China plans to inject some $46bn - almost three times the entire foreign direct investment Pakistan has received since 2008. Many say Mr Sharif's penchant for "thinking big" and China's increasing need to control maritime trade routes may well combine to pull off an economic miracle in Pakistan.

But there are questions over Pakistan's ability to absorb this investment given its chronic problems with militancy, separatism, political volatility and official corruption. China is worried about violence from ethnic Uighurs in its mostly Muslim north-western Xinjiang region and fears hard-line separatists could team up with Uighur militants fighting alongside members of Pakistan's Taliban.

$46 billion! Even $4.6 billion a year would have been mighty impressive in light of the funds provided by the World Bank and other institutions of American hegemony. You have to wonder though if strife-torn Pakistan has the absorptive capacity to productively use so much capital being injected in so little time.

Given Pakistan's history of uncontrolled corruption and insurgency, it may ironically be this country that makes China more aware of the needs for good governance if it turns out that it is throwing away good money after bad on a country that's proven to be a bottomless money pit since its independence. In that case, it would begin to act like any other international lender.

Meet Europe's Hardest Workers: The, er, Greeks

♠ Posted by Emmanuel in Europe,Labor at 5/11/2015 01:30:00 AM

If Greeks work such long hours, then why are they so broke?

One of the more astounding facts I routinely come across about Europe is that the Greeks work the most number of hours going by OECD data.This finding, of course, flies in the face of common assumptions nowadays that the Greeks are lazy people whose lack of effort has precipitated the economic crisis it's been facing for years and years. Perhaps the Greeks are the European equivalents of James Brown, the hardest working man in show business?

But I digress. The sheer number of hours worked gives very little indication of worker productivity. First, they may be working a lot of hours doing grunt work that does not yield much in terms of economic output. That is, many Greeks may be stuck doing barely sophisticated manual labor. Second, when labor is not matched with adequate capital, then total factor productivity may suffer. Sure they work a lot, but again, they do not produce much without the aid of sophisticated machinery or computers.

This finding has prompted much griping in the Greek press that stereotypes about them are unjustified. Meanwhile, the Germans and Dutch allegedly do not deserve their reputation for being hard working people going by the numbers presented above:

Greeks are the hardest working people in Europe, since they work 2,037 hours per year, a[n] OECD study shows. The Organisation for Economic Co-operation and Development conducted a study to determine in which of the 38 OECD member-countries people work the most. Greece ranked third in the world, after Korea and Mexico, and first among European countries.

In Europe, the Dutch work the least hours per year (1380), followed closely by the Germans who work 1388 hours. Norway comes third with its people working 1408 hours every year, followed by the Danish who work 1411. Greeks are the hardest working Europeans (2,037 hours) followed by the Polish (1918 hours), the Hungarians (1883 hours) and the Estonians (1868).

The BBC has an earlier article explaining how these numbers are "artifactual" at best:

The average Greek is working a full 40% longer than the average German. But there is more to these figures than meets the eye. There are two big reasons why these two countries have such different annual working hour totals.

Pascal Marianna, who is a labour markets statistician at the OECD says: "The Greek labour market is composed of a large number of people who are self-employed, meaning farmers and - on the other hand - shop-keepers who are working long hours." Self-employed workers tend to work more than those who have specified hours in an employment contract.

The second reason Mr Marianna points to is the different number of part-time workers in each country. "In Germany, the share of employees working part-time is quite high. This represents something like one in four," he says. As these annual hours figures are for all workers, the large proportion who work part-time in Germany is bringing down the overall average. In Greece, far fewer people work part-time.

We should again return to the matter of productivity:

Why is it then that it's Greece that needs to be bailed out, and not Germany? That's a complicated question. But you get part way to answering it by doing another simple sum. Take gross domestic product (GDP) - that's the country's entire production - and divide it by the number of workers.

On this basis, the average German worker is more productive than the average Greek. Germany ranks as the eighth most productive country by worker out of the OECD countries - or the seventh out of the European countries - while Greece comes in at 24th. Mr Marianna says this is mainly because Germany has a very efficient manufacturing sector. And while a smaller proportion of Germans work in agriculture, here too they are more efficient - partly because "technology is more widespread", he says.

As with South Korea--another country even more famous for its long work hours (and low productivity)--you have to consider what people actually do on the job more than how many hours they claim to be on the job. As if we needed more proof that it's better to work "smart" than work "hard." Pencil-pushing and sticking around the office just for the sake of doing so may impress others, but productivity statistics eventually show up such needless demonstrations of earnestness.

It's 2015, But Japan is USA's Largest Creditor (Again)

♠ Posted by Emmanuel in Currencies,Japan at 5/09/2015 01:30:00 AM

A not-quite-newsworthy flashback that I must note nonetheless.

This news was buried somewhere with all else that's happening in the world economy, and I'm not sure if it's even that significant, but Japan has resumed the mantle of being the United States' largest lender going by the amount of Treasuries it holds. For the month of February 2015, it's Japan at $1.2244T to China at 1.2237T [cue We are the Champions]. It's certainly not a distinction to be proud of, but for what it's worth, earlier predictions that it would come true have proven good. In mid-2014, the purchases of the Japanese pension fund in foreign sovereign bonds to boost negligible returns on Japanese government bonds (JGBs) was offered as a reason Japan was set to overtake China:

Japan is poised to pass China as America’s biggest foreign creditor this year with help from the world’s largest pension fund, according to Nomura Holdings Inc. The 126.6 trillion yen ($1.25 trillion) Government Pension Investment Fund will increase overseas bond holdings in coming months to earn higher yields, according to money managers, strategists and economists surveyed by Bloomberg. Separate funds in Japan that use GPIF’s allocations as a benchmark may follow, according to a professor who advises the government. China’s accumulation of reserves that it has used to buy Treasuries will diminish, a Beijing-based official said last month.

“We do think the flow is going to be notable,” Martin Whetton, an interest-rate strategist in Sydney at Nomura, Japan’s biggest brokerage, said in a phone interview on July 7. “From October onwards is when they would start to move some of this money. It’s not enough of a flow to stop yields in their tracks from rising.”

Meanwhile, what's the deal with China and its (slightly) falling holdings of Treasuries? The PRC's slowing economy has slackened the rate of reserve accumulation and has possibly resulted in a little "rainy day" cashing in. Add in that US fixed income rates are rather more attractive that those in the more advanced Eurozone economies and Japan has few other choices as far as reserve currencies are concerned:

Japan has increased its net holdings of U.S. Treasuries by $13.6 billion over the past year. Meanwhile, China has decreased its net Treasury holdings by $49.2 billion over this same period, as its once red-hot economy has begun to cool. Therefore, it is not surprising that Japan has overtaken China as the largest U.S. creditor.

Experts attribute this shift to several factors. The most immediate is a recent change in the asset allocation policy of the Government Pension Investment Fund of Japan (GPIF), the largest state pension fund in the world. The GPIF raised its allocation for foreign bonds from eleven percent to fifteen percent last fall in order to reap higher yields than those available on Japanese debt. For example, the yield on a ten-year Japanese government bond was just 0.30% on April 17, while the yield on the comparable U.S. Treasury note was 1.87% on April 17.

Government bond yields are also falling throughout the euro zone as central banks’ bond purchases have pushed bond yields close to zero. For example, the yield on the ten-year German government bond was just 0.08% on April 17. Japan (along with most other nations) believes the U.S. will be the only developed country in the world to raise interest rates in the near future.

I suspect that Trans-Pacific Partnership (TPP) expansion critics will use this news as ammunition for accusations that Japan is a "currency manipulator," but for me, the notion is as retrograde as Japan being the #1 target of American demagoguery. It's so 1985, dear readers.

Outmigration: Escaping Greece's Economic Killing Fields

♠ Posted by Emmanuel in Europe,Migration at 5/08/2015 01:30:00 AM

Get the !@#$ outta Greece: the only hope for the future?

Oh, dear. Of all the woes besetting modern Greece, here's one that not many talk about but probably will have the greatest impact going forward: the mass exodus of educated young people continues apace. When they install some vainglorious, bald-headed action star wannabe as finance minister, you know that things have only one way to go in the near future: down. With EU membership (for now) guaranteeing freedom of movement, there really is no need for college graduates and other holders of advanced "human capital" to stick around:

A devastating brain drain is luring away the best and brightest of Greece’s workforce, several reports showed, with estimates varying between 180,000 and 200,000 well-educated citizens leaving the cash-strapped nation. At that rate, the exodus translates to about 10% of the country’s total university-educated workforce, said Lois Lambrinidis, a professor of economic geography at the University of Macedonia.

On a macro level, this movement is a clear brain drain, said Nicholas Alexiou, a sociology professor at CUNY’s Queens College who studies Greek immigration patterns. What differentiates a brain drain from other types of migrant waves is the high percentage of skilled and educated people who leave the country, Alexiou said.

In other words, Greece is losing its “youngest, best and brightest,” as a European University Institute study dated March 2014 noted. According to the study, of those who have left 88% hold a university degree, and of those, over 60% have a master's degree, while 11% hold a Ph.D. According to the EUI report, 79% of those who left Greece during the crisis were actually employed but felt that there was “no future” in the country (50%) or no professional opportunities (25%).

The brain drain is differentiated from other exodus in the smartest leaving, and affects all sorts of economic matters:

It has fiscal implications, affecting income and consumption taxes, among others. But the brain drain also deprives the country of the capacity to generate higher-value production, said Joan Vidra, a former Moody’s analyst who now heads the sovereign-ratings department at ARC Ratings. Even in tourism, despite the increase in the number of international visitors, total income decreased by 36%, according to a study by Endeavor, an international nonprofit supporting entrepreneurship.

Things could get even worse, as around 35,000 young Greeks are currently studying abroad and could decide to seek employment outside the country, the report noted. Not to mention the number of Greeks living in the country who are in the process of relocating. In January 2014, Greek newspaper “To Vima” published a study by Greek market research firm Kapa Research, which showed that 70% of Greek recent graduates wish to work abroad and 10% are already actively looking for a job in a different country.

So, where do these highly educated Greeks go? Overall, the most popular destination is the U.K., followed by Germany and the Netherlands, according to the EUI study. Endeavor’s study says that for those up to 35-years-old (and for moves strictly related to employment — excluding studies, family or other reasons to migrate), the most popular destination is Germany. Germany and U.K. are the most popular destinations accounting for more than 50% of the work-related immigration below the age of 35, said an Endeavor spokesperson.

It behooves me to classify Greece as a "developed" nation when its GDP has already shrunken by 25%, but hey, this remains a case of North-North migration using current country classifications. As the article later notes, one of the main beneficiaries of Greece's implosion in terms of human capital are the Germans, who can pick off the best and the brightest of them to work in the rather more secure confines of Deutschland--another unexpected consequence or regional integration.

In the meantime, the same advice that Ice T gave residents of LA ghettos in the early Nineties is perfectly applicable to Greece's situation as generation upon generations of them will likely pay for the mistakes of their predecessors:

No one wants to live in an urban war
You live there 'cause your parents were poor
They live there because theirs were also
Get yourself together
Hit the gates bro!

The only ones left will be those desperate enough to think voting in nutcases like Syriza will fix Greece's woes. When sanity has left, you might as well, too.

Woman Beater Mayweather, Hublot's Celeb Endorser

♠ Posted by Emmanuel in CSR,Gender Equality,Sports at 5/06/2015 01:30:00 AM

Hublot's adverts featuring Mayweather should feature this background music.

We haven't had a corporate social responsibility (CSR) post for quite some time, so here's one. I am afraid that the only "knockout" I observed during the much-ballyhooed but ultimately dull Pacquiao-Mayweather "Fight of the Century" was me falling asleep sometime during the third round. Believe me, I was out cold. So the fight itself was utterly forgettable, but one thing I did note before being KO'ed were the Hublot-sponsored trunks Mayweather was wearing.

For those of you who don't know Hublot, it's a maker of flashy, bling-bling watches of the sort a chap like Mayweather would like, festooned as they are with gold and jewels. Chintzy trinkets for tawdry people. Watch-collecting cognoscenti in the know tend to disdain the brand for this very reason--it's flash over substance. True, Hublot has tried to remedy this image by making movements in-house for its latest timepieces instead of buying (relatively inexpensive) ones from someone else not on par with the prices they're charging, but the image persists. For an analogy, think of Hublot as the Dre Beats of watchmaking instead of headphones--all marketing hype but little substance that more discerning buyers can observe.

I am afraid that Hublot did itself no favors by selecting perhaps the most hated man in sports as their celebrity endorser. For an undefeated American champion, Mayweather getting lustily booed in his hometown speaks volumes. What kind of feel-good factor do you get from hiring Mayweather as your endorser? Anyway, to the press blurb for the Hublot endorsement:

Today, luxury Swiss watch brand Hublot had the honor of hosting a press gathering with 10-Time World Champion Floyd "Money" Mayweather to announce their sponsorship of the future Hall of Famer for his highly anticipated match-up against Manny Pacquiao on Saturday night in Las Vegas.

To mark the occasion, Hublot CEO Ricardo Guadalupe presented a King Power WBC Full Pave with Emeralds to the undefeated champion, who will also wear the Hublot brand name on his boxing trunks on Saturday night. In line with Hublot's "First, Different, Unique" brand ethos, Mayweather has previously never had a brand adorn his boxing shorts. The Presentation took place minutes before the boxer took the stage for the highly touted Weigh In.

"Everyone knows I am a big fan of luxury watches and Hublot is one of them," said Mayweather. "I am extremely grateful for their support and I look forward to adding the King Power WBC Full Pave with Emeralds to my collection."

Once upon a time, Tiger Woods had a clean-cut image that advertisers desired. (He also used to win major tournaments on a regular basis, but alas, time has moved on.) After details of his salacious personal life began to emerge, though, most left until few remained. It is thus puzzling why anyone would choose a convicted woman beater only released from jail in the past few years as a product endorser. Is he not toxic enough? This controversy was resurrected recently when female reporters who had investigated the domestic abuse were denied press credentials for the yawner of a fight.

Meanwhile, the boxer remains unapologetic:

Questioned by CNN reporter Rachel Nichols last year about his abusive behavior, Mayweather showed little remorse. He noted that there were "no pictures ... just hearsay and allegations." He has previously said he should not be compared to O.J. Simpson or Chris Brown because there are no pictures of the women he has allegedly abused -- as if the lack of video or photographic evidence is equal to exoneration. In fact, Mayweather spent several months in jail in 2012 after pleading guilty to misdemeanor assault charges.

What is astonishing here, however, is that the public is willing to overlook Mayweather's misogynistic, violent behavior outside the ring. Consider how well all the hype over the Mayweather-Pacquiao fight is paying off. The Los Angeles Times reports that gambling on the fight is expected to be heavy, with one MGM Resorts official estimating the total amount of wagers at $80 million. The 16,800-capacity MGM Grand Garden Arena has sold out, generating a record $74 million.

Mayweather, whom Forbes has named the highest-paid sportsman in the world, is set to take home $180 million for the fight.

Such collective indifference by the public of Mayweather's domestic abuse is curious considering other incidents involving football players. After video surfaced of Ray Rice punching his then-fiancée (now wife) in an Atlantic City, New Jersey, elevator, he was temporarily suspended by the NFL and later dropped by the Baltimore Ravens.

Perhaps Mayweather's apparent elusiveness in the ring is also evident outside of it as his well-documented history of beating women up--something which severely tars other athletes--has not really affected him that much commercially-speaking. In any event, Hublot has chosen to open itself up to potentially massive criticism in heaping praise and money on a social pariah. Somehow, being "The Woman Beater's Watch" doesn't strike me as a particularly effective marketing ploy.

What self-respecting woman would wear a Hublot watch knowing all this?