Best comment in 2014

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.

2.  UPDATE 1-Russia's Gazprom says Ukraine did not pay for gas on time Reuters 9 April 2014

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.

But anything can happen for now, as nationalism of reverting to old Soviet imbues in Russia, to Russians, the dissolution of ex-Soviet was above reproach, Putin’s incursion by means of nefarious tactics to the secession of ex-soviet Federations endears fervent support domestically, some describe it as revanchism that pushing up Mr Putin's rating. For that, Mr Putin may hell-bent on making aberrated decision, a brink of abyss


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  

4. Putin No Mad Man to Russians as Power Play Trumps Economic Risk (Bloomberg) 17 March 2014

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.

If the West is in unity to boycott Russia’s energy supplies that will cause a big dent to their energy revenues. For this, it will draw Mr Putin to the negotiation table, and both sides will find palatable middle ground. For Russia, it will avert colossal economic failures. But what is lamentable is Ukraine, being a seed of the chess board in the new Cold War's game plan

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 shrewd Russian has made calculated moves; they know they can replay the episode of Georgia without any threat. They don’t believe in international law, but military might with nuclear threat. They fired a long range missile to forewarn the US of their military capability. The Cold War is not over, less ideological, but competing on military might. This applies to China, and North Korea. That is the reason why China is flexing its muscle to show strong-arm tactic to their neighbours and North Korea never be naïve to give up nuclear weapons hope. They pragmatically learn from one another how to survive in this contemporary jungle. 

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.

At this slowing economic environment, PMI and manufacturing data indicating bleak economic prospect, currency devaluation gives the export economy a boost, as the coastal areas are fighting for increasing wages, intensive competition as cheap source of supplies, more expensive input in pursuit for a razor thin margin. It certainly will give a breathing space for manufacturing front amidst the restructuring process in the sector. It is not clear how it will boost domestic consumption by cheaper import in Chinese stance (No clear evidence of demand elasticity in foreign goods), neither would the devaluation will elevate price level, so the impact I see in no uncertain terms is neutral.

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.

11,   Austerity drive crimps gift-giving by China’s rich - FT.com | China                    17 January 2014

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.

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.

 

    

Best comments 2013 (part 2)

1. China's cash crunch threatens Shadow Banking shock - Telegraph 24 Dec 2013

The repo has descended to 5.4% today after central bank injected liquidity into the system. The liquidity in the market is abundant, especially for larger banks, but the lending is dismal. A slowing economy results in slower credit growth that banks play fast and loose, circumscribed by prudent lending.

Larger banks usually chime with larger customers basically are state enterprises, are not doing well as it is now, whereas small medium enterprises(SMEs) are duds, fraught with vestige of lending money due to poor credit quality that large banks are reluctant to make lending which restricting credit growth.

The ramification is those need cash the most (SMEs) are running short of cash, A cash crunch came thick and fast is just a replay of past episode few months ago. it also means that there is no effective solution to resolve the hitch despite the Chinese government loosen the grip to allow smaller private banks beginning lending business afoot  to SMEs.

            In the end, credit quality is an overarching factor, whatever the size of the bank, It is               primal that banks are in for a profitable business. Chinese businesses must learn to                    weather good times and bad. There should be chapter 11 like bankruptcy law for                      insolvent companies in no time to reorganize and restructuring trouble businesses out              of the pickle to protect not only debtors but stakeholders. The problem lies in the                       execution.

2. China sends warplanes into air defense zone - Chicago Sun-Times 29 Nov 2013

The tension is now heightening. the idea of air defence zone was folly that China now can't withdraw, neither can it back away from execution due to lose face and is mortified by domestic opprobrium for no action to uphold their claim  which  results in they can only harden their stance.

I t was also folly in the sense that the Adiz(Air defence identification zone) helped their foe to push the US to the frontline, in direct Sino-US confrontation, and the chances to flare up warfare due to miscalculation is all time high.

It benefits only to the rightist Japanese they anticipate anxiously the US to protect their Diaoyu / Senkaku Island’s sovereignty, and now China has escalated the tension by giving itself lesser leeway to maneuver diplomatically. Both the US and China are in a dire strait at the altar to fight for few rocks at a no win situation and the balance go the other way only benefit the rightist Japanese.

            The Adiz also serves as writing on the war to China’s neighboring countries and the                  world that a rising China will not always be peaceful.

3. China creates 'air-defence zone'

China always claims its rising as peaceful, but others smell rat. The Chinese president Xi Jinping reassured the world that the country would not pursue hegemony. But watch what they do is a much reliable evidence than he said.

Immediately after China’s self-proclaimed "air-defence zone", It truly put the America in a fix, the tension between the two super powers escalated. Despite the protests by the US, Japan and South Korea, China is bizarre in testing their brinkmanship perceptibly to check what the reaction by the concerned parties. It simply can ignore a litany of protests, because this is rather a weak challenge to their legitimacy. As year go by, the territorial disputes becomes fait accompli--a legitimate claim.

The shrewd Chinese wields its economic clouts to tame dissidents. South Korea is the weakest in the link due to its close economic tie and its proximity with China. Though an ally of the US, it probably will not adopt a confrontation stance toward China. It also depends much on China to influence the wayward North Korea.

The Japanese Prime Minister Shinzo Abe is a tough nut to crack. There is no denial about the Chinese territorial ambition. To my mind, the Chinese does not want to escalate the Diaoyu / Senkaku-shotō Island, so long as the Japanese admits the island is in dispute and does nothing about it; the Chinese would probably leave it as it is until they are growing into strength in time to come. Shinzo Abe is eager to show in no uncertain terms about Japanese’s sovereignty about the island, if such is the situation that leaves China with no choice if they want to pursue the same claim.

The “air defence zone” probably put the US in the worst possible choice, as conflicts easily flare up if China adopt a harden stance. The US will be in direct confrontation with China, which China also try to eschew going war with the US, but when the nationalism overshadows cool mind in China will force the government to make a hard choice the more, anything can happen. And to the US, if the US dares not to confront China, it would probably lose its leadership in Asia Pacific region when its claim of AP is pivotal is a fantastic talk, so, the probability to go for war is still good.

Amidst quarrel and squabble, the only solution for direct clash is back to negotiation table. Each party must concede a well grooved pattern that there is a grey area in strife-torn East China sea where no party should assert sovereignty. Suffice it to say that leave it as status quo for the time being is the optimal choice.

4.China hard landing is likely: Andy Xie Caixin Online Finance plus 22 Nov 2013

It is probably hyperbole that on the verge of hard landing is impending.

Le Keqiang is probably not in the least fear of adopting bold steps to forge ahead financial reforms, and is willing to experiment new ideas, such as that of Shanghai economic special zone.

In the midst of any reforms, not only in China, reformer encounters exogenous and endogenous impediments, such as that mentioned in the article:  carried trade, if it happens in relatively advanced financial market like that of Japan, it goes without saying that there bounds to be hordes of speculators looking for higher yield opportunities in a quasi-capital control country, like China.

Non-performing loans and shadow banking are unpalatable wild cards, usually prevailing under depressed or undeveloped economy and housing market. This phenomenon also happens in Europe. The Chinese government is cognizant of the housing sluts in derelict in some cities. They are testing water to find a right balance in between healthy property market growth and the suppression of speculative housing activities.

 To my mind, the crux to nip in the bud, eradicating housing bubble risk is to control land sales and cater for more subsidized public housing to allay lower rung’s crying need of housing demand, The odd thing is, land sales, to say the least , are the source of the housing bubble and the major source of local government income. The Chinese government must bear the mantle to learn from past lessons.

5.Chinese business investors flock to UK - FT.com | UK Business 18 November 2013

It can be good news and bad news for the UK. This stupendous progress  at the back of high public and private debts, tenaciously attracting foreign investments will bring sustainable growth to the country by using foreign funds. Over and above, foreign direct investments also help to lower unemployment.

The flip side is Chinese entrepreneurs (except those receiving higher education abroad) are blindsided by having little knowledge about the razzle-dazzle Western business and regulatory environment.

They will encounter rifts in terms of unconscionable culture shock, and intensive and cacophonous conflicts if they resort to deeply grooved habits and using boilerplate business skills acquired at home to run their foreign businesses, will cast a pall to their foreign ambition. It behooves that both sides need to, especially the Chinese side, in no small part,  to gradually adapt to variegated changes by learning the rope.

All that said, a quicker way, come hell or high way,  will be giving foreign managers carte-blanche and for them taking a back seat, it is an inopportune time to be on their own until they are through the gamut of the whole operation then consider weaning off.

6. The ECB’s Asset Quality Review: Are Banks Doing Their Homework? 7 November 2013

It is evident that the current prostrate large banks in Eurozone are undercapitalized. Why local governments take a respite acted supinely? It is because big banks assets usually larger than those of the governments, and there is no clear demarcation to garner the needed funding in between government and banking sector.

And now, most Eurozone countries are heavily in debt, let alone have the ability to rake up funds to recapitalize their banks in any endeavors. According to the economist, even France and Germany's large banks can’t elude the fact of undercapitalization. There is no qualm that many of the big banks will fail the review, but the question is not the review, but where (ECB, Germany, IMF or public tender?) to marshal the needed funds? Without recapitalization, Eurozone’s  recovery is hanging in the balance! 

7.Senate Passes Bill to End Fiscal Impasse  17 Oct 2013

The outcome is now a prosaic stagnation; all are back to the bargaining table, a circuitous round back to the original point. The merit is it eluded a deleterious head-on default in the nick of time. According to Financial Times, the treasury’s computer system cannot prioritize payments to international creditors, so presumably, heading to a default was inevitable, and now budget talk deadline defers to another showdown four months ahead, and no one knows whether it continues to boondoggle repeating the same episode, the out of whack political system consuming enormous energy but yielding no results and only kicking the can down the road.

I mentioned in my previous comment, a two party system (bipartisan) unwilling to compromise only leading to a big crash than a political solution. The strategy to elicit constructive checks and balances between parties diminishes. I read many comments from LinkedIn’s group subscribers; it appears that many Americans still value checks and balances. The crux of the problem of the current system now is it hampers political progress. You may blame the Republican Party for all the havocs, but deep in the skin it is the ideologically divided Americans is the center of the issues.

How to break through the current political stalemate, I think a new centrist political party may be a way forward to progress the political agendas. They are neither red nor blue, say purple. The purple party will pursue a center approach. Their targeted competing political territories will be at swing states where neither red nor blue is predominant. Ideally they capture all the seats of swing states, which resulting neither one party can command the majority vote in the house, In order to pass the bills, red or blue must coalesce the center party and move their stance toward the center than to the extreme, making it easier to break the political gridlock that is the primary purpose of the existence of the center party.

But now, who is willing to come to the fore playing this role? 

8. US government shutdown: lessons in leadership Executive suite 11 October 2013

The recent development is the Republican offered to lift the debt ceiling temporarily for six weeks to facilitate the budget talk, but the Whitehouse rejected the offer, insisting to open the government and lift the debt ceiling first before talk can begin.

It would be hard for the Republican to accept a frizzled out and stop the farce if open the government ostensibly means approving the budget without any haggling, the talk after approval carries very weak negotiating power, and it is hard for them to accept this deal, and may be the standoff continues and everything is back to square. One solution to the stalemate is partial approval to let talk continue and temporary open the government to give further negotiation a chance.

There are mooted wild guess about there will be no default on payment obligation among some observers and Republicans, because tax revenues continue to pour in and the government can prioritize what to pay first. There are some truths in them, but no one knows the veracity of actual cashflow position more than Jack Lew. There are several determinants unknown to us:

1.      The quantity of tax revenues flow in and conserve for the next big payouts, and the consistency and predictability of tax revenues flow. This part usually is uncertain and unpredictable.

2.      The quantity of essential payments: this part usually is certain and fixed. Non-essential payments either deferred or whittled away.

Even the government will not default on bond payment due; we can imagine the treasury will be operating in a constricted manner tantamount to an austerity.

To break the gridlock, both sides must disabuse to manifest flexibility and readily to see from the other party perspectives. The purpose of Republican’s offer is not to yield to Mr. Obama’s demand, but switch their firepower to budget negotiation, lifting debt ceiling is a minnow (I have explained in the previous comment); we can foresee there will be a harrowing hard bargain. The Whitehouse‘s rejection also means now turning the table around, the Republican is emboldened to vociferously use this for a haranguer that the president turned down the offer, it is he culpable not them pugnacious. So, it is imperative to find middle ground to resolve the conflict stymies the progress rather than balked at the status quo resulting unruly calamity causing disarray.

9. Markets are betting that the U.S. Debt ceiling will be finally raised before the 17th of October. But imagine the opposite! CFO 8 October 2013

It is a political brinkmanship that each side refuses to budge, stuck in the cul-de-sac that expecting the other side to chicken out of the political stalemate. In the latest edition, a joke in the economist wrote” To a wondering world, the recriminations missed the point. When you are brawling on the edge of a cliff, the big question is not “Who is right?”, but “What the hell are you doing on the edge of a cliff?”

It is not facetious, in my previous comment; I said the pressure was on the Republican side. Majority of the Americans cannot condone the republican rancorous politics using Obama care to hold their President hostage, Even though they don’t fully endorse with the healthcare policy.

it is a lose/lose situation, Mr Obama cannot sit tight to wait for the Republican yield to his request. It is the Administration that runs the country, not the Congress. If the Republican stick to their gun let all fail together. The outcome can be irreparable. It is the Administration to clean up the leftover, so, it is a lose/lose situation. The American people do not want to see the country in a dicey state, expecting the administration to lead and in control of the whole situation; implementing damage control to minimize the risk of worst possible outcome.

Since both sides are stonewalling, it is imperative to have mitigator schmoozing seeking breakthrough to the gridlock, and it is achievable as many Republican congressmen do not endorse the idea of tying the budget or debt ceiling to Obama care. Now it is only face savings on both sides that is the issue, a bearable concession would be able to break the ice and ensure the matter not scuppered. The Vice President Mr Joe Biden is an ideal candidate as mitigator, a wise and canny politician with abundant political capital in his bag. There is no qualm he can achieve the task.

In fact there is no need to set a debt ceiling, because it is repeating the task of formulating the budget. Debt ceiling is a level doesn't say anything good or bad. It is the gradual decline of debt level is the primary concern, and budget cut already performing the task of debt reduction. The whole idea of budget is to ensure you are prudent enough not to spend more than what you earn. Beside quantitative target, there should be qualitative goal if you want to be constructive to ensure that certain level of spending must gear toward generating future revenues. Not just haggling of what to cut what to spend that frequently mire into political wrangling. (Republican wants to increase Defence budget whereas Democrats want to increase social welfare.)It is the consensus of strategic intent that is crucial to build into budget formulation. Since the debate of budget has already done the job, why debt ceiling must be there? 

10.This shutdown may push the parties to come up with an agreement on the debt, and that would be a good thing. bit.ly/1hfpNda  Chief Financial Officer 2 October 2013

It is a sad episode that bipartisan interminable rancor in a morass finding innocent civil servants victimized (taking no pay leave). If shutdown may push both parties to reach agreement, it won’t evolve by keeping feisty to the current bane. What is causing the gridlock is neither side has the attitude of compromising, and the refusal of either party to see each other stance.

Of course now the pressure is on the Republican side, on the part of bad publicity. Forget about the tea party put muck out of thin air, the feckless younger Republican congressmen may be of the view that the harder they push to topple Obama care, the greater they get the ground support from their own territory. But for neither blue nor red territories, bad publicity will gravitate more seats toward the Democrats, if they are unyielding. According to later survey, majority of Americans do not want Republican congressmen use budget approval as weapon to postpone Obama care. Which only to prove it is wrong strategy that it does not play out constructively as expected for each party to counter check the others if neither side wish to compromise. 

Republican should see Mr. Obama will take his healthcare reform as a signature piece during his presidency. Any move to eradicate this achievement will encounter strong resistance. Mr. Obama also must not over ebullient, there are shortfalls in the newly born healthcare policy rickety that need to refine.

According to Wall Street Journal, temporary employment business is booming, because companies are skittish about bringing on permanent hires to keep employees to below 50 level to get round Obama care’s magic number. If Mr. Obama is open his health care system for refinement and offers continue dialogue, in exchange for the Republican’s support.

If worse comes to worst, Republican has nothing to win for prolonged shutdown, overdone pre-election bluster only see them losing more seats next year; this will be a stepping stone to come to term with Mr. Obama for those non-extremist Republicans to compromise, support the budget and lift debt ceiling (why it should be there at all to consume so much energy year in year out, after all.).

11  Give Jobs a Chance nytimes.com by Paul Krugman CFO 17 September 2013

My line of thought does not go along with Mr. Paul Krugman.

First, it is felicitous to taper if Fed found open market operation was no longer as effective. There is no reason to continue the futile effort to flux the market with excess monies that no longer stimulate derisory demand; Bernanke’s experiments can only speak of one truth that monetary policy can only do so much. And highlight an important lesson that monetary policy can only be effective if there is resurgence of corporeal demands. A surfeit of monies can be counterproductive in driving economic growth.

Second, the easing policy keeps the interest rate low has already revived the housing market, there is no need to keep interest rate low for prolong period of time to induce an effervescent housing market, tapering is to correct the market to its fundamental.

Third, there is no concrete evidence to adduce that there is strong correlation

between easy monies and job growth. 

I am discomfited by Mr. Krugman recent article that he lamented it was the quantities of the monies not swingeing enough that obstructs job growth. If there is strong corporeal demand, it would be sensitive to money supply growth. It is elusive by increasing further money supply that can’t make any wonder. He should consider other factors are at play which weakens the demand, such as rickety global economic recovery, government budget sequestration and austerity measures in Eurozone, and nascent private sector growth.  All these are projecting a low growth, low consumption environment; the buck, as it were, stop there; there is nothing easy money can do about.

12. US, Russian Naval Deployment Near Syria - Update 10 September 2013

A sigh of relief, there is an optimal option now that proposed by Russian foreign minister that for Syria to surrender the chemical weapons. According to news, Mr. Obama is keen to pursue diplomatic solution. In my last comment, I suggested not rushing into war; the reason was the process of gathering evidence was incomplete.

Though the president has the authority to wage war but could fell into the trap of Mr. George W. Bush’s footstep. With hindsight, many US allies carefully drafted using the words of “strong response against the regime” few stop short of explicitly supported military option (Most probably concerned about the prohibitions of UN charters).

To my surprise, Mr. Obama opted for congress’s authorization. This move is risky indeed, because the perspectives of viewing the incident amongst the white house, the senates, and the lower house, the differences can be widely apart, especially the lower house, their votes are driven by ground sentiments, and about 60 % of American against intervention, That will ensnare Mr. Obama in an awkward position, because the president can’t on the one hand seeks authorization, and on the other ignore the Americans’ wish not to be heady for war. This was why David Cameron opted out.

The dilemma is now solved by the new option for Syria to surrender Chemical weapons, why I see this as an optimal solution for the president;

First, it gives the president a stepping stone to go with the view of the majority Americans.

Second, the objective is to stop the proliferation of chemical use, and the West was trying hard the UN security option but to no avail, because the Security Council was “held hostage” by some members. In fact, the Security Council is badly needed to reform to facilitate decision making rather than being obstructed by unanimous agreement. Mr. Ban ki-moon fails to restructure the council to facilitate majority-voting.

Third, some say military strike fizzles out, the president’s cachet and US leadership in the Middle East are at stake. That is wrong mindset, We should measure against outcome not means. Military action is only the last option, there was a war strategy in ancient China by Sun-zi “不战而屈人之兵” It literally means “winning the battle without going for war is top choice.” the ultimate objective was to stop chemical weapon use not just flexing muscle. In fact, it was the president shows his mettle by garnering international support that puts Russia and Syria in hot soup to seek viable option.

Fourth, as to where and how many weapons that Syria possesses is a matter of intelligence, the US can up the stake by asking Syria and the rebels to sign treaty not to proliferate chemical weapons, this is to stop any future use. According to some magazine, the purpose of Syria chemical weapons accumulation was to counter the threat of Israel. Involving in the Middle East ethnic conflicts is meaningless; using military option to solve these conflicts is pointless. Not one to mince words, the only solution to Middle East issues is soft power that boils down to two words, “trust” and “tolerance”. This also applies to the relationship between Israel and Arab countries.

13.Syria intervention plan fueled by oil interests, not chemical weapon... theguardian.com 5 September 2013

The statement sounds familiar, there was a time during the Iraq war, the Chinese media clamored about the ultimate motive of US’s Iraq war intervention was germane to devouring the abundant oil supplies in Iraq. With hindsight, who benefits now the most from the supply of oil from Iraq? It is China. It is absurd to speculate Syria military intervention plan was fuelled by oil and gas interests. Without proffering ground troops in Syria and securing domination in the politics of the rebel parties, there is very little influence in exploiting energy advantage. Judging from the portend of current mayhems in the Middle East's geo-political conflicts, the speculation is crassly unfounded.

14.The Triumph of Parliament – Telegraph Blogs 31 August 2013

It is too early to celebrate the triumph of the thirty vote’s majority. I think it was a wrong precedent in the past that clouds the right decision now. It was the ex-US president George W Bush and   ex-British Prime Minister Tony Blair without concrete evidence of "chemical weapon of massive destruction" that impugn the credibility of the subsequent just war against a crime that was pernicious; the vile effect is to sway the public confidence that it is "a lie of wolf come again"

However, all is not gone. The UN inspectors can play a crucial role now as independent party to testify whether it is a fact or lie. There is no hurry to rush to wallop Assad by missile attack in fear of letting him scot-free, think of something more effective to cripple the regime, and first and foremost, for any troop going to war, there must be a overwhelming purpose that people will convince it is just a holy war. a vivid video image will have explosive impact to say everything than a thousand words of any persuasion.

15.60% Of Americans Oppose US Involvement In Syria, Only 9% Support... 26 August 2013

It is not a simple black and white issue. I believe the Whitehouse has taken into account the pros and cons of direct intervention, of course, also the view of the Americans. 

The Whitehouse weighs against ethical belief against non-intervention, the strong opposition stance of Russia, the chances of quick win, the connection of the rebels with Al-Qaeda, the solidarity among the rebels, the credibility of rebels to lead the country and the nature of conflicts in the civil war are also the concerns, and ultimately, how the world look upon the America as a credible world leader to manage peace,

16.Radioactive Leaks in Japan Prompt Call for Overseas Help  bloomberg.com  21 August 2013

Woefully, the Japanese at Fukushima suffered another onslaught in a rash. 

First, it is the underestimation of the risks of deploying nuclear energy untoward into disarray, and also the lacking of readiness undermine to meaningful response to any kind of unruly nuclear crisis.

Probably there was too little successful precedence to follow, to say the least. The consequences are baleful to human lives and damage to the environment.

It is now clear that the price to pay for technical incompetence is egregiously large. There is also an element of staid Japanese politics into play as to how to manage a crisis to allay public worries leaving the mayhem.