Category: Current Affairs
China fact of the day
Recent overweighting to stem A-share plunge has made China Securities Finance Corp (CSF), central bank-backed refinancing institution, among top 10 shareholders of many listed-firms, reported Securities Times on Wednesday.
Among all investments, eight firms have been confirmed of the CSF’s stake, which include property developer Dulexe Family, Hualan Biological Engineering, resource purifying developer SJ Environment Protection, Yunnan Tin Company Group, Fujian Cosunter Pharmaceutical Co, Hunan Er-Kang Pharmaceutical Co, digital map provider NavInfo Co, and retailer Friendship&Apollo.
The CSF has been listed as the second-largest holder of tradable shares at Cosunter Pharmaceutical, third largest at SJ Environment Protection, and fifth-largest shareholders at Yunnan Tin Company, according to the Times citing disclosures to Shanghai and Shenzhen stock exchanges.
There is more here, by ChinaDaily, via Patrick Chovanec. I wonder how they are planning to unwind all of those share purchases?
Taylor Swift, Straussian?
The singer is launching her own Taylor Swift-branded clothing line next month, on the platforms of local e-commerce giants JD.com and the Alibaba group, with t-shirts, dresses and sweatshirts featuring the politically charged date 1989.
The date – as well as being Swift’s year of birth – refers to her album and live tour of the same name, which she will perform in Shanghai in November.
But the date – and the initials TS – are particularly sensitive in China, as they signify the Tiananmen Square massace in 1989, when hundreds of students were killed in pro-democracy protests.
There is more here. Here is a story on the map of China accompanying Dwyane Wade.
What makes the Very Serious People so very serious?
I mean that question quite um…seriously.
Paul Krugman, who I believe originated the concept, recently defined it as follows: “…someone distinguished by his faith in received orthodoxy no matter the evidence.” I would rather have something less normative and also more specific.
I think of it this way: the People are Very Serious if they realize that common sense morality must, to a considerable extent, rule politics. At least if voters are watching.
So what is common sense morality in this context? It embodies a number of propositions, including, for instance (with cultural variants across nations):
1. Political decisions should be based on what people and institutions deserve, based on their prior conduct and also on their contributions to the general good.
2. Economic nationalism.
3. Traditional morality, based on respect for authority, repayment of debts, savings, and hard work.
4. Inflation is bad, in part because it violates #1 and #3, and in the case of the eurozone it often violates #2 as well.
5. “I don’t care what you all say, the government should be able to find some way of arranging things so that I don’t have to suffer too badly from this.”
Now here’s the thing: common sense morality very often is wrong, or when it is right that is often with qualifications.
Therefore at the margin there is almost always a way to improve on what the Very Serious People are pushing for. The Very Serious People realize this themselves, though not usually to the full extent, because they have been cognitively captured by their situations. They see themselves as “a wee bit off due to political constraints,” instead of “a fair amount off due to political constraints.” So there is usually some quite justified criticism of the Very Serious People. Common sense morality is needed at some level, but still at the margin we wish to deviate from it.
That said, it is a big mistake to try to throw the Very Serious People under the bus. The Very Serious People understand pretty well how to deal with a public which believes in some version of 1-5, and furthermore they often know that such public beliefs, whatever their limitations, are useful too. Anyone else trying to manage the situation may come up with some favorable breakthroughs, but also may make a total hash of it, as was the case with Syriza. Syriza failed to realize the import of 1-5 for both domestic and foreign politics,and so they drove the Greek economy to the point of total desperation. There is a nested game going on, where the public has a big say on the heavily publicized issues, and the politicians must in some way heed that.
If you want to try the “replace the Very Serious People” game, and assume the subsequent risks, that is a judgment which can be made. The mistake is to think that the partial wrongness of the Very Serious People is necessarily a reason to take matters out of their hands.
Addendum: Via Tim, here is the entry on Very Serious People on RationalWiki, it seems Atrios first put forward the concept. And here are the remarks of Tsipras.
U.S. minimum wage fact of the day
In Arkansas, the median hourly wage is $14.01. In Mississippi, it’s an astoundingly low $13.76. It’s likewise below $15 in six other states, and three U.S. territories.
That is from Catherine Rampell. In such situations, a $15 an hour minimum wage is…shall we say…risky?
China fact of the day
#China bailout support now stands at 9.8 trillion RMB or $1.6t USD
That is from Christopher Balding, and that is [to correct a claim from an earlier version of this post] combining both the stocks bailout and the ongoing municipal bailouts.
Modern German nationalism
There are plans to legally restrict the export of some paintings from Germany, and so far the proposed policy is not working out well. Collectors are rushing to take their loans off museum walls and get them out of the country, or hold them incognito.
The law would apply to works of historical importance more than fifty years old, worth more than 150,000 euros, and judged by regional boards to be of historic importance. It is interesting which works may fall under this designation:
In one interview, she [Germany’s culture minister] raised the prospect that foreign works could be classified as national treasures. For example, she said the Warhol silk-screens of Elvis Presley and Marlon Brando that were sold by the state-owned casino were “emblematic” of the collecting history of the Rhineland.
Apparently Gerhardt Richter is a hard-core libertarian, like most other painters, because he asserted: “No one has the right to tell me what I do with my images.”
For the pointer I thank Cyril Morong, a loyal MR reader.
Iran fact of the day
Mr Rouhani’s cabinet boasts more American doctorates than Mr Obama’s.
There are some more general remarks on Iran here.
Maurice Obstfeld is new chief economist of the IMF
Obstfeld is the former chair of the department of economics at the University of California, Berkeley. He is currently a member of President Obama’s Council of Economic Advisers.
Like Blanchard, Obstfeld’s background is largely as an academic economist.
He is the co-author of two textbooks on international economics—Foundations of International Macroeconomics with former IMF chief economist Kenneth Rogoff, and International Economics with Paul Krugman and Marc Melitz.
Here is the FT coverage, here is the IMF announcement, and here is Obstfeld’s home page. He wrote this on the eurozone. Overall I would say this reflects the continuing preeminence of MIT-style macroeconomics in the current policy community, his MIT Ph.d. is from 1979 and his work has been very much in that vein.
The culture that is Singapore
The Commuter Graciousness Index, now in its third year, found that graciousness levels rose to 61.3 per cent in 2014, up from 42 per cent the year before. In 2012, the index stood at 38.6 per cent.
The index measures the perceived change in behaviour of commuters on public transport, and looks at three core behaviours: queuing up and giving way to fellow commuters, giving up seats to those who need them more, and moving in to allow more passengers to boardthe bus and train.
…In 2014, the LTA launched five cartoon mascots to promote more gracious behaviour among commuters: Stand-up Stacey, Give-Way Glenda, Move-in Martin, Bag-Down Benny and Hush-Hush Hannah.
They will continue to front the graciousness campaign, the LTA said, with a new three-dimensional look.
The full story is here, via Andrew Jackson.
When will Sana’a run out of water?
Yemen’s capital, Sanaa, may run out of economically viable water supplies by 2017 as available groundwater is unable to keep pace with the needs of a fast-growing population, experts warn.
Per capita water consumption is right now about two hundred cubic meters per year, compared to a scarcity threshold of 1700 cubic meters per year.
The cost of water has tripled in the last year, and the population of the city is expected to double within the next ten years.
There has been talk of moving the capital, as well as desalinating seawater on the coast and pumping it 2,000 metres uphill to Sanaa. But there are no concrete plans.
It may be too late for the removal of various water subsidies to make a difference, even assuming that were to happen. In the meantime, there have been few positive developments and of course the war is a huge negative.
It would be tragic, and in modern times unprecedented, if and when a major city simply runs out of water, and that could happen in about two years’ time. Here is further coverage.
Two deals in a day
In my opinion, neither will stick, and from surface indications neither arrangement sounds very effective. But probably both have to be tried. One deal opens the way for true Grexit, if the deal fails. The U.S.-Iran agreement opens the way for an actual attack on Iran, or some other non-constructive form of engagement (in a proxy war?), if the deal fails. These deals thus each contain a very real streak of danger.
I give each deal about a 30-40% chance of succeeding. Above all, these deals show the limits of what is possible, and not possible, in international affairs where there is not an obvious concordance of self-interest.
You will read much about whether these are good or bad deals. But sometimes the positive perspective is more illuminating than the normative. In both cases, the relevant participants still “have a deal in their system,” and so we will be working through the logic of these agreements, for better or worse.
Keep your fingers crossed. In the meantime, even if you think, as I do, that both of these deals will fail, these are still — stochastically speaking — big wins for Obama. Let’s just call July “Obama’s month.”
What kind of Greek deal is on the table?
Hugo Dixon offers some very useful remarks. And here is a good running survey from Politico. I’ll add two points. First, all of a sudden Merkel has lost the “blame game” battle. [Update: But the actual reality now seems to be a deal will be reached, and I suspect the process will be forgotten, or judged only on the basis of whether the deal works.] Second, I am reading many, many dramatic remarks about the collapse of European institutions, etc. Will these be retracted if they are not supported by market prices upon opening? I don’t think so.
Latin American productivity problems
The Economist had a good feature story on this topic, here are a few points:
1. According to the IMF, Latin America will grow at only 0.9% this year.
2. Brazil may do -1.25%, while Argentina and Venezuela continue to deteriorate.
3. Given the location of South America, it is harder for those countries to plug into global supply chains. Of the Latin countries, only Mexico has managed this, largely because of its proximity to the United States. Yet even Mexico has grown an average of only 2.4% a year over the last twenty years.
4. Latin American productivity levels were closer to those of the United States in 1960 than they are today.
5. There is far too much labor in the informal economy.
6. Latin America as a whole invests only 3% of its gdp in infrastructure, compared to 6% for India and 9% for China.
Post a bond or five-year “temporary” Grexit?
That is the latest development, albeit not the final word:
Should no deal be forthcoming, the German government has made preparations to negotiate a temporary five-year euro exit, providing Greece with humanitarian aid while it makes the transition.
An incendiary plan drafted by Berlin’s finance ministry, with the backing of Angela Merkel, laid out two stark options for Greece: either the government submits to drastic measures such as placing €50bn of its assets in a trust fund to pay off its debts, and have Brussels take over its public administration, or agree to a “time-out” solution where it would be expelled from the eurozone.
Finland, the Netherlands, and Slovakia, among others, don’t seem keen to have Greece continuing in the eurozone. And so yet another “final deadline” is approaching…
Iceland and China, Department of Uh -Oh
One of the most stunning and shocking findings of the Icelandic SIC report was the widespread use of shares as collaterals for loans in all Icelandic banks, small and large but most notably the three largest ones – Kaupthing, Landsbanki and Glitnir.
It is necessary to distinguish between two types of lending against shares as practiced in Iceland: one is a bank funding purchase of its own shares, with only the shares as collaterals. The other type is taking other shares as collaterals.
These loans with shares as collaterals were mainly offered to the banks’ largest shareholders – in the big banks these were the main Icelandic business leaders – their partners and bank managers. In the smaller banks local business magnates who in many cases were partners to those Icelandic businessmen who operated abroad, as well as in Iceland. Thus, this practice defined a two tier banking system: with services like these to a small group of clients – that I have called the “favoured clients” – and then normal services for anyone else.
As a general banking model it would not make sense – the risk is far too great.
That is from Sigrún Davíðsdóttir, there is much more at the link.