Today's PRC Pt II: Letting SOEs Fail

♠ Posted by Emmanuel in , at 4/30/2016 08:45:00 PM
No longer a novelty: a Chinese SOE that goes belly up. Warren Buffett had a memorable turn of phrase when he said that we can identify who's naked when the tide rolls out. With the recent slowdown of China, we are seeing a similar phenomenon. Many--myself included--believed that the PRC would extend unconditional help to distressed state-owned enterprises (SOEs) when push came to shove. As any number of these SOEs are coming under distress, we are finding that there is no "blanket" coverage for these firms as quite a few have been left waiting for a state rescue that may never come: China’s state-backed companies no longer...
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Today's PRC Pt I: Michael Jordan Takes On "Qiaodan"

♠ Posted by Emmanuel in , at 4/26/2016 03:36:00 PM
Just sue it: Michael Jordan takes on the fakers "Qiaodan" ."The image of China as the Wild, Wild East of intellectual property protection is, in many instances, well-deserved. After all, if you allow copying entire Apple Stores or Land Rover automobiles, then IP protection is probably not one of your priorities. But, that may become a thing of the past as the American basketball legend Michael Jordan has reached China's Supreme People's Court in a case against PRC-based "Qiaodan." Despite the knock-off being around since, oh, 1984, let's just say that it took this long to get around to meaningful legal action: In the appeal...
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Volkswagen's State Capture of Germany

♠ Posted by Emmanuel in , at 4/24/2016 07:59:00 PM
Chancellor Merkel and ex-VW honcho Martin Winterkorn in happier times. The Financial Times has a very interesting article on the extent of German automakers' influence on the German state. You would think that the Germans of all people are not as prone to the pitfalls of excessively close state-firm ties, but the Volkswagen emissions scandal raised all sorts of pointed questions about the matter. Just recently, the giant automaker set aside $18 billion to cover costs associated with its emissions-cheating violations. As it turns out, Chancellor Merkel has been lobbying on behalf of Germany's automakers all these years for...
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$315B: Forex Reserves Vaporized by Oil Crash

♠ Posted by Emmanuel in , at 4/20/2016 06:30:00 PM
The Doha meeting of oil producers was such a non-event that I did not even bother posting about it despite its obvious political economy connections. In the run-up to that event, Bloomberg presented data on just how much oil exporters had used from their rainy-day funds as the price of oil fell earlier this year to nearly a third of what it was in 2013. True, prices have recovered somewhat these past few weeks, but not to the level necessary to stabilize any number of marginal petro-states. In the meantime, those forex reserves are disappearing faster than sane people at a Donald Trump rally: The world’s top oil exporters...
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EU Footballers: Would Brexit Ruin Premier League?

♠ Posted by Emmanuel in , at 4/18/2016 10:32:00 AM
Coach Wenger [hearts] the EU: Like his European players, he would find it much harder to work in the UK if it left the EU. I am likely preaching to the converted here, but consider this somewhat surprising voice in favor of the UK remaining in the EU. While many different people, places and things have waxed and waned in terms of popularity in the UK, you can pretty much be certain that football remains at the forefront of its people's attentions. As IPE types ponder more economically relevant questions such as the effects of Brexit on UK trade with the single market, longtime French Arsenal FC coach Arsene Wenger now...
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Brexit Scenario: Stockholm as London's Replacement

♠ Posted by Emmanuel in at 4/15/2016 10:33:00 AM
MNCs decamping from London to Stockholm after Brexit: a fanciful or plausible scenario? Can Scandinavian social democracy beat English laissez-faire after all in the big-money arena of European global business? The Swedes are now thinking of what seemed unthinkable--or, indeed still sounds implausible: How about Sweden being the replacement for London for any number of European multinationals if the UK referendum results in it leaving the European Union? It would be a turtle-and-hare story of unimaginable proportions. Consider that while London is the world's top financial center, Stockholm ranks a very distant 32nd. Then...
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Malaysian PM Razak and the $4.2B Missing From 1MDB

♠ Posted by Emmanuel in at 4/12/2016 07:42:00 PM
80,000 protesters and Razak is still there: can the international financial community oust him, though? A few months ago, I wrote about the goings-on in Malaysia with Prime Minister Najib Razak's controversial 1MDB fund, which styles itself as a "strategic development company"  instead of a sovereign wealth fund. Razak's critics, including former PM Mahathir, would instead classify it as a personal slush fund for Razak. Earlier this year, Malaysian courts cleared 1MDB and, by extension, Razak of wrongdoing in supposedly diverting $681 million into his personal coffers. If only authorities in other countries would...
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US Kills $150B Pfizer-Allergan Tax Avoidance Merger

♠ Posted by Emmanuel in , at 4/06/2016 06:11:00 PM
Not gonna happen thanks to Uncle Sam's intervention. A few weeks ago, I had written about the impending pharmaceutical mega-merger of Pfizer and Allergan. Although Pfizer is much larger than Allergan, the deal would have domiciled the combined corporation in Allergan's headquarters, Ireland, where tax rates have been historically low to attract foreign investment, among other things. A 12.5% tax rate looks none too shabby, right? They call this process "tax inversion." Meanwhile, there has been a massive outcry in the United States over this deal that is in large part meant to avoid taxation at higher US rates. Two days...
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Would You Link to China's Global Power Grid?

♠ Posted by Emmanuel in , at 4/04/2016 01:08:00 PM
The future? Linking not to a national grid but an international one. Adam Minter over at Bloomberg has an interesting article on how China's State Grid Corporation, the world's largest electricity supplier, is busy buying up energy assets all over the world. Apparently, it's all part of CEO Liu Zehnya's plans to eventually establish--get this--a global power grid. From an environmental standpoint, what's interesting is that it's designed to link producers of renewables to faraway customers in a way that has not been possible before when nearly all energy grids were, well, national: China’s State Grid Corporation, the world’s...
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Sweden as a Model for De-Carbonization

♠ Posted by Emmanuel in , at 4/01/2016 05:13:00 PM
In Sweden, they don't have to pollute to generate income. But can the rest of the world emulate its example? There's an interesting article in the journal of the Bulletin of the Atomic Scientists by Raymond Pierrehumbert on why Sweden can be a role model for other countries in reducing carbon emissions. Especially with the contentious debate in the United States in mind, the Swedish example is notable in using markets to help the cause and to generate marketable solutions to the problem. That is, reducing carbon emissions successfully is not equivalent to "socialism" since market mechanisms can be used to address these...
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