Economy

China’s Tremors Further Quake Housing Prices

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Yingjiang County encountered severe damage following an earthquake that shattered Yunnan Province in southwest China.  This resulted in the collapse of many houses, as well as seven fatalities (and perhaps more).  According to the China Earthquake Networks Center the epicenter was monitored at 24.7 degrees north latitude, 97.9 degrees east longitude.

This can’t be good news when the country is attempting (successfully right now) to reduce property prices “with sales volume already falling following purchase restrictions by local governments.”  The attempt is to make housing more affordable for the Chinese.  But with this earthquake home prices are more likely to rise again, undoing all the good work of the local governments.

Wen Jiabao’s Work for Nothing?

It makes one feel bad for the Chinese premier.  Poor Wen Jiabao has been so resilient in his efforts to “’resolutely’ press ahead with controls on the property market…reiterating a pledge to keep housing affordable.”  As well, the government has pledge to take drastic actions on any irregularities that occur in the property market vis-à-vis tax and credit policies, forcing officials to become accountable for home price maintenance.

What the country should really do is to gradually increase interest rates but this should just be one piece in the puzzle of trying to control inflation.  Inflation is also impacted by escalating worldwide prices of raw materials and this has to be accounted for as well.

Pridiyathorn To Peak Asia’s Economy?

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Asia’s economy is a bit of a mess.  Actually it's a  big mess.  And it doesn’t look like this situation is about to improve any time soon either.  Inflation looks set to continue; capital flows are extremely volatile.  But the fact that China has been trying to liberalize its currency exchange rate could be good news for economies in the region, enabling them to move away from trade settlement within the current global economic climate.  It’s a shame Pridiyathorn Devakula is somewhat removed from the political scene these days though.  Thailand’s previous Deputy Prime Minister is quite well-to-do these days.  His wife has a staggering Bt258 million to enjoy while their daughter isn’t too badly off either at Bt7 million.  Perhaps if the family shares some of its wealth it can pull the region out of its financial hole.

Yuan Goes International

But even if the Devakula family decides to keep their wealth to themselves (giving them near-billionaire status), the yuan need not suffer.  It seems like the government of China is moving toward the possibility of internationalizing this currency alongside the Euro and the dollar.  As well, plans are set for Hong Kong to become the traing center for yuan-denominated assets enabling foreign companies to “issue yuan-denominated assets in Hong Kong” which will also mean the Bank of China NY branch will be able to open yuan deposits.  The hope is that investment abroad will increase too.  As well, if they adopt Devakula’s idea of “co-operation among regional economies” to establish a benchmark currency, then the region’s economy could potentially peak.

India’s Booming Economy Doesn’t Reflect Its Women

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While the economy in India goes from strength to strength with the trend set to continue, it seems the women of the country feel there is little to celebrate.  Indian finance officials predicted that if the economy “sustains a nine per cent GDP growth” in the next decade, the economy is likely to reach a staggering $ six trillion.  If this is the case, why do the women feel there is nothing to celebrate alongside their sisters on International Women’s Day on March 8?  Most are unaware of the date and its significance (which began in 1910 at a conference to change women’s difficult work conditions, leading to the UN declaration in 1977 of this date being the International Day for Women’s Rights and International Peace).  Indeed, one Indian school teacher commented, “International Women’s Day makes no difference to me. I go to school, and I get back home to do my chores.”  For her – like many other women in India – no matter how the country is advancing – at the end of the day she still needs to work her fingers to the bone to keep everything on track. 


Women’s Plight “Dismal”


It seems there is little for the women of India to celebrate.  Content writer at PlaNET Surf Smriti K thus pointed out that “it makes no sense to celebrate such days when there is no real difference to the plight of ordinary women.”  This seems like such a shame since they should be benefiting from how the Indian economy is set to grow to nearly $1.8 trillion in the next two or three years.  If this really happens then it will result in the country becoming a world power, but if the women are still suffering and their plight is really so dismal, then the extreme disparity in the country cannot be good.
Perhaps if the women could find ways to celebrate International Women’s Day and to be more assertive and fight for more rights then they too could benefit from the country’s successfully developing economy.  When that happens, the whole country can start to enjoy the fruits of their labor.
 

What Would King George VI Have Said About Singapore’s Rice Crisis?

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Pest storms are devastating rice production in Singapore, which is no good for anyone since this grain is a staple throughout Asia.  This is becoming a threat to the country’s food security and could completely destroy rice farms throughout the region, according to Singapore scientists.  Indeed, there is talk that the pesticides used to counter this problem may be doing the opposite – making it worse.  The problem has partly been caused by trying to go cheap:  use of less expensive pesticides; poor farmer education and destruction of ecosystems around paddies, to name but a few.

Historically this wouldn’t have been the case.  Farmers took immense pride in their plots and ensured their produce was protected.  King George VI would have been ashamed at his Asian brethren and might not have so readily agreed to having his face emblazoned on a set of Singapore stamps issued in 1948.

 

 

Mid-East Flare Up Leaves Korea a Mess

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While China’s economy and finance markets are looking bold and strong, its Korean neighbor isn’t faring quite so well.  The potential of the Middle Eastern mess is once again being blamed for the success and stagnation of the yuan and the won.  Indeed, statistics showed a hit of 345.35 billion yuan (probably supported by short- and medium-term bonds).  Meanwhile in North Korea the “dire economic situation” is so extreme that international food aid calls (which have likely lessened due to missile and nuclear programs) are becoming increasingly louder, apparently to no avail.  On the one hand the country was blaming international pressure for their failure while simultaneously asking the world for charitable handouts.  Despite its attractive-looking economy, China has not been dealing with the Middle Eastern mess so well, and instead psychologically ignoring its very existence, or running into a panic at the thought of what might entail.

China’s Success Mimics Korea’s Failure

So while the Chinese economy is going from strength to strength, the same can’t be said for Korea.  This hasn’t always been the case.  At one time, it was reported that South Korea was providing around 400,000 tons of rice each year to North Korea but once relations between the two started depleting around three years ago, this gift ended too.

Looking towards China though, things couldn’t be brighter.  It seems that Yujiapu is set to be home to “the world’s largest financial zone a decade from now.”  A set of twelve buildings are to be constructed marking just the “first phase” in this new financial world headquarter, really putting the rest of the region to shame.  While their brothers in North Korea are looking for bread and water, the Chinese are enjoying festive banqueting.


 

South Korea Smart Grid Investment

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A nationwide smart grid is to be built by 2030, receiving a staggering $7.18 billion investment from South Korea’s state-run Korea Electric Power Corp (KEPCO), in an attempt to “curb the country's carbon emissions and improve efficiency in its electricity market.”  There have been various greening efforts in South Korea such as 131-acre rooftop gardens; electric scooters for local police etc.
Ultimately the smart grid will provide for more efficient power distribution and maintenance.  Consumers are able to participate in a more active role to determine power usage via home appliance monitoring and direct grid feedback.
 

Korea Investment & Securities Versus Lehman Brothers International

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Just today, the attempts by Korea Investment & Securities (KIS) to accrue payment from Lehman Brothers International vis-à-vis the company's purchase of credit-linked notes (CLN’s) which are securities that have embedded credit default swaps enabling the issuer to transfer a credit risk to credit investors, four and a half years ago, were dismissed.  A few weeks ago the court dismissed TrueFriend’s claim (a KIS assignee) against Lehman Brothers International Europe (LBIE) which tried to recover $1314 million in loss on these CLN’s from November 2006.

 

This particular case is KIS’s purchase of CLNs from Lehman Brothers Treasure Co. a few years ago.  Some months later TrueFriend was set up by KIS, which it used to transfer/sell the CLN to.  A year and a half later following Lehman Brothers’ bankruptcy, TrueFriend no longer received any more payments, claiming LBIE to be the “de facto issuer,” not the LBTC.

 

Today, Mike Jervis (PriceWaterhouseCoopers partner in London) said, “The administrators welcome the court’s judgment, which will now enable them to continue with the orderly wind-down of LBIE and return of assets to creditors in a timely fashion.”

 

There is some talk that KIS will appeal the decision but Jarvis remains hopeful for KIS as the CLN “remains a valid claim in bankruptcy against LBTC and LBHI.

 

South Korea Investment News

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KEPCO (Korea Electric Power Corp) just announced that South Korea will be investing $7.18 billion into a nationwide smart grid that is due for completion by 2030.  This investment is an attempt to “curb the country’s carbon emissions and improve efficiency in its electricity market.”  It seems that South Korea is the perfect location for smaller-scale greening efforts such as the transformation of landfills into hydrogen generators; the construction of huge 131-acre rooftop gardens; the introduction and use of electric scooters for local police.  This is great, but it comes alongside the fact that the country is quite a high carbon polluter within the OECD (Organization for Economic Cooperation and Development) countries. For South Korea, this will ultimately mean that 11 percent of energy will be taken from renewable sources like wind and solar.  The country will draw 11% of its energy from renewable sources, such as wind and solar.
 

China’s Wealth Gap

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On 27 February, Wen Jiabao (China’s Premier) compared the country’s economic development to a cake that needed to be larger and more evenly distributed.  He insisted it was essential that the government take on the task of “ensuring fair income distribution” over the next five years.  This is not just for the country’s economic stability (which of course is important) but also as a measure of “social justice and fairness” in China.  Whilst indeed the country has witnessed significant economic advancement, it still suffers from social/class difficulties such as a “widening wealth gap and slow increase in incomes.”  In some areas this has even led to social conflict which of course will ultimately impact the country’s economy. 
 

Tokyo’s Investments Today

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Good news has just been reported for Tokyo this year is the doubling of investment in large Japanese blue-chip companies.  Indeed combined stakes are now worth more than 1.6 trillion yen (which translates to $US19.4 billion).  The stakes do seem somewhat passive (investors remaining tight-lipped on corporate strategy and management).  But the stakes also show the escalating monetary ties between China and Japan as well as China’s increasing financial status.  This is simultaneous to the eclipsing of the Chinese economy and the Japanese economy’s rise in status to second in the world. 
During the second and third quarter of 2010, SSBT OD05 Omnibus Account Treaty Clients (a shareholder) made it to the top 10 shareholder registry of major Japanese companies (Toshiba is also on the list).  Six months prior to this, this was not the case; the shareholder made a significant jump during 2010.