1 US sanctions against Moscow could come as early as Monday - FT.com |... 26 April 2014
I am pessimistic. The
effects of sanction are rather slow and meek lagging behind strategically the pace
their opponent (Russia) acting which is solid and to the point. It is a bad
deal, inimical to Ukrainian either by losing their territory in exchange for
further sanction. Those ex-soviet secessionist countries are wary intensely. Is
the kind of protection they will receive from the West similar to that of
Ukraine? I am also wary of the jarring EU members’ resolve and solidity to
counter Russian’s aggression.
One third of gas
supplies are from Russia to Europe. Some European members can’t endure the
short- term pain of gas supply shortage to look for long- term solution of
energy dependency. There is no spirit of sacrifice; what happened in Ukraine
has not, in a least, imminent threat to them; because they are not one of
ex-soviet, and Russia is far and away that stand them in good stead. To rest on
their laurels for the false dawn of peace in no small measure, as ill luck
would have it, is an omen of sound the death knell. Revanchist’s ambition will
not just stop at reverting to Soviet which is a gospel truth.
Without NATO, it is not
clear a bloc which cutting defense expenses profusely can withstand immense
pressure by the incursion of Russia in nick of time. Or are they still dreaming
Russia is an affable lion in the jungle. It is realized now, more than at any
other time that as global police, the US should envision where the global hot
spots are? And draw up its military
plans by training regional military forces at those hot spots(self-governing),
so that it will not firefighting sending troops round the globe, be they
in middle East, Europe, or Asia pacific.
This regional security structure will alleviate the financial burden of the US;
the regional security is borne out by regional countries per se.
What the overarching teething
troubles facing Ukraine are obligatory allegiance to the country and the
concept of sovereignty. A divided country is ungovernable. The new government
will find allegiance problem, at the very worst, continue to haunt them, enfeeble
them, be it in cabinet, military or man in the street. It was a history baggage
by the decision of the dictator-- Stalin; Russians migrated to the Eastern part
of Ukraine. Now those Russians must make a choice either choose allegiance to
Ukraine or return to Russia; so that the splitting country can move on. Those
Russians living in Eastern Ukraine have weak concept of sovereignty, they
thought Ukraine is still part of Russia and by no means, a sovereign country.
That mindset must change and it takes time.
How to turn around
Ukraine economy?
Ukraine is predominantly, in the main, an agricultural and
mining country. Ukraine should not rush to transform its economy by large scale
industrialization. That way will never succeed. It must take stock of current
capability by playing a complementary role in the world market, tapping into
advanced skills from the West to improve productivity in agricultural sector,
and push for clean coal and nuclear power for energy sustainability.
But in
spite of all this, Industrialization is a process where Ukraine must determine
what role to play in the value creation process and assessing its capability,
build capability around the chosen role and migrating to it. It takes time to change and train the existing
resources. Least of all, don’t tear down factories, and all hell makes loose,
leaving wandering unemployed on the street creating chaos and social unrest. On
all these grounds, the reform must one step at a time; by this, in the course
of time change will happen.
Russia does not disrupt gas supply for now of
course not due to mercy in earnest, but has scruples about evocative effects of
downstream supplies to Europe which reminisce the danger of energy dependency
plaguing the EU in the past. That shows Russia is reticent if disruption will
precipitate the losing of big customers from EU. Globalization accentuates
mutual dependency. But there is a difference in leveraging power in between
energy supplier and customers. As EU has built up their energy reserves, they
can withstand the shock of short-term supply disruption that tips the balance.
In other words, they are better leverage than the Russia is.
3 .No, Russia Isn’t Going Broke Any Time Soon
Rising bond yield
signified higher risk intrinsically inherent in bond issue; i.e. higher cost of
fund. If you want to judge whether Russia is going broke. The fund use tells the
entire story whether it is ominous. If the bond’s proceeds are gearing towards
maintaining existing structure, probably the writing is on the wall. It means
the government is running out of tax revenues, fiscal condition is
deteriorating.
To punish Russia’s
annexation of Crimea, the West’s retaliation is reactive, and impotent. Russia
does not take it seriously. The West is still harbouring the illusion that
Russia will cave in by limited sanctions
and will withdraw troops from Crimea. It is really making Mr Putin pooh-poohed.
That is how he can maintain upper hand pitting against the West, making the
West dumbfounded and crestfallen, gritting their teeth; it is because his every
punch was forceful.
How he deliberately annexed
Crimea and legalize to make it a fait accompli, how he countered Western
sanction by imposing doubling gas price to Ukraine. So, the aids from US, EU or
IMF are transferred to left hand of Ukraine and right hand pay for the gas
bills, also his plan to build Crimea as the special economic zone. The jarring west is still pondering until
the next step if Russia’s incursion will cover the whole of Ukraine, and then possibly
step up further economic sanction. If Russia does not feel the pinch of the sanction,
then possibly the punch does not carry any weight at best. That is why Russia
is still talk big.
The crux to cripple
Russia’s economy as I mentioned in my previous comment is to boycott any energy
trading with Russia. It is quixotic! Russia can’t build gas pipes fast enough to
the East to make up the short fall. China can’t fill the vacuum to absorb all
the needs. The question is the West till now does not have a nifty concrete
plan for alternative replacement to blunt the imminent impacts of Russia energy
supplies. Russia just gave an onslaught quick punch by raising Ukraine’s energy
price. Ukraine has to seek EU for alternative energy supply.
In fact, Ukraine can
play tit for tat afoot by cutting water and electric supplies to Crimea (80 %
of Crimea depends on Kieu for importing electricity and water) or raising the
price to make up for gas price increase. Since the peninsula is not self
sufficient
There are two interesting arguments here:
1. Does the Russians live in Crimea have the rights to change loyalty to
another country by annexing a sovereignty of the country they live to their
origin by way of referendum?
In my previous comment, I cited Russian does not respect international law,
military might and nuclear threat say much louder. From the Russian point of
view, Crimea was once part of Russia. And majority of Crimean are Russians.
They are parochial. Today, some Russian political analysts even criticized
Khrushchev a drunkard by giving up Crimea to Ukraine during the dissolution of
ex-soviet.
In other words, Few Russians know or respect
international law but indulge in nationalist territorial ambition of the old
Soviet Federation. It is same argument like China citing historical reason that
hundred years back, South China Sea was once annexed into China’s territory,
therefore is a legitimate claim, but vehemently oppose other claiming party to
bring the dispute to international court for settlement.
2. What
is the optimal outcome of the crisis?
The Russian has engineered Crimea return to them. It is
unlikely to cough out its prey they devoured easily. Even the fragile sanction
by the West is lacking the fire power that emboldens them.
The worst case will be: It arouses political upheavals in
the East of Ukraine or where Russians are
the majority inhabited. It doesn't have to vanquish the whole of
Ukraine, but exhibits their existence by harassments of the local government,
using Ukraine to create a buffer zone to avert NATO’s encroachment. Putin is
not an economic czar but superb in political manoeuvre. Their is an energy
economy. He can’t turn Ukraine economy around, conquering Ukraine only adds to
the burden of his own country. Energy sale dependence becomes his Achilles
heel.
5. US to release oil from strategic reserve - FT.com | US Politics &... 13 March 2014
The caption is
tantamount to imply that whether direct confrontation in between Russia and
China is eminent. Many political analysts' short answer is no. Citing the era
of Cold War is over, as the world is gearing toward globalization. Each economy
is now intertwined. I am particularly lamenting the West put their economic
interests above rescuing a democratic process. It is not clear how adamant the
US is willing to go for war for the Ukrainians. It was said that there are some
oil and gas contracts with Russia are impending, and the US without the EU
cooperation is rickety, there is little headway. US does less trade with
Russia, but not as vulnerable as her Europe counterparts.
The American is
warm; John Kerry was the first leader to give physical support to the
Ukrainian’s interim government that saw he held hands with Ukrainian’s leaders,
on TV screen, the non-verbal signal exuded on the face see grinning. Ukrainian
has little hope that the EU what they longed to join has given them cold
shoulder. The Germany is depending on the natural gas from Russia, and France
lucrative navy contract, UK is for financial center making them reluctant to
uphold justice. Especially is the warm tie in between the big brother in the
EU, the Germany and Russia for some historical reasons, making imposing
economic sanction near impossible. There is a big leak in the imposition.
The Russians foresee the US will not involve in military intervention and they can easily get away with incursion to the soil of Ukraine without any punishment. And now Crimea is under Russia military control. This is strategic. Russia may not want to further its military expansion to cover the whole of Ukraine with no clear advantage, because Ukraine is almost economically broke, and the repercussion of the world haranguing. It is a sad story for a weak country hectored by its far stronger neighbour.
6.Renminbi’s fall marks seismic shift FT .com 3 March 2014
It is not hard to engineer the FX rate in all
possible ways, if you have amply kept fabulous foreign reserves that form a
major market force to influence the currency trends. It is as if the Japanese
Yen fallen against the greenback in the past year. Of course, we want to check
the justification for currency devaluation against the fundamentals. It was
said that devaluation will curb the teething trouble of hot monies flowing into
China. This foreign fund was deemed as real culprit for speculation sloshing
around blowing up property bubbles.
A change of direction will be a showpiece
that there is a limit to currency appreciation; especially to speculators that
long RMB, in the thought that uptrend will continue perennially. Those got
their hand burnt will likely to think again their currency strategy that will
help to cool the influx of foreign funds. There will soon come a time when the
wider band of currency fall also engrains the currency policy reform towards
free float.
7. What's going on with emerging market stocks? 4 Feb 2014 CFO network
I see it as a litmus test to the financial health of the emerging market.
If the emerging market observed fiscal policy rectitude early, it would have
had better fortified its financial position. The rout of funds from equity
market and the risk of currency gyration would not make a big dent to the
emerging economies. Look beyond Indonesia, Turkey, Argentina, India or
Brazil.
2014 started at the wrong foot, the world economy did not cut the mustard.
Contagious or not, or blame the Fed withering stimulus process , There was
bubble hyping the equity market by the idle cash speculation, and now the
market is back to its normalcy.
Nevertheless, I am viscerally of the view that the world economic growth is
an undulating path and convulsive; it is too early have a jaundiced eye to
devoutly envision an ephemeral phenomenon as trends going forward, and
oblivious to the fact that the incipient world economic recovery is gradually
gaining strength.
8, Thai
Default Risk Soars as Funds Pull $4 Billion: Southeast Asia 21
Jan 2014
If I were the
investor, I would shelve my investment plan for the inveterate risk of
political ambivalence in Thailand despite some Thai businessmen optimism's
about quick rebound once the crisis is over. I don't share that euphoria for
there is no solution in sight, as the protestors’ unyielding stance wanting the
Prime Minister Yingluck Shinawatra to step down. Whereas Yingluck adamantly stays put. She was
accused to be the puppet of her brother Thaksin Shinawatra who went on exile
after indicted of corruption.
Though many Thais
believe Thaksin is the person ruling Thailand behind the veil. Unlike her
ousted brother, Yinkluck comes clean and not a despot besides her controversial
unsustainable rice purchasing policy placates rice farmers in the North which
almost depletes the government cash reserves, and now owing the farmers for
several months most likely will induce political upheaval if that populist
policy boomerangs.
It is also the discontent of the opulent Bangkok middle class accusing Yingluck using their tax money to subsidize farmers in the North. (According to a
paper, Farmers in the North also pay tax, the amount goes into subsidies
probably is negligible.) For this policy, Ms Yingluck will also face indictment
by anti-corruption committee. So there are
many hurdles hobble ahead waiting for her to stumble. And it was said that the
upper house lawmakers, Judiciary members, even the monarchy, and the army are
all not on her side, the army is supposed to assist the government to maintain
the rule of law, but Ms Yingluck requests the army to be neutral, rather than
on her side.
The whole situation is the army doesn’t take side means on the
side of her unrelenting opponent Mr Suthep, because without the military
backing, her position is precarious. The arrest warrant serves to detain Suthep
of little avail, no action by the police force thus far. A commander in the
crisis can‘t bestride the country by mobilizing forces to maintain law and
order, and then her position probably is precarious. Mr Suthep is taking
advantage of her political naiveté and ineptitude. She thought without using
force, she will be at the political high ground. By any western standard, the protesters have crossed the red line, should be dispersed by force.
The aim of the
protestors is tantamount to overthrow an elected government. Nothing more than
that! Ms Yingluck might be a puppet of her brother, and implemented the wrong
policy that now backfired. Her opponent can’t prove that she is corrupt. There
is no compelling reason to topple her because her brother was indicted. Her
opponent was going too far by planning an unelected people to change the
constitution to suit his clique than to all in Thailand. Mr Suthep knows that
he has skin in the game, if he fails to vanquish Yingluck; he will be bereft of
hope but facing severe sentences. Only he wins this political game will he be
exonerated. That is why he refuses to batten down the hatches.
Can see the
gridlock why there is no easy solution for the time being, and why the prolong
stalemate is the inherent dark cloud overshadow any efforts seeking for middle
ground.
9 How Germany
Just Undercut the Euro 8 Feb 2014
While the Germany was on the one hand to prevent a
riven Eurozone from dissipating during the crisis; on the other hand, on major
policy, it acted intransigently, snootily blushing aside ECB's achievement--
when the southern Eurozone countries were badly in need of funds inject to
their financial systems, and ECB came to the rescue.
What should come first? The positive result of an
act or an outdated yesteryear's law? Apparently, ECB acted correctly when all
hell breaks loose, Eurozone was prostrate, and many Eurozone countries were
tenuous on the brink. And now the crisis is near over, the German nitpicking
over the past, Look very much archetypically petty politics!
10. China Auditors Appeal U.S. Ban as Ruling Endangers Diplomacy 15 Feb 2014
Many Chinese listed firms are fraught with earning quality problems, not only in the US, but also in this part of the world. Auditor should have unfettered access to document in order to validate the truth and fairness of accounts presented. We should weight the cost of losing business of noncompliance with opaque Chinese law with maintaining overall audit quality that has been established as our brand over the years. If regulator in favor of more IPOs and Chinese audit clients, then it should get ready for more frequent fall out of accounting shenanigans, a price to pay for.
This change of bureaucratic and business culture is long overdue. It epitomizes rampant corruption practice in disguise. Only Xi JingPing has the mettle to eradicate this aged-old practice. This episode is part of the larger picture of anti-corruption movement. Xi and other communist leaders fully aware that if they fail to stem it. The party's legitimacy would be at stake. Imagine its prevalence encroaches into central committee, like Zhou Yongkang. A culture of power entwine with money. There are good chances to get rich quick at any level in the hierarchy. Even in the hospital, you must give red packet to the surgeon to receive surgical operation. Look absurd, but is true in China..
12 Baltic Dry Index Crashes 18% In 2 Days 14 Jan 2014
The New Year was heralded with the rout of Baltic Dry index that frizzled out the proverbial analysts’ very much raved about exuberant optimism. Speaking in earnest, the realistic scenario probably will envision a mild one, the raison d’etre is the pernicious feeble demand which overshadows among economic powers, such as the US, China and Eurozone, albeit light in the tunnel, bereft of momentous intensity to propel the world economy toward faster growth. Baltic Dry index‘s rout is just a prognosis of how low trade demand ensnares the world economy to a supine low growth environment.
13 Fears after key China debt level soars 70% - FT.com | China 1 Jan 2014
Not particularly alarming at this stage by looking at the Balance Sheet as a whole which amassed with foreign reserves. The latest changes of sharing of tax revenues in between the central government and the local in a way will help the deleveraging process.
Not particularly alarming at this stage by looking at the Balance Sheet as a whole which amassed with foreign reserves. The latest changes of sharing of tax revenues in between the central government and the local in a way will help the deleveraging process.
The public debts can take it in own stride for the time being, unbeknownst to us is the flimsy level of private debt which accentuates to have a bash of debt restructuring process at full throttle may be on the card for now to avert the bane of a hastening full blown crisis in times.
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