Head towards the light...

...a silly analysis by a Chinese statesman. The Euro imposes "discipline" to the extant its members find it palatable to adhere to its rules (and so long as the "rules" are subject to political interpretation given changing economic and political climates)

The economic climate is changing...and so are the rules.

Its an interesting opinion, and one that marches lock-step with post-modern communist ideology. I care less about the outcomes political thinkers attempt to engineer (as they so often fail miserably to do so)...I care far more about their analytical and emotional processes that categorize these outcomes as "desirable". Utopia has always been an excellent outcome to engineer, but thinkers such as Plato, Thomas More, and Marx each used a different calculus in heading towards the light.

This line of thinking applies to the U.S. as well given the current administration and pending supermajority in congress.

The Recapitulator also sends his condolences to those affected by the actions of terrorists in Mubai. Sushil, be well.

Britain's efforts to hold on to sterling are doomed to failure in a global economy dominated by powerful currency blocs, said Hong Kong's leader Donald Tsang.

http://www.telegraph.co.uk/finance/financetopics/financialcrisis/3531461/Britain-should-join-euro-says-Hong-Kongs-Tsang.html
By Ambrose Evans-Pritchard, International Business Editor
Last Updated: 11:12PM GMT 27 Nov 2008



Mr Tsang, an elder statesman of Asian finance, said open trading states must adapt to the realities of modern finance.

"I do not believe in the sustainability of a small floating currency. Look at the pound, it's being attacked," he said in interview with the Daily Telegraph.

"The euro is a good move. People have to abide by the Maastricht criteria, so it imposes discipline. Other options are less palatable if you really want to become a big strong economic union."

Mr Tsang, the chief Executive of the Hong Kong Special Administrative Region of the People's Republic of China, is a veteran of East Asia's currency crisis of the late 1990s and the SARS epidemic. As a Beijing loyalist, he offers clues into the current thinking of the Chinese leadership. His comments on sterling are a warning sign that China may ultimately prove reluctant to buy large amounts of UK Treasury debt in the future.

Mr Tsang, as always wearing his signature bow tie, said it will be impossible for the Far East to launch its own currency union until China makes the renminbi convertible. This is not yet remotely on the agenda.

Signal filters.

People operate with different filtering devices to sort, process and deflect information. In my view elections in this country are sort of a vetting process whereby the electorate votes a preference for a set of signal filters.

A new executive administration brings new "signal filters" that determine policy going forward. This makes markets nervous as new investment decisions must be made in a changing environment.

Mr. Obama continues to demonstrate he knows this, and makes appointment after appointment that solidifies his pragmatic credentials.
Obama Plans to Retain Gates at Defense Department

By PETER BAKER and THOM SHANKER
WASHINGTON — President-elect Barack Obama has decided to keep Defense Secretary Robert M. Gates in his post, a show of bipartisan continuity in a time of war that will be the first time a Pentagon chief has been carried over from a president of a different party, Democrats close to the transition said Tuesday.

Mr. Obama’s advisers were nearing a formal agreement with Mr. Gates to stay on for perhaps a year, the Democrats said, and they expected to announce the decision as early as next week, along with other choices for the national security team. The two sides have been working out details on how Mr. Gates would wield authority in a new administration.

The move will give the new president a defense secretary with support on both sides of the aisle in Congress, as well as experience with foreign leaders around the world and respect among the senior military officer corps. But two years after President Bush picked him to lead the armed forces, Mr. Gates will now have to pivot from serving the commander in chief who started the Iraq war to serving one who has promised to end it.

In deciding to ask Mr. Gates to stay, Mr. Obama put aside concerns that he would send a jarring signal after a political campaign in which he made opposition to the war his signature issue in the early days. Some Democrats who have advised his campaign quietly complained that he was undercutting his own message and risked alienating war critics who formed his initial base of support, especially after tapping his primary rival, Senator Hillary Rodham Clinton, for secretary of state.

Flow reversal

Very important anecdotal article (the only kind of article this particular publication uses) regarding incentives of U.S. students. The "brain drain" that flowed from top engineering and mathematics universities is now reversing. Economic incentives create innovation. this is good news.

Engineering: Suddenly Sexy for College Grads
As the financial crisis deepens, science and math grads who once flocked to investment banking are now considering jobs in engineering

By Vivek Wadhwa

Early in his college career, Tyler Bosmeny assumed that after graduating, he would do what hundreds of other self-respecting Harvard University engineering, math, and science students do: take a job on Wall Street. "I had done a summer internship in investment banking, and part of me always figured that I'd be working in finance after Harvard," says Bosmeny, an applied mathematics major. But on graduation in June 2009, Bosmeny will work instead for an Internet startup he founded with five undergraduates from top schools who, like him, were on student newspapers. Called PaperG, the startup sells online advertising to local businesses.

Only three years ago Bosmeny could have written his ticket for an entry-level job in the financial sector with a starting salary north of six figures. Those days are over, at least for now. The global market crash and the contraction of the financial sector has dramatically changed the decision matrix for tens of thousands of promising math, science, and engineering graduates such as Tyler. Students who in years past would have flocked to Wall Street are considering careers in engineering and technology. Suddenly, science is sexy.

Ranjitha Kurra, a student at the Masters of Engineering Management program at Duke University, says she interned as a business analyst at Barclays Capital (BARC) this summer and had an offer for a full-time job. But following Barclays' recent acquisition of Lehman Brothers, Kurra was told she may not have a job when she graduates in December. She worries that even if Barclays were to meet its commitment, she might be laid off within months. She doesn't want to return to her home in India yet, so she is looking for a job in engineering, an area she thinks will be safer than anything in financial services.

SAFETY IS RELATIVE
Sure, the tech sector is shaky, too. Witness Intel's (INTC) Nov. 12 announcement that fourth-quarter sales will fall short of previous forecasts (BusinessWeek.com, 11/13/08) and Cisco's recent disclosure that sales in the period that ends in January will decline. But few expect Silicon Valley to undergo the carnage suffered by Wall Street.

Fiscal stimulus...

...with the U.S. the next in line. All very interesting in timing and ordinal rank.
I have already commented on the competitive aspects of this. The U.S. is in position to know the fiscal packages its competitors have enacted. A good spot to be in.

http://www.reuters.com/article/BANKSL/idUSLN44450720081123
* CHINA:

-- Provincial government plans will add an additional 10 trillion yuan ($1.464 trillion) to a 4 trillion yuan stimulus package announced by the central government earlier this month, state television said. The central scheme included rail and infrastructure schemes as well as extra social spending to offset the sharp drop in demand for the exports which fuel China's economy.

-- China is also changing value added tax (VAT) to allow companies to deduct the cost of capital equipment, saving them about 120 billion yuan a year.

* EUROPEAN UNION

- An economic stimulus plan to be presented on Nov. 26 will include a significant budgetary expansion, the head of the EU executive said on Friday, as it signalled longer deadlines for countries to slash budget gaps.

-- German Economy Minister Michael Glos has said the plan envisaged, among other things, a 1 percentage point cut in value-added tax across the EU and that the total value of the stimulus was 130 billion euros ($163 billion).

* GERMANY:

-- The government has announced a package which will generate about 50 billion euros ($64.22 billion) in investment and contracts.

- A new lending programme of up to 15 billion euros will be introduced for German state-owned development bank Kreditanstalt fuer Wiederaufbau (KfW) to strengthen its lending activities. KfW's infrastructure programme for structurally weak local authorities will be raised by 3 billion euros.

-- Urgent investment in transport will be accelerated via a new programme totalling 1 billion euros in both 2009 and 2010.

-- Parliament has approved a rise in government net new borrowing in 2009 to 18.5 billion euros from 10.5 billion.

* HUNGARY:

-- Hungary announced plans for a 1,400 billion forint ($6.88 billion), two-year stimulus package to kick-start economic growth. The package does not involve new spending but a regrouping of existing funds to assist small and medium-sized businesses.

-- 680 billion forints will be allocated to provide lending guarantees primarily to SMEs and 260 billion forints will provide liquidity for lending.

* NETHERLANDS

-- The government has announced a "liquidity impulse" of about 6 billion euros ($7.5 billion), including allowing companies to write down investments earlier than usual.

-- Companies will also receive temporary financial support from an unemployment fund to pay employees who will cut down on their working hours.

*RUSSIA

-- Prime Minister Vladimir Putin on Nov. 20 unveiled a $20 billion economic stimulus package and help for people hurt in the economic slowdown. He offered assurances there would be no repeat of the economic turmoil when the Soviet Union collapsed in 1991 and, 10 years ago, when the state defaulted on its debt.

-- The package will include a cut in profit tax, which accounts for 8.5 percent of budget revenues, to 20 percent from 24 now, and a new depreciation mechanism that will allow firms to reduce the profit tax further.

-- The government has already sanctioned state-run banks to support industry with billions of dollars of soft funding.

Fleshing out the Obama doctrine...

I have maintained for some time that there is now a modern corollary to the Monroe Doctrine. This "Obama Doctrine" will emphasize the antipodes, and more specifically Latin America and Africa.

Obama's selections thus far for the Treasury (and I am of the opinion that Larry Summers will be Fed Chair) and other cabinet positions reinforce my opinion that this is a pragmatic administration.

Realpolitik is back (if indeed it ever left). The results from the G20 "coordination" meetings will be telling on this account.

Thus this article is corroborative evidence for the above thoughts:

http://www.iht.com/articles/2008/11/21/america/russia.php
Medvedev faces hard sell in Latin America
By Simon Romero, Michael Schwirtz and Alexei Barrionuevo
Friday, November 21, 2008
CARACAS:

When President Dmitri Medvedev planned his forthcoming trip through Latin America, Russia seemed poised to present one of the most visible challenges in years to U.S. influence in the region.

With oil prices high, Russia was flush with cash and planning a range of measures, from helping Venezuela build a nuclear reactor to strengthening military ties with Cuba, a Cold War ally of the Soviet Union.

But when Medvedev reaches the region next week, he will find it drastically altered by events - and in some cases, less receptive to his overtures. Plunging oil prices and the global financial crisis, which have hammered Russia particularly hard, have raised questions about Russia's reliability as an economic partner, while Senator Barack Obama's victory in the presidential race has raised hopes throughout Latin America of a new era of improved relations with the United States.

In this rapidly changing landscape, most Latin American countries are recalibrating their political interests, frustrating Russian efforts to deepen regional ties as China did in the last decade.

"Russia's elites, including President Medvedev, look on China's rising diplomatic and economic successes in Latin America and in Africa with envy," said Stephen Kotkin, the director of Russian studies at Princeton University. "They also perceive an opportunity, much exaggerated, to send the U.S. a message in its supposed backyard."

But throughout the region, Medvedev faces a hard sell. In Cuba there are lingering suspicions about Russian intentions, after the Cuban economy collapsed when the Soviet Union withdrew in the 1990s, as well as a reluctance to alienate the incoming Obama administration that might push to end the trade embargo.

Brazil, Latin America's largest country, which also places a high priority on relations with an Obama administration, wants to engage Russia not as a source of weapons or military assistance but as an equal partner.

Land grab...

Interesting...even more so in light the "Obama doctrine" that I have written about. That Madagascar (off the coast of mainland Africa) was the choice here by S. Korean operators is also important.

Land leased to secure crops for South Korea
By Javier Blas in London
Published: November 18 2008 18:45 | Last updated: November 18 2008 18:45
Daewoo Logistics of South Korea has secured farmland in Madagascar to grow food crops for Seoul, in a deal that diplomats and consultants said was the largest of its kind.

The company said it had leased 1.3m hectares of farmland – about half the size of Belgium – from Madagascar’s government for 99 years. It plans to ship the maize and palm oil harvests back to South Korea. Terms of the deal were not disclosed.

The pursuit of foreign farm investments is a clear sign of how countries are seeking food security following this year’s crisis – which saw record prices for commodities such as wheat and rice and food riots in countries from Egypt to Haiti.

Prices for agricultural commodities have tumbled by about half from such levels but countries remain concerned about long-term supplies.

The United Nations’ Food and Agriculture Organisation warned this year that the race by some countries to secure farmland overseas risked creating a “neo-colonial” system. Those fears could be increased by the fact that Daewoo’s farm in Madagascar represents about half the African country’s arable land, according to estimates by the US government.

More evidence...

...for conclusions listed in previous posts.

Russia to raise import duties
By Alan Beattie in London

Published: November 17 2008 18:14 | Last updated: November 17 2008 18:14

Russia said on Monday that it would push ahead with sharp rises in import duties in the near future in spite of signing the Group of 20 communiqué that promised not to introduce protectionist measures for a year.

Dmitry Pankin, deputy finance minister, said Moscow would increase tariffs on imported cars, a move that had already been planned to protect Russian car producers. Russia has also announced a general review of trade agreements, including commitments made as part of its application to join the World Trade Organisation. The review may result in duties being increased and import quotas for sensitive products being cut.


Nov. 18 (Bloomberg) -- Brazil and Argentina agreed to raise import
taxes on various products from outside the Mercosur trading bloc, O
Globo said.

A proposal for raising the tariffs was adopted at a bilateral trade
commission meeting in Buenos Aires and should be formally approved at
a Mercosur meeting in December, according to O Globo, which didn't say
where it got the information.

The higher taxes will be applied to imports of products including
wine, peaches, canned foods, textiles, pasta and wooden furniture, the