Raptors' Multicultural Canada, Antidote to Trump's US

♠ Posted by Emmanuel in ,, at 6/16/2019 04:35:00 PM
The chances of a Sikh gent being the face of Trumpmerica: 0.00%. For multicultural Canada, it's already reality.
The white supremacist sympathies of Donald Trump have put paid to the idea that diversity is inevitable in the United States, as have any number of actions his administration or party are pushing: asking citizenship status in the census (which is a population and not a white person count); strategizing electoral victory through disenfranchisement of minorities, reducing all forms of legal and illegal immigration---you name it. For a country whose birthrate is below replacement, the inevitable consequence of continued Trumpism would be depopulation. "But hey! We may be depopulating, but we're a depopulating majority white country," rabid Trump fans would say.

As those who've watched the recent NBA Finals have seen, though, the Canadians have other ideas. Not only has the entire city of Toronto become a strong supporter of the multicultural Raptors, but the entire country. In other words, they are not quite Trump-like America (i.e., white people) firsters. The rainbow team is a microcosm of where Canada is headed, and the Canadians are not as disdainful of this general direction:
The team itself is celebrated for its own diversity, starting at the top with Masai Ujiri, the team’s widely respected president from Nigeria. There is player Pascal Siakam of Cameroon or Serge Ibaka, born in the Republic of Congo. And one might argue that as the lone NBA team from Canada, the vast majority of the players come from somewhere else – specifically south of the border – like Raptors star players Kawhi Leonard (Los Angeles) and Kyle Lowry (Philadelphia).

Yet it’s the team’s fanbase, outside or inside the Scotiabank Arena, that illustrates the diversity of Toronto, where 51.5 percent of residents identified as a “visible minority” in the latest census – women like Claudette Gardiner, born in Jamaica, who is at the playoff game with her Canadian-born daughter Micaela Evans and who talks about the team’s plucky rise in Toronto.
The rise of basketball as a sport in a country dominated by ice hockey deserves mention as a reflection of demographic trends:
Marvin Ryder, who analyzes sports marketing as a professor at McMaster University in Hamilton, Ontario, expects the basketball buzz to grow, at least in urban centers. Canada’s newcomers gravitate to basketball and soccer, which are more accessible than ice hockey. This season the Raptors have given Canada a chance at a badly desired championship. As television crews pan the arena, he says, it shows the pulsing metropolis that is today Toronto and that many outsiders (specifically Americans, he says) haven’t understood. “It is a great way to showcase that Toronto is truly a city of the 21st century,” Professor Ryder says.
Importantly, maybe there is hope even for Trump's America. It was not always this way as even now famous Raptors superfan Nav Bhatia was no stranger to racism when he first arrived in Toronto:
It was not always that way, as Mr. Bhatia can attest. When he first arrived, as a trained mechanical engineer, he couldn't get a job in his field. Instead, he worked as a car salesman. He says at that time he was called far worse than a cab driver. “I never get upset; I do something positive to take away the negativity,” he says. For him that meant inviting underprivileged kids from all different religious and racial backgrounds to games, something he could afford as his own career grew from salesman to manager to successful car dealership owner today. “That is why today you will see here my community,” he says. “I use the game of basketball to bring the world together.”
Perhaps even Trump's America can change if Canadians have even if the latter are generally regarded worldwide as the more civilized North Americans.

UPDATE: See Kareem Abdul-Jabbar expounding on a similar theme in a new Guardian op-ed.

City of Londoners: PM Boris Johnson = Disaster

♠ Posted by Emmanuel in , at 5/28/2019 12:59:00 PM
Some fat white guy with weird "blonde" hair: from the US to the UK, it brings disaster.
This is a no-brainer: when the likely next prime minister of the United kingdom has said "f--k business" when asked about Brexit's fallout on British commerce, businesspersons are going to be concerned. With the recent resignation of Theresa May from that post, and Boris Johnson (former London mayor) being the front-runner, denizens of the City of London are antsy. Will he be the kryptonite of the financial services industry that plays an outsized role in UK commerce?

Folks in the City are pessimistic on the arch-Brexiteer Johnson, to say the least:
More than 80% of respondents to an FN poll believe the former foreign secretary is the wrong person to replace May and will be bad news for the Square Mile Financiers in the City have expressed deep concern at the prospect of Boris Johnson replacing Theresa May at Number 10, fearing the former mayor of London’s appointment would be very detrimental to the Square Mile.

Executives have baulked at the possibility of Johnson becoming the next prime minister, expressing fears his appointment would increase the likelihood of Britain crashing out of the EU without a deal and inflame the risks of a UK recession. According to a Financial News poll of 70 people working in the Square Mile, more than 80% said Johnson is the wrong person to replace May. A further 77% said his appointment would have a negative impact on the City.

“I can't think of a single good thing to say about Boris Johnson,” said one senior banker based in London. According to the latest betting odds, Johnson is the overwhelming favourite to become PM. William Hill, the bookmaker, is giving odds of 13/8 he will succeed, ahead of former Brexit secretary Dominic Raab at 4/1. May will quit as Conservative leader on June 7.
The forecasts are dire for a Johnson government despite it being seemingly hard to avoid installing the guy. You could say he's the sum of all Brexit fears:
Gina Miller, the fund manager and prominent anti-Brexit campaigner, told Financial News: “The qualities of honesty, integrity, strategic thinking, maturity, a work-ethic and acumen should all be the prerequisites of a leader. Boris possesses few of these.”

Executives are particularly troubled by the “f*ck business” comment Johnson was reported to have made in June last year when the then foreign secretary was asked about industry’s concerns over Brexit.

“Anyone who says ‘f*ck business’ is not good for the City,” said one director of a European bank. “A hard Brexit will be a disaster [for the Square Mile]. Just look at the sterling-dollar rate.” The chief executive of a London-based asset manager added: “Boris has done nothing to show he has any regard for the City.”

Big Biz: Helping Move Mfg Out of China

♠ Posted by Emmanuel in , at 5/23/2019 04:03:00 PM
Trade war or not, manufacturing in the lowest-cost sectors will inevitably move out of China to places like Vietnam.
How do you make money in China nowadays...as an export-oriented concern? Yes, this is a trick question whose answer should be obvious from the post title. Firms that help manufacturing concerns move their production facilities to lower-cost locations in the aftermath of Trump's trade war is the obvious answer here. Notably, while rising costs in China have already become plenty evident--higher wages and more stringent labor and environmental regulations--the forthcoming declaration of total tariffication of all Chinese exports to the United States seems to be the last straw:
However, plenty of on the ground accounts suggest that factories are being downsized or closed completely, with firms moving to Vietnam, Taiwan, Cambodia, Thailand and other parts of Southeast Asia. This is not solely due to the trade war, since the rising cost of labour and meeting environmental regulations in China have also led to companies seeking cheaper production hubs over recent years.

But the tariffs have accelerated the trend, and logistics companies with cross-border capability are milking the opportunities, moving the growing traffic of Chinese firms from China’s industrial heartlands and newly-built industrial parks in neighbouring countries.
“Since the second half of 2018, our company has helped 10 manufacturers – in sectors from jewellery, to electronics, to printing – relocate their entire plant. That is to say, these 10 enterprises have completely shifted and withdrawn from China,” said Eric Huang, who runs one of the leading logistics companies in Guangzhou, R&T Transportation.

“We have also helped at least 500 companies to transport their partial production lines, as well as raw materials and equipment, to their newly-built plants in Vietnam, Indonesia and Thailand,” he said. As the trade war escalated in recent weeks, the pace of the exodus has sped up too. On May 10, Trump increased tariffs on US$200 billion of Chinese goods from 10 per cent to 25 per cent.
And so ends China's turn as the factory to the world? At least it's status as the lowest-cost producer is certainly in question. Even if the trade war were to cease today, the transition to ever-lower cost locations will continue as China loses that status:
Even if the trade war were to end tomorrow, the logistics companies do not expect this trend to grind to a halt.

“We started logistics business between China and Southeast Asian countries in 2011, with about 30 million yuan (US$4.34 million) of annual turnover at the time. Our turnover was 150 million yuan in 2018. Though no one knows the final outcome of the trade war, the relocation trend is sure to increase. It is quite possible that the business will double to 300 million yuan this year,” Huang said.

How Gen. Franco Begat Spanish MotoGP Dominance

♠ Posted by Emmanuel in , at 5/19/2019 06:07:00 PM
A long-dead dictator set into motion the dominance of sporting figures like Marc Marquez and Jorge Lorenzo.
I've been paying more attention than usual to MotoGP, the top flight of motorcycle racing. Formerly, there were three classes--500cc, 250cc, and 125cc denoting different engine displacements. Eventually, these have been rebranded MotoGP, Moto2, and Moto3, respectively. Regardless, even a casual viewer like myself will notice that a lot of the top riders and teams in these competitions are Spanish. How did this happen? As it turns out, there is a potentially interesting history behind it all.

One of the most fascinating interpretations comes care of Motor Sports Magazine. it writes that Spanish obsession with these two-wheeled vehicles can be traced to the military dictatorship of Generalissimo Francisco Franco. Shunned by the rest of the world, local bike industries emerged, with sporting events being organized around these manufacturing concerns:
To understand why Spaniards race motorcycles better than anyone, you need to go back decades, all the way to the 1960s, because this is a tale of politics, protectionism, industry, media money and balmy Mediterranean weather.

During the 1960s Spain was still under the heel of dictator General Franco. Since the end of the Second World War, the country had been a pariah to the rest of Europe, which had fought off fascism at a terrifying cost, while Franco blithely remained neutral.

Spain was therefore isolated, so Franco prescribed an economy of self-sufficiency and protectionism. The nascent Spanish motorcycle industry was one of many protected from outside competition, most importantly from Japan. Companies like Bultaco, Derbi, Montesa and Ossa were able to flourish – to an extent – by manufacturing cheap little two-strokes that helped mobilise the nation. Inevitably, locals started using these bikes in street races, organised in towns and cities across the country.
Even if the dictator is long dead, Spanish national competitions now serve as feeders for those aspiring to international competition in the various Moto racing series. Even other Europeans come to compete in Spain for this very reason:
This is where the Spanish have been particularly effective. They succeed at world level because they laid strong foundations at home by creating highly competitive national championships and then taking their best riders through international series and into Grands Prix.

[Major Spanish organizer] Dorna took a while to get a real grip on motorcycle racing. But it got there in the end. As a result Spain has become the global centre of bike racing. The country’s multiple championships – from tiny minimotos through to the larger categories – offers a ladder to the big time. So much so that ambitious riders from around the world quit their national championships and head to Spain.

To underline how things have changed since the 1970s, Kenny Roberts took his eldest son Kenny Jnr away from the US racing scene to contest Spain’s Ducados Open series. He went on to win the 500cc world title in 2000.
Perhaps it wasn't the intention, but Franco may have set Spanish motorcycle racing domination into motion all those years ago. 

Trump on LDCs: Give Shitholes Food Aid

♠ Posted by Emmanuel in ,,, at 5/13/2019 04:37:00 PM
Feed Shithole Countries Program [FSCP]--a forthcoming American "gift" to the world?
Sometime ago, precisely zero people were surprised when US President Donald Trump characterized what were understood to be poor, migrant-sending countries as "shitholes." Rising to political prominence on a false, racist claim--the Obama "birther" conspiracy--displaying such verbal animus was to be expected. More recently, though, Trump has been toying with the idea that all the agricultural products which would have been sold to China can instead be purchased by the US government and distributed to these "shithole" countries as food aid. This action is to be done to help farmers who voted by and large for this obese racist (who probably doesn't need more food anywaygoing by his portly physique).

Leaving aside the intent here--Trump does not have a charitable or well-meaning bone in his body (remember that his "foundation" was a scam that's since been shut down)--there are several salient points which suggest it will help neither American farmers nor citizens of poor countries if Trump's latest harebrained idea was to be implemented. Bloomberg explains.

First, this idea has already been tried before during the Carter administration, and it didn't quite work as planned:
In the 1980s, crops expanded just as the export ban caused Soviet Union countries to start buying grain elsewhere. At the time, growers could deliver supplies to the Commodity Credit Corporation below certain loan rates...

The purchases aren’t a “very effective” way to deal with overhang, “and that’s what the government eventually realized," said Arlan Suderman, chief commodities economist at brokerage INTL FCStone Inc. “It does help support cash prices, but it limits rallies in the market because the market knows if it rallies too much, there are all those bushels still in the bin that will come out.”
Second, much of what China bought was not for human consumption but rather feed for livestock. What's more, LDCs are ill-positioned to receive a deluge of food anyway:
Aid programs are also too small. The U.S. government’s Food for Peace program usually buys and ships about $1.5 billion worth of goods a year to other countries. On top of that, the nations in need are usually seeking food-grade commodities, such as rice and wheat, said Joseph Glauber, former chief economist at the U.S. Department of Agriculture. The vast majority of U.S. corn and soy production is for use in animal feed or biofuel.

Many poor countries may also not have the facilities needed to process soybeans, which can also yield cooking oil. Some countries may also be opposed to large amounts of aid because it could hurt their farmers.
Third, dumping government-subsidized foodstuffs in the developing world would constitute a flagrant violation of WTO rules specifically meant to protect poor countries' farmers from such dumping:
Trump’s move could also generate disputes in the World Trade Organization as the measures can be seen as market distorting. The aid could send prices lower, hurting countries like Brazil and Argentina, which are also major corn and soybean exporters. “You can’t just dump grain at concessional prices,” Glauber said. “That would constitute an export subsidy. That is something the WTO members agreed not to do.”
Memo to Trump: the developing world doesn't need your racism or your country's food aid. 

US-China Trade Negos: The 'Rashomon' Effect

♠ Posted by Emmanuel in , at 5/09/2019 10:45:00 AM
This guy looks about as crazy as Trump, which is no mean feat. How Rashomon explains international economic diplomacy.
Blame in on Akira Kurosawa. The famed Japanese director's acclaimed film Rashomon featured the same event--a murder--as narrated by four different parties, to vastly different versions. Today, we have the same thing going on with trade negotiations that have been occurring between Chinese and American negotiators. The accounts are so vastly different that the rest of us aren't exactly sure whose version is accurate given that there is so little overlap. As the late film critic Roger Ebert keenly observed about Rashomon, there are four accounts offered, but no apparent solution. And so it is with the China-US trade negotiations. Let's begin with the more widely-publicized, American version of these events:
In a Reuters report published Wednesday and attributed principally to three U.S. government sources, the Chinese had been on the brink of an unconditional surrender before trying to wriggle out of it at the last minute. A nearly 150-page, seven-chapter draft had included binding legal language to change its legislation on intellectual property theft, forced technology transfers, competition policy, currency manipulation and access to financial services, Reuters reported, alongside an enforcement regime similar to those imposed on troublesome countries like North Korea and Iran. Beijing tried to reverse all that in a series of last-minute edits, according to the report.

That backs up an earlier report by Jenny Leonard, Saleha Mohsin and Jennifer Jacobs of Bloomberg News citing people familiar with the matter saying that the Chinese went back on promises to include changes to its laws in the text of the deal.
In short, "the Chinese reneged" is the Yankee take on events. How about for the Chinese?
An article in the Wall Street Journal, sourced to “people familiar with the thinking of the Chinese side,”  had a vastly different read. President Donald Trump’s tweets about his friendship with President Xi Jinping; praise of China’s economic stimulus; criticism of the U.S. Federal Reserve; and positive statements about planned Chinese purchases of U.S. soybeans – all were taken as evidence that Washington’s resolve was weakening along with its economy, according to the report. Beijing never had any intention of specifying which laws it was prepared to change to get a deal over the finish line, and didn’t take seriously hints from the U.S. that time was running out, it said.

The Chinese, on the other hand, never explicitly said that they would revise their national laws to comply with the Americans' wishes in their version of events.
Having studied and taught some material on cross-cultural communication, could it all have been a case of mutual misunderstanding?
Still, the risks of such misinterpretation are a familiar hazard of diplomacy, especially in discussions between negotiators with different languages and cultural contexts, so it’s somewhat astonishing to see such a gap still yawning between the two sides after all the talking that’s been done over the past year.
Maybe there should be experts in cross-cultural communication participating in these sorts of high-stakes discussions? It's only the fate of the world economy that hangs in the balance, after all. 

Paris Plays for Brexit’s Refugees

♠ Posted by Emmanuel in at 5/02/2019 12:00:00 PM
Paris' main financial district is La Defense. Nowadays, they aren't defending themselves from English speakers, apparently.
 When it comes to bourgeois world leaders, they don't come much posher than French President Emmanuel Macron. A former investment banker, there were fears before he ran for the highest office in the land that he'd be an easy target for being out of touch with the common man. And so it has proven: for months and months, he's had to endure endless protests from the "yellow vest" movement.

Interestingly enough, though, Macron is still intent on luring more of those like him from London to Paris in the run-up to the UK's impending exit from the European Union. Those investment bankers need to go...somewhere else. But how about those who aren't masters of the (financial) universe, those unwashed masses filled with Gallic pride? Well, they could offer services for the plethora of ex-London investment bankers Macron envisions will decamp to Paris:
On floors 24 to 27 of the Europlaza tower in La Defense, on the outskirts of Paris, workers hammer away as they prepare the offices of the European Banking Authority, unperturbed by the twists and turns of the seemingly never-ending Brexit negotiations.

The regulator in charge of setting standards for European lenders and conducting bank stress tests will be fully operational from Paris with a 200-strong staff on June 3, ending its eight-year existence in London regardless of when exactly the U.K. leaves the European Union.

“We will continue operating as we did from London,” Executive Director Adam Farkas said in an interview. “Staff members enjoyed the offerings of London. I’m pretty sure they’ll find a way to enjoy Paris soon.”

Winning the bid to host the body was a coup for the French capital after it competed with Frankfurt, Dublin, Madrid and Amsterdam to be known as the EU’s financial epicenter. Now, the butchers, hairdressers and schools of Paris, like its government, are going all out to ensure Brexit-driven movers are made to feel at home, bringing imperceptible changes to life in a city that hasn’t always been seen as welcoming.
How serious are they? the culturally and linguistically more insular Parisian merchants are--good heavens--learning how to speak that accursed English:
Unlike the Germans and the Dutch, for example, the French have been reluctant speakers of English in spite of the country’s ranking among the world’s top tourist destinations. That’s changing.

Laurent Dumont and his wife Nathalie, who run their family butcher’s shop, Boucherie des ArĂȘnes, on rue Monge in the fancy 5th arrondissement of Paris, roll their tongues around unfamiliar-sounding English words these days to describe their offerings of Porc Noir de Bigorre or Boeuf de race Parthenaise.

“We have an increasing number of English-speaking clients,” said Nathalie. “They don’t even try to speak French; they launch straight away into English and we’ve had to adapt. There are two of us speaking English in the butcher shop, which is obviously a good thing.” She’s now working on boosting her employees’ English skills.

Florence Charlet, a 46-year-old hairdresser at Thomas C Coiffure in Paris’s fashionable 8th arrondissement, has a similar tale to tell. “We’re having to speak English more and more,” she said. “The last hairdresser I hired had to speak English—it’s a required skill.”
It reminds me of that time my mum visited a Lancel boutique with me in 1994. Back then, having English and Mandarin speakers was a novelty, but there were already a few of them even back then. Now, you see an encroachment into other aspects of French (or more accurately Parisian) commercial life not necessarily geared towards tourists but French-challenged residents.

Times have changed when the French finally relent on speaking English as a commercial necessity, but apparently you don't even need Macron to convince more than a few.

Make no mistake: the British are coming to Paris.

Why are US Firms Lame in 5G?

♠ Posted by Emmanuel in ,, at 4/22/2019 04:01:00 PM
By failing to conform to GSM--the global telecoms standard--the US fell well behind the leading edge..
Recent times have witnessed the United States trying to stop Chinese telecommunications equipment manufacturers--most notably Huawei--from gaining market share abroad. The ostensible purpose is that the United States is concerned about Huawei and the rest accommodating Communist Party wishes to spy on other countries. If government buyers of this gear were to install Huawei gear, the explanation goes, it would make them vulnerable to Chinese spying that would hinder US intelligence cooperation.

But what American gear does the United States offer instead for those wanting to buy next-generation telecommunications equipment? Therein lies the rub: the United States does not have any vendor of gear that is as advanced as Huawei's. In 5G, the United States is arguably a laggard not because the government interfered too much but rather because it left the industry to its own devices, as the South China Morning Post explains:
How exactly did the US go from being the leader of modern telephony to also-ran within a matter of decades, allowing a Chinese company to become the 5G leader today?[...]

Experts and former US telecoms employees point to the confluence of several factors that ultimately led to the downfall of the industry, including its deregulation in 1996 and the lack of national mobile standards. Europe had already mandated the use of the GSM mobile network standard in 1987. US regulators, however, allowed carriers to go with whatever mobile standard they preferred. US carriers Verizon and Sprint chose to offer services using the CDMA mobile standard, developed by US firm Qualcomm – which operates on different frequencies to GSM, which AT&T and T-Mobile adopted.

Consumers who subscribed to a Verizon carrier, for example, would likely have to switch handsets if they wanted to change providers, as a device configured for CDMA might not run on a network supporting GSM. “In the US there were wireless networks like TDMA, CDMA and GSM, and any carrier could choose any of those if they thought that it would be best for their own growth plan … the US was like the Wild West,” said Thomas J. Lauria, a former AT&T employee, telecoms analyst as well as the author of the book The Fall of Telecom. “Europe managed itself more contiguously than the US, they did not have a lot of disparate networks and picked the [GSM] standard that everyone had to agree to.” 
The government not insisting on standards was made worse by industry deregulation encouraging the adoption of multiple standards without penalty. They did not think highly of the European GSM effort [which established standards for 2G, 3G, 4G, 5G and so on]:
The existence of multiple mobile standards in one market was further encouraged by the deregulation of the US industry under the Telecommunications Act of 1996, in which the US opened up the market, removing the monopoly that AT&T had on phone services and allowing smaller carriers to sprout. The entry of multiple service providers, all of whom were free to adopt different standards, was at the beginning viewed as beneficial for consumers and the industry as a whole. AT&T spun off its equipment division into what became known as Lucent Technologies, which thereafter listed on the New York Stock Exchange and raised US$3 billion in its initial public offering – then the largest ever in American history.

Lucent’s revenues grew rapidly by providing new entrants with networking equipment, and initially offered a variety of products compatible with different mobile standards, including CDMA, TDMA, GSM and AMPS. But multiple standards also meant that it was difficult to achieve economies of scale, so Lucent eventually bet on CDMA and UMTS – neither of which took off in Europe and most of Asia, costing it expansion opportunities in international markets.

“The US vendors were not convinced that GSM would become a global standard,” said Bengt Nordstrom, chief executive of Stockholm-based consultancy Northstream. “Instead, they supported all the technical standards in the US for their customers there. In many aspects, the era from the early 1990s to mid 2000s was lost time for the US mobile industry.” “From a US perspective and mentality, it is hard to understand why a technology not coming from the US should be better,” he added.
I have an issue with the pro-government intervention argument in that the US federal government could have insisted on a standard which ultimately lost out in the global market. Still, the episode does point out the downsides to allowing a fast-moving industry too much leeway in deregulating and tolerating the proliferation of incompatible standards. The end result is what we have today: Americans telling people not to buy Chinese 5G gear to which US-based companies offer no real alternatives. 

US to WTO: China Isn't a Developing Country

♠ Posted by Emmanuel in , at 4/09/2019 10:44:00 AM
If Trump had his way, the WTO would have far fewer "developing countries." (China wouldn't be one, of course.)
There's an interesting fight going on at the WTO on the classification of developing countries as, well, developing countries. The Trump administration--never a fan of multilateral organizations like the WTO to begin with--wants fewer countries to be classified as such. At present, about two-third of WTO member countries have this status, and together with it, special and differential treatment (SD&T). SD&T allows preferences for developing countries that developed countries do not have such as a longer time frame for meeting WTO commitments or subsidizing their agricultural industries. From America's point of view [or is that Trump's?], this abuse has gone on for far too long.

On the other hand, China wants to keep this designation despite becoming the world's second-largest economy. From the South China Morning Post:
China will refuse to give up the “special and differential treatment” it enjoys as a developing nation at the World Trade Organisation, in a rebuke to a US proposal that would pare back the privileges China and other nations enjoy on trade. China is categorised as a developing country at the Geneva-based institution, which affords it “special and differential treatment”. This enables China to provide subsidies in agriculture and set higher barriers to market entry than more developed economies.

The dispute reflects a fundamental divide within the WTO that has threatened the future of the global multilateral trading system. The United States has long complained that too many WTO members – about two-thirds – define themselves as developing countries to take advantage of the terms the status permits them to trade under.
Allowing WTO members to classify themselves as developing countries to avail of SD&T is the latest American grievance against the WTO:
China, India, South Africa and Venezuela have opposed a US proposal to reform the “special and differential treatment”, published earlier this year. The four have already submitted a paper to the WTO saying that the self-classification of developing member status has been a long-standing practice and best serves the WTO’s objectives.

The joint letter also claims that many WTO rules have actually favoured the US and other developed countries, in the areas of agricultural support, textile quotas and intellectual property rights protection.
Unless other wealthy countries jion with the United States it's hard to see how the US gets traction on this issue in the medium term. 

NOPEC: Will Saudis Deny USD Oil Payment?

♠ Posted by Emmanuel in ,, at 4/05/2019 04:03:00 PM
Here's some news important to the study of IPE that has been flying under the radar. American lawmakers have, since the turn of the millennium, been contemplating passage of a "NOPEC" law removing the immunity of nations from American antitrust laws. As the name implies, the main target is collusion on setting global oil prices by OPEC member countries. In response to the Trump administration's increasing browbeating about high oil prices and OPEC's role in causing them, Saudi Arabia has come up with a potentially consequential strategy. That is, the Saudis will begin pricing their oil in a currency other than US dollars:
Saudi Arabia is threatening to sell its oil in currencies other than the dollar if Washington passes a bill exposing OPEC members to U.S. antitrust lawsuits, three sources familiar with Saudi energy policy said.

They said the option had been discussed internally by senior Saudi energy officials in recent months. Two of the sources said the plan had been discussed with OPEC members and one source briefed on Saudi oil policy said Riyadh had also communicated the threat to senior U.S. energy officials.The chances of the U.S. bill known as NOPEC coming into force are slim and Saudi Arabia would be unlikely to follow through, but the fact Riyadh is considering such a drastic step is a sign of the kingdom’s annoyance about potential U.S. legal challenges to OPEC.

In the unlikely event Riyadh were to ditch the dollar, it would undermine the its status as the world’s main reserve currency, reduce Washington’s clout in global trade and weaken its ability to enforce sanctions on nation states.

“The Saudis know they have the dollar as the nuclear option,” one of the sources familiar with the matter said.“The Saudis say: let the Americans pass NOPEC and it would be the U.S. economy that would fall apart,” another source said. 
Despite being a dollar bear, I am unsure if the Saudis denominating oil sales in another currency would be the proximate cause of the dollar becoming an even less dominant currency worldwide. At any rate, here's a NOPEC description:
NOPEC, or the No Oil Producing and Exporting Cartels Act, was first introduced in 2000 and aims to remove sovereign immunity from U.S. antitrust law, paving the way for OPEC states to be sued for curbing output in a bid to raise oil prices.

While the bill has never made it into law despite numerous attempts, the legislation has gained momentum since U.S. President Donald Trump came to office. Trump said he backed NOPEC in a book published in 2011 before he was elected, though he not has not voiced support for NOPEC as president.

Trump has instead stressed the importance of U.S-Saudi relations, including sales of U.S. military equipment, even after the killing of journalist Jamal Khashoggi last year. A move by Saudi Arabia to ditch the dollar would resonate well with big non-OPEC oil producers such as Russia as well as major consumers China and the European Union, which have been calling for moves to diversify global trade away from the dollar to dilute U.S. influence over the world economy.
It could be potentially exciting, eh? The real question for me is what would cause such a dramatic rupture in US-Saudi relations that the Arabs would stop pricing oil in USD. Still, I do not think the economic consequences for the dollar would be catastrophic. If many others follow suit, though, then we may be on the cusp of a whole new international political economy (though I doubt it).

WTO ‘National Security’ Ruling Meets Trump

♠ Posted by Emmanuel in , at 3/30/2019 07:36:00 PM
From Crimea to America: considering the plight of "national security" trade barriers.
Here's a heads-up for everyone; over the next few days, the World Trade Organization is expected to rule over Russia hitting the Ukraine with trade sanctions on "national security" grounds [DS512]. In the past, such claims were considered unquestionable by the WTO. However, the expectation now is that the WTO will rule against Russia and in favor of the Ukraine.

You should be asking by now, "What do Russia-Ukraine 'national security' dust-ups have to do with the United States?" Well, it sets a precedent for the WTO proceeding with cases having to do with national security and ruling in favor of the complainant. And, insofar as the United States has hit so many of its trade partners with such claims for limiting imports, the WTO's change of heart would render the US vulnerable to a world...of hurt:
The World Trade Organization is set to rule for the first time on a dispute involving a member’s national security, challenging a key justification for President Donald Trump’s tariffs and putting the arbiter of international trade conflicts on a collision course with the U.S. The WTO will issue a ruling on a case in which Russia imposed trade restrictions on Ukraine, saying they were necessary in the interest of national security, according to an official with knowledge of the report who asked not to be named because the process is private.

The decision could still be appealed or settled outside of the WTO. The ruling confirms the WTO’s authority to determine whether such measures are necessary to protect a country’s security.
The ruling could set up a showdown as US trade partners take it to the WTO dispute settlement mechanism over similar "national security" tariffs:
A WTO ruling on the Russia dispute could force the U.S. to justify why the European Union, Canada, Mexico and a half-dozen other nations that have filed disputes against Trump’s metal tariffs, pose a security threat. “The fact that the panel is actually going to engage in an inquiry of whether there is basis for these national security measures means things are looking really bleak for the U.S.” Nicolas Lamp, a former dispute settlement attorney at the WTO, said in an interview on Wednesday. “For the U.S., this finding could confirm all their worst fears about the WTO.”
To be sure, the isolationist-nationalist Trump would like nothing more than to pull the US out of the WTO, and being taken to court there over "national security" could be the last straw. Then again, Trump is still not the United States, and there may be a more united pushback from the business community and business-minded legislators if Trump threatens WTO withdrawal.

At any rate, the fate of the WTO is going to be shaped a lot over the next few days. Stay tuned.

Grindr, a US National Security Threat

♠ Posted by Emmanuel in ,, at 3/27/2019 04:07:00 PM
Fat, old guys like Trump and Xi need not apply on Grindr, but their geopolitics still shape the app's governance.
Never let it be said that American protectionism was always staid. As it turns out, the Committee On Foreign Investment in the United States (CFIUS) is now forcing the divestment of the gay dating app Grindr by its Chinese owners who bought the service in 2016. It may sound strange, but it's true: gay bureaucrats on Grindr appear to be a security concern since they may disclose too much about their employment to boys they meet [hunky PRC spy guys, mayhaps?] in this Chinese-owned digital playground:
Chinese gaming company Beijing Kunlun Tech Co Ltd is seeking to sell Grindr LLC, the popular gay dating app it has owned since 2016, after a U.S. government national security panel raised concerns about its ownership, according to people familiar with the matter.

The Committee on Foreign Investment in the United States (CFIUS) has informed Kunlun that its ownership of West Hollywood, California-based Grindr constitutes a national security risk, the two sources said.

CFIUS’ specific concerns and whether any attempt was made to mitigate them could not be learned. The United States has been increasingly scrutinizing app developers over the safety of personal data they handle, especially if some of it involves U.S. military or intelligence personnel.

Kunlun had said last August it was preparing for an initial public offering (IPO) of Grindr. As a result of CFIUS’ intervention, Kunlun has now shifted its focus to an auction process to sell Grindr outright, given that the IPO would have kept Grindr under Kunlun’s control for a longer period of time, the sources said.
 The grounds for the CFIUS forcing divestment are unknown, but we can pretty much guess the general rationales based on other FDI transactions involving the Chinese and personal data that have been proscribed:
CFIUS’ intervention in the Grindr deal underscores its focus on the safety of personal data, after it blocked the acquisitions of U.S. money transfer company MoneyGram International Inc and mobile marketing firm AppLovin by Chinese bidders in the last two years.

CFIUS does not always reveal the reasons it chooses to block a deal to the companies involved, as doing so could potentially reveal classified conclusions by U.S. agencies, said Jason Waite, a partner at law firm Alston & Bird LLP focusing on the regulatory aspects of international trade and investment. 
My belief is that it's the most pathetic American excuse for protectionism yet, but your mileage may vary.

Will Boeing's 737 Ground US-China Trade Talks?

♠ Posted by Emmanuel in , at 3/20/2019 05:19:00 PM
The only thing being "maxed" around here are US-China trade tensions.
It's a major embarrassment for the mainstay product of the United States' largest exporter of manufactures to be grounded worldwide. Remember, though, that Chinese aviation authorities were among the first to do so. Boeing's workhorse model, the 737, has had teething problems with the rollout of its latest edition, the Max 8 and 9. Worse still, the two recent crashes of the plane appear to have been caused by similar factors, shifting the likelihood of blame away from pilot error to the software of the plane.

Now, we learn that not only is the Boeing 737 Max a global aviation concern, but also one that could ground US-China trade talks. You see, one of the quicker ways to "bridge" the enormous US-China trade imbalance is for the PRC to buy big-ticket items, and few come more expensive than state-of-the-art jetliners. Unfortunately, though, the Chinese understandably balking at purchasing more 737s--these are meant more for the domestic market--may cause wider damage to trade negotiations:
China’s move to ground Boeing Co’s 737 MAX jetliners following the deadly Ethiopian Airlines crash has cast a shadow over the American planemaker’s immediate hopes for a major jet order linked to a U.S.-China trade deal, industry sources said...

Evidence of a major potential order for more than 100 jets worth well over $10 billion at list prices had risen in recent weeks as Washington and Beijing reported some progress in trade talks to resolve a months-long trade war.

Those expectations were fanned by signs of pent-up demand stemming not only from a drop in China’s public purchases as the two sides descended into a tariff war, but also because China placed no private orders for Boeing aircraft in 2018, according to trade and industry sources familiar with the matter. Now, those sources say it is uncertain how quickly China will be willing to give the 737 MAX the expected new endorsement after ordering its own airlines to stop flying the jet
Also keep in mind that the Chinese are busy rolling out their own Boeing 737 / Airbus A320 competitor, the COMAC C919. To burnish its reputation for safety, especially among PRC nationals, it may be worth denigrating the Boeing 737 as unsafe such as by canceling orders originally meant to appease the trade-crazed Donald Trump:
China may now see an opening to establish itself as more of a leader in the aerospace industry, having already embarrassed the Federal Aviation Administration by leading a global charge to ground the Max that left the U.S. regulator isolated in its defense of the plane’s airworthiness and nearly the last of its brethren to temporarily ban the jet from commercial flight. China may be wont to relinquish its newfound role as a champion of safety, particularly as Comac prepares to drive a wedge in the Boeing-Airbus duopoly with the roll-out of its C919 in 2021. China says the plane — which can fit up to 168 passengers, similar to the Max 8 plane implicated in the crashes — has more than 800 orders worldwide.
In any event, this latest brouhaha over the 737 Max surely does not look like it's helping to bring current trade talks to a successful conclusion. After all, what else big-ticket goods are still made in the USA that the Chinese would buy lots and lots of?

Did PRC Cave In to Trump on Knowledge Transfer?

♠ Posted by Emmanuel in ,, at 3/15/2019 12:20:00 PM
All hail great American leader Trump! Sort of.

One of the main grievances the United States has had about Chinese trade practices concerns requiring knowledge transfer to domestic firms. To Westerners, such provisions are increasingly questionable intrusions on their intellectual property rights at a time when PRC firms are not so far behind their developed-world counterparts or even surpass their knowledge in certain respects like in 5G.

It is certainly up for debate whether China or the United States is being hurt the most amid Trump's ongoing tariff-slapping frenzy, but that the Chinese are eager to have these tariffs removed is beyond any doubt. We recently received evidence of this assertion with their "legislature" quickly passing a law watering down these technology transfer requirements:
The National People's Congress voted 2,929 in favour of the law -- with eight against and eight abstentions -- barely three months after a first draft was debated, an unusually quick turnaround for the legislature, which meets once a year. The move comes as US and Chinese negotiators hold complex talks aimed at resolving a months-long trade war that has pounded businesses with tariffs on $360 billion in two-way commerce.
Although the specifics are not yet definitive, the rough outlines appear to be like so:
China will also amend its intellectual property law and "introduce a punitive damages mechanism to ensure that all infringements will be seriously dealt with", Chinese Premier Li Keqiang told reporters at the end of the parliament's two-week session. The changes will "ensure violators have no place to hide", he said. 

Under the bill, foreign investors will enjoy the same privileges as Chinese companies in most sectors, except those placed on "negative lists", officials say.
That said, foreign investors are still, rightly, more concerned with how these IP law changes are implemented than what is written on paper:
Tim Stratford, chairman of the American Chamber of Commerce in China, said "the last minute efforts are appreciated". But, he added, the changes "only address a small slice of the overall set of concerns our members have about the uneven playing field foreign companies encounter in China".

The chamber was concerned about vague language in provisions that allowed local governments to expropriate investments that "harm public interest" and the inability to appeal against the outcome of national security reviews.

Jacob Parker, Beijing-based vice president at the US-China Business Council, welcomed the "positive language" in the bill but added that "real investment on the ground will depend on how narrowly tailored those negative lists are going forward".

Businesses are still concerned that industry-specific laws and local administrative approvals may impede full market access despite provisions in the negative list.
As always, implementation is going to be more important to foreign investors as to whether their longstanding IP concerns are met or otherwise. And, I suspect this story will continue long after Trump has departed the scene. 

Did US Win Big Over PRC Ag @ WTO?

♠ Posted by Emmanuel in ,, at 3/12/2019 02:31:00 PM
There was actually a  (pre-Trump) time when the "WTO court" actually functioned. But no longer.
In case you missed it, the WTO recently ruled against Chinese agricultural subsidies that the United States complained about. Note this case, DS511, predates the Trump administration and was originally during that of his predecessor, Barack Obama. Given that China is a huge market for foodstuffs--they need to feed 1.4 billion folks--it's a pretty big deal for those who hope to export agricultural products to China. Unbeknownst to most of the rest of us, China is by now actually the biggest agricultural subsidizer of them all--no mean feat considering that list includes wealthy areas like the United States and the European Union:

Kristen Hopewell of Edinburgh University explains:
China is now the world’s largest subsidizer of agriculture — Beijing provided an estimated $212 billion in farm subsidies in 2016, significantly more than the European Union ($100 billion), United States ($33 billion) or any other country.

Subsidies now make up a significant portion of earnings for Chinese farmers, accounting for 38 percent of their revenue for wheat, 29 percent for corn and 32 percent for rice. By comparison, U.S. subsidies constitute 8 percent of U.S. farm earnings for wheat, 4 percent for corn and 2 percent for rice.

Beijing’s support to China’s agriculture sector includes government purchases at above-market prices, as well as market price support programs, where farmers receive a direct payment from the government if market prices fall below a minimum set price.
China's pattern of accumulating massive stockpiles of agricultural products and then dumping these at presumably below-market prices would represent a massive distortion to global agricultural markets:
And there’s another issue: China’s policy of supporting producers by purchasing agricultural commodities at above-market prices has led to the accumulation of massive government stockpiles. By 2016, China had amassed 60 percent of the world’s cotton supplies, over 50 percent of its corn, 40 percent of wheat and 21 percent of soybeans.

To dispose of these large stocks, the government periodically auctions them off at below-acquisition cost. Analysts believe China’s policies exert “a colossal influence” on world prices, given the size of its state reserves. A mass sell-off from China’s sugar reserves in 2016, for example, helped to push the global price of sugar down by almost a quarter.
But, as with most things happening under the Trump administration, there's a catch which alludes to the post title: Is the US "winning big" against China with this ruling going forward? Ironically, the Trump administration's ongoing efforts to kill the WTO by starving its judicial system of appeals court judges may soon backfire: All China needs to seemingly do is appeal the case and it will come to a standstill since there will be insufficient numbers of appeals court judges to make an appeals ruling on this case...or any WTO appeals case for that matter:
But the Appellate Body, well, is short of bodies. The Trump administration has been blocking all appointments to the Appellate Body as the terms of its current judges expire. The Appellate Body has been reduced to three judges — the minimum needed to adjudicate a dispute — with the remaining four of its seven seats vacant.

Two of those judges will reach the end of their terms in December [2020], leaving the Appellate Body without enough judges to review cases.

And once an appeal is lodged, a dispute settlement panel decision remains blocked until the decision of the Appellate Body. This means that without a functioning Appellate Body, China may be able to simply block the WTO ruling on its agricultural subsidies, placing the case in legal limbo.
Talk about shooting yourself in the foot: the United States--or at least the Barack Obama-era remnants of it--secure a famous victory at the WTO. However, the Trump administration, in its haste to render the WTO ineffective since it hates all kinds of multilateral institutions, has made enforcement of this ruling unlikely to happen.

Once more, good job, Trumpy (with a hat tip to trade-o-phobe USTR Robert Lighthizer). 

Techlash: Huawei Strikes Back at Canada, US

♠ Posted by Emmanuel in ,, at 3/04/2019 02:37:00 PM

I suppose the headlines Huawei garners is related to what's at stake with 5G coming into wider commercial use. Will China be able to capitalize on its little-doubted technical advantage in 5G, or will the US be able to negate this advantage by getting its allies to boycott PC 5G gear over "security" concerns? Previously we talked about its attempts to use soft power--gaining influence not through the use of coercion but rather through attraction. Apparently, though, there are limits to the Huawei folks' patience with trying to win friends and influence people. Not having been very successful swaying North American (US and Canadian) public opinion, Huawei is now resorting to old-fashioned litigation.

In Canada, detained CFO Meng Wanzhou's lawyers intend to sue the government with her extradition to the United States imminent:
Ms Meng's claim - filed in British Columbia's Supreme Court on Friday - seeks damages against the Royal Canadian Mounted Police (RCMP), Canadian Border Services Agency (CBSA) and the federal government for allegedly breaching her civil rights under Canada's Charter of Rights and Freedoms. She says CBSA officers held, searched and questioned her at the airport under false pretences before she was arrested by the RCMP.

Her detention was "unlawful" and "arbitrary", the suit says, and officers "intentionally failed to advise her of the true reasons for her detention, her right to counsel, and her right to silence".
And speaking of the Yanks, Huawei is also preparing a case in US of A aimed at restrictions on federal purchases of its gear over alleged spying concerns:
The Chinese electronics giant Huawei is preparing to sue the United States government for banning federal agencies from using the company’s products, according to two people familiar with the matter.

The lawsuit is due to be filed in the Eastern District of Texas, where Huawei has its American headquarters, according to the people, who requested anonymity to discuss confidential plans. The company plans to announce the suit later this week.

The move could be aimed at forcing the United States government to more publicly make its case against the Chinese equipment maker. It is part of a broad push by Huawei to defend itself against a campaign led by the United States to undermine the company, which Washington sees as a security threat. Executives have spoken out strongly against America’s actions, and new marketing campaigns have been aimed at mending the company’s image among consumers.
I don't think that Huawei actually expects the federal ban on purchases of Huawei telecoms gear to be overturned. Rather, it's an effort intended to force the US government to identify rationales for banning Huawei from federal procurement. Once identified, these rationales could serve the basis for further PRC legal action against the United States. You do have to wonder though how much mileage legal action will get them, or whether public opinion only turns more against them in North America. (PRC) heavy-handed actions do not necessarily right (North American) heavy-handed actions. 

Huawei’s Soft Power Charm Offensive

♠ Posted by Emmanuel in ,, at 2/25/2019 03:51:00 PM
With the United States portraying Chinese telecommunications gear manufacturer Huawei as the devil incarnate seeking to infiltrate the rest of the world, a Huawei pushback was perhaps inevitable. But the question is, how exactly do you counter the American accusations of large-scale PRC espionage being facilitated by this seller of telecoms equipment? It appears that tactics differ based on the audience in question.

Canada, where the Huawei CFO has been detained by officials for violating US-led sanctions on Iran, is receiving ads that refrain from suggesting anything unusual is going on with Canada-PRC relations (like, say, putting Canadian citizens on death row in retribution). Soft power it is, then:
As a nasty diplomatic feud deepens between the two countries over the tech company, involving arrests and execution orders, it hasn’t gone unnoticed that Huawei’s bright red fan-shaped logo is plastered prominently on the set of “Hockey Night in Canada.” TV hosts regularly remind the 1.8 million weekly viewers that program segments are “presented by Huawei smartphones.”

The cheery corporate message contrasts with the standoff over the arrest of Huawei Chief Financial Officer Meng Wanzhou on a U.S. warrant. In what looks like retaliation, China detained two Canadians and plans to execute a third — heavy-handed tactics that, because they leave some Canadians with the impression the privately owned company is an arm of the Chinese government, give its sponsorship a surreal quality.
What's at stake here commercially speaking is substantial, and is no less than the future of technology. Huawei is advanced in the manufacture of 5G gear that will undergird the next generation of telecoms equipment. However, the United States is trying to convince everyone else that it's a "Trojan horse" for china's Communist Party to infiltrate global networks for sinister purposes.

Hence, the public relations contest is ramping up:
The TV deal is one of many examples of how Huawei, the world’s biggest telecom gear producer and one of the top smartphone makers, has embarked on a global push to win consumers and burnish its brand. It sponsors Australian rugby, funds research at universities around the world, and brings foreign students to China for technical training. It has promoted classical music concerts in Europe and donated pianos to New Zealand schools.

Its efforts are now threatened by the dispute with Canada and U.S. accusations that it could help China’s authoritarian government spy on people around the world. “Huawei’s marketing plan up until Dec. 1 (when Meng was arrested) was working very well,” said Guy Saint-Jacques, a former Canadian ambassador to China. Now, “public opinion is changing toward China and Huawei.”

At stake for Huawei are lucrative contracts to provide new superfast mobile networks called 5G. The U.S. says Meng helped break sanctions and accuses Huawei of stealing trade secrets. It also says the company could let the Chinese government tap its networks, which in the case of 5G would cover massive amounts of consumer data worldwide. U.S. Secretary of State Mike Pompeo pressed that point to European allies on a tour this week.
5G is a challenge to American technological dominance; that much is apparent from the alarm raised by US government officialdom. What I would like to know, though, is the alternative proposed by the Yanks. How can the rest of the world meet their technology upgrading needs with non-Huawei (or ZTE for that matter) gear? Are there other European, American or non-Chinese Asian suppliers they recommend instead? It seems to me that this round of technological upgrading from the American standpoint is not so much about the benefits on offer but about bashing manufactures from a particular nation. That is, the framing is almost entirely negative about the downsides of buying Chinese without identifying upsides of not doing so.

It's in this respect where Huawei can accentuate the positives for 5G adoption and contrast such a message with the relentlessly dour American vision of technological apocalypse. After all, soft power is about persuading through attraction instead of (obtuse) threats the Yanks are brandishing nowadays.

Fat-Shaming & Debt-Shaming Undisciplined Yanks

♠ Posted by Emmanuel in , at 2/20/2019 02:52:00 PM
Oink, oink: Can the archetypal American Porker-in-Chief be fat-shamed...and debt-shamed, too?
It was perhaps inevitable that the lard-assed American President Donald Trump would be medically classified as obese sooner or later. And so it was that we recently received news that he is clinically obese. In this case at least, Trump exudes the true American spirit in being really, really fat: nearly 40% of his countrymen have the same kind of bulbous, fat-laden Jabba-esque physique. In a previous post, I have made the obvious connection between American health indiscipline and fiscal indiscipline. That is, American super-indebtedness and super-obesity originate from the same place, which is a lack of self-regulation.

What is the rest of the world to do with exploding American deficits as health spending on these  fatsos shoots into orbit? The estimated annual medical cost of obesity in the United States was $147 billion in 2008 US dollars; the medical cost for people who have obesity was $1,429 higher than those of normal weight [article here]. Ultimately, the rest of the world is paying the price for American obesity when it props up American indebtedness through the purchase of US Treasuries.

An interesting suggestion in the Atlantic argues that Americans have not been fat-shamed enough, resulting in a smug self-satisfaction about wallowing in pools of cellulite. Take, for instance, the social stigmatization of smoking that seems to have done wonders for forcing many folks to quite:
People don't hate being fat enough, basically, according to Hastings Center bioethicist Daniel Callahan. In an editorial published in the Hastings Center Report, he argues that nothing -- not diets, drugs, sugeries, nor appeals to our health -- is working, and goes on to make the case for fat-shaming people until they start eating more salad.

"An edgier strategy is needed," is his (earnest and entirely devoid of irony) way of putting it. The edgy strategy he came up with entails "social pressure combined with vigorous government action." Callahan likens it to the campaign to end smoking: The combination, in his experience, of being criticized, sent outside, and taxed for his "nasty habit" was the motivation he needed to quit. "The force of being shamed and beat upon socially," he writes, "was as persuasive for me to stop smoking as the threats to my health."
Trump is famously shameless; he's a lardbucket who's insulted any number of other people as fat despite his massive girth. However, it does make for an interesting idea: if Trump is so fat because he hasn't been fat-shamed enough, can the rest of the world debt-shame the United States? While the best solution from my perspective is to simply stop appeasing these debt-addled porkers altogether to instill discipline, maybe they haven't been shamed enough about their profligate ways that's causing this debt hemorrhage.

With a 40% obesity rate or so and $22 trillion in debt and counting, the rest of the world could surely do better in instilling discipline into these undisciplined Yanks. It is no mere coincidence that both American medical and fiscal are deteriorating rapidly with their poster boy, Donald Trump.

Development Debacle: Malpass for World Bank President

♠ Posted by Emmanuel in , at 2/11/2019 09:38:00 AM
Alumni of long-gone Bear Stearns and global financial crisis denier circa 2007: Meet David Malpass.
The abrupt resignation of Jim Yong Kim as World Bank president has opened up a lot of old wounds, especially now in the Trump era. If you will recall, there was a big brouhaha over the United States still getting to nominate its president. In an arrangement that's a throwback to when Western countries dominated the global political economy, the US still gets the right to select the World Bank's leader, while the Europeans still do so for the IMF's leader. The Obama administration's choice of the departed Kim was meant to be a partial appeasement to developing countries wanting more say in a body whose activities do affect them. Sure, he was an American, but he was a Korean-American immigrant.

Let's just say that Trump is the least international and the most US-centric American leader in a long time. So, he's unsurprisingly scotched any attempts to appoint a non-white or non-American to lead the World Bank despite his suspicion of all multilateral institutions:
Kim’s abrupt resignation leaves Donald Trump with the opportunity to appoint a successor. He could turn to Bulgarian national Kristalina Georgieva, the bank’s chief executive, who will take over as interim president when Kim leaves. The much-respected official was a European commissioner and EU finance chief before moving to Washington.

Before Kim took over, the bank laid down criteria for appointing future presidents, which were designed to exclude officials with little experience of running large organisations or who lacked relevant experience, especially in the developing world. However, Trump is expected to use his effective power of veto to make sure a close adviser or a sympathetic political figure takes over.
So Trump is going ahead and contravening new World Bank presidential selection criteria by nominating someone, er, unfamiliar with running large international organizations and development work in David Malpass. This fellow is a proud America-firster like Trump:
Donald Trump confirmed his choice on Wednesday that the World Bank should be led by the US treasury official David Malpass, a Trump loyalist and critic of such multilateral institutions who has vowed to pursue “pro-growth” reforms at the global lender.

Trump’s nomination of Malpass, the treasury department’s top diplomat, is subject to a vote by the World Bank’s executive board and could draw challengers from some of the bank’s 188 other shareholding countries...

Malpass, treasury undersecretary for international affairs, has criticized the World Bank and other multilateral institutions for growing larger, and becoming more “intrusive” and “entrenched”, and targeted the bank for its continued lending to China, a country he sees as too wealthy for such aid.
Recall the last time an American president chose a controversial conservative figure to head the World Bank: George W. Bush selected the short-tenured Paul Wolfowitz, an architect of the ill-fated 2003 invasion of Iraq. Instead of blowing up other countries for no good reason, Malpass to his credit only failed to see how the Bush administration was blowing up the world economy. Malpass is a another conservative with extreme views, having been a chief economist at the ill-fated Bear Stearns who declared in so many words that there was no financial crisis brewing Stateside right before ti hit:
"Housing and debt markets are not that big a part of the US economy, or of job creation," Mr Malpass wrote before the impending economic crisis. "It's more likely the economy is sturdy and will grow solidly in coming months, and perhaps years."

The New York Times also criticised Mr Malpass for that and other Wall Street Journal articles, saying partisan bias towards Republican policy by economists had "unquestionably contributed to their forecast errors".
While it's true that other nominees may be put forward by other countries--especially developing ones--there is some doubt as to whether they would have meaningful chances at obtaining the World Bank's top job absent the support of the United States given its historical dominance of the institution. I also don't see much of a rallying cry to appoint a leader from the developing world this time. Perhaps we've become disenchanted with the whole process after what happened with Kim's victory under a far more progressive American president in Barack Obama.

Trump's worldview is prehistoric and his candidate is positively Neanderthal, but if everyone's fed up with the World Bank presidential selection process, it's going to be the same old story all over again.

Brexit or Not, London Loses Financial Centre Role

♠ Posted by Emmanuel in , at 2/10/2019 04:24:00 PM
This place used to compete with New York as the world's financial capital. No more.
I used to snicker whenever CNBC used to announce that it was broadcasting from New York, the "financial capital of the world."  In many respects, London held that honor well into the 21st century despite the United Kingdom long, long ago ceding global influence to the United States. Last year, the Global Centre Financial Index (GCFI) ranked New York ever-so-slightly ahead of London, with the rest of the pack catching up on these two.

If the end of Rule Britannia did not end London's role as the world's capital for finance, the 2016 referendum aftermath's result to leave the European Union has put paid to that status for good. You see, most of haute finance's titans circa 2019 are not sticking around to see the end of the sorry Brexit melodrama. They've had it and are packing their bags for continental Europe which is, er, actually still part of the European Union:
The world’s biggest investment banks will not reverse plans to shift billions of dollars and thousands of jobs out of the UK even if Britain ends up staying in the European Union, senior bank executives and people with knowledge of the plans revealed to Financial News.

In a big blow to the City, at least eight of the largest investment banks in London, including Bank of America Merrill Lynch, Citigroup, Goldman Sachs and JPMorgan, have said they will shift a significant proportion of their operations to Europe irrespective of the outcome of Brexit.

The move would harm the City of London’s status as a global financial centre. Banks are already preparing to move hundreds of billions of dollars from London to the continent after Brexit. Deutsche Bank is reportedly set to shift €400bn from its balance sheet to Frankfurt, while JPMorgan will move €200bn to the German city.
The marginalization of London will continue whatever the endgame for Brexit since, having already decided, banks will not be coming back whatever happens. What's more, hiring will more often occur where they will be in the future, i.e., continental Europe:
Longer term, bank executives say Brexit will change the way they recruit staff. “London would have been the natural choice to hire new bankers. Now, after the investment we’ve made in Europe, if someone leaves in the UK or we want to recruit someone, we’re just as likely to base them in Frankfurt or Paris,” said one European chief executive of a US investment bank.

Banks are unlikely to move people back in the event Brexit is overturned, said Jenni Hibbert, global practice managing partner at Heidrick & Struggles Financial Services, the recruiter. “If they do, it won’t happen overnight”, given the cost and effort involved.

The damage inflicted in the Square Mile will be permanent, said another head of investment banking. “London as a financial centre will remain, but will be severely diminished.”
Times are changing. Just as Little Englanders carried the day during the Brexit referendum, so it's fitting that the UK is left with a Lilliputian financial services sector to match its citizens' backward- and inward-looking proclivities. Frankfurt, Paris, parts unknown are calling...

The EU Vehicle to Evade US Sanctions on Iran

♠ Posted by Emmanuel in , at 1/31/2019 07:29:00 AM

Recently, the Trump administration's intelligence officials testified to Congress. In so doing, they contradicted the American president's beliefs and positions again and again. Being ever so shameless, Trump in so many words said these appointees of his were wrong and he was right on Syria, ISIS, North Korea, Iran, etc. For this post, US sanctions on Iran are of particular interest since--as far as the American spooks can tell--Iran has not violated the terms of JCPOA. That is, the agreement the US pulled out of in order to reimpose sanctions on Iran has been faithfully followed even after America, not Iran, reneged on the deal not to enrich uranium:
Europe has remained united in its support for the Iran nuclear deal. Germany, France and Britain maintain that Iran has complied with the deal’s conditions and that the agreement is the best way to prevent Iran from building nuclear weapons. In the Worldwide Threat Assessment report that was presented by Coats and other intelligence officials, U.S. officials appear to agree with prior analyses by their European counterparts, writing that Iran is not attempting to build a nuclear weapon. That assessment raises questions over the basis for Trump’s claim in May that Iran was seeking nuclear weapons.
We've been waiting for the Europeans to do something about this matter. Since they view continuing Iranian compliance as something worth living up to in keeping JCPOA alive, they have been trying to figure out how to keep trading with Iran by shielding European firms from American sanctions. Henee the special purpose vehicle (SPV) they soon intend to put into operation. The SPV would buttress the EU's efforts to get European firms not to comply with US sanctions without consulting Brussels first:
Germany’s foreign minister says the European Union is on the verge of setting up an alternative channel to send money to Iran that would side-step U.S. sanctions against the Islamic republic. Foreign Minister Heiko Maas said Monday that Germany has been working notably with Britain and France but also other EU partners in recent months to set up the “special purpose vehicle.”

He says their aim is to ensure that “business not sanctioned by the U.S. can be upheld, and there is a suitable instrument for international payments.” The EU has struggled to keep alive the Iran nuclear since President Donald Trump pulled out of it last year. The bloc has already introduced measures to stop European companies from complying with the U.S. sanctions without authorization from Brussels.
The danger, as you may have surmised, is not really from Iran but from the Trump administration. It promises to hit European firms using the forthcoming SPV with fines and sanctions. Actually, part of the reason why the SPV's workings haven't been disclosed is to avoid Americans figuring out Europe's strategy to avoid sanctions on its firms ahead of time:
Senior EU officials have been saying for weeks that the financing mechanism would be up and running soon, but they have hesitated to provide details amid European concern that Trump would target the country where it is based and any others taking part.

The White House has been warning the Europeans that they could face stiff fines and penalties should they try to circumvent the sanctions.
So the situation is one where US intelligence officials effectively concede that their European counterparts are right and Trump is wrong on Iran's intentions and actions. Still, the Trump administration is threatening Europeans with penalties for dealing with a country living up to its obligations (Iran). It's a topsy-tury world we live in, indeed.