The G-20 Finance Ministers’ meeting in Moscow last weekend essentially told Japan it could keep doing what it had been doing but to be less public about it. And, more generally speaking, it implicitly acknowledged that ‘competitive devaluations’ are now the order of the day but that officials should quit talking about “currency wars”. In its aftermath two things were worthy of note. IMF Managing Director Christine Laggard declared that there were no currency wars (thereby confirming that there are currency wars), & the Governor of the Bank of New Zealand, in a speech on February 20th, said he deemed the New Zealand dollar overvalued (thereby rationalizing a need to ‘drive it down’), thereby joining his South Korean & Norwegian counterparts who recently said similar things.
In 1947 3% of all retiring members of Congress joined the ranks of paid lobbyists; today half of all ex-Senators & 42% of all retiring members of the House of Representatives do so – why, if Americans do not allow human incest, do they tolerate industrial-political incest?
Fareed Zakaria on his Sunday morning program on CNN had an interview with former Australian Prime Minister John Howard who, over a decade ago, prompted by the 1996 Port Arthur massacre in which 35 people were killed & 21 more injured, forced the states (since his government had no jurisdiction to enact gun control laws) to sign on to a National Firearms Agreement that banned all semi-automatic rifles as well as all semi-automatic & pump action shotguns, and seriously tightened gun ownership & acquisition regulations. And if the statistics they trotted out about the decline since then in killings & suicides involving guns are anywhere near the truth, they wholly invalidate the NRA’s claims that restrictions on gun ownership & acquisition don’t have any impact on such killings & suicides (if my memory serves me right, but I am not counting on that & neither should you, they talked about a 59% decline in suicides by gun). But unfortunately he then featured Larry Summers on what is needed to get the economy growing again, he being someone who deserves no credibility whatsoever on this or any other subject. First ‘he was run out of town on a rail’ from the Harvard University President’s office, then was a key player in the clique in the Second Clinton Administration that prompted Congress to kill off Glass-Steagall (that, since the 30’s had separated commercial- from investment banking) with the Gramm-Leach-Bliley Act, thereby setting the stage for, & spawning, the 2007 financial crisis, next spent a few years amassing a small fortune in the resultant free-for-all financial sector &, finally, returned to help lead Obama, who doesn’t seem to know economics from first base, up the economic garden path during his first ter
Deng Fei is a social activist in China’s cyberspace, well-known for launching periodic online campaigns, usually to help children. And when everyone was home for the Chinese New Year holidays, he launched another, but different, one asking “How is the river in your hometown?” & suggesting everyone home for the holidays should take a picture of a body of water there & upload it to Sina Weibo, China’s Twitter counterpart. Despite interference from the censors, it quickly went viral with thousands upon thousands of people doing so, and most of what they showed wasn’t pretty. But, more importantly, this threw the spot light on a related issue, the evidence of which couldn’t be uploaded so easily, if at all, to Weibo, namely that it’s not just the surface water that’s being polluted but that huge amounts of polluted waste water are being pumped underground to circumvent whatever (weak?) regulations may be in place that require it to be dealt with on the surface. This quickly became such an issue in its own right that the China Daily, the official mouthpiece of the Communist Party felt compelled post the following commentary on Weibo : “Many regions have reported smog, and now there are tragical reports of underground water pollution. Dumping waste water underground is an evil act; is it any different from killing future generations? We may be keeping silent for our own sake, and unable to say, for our children’s and grandchildren’s sake : Let the skies be clear again, let our earth and water be pure once more, tighten regulations, do not delay, for there is no time to waste; make great changes now and there will be hope for the future. We can’t talk about a beautiful China without doing something to make China beautiful; we look forward to a wave of environmentalist action. Good night.” Since then there have been two interesting developments. The government of Weifang City, Shandong Province, has offered a 100,000 yuan ((US$16,000) reward (i.e. almost twice the average annual wage) for the first whistleblower who can substantiate “the widely circulated rumours of chemical plants and paper mills pumping polluted waste water underground.” And the Straits Times, an English-language newspaper published in Singapore, reported on its front page that an unnamed official from the China Geological Survey had recently told an international groundwater conference that the groundwater in 90% of Chinese cities is polluted & in 60% of them “severely so” (which in a way is ‘old news’ since last September already the China Business Times reported that, according to China’s Ministry of Environmental Protection, & that of Lands and Resources, 90% of China’s groundwater is contaminated with poisonous pollutants, and that the quality of 40% thereof is getting even worse). It may well be that for future generations of Chinese the unfunded environmental cost of the past three decades of headlong, mindless economic growth with no regard for its long-term environmental consequences will become an albatross around their necks not unlike that created for future generations of North Americans by the ill-advised & underfunded, untrammeled expansion of social welfare-, & pension-, entitlements in the past four, five decades. And before Canadians in general, & Albertans in particular, get too snooty about the shortsightedness of the Chinese government, they might want to take note of the fact it has recently come to light that Canada’s Minister of the (Anti?) Environment was, in an internal memo from his Deputy Minister dated June 19th, 2012, apprised of the growing evidence that waste water from the Alberta oilsands’ tailing ponds is finding its way into the Province’s groundwater.
The Epoch Times is the offshore voice of the Falun Gong &, as such, anything but unbiased on Chinese political matters. But it can be a useful source of factual information on China. Thus in its latest issue it reported that ‘long-term industrial pollution’ has resulted in an accumulation of agricultural chemicals, heavy metals & non-biodegradable pollutants in the soils of tens-, if not hundreds-, of hectares of farm land in the Pearl-, & Yangtze-, River Deltas, and the Bohai Economic Rim’ with presumably potentially serious public health implications (the Bohai Sea is the very Northern-most part of the East China Sea the Bohai Economic Rim runs East from Beijing & Tianjin & the surrounding area to the North Korean border). And its source for this was Time Weekly, a Guangzhou-based five year-old weekly newspaper that ‘partners’ with the NYT, which had in turn had based its story on documents leaked on the Internet from a nationwide investigation into soil pollution by the Ministries of Environmental Protection & of Land and Resources; launched in 2006 that had used 20,000 people to take & analyze soil samples from all over the country, cost 1BN yuan (US$150MM, give or take), & taken three years to complete.
Business Week has a fascinating article about a hacking source sleuth taking advantage of a slip-up by a Chinese (officially-sponsored?) hacker to unmask him to the point where he not only could name him & identify where he worked (a university) but also was able to show a picture of him & his wife.
The end of an era? Rabobank has sold 90.1% of the shares in Rotterdam-based Robeco to Orix Corp., a Japanese financial services group. This is likely the oldest mutual fund management group in existence. It was founded in 1929 by a group of Rotterdam businessmen &, after a shaky start (it lost half its initial ƒ2MM stake in the first three years of its life) it flourished in the post-WW II era, in part because much of its assets had been invested in the US before the war. Until fairly recently scuttlebutt had it that Australia’s Macquarie had the inside track with a price in the 3BN Euro (US$3.96BN) range; so both Orix coming out on top, & the price it paid (1.9BN Euros/US$2.54BN) for 90.1%, were a bit of a surprise. And with Robeco having AUM of 190BN Euros, Orix did get a good deal, unless there was a reason for the sudden downsizing of its value (early in my career I called a couple of times on the Robeco people at its then Rotterdam headquarters & while at Alberta Treasury in the 80’s its CEO made a couple visits there and, being almost stone deaf, he always brought with him his own sound system with microphones wired together – this was in the olden, pre-wireless days – so that there was a microphone in front of every person at the meeting, and he could hear what was going on).
The CW has it that Western civilization is doomed to be overwhelmed in time by the Muslim East because of the latter’s higher fertility rate. But Nicholas Eberstadt, a demographer at the American Enterprise Institute begs to differ. For in a paper entitled The Fertility Decline in the Muslim World : A Veritable Sea Change, Still Commonly Unnoticed he documents how in 49 Muslim countries the fertility rate fell off sharply between 1975-80 & 2005-10, in 22 of them by 50%, or more, in nine (Albania, Algeria, Bangladesh, Kuwait, Libya, Oman, Qatar, Tunisia & UAE) by 60%, or more, and in Iran by 70% (to the point it is now below the 2.1 ‘replacement rate). But he then strays off into, possibly ideology-driven, pontificating about the effect this will have on population growth during the foreseeable future (while as a demographer he should know better than most that demographic trends change at a snail’s pace & have long lead times). And fails to mention these declines from what were off exceedingly high initial levels).
GLEANINGS II – 499
Thursday February 21st, 2013
THE GOP’S NASTY NEWCOMER (NYT, Frank Bruni)
Cruz is 41, a former Assistant Deputy Attorney-General &Texas’ Solicitor-General (the youngest in the US),he now is Vice Chairman of the National Republican Senatorial Committee.
NEXT OIL BOOM UNDER CALIFORNIA FARM LAND? (NBCNews, Jane Wells)
THE GUN DEBATE IS CHANGING THE DEMOCRATIC PARTY (NBCNews, M. Murray)
It’s not her promises that makes this interesting, for political campaign promises are worthless, but the fact she is willing to take on the NRA in her campaign & that it appears not to be fighting back. But Chicago is not the US, it is the country’s murder capital & recently witnessed some particularly headline-grabbing murders of innocent, young, female bystanders.
YOUNG AMERICANS : NO HOUSE, NO CAR, LESS DEBT (NBCNews, John W. Schoen)
While their student loan burden also prevents them from saving up for a down payment on a house, this is all part of a sea change in popular attitudes that is making a break from the credit-fueled, instant gratification ,‘and-and’ spending mindset of the Boomer Generation.
CORN SHORTAGE FUELS ETHANOL PLANT COUNTDOWN (CP)
The economics of ethanol production are such that plants must be located near their source of raw material; so plant closures are heavily influenced by local farm conditions.
KERRY SPEAKS TO NETANYAHU, ABBAS ABOUT PEACE (China Daily)
Netanyahu’s progress in coalition-building is moving slowly. So far he has only officially signed up Tzipi Livni & her six seats by promising her the Minister of Justice portfolio and one more ministerial post (prompting tension among her followers as to who would get it); in addition she will resume the role of chief negotiator with the Palestinians which she had when Foreign Minister under Ehud Olmert (which is interesting in light of Netanyahu’s above-noted comments). While his critics call this a ‘union of two failed politicians’ because both fared badly in the election & say he will break his signed agreement with her at the drop of a hat if a better offer were to come along, the Jewish Home Party says Netanyahu’s deal with her alienates it since “a government with one of the major supporters of the Gaza disengagement, who is in favor of dividing Jerusalem, is not a right wing government” (conveniently overlooking that Yair Lapid who heads the Yesh Atid Party with which it has made a deal not to join any coalition that doesn’t include the other, also supported Gaza disengagement in his day days as a TV news anchor), with one of its leading MKs-to-be calling on “all the heads of regional councils in Judea & Samaria to prevent putting talking with the Palestinians in Livni’s hands and prevent the forming a left-wing government” (which may be exactly where Netanyahu may be heading, for it may prove easier to create a viable, moderately left-of-centre-, rather than a a right-of-centre-, coalition, provided he can bring the rump of his Likud following with him & Yair Lapid is willing to break his solidarity agreement with Naftali Bennett, the leader of the Jewish Home Party. And the plot is thickening. For on February 20 a couple of Jewish Home MK-elects complained publicly that Netanyahu isn’t talking to-, & Naftali Bennett himself called on him to start conducting coalition negotiations with-, his party (despite mounting pressures within it to shun Netanyahu since he broke a campaign pledge not to let Tzipi Livni anywhere near the negotiations with the Palestinians). Meanwhile Likud officials took to the airwaves on February 21st to assert that Bennett has no option but to join the coalition because his voters wouldn’t forgive him if Netanyahu formed a government without him and said “We have talked to the bigger parties first … We have met with (Labor’s) Shelley Yacimovich and [Yesh Atid’s] Yair Lapid twice, this is where the main effort lies … And because we don’t want a narrow government, we have to bring in smaller parties as well, like Bayit Yehudi (Jewish Home) and Shas”, seemingly more evidence that the eventual outcome may be a coalition in which the right of centre voices will be less dominant than in the last one (although where Netanyahu involved predicting the future is a hazardous undertaking).
KERRY HEADING FOR EUROPE, MIDEAST; NO ISRAEL STOP
(msnnews, Bradley Klapper)
But some people see this as a not-so-subtle signal to Israelis & Palestinians that, for the first time in six decades, their affairs won’t be the epicentre of Washington’s diplomatic efforts.
CANADA’S ECONOMIC OUTLOOK ‘RELATIVELY’ ROSY’ (FP, Gordon Isfeld)
EAST COAST RISES AS ALBERTA DISCOUNTS BITE (FP, Jeff Lewis)
This activity will eat Alberta’s lunch in two, & possibly three, critical ways. In the short run it will syphon off investment capital that would otherwise have gone into the oil sands (in this context it may be significant that Suncor, that so far has spent $4BN on its $14BN Voyageur upgrader in Alberta is said to be considering whether its optimum short-to-medium-term strategy may be to suspend work & further spending on it until Alberta solves its access-to-markets problem). Secondly, medium term, while costly & slow to develop, they are no more so than Alberta oil sands projects but once completed, will get the world price net (i.e. without having to incur any overland transportation costs) & will have no market access problems such as landlocked Alberta oil is currently encountering. And finally, any increase in oil output off Canada’s East Coast will weaken the potential demand for Alberta oil in Central & Eastern Canada (except at discount prices).
BRIDGE DEMOLISHED, CITING SAFETY CONCERNS (CTV News)
This is bureaucracy run amok. Some locals believed the bridge could have been repaired (at least until a new one could be built). Alternately, it presumably could have been continued to be used in a limited manner, possibly subject to restrictions on vehicle speeds & weights.
DAY WILL COME WHEN WE MUST CHOSE US OR CHINA (theage.com.au, John Arnaut)
Each had a different mission. The colonel’s was to remind Australia of Beijing’s perception of reality. The general’s to sooth American public opinion. And the Pacific Fleet’s intelligence chief’s to ensure the denizens of that city, home to the US Navy’s largest naval base on the West Coast & the secondary home base for the Pacific Fleet, that their future was secure. But the colonel likely was interpreting Xi Jinping’s recent call for a “new type of great power relationship” in a nationalistic manner (it can be no coincidence that his hyper-nationalistic book The China Dream has reappeared on book store shelves since Xi’s starting to talk up his own nationalistic China Dream).
CHINA’S HOLLYWOOD ‘KILLED’ 1 BILLION JAPANESE LAST YEAR (Want China Times)
It’s payback for the “fifty years of humiliation” (from 1985 to 1945). The Hengdian studio complex covers 330 hectares (840 acres) & has 500,000 square meters (50 hectares/125 acres) of buildings. Zhejian is a coastal province South of Shanghai, one of China’s richest, & the studios provide much part-time employment for locals as extras (Want China Times in Taiwan-based).
INSIDE CHINA’S GENOME FACTORY (MIT Technology Review, Christina Larson)
All in all, this is another example of Beijing positioning its economy to occupy global economic ‘heights of land” in key industrial sectors, just as it has done in the past, among others , in magnets, containerization, and tungsten & rare earth products.
CHINA’S GOLD CONSUMPTION UP 9.35 PCT IN 2012 (englishday.com)
NETHERLANDS BAILS OUT BANK FOR 3.7 BILLION EUROS
(The Australian, Jan Hennop)
It’s amazing how little media exposure this event has had. Between January 16th & the government’s move, deposit withdrawals had reduced the bank’s cash position from 4.5BN to just 2.0BN Euros. According to a valuation done by a third party for the government, in a base case the group stood to lose 2.4BN Euros on its 8.5BN Euro real estate portfolio (which accounted for 10+% of its total balance sheet), & 3.2BN in a worst case scenario. On February 14th the top Dutch administrative court heard appeals by lawyers for shareholders against this ‘expropriation’, arguing the state had unduly relied on a single valuation of the real estate assets involved (that, it was alleged, had used a 7% discount rate rather than a more ‘realistic’ 4%), & from those for international subordinate bond holders that “it infringed on the free movement of capital”, while the government’s counsel countered “The state doesn’t intervene in banks to protect investors … If you invest, you know you are taking risks.” The court is expected to render a judgment on Monday February 25th.