Comments on Robert Gottliebsen “Can't hold back the rising tide”, 1/07/2009, http://www.businessspectator.com.au/bs.nsf/Article/WallStreet-pd20090701-THS6A?OpenDocument&src=sph
The practice of mortgage and foreclosure in the US is different from that in Australia. Foreclosure has been more widespread in the US than here. It is hard to say which is more beneficial or harmful to the lenders involved.
The culture of foreclosure by individual lenders is no different from herd behaviour in a bear market. If you don’t do it and get out quickly enough, you may get stampeded and crushed and incur greater losses. It is like the prisoners’ dilemma.
If all lenders can come to an agreement and hold their fires, then the collective outcome may be better. But that needs everyone to do the same and few to breach the code.
Government’s intervention may help if the problems are not too severe and persistent. If the problems are very severe and persistent, then what the government does is to momentarily prevent the collapse of a dam that will eventually collapse. When the time of collapse comes at a later stage, the collapse may be more severe and the damage greater.
The US has already got the crisis and the crisis will still run its courses. No matter it is the lenders or the US government, they cannot got rid of all the pains, like foreclosure, without them being felt by many Americans. It is a painful process and this article just indicates that.
A better way for the government to do is to deal with the causes of foreclosure in the first place, to prevent the development of bubbles and to prevent lenders from doing malpractice in lending. While it is too late for the current crisis, it will be valuable for the future.
2009-07-01
Asia can and should free itself from the IMF
Second comment on Barry Eichengreen “Can Asia Free Itself from the IMF?” 30/06/2009, http://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/
I have two additional comments. The first one is about the voting mechanism and the other on policy monitoring.
Firstly, on voting mechanism. While the majority voting mechanism is better and more efficient than consensus, it still does not have a strong feel of a close community, if it is based purely on countries’ shares of their contributions.
A better voting mechanism would be able to balance two important things. First, it recognises countries’ contributions so to be accountable. Second, it can foster a closer community feel and recognise each member country as an important constituent.
In that light, an alternative voting mechanism to the purely share based majority voting is to have a combination of this voting with a simple country member voting, as I have proposed elsewhere. That is to say, for example, to have the contribution based voting for half of the total vote and the other half to be determined by the number of member countries.
If this alternative voting mechanism is adopted, any country irrespective whether it has contributed to the funds or irrespective to its size will have a vote for half of the total vote. This will make every country more respectable and thus will be more democratic. At the same time, the contribution of any country is also valued and its interest is reflected in the voting.
Secondly, on policy monitoring. Rather than handing this role to IMF bureaucrats that have little to do with this Asian institution, why not outsourcing it to an independent research or academic institution to do it? Such an institution could organise a group of eminent people from the region with the relevant expertise to undertake that monitoring task.
I have two additional comments. The first one is about the voting mechanism and the other on policy monitoring.
Firstly, on voting mechanism. While the majority voting mechanism is better and more efficient than consensus, it still does not have a strong feel of a close community, if it is based purely on countries’ shares of their contributions.
A better voting mechanism would be able to balance two important things. First, it recognises countries’ contributions so to be accountable. Second, it can foster a closer community feel and recognise each member country as an important constituent.
In that light, an alternative voting mechanism to the purely share based majority voting is to have a combination of this voting with a simple country member voting, as I have proposed elsewhere. That is to say, for example, to have the contribution based voting for half of the total vote and the other half to be determined by the number of member countries.
If this alternative voting mechanism is adopted, any country irrespective whether it has contributed to the funds or irrespective to its size will have a vote for half of the total vote. This will make every country more respectable and thus will be more democratic. At the same time, the contribution of any country is also valued and its interest is reflected in the voting.
Secondly, on policy monitoring. Rather than handing this role to IMF bureaucrats that have little to do with this Asian institution, why not outsourcing it to an independent research or academic institution to do it? Such an institution could organise a group of eminent people from the region with the relevant expertise to undertake that monitoring task.
Hong Kong: best place for future Asian institutions
Comments on Barry Eichengreen “Can Asia Free Itself from the IMF?” 30/06/2009, http://www.eastasiaforum.org/2009/06/30/can-asia-free-itself-from-the-imf/
In terms of location for such an Asian financial institution, Hong Kong may be a good candidate.
Although Hong Kong is part of China, it and Macau all have a special status of special administrative regions in China. It requires “Hong Kong” Visa to visit and even mainland Chinese people are not free to visit without an appropriate travel document.
It was a British colony for a long time. It is a more neutral place than any other places in East Asia.
Hong Kong has also been a regional financial centre. So there are both physical and human infrastructures there. It is also located in the middle of East Asia geographically.
Why not make Hong Kong a permanent place for Asian institutions? Why not China and other countries negotiate to make Hong Kong such a neutral place for all Asians to benefit, with China retaining its sovereignty, but otherwise letting Hong Kong be a place as it is now for the future to come?
With huge land, it could be possible for China to make more land available for such a special region.
I think all stakeholders should consider Hong Kong as a perfect candidate.
In terms of location for such an Asian financial institution, Hong Kong may be a good candidate.
Although Hong Kong is part of China, it and Macau all have a special status of special administrative regions in China. It requires “Hong Kong” Visa to visit and even mainland Chinese people are not free to visit without an appropriate travel document.
It was a British colony for a long time. It is a more neutral place than any other places in East Asia.
Hong Kong has also been a regional financial centre. So there are both physical and human infrastructures there. It is also located in the middle of East Asia geographically.
Why not make Hong Kong a permanent place for Asian institutions? Why not China and other countries negotiate to make Hong Kong such a neutral place for all Asians to benefit, with China retaining its sovereignty, but otherwise letting Hong Kong be a place as it is now for the future to come?
With huge land, it could be possible for China to make more land available for such a special region.
I think all stakeholders should consider Hong Kong as a perfect candidate.
Workplace relations regime needs to be fair, productive and long lasting
Comments on Michael Stutchbury “Boneheads are back on the streets”, 1/07/2009, http://blogs.theaustralian.news.com.au/currentaccount/index.php/theaustralian/comments/boneheads_are_back_on_the_streets/
The Rudd government was given a mandate to abolish Work Choices and replace it with a better and fair one. Work Choices just went too far in reforming workplace relations. As a result, it lost the support of most Australians.
In the same token, it seems the current new regime of workplace relations under Rudd / Gillard is doing the same – it has gone too far but in just the opposite direction.
The rights of every working person in Australia should be protected. Naturally, most individual employees are more vulnerable compared to most employers when employees and employers come together and negotiate working conditions and pays. There are clearly needs for laws to protect the rights of working people.
There can also be an appropriate role for unions to play. However, the role for unions should not be mandatory. Employees should have the right to have individual agreements if that is what they so choose.
A fair and productive work relations regime is important in both protecting the rights of employees and employers and being conducive to productivity. Neither too far to the right or the left is right. It needs a balanced approach.
Diversity also has its virtual. Forcing people to go either for the former AWAs or collective agreement will not be best for Australia.
It seems there is a need for more fundamental reforms to the regime governing work place relations. There should be a mechanism that can prevent any government from going too far to either direction.
The Rudd government was given a mandate to abolish Work Choices and replace it with a better and fair one. Work Choices just went too far in reforming workplace relations. As a result, it lost the support of most Australians.
In the same token, it seems the current new regime of workplace relations under Rudd / Gillard is doing the same – it has gone too far but in just the opposite direction.
The rights of every working person in Australia should be protected. Naturally, most individual employees are more vulnerable compared to most employers when employees and employers come together and negotiate working conditions and pays. There are clearly needs for laws to protect the rights of working people.
There can also be an appropriate role for unions to play. However, the role for unions should not be mandatory. Employees should have the right to have individual agreements if that is what they so choose.
A fair and productive work relations regime is important in both protecting the rights of employees and employers and being conducive to productivity. Neither too far to the right or the left is right. It needs a balanced approach.
Diversity also has its virtual. Forcing people to go either for the former AWAs or collective agreement will not be best for Australia.
It seems there is a need for more fundamental reforms to the regime governing work place relations. There should be a mechanism that can prevent any government from going too far to either direction.
Close the gap of Indigenous disadvantage
Comments on Kevin Rudd “Reformed COAG a one-stop co-op”, 1/07/2009, http://www.theaustralian.news.com.au/story/0,25197,25715209-5013480,00.html
The Rudd government has done significant reforms to the federal relations and should be congratulated for those achievements.
The main agenda item for the next meeting is an important one. The gap of disadvantage facing our Indigenous people is big and should not be tolerated by decent Australians. The federal and state governments must find more effective ways to narrow that gap.
While I don’t necessarily share the view of big government and spending as the PM does, I do wish him success in his effort in closing the gap between our Indigenous people and our other people.
There is also a responsibility for the leaders of our Indigenous people in closing the gap. Indigenous people themselves have an important role to play. Let’s hope that all relevant people play their part wherever and whenever they can to do their bits to close the gap.
The Rudd government has done significant reforms to the federal relations and should be congratulated for those achievements.
The main agenda item for the next meeting is an important one. The gap of disadvantage facing our Indigenous people is big and should not be tolerated by decent Australians. The federal and state governments must find more effective ways to narrow that gap.
While I don’t necessarily share the view of big government and spending as the PM does, I do wish him success in his effort in closing the gap between our Indigenous people and our other people.
There is also a responsibility for the leaders of our Indigenous people in closing the gap. Indigenous people themselves have an important role to play. Let’s hope that all relevant people play their part wherever and whenever they can to do their bits to close the gap.
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