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Posts Tagged ‘globalization

[LINK] “Alarm Bell Rings in Tokyo at Rapid Rise in German Exports to China”

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Bloomberg’s Yoshiaki Nohara reports on Germany’s advantage over Japan in China.

As if Japan didn’t have enough economic problems to overcome, officials in Tokyo have identified another worrying trend: lagging export growth to China.

Rapid gains in German shipments to China have caught their attention, with exports from the European powerhouse doubling in value since 2008 and reaching 74.5 billion euros ($82.5 billion) last year.

Japanese sales to China, the nation’s biggest trading partner, crept up by just 3.3 percent over the same period. Japan still holds a solid lead though, with to 13.4 trillion yen ($109 billion) worth of shipments to China in 2014.

To be sure, part of the weakness in these Japanese export figures is because companies from Toyota Motor Corp to air-conditioner maker Daikin Industries Ltd. have been building factories in growing markets like China. While the profits from these plants are brought home, it means less industrial production in Japan.

[. . . T]otal exports account for about 15 percent of Japan’s gross domestic product, compared with around 40 percent for Germany, according to a report by the statistics bureau in Tokyo.

Written by Randy McDonald

July 29, 2015 at 10:30 pm

[LINK] “Japan to ‘start over’ on Tokyo Olympic stadium due to cost overruns”

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CBC carries the Associated Press’ report about cost overruns in Japan as that country prepares for the 2020 Olympics.

In a major reversal, Japan’s leader announced Friday that the plans for the main stadium for the 2020 Olympics will be redone because of spiralling costs.

As a result, the stadium won’t be completed in time for the 2019 Rugby World Cup, as planned, Prime Minister Shinzo Abe said.

“We have decided to go back to the start on the Tokyo Olympics-Paralympics stadium plan, and start over from zero,” Abe told reporters after a meeting at his office with Yoshiro Mori, chairman of the Tokyo 2020 organizing committee.

The government has come under growing criticism as the estimated cost for the new National Stadium rose to 252 billion yen (more than $2 billion CDN), nearly twice as much as the initial plan of 130 billion.

The controversy was an additional headache for Abe, whose support rating has fallen over unpopular defense legislation that he is pushing to expand the role of Japan’s military overseas.

Written by Randy McDonald

July 23, 2015 at 10:14 pm

[LINK] On the worldwide fanbase of the Esperanto language

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In the post “Esperanto Fans”, Tyler Cowen of Marginal Revolution linked to an article in The Verge talking about how Esperanto lives even in the 21st century. The discussion at Marginal Revolution focuses on ways in which the language is still useful.

Like its vastly more successful digital cousins — C++, HTML, Python — Esperanto is an artificial language, designed to have perfectly regular grammar, with none of the messy exceptions of natural tongues. Out loud, all that regularity creates strange cadences, like someone speaking Italian slowly while chewing gum. William Auld, the Modernist Scottish poet who wrote his greatest work in Esperanto, was nominated for the Nobel Prize multiple times, but never won. But it is supremely easy to learn, like a puzzle piece formed to fit into the human brain.

Invented at the end of the 19th century, in many ways it presaged the early online society that the web would bring to life at the end of the 20th. It’s only ever been spoken by an assortment of fans and true believers spread across the globe, but to speak Esperanto is to become an automatic citizen in the most welcoming non-nation on Earth.

Decades before Couchsurfing became a website (or the word website existed), Esperantists had an international homestay service called Pasporta Servo, in which friendly hosts around the world listed their phone numbers and home addresses in a central directory available to traveling Esperantists. It may be a small, widely dispersed, and self-selected diaspora, but wherever you go, there are Esperantists who are excited that you exist.

It sounds hokey, but this is the central appeal of Esperanto. It’s as if the initial utopian vibes of the World Wide Web had never reached a wider audience. There’s no money, no power, no marketing, no prestige — Esperanto speakers speak Esperanto because they believe in it, and because it’s fun to speak a foreign language almost instantly, after a couple months of rolling the words around in your mouth.

The internet, though, has been a mixed blessing for Esperanto. While providing a place for Esperantists to convene without the hassle of traveling to conventions or local club meetings, some Esperantists believe those meatspace meet ups were what held the community together. The Esperanto Society of New York has 214 members on Facebook, but only eight of them showed up for the meeting. The shift to the web, meanwhile, has been haphazard, consisting mostly of message boards, listservs, and scattered blogs. A website called Lernu! — Esperanto for the imperative “learn!” — is the center of the Esperanto internet, with online classes and an active forum. But it’s stuck with a Web 1.0 aesthetic, and the forum is prone to trolls, a byproduct of Esperanto’s culture of openness to almost any conversation as long as it’s conducted in — or even tangentially related to — Esperanto.

Written by Randy McDonald

July 17, 2015 at 10:31 pm

[LINK] “Greece, Argentina Provide Model as Ukraine Considers GDP Linkers”

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I have to say, reading Lyubov Pronina and Katia Porzecanski’s Bloomberg article, that none of this looks good for Ukraine.

As debt talks intensify between Ukraine and its creditors, securities that pay out if economic growth exceeds expectations will probably be on the agenda, echoing deals done by Argentina and Greece in the past decade.

Ukraine’s restructuring proposal includes a “value-recovery instrument,” the Finance Ministry said last month, while a person familiar with a bondholder plan submitted in May said it has a debt-for-equity swap element. Both securities feature interest payments tied to gross domestic product, so-called GDP-linked warrants.

The main point of disagreement in the talks is whether bondholders should accept losses on the face value of the debt, something that Ukraine insists upon, while a creditor group led by Franklin Templeton has said it isn’t necessary to achieve the goals of the restructuring. The two sides said today they made progress in talks this week and are working on “narrowing the gaps” between their proposals.

While providing scope for compromise, GDP warrants are also likely to be a source of further disagreement, with the level at which they’re triggered open to debate. Argentina is considered to have set it too low, saddling the country with billions of dollars of payments over the past decade, while the Greek securities have yet to bear fruit with the nation’s economy shrinking in every year but one since its bailout.

Written by Randy McDonald

July 16, 2015 at 9:34 pm

[LINK] Slavoj Žižek in the LRB on the Chinese model

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Writing in the London Review of Books, Slavoj Žižek writes about the extent to which politics has been depoliticized. He turns to China, ostensibly the last major Communist power, as proof.

An exemplary case of today’s ‘socialism’ is China, where the Communist Party is engaged in a campaign of self-legitimisation which promotes three theses: 1) Communist Party rule alone can guarantee successful capitalism; 2) the rule of the atheist Communist Party alone can guarantee authentic religious freedom; and 3) continuing Communist Party rule alone can guarantee that China will be a society of Confucian conservative values (social harmony, patriotism, moral order). These aren’t simply nonsensical paradoxes. The reasoning might go as follows: 1) without the party’s stabilising power, capitalist development would explode into a chaos of riots and protests; 2) religious factional struggles would disturb social stability; and 3) unbridled hedonist individualism would corrode social harmony. The third point is crucial, since what lies in the background is a fear of the corrosive influence of Western ‘universal values’: freedom, democracy, human rights and hedonist individualism. The ultimate enemy is not capitalism as such but the rootless Western culture threatening China through the free flow of the internet. It must be fought with Chinese patriotism; even religion should be ‘sinicised’ to ensure social stability. A Communist Party official in Xinjiang, Zhang Chunxian, said recently that while ‘hostile forces’ are stepping up their infiltration, religions must work under socialism to serve economic development, social harmony, ethnic unity and the unification of the country: ‘Only when one is a good citizen can one be a good believer.’

But this ‘sinicisation’ of religion isn’t enough: any religion, no matter how ‘sinicised’, is incompatible with membership of the Communist Party. An article in the newsletter of the party’s Central Commission for Discipline Inspection claims that since it is a ‘founding ideological principle that Communist Party members cannot be religious’, party members don’t enjoy the right to religious freedom: ‘Chinese citizens have the freedom of religious belief, but Communist Party members are not the same as regular citizens; they are fighters in the vanguard for a communist consciousness.’ How does this exclusion of believers from the party aid religious freedom? Marx’s analysis of the political imbroglio of the French Revolution of 1848 comes to mind. The ruling Party of Order was the coalition of the two royalist wings, the Bourbons and the Orleanists. The two parties were, by definition, unable to find a common denominator in their royalism, since one cannot be a royalist in general, only a supporter of a particular royal house, so the only way for the two to unite was under the banner of the ‘anonymous kingdom of the Republic’. In other words, the only way to be a royalist in general is to be a republican. The same is true of religion. One cannot be religious in general: one can only believe in a particular god, or gods, to the detriment of others. The failure of all attempts to unite religions shows that the only way to be religious in general is under the banner of the ‘anonymous religion of atheism’. Effectively, only an atheist regime can guarantee religious tolerance: the moment this atheist frame disappears, factional struggle among different religions will explode. Although fundamentalist Islamists all attack the godless West, the worst struggles go on between them (IS focuses on killing Shia Muslims).

There is, however, a deeper fear at work in the prohibition of religious belief for members of the Communist Party. ‘It would have been best for the Chinese Communist Party if its members were not to believe in anything, not even in communism,’ Zorana Baković, the China correspondent for the Slovenian newspaper Delo, wrote recently, ‘since numerous party members joined churches (most of them Protestant churches) precisely because of their disappointment at how even the smallest trace of their communist ideals had disappeared from today’s Chinese politics.’

Written by Randy McDonald

July 15, 2015 at 7:03 pm

[ISL] On how the recovery of Iceland from 2008 was not so miraculous

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The New York Times‘ Jenny Anderson reported from Iceland as it prepares to lift post-2008 capital controls, noting how it recovered with an eye towards how it might serve as a model of some kind for Greece.

Iceland is not Greece. As a tiny island with a population of 320,000, it was able to muster political will more easily than most countries. (Meeting the prime minister is no big deal to locals.) Greece has a population of 11 million, a gross domestic product that is $242 billion, or 16 times Iceland’s, and a history of political antagonism and government corruption. The two countries blew themselves up, though in different ways. Greece, as a nation, spent too much; in Iceland, the private banks went on a bender that ended badly.

But Iceland came out the other side of disaster in part because it had its own currency, which devalued, and it imposed draconian capital controls. If Greece ends up with its own currency, it would most likely descend into an economic Hades in the months after dumping the euro before even having a chance to emerge on the other side.

Yet, even as Iceland is in the bloom of health, its comeback is about to be tested again. The government recently announced it would start to lift capital controls imposed at the peak of the crisis. Meant to last a few months, the controls have been in place for seven years, creating a shelter under which Iceland has mostly thrived.

Their success, paradoxically, has made their removal all the more precarious.

“They worked better than anyone expected them to work,” said Sigmundur David Gunnlaugsson, the prime minister. “But they of course are not a sustainable situation for an economy.”

Anderson goes on at length, noting the specific policies adopted. Matt O’Brien of the Washington Post‘s Wonkblog crunches the data, noting that the much-mooted miraculous recovery of Iceland is actually not that, starting off by comparing Iceland with Ireland.

Both countries’ banks went bust, both got bailed out by the International Monetary Fund, and both did austerity afterward. But despite these similarities, Iceland’s recovery has been better than Ireland’s. Specifically, its economy is 1 percent bigger than it was before 2008, while Ireland’s is still 2 percent smaller. That’s more surprising than it sounds since Ireland’s crisis was merely catastrophic and Iceland’s was completely so. But more than that, Iceland is doing better even though—or, for the most part, because—it did everything you’re not supposed to. It let its banks fail, it let its currency collapse, and it implemented capital controls–limits on people taking money out of the financial system–that it’s only now getting ready to lift. Not all of it helped, but enough of it did that the question has become how much of a role model Iceland should be for everyone else. And the answer is: It depends!

Iceland might have been the most obvious bubble ever. During the mid-2000s, it went from being an Arctic backwater that specialized in fishing and aluminum smelting to an Arctic backwater that specialized in global finance. Iceland’s three biggest banks grew to 10 times the size of their economy by offering people overseas, especially in the Netherlands and Britain, higher interest rates than they could get at home. Then, armed with this cash, Iceland’s bankers went on a historically ill-advised buying spree. They bought foreign companies, they bought foreign real estate, they even bought foreign soccer teams. But with it all, they bought the dregs. The problem, in other words, was that Iceland’s banks were not only paying high prices for questionable assets, but also promising to pay their depositors high interest rates. This was about as unsustainable as business models get, and it wasn’t that hard to tell. All you had to do was look for five minutes. That’s what Bob Aliber, a professor emeritus at the University of Chicago, did in 2006 after he heard a talk about Iceland that might as well have been a neon sign flashing financial crisis. What he found convinced him, as Michael Lewis tells us, to start writing about Iceland’s crash even before it happened.

And then it did. Short-term lending died after Lehman Brothers went bankrupt, and Iceland’s banks were collateral damage. Although, to be honest, they were so mismanaged that collapse was inevitable (which is why some of their high-level execs have been sent to jail). But in any case, Iceland’s government couldn’t afford to bail out its banks that had gotten so much bigger than its economy. The only choice was to let them go under. In other words, Iceland’s banks were too-big-not-to-fail. That was a lot easier, though, when letting the banks fail meant letting foreigners lose their money. Iceland’s government, you see, guaranteed its own people’s deposits, but no one else’s.

But now it was Iceland’s government that needed a bailout. It needed the money to protect domestic deposits, cushion the economy’s free fall, and keep their currency, the krona, from crashing much more. In all, Iceland got $4.6 billion, with $2.1 billion of that coming from the IMF and the other $2.5 billion from its Scandinavian neighbors.

This is where the story that Iceland broke all the financial rules begins to fall apart. In a lot of ways, the IMF’s intervention was typical. Iceland sharply reduced spending—introducing more austerity than than Ireland or Portugal or Spain or Britain or even supposed budget-cutting superhero Latvia did, as economist Scott Sumner points out. Only Greece has done more. Not only that, but Iceland also increased interest rates all the way up to 18 percent in the immediate aftermath of the crisis to rein in inflation. It gradually cut interest rates afterward, but it wasn’t until 2011 that they reached a “low” of 4.25 percent.

There was no economics-revamping miracle on Iceland, it turns out.

Written by Randy McDonald

July 15, 2015 at 6:54 pm

[LINK] “Why The World Might Be Running Out Of Cocoa Farmers”

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NPR’s Eliza Barclay makes a report that make sense of a lot of press coverage about West African cocoa. Of course there would be heavy recourse to child and slave labour if the cocoa plantations are unrenumative.

[T]he 2015 Cocoa Barometer [is] an overview of sustainability issues in the cocoa sector, written by various European and U.S. NGOs, and was released in the U.S. this week. And what they’re really worried about is the people who grow the beans that are ground up to make our beloved treat.

“The world is running out of cocoa farmers,” the report states. “Younger generations no longer want to be in cocoa. Older generations are reaching their life expectancy.”

It’s well known that most cocoa farmers live in extreme poverty. There are about 2 million small-scale farmers in Ghana and Ivory Coast, the West African countries that produce at least 70 percent of the world’s cocoa beans. The average cocoa farmer in Ghana earns 84 cents a day, while the average small farmer in Ivory Coast earns just 50 cents a day, according to the Barometer.

I met two women cocoa farmers at the World Cocoa Foundation’s meeting in Washington, D.C., this week. Assata Doumbia tells me (in French, through a translator) that she and her husband are both in ECAM, a cooperative of 900 farmers in Ivory Coast, and that their income is “extremely low, almost nothing.” What little they do earn goes straight to her husband.

“Men have all the control and decision-making power in the cocoa sector,” she says, though she and a few other women are trying to change that for the 120 women in the cooperative.blockquote>

Written by Randy McDonald

July 10, 2015 at 9:50 pm

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