That Makes 5: Chinese Yuan a Part of IMF SDR

♠ Posted by Emmanuel in ,, at 11/30/2015 07:07:00 PM
Here's another step towards the Chinese currency becoming a globally important one. Everyone sort of expected this, but for the Chinese, it's a major achievement nonetheless. While the inclusion of the yuan in the basket of currencies the IMF uses as reference will not result in a massive surge in RMB holdings there, the symbolism matters quite a lot. As in, China becomes the first developing country to have its currency included in the SDR. From the IMF blurb: The Executive Board of the International Monetary Fund (IMF) today completed the regular five-yearly review of the basket of currencies that make up the Special...
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Fortress Europe: Trade Costs of Re-Establishing Border Controls

♠ Posted by Emmanuel in , at 11/29/2015 04:45:00 PM
"Welcome to the EU!" [not]. Yes, Hungary is part of the Schengen area...for now. With lurid scare stories about the endless flows of migrants emanating from the Middle East--especially jihadist/terrorist-affiliated elements--Europe's days as a largely border control-free area are supposedly limited. It's a long story, but do note that not all countries in the EU are part of the Schengen area which has abolished passport and border controls. Examples include Ireland and the UK. (There are newer accession countries like Croatia that are expected to join the Schengen area in the future.) Conversely, there are Schengen area...
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Like Clockwork, Russia Cuts Gas to Ukraine in Winter

♠ Posted by Emmanuel in ,, at 11/27/2015 01:30:00 AM
There are certainties in life that mark the turn of seasons: Cherry blossom season begins in Japan as March gives way to April. Oktoberfest begins in mid-September in Germany. Meanwhile, in Eastern Europe, the Russians will cut gas off to Ukraine as the coldest winter months begin over delayed payments. It was ever thus: even before the Russians commenced military adventures there, Ukraine always felt the brunt of gas being cut during winter. Ho-ho-ho, merry Christmas. You don't have to be a cynic to wonder why Russia never cuts off or slows the gas supply to Ukraine during, say, the summer months. For what it's worth,...
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Re: Russian Jet, Tell Turkey Trade Brings Peace

♠ Posted by Emmanuel in , at 11/24/2015 12:03:00 PM
Does shooting down your second-largest trading partner's jet affect trade? I guess we'll find out soon. There's a longstanding idea among proponents of capitalism that commerce between nations has civilizing effects. (Albert Hirschman called it the "doux-commerce thesis.") Instead of having to resort to military confrontation to obtain what you want, you can instead get it through comparatively peaceful trade. Or so the theory goes. Sometimes real-world events have the habit of making a mockery of such truisms. Witness Turkey and Russia just a few moments ago. We have news that Turkey recently shot down a Russian jet assumed...
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Pfizer-Allergan Merger: Tax Avoidance Mothership

♠ Posted by Emmanuel in , at 11/23/2015 03:48:00 PM
It'd be more appropriate if they depicted two accountants shaking hands. In trying to be impartial by covering the entire ideological spectrum of IPE, my link list at the bottom includes the Tax Justice Network and Tax Research UK. These folks are frothing at the mouth all the time about persons and corporations (literally, corporate persons) not paying what is due by engaging in all sorts of fiscal tomfoolery. Large multinational corporations are prone to reporting most of their earnings in low-tax locations such as Ireland for obvious reasons. Needless to say, many nation-states are unhappy about their corporations not...
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China Gangstas II: Smuggling Cash Out of the PRC

♠ Posted by Emmanuel in , at 11/20/2015 02:13:00 PM
Any which way but lose [sic]: Time to get the @#$% out of Dalian. Here's another no-win situation China confronts: Until a few years ago, people used to try and evade the PRC's capital controls on inflows since the rise in the yuan's value was more or less guaranteed due to external pressures to revalue and the upward trajectory of Chinese growth. Nowadays, you still have the capital controls, but expectations for the currency are different--competitive devaluation as its economy slows down resulting in massive capital outflows. What to do? PRC citizens are now engaged in a cat-and-mouse game with officialdom on how to...
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China Gangstas I: Cigarettes & Hong Kong Syndicates

♠ Posted by Emmanuel in , at 11/20/2015 11:21:00 AM
Hong Kong's roaring trade in illicit cigarettes is largely of its own making. As far as I can remember, the violent, crime-ridden mean streets of Hong Kong portrayed in Bruce Lee movies (or even the Sleeping Dogs video game) have never really existed. During British rule, the excellent police force was able to keep gang members in line and confined to activities that posed minimal physical threat to citizens. During Chinese rule, things have remained largely the same. However, things have taken a turn towards Bruce Lee movieland in recent years. With the Hong Kong government taxing the bejesus out of cigarettes, its smokers...
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If Egypt Hates Foreigners, Why Not Tourists Too?

♠ Posted by Emmanuel in ,, at 11/19/2015 02:36:00 PM
It's all part of a vast conspiracy to defame Egypt's leaders according to, er, Egypt's leaders. One thing that usually unites all conspiracy theories is that they lack logical coherence. At the broadest level, it is doubtful that so many entities would be conspiring to be against you specifically Similarly, it is often doubtful whether others would go to such extreme lengths to put you down. It is unfortunate that both are operational in modern-day Egypt after the downing of a Russian aircraft. Yes, it's apparently being called a Western plot to defame Egypt's leadership. While even Russian authorities have now concluded...
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Shaming Israel: EU Labels Goods from Occupied Territories

♠ Posted by Emmanuel in , at 11/15/2015 02:28:00 PM
From the occupied territories--not Israel--to dinner tables in Europe. Are product labels entirely innocuous things simply meant to disclose factual information about the product? Make no mistake that there is a political economy behind product labeling. In the EU, foodstuffs containing genetically modified organisms must be labeled as such. Today, though, we have concerns not about the contents of products but where they're manufactured. Recently, the EU made a move to label products made in Israel's occupied territories as such: The European Union published new guidelines on Wednesday for labeling products made in Israeli...
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Korea, 1st Sovereign Issuer of PRC 'Panda' Bonds

♠ Posted by Emmanuel in ,, at 11/13/2015 11:37:00 AM
In East Asia, China and South Korea have generally gotten along better than either of them with Japan due to the latter's WWII-era imperialism. Nor does China have any major territorial dispute with South Korea--they only have minor tiffs over some rock. It should come as no surprise then that the Koreans are becoming financial innovators in a sense. You see, they will be the first sovereign issuers of yuan-denominated bonds in the mainland. Yes, of course there are already RMB bond issuances by offshore entities--the Asian Development Bank and the (World Bank's) International Finance Corporation come to mind. But issuance...
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Chinese-Canadian Miss World, Falun Gong & PRC Persecution

♠ Posted by Emmanuel in at 11/11/2015 02:44:00 PM
"Dem commies are evil!" Miss World - Canada Anastasia Lin with Chris Smith [R-NJ]. The Chinese Communist Party has long since banned the Falun Gong--which initially started as a movement doing stretching exercises but then committed the mortal sin of moving into politics--from the mainland. Outside China, the Falun Gong [AKA Falun Dafa] has outposts nearly everywhere you'll find the Chinese diaspora as well as an active press service, The Epoch Times, which is perhaps the most stridently anti-Communist Party media outlet there is. Like any other potential "threat" to single-party rule, most notably Catholicism, the nominally...
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The Lameness of Western Banks' PRC Joint Ventures

♠ Posted by Emmanuel in , at 11/10/2015 10:28:00 AM
Mainland PRC, where even the mighty barely roam. It's 2015. Do you know how well international banks' joint ventures in China have done? The perhaps surprising answer is: not well at all. These banks have had to take joint ventures since wholly-owned foreign subsidiaries remain disallowed. With the notion that one cannot be left behind by not having a China presence, most Western majors have piled in at one point or another. Now, HSBC is taking another stab at it, with the advantage of potentially being allowed a majority stake for the first time as a Hong Kong-based entity. That said, the history of these JVs isn't all...
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Climate Change, Lies & ExxonMobil

♠ Posted by Emmanuel in ,, at 11/08/2015 01:40:00 PM
So evil that prospective investors should be warned: "OWNING XOM SHARES IS HAZARDOUS TO YOUR SOUL"? There is an interesting legal wrangle underway concerning the energy giant ExxonMobil--I can recommend Steve Coll's book Private Empire: ExxonMobil and American Power if you need further information on the company's globe-spanning reach. Unsurprisingly as one of the world's biggest energy companies, ExxonMobil has long been a bogeyman for environmentalists. The latest investigation involves these corporate evildoers failing to disclose fuel-burning's effects on climate change when it supposedly knew of them long ago: Oil...
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$45B in PRC Freebies Ain't Enough: Venezuela Hits IMF

♠ Posted by Emmanuel in ,, at 11/07/2015 02:44:00 PM
So broke he can't even spend the night: Venezuela's President Maduro. We all have wastrel friends and relatives of no particular achievements, distinction or talents who get by through begging, borrowing or stealing money. Such is the nature of life, unfortunately. In the international community, there is a country which embodies such turpitude: It's called Venezuela. To put its senseless wastefulness into perspective, consider that it's already received $45B from China, most of which I guarantee you has already been poured down some rathole. How do I know this? Well, unbeknownst to many, it's also been taking out its...
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Me Too! Do S Korea & Indonesia Want to Join TPP?

♠ Posted by Emmanuel in ,,, at 11/05/2015 12:10:00 PM
Indonesia and S Korea apparently seek a seat at this table now. It appears as though the United States is gaining the upper hand in signing FTAs in the Asia-Pacific after the TPP enlargement. With China's pan-Pacific equivalent not gaining any traction, the undecideds--countries that sat out the TPP negotiations to see how matters progress--appear to be more favorably disposed now to the American effort. Chalk this one up to the "bandwagon" effect: non-participants in the TPP negotiations fear being left out will cause their exports to be less competitive as those within the FTA benefit from lower tariffs. Make no mistake...
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Does Pakistan Really Have "Record" Forex Reserves?

♠ Posted by Emmanuel in , at 11/03/2015 03:38:00 PM
Pakistan's aid donors help bolster its reserves--not financial inflows for the most part. It is sad that accumulating $20B in reserves--this in a country with a population of 182 million--is considered as a "record." However, that is the case for Pakistan and its recent report on foreign exchange reserves. As chronicled in this blog [1, 2], Pakistan is a habitual borrower from the IMF--a dubious distinction if there ever was one that even the IMF would prefer avoiding. Unfortunately, Pakistan's bolstered reserves, low as they are in ultimate terms--China has over a whopping 175 times more by my estimates--are mostly the...
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Did Uber Kill London Cabbies' Need for "Knowledge"?

♠ Posted by Emmanuel in , at 11/02/2015 11:57:00 AM
London black cab drivers must famously have memorized the streets of central London by acquiring "The Knowledge." Without it, they cannot acquire a license to drive a taxi in that world-famous city. Unless you've been hiding under a cave, the emergence of Uber--the ride-sharing service--has dented the business of licensed taxi drivers the world over. After all, why spend so much time (3-5 years), effort and expense to acquire a license when some joker with a smartphone and Uber can do exactly the same sort of thing? As it so happens, the largest cabbie school in London is closing its doors--mostly due to the Uber phenomenon: Malcolm...
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