Nick Rost van Tonningen ~ Gleanings II ~ 516 Posted by John on June 20, 2013
I was at a conference last weekend. While there, I saw an amazing sight. One attendee was a member of Edmonton’s two dozen-strong deaf-blind community (like the famous Helen Keller a century ago). He was able to follow the proceedings because he was accompanied by two ladies who took turns sitting across from him face-to-face, translating what was being said in sign language with their hands touching (because he obviously couldn’t ‘read’ ordinary sign language). It was, to me at least, an eye-opener. Another seminal event there for me was the dinner address by Amanda Lindhout, the Canadian freelance journalist who was taken hostage in Somalia in 2008 & spent 460 days there in captivity under what sounded like appalling conditions. While the part of her talk that related to how she got herself into that jam only confirmed what I had always thought, namely that her predicament was caused by out & out stupidity & Western naivete about the way things work outside North America (which was further confirmed when she told us how she & her camera man/ex-lover had attempted to escape – two white people a gazillion miles from the nearest place where they would not stand out like sore thumbs), her keeping her sanity during, & after, her ordeal was for me, like the attendance of the deaf-blind person, a testimony to the human spirit & to some people’s ability to rise above their misfortunes, rather than waste their time bemoaning the unfairness of it all.
The markets took fright at Bernanke’s remarks at his June 19th post-FOMC meeting press conference that QE3 ‘tapering’ would start in the Fourth Quarter & the whole endeavour laid to rest in mid-2014 despite his assurance that he expected the Fed’s ‘accommodative’ stance to remain in place for a long time to come (the latter view was seemingly shared by 14 of the 19 voting & non-voting members of the FOMC who, when canvassed by Bloomberg, were in agreement that raising interest rates would likely not be “appropriate” until sometime in 2015). The market’s reaction ignored the fact that his choice of words carefully hedged his bet by making it all conditional upon the universe unfolding as the Fed presently thinks it should.
In the aftermath of President Obama making it official that there will a new face at the helm of the Fed when Bernanke’s term ends next January, an earlier rumour has re-surfaced that he may be succeeded by Stanley Fisher, since 2005 the Governor of the Bank of Israel, who announced last January he planned to exit the Bank of Israel on June 30th, almost two years before the end of his second five-year term. Given his career path, his would be an inspired choice at a time of much uncertainty & market volatility when a sub-optimal choice by Obama to succeed Bernanke at the Fed could seriously roil markets with God only knows what unintended & unforeseen consequences.
Fisher was born in what is now Zambia & became a US citizen in 1976 (but didn’t surrender his US citizenship when he became an Israeli citizen before becoming Governor of the Bank of Israel). He is a graduate of LSE & MIT. He has taught at the University of Chicago & MIT where his students included many of today’s central bankers, and he was the thesis supervisor for, among others, Bernanke, Mario Draghi & former Bank of England Governor Mervyn King. From 1988 to 1990 he was the World Bank’s Chief Economist, from 1994 to 2001 First Deputy Managing Director of the IMF, & from 2001 to 2005 Vice-Chairman of Citigroup. He is said to have done an outstanding job at the Bank of Israel during a difficult period to the point that some of his peers deem him the world’s premier central bank governor. Two years ago he angled to become the next IMF Managing Director but this went nowhere due to his age (the IMF has a 65 year age limit while he was 67 then & now is 70).
The US National Association of Home Builders’ Housing Market Index (that measures home builders’ confidence in the outlook for their industry) stood at 44 in April. But in May, instead of the expected modest rise to 45, it took a ‘great leap forward’ to 54, the first time since May 2006 it has been in ‘positive territory’ (i.e. above 50). This was likely due to the fact that new home sales are growing (albeit still at levels way below those before the Great Recession).
In the 70’s, early in his career as a geologist, the now 63 year-old Donald Rae wondered about his career choice as, convinced that Alberta was running out of oil, oil companies were laying off geologists & engineers left, right & centre. But he stuck with it and, after working for some of the biggest of them, started his own company that was one of the pioneers in horizontal drilling & fracking, and that he sold, five years after founding it, for $665MM. He subsequently started another company, Coral Energy Ltd., that in the past two years has ramped up its output from ‘tight oil’ formations three-fold from 1,400 to 5,000 bbld. But his experience with tight oil makes him skeptical of projections that it will make the US energy-independent; for he knows from first-hand experience that tight oil wells will often, in the beginning, gush oil at a 1,000 bbld rate, only to settle down, after a month or so, to a more sustainable 200 bbld. On the other hand he thinks there is enough potential for growth left for the industry in the 80% of the oil remaining in abandoned reservoirs to sustain it for a long time [although that will, almost by definition, require higher prices (& further) technological breakthroughs].
The rule of thumb for mortgage lenders in Canada to qualify as a prime mortgage prospect is that mortgage payments, property taxes & heating costs should not exceed 32% of gross (i.e. before tax) household income. But according to the Royal Bank of Canada, in the First Quarter the actual percentage (presumably in major cities) of average household income for a detached bungalow was 42.5% nationwide & ranged from a low of 30.4% in Edmonton to a high of 82.3% in Vancouver (vs. an average since 1985 of 39.0%, 33.1%, & 59.8% respectively).
New research at Agriculture Canada’s research establishment in Lacombe, Alberta found that there is no need to cook mechanically tenderized steaks to the well-done stage (i.e. to an internal temperature of 71E Celsius/160E Fahrenheit) but that they are safe to eat medium-rare (i.e. cooked to 63E/145E) provided they are turned at least twice during cooking (to eliminate ‘cold spots’) – according the Health Canada as much as 25% of all whole muscle beef is being tenderized mechanically, which can introduce harmful bacteria in the meat’s interior.
The US-Taliban “Peace Talks” are a misnomer; they should more appropriately be called the “US-Taliban Bug-out Justification Talks”. It’s seldom possible to have much sympathy for anything President Hamid Karzai thinks, says or does. But in this case he seems justified in worrying about being sold down the river by an America anxious to declare victory & leave.
Fitch has just commented on China’s credit bubble as follows : “The credit-driven growth model is clearly falling apart. This could feed into a massive over-capacity problem, and potentially lead to a Japanese-style deflation.” – the former is a statement of fact but the latter an opinion with a significant probability of being proven wrong. For Beijing is as much, if not far more, aware of what is going on as, has far more at stake in the outcome than Fitch, or anyone else for that matter, & has been taking steps to avoid its nightmare scenario. In so doing, it will be helped by the presence of virtually endless unsatisfied local demand. In addition, many American ‘flat earthlings’ tend to underestimate the extent to which Beijing, untrammeled by the political niceties that tie the hands of democratic governments, has an ability to make, & has a track record of making, things happen with despatch that it wants to happen.
Over the years there have been periodic rumblings in the Chinese media about the risk to its national security from undue reliance on US software, and networking & telecom hardware (Cisco, for instance, has a significant market share in core parts of its networking systems). Concern is now growing in Washington that, now that Huawei has been blocked, for ‘national security reasons’, from selling its networking equipment in the US, Beijing will reciprocate by using the same reasoning to shut US firms out from its networking cum telecom market – there are lots of old sayings that apply, incl. “What’s sauce for the goose is sauce for the gander”, “Monkey see, monkey do”, and one that seems particularly appropriate, “Why buy the cow if you can get the milk through the fence” ?(by hacking) – by the way, having been spurned in its direct approach to enter the US market, Huawei now may be resorting to the indirect one; for it is rumoured to be about to offer to buy Finland’s once high-flying, but now struggling, Nokia.
According to a survey conducted by the Beijing Police 3.8MM of the city’s 13.2MM housing units (i.e. 28.9%) are confirmed “vacant” (i.e. no one has lived in them for at least six months). Meanwhile, Beijing is planning to move 400MM people from the countryside into urban areas during the foreseeable future, incl. many into ‘greenfield’ cities, such as Lanzhou Xinqu, Gansu Province, Northwestern China, the establishment of which was only approved in August 2010 but which is expected to have 500,000 in habitants & a 20BN Yuan (US$3+BN) GDP by 2020.
Col. Latifa Nabizada (& her twin sister Laliuma) after several unsuccesful attempts were finally admitted to Afghanistan’s military academy in 1989 & became the country’s first female military pilots. After the Taliban took over Kabul in 1996, they did combat missions against the Taliban forces from an airbase near Mazar al-Shariff in Northern Afganistan until the Taliban overran that city, after which they fled to Pakistan where they survived by weaving carpets only to return to Afghanistan & rejoin the air force after the Taliban regime was overthrown. When both sisters became pregnant in 2006, they kept flying as long as they were allowed to and, after her daughter was born, she started taking her with her in her helicopter, despite the US advisers’ horror at her doing so, & kept on doing so even after she started walking, claiming that it made her be extra careful. Now her daughter, age seven, wants to be an astronaut. Small wonder.
In May new car registrations in the EU were down 5.9% YoY to a 20-year low for the month (& YTD were down 6.8%). Peugeot was hardest hit with a 13.2%-, with Renault not far behind with a 10.0%-, decline. At the other extreme Volkswagen was down only 2.8% & Ford 0.3%, while Daimler registrations were actually up 0.7%.
On opening day at the Paris Air Show Boeing garnered US$12.2BN in new orders, little more than half Airbus’ US$23.2BN, & not that far ahead of Embraer’s US$9.6BN (all these are at list prices & thus tell only part of the story) – not too much stock should be put in these numbers since Boeing reports incoming orders throughout the year as they come in while Airbus always keeps some back to maximize the impact of their announcement at ‘its’ air show (at last report Boeing had largely closed the gap, with US$66BN in orders vs. Airbus’ US$68.7BN, with almost US$30BN thereof accounted for by 102 orders for its stretch-787).
In October 2011 popular pressure forced the Frankfurt Airport to impose a 11:00 p.m. to 5:00 a.m. curfew on takeoffs & landings, most of which affected airfreight flights, many of them from Latin America. As a result, its volume of cocaine seizures dropped dramatically, from 524 kilos in 2011 to 246 kilos in 2012 – but in the overall scheme of things it made little difference since seizures rose at the other airports to which those airfreight flights were diverted.
The Soviet Union’s collapse prompted an explosion in the number of articles in peer-reviewed scientific journals by Russian scientists from a handful in 1989 to 25,000 by 1993. But since then they have plateaued in the 25,000 – 30,000 range while those from the other three BRIC countries has kept pace with the growth in their economies. The main reason seems to have been monetary : thus funding for the Russian Academy of Sciences in 2012 was the equivalent of US$1.9BN, 5% of that in the US for the National Science Foundation & the National Institutes of Health (while Russia’s GDP is about 12% of that of the US). This has led to an exodus of Russian scientists & a concentration on less costly research in theoretical physics & chemistry at the expense of that in leading edge areas like biochemistry & molecular biology.
The MS Tûranor PlanetSolar is a 30 metre-long, 85 tonne dwt, German-built, Swiss-owned 15MM Euro catameran with a top speed of 14 knots (16.1 miles) with a difference : it’s exclusively solar powered with over 500 square metres of solar panels capable of generating 93 Kw of electric power. Designed as a luxury yacht/cruise vessel for 12 passengers, it is currently engaged in ocean research in the Caribbean. Last year it became the first solar-powered vessel to circumnavigate the globe and last month it set a record for vessels of its type with a 2,867 knot (5,310 km) transatlantic crossing from Las Palmas, Spain to Marigot, St Maarten in 22 days, 12 hours & 32 minutes, for an average speed of 5.3 knots.
GLEANINGS II – 515
Thursday June 13th, 2013
IF BERNANKE REALLY SHAKES THE TREE, HALF THE WORLD MAY FALL OUT
(The Telegraph, Ambrose Evans-Pritchard)
$ More & more influential voices have started saying QE has become counter-productive. First a paper co-authored by Fred Mishkin, a close Bernanke friend & himself a former Fed Governor, entitled Crunch Time : Fiscal Crises and the Role of Monetary Policy, warned it will become ever harder to extricate safely from QE (& by next year may become all but impossible) and that the Fed’s own capital base could be wiped out “several times” if borrowing costs were to spike. Then the minutes of the Federal Advisory Council opined it is “not clear” QE is boosting the economy while the toxic side-effects, unsustainable bubbles in asset prices & pension funds being pushed underwater, and corporate investment being deferred, are very clear. Next the BIS weighed in with a full frontal attack on QE, saying it doesn’t work & does more harm than good. And finally, Eric Rosengren, the über-dovish President of the Boston Fed, & this year a voting member of the FOMC, began talking about early ‘tapering’, a clear sign the Fed’s centre of gravity has shifted (from being über-accommodative?). But as Jan G. Loeys, JPM’s Global Head of Market Strategy, pointed out in a note to clients last week, “Regime change is like shaking a tree; one has no idea who, or what, will fall out.”
All this seems to validate what critics of QE3 have been saying all along, namely that each incremental dollar of government debt has had less & less of an effect on GDP growth. While the market fussed over President Obama’s observation this week that Bernanke has “already stayed a lot longer than he wanted or was supposed to”, the former wasn’t news since Bernanke has made no bones about the fact he will leave when his term ends in January. But the latter raises questions as to why Obama re-appointed him, a Bush nominee, when he had the chance not to (later the White House found it necessary to issue a clarifying statement saying the President had intended this observation as a compliment). And the apparent change in the Fed’s mindset, & the President’s remarks, put into question the CW that the dovish Fed Vice Chair, Janet Yellen, is a shoo-in to succeed Bernanke next January (as Bernanke seemed to indicate he wants when he chose to pass on the global central bankers’ clambake in Jackson’s Hole, Wyo., in August, thereby making Janet Yellen the senior Fed official there. And there are those who say the time is long overdue for an ‘external’ appointment, i.e. someone from the “real”-, i.e. business-, world, rather than from inside the Fed or from academia – but why would anybody in his right mind, inside or outside the Fed, want the job of cleaning up Bernanke’s legacy, when he doesn’t?
THE GOLD CLOCK GOES TIC-TOCK IN SE ASIA Seeking Alpha, Tom Luongo)
$ In August 2011 China dumped US$100BN in UST securities onto the market, prompting the gold price to spike to US$1,926 & the five major central banks to set up a US$500BN swap facility to ensure FX market liquidity (in a global FX market with a US$5TR daily turnover?). Since then foreign souvereigns have been increasing their UST holdings at a 0.5%-1.0% monthly rate. Until last April that is, when they declined by US$69.4BN, most of it due to sales by Asian governments (while Japan’s US$14BN rundown was a mere bagatelle given the size of its total holdings, Singapore’s US$8BN represented 8.2% of its total UST portfolio, & April was the second month in a row it was a seller). During April total UST holdings by Asia-Pacific countries other than China declined 2.3% to US$1.7TR. Since April emerging markets have been experiencing capital outflows that have forced them to sell UST securities to free up dollars to meet the resultant drawdowns of their FX reserves. Meanwhile, the Chinese interbank market is drying up (to the point where on June 20th the repo rate, the price banks charge each other for overnight money, soared to 25%, as in Lehman crisis-like fashion the local banks quit trusting each other), causing Chinese consumers to line up by the thousands to buy gold, the real stuff, not the paper variety (with the People’s Bank of China so far reluctant to address the problem on the grounds the banks unduly dependent on the wholesale funding market that are now feeling the pinch only have themselves to blame for using that market to circumvent regulatory caps on lending). And in Vietnam the going (retail) price for physical gold is up to US$217 over the official (paper) gold price
The writer is a chemist by training who has turned into a financial writer with an Austrian (‘austerity’) School libertarian bent (& so he is ‘long’ gold himself). But the really interesting question he doesn’t ask is where the outflows from emerging markets are being re-invested, since the numbers suggest it’s not in the UST market, the traditional ‘safe haven’.
U.K. TO FILE FRAUD CHARGES IN LIBOR PROBE (WSJ, David Enrich)
$ Their initial target for criminal fraud charges will be Tom Hayes, a 33 year-old British citizen and former UBS & Citigroup yen derivatives’ trader (in Tokyo), who last December, together with a former colleague, was charged with conspiracy to commit fraud by the US Justice Department. Arrested last December, the day before the US Justice Department was to file charges against him, by the Serious Fraud Office which seized his passport, he has since been out on bail since, & cooperating with prosecutors trying to build a case against other UBS & Citigroup employees.
$ In an email to the Wall Street Journal last January he observed “this goes much higher than me.” And in fact, when the US & UK authorities settled out of court with UBS they released documents indicating that his superiors were aware of his tactics & that in 2009, when Citigroup tried to steal him away from UBS with a US$5MM offer, one UBS executive wrote in an internal memo that his “strong connections with the Libor settlers in London … (are) invaluable.”
The best part of all this for Mr. Hayes is that, if he goes to court in the UK, under that country’s double jeopardy laws he cannot be extradited afterwards to face similar charges elsewhere. While this annoys the US authorities to no end, it gives every incentive to sing like a canary!
UNWINDING QUANTITATIVE EASING TOO QUICKLY COULD ROCK GLOBAL MARKETS (Bloomberg/AP)
$ In its annual assessment of the US economy made public June 14th, the IMF concluded that in the Fed’s management of its exit from QE “Effective communication on the exit strategy and a careful calibration of its timing will be critical for reducing the risk of abrupt and sustained moves in long-term interest rates and excessive interest-rate volatility as the exit nears … (for such moves) could have adverse global implications, including a reversal of capital flows to emerging markets and higher international financial market volatility.” On the other hand, while unwinding QE will be challenging, it expressed optimism the Fed has “the range of tools” needed to do so.
Note that it talks about “reducing”, not ‘eliminating’ the risk; i.e. it seems to imply that some untoward events are likely.
BUDGET DEFICIT WIDENED IN MAY (Bloomberg)
$ In May it was US$139BN, up from US$125BN in the year-earlier period largely due to a 9.1% YoY increase in spending, despite sequestration and lower outflows under TARP and to Fannie, Freddie & the FHA. On the other hand, the CBO claims it would have been US$18BN lower, i.e. down US$4BN, but for changes in timing some outflows.
The CBO recently came out with numbers showing that in the first eight months of the current fiscal year the budgetary deficit was down US$220BN YoY to US$627BN & then forecast a deficit for the year as a whole of US$642BN (i.e. basically a ‘flat’ summer federal budget-wise). And Treasury Secretary Jacob J. Lew announced he was suspending the reinvestment of the Government Security Fund of the Federal Employees’ Retirement System as one of several initiatives to defer the ‘drop-dead’ date for hitting the debt ceiling until September. And earlier this month S&P adjusted its outlook for the US’ AA+ rating from “Stable” to “Negative”.
JOBLESS CLAIMS RISE AS MANUFACTURING GROWTH SLOWS (CNBC)
$ In the latest week initial claims for unemployment benefits were 354,000, up 18,000 from the previous week’s upwardly adjusted (by 2,000) 336,000, while the market had expected only a modest increase to 340,000.
According to the Fed the downside risk to the job market outlook has declined over the last year
FARM BILL FAILS IN HOUSE (NBCNews, Michael O’Brien)
$ The US$940BN Republican-written farm bill that President Obama had threatened to veto failed in a surprising & dramatic defeat when 62 right wing conservative Republicans joined 172 Democrats (out of 196) to defeat it 234-195. While former objected to its price tag, most Democrats were angry about its heavy cuts to food stamp programs. This leaves the farm program in limbo since the last (five year) Farm Bill expired last December 31st & the farmers now operate under an ad hoc partial extension thereof that will expire at the end of the fiscal year, on September 30th.
This will add to the problems facing House Speaker John Boehner (R-Ohio) & the rest of the House Republican leadership who have seen other of their legislative initiatives founder on the shoals of rightwing conservative opposition in their ranks.
DETROIT TO DEFAULT ON $2.5BN DEBT TO AVOID BANKRUPTCY (Fox News)
$ On Friday June 14th Kevyn Orr, the city’s state-appointed ‘emergency manager, said the city will stop making payments on about US$2.5BN of unsecured debt & asked creditors, first & foremost the city’s own pension-, & employee benefit-, funds to take a 90% “haircut” so as to avoid the country’s biggest municipal bankruptcy ever, and told reporters “there may be some room for negotiations, but not a lot.” This year 42% of the city’s revenues are needed for debt service-, & employee benefit-, payments which, in the absence of action, would rise to 65% by 2017. Mr. Orr also said “the average Detroiter has to understand that this is a culmination of years and years of kicking the can down the road”, as the city borrowed to pay bills its general funds couldn’t.
Detroit’s total debt load is almost US$17BN, i.e. roughly US$25,000 per capita in a city in which the average household income at last report was < US$27,000. Nevertheless, there are said to be encouraging ‘green shoots’ at the grass roots, private sector level.
HOSPITAL ACCUSED OF BILLING FOR UNNEEDED SURGERIES
(Bloomberg, Charles R. Babcock)
$ A 90-page FBI affidavit, in part based on videos made surreptitiously by staff members, quotes the owner of the Sacred Heart Hospital in Chicago as saying tracheotomies were its “biggest money maker” & alleges the hospital’s pulmonologist kept patients so sedated they were unable to breathe on their own & then ordered tracheotomies that generated up to US$180,000 for the hospital. It quoted one nursing supervisor as saying the doctor had directed an ICU nurse to “snow the patient”, i.e. pump him so full of sedatives only the whites of his eyes would be visible. While the investigation is still ongoing, the government has already charged the owner, his CFO & five physicians with Medicare fraud. According to a former healthcare fraud investigator this case is unusual & troubling because, rather than just involving phantom billing or improper coding, it alleges doctors were performing unnecessary invasive surgery to justify false billing.
Even though there always are, & always have been, ‘bad apples in every barrel, this & other examples elsewhere in the economy are illustrative of a breakdown in ethical/moral standards that makes the monetary end justify any means.
THREE LESSONS FROM THE IRANIAN ELECTIONS (G&M, Doug Sanders)
$ It was less a victory for the reformers than a defeat for the hardliners – The new President, Hassan Rowhani, is not only an Islamic cleric but was also only elected after the Supreme Leader had carefully weeded out all real reformers, incl. two former presidents. But there were nevertheless celebrations in the streets since his victory was a humiliating defeat for the fundamentalists or, as in the hardline newspaper Tabnak put it, “The people of Iran said no to the fundamentalists because they were unhappy about the way the country was being managed and (they) were hurt because of it;
$ The new president isn’t really a reformer or a moderate – he was only the Green movement’s third choice & was only able to win because the Supreme Leader believed he was safe enough to leave on the ballot; for they have been friends for 45 years & Rowhani has been his man on the National Security Council for two decades. Still, his election may enable Iran to become a more peaceful partner for the West because, having lived for many years in, & having two degrees from the University of, Glasgow, he may disdain the clash-of-civilizations narrative so beloved by the Ahmadinejad crowd;
$ He may make Ahmadinejad look like an anti-authoritarian rebel – while the West saw him as an antagonistic hothead, as a non-cleric populist he constituted a challenge to the Supreme Leader & his clerical lot, whereas Rowhani, a cleric himself, is unlikely to play a similar adversarial role. And the combination of his likely ability to navigate in the Iranian system, his familiarity with the West & the support he can expect to get from the real reformers (as the best of a bad lot) may well enable him to reopen a dialogue of sorts with the West, likely the best the world can hope for at this stage.
This is contrary to, but more realistic than, the CW that sees the outcome in a more reformist light. But as Lao Tzu, the Chinese sage of the 6th Century BC, put it , “a journey of a thousand miles begins with a single step”, & any de-escalation of Iran’s belligerent stance would constitute progress. And so far he certainly has been making the right noises).
COL. LATIFA NABIZDA – AFGHANISTAN’S FIRST WOMAN OF THE SKIES (BBCNews)
$ She & her sister Laliuma wanted to be pilots from a very young age. After repeated turndowns they were finally allowed to enter the Afghan military academy in 1989 after which they became the first woman pilots in the Afghan air force. In 1996 when the Taliban captured Kabul, they moved to an air base near Mazar al-Shariff, in the country’s North, from where they flew combat missions against the Taliban forces. And when the Taliban overran Mazar al-Shariff, they fled to Pakistan & supported themselves by weaving carpets until the Taliban was defeated & they could return to Kabul. In 2006 both became pregnant but kept flying as long they were allowed to. While her sister died in child birth, she had no one to care for her daughter so from the age of two months she started to take her daughter with her in her helicopter & continued to do so after she began walking, even though the US advisers were horrified by her doing so while she told them it made her doubly careful. Now her daughter’s ambition is to be an astronaut.
Small wonder!
MYANMAR’S OLD FRIEND CHINA IS LEFT WONDERING WHERE IT WENT WRONG
(FT, Jamil Anderlini)
$ Earlier this month 900+ executives from around the world gathered in the Chinese-built, & subsequently donated, convention centre in Naypuidan (the country’s newly-built inland capital, like Brasilia located at the geographic centre of the country) where it hosted its first-ever World Economic Forum. But there were only 16 Chinese. The reason is that in Beijing today one frequently-asked question among policy makers is “What happened in Burma?” (the old, colonial era name for what is now called Myanmar). For it has turned, in a few short years, from a totalitarian, Chinese client state into one seemingly more open to reform & change (albeit only up to a point; thus the President only a few days ago turned down Suu Kyi’s proposals for constitutional reform) that foreign interests are rushing into, now that the sanctions are lifted, to fill the massive voids in a 60MM people economy created by decades of isolation.
$ In his opening address President Thein Sein, the general-turned-civilian-president, told those present that he personally despises Beijing’s influence in his country. And the very next day Beijing–owned telecom giant China Mobile dropped its joint bid with Vodafone to develop the country’s mobile phone network (supposedly after having been told it had no hope of being successful). In the words of one ministerial adviser, “We said thank you very much to the Chinese for their help and then we asked them to leave.”
Among the reasons often given for this turn of events are Chinese arrogance and neglect (of local customs & sensitivities), and the People’s Liberation Army’s meddling (in local affairs) – this ought to be a warning, & a lesson, for the more recent arrivals from abroad.
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