Saturday, 27 December 2008
Meanwhile, watch China and Russia. With Chinese authorities in full stimulus mode through spending, monetary easing and other measures to boost confidence, we see a good chance that construction and commodity demand will begin to recover by the middle of 2009. This could have significant, positive implications for market sentiment. On the other hand, Russia’s severe domestic banking system weakness has been surprising, making this economy a potential downside factor.
PhD economist Marc Faber said in a recent interview that the last bubble to crash will be in long-term U.S. treasury bonds. Indeed, Faber has suggested shorting long-term treasuries at just the right moment. (He also is confident that - sooner or later - the U.S will go bankrupt).
China plans to offer incentives for car owners to scrap their old models in favour of new ones, in a bid to lift the auto industry as it enters a period of crisis, state media said Saturday.
Until December 20, more than 3.77 million migrant workers have returned to Henan Province, 60 percent of whom lost their jobs due to the economic slowdown. Henan has the largest population in China and is one of the major labor sourcing provinces.
I have stressed several times in this column this year that China will no longer be bullied; recent incidents have proved my point. When French President Nicolas Sarkozy disregarded Beijing’s warnings and met - in his capacity as head of the European Union - the Dalai Lama in Poland, Beijing cancelled the Sino-European summit and its Airbus orders.
This is not a time to put the squeeze on Taiwan. This is a time for generosity of spirit.
In many areas, appearances do not matter. But it does in corporate governance. If the SGX is truly seeking to uphold high standards of corporate governance for the whole market, it has some issues of its own to address.
“You can tell that the senior leaders know political change will come to China eventually and that the Party can’t hang on indefinitely,” says the diplomat. “That’s why 90% of their children are in business, not working their way up the Communist Youth League or whatever. But that change is 15, 20 years down the road. That’s not going to happen now, even if it is a very bad downturn. Change will come to China. But not yet. Not now.”
“Usually it’s the rich country lending to the poor. This time, it’s the poor country lending to the rich.”
Chinese regulators have stepped up their policing of banks, ordered them to limit their counterparty risk in overseas derivatives transactions and reviewed trust companies to make sure that they are not taking inappropriate risks. But China’s most unusual response to international financial turmoil has been the government’s decision to increase rapidly the number of qualification tests that are required for workers in the financial sector. The government has also increased the number of people required to take these tests.
The mainland is unlikely to slash interest rates next year as aggressively as it did this year, because rising expectations of yuan depreciation, a by-product of rate cuts, could undermine Beijing’s efforts to shore up the economy.
600 years ago, Zheng He, the great navigator of the Ming Dynasty, led an enormous fleet across the Western (Indian) Ocean, and reached the east coast of Africa, touching land at what is now Somali. Now, 600 years later, the Chinese Navy ships will once again leave for the Gulf of Aden. This time, though, they will not be bearing gifts, but arms, as they will enter Somalia waters to combat the recent rampant piracy that is endangering all sea-going traffic in that vital area.
The Chinese government is putting effort into its attempts to reverse the slump of the real estate market. Besides cutting transaction taxes, it is also now allowing developers with sound credit to issue debentures and real estate investment trusts (reits). This is the government’s first clear funding support for developers in two years.
According to Henry Kissinger, Chinese leaders never understood Watergate and what it meant to Americans. Chinese, of course, don’t understand how democracy really works. But, it seems Americans understand it even less.
“When the retail guys begin to go away, suddenly all you have is very knowledgeable players playing with each other, and it gets a little dicey,” said Brad Hintz, analyst at Sanford Bernstein, who expects trading volumes to decline until 2010.
Friday, 26 December 2008
Wednesday, 24 December 2008
There is a teaching in the Talmud that says an individual who comes before God after death will be asked a series of questions, the first one of which is, “Were you honest in your business dealings?” But it is the Ten Commandments that have weighed most heavily on the mind of Rabbi David Wolpe of Sinai Temple in Los Angeles in light of the sins for which Bernard Madoff stands accused.