Pancake Index?

Mmmmm pancake. Dope!

There seems to be some sort of obsession by the team at The Economist; in addition to creating the Big Mac Index in measuring currency over or under valuations (with its own set of limitations of course), they have (unofficially) developed another index based on cost of pancake ingredients; although it seems that they have done this to commemorate Shrove Tuesday rather than planning on doing it on a regular interval.

Still, deliciously informative.

Notes to the Prime Minister

He has spoken!

Two recently good articles by Mahathir on how the west is poor and how Malaysians are immature in dealing in rationally discussed emotional and sensitive issues.

Sustaining Japanese Exports

Good point; why dont they try to export their Sumo sports?

Well can they? In a recent article from Yomiuri, Japan posted their first Trade Deficit in 31 Years (since 1980); should we call this an achievement? Definitely, but not a positive one.

The deficit is a result of four consecutive events which occured in 2011; The Japanese Earthquake, The Flooding of Thailand, Appreciation of Yen and a Surge in LNG Imports to commenstruate the loss of power generated from the Fukushima Nuclear Plan. Now apart from Trade Deficit, another concern of theirs would be their dwindling Current Account Balance.

Ouch! Two hits in one year; that can't be pretty. Apparently the majority of the surplus in their Account Balance is driven from the interest payments received from U.S. Bonds in which the Japanese Government holds quite a nice sum. This is what happens when you get America to spend a lot, and East Asian countries to produce them; imbalance in the production and spending side of Capitalism. So when a major importer like America and EU get hit by recessions, they don't have anywhere to export their products. This trend can be seen happening in all high value (non commodity) export-dependant countries like South Korea as well; actually based on another article from Voxeu, Korea's economy looks much more volatile compared to Japan.

The graph basically depicts Import Contents of each main GDP Component; carefully look at their "Exports" column, and you'd be surprised to see that close to 40% of the products they produced contain imported contents (most probably from Japan or China). So what does this tell us? Simple. Either find new markets, or stimulate your domestic economy. Concerns are currently being raised in Japan; the appreciation of the Yen has led (more like forced) companies to move their manufacturing operations overseas, potentially hollowing out Japan's manufacturing industry. So what happens next? Good example is America; where the rich get richer and the poor get poorer.

Don't you just love the world that we live in?

Repurcussions on Denouncing FTAs

Sorry ... I don't speak Chinese, English please?

I was surprised to read an article saying that should the opposition party in Korea win the upcoming April 2012 elections, they might be inclined to repet the US-Korea FTA which was some at, uhm, sometime ago after (what I recall as) a long series of negotiations. To answer the question whether they should or should not write off their FTA, they must first ask themselves; what made them negotiate and sign an FTA with America in the first place?

I recall reading a discussion on the US-Korea FTA in one of my groups on LinkedIn. As far as I can remember, the argument was even though both parties opened up certain industries for mutual benefit, Korea loses grounds in their agriculture industry; where the evidence can be seen in the government's efforts to give support to their Farmers and Fisherman (also interesting; 15,000 farmers earn more than USD 100,000 annually). Now as much as I am all go for Free Trade Agreements, one thing I would disagree is creating a disadvantageous environment (unfair competition) for key industries, one of which is Agriculture. The reason being is, if you open yourself or create an environment where basic necessities such as food being open to foreign competition, what if the import supply gets cut off?

Now of course, this is quite a contentious issue and the government knows this and is trying to circumvent the issue by giving them subsidiaries. But would that be enough? We all know subsidies can help cushion certain impacts but also creates market distortions. So the question now for this particular issue is; are they making the right move?

Obviously no.

Yen Intervention; Again?

Illustrates the actual situation perfectly.

The Japanese Government is at it again by selling up the yen to ease the appreciation of the Japanese Yen against the dollar. Have they ever thought for the slightest moment that, the problem resides in the depreciation of the US Dollar rather than the appreciation of the Yen? Would selling the Yen increase the circulation of the currency therefore, devaluing their currency? I doubt so; and wouldn't such an intervention be deemed as illegal? How come America's allies always gets away with everything and Iran's so called "Nuclear Programme" suddenly gets a bill banning any financial institution from conducting dealings with them. God damn capitalists.

But the results are apparent, they posted their first Trade Deficit in 31 years, and numerous Japanese companies are feeling the pinch, instances like NEC cutting 10,000 staffs globally, Sony changing their CEO, Toyota posting the largest loss ever since their inception; and so too is Panasonic. To top this off, South Korea; both its citizens and companies are surpassing them in every front. Their people are learning English overseas, creating human capital capable of integrating into the global economy much easier compared to Japanese and its firm. Now they're losing out on their exports; they should either stimulate their stagnating domestic economy or change the perception of their citizens on adapting to globalization.

The question is, are willing to do so?

Linguistics with Trade & Economics

Parle vu Englisheru?

Very thoughtful argument on the impact of language on trade and integration of the economy into the world. I do believe language does have an influence somewhat (e.g. my belief that one of the reasons Korea is surpassing Japan stems from the fact that a lot of Koreans are open / willing to learn English; to the extent that a lot of Koreans spend their highschool years overseas in English Speaking countries) on the economic development of a country. I think claiming that learning other language is "useless" is extremely one-sided. The exchange languages, apart from English, generates economic activities itself; through cultural mediums be it tangible or not. Should the world unify and speak one language; wouldn't it be a dull world?

Be damned if it wouldn't!

Repatriating Koreans

Picture totally unrelated. Seriously.

A bit off topic - but I plan on making this a regular thing.

This is an amazing article about how the founder of Ticket Monster (Dan Shim) quit his job at a reputable consulting firm (McKinsey) to do his own startup - very inspirational indeed. Remind to self; start doing your own research and brainstorming sessions.