Comments on Editors, East Asia Forum "Can Asia shield the world against Europe’s Brexit woes?" 28/06/2016
While there is no question that the Brexit has and will continue to be a source of uncertainty, particularly for financial market, the scenarios presented in this post may appear to be too and overly pessimistic.
While the EU integration in general has been a good thing, the economic woos in some Euro zone economies in the wake of the GFC undoubtedly suggest there is a need for an exit mechanism for a member of an integrated regional organisation, such as the Euro zone or, for that matter EU. Such a mechanism, with good wills and intentions of all involved, would allow the exit of a member with either some difficulties or political determinations.
Such a mechanism should be friendly, as opposed to punitive.
Greece, with its painful economic, political and social problems, would have benefited if a helpful exit mechanism allowed it to use a national currency as an adjustment tool, as opposed to cuts to nominal wages, social securities and pensions.
Married couples may divorce and most countries have laws allow that to happen. Then why not allow a member of an integrated organisation to exit?
We should not just think in only one direction, that is, to integrate with no exist possibility and mechanism. That way of think is problematic itself. And that is one of the key sources of uncertainty in the wake of the Brexit vote outcome.
It is unhelpful and unproductive to blame or complain the Brexit.
I believe that Britain and the EU will negotiate creatively with mutual benefits for a successful Britain exit. They should and will create a workable framework to facilitate the Britain exit.
Showing posts with label EU. Show all posts
Showing posts with label EU. Show all posts
2016-02-01
Changed relationship between QE and inflation
Comments on Masanaga Kumakura "Japan is sinking in a sea of money", 28/01/2016
The recent QEs in the US, European Central Bank and Japan appear to have cast doubt on the conventional economic theory, i.e. the monetisation of government debt is a recipe for fiscal profligacy and hyperinflation. Whether it is because the special circumstances or other reasons, the QE in the US played a useful role in averting more nasty economic depression. Economists should revisit that conventional economic theory, perhaps.
The recent QEs in the US, European Central Bank and Japan appear to have cast doubt on the conventional economic theory, i.e. the monetisation of government debt is a recipe for fiscal profligacy and hyperinflation. Whether it is because the special circumstances or other reasons, the QE in the US played a useful role in averting more nasty economic depression. Economists should revisit that conventional economic theory, perhaps.
2015-07-24
No need to be arrogant and Europe centric
Comments on Maaike Okano-Heijmans and Daniel Lanting "Europe finds the China connection", 24/07/2015
This post seems completely European centric. It is quite one sided advocate for the European standards and I am not sure that is either the best way for all European countries to work with China or indeed for a better world.
First, are the European standards the best standards with no room to improve? I think those people who hold that view may be too arrogant and out of touch.
Secondly, if it is to work with China in a collaborative way, why should only the European standards need to be followed and why not also consider a compromise between the European standards and the presumably different Chinese or Asian standards?
Given the quite diverse situations among the European countries, the benefits and otherwise of working with China may be quite different. As a result, the member states of Europe are likely to seek more cooperative solutions as opposed to the authors' advocate of a consolidated approach to hold the European standards.
On China's part, it is likely to invest in countries where maximum benefits for both partners can be expected to achieve.
PS, what a title that is quite different from its content.
This post seems completely European centric. It is quite one sided advocate for the European standards and I am not sure that is either the best way for all European countries to work with China or indeed for a better world.
First, are the European standards the best standards with no room to improve? I think those people who hold that view may be too arrogant and out of touch.
Secondly, if it is to work with China in a collaborative way, why should only the European standards need to be followed and why not also consider a compromise between the European standards and the presumably different Chinese or Asian standards?
Given the quite diverse situations among the European countries, the benefits and otherwise of working with China may be quite different. As a result, the member states of Europe are likely to seek more cooperative solutions as opposed to the authors' advocate of a consolidated approach to hold the European standards.
On China's part, it is likely to invest in countries where maximum benefits for both partners can be expected to achieve.
PS, what a title that is quite different from its content.
2011-10-28
A mixed denomination is good for both sides
Comments on Robert Gottliebsen “France passes the baton to China”, 28/10/2011, http://www.businessspectator.com.au/bs.nsf/Article/France-China-US-EU-debt-deal-summit-loan-credit-cr-pd20111028-N2RD8?OpenDocument&src=sph&src=rot
If your information is correct, surely a mixed currency denomination required by the Chinese is fairer than using either currency alone.
The Chinese know its currency is rising in value, partly as international pressures. So if it is complete denominated in euro, then it is pretty hard to sell it to its people by the Chinese authority.
Most people understand why the Chinese are resisting rapid currency appreciation, because it will make huge losses due to its international assets or reserves, mostly in $US.
It is hypocritical of the US for it to pressure the Chinese to appreciate its currency against the $US without any mentioning of any considerations of the huge losses China will incur.
If your information is correct, surely a mixed currency denomination required by the Chinese is fairer than using either currency alone.
The Chinese know its currency is rising in value, partly as international pressures. So if it is complete denominated in euro, then it is pretty hard to sell it to its people by the Chinese authority.
Most people understand why the Chinese are resisting rapid currency appreciation, because it will make huge losses due to its international assets or reserves, mostly in $US.
It is hypocritical of the US for it to pressure the Chinese to appreciate its currency against the $US without any mentioning of any considerations of the huge losses China will incur.
2011-08-18
Are the much mentioned euro bonds feasible?
Comments on Martin Sandbu "Shaking off Europe's German bonds", 18/08/2011, http://www.businessspectator.com.au/bs.nsf/Article/Eurozone-debt-crisis-eurobonds-markets-yields-Germ-pd20110817-KT3T8?OpenDocument&src=rot
While the argument that size matters is reasonable enough, the use of the US and Japan as example needs some caution, because each has its own advantages that are not just limited to their sizes.
Japan first. How much of the Japanese government bonds is has been bought and held by funds and people outside Japan? My answer is likely to be: not much and its share is small. If that answer is correct, then it shows the Japanese are different in some key aspects in terms of their portfolio investments in Japan and abroad, as opposed to most other people in the west. It is the Japanese they themselves buy their low yield government bonds.
Now the US. It is true that it has been the largest economy and also a very large government bonds market - that is, its size is large. However, its political influences and its role as the leader of the west world also have a significant effect beyond the size of its government bonds market.
Ignoring these characteristics of Japan and the US is likely to make the argument and conclusion questionable.
Of course, another consideration is whether the individual states of the USA need to issue their own bonds or can they use the federal government bonds to finance their own debts.
One needs also recognise the further difficulty that the euro zone or EU have a looser structure than the USA. Would the key members that are in a better state be willing to subsidise other members so explicitly?
While the argument that size matters is reasonable enough, the use of the US and Japan as example needs some caution, because each has its own advantages that are not just limited to their sizes.
Japan first. How much of the Japanese government bonds is has been bought and held by funds and people outside Japan? My answer is likely to be: not much and its share is small. If that answer is correct, then it shows the Japanese are different in some key aspects in terms of their portfolio investments in Japan and abroad, as opposed to most other people in the west. It is the Japanese they themselves buy their low yield government bonds.
Now the US. It is true that it has been the largest economy and also a very large government bonds market - that is, its size is large. However, its political influences and its role as the leader of the west world also have a significant effect beyond the size of its government bonds market.
Ignoring these characteristics of Japan and the US is likely to make the argument and conclusion questionable.
Of course, another consideration is whether the individual states of the USA need to issue their own bonds or can they use the federal government bonds to finance their own debts.
One needs also recognise the further difficulty that the euro zone or EU have a looser structure than the USA. Would the key members that are in a better state be willing to subsidise other members so explicitly?
2011-05-19
Daniel Gros' solution to Irish sovereign debts no credible
Comments on Daniel Gros “How to make Ireland solvent”, 19/05/2011, http://www.businessspectator.com.au/bs.nsf/Article/Ireland-foreign-debt-bail-out-Irish-pension-funds--pd20110518-GY97D?OpenDocument&src=rot
Daniel Gros appears to have been confused by different ownerships and their implications.
A/the government of a country is different from its individual constituency. Their interests may be the same on some matters, but can differ in a whole range of other matters.
In another word, their interests may converge on some and diverge on some others. Further, the interests of different constituent members are different.
This is no different to taxation.
A country (or rather its government) may bankrupt, but some of its constituency members may not be affected by that, or may even benefit from that.
Even in the context of Daniel Gros concerns, those funds may actually do better if they avoid poor Irish government bonds altogether, given the risks associated with them.
It is the risk weighted returns that matter, not what Daniel Gros simply argued.
Daniel Gros may have assumed away those risks, but those funds are unlikely to do the same.
Daniel Gros may argue that the GFC cannot happen because there are always credits for any debts owed, so if all parties come together, there will not be any credit crunch and shortages.
Is that line of argument credible in the real world? Even Daniel Gros must admit it is not.
Daniel Gros appears to have been confused by different ownerships and their implications.
A/the government of a country is different from its individual constituency. Their interests may be the same on some matters, but can differ in a whole range of other matters.
In another word, their interests may converge on some and diverge on some others. Further, the interests of different constituent members are different.
This is no different to taxation.
A country (or rather its government) may bankrupt, but some of its constituency members may not be affected by that, or may even benefit from that.
Even in the context of Daniel Gros concerns, those funds may actually do better if they avoid poor Irish government bonds altogether, given the risks associated with them.
It is the risk weighted returns that matter, not what Daniel Gros simply argued.
Daniel Gros may have assumed away those risks, but those funds are unlikely to do the same.
Daniel Gros may argue that the GFC cannot happen because there are always credits for any debts owed, so if all parties come together, there will not be any credit crunch and shortages.
Is that line of argument credible in the real world? Even Daniel Gros must admit it is not.
2010-12-16
Evolution and design - extreme forms and common grounds
Comments on Oliver Marc Hartwich “A fundamental Euro flaw”, 16/12/2010, http://www.businessspectator.com.au/bs.nsf/Article/European-Union-France-Germany-politics-pd20101214-C57AR?OpenDocument&src=rot
While the two schools of thought that Dr Oliver Marc Hartwich compared and contrasted may in their own extreme forms be incompatible with each other, there surely are some common grounds they can both work to reflect the different histories of human beings and societies.
There are obvious many differences between different societies that cannot and should not be ignored. However, how has each society developed or evolved in history to become today’s form?
There must have been many human designs in the long history of each society that exists today. Laws, for example, are designed and made by people.
So, it seems that both evolution and human designs must have both worked in the long historical process.
That is not to say that one can design anything that will work and can completely ignore the existing structures of the society.
It is important that one does not have to rely on any one of the two extreme forms of the two schools of thought, even though the euro may have been designed and implemented too hastily and too early.
While the two schools of thought that Dr Oliver Marc Hartwich compared and contrasted may in their own extreme forms be incompatible with each other, there surely are some common grounds they can both work to reflect the different histories of human beings and societies.
There are obvious many differences between different societies that cannot and should not be ignored. However, how has each society developed or evolved in history to become today’s form?
There must have been many human designs in the long history of each society that exists today. Laws, for example, are designed and made by people.
So, it seems that both evolution and human designs must have both worked in the long historical process.
That is not to say that one can design anything that will work and can completely ignore the existing structures of the society.
It is important that one does not have to rely on any one of the two extreme forms of the two schools of thought, even though the euro may have been designed and implemented too hastily and too early.
2010-03-02
On the value-based system
Comments on John Hemm “EU-China relations: Disappointment after Copenhagen”, 1/02/2010, http://www.eastasiaforum.org/2010/03/01/eu-china-relations-disappointment-after-copenhagen/
It is so interesting to see how some people may be so good intentioned sometimes or even all the times can produce so much hypocrisy in their approaches to different situations and still either do not realise that or deliberately avoid or hide that.
While I do not in any ways imply any fault with the author, the above observation can also be seen rather clearly from some points in this article.
For example, it is completely understandable to desire or even demand good governance by any governments, including foreign and sovereign governments. However, that does not equal to selective application of that principle or demand, especially by some world powers.
Kosovo is a part of such examples. The European Union countries and the United States opposed to the Serbian rule or the Serbian way of rules of Kosovo. That is still fine and I personally do not have big problems with that, if that is really fair and good for all peoples involved.
Another side of the story is the Iraq invasion. Some world powers, without a clear mandate from the UN, unilaterally invaded Iraq, under the false information of the existence of WMD. How many deaths, including how many innocent Iraqi civilians and destructions has that caused? It is not just the information was proved inadequate later on, but how the information was produced and used by those at the centre of the decisions to make the war.
So, who are responsible for those deaths and destructions?
Do those who made the decisions have any war crime responsibilities?
Or, is that good governance by any internationally accepted decent standard? Was the invasion of Iraq before or after the Kosovo intervention?
Was that for good governance or for oil or attempting to do so in Iraq?
Why didn’t the author have a balanced view of major world events?
Talking about value-based system, whose value is it? Copenhagen is a good example.
What the rich countries wanted to do is nothing more than to entrench their excessive damages to the climate.
Emissions and global warming is a typical environmental externality problem at the global scale. So the best and most fair way is to remedy that externality by applying a global emissions tax to correct the incorrect price signal and allocate the proceeds from it equally among the world population who should have an equal right to a good climate.
Does the EU, or any rich countries’ proposal apply that principle? Was it because no state of the rich had the intellectual to design such a proposal, or something else?
Where was the economics most people in those rich states have learnt? Was it lost or forgotten?
But on the other hand, they demanded developing countries do this and do that, and when the latter did not accept the former’s demand, then the former, in turn, blames the latter for the failure of Copenhagen.
Is that value the right value that should be used as the basis for the value-based system?
It is so interesting to see how some people may be so good intentioned sometimes or even all the times can produce so much hypocrisy in their approaches to different situations and still either do not realise that or deliberately avoid or hide that.
While I do not in any ways imply any fault with the author, the above observation can also be seen rather clearly from some points in this article.
For example, it is completely understandable to desire or even demand good governance by any governments, including foreign and sovereign governments. However, that does not equal to selective application of that principle or demand, especially by some world powers.
Kosovo is a part of such examples. The European Union countries and the United States opposed to the Serbian rule or the Serbian way of rules of Kosovo. That is still fine and I personally do not have big problems with that, if that is really fair and good for all peoples involved.
Another side of the story is the Iraq invasion. Some world powers, without a clear mandate from the UN, unilaterally invaded Iraq, under the false information of the existence of WMD. How many deaths, including how many innocent Iraqi civilians and destructions has that caused? It is not just the information was proved inadequate later on, but how the information was produced and used by those at the centre of the decisions to make the war.
So, who are responsible for those deaths and destructions?
Do those who made the decisions have any war crime responsibilities?
Or, is that good governance by any internationally accepted decent standard? Was the invasion of Iraq before or after the Kosovo intervention?
Was that for good governance or for oil or attempting to do so in Iraq?
Why didn’t the author have a balanced view of major world events?
Talking about value-based system, whose value is it? Copenhagen is a good example.
What the rich countries wanted to do is nothing more than to entrench their excessive damages to the climate.
Emissions and global warming is a typical environmental externality problem at the global scale. So the best and most fair way is to remedy that externality by applying a global emissions tax to correct the incorrect price signal and allocate the proceeds from it equally among the world population who should have an equal right to a good climate.
Does the EU, or any rich countries’ proposal apply that principle? Was it because no state of the rich had the intellectual to design such a proposal, or something else?
Where was the economics most people in those rich states have learnt? Was it lost or forgotten?
But on the other hand, they demanded developing countries do this and do that, and when the latter did not accept the former’s demand, then the former, in turn, blames the latter for the failure of Copenhagen.
Is that value the right value that should be used as the basis for the value-based system?
2010-02-04
EU's real dilema with the Greece crisis
Comments on Robert Gottliebsen “Europe at a crossroads”, 4/02/2010, http://www.businessspectator.com.au/bs.nsf/Article/Europe-at-a-cross-roads-pd20100204-2BU5S?OpenDocument&src=sph
Robert, after reading you say the following:
"If Europe is not prepared to save its weak states then the future of the euro and the European Union is grim, because the problem states may be cast off. This is a defining moment for Europe."
I would have thought it is not a question of if, rather, it is a question of impossibility.
The main reason for this is that now most major EU countries if not every one of them are not in a position to help others given the consequence or in the wake of the GFC.
In principle some may want to, but in reality none is able to, especially politically considering any the potential economic consequence of any rescue for any countries which would have to contribute.
That is the dilemma they are having now.
So it is not high principle, high moral grounds, it is practicality and circumstances.
What conclusion would you draw had you been a politician in a major EU country?
Robert, after reading you say the following:
"If Europe is not prepared to save its weak states then the future of the euro and the European Union is grim, because the problem states may be cast off. This is a defining moment for Europe."
I would have thought it is not a question of if, rather, it is a question of impossibility.
The main reason for this is that now most major EU countries if not every one of them are not in a position to help others given the consequence or in the wake of the GFC.
In principle some may want to, but in reality none is able to, especially politically considering any the potential economic consequence of any rescue for any countries which would have to contribute.
That is the dilemma they are having now.
So it is not high principle, high moral grounds, it is practicality and circumstances.
What conclusion would you draw had you been a politician in a major EU country?
Greek crisis and EU - creative thinking needed urgently
Comments on Karen Maley “Greece's crisis is contagious”, 4/02/2010, http://www.businessspectator.com.au/bs.nsf/Article/Closing-act-in-Greek-tragedy-pd20100204-2BRRZ?OpenDocument&src=sph
Why can't the EU issue EU bonds and lending that to its countries members on agreed, objectively set and discreet basis?
In that way, the EU can be seen as a whole to withstand a crisis in a member country and can also influence member countries to be responsible in its fiscal policies.
I was wondering why people don’t come up with innovative ways and better solutions to problems. What are the EU, including member countries, bureaucrats has been doing?
Everyone needs to be creative!
Why can't the EU issue EU bonds and lending that to its countries members on agreed, objectively set and discreet basis?
In that way, the EU can be seen as a whole to withstand a crisis in a member country and can also influence member countries to be responsible in its fiscal policies.
I was wondering why people don’t come up with innovative ways and better solutions to problems. What are the EU, including member countries, bureaucrats has been doing?
Everyone needs to be creative!
2009-10-06
How should Europe be represented at international bodies?
Comments on Gideon Rachman “Europe’s plot to take over the world”, 6/10/2009, http://www.businessspectator.com.au/bs.nsf/Article/Europes-plot-to-take-over-the-world-pd20091006-WK2CN?OpenDocument&src=sph
While the current structure and membership of the G20 can be regarded as a transitional arrangement to bridge the G8 and a new permanent G20, it is a bit unfair to have so many European representatives from both its individual member countries and from its unity bodies.
Europe should be represented either as a group or as individual countries, but not by both. It is up to them to decide how they would like to be represented.
While others are polite enough not to raise this issue openly and directly with the Europeans, they should have self awareness and be wise enough not to be unreasonable in their representation at the G20.
They should act without the urge of others. The earlier they do that, the better for both them and the rest.
While the current structure and membership of the G20 can be regarded as a transitional arrangement to bridge the G8 and a new permanent G20, it is a bit unfair to have so many European representatives from both its individual member countries and from its unity bodies.
Europe should be represented either as a group or as individual countries, but not by both. It is up to them to decide how they would like to be represented.
While others are polite enough not to raise this issue openly and directly with the Europeans, they should have self awareness and be wise enough not to be unreasonable in their representation at the G20.
They should act without the urge of others. The earlier they do that, the better for both them and the rest.
2009-07-27
Same effects, different causes - Asia, EU and the US
Comments on Wendy Dobson “The financial crisis and East Asia”, and Guy de Jonquieres’ comments, 26/07/2009, http://www.eastasiaforum.org/2009/07/26/the-financial-crisis-and-east-asia/
While what Guy de Jonquieres says may be true, there seems to be a big difference between the Asian case and other cases, that, there has no clear regional governance mechanism or structure formally in place.
In the EU or Eurozone cases, the main causes for lack of policy coordination or mutual assistance may be that the region lacked the financial capacity as a result of the financial and economic crisis, as opposed to other things.
While in the Asian case, they had the capacity to do something, but the lack of clear governance structure or consensual agreements was more likely to be the cause of inaction.
The geopolitical issues for regional influences, especially Japan’s attitude (see “The rise of China: the impetus behind Japanese regionalism” by Takashi Terada earlier on in the EastAsiaforum), have made Asia’s regional institutions building more complex.
Asia needs to overcome geopolitical rivalry within itself and builds truly cooperative regional bodies to advance its welfares.
While what Guy de Jonquieres says may be true, there seems to be a big difference between the Asian case and other cases, that, there has no clear regional governance mechanism or structure formally in place.
In the EU or Eurozone cases, the main causes for lack of policy coordination or mutual assistance may be that the region lacked the financial capacity as a result of the financial and economic crisis, as opposed to other things.
While in the Asian case, they had the capacity to do something, but the lack of clear governance structure or consensual agreements was more likely to be the cause of inaction.
The geopolitical issues for regional influences, especially Japan’s attitude (see “The rise of China: the impetus behind Japanese regionalism” by Takashi Terada earlier on in the EastAsiaforum), have made Asia’s regional institutions building more complex.
Asia needs to overcome geopolitical rivalry within itself and builds truly cooperative regional bodies to advance its welfares.
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