Europe's Final Countdown

"As much as I hate this fatass ..."

... I still think that his article is a brilliant piece of work. Lack of political integration despite unified monetarily speaking, the fallibility and reflexivity of modern economic theories; without understanding the problem - just some of the issues plaguing Europe.

Time's running out!

Grow Up Greece!

"Cage them! Cage them now!"

To be a single nation or not to be? That is the question.

In order to answer this question, another question must be answered beforehand - would Greece be able to pay off their debts? Clearly, the answer is no. Knowing thism Greeks must unite and take the necessary measures in oreder to contain their financial problems - but the problem is even the citizens themselves don't know who to elect. Reason being? All the candidates speak of austerity measures which is extremely unpopular with the public.

Are fucking retarded?

Its high time that you put a sock in it after years of binge spending. You want to tell me you're unwilling to cut down your spending? Isn't that a bit childish? Look at how Koreans were willing to give their personal gold during the Asian Financial Crisis 97/98 just to help their country to get out of the debts in which those IMF & World Bank assholes put them into.

Get your act together retards!

The Great Hiatus

"We will return shortly ... maybe after 2 months"



... Yeah. Procrastination and pretending to be busy at work was probably the reason.

Getting back;,here are two interesting stories.

So it seems like there's a growing number of Chinese Companies defaulting on their contracts; why you cunning bastards. Can't blame them since there's their economy has been going downhill since last year. Now that demand on their side is weakening the whole world is in panic mode; affecting countries like Australia. Could this mark the downfall of China's economy - therefore the world? Fuck no. I'm pretty sure its temporary. I had a good chat with a newly made acquaintance who thinks that the China's economy isn't really slowing down; the Chinese government is artificially cooling (with the relevant policies) the economy to make sure they don't grow 12" inches too long or to a point where inflation comes on their faces harder than a brick wall. In his words; Effective first, then Effeciency. So I guess the government is making tweaks to make sure growth is stable in the long run; hell any GDP growth of <5% should be better than any of the already developed countries.

On another note, I recall reading an article on South Korea being pressured to halt their imports of oil from Iran; although America agreed to allow them to continue all non-oil related transactions, EU is starting to throw a fit and rejected any exemption appeals by the Korean government. Not a big fucking deal to me anyway but I was drawed towards this particular line in one of the articles;

European insurers have a monopoly on shipping insurance, so it will be extremely difficult to find replacements

How come they have monopoly over shipping insurance; in particular, for Oil Shipments? I think that is a huge fucking question that needs to be answered; I'm demanding it to be answered. Could it be because of the fact that they have been in the industry so long? Is it because only they have the capital for it? I doubt it. This is definitely something worthwhile doing a bit more research on.

Feels good to be writting again.

Why He Needs To Come Back

Ex-PM, 86 Years Old, still runs it Like A Boss

Despite being past his prime, he still exerts a strong influence over the country, while at the same time displaying hit wit and wisdom (with a tinge of criticism) in his latest public appearance. Always brings out goods points (but arguably not all the time); but I've always been an advent supporter of his Look East policy, condemning the West for their extravagant spending, and the mentality that they will always be rich.

Come back to us bro.

The Heat Of Financial Volatility

Very nice I like very much

Turns out the sneaky Chinese government finally came out of the closet by professing that in return for buying European bonds, the EU should reciprocate by granting them "market economy" status. Pretty smart eh? I've always known that the Chinese are a bunch of sneaky people. I've always had a sense of respect for them, until this Korean guy I met told me about his opinion on the country and its government. It all came much clearer when he reminded me of the country's kanji characters; "中国", where "中" means "centre / middle" and "国" refers to country. Get it? They see themselves as the centre of the world.

On another note in relation to the current Global Financial Meltdown; the one that has been hogging all of my blogspace of late to a point where I cant find any other shit to write about since its all over the news, Steve Forbes openly criticized Barrack Obama's stimulus package by quoting Japan's experience in dealing such matter; that they have had 15 stimulus packages in the last 20 years, and the outcome? Nothing. Frankly, I couldn't agree more on this but there are vast macro and microeconomic characteristics between United States and Japan (some discussed here), so a set of stimulus measures which doesn't work in Japan, might work in United States and vice versa.

The funny thing I find about this whole ordeal is how America keeps telling Europe to get their shit together but they can't even handle their own problems. This entire charade is too politically intertwined; stimulus package is tied to America's next General Election, Europeans can't think as a united entity and China is buying debts not for investment purposes, but for political gains. It's like the whole world is a fucking stageshow!

Think about the people you twats.

Where Are We Headed Part 2

But then the sun will go down again!

In a continuation of my previous post, where I somehow feel that the world is heading into a period of stagflation, let me justify that this was made based on three critical assumptions, where the fulfilment of all three (not either one) would definitely plunge the global economy into a period of stagflation;

Assumption 1 ;

If America fails to reduce and control its fiscal deficits; the downgrading of the American bond is not as much of a threat when compared to its inability to control its own budget. What happened subsequent to the downgrade was the lost in investor's confidence (from individuals to small companies) since, if the market really thought that America couldn't pay its debt, China would already be on a fire sale since they are America's biggest lender.

Assumption 2 ;

That unless Europe either kick the shit out of Greece out of Europe (for failing to meet their fiscal target), increase European Financial Stability Fund's funding capacity, or actually act as a fucking United Europe instead of whining like a bitch about how they have to pay for the other countries' fuckups, the region's continued instability posses a massive risk to the global economy. To put it simply; they need to stop being politically divided and stand united.

Assumption 3 ;

Unless China controls its rate of inflation, the global inflation rate would continue to rise. This is simply driven by the fact that the Chinese just manufacture too much shit; everything for $1 dollar. If the domestic prices continue to increase, then this would gradually lead in an increase of prices for their exports. Then, we can start getting ourselves busy by digging our own graves.

Luckily, it seems that China's inflation rate seems to be cooling off of late, and by the looks of it the government plans on putting their consistent interest rate hikes to a halt to accomodate growth. But the prospects for America still looking uncertain as they plan for another massive job growth package, while at the same time, urging European countries to bail out their debt-riddled neighbors under the pretext that "stronger members should absorb the costs; else, the regional effects would cost much greater". As Assumption No. 3 slowly cools off, we still have the first two to worry about; would we still be headed towards a global stagflation?

By the looks of it, the indicators are too strong to suggest otherwise.

Where Are We Headed Part 1

Coming soon to a store near you.

In the west, we have America's debt ceiling crisis (which remains partially unresolved), with Europe on the verge of kicking Greece out of the eurozone for failing to meet their fiscal targets; being one of the conditions they accepted when receiving the bailout fund from the European Financial Stability Fund / European Central Bank. I knew that this whole debt-crisis bullshit would somehow spread to the east, but I didn't expect it to have such an impact to a point where Fitch Ratings changed their outlook to China to negative, with a high probability of downgrading their bond ratings as well; including Japan.

Although numerous organizations are confident that chances for a double-dip recession or a meltdown similiar to 2008 are low, the outlook is still bleak, worse, we might even be heading towards a total global stagflation. Personally I believe this is the only direction in which the global economy is heading, and the signs are evident. High inflation, with moderated or low economic growth leaves legislators and central bankers with a massive headache. The South Korean government is one of the many countries currently experiencing this issue.

Despite all this, OECD has called for central banks to maintain their interest rates, wheras the IMF has urged countries to opt for stimulus packages or introduce some measures to develop growth (provided that they develop a credible mid-term debt control strategy) instead of focusing on short term austerity measures. These options however, are extremely tight and limited; not many countries (especially ones which are currently debt riddled) have the luxury executing anything else except an expenditure cut. So where does all this leaves us? In a shithole without a doubt.

Maybe Paul Krugman can come up with a Plan C this time?

Korea and External Uncertainties

O RLY? NO WAI!

In a report done by Morgan Stanley taken from JoongAng Daily, South Korea was rated last amongst Asia's emerging economy (including Malaysia, Philippines, China, Taiwan & Indonesia among others) in terms of ability to handle any external financial shocks. Now as much as I somewhat agree on this issue (since almost any export-dependant country might have difficulties in handling external financial turbulances), why was did Morgan Stanley classify South Korea as an "emerging economy"?

With a 1 trillion dollar economy, and per capita income way above World Bank's threshold for 'high income economy', would they be already have a developed economy? But it seems like there's a difference between "emerging economy" and "developed country".

Nonetheless, even local South Korean think tanks, LG Economic Research Institute (they seem to have a lot of corporate funded economic research organizations) mentioned that due to the Debt Crisis plaguing America and Europe, they too think that Korea's economy will not meet its projected GDP growth.

Maybe it's time they should switch to a more domestic based economy rather than relying on exports.

America's Debt Crisis

"Investors won't learn much new from S&P's announcement. Politicians should."

Downgrading our politics. The Economist.

Notes To The Prime Minister.

Is full of typos.

But the book itself is a vivid reminder of the Asian Financial Crisis which struck the region in '97. What made me like the book (aside from the fact that I got it for free) was how the author wrote, in detail, how the crisis affected the country, as well as Tun Dr. Mahathir's predicament at that time. The conditions and perils in which Malaysian citizens suffered, as well as the reasoning for the drastic measures in which Mahathir was forced to take, to subsequent castigation's by the international community, all documented in one full of typos good book.

Although I might have thought differently if I actually had to pay for the book. 

There were a number of pages which caught my attention but one page stood above all else - Page 336, where details on the criticisms made by the international community was laid down. Business Week labelled Malaysia as a renegade economy, and that the government made the worst possible choice. The International Herald Tribute proclaimed that Malaysia shut the door on the global economy. A London-based analyst claimed that Malaysia suffered an IQ-crisis. Pretty harsh.

When the government decided to peg the Ringgit to USD$3.80 it was blatantly obvious that the ringgit was being undervalued, depriving Black Market traders from the incentive to conduct currency exchanges. Since the country refused support from the International Monetary Fund, they were not burdened with ridiculous interest rates unlike Indonesia and Thailand, allowing them to have much more freedom in managing their budget without foreign intervention. In the end, it seemed that the measures which the government took neither helped the economy to recover, nor did it inadvertently made it worse. Recovery ensued nonetheless.

Where most of the western community backed the IMF's revival package for Asian countries, one particular oddball, Paul Krugman's Plan B to revive Asian markets was very similar to the actions Mahathir took. In his article, he noted that instead of cutting spending and increasing interest rates, the exact opposite should be enacted. He believed that the Asian economies were in dead water and all they needed was something to jump start them back into drive mode. So maybe he was spot on, in a way.

I believe that the book should be kept in close quarters for young Malaysians as a reminder of the past, to never forget the difficulties in which the country faced, and how it survived and recovered faster among its peers. Although I'm pretty sure most youngsters would prefer having Justin Bieber CD's with Japanese Mangas stacked up on their book racks.

To the least, it will have a place on my bookshelf.