Gold & Euros: Is Russia's Central Banker Really That Dumb?

♠ Posted by Emmanuel in ,, at 7/31/2015 01:30:00 AM
For everything there is a season, a time for every activity under heaven - Ecclesiastes 3:1. If you had loaded up on gold and euros during, say, the pre-global financial crisis time frame, I suppose you'd have done well as both increased significantly in value. China's voracious demand buoyed gold and the euro as well as the commodity supercycle approached its peak. However, in the run-up to a Federal Reserve rate hike--the first in a long time since rates were slashed to zero during the aforementioned financial crisis--you'd be a fool to go long on gold and euros. Unfortunately for Russia, that's exactly what its central...
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Financial Adventure Time...and Now for Iran Bonds

♠ Posted by Emmanuel in at 7/30/2015 01:30:00 AM
Isfahan, one of the potential beneficiaries of international bond issuance. First Kurdistan bonds, now Iran bonds! What's the world coming to? With yields so low for developed (especially reserve currency-issuing) countries' official debt, bond investors are looking at some fairly exotic places for higher returns. With normalization of Iranian relations with the rest of the world on the cards, relaxation of sanctions will mean its banks will again be able to conduct SWIFT transfers. More exciting though is the prospect of Iran offering bonds to global investors, which is not as far off as you think should relations indeed...
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China Buying America: From Tech to Flicks

♠ Posted by Emmanuel in , at 7/27/2015 01:30:00 AM
China funding Hollywood...what's the deal? Two new articles in the WSJ illustrate China's ambitions in terms of acquiring Western technology--we've always known about this, but they've frequently been frustrated over trumped-up national security concerns--and bankrolling entertainment. Let's start with a new venture capital firm formed by technology entrepreneurs in China with blessings from the Communist Party: The quest by Chinese firms to acquire global technology is about to get $5 billion boost. Chinese venture-capital firm GSR Ventures is raising a $5 billion fund to buy overseas assets, according to people familiar...
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The West: Punishing PRC for '$483B' Stock Market Intervention

♠ Posted by Emmanuel in , at 7/24/2015 01:42:00 PM
Shenzen, where the finest stocks state funds can buy are traded. Nobody knows for certain how much the PRC has sunk into propping up its faltering stock markets. The FT totted up the figures and said that state-owned banks have been forced to cough up $209B to provide brokerages for buying up A shares: According to the latest revelations, the big state-owned banks have lent a combined Rmb1.3tn ($209bn) in recent weeks to the China Securities Finance Corp, for lending on to brokerages to finance their investment in shares and to purchase mutual funds directly.  Meanwhile, Bloomberg said that, actually, it's more like...
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When in Buenos Aires, See 'Museum of Foreign Debt'

♠ Posted by Emmanuel in , at 7/23/2015 01:30:00 AM
Vultures, the foreign debt board game and other Argentinian jollity. Argentina has a wealth of attractions: The awesome natural grandeur of Perito Moreno Glacier. Ushuaia, the "end of the world" on its southern tip (next stop: the Arctic).  Tango, the dance of sultry romance. Call me weird but, as an IPE scholar, my first port of call would instead be the Museum of Foreign Debt at the University of Buenos Aires' School of Economics. I was peripherally aware that there was such a place, but a recent Bloomberg article jogged my memory: Argentina’s fight with foreign banks and bondholders is more than just business....
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Chaebol Family Governance: Samsung 1, Hedge Funds 0

♠ Posted by Emmanuel in at 7/21/2015 01:30:00 AM
To the Lees, control of Samsung is their birthright. To Westerners, the Lees are not a corporate royal family. The intricate web of cross-shareholdings characterizing Japanese and Korean multinationals has long befuddled and annoyed Westerners. In Japan, the keiretsu (cross-shareholding) system based on conglomerates' various companies owning each other's shares is deliberately meant to keep longstanding and closely-linked structures intact for the likes of Mitsui, Sumitomo, etc. In Korea, the chaebol perform a similar function. In more recent times, especially after liberalizations demanded of Korea in exchange for IMF...
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Egads, a WTO Deal...on Expanding IT Goods

♠ Posted by Emmanuel in , at 7/20/2015 01:30:00 AM
Coming soon to your country: duty-free PlayStations. OK, so it isn't the completion of the Doha Round (in progress from 2001 to, well, never evermore it seems). I suppose that it's still an achievement that the Information Technology Agreement (ITA) has been moved expanded to include more kinds of electronics--including game consoles [!]--and more tariff reductions. In this day and age where skepticism about the benefits of trade are evident around the world, any sort of multilateral deal is worth mentioning: Trade negotiators on Saturday tentatively agreed to eliminate tariffs on an array of technology products valued...
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Japan's Cure for Juvenile Delinquency: No Juveniles

♠ Posted by Emmanuel in at 7/18/2015 01:30:00 AM
Meet the, er, "new" generation of Japanese criminality. Here's another post on the strange relationship between aging and criminality in Japan: a few weeks ago, we had elderly committing minor crimes since they preferred a life of incarceration to homelessness. Still, it appears the ultimate cure for juvenile delinquency has been found in Japan: have no juveniles. Given its graying demographic, this may be an extreme unintended measure, but hey, that it's working is undeniable. With fewer young people with tendencies towards--how do we call it--exuberance, the staid and old are actually the more criminal elements in society...
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Be Merkel: D-I-Y Austerity Measures on Greece

♠ Posted by Emmanuel in , at 7/17/2015 12:47:00 PM
Austerity may cause the Greek speaker of parliament to literally lose the shirt off her back according to this site. From MarketWatch we receive word of the "Random Austerity Measure Generator" that spits out additional, somewhat amusing, austerity measures for various hapless EU peripheral economies. But seriously, there is certainly a worthwhile debate to be had about the economic consequences of these Eurozone slackers being subject to austerity measures. There is even a reasonable case for removing Germany from the Eurozone to improve the competitiveness of the ne'er-do-wells. That said, constant mediocrity inevitably...
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Absolutely Banzai Stock Picks in Japan's Remilitarization

♠ Posted by Emmanuel in ,, at 7/16/2015 01:30:00 AM
Rock you like a hurricane: Japan's defense stocks are soaring with the nation's security ambitions. Aside from easy money policies, Shinzo Abe's second time around as Japan's prime minister has been characterized by a drive to remilitarize the nation. In a word, the cause is "China"; its allies, the North Korean crazies, certainly don't help matters. After Japan's World War II atrocities, let's just say it's neighbors haven't been particularly keen on this policy change from a pacifist constitution. Japan's "Self-Defense Force"? Give me a break. Then again, some in the region may be actually glad about Japan's change of...
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Did World Bank Wimp Out on PRC Financial Interference?

♠ Posted by Emmanuel in , at 7/14/2015 01:30:00 AM
I almost forgot to post about this recent event that does not seem to have attracted much attention from IPE scholars, but should. As I've mentioned several times now, China isn't exactly an exemplar of a market-based economy as the state has repeatedly stepped in to interfere in its operations. Witness its current desperation to prop up its stock markets to mixed effect. In particular, the allocation of capital is hardly determined by market forces as the state often dictates when, where and how the galaxy of state-owned firms should generate capital. Recently, a World Bank called China out on this level of intervention...
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Grecian Style [sic]: The ECB Haircut Guide

♠ Posted by Emmanuel in , at 7/11/2015 01:30:00 AM
From Patrick Chovanec, it's the barbershop special for Greece. I doubt whether its creditors will reduce the amount of debt they're owed by Greece this time around, but it's likely inevitable if they decide to keep the country in the Eurozone. That is, a reduction or haircut on the face value of Greece's debts can hardly be avoided. At the moment it looks like "extend and pretend" that Greece will be able to pay. Until the day of reckoning comes, enjoy the stylistic decisions that have to be made before then... ...
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Nothing Works: Top 10 Stupid Tricks to 'Save' PRC Stocks

♠ Posted by Emmanuel in , at 7/09/2015 01:30:00 AM
Dontcha worry; more official "help" is on the way. Or maybe you should worry a lot more because of it. The recent retirement of comedian David Letterman has deprived humanity of two outstanding recurring gags of his: the "Top 10 Lists" and "Stupid Human Tricks." Unfortunately for so-called investors in Chinese stocks, I am afraid that the PRC Communist leadership has turned their activities into a financially worrisome joke as their stock markets plunge day in and day out despite all sorts of interventions being introduced to stem the rout. Is China a market-based economy? If you needed any more proof that isn't, then you...
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Yanis Varoufakis' Next Gig Should be...ISIS Finance Minister

♠ Posted by Emmanuel in , at 7/07/2015 01:30:00 AM
Like a bat out of hell: Next stop ought to be Raqqa, Syria. The vainglorious econocomedian, [now ex-]Greek Finance Minister Yanis Varoufakis, said he would resign if Greek voters said "yes" to the bailout program offered by its creditors a week ago (which means the joke of a referendum wasn't valid since the country has since defaulted on its IMF loans and terms would be different anyway). As it turned out, the masochists in Greece turned out in greater number and the "no" vote won...and still Varoufakis quit. While I will certainly miss his amateurish Marxist comic stylings, I think he has the perfect next job lined...
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Malaysia, Middle-Income Trap, Failed SWF & Kickbacks

♠ Posted by Emmanuel in , at 7/06/2015 01:30:00 AM
The media's new poster boy for Asian corruption and mismanagement: 1MDB. Despite being the next-most advanced nation in Southeast Asia after Singapore, Malaysia has never quite made it to "developed" status. It is usually cited as an example of a country stuck in a "middle-income trap": Its labor costs are no longer rock-bottom having achieved a certain level of development and thus cannot compete with lowest-cost labor locations. Yet, it is not sophisticated enough to compete with the sophisticated goods and services offered by the developed countries. One of the initiatives to address this situation was the creation...
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PRC Stock Plunge as Western Conspiracy + Bet Yer House

♠ Posted by Emmanuel in , at 7/04/2015 01:30:00 AM
Easy come, easy go: Welcome to the Shanghai bourse, world's biggest casino. The death spiral in Chinese stocks continues, with the Shanghai Composite whose chart is above dropping another 5.77% on Friday. Since peaking in mid-June, an astronomical $3.7 trillion has been wiped out in stock market capitalization, with the index falling 30% in the space of a few days. Continuing from the theme in the post below, PRC authorities have, in sheer desperation, tried everything to no effect: Beijing seems to be doing everything it can to support the bull market. The People’s Bank of China cut interest rates last weekend. The Ministry...
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America & China: Flipsides of Economic Desperation

♠ Posted by Emmanuel in , at 7/03/2015 01:30:00 AM
America: Where Nobody Wants to Work (What, Me Get a Job?) If there is an even better metaphor for subprime globalization's follies, I have yet to find them. So we are led to believe that the US and China are the world's largest economies. However, recent news paints both in a negative light in terms of being able to do something about their desperate situations. Let us start with the US. Because of the Fourth of July holiday weekend, the jobs report which usually comes out on the first Friday of the month containing data on the prior month was released today. Lo and behold, the glorious Bushbama years have bombed America's...
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BRICs Illusion: Western Banks' Exodus from Brazil

♠ Posted by Emmanuel in at 7/02/2015 01:30:00 AM
Adios HSBC in Brazil; we hardly knew ye. There was a time when Brazil, Russia, India and China or the BRICS were all the rage, and MNCs felt they had to have a presence in these countries. Unfortunately, we all know what's happened since. Consider China and Brazil in particular: China has slowed down tremendously as its export-driven economy has reached its limits and saturation of the world market with PRC-made goods has set in. As a result, Brazil's resource-dominated exports have found fewer and fewer Chinese takers. Being a fairly undiversified economy, Brazil has slown down and even gone into reverse. Recent news...
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