US mind-boggling politicians: stop rocking the boat, China Daily said


US gov shutdown1Furloughed federal employees, along with their family members, protest the government shutdown outside the US Capitol in Washington DC, USA, 08 October 2013. The federal shutdown in the US is in its second week – EPA Photo.

The prospect of dimmer global growth predicted by the International Monetary Fund should make it a matter of urgency for US politicians to stop manufacturing crises.

Five years after the start of the global financial meltdown triggered by the bankruptcy of Lehman Brothers, it is pitiful that the US is now putting the fragile global recovery under renewed threat with its mind-boggling political infighting.

The IMF on Tuesday cut its global growth forecast to 2.9 percent this year and 3.6 percent for next year. This year’s growth forecast is 0.3 percentage points lower, and next year’s 0.2 percentage points down, than the July projection.

Indeed, the growth slowdown in major emerging economies, as the Washington-based global lender identified, will contribute to a global growth fall in the coming years. Both cyclical and structural problems in these economies are demanding immediate and bold reforms to make growth more sustainable.

However, when financial ministers and central bankers gather in Washington later this week to discuss global growth issues, they will be lucky if their attention is not too distracted by the US government shutdown.

The inconvenience caused by the shutdown may be the least of their worries. The elephant in the room, the once inconceivable notion of the US defaulting on its debt and ensuing dollar upheavals will have to be acknowledged.

As the world’s largest economy and the home of the global reserve currency, the US surely has the wherewithal to fund its government and avoid a catastrophic default by raising its self-imposed debt ceiling.

Yet the astonishing failure of the US Congress to put national needs before their partisan interests has sparked fears among investors and governments around the world that maybe it is time to think about the unthinkable.

That may explain why the biggest US creditors, China and Japan, have expressed concern over developments in Washington which could affect their several-trillion-dollar investments in US Treasury bonds.

US politicians can discuss, bicker and argue over government spending and economic growth. Kicking cans is one thing, but throwing caution to the wind is not a course of action worthy of the world’s leading economy.

-  China Daily

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Time for crucial fiscal reforms: Malaysia Budget 2014 
USA government shutdown !

IMF, China, Japan warn USA’s debts on default! Demystifying the US debt ceiling


US debt default

UNITED States (U.S.) President Barack Obama Tuesday declared that he was willing to negotiate with Republicans in passing at least a short-term budget that opens up the government at current funding levels.

But Obama, during a media briefing Tuesday, said his offer to negotiate with Republicans on the issues would “absolutely” stand if Congress passes even short-term clean spending and debt ceiling bills.

However, he declared that “the only thing that I will say is, we’re not going to pay ransom for” America paying its bills.

This came as it was revealed yesterday that there are no talks going on at any level to resolve differences over the government shutdown and the debt ceiling deadline.

But Washington’s march toward self-inflicted financial calamity is setting off alarm bells around the world as general bewilderment turns into genuine concern over a possible default by the world’s lone superpower.

The International Monetary Fund (IMF) as well as China and Japan – which hold a combined $2.4 trillion in U.S. debt – have called for a quick resolution to the crisis and expressed worries over the economic consequences of a default.

Meanwhile, Obama said U.S. credit-worthiness will be affected if markets see that “we’re not paying all our bills on time.”

Noting that he missed a major conference in Asia this week because of the government shutdown issues, said the president said: “whenever we do these things, it hurts our credibility around the world. Makes it look like we don’t have our act together.”

He warned that if Congress doesn’t raise the debt ceiling, “every American could see their 401Ks and home values fall,” and the country would see a “very significant risk” of a deep recession.

Obama said that Congress has to vote to raise the debt ceiling as soon as it votes to reopen the government. Failing to raise the debt ceiling “would be dramatically worse” than a government shutdown, he said.

He criticised House Republican tactics in dealing with the government shutdown and a debt ceiling increase. “Let’s lift these threats from our families and our businesses and let’s get down to work,” he told reporters yesterday.

Obama spoke after Republicans reportedly offered a new approach yesterday to resolve the U.S. fiscal standoff, proposing creation of a bipartisan panel to work on deficit reduction and find ways to end the government shutdown and make recommendations on a debt-limit increase.

The proposal, which was quickly dismissed by Democrats, came as House of Representatives Speaker John Boehner and President Barack Obama spoke by telephone shortly after Boehner adopted a slightly more conciliatory tone in comments to reporters.

“There are no boundaries here. There’s nothing on the table, there’s nothing off the table,” Boehner said after a meeting with House Republicans, making no mention of his recent demands to delay parts of Obama’s healthcare law in return for approving funds to end the government shutdown.

In the first official response by China, Vice Finance Minister Zhu Guangyao said that a solution must be found quickly in order to “ensure the safety of Chinese investments” and provide stability for economies around the globe.

“We ask that the United States earnestly take steps to resolve in a timely way the political issues around the debt ceiling and prevent a debt default,” he said. “This is the United States’ responsibility.”

The International Monetary Fund (IMF) has trimmed its forecast for global economic growth at the same time as lifting its UK growth projection.

It now expects global growth of 2.9% this year, a cut of 0.3% from July’s estimate. In 2014 it expects global growth of 3.6%, down 0.2%.

It cited weakness in emerging economies for the cut.

But it warns that the political standoff over raising the US government’s borrowing limit, if it results in the US defaulting on its debt payments, “could seriously damage the global economy”.

It expects growth of 1.6% in the US this year and 2.6% next year, down 0.1% and 0.2% from its July forecast.

Economists have predicted that a default would do great harm to economies around the world.
Obama recounted to reporters his telephone discussion yesterday morning with House Speaker John Boehner:

He was happy to eventually talk with Republicans about issues they care about, but that “shouldn’t require threats of a government shutdown” or economic chaos over the heads of the American people.

Yesterday, there were news conferences and a high-level phone call between Obama and the House Speaker, but no immediate sign of progress on reopening the government a week into a partial shutdown or reaching a deal to avoid the first-ever U.S. default next week.

Obama called Boehner yesterday morning, and the White House then announced the president would make a statement and take some questions from reporters at 2 p.m. ET.

Earlier, Boehner demanded that Obama and Democrats negotiate with Republicans on steps needed to end the shutdown that began on October 1 and raise the nation’s debt ceiling before the deadline for default on October 17.

“Americans expect us to work out our differences, but refusing to negotiate is an untenable position,” Boehner said, adding that Obama and Senate Majority Leader Harry Reid are “putting our country on a pretty dangerous path” by rejecting GOP calls for talks

- The Guardian

Demystifying the US debt ceiling: 5 things you should know

As the US government is about to hit its so-called debt ceiling of $16.7 trillion on Oct. 17, the frightening prospect of the world’s biggest economy running out of cash is dominating headlines around the globe.

So, in an effort to shine some light on what exactly the debt ceiling means to all of us, Business RT spoke to leading Moscow financial expert Chris Weafer, a senior partner at Macro-Advisory.com.

What exactly is the “debt ceiling?”
 
The US debt ceiling has existed for almost a century, and describes the maximum amount of money the US can legally borrow. The country introduced the legislative limit on its debt back in 1917, and since then it has stipulated the affordable amount of national debt that can be issued by the US Treasury. As of September 25, the US Treasury reported federal government debt at just shy of $16.7 trillion
($16,699,396,000,000.00, to be exact) in its daily statement, a figure which has been reported for 130 days straight. This is about $25 billion shy of the precise legal limit – $16,699,421,095,673.60. When the US approaches this debt limit, it can take some “extraordinary measures” to buy some time before Congress agrees to raise the ceiling. In its entire history, the US has so far never reached the point of default, where Treasury can’t pay its debt obligations.

Who holds the US debt?
 

The US owes about two-thirds of its debt to US-based creditors, with almost 66 percent of the country’s debt held domestically. US individuals and financial institutions hold around 31.7 percent of US Treasuries, with the US central bank, the Federal Reserve, which holds some 12 percent of the debt. Foreign creditors, including China and Japan, own an estimated 34 percent of total US government debt. These two ‘big lender’ countries have recently urged the US to take decisive steps to avoid a default.

3 What does the US borrow the money for?
 
In the US, often referred to as a ‘big-spending’ country, both individuals and the government have habitually spent more than they earn, pushing the economy deeper into debt.

“Just like any ordinary individual, the choice is either to cut back on spending or to borrow money to bridge the gap,” Weafer says.

In 2012, 22 percent of total government expenditures went to social security (means-tested payments to the poor and unemployed), while 21 percent was spent on healthcare, again mostly for poor Americans who cannot afford private health insurance. The third largest expenditure item is defense at 19 percent. In recent decades, the US defense bill has ballooned, mainly due to costly wars in Iraq, Afghanistan and elsewhere. The so-called War on Terror has also added greatly to the debt burden, while the Department of Homeland Security, created after the September 11, 2001, attacks on the US, has cost taxpayers more than a cumulative $800 billion.

The biggest contributory factor to the fast-growing debt mountain in recent years, however, has been the economic crisis that began in 2008. Apart from hundreds of billions of dollars paid out to rescue failing Wall Street banks that had made too many toxic loans, the US government has also paid out large amounts on vital social programs to aid the growing ‘army of the unemployed’. Coupled with the Bush-era tax cuts to the rich and big business, lower average incomes and greater unemployment have hit government tax revenues hard, sending federal government debt sky-high.

Why can’t they simply print more dollars and pay their debt?
 

No economy in the world can simply turn on its printing presses and create as much cash as it wishes, as this would make its currency worthless.

“If the amount of currency in issue is not sensibly related to the strength of the economy, then foreign trade partners will … devalue the currency quickly,” Weafer explains. “If you have one asset and income source which allows you to issue one dollar, and then you print one more dollar, everybody else will see what you have done and will value your one dollar at only 50 cents. Some countries have done that in the past, but in those cases people soon had to use suitcases just to carry enough currency to buy a loaf of bread.”
 
Under the Bretton Woods financial system, established in 1944, the amount of currency in circulation was linked to gold reserves. But in 1971, the US abandoned this system and started to include a number of other economic factors, based on a recognized ability to service debt and prevent inflation, and maintain orderly trade with the rest of the world.

5 How would a US default affect people around the world, on a macro and personal level?
 
If the US defaulted, then the world’s financial system “would start to freeze up,” Weafer says. “Banks would pull back from risk and lending. The US economy would slide towards recession and the global economy would quickly be affected.” A prolonged US default would lead to job losses everywhere and much tougher borrowing conditions for companies and individuals, he adds.

“A short period of default would also have a bad effect in that it would hurt confidence in the world’s financial system,” he says. “Bankers and investors would assume that a short-term fix in the US would mean it would only be a matter of time before the same issue arises again in 2014. The resulting caution would make life that much tougher for all of us.”
 
- RT news

Related post:
 USA government shutdown !

USA government shutdown !


US gov shutdown

The mood was grim at the Capitol Monday as Democrats and Republicans couldn’t get it together for the good of the nation. 

http://landing.newsinc.com/shared/video.html?freewheel=90051&sitesection=nydailynews&VID=25214750

OUT OF SERVICE: Federal government enters first shutdown in 17 years; lawmakers remain divided over Obamacare

The U.S. government has shut down as Democrats and Republicans refuse to negotiate on Capitol Hill. GOP leaders remain determined that key aspects of Obamacare must be delayed, while President Obama insists that the demand ‘is the height of irresponsibility.’

WASHINGTON — The first shutdown of the U.S. government in 17 years began early Tuesday as Congress bickered and bungled an effort to fund federal agencies due to a bitter ideological standoff over Obamacare.

The embarrassing disruption that an angry President Obama said was “entirely preventable” and would “throw a wrench into the gears” of the country’s recovering economy was triggered as a midnight deadline passed without agreement between the Republican-controlled House and Democrat-run Senate.

Senate Majority Leader Harry Reid (D-Nev.) disclosed at midnight that the White House budget office had directed agencies to start closing up shop. He then called a recess until 9:30 a.m., meaning that there would be no House-Senate deal in the wee hours Tuesday.

President Obama criticized Republicans' efforts to delay key aspects of the Affordable Care Act.

Susan Walsh/AP

President Obama criticized Republicans’ efforts to delay key aspects of the Affordable Care Act.

The shutdown would keep 800,000 federal workers at home on Tuesday and inconvenience millions of people who rely on federal services or are drawn to the nation’s parks and other attractions. Critical workers, from the Border Patrol to air-traffic controllers, would remain on the job, unpaid.

Legislation was passed, however, to fund the armed services during the shutdown.

House Speaker John Boehner said Obamacare 'is having a devastating impact.'

Chip Somodevilla/Getty Images

House Speaker John Boehner said Obamacare ‘is having a devastating impact.’

Despite the drama, members of Congress faced no threat to their own pay, because the 27th Amendment to the Constitution bars their salaries from being subjected to the annual appropriations process. Obama, too, will still be paid.

PHOTOS: GOVERNMENT SHUTDOWN FURLOUGHS THOUSANDS OF FEDERAL EMPLOYEES

Conservative firebrand Sen. Ted Cruz (R-Tex.), who made himself the face of the GOP effort to block Obamacare through the funding bill, pledged Monday to donate his salary to charity during the shutdown.

Many Americans will be inconvenienced by a shutdown.

Photos by AP, Debbie Egan-Chin/New York Daily News

Many Americans will be inconvenienced by a shutdown.

Repeatedly Monday, amid all the political posturing and rhetoric, the House amended a Senate resolution to fund the government to add a one-year delay in Obamacare, and other alterations. Repeatedly the Senate rejected those conservative-backed changes.

The House was expected to pass the latest health-care law changes in an early morning vote. The Senate was set to reject those additions when they return Tuesday.

RELATED: WARREN: NOT MUCH COURAGE ON CAPITOL HILL AS SHUTDOWN LOOMS

Senate Majority Leader Harry Reid (D-Nev.) arrives at the Capitol Monday. The Senate voted Monday to defeat a House bill that links keeping the government funded to delaying 'Obamacare' for one year.

Win McNamee/Getty Images

Senate Majority Leader Harry Reid (D-Nev.) arrives at the Capitol Monday. The Senate voted Monday to defeat a House bill that links keeping the government funded to delaying ‘Obamacare’ for one year.

As the nearly ridiculous legislative tit-for-tat played out, Obama went to the White House briefing room to insist that Republicans give up their demand to tie new money for the government to scuttling or delaying his health care law.

“One faction of one party in one house of Congress in one branch of government doesn’t get to shut down the entire government just to refight the results of an election,” Obama said.

“You don’t get to extract a ransom for doing your job, for doing what you’re supposed to be doing anyway, or just because there’s a law there that you don’t like.”

The front page of the NY Daily News on October 1, 2013.

The front page of the NY Daily News on October 1, 2013. 
 

RELATED: MEADOWS PUT GOVERNMENT ON ROAD TO SHUTDOWN

House Speaker John Boehner (R-Ohio) responded a few hours later on the House floor. “The American people don’t want a shutdown, and neither do I,” he said. Yet, he added, the new health care law “is having a devastating impact. . . . Something has to be done.”

Even more troubling than the shutdown was that the partisan stalemate that caused it sets the stage for an even more high-stakes clash, as Congress must soon deal with raising the debt limit by Oct. 17 — a matter in which both sides concede that failure would be perilous for the U.S. economy and economies worldwide. Republicans also want to attach conditions to that vote. Democrats said giving ground now would encourage Republicans to take a harder line in that fight.

Congress remained gridlocked Monday over legislation to continue funding the federal government. The federal government shut down after both chambers failed to pass a resolution before midnight.

Win McNamee/Getty Images

Congress remained gridlocked Monday over legislation to continue funding the federal government. The federal government shut down after both chambers failed to pass a resolution before midnight.

“You know with a bully you can’t let them slap you around because they slap you around today, they slap you five or six times tomorrow,” Reid said.

RELATED: PANDA-MONIUM: NATIONAL ZOO’S BELOVED PANDA CAM WILL SHUTTER IF FEDERAL GOVERNMENT SHUTS DOWN

Monday’s failure on Capitol Hill caused the stock market to drop on fears that gridlock would continue and Congress would shoot the recovering economy in the foot. The Dow Jones slipped 128 points, or 0.8%.

The last shutdown happened during President Clinton's time in office.

Photo by AP

The last shutdown happened during President Clinton’s time in office.

The fight also sent Congress’ already abysmal approval plunging to a new low. A CNN poll released late Monday found that just 10% of Americans approve of the job Congress is doing, while a record 87% disapprove. And Americans are blaming the Tea Party and its no-holds-barred-against-Obama stance for the crisis — the party had its lowest favorable rating in its five-year history, at 31%.

At times Monday, Washington seemed like a real-life “House of Cards,” the Netflix drama in which D.C. power players are motivated by dark self-interest rather than the national interest.

RELATED: US LAWMAKERS TRADE BARBS AS GOVERNMENT SHUTDOWN LOOMS

Boehner arrives with his security detail at the Capitol on Monday, remained adamant that 'Obamacare' be delayed. 'This law is not ready for prime time,' he said.

JONATHAN ERNST/REUTERS 

Boehner arrives with his security detail at the Capitol on Monday, remained adamant that ‘Obamacare’ be delayed. ‘This law is not ready for prime time,’ he said.

Congress, and the government, needed to act because there was no authorization for the government to spend any money as of 12:01 a.m. on Tuesday, the start of the new budget year.

Monday’s maneuvering began in the Democrat-controlled Senate, which voted, 54 to 46, to kill a House-passed bill that would keep the government funded but delay Obamacare for a year.

The Senate then sent the House a so-called “clean” bill — one that would simply keep government running through Nov. 15. With the ball back in their court, House Republicans sought different concessions in exchange for keeping the government funded. They called for a one-year delay in the Obamacare requirement for individuals to buy coverage.

Only 36% of Americans blame President Obama for the shutdown, a poll released Monday showed. 46% blame Republicans.

Charles Dharapak/AP 
 
Only 36% of Americans blame President Obama for the shutdown, a poll released Monday showed. 46% blame Republicans.
Sources: NEW YORK DAILY NEWS
Shutdown effects ripple across US

A string of cancellations and delays caused by the federal government shutdown is rippling across the United States, ruining dream vacations, upending carefully laid wedding plans and complicating the lives of millions of people.

From blood drives to daycare programs, musical performances to research projects, the disruptions caused by the political stalemate in Washington sparked growing frustrations and left people scrambling to make alternative plans.

Scores of weddings planned at national parks and monuments around the country were moved or postponed, and vacationers hustled to change their itineraries after finding iconic sites from the Statue of Liberty to the Lincoln Memorial closed.

“We’re really disappointed. We spent a lot of days waiting for tickets so we just want to go inside the statue,” said Gaelle Masse, a tourist from Paris who was startled to discover the Statue of Liberty was closed.
Thousands of tourists with prepaid tickets to visit Alcatraz Island, the famed prison site in San Francisco Bay, were unable to tour the former penitentiary.

In Boston, Italian tourist Federico Paliero and his girlfriend Claudia Costato peered through a closed metal gate to catch a glimpse of the USS Constitution, a wooden, three-masted US Navy ship from the 18th century docked in Boston Harbor that serves as one of the city’s major attractions.

Normally buzzing with tourists, the site was nearly abandoned on Wednesday, except for a handful of people looking lost and dismayed as they gawked at a sign explaining the closure.

“Italy is not the only state with money problems,” Paliero said, rubbing his thumb and forefingers together.

At Great Smoky Mountains National Park in Tennessee, park staff said nearly 30 weddings scheduled for the next two weeks are threatened by the shutdown, which also sent hundreds of campers packing.

‘WORRIED ABOUT RAIN’

Two dozen weddings planned at monuments on the Washington mall in October also were threatened, a park service spokeswoman said.

“I wasn’t worried about the government shutting down. I was worried about rain,” said bride-to-be MaiLien Le, who was planning to walk down the aisle at the Jefferson Memorial on Saturday.

Having to possibly change venues just days before her wedding is “really upsetting,” she said on NBC’s “Today” show.

In northern Virginia, officials canceled blood drives that would have provided transfusions for up to 900 area patients.

The Library of Congress in Washington closed its doors, disrupting research projects and canceling a musical performance by Randy Newman.

About one-fifth of the classes at the Naval Academy in Annapolis, Maryland, were scrapped, and science laboratories at the school were shut down as furloughs for civilian Defense Department employees took hold.

The Smithsonian, which shuttered all of its museums and the National Zoo, also had to close its early childhood center even though many parents had already paid between $300 and $400 in tuition for the week, according to local radio station WTOP.

“When you have to sit down and explain to a 5-year-old why he can’t go to school, it’s a difficult conversation,” Virginia resident Brian Katz, whose two children attend the Smithsonian Early Enrichment Center housed in the Natural History Museum, told a local Fox television station.

Juleon Rabbani, 28, got a call from the National Park Service informing him that his scientific research in national parks would be shut down for now, compounding funding issues he was already facing.

“I wanted to graduate in the fall of 2014, but with my funding being held up and since my research sites are national parks, it will be well into 2015 before I am done,” he said. “The funding I need won’t come through, and who knows how long this shutdown will be.”

Some Washington businesses faced growing uncertainty as the shutdown continued, keeping government events away from hotels and federal workers out of their usual restaurants.

David Hill, general manager for two area hotels, said two dozen events at the hotels have been canceled in the coming weeks, including one large government group that triggered a $45,000 loss.

“What I’ve told my team is: for us, it’s business as usual … but everything in the future is in limbo,” said Hill, who manages the Phoenix Park Hotel just blocks from the US Capitol and the Four Points by Sheraton near the White House.

Grain traders in Chicago were preparing to cope without weekly US Department of Agriculture data on export sales typically released on Thursdays. The data, covering sales the previous week, can roil prices for crops like corn and wheat if demand is unexpectedly strong or weak.

“For now, we’ll go with our best guesses,” said Sterling Smith, futures specialist for Citigroup.

Traders and analysts were frustrated that USDA websites went dark as a result of the federal shutdown. They mine the sites for data on crop supplies and demand to project price trends.

Terry Reilly, analyst for Futures International, said he could not complete presentations on the grain markets for clients because USDA data was unavailable.

“It makes no sense to me that they would shut down their websites,” he said.

Sources: Reuters

Views by market research analysts, would the Snake bite 2013?


The 12-year zodiac has turned from the last year dragon to Snake 2013. Would the snake bite as the snake’s reputation might be? Remember 2001 was the year of the 9/11!

2013 Chinese-snake

Welcome to Year of the Water Snake! Snake is the Yin to last year’s Dragon Yang. That said, Snake does not settle for mediocrity, either. We’re likely to see significant developments in the area of science and technology this year. Research and development are apt to flourish. This is a Water year as well, the element most closely associated with education and research, making 2013 a very special year for scientists and scholars. Snake is a great sign, a positive one, with energy that can help us face all of the challenges ahead of us. Let’s take advantage of this vibrant influence to improve our lives — and our world!

THE world markets have always been a subject of focus whenever a brand new year comes a-calling.

Will they perform well or are investors in for a tough time?

As usual, while some have looked to the study of feng shui to predict how markets will perform and react in this Year of the Water Snake, a few analysts and fund managers have mostly chosen to stick to regular facts and figures when giving their opinions.

Here are the views of some of them randomly selected by StarBizWeek.
VINCENT KHOO
Head of research
UOBKayHian Research

Do you believe in using feng shui to predict market movements?

For fundamental research, we do not take feng shui into consideration

What are your top picks in the Year of the Snake? Why?

The over-riding investment theme for the year’s market is laggards. Market laggards dominate our “buy” list.

We also advocate three categories of stocks to focus on for timing purposes. These are stocks which are immediate “buys” such as high-yielding stocks including number forecast operators and construction stocks, noting that positive newsflows are already emerging, stocks to accumulate on slight weakness such as telecommunication stocks, and stocks to accumulate on deeper retreats, such as the perceived politically-linked stocks which feature exciting growth prospects

Our contrarian view includes being overweight on construction stocks.

What are some of your “predictions” for financial markets this year?

The local market has predictably fallen after a short year-start rally. We expect a significant retreat in small-mid caps after an impressive January-Effect’ rally. We also expect market to dip further before elections, but downside is limited, and it should recover significantly thereafter.

THOMAS YONG
Chief executive officer
Fortress Capital Asset Management (M) Sdn Bhd

Do you believe in using feng shui to predict market movements?

We don’t use feng shui in our work.

What are your top picks in the Year of the Snake? Why?

In Malaysia, our top picks are UMW Holdings Bhd and CIMB Group Holdings Bhd. Despite a return of 70% in the year of 2012, we think that the prospects for UMW continue to remain bright.

The automotive division has been performing well as its Toyota brand continues to gain market share, while the Perodua brand dominates the budget segment.

Earnings contribution from the oil and gas division has improved vastly and the earnings momentum is likely to pick up in coming years, buoyed by the potential of raising funds via an initial public offering.

In the near-term, weakening of the US dollar and Japanese yen arising from quantitative easing would also be favourable to UMW Holdings.

CIMB Holdings has been delivering consistent earnings but its share price has under-performed the market, due to political concerns in Malaysia.

The group actually derives about 40% of earnings outside Malaysia and the overseas earnings contribution is expected to increase further with the strategic regional expansion.

Besides positive enhancement of the CIMB brand, its recent acquisition of Royal Bank of Scotland investment banking operations has also provided CIMB Group with an established platform to compete internationally.

Notwithstanding the solid fundamentals of the two stocks, one need to be cautious in determining the entry level for the stocks in light of the recent market volatility on the back of election politics.

What are some of your “predictions” for financial markets this year?

As the US and Japan are expected to continue with quantitative easing, we expect interest rates to stay low for the year 2013, stoking asset inflation.

While alternative investment such as property has traditionally proven to be a good asset inflation play, the sector will likely face continued policy curbs.

Taken with sight of economy recovery led by China and the United States, we believe equity as an asset class provides a very attractive risk return potential.

HWANGDBS VICKERS RESEARCH
MALAYSIAN RESEARCH TEAM

Do you believe in using feng shui to predict market movements?

Feng shui is just an additional tool used to make certain predictions.

Our bread-and-butter research approach has always been fundamental analysis supported by technical analysis.

What are your top picks in the Year of the Snake? Why?

Against a turbulent market backdrop, the benchmark FBM KLCI could swing between 1,500 and 1,750 going forward, and probably settle at our fundamentally-driven end-2013 target of 1,690 (based on one-year forward P/E of 14 times.

Hence, investors should view any market dips as buying opportunities to ride on the subsequent recoveries.

The Year of the Snake may bring good luck to industries linked to earth, metal and water elements, such as property, construction, petroleum and banking.

By being defensive, investors are expected to flock to sectors or stocks that generate strong operating cash flows and pay appealing dividend yields such as Pos Malaysia, Maybank and KLCC Property, to name a few.

What are some of your “predictions” for financial markets this year?

On the global economic front, we should see continuous gradual recovery supported by an underlying positive mood.

The recurrence of an economic fallout in the United States or a financial blow out in eurozone can happen, which can then force a downward spiral in investors’ confidence.

KALADHER GOVINDAN
TA Securities
Head of research

Do you believe in using fengshui beliefs to predict market movements?

I wish predicting market behaviour could be that easy. Feng shui or even the much older Indian version, Vastu, for that matter gives you a “common sense” perspective on how certain things should be done in harmony with nature to reap the maximum benefits for health and well being but it is not a single criterion that binds everything for success or wealth.

What are your top picks in the Year of the Snake? Why?

Sell-on-strength, especially overvalued defensive plays in the consumer, healthcare and telco sectors, and turn cash-heavy to accumulate high beta plays in domestic sectors, which are mainly related to construction, oil and gas and property sectors, in the first half of 20 13. The banking sector holds good buys based on their attractive valuation, still robust loan growth and bright chances of benefiting from ongoing domestic expansion .

What are some of your “predictions” for financial markets this year?

Issues in Europe will last longer. The structural flaws cannot be undone overnight but expect bouts of positive improvements to kick in the second half of 2 013 as fats are trimmed and jobs created. China could revive its domestic growth without stoking inflationary pressure but it can be a destabilising factor if its row with Japan escalates. The same applies to Iran and the West.

LIM TECK SENG
Deputy managing director
JF Apex Securities Bhd

Do you believe in using feng shui to predict market movements?

Not at all.

What are your top picks in the Year of the Snake? Why?

I prefer good value penny stocks because the capital appreciation of these stocks are much faster and larger, compared to bigger-cap stocks. Stocks are all about packaging, style and branding.

What are some of your “predictions” for financial markets this year?

Financial markets revolve around banking, wealth management and the economy.

It has nothing much to do with stock markets. The stock market is all about liquidity and cashflow.

If there is enough liquidity, cashflow and interest in the stock, the stock will run. Liquidity is the most crucial component to the stock market.

EDMUND THAM
Head of Research
Mercury Securities

Do you believe in using feng shui to predict market movements?

Some people may use it, but I personally do not use feng shui to predict the market.

What are your top picks in the Year of the Snake? Why?

Currently I’m looking at property and crude palm oil (CPO) stocks, for both value and dividend yield.

The prices of quite a number of them have come down recently. However, they have the potential to “come back” later in the year. CPO stocks would probably only come back later in the year if and when CPO prices recover.

Property players with projects in prime areas locally (Penang island, Klang Valley, Iskandar Region) and overseas stand to perform well.

CPO picks – IOI Corp Bhd, TDM Bhd, TH Plantations Bhd, Hap Seng Plantations Holdings Bhd.
Property picks – Glomac Bhd, Mah Sing Group Bhd, SP Setia Bhd, UOA Development Bhd.

What are some of your “predictions” for financial markets this year?

For the local market, less volatility could lead to a higher KLCI level, especially in the first half of 2013.

The cautious investor sentiment due to GE13 is likely to suppress market participation for Q1 and maybe Q2.

The Dow Jones is at quite a lofty level, and we’re not sure if it can be sustained above the 14,000 points level.

By YVONNE TAN yvonne@thestar.com.my 

Related posts:

Homeless in Penang no shelter !


Penang-homelessThe homeless in Penang are facing a hard time.

Non-governmental organisations (NGOs) have pointed out that the state still has no government shelter for the homeless and needy, even though Penang has a large number of homeless people.

According to NGO volunteers, there are only two free-of-charge stay-in shelters in the state and these are run by NGOs.

The volunteers claimed that the DAP-led state government had promised to build a shelter when it came to power in 2008, but nothing had materialised so far.

As a result, hundreds of homeless people could be found at public places, such as bus stops, five-foot ways, under bridges and on pedestrian crossings, according to P. Muru¬giah, coordinator of the Temple of Fine Arts’ Klinik Derma Sivasanta.

He said that half of the 70 or 80 needy patients treated by the charity clinic twice a week were in fact homeless.

“The Government needs to build a shelter for the homeless and provide medical care for them,” he told The Star Online.

Murugiah said his clinic had even collected and cremated 40 unclaimed bodies last year.

He suggested that Penang had a high number of homeless people because the state was densely populated with many senior citizens, and some of these were neglected by their children.

A volunteer at Kawan, a drop-in centre for the homeless and needy, said homeless people were made up of vagrants, the mentally-ill, drug addicts, as well as unemployed youths from other states.

“Half of them are those aged 50 and above and illiterate,” said the volunteer, who gave his name as James.

“There is a sizeable number of elderly people and the government needs to set up a shelter quickly.”

A doctor in George Town, who declined to be named, told The Star Online that the federal government should step in to solve the problem.

Once again, the disadvantaged sections of society have received no help from Guan Eng’s administration, forcing the Barisan Nasional government to step in to help Penangites.

If it was affordable housing earlier, this time it is shelters for the homeless. Either way, the federal government has always carried out its responsibility to the people whereas the DAP-led state government has been found wanting.

Sources: thechoice.my

 

Penang homeless need shelter

I STRONGLY support the call by various NGOs for a shelter for the homeless and needy in Penang.

Many of these homeless people sleep on corridors outside shops and temples. Some sleep in sheds and bus stops during the night, and try and get some work during the day.

The elderly and sick end up in hospitals and refuse to leave the wards when they are discharged because they have no home to go back to.

The state Welfare Department’s regular beggar raids cannot ease the situation because only those without serious medical problems and are above 60 years old can enter government-run old folks home.

The rest of the homeless go back to the streets because they cannot afford to rent rooms.

It is high time that the Federal and state governments work with NGOs in Penang to identify a place and start this service. The authorities need to provide support and allocate funds, and not let NGOs run shelter homes in the name of charity.

These shelter homes must also have trained social workers and volunteers.

As Penang strives to retain its modern and heritage status, social service for the needy and disadvantaged groups must always be part of the plan.

LIM B. EAN Penang The Star

The new year 2013 will continue with the trends of of the passing year


Snake Yr 2013The new year will start with two economic crisis events in the United States but otherwise, we can expect 2013 to continue with the trends of the passing year

IF 2012 is the year that did not bring about the end of the world, then 2013 should be the beginning of a new era, according to the Mayan prophecy.

But it is unlikely the new year will herald a brand new age for the world as a whole.

More probably, it will continue the trends in the old year but in more pronounced and deeply felt ways.

The year 2013 starts with the United States falling off the “fiscal cliff” or else escaping from that at the last moment.

If the fiscal cliff takes effect fully, up to four percentage points of GNP are expected to be sucked out of the US economy due to tax increases and government spending cuts combined, thus resulting in a new recession.

Another problem will soon reach crisis point.

The US government debt will reach its mandated limit around now, and President Barack Obama and Congress will have one to two months to negotiate an increase in that limit before the administration runs out of money to pay for its operations or service its debts.

Thus, we can expect the first two months of 2013 to be preoccupied with the drama of the US politics on debt, taxes and government spending.

It seems that the President-Congress and Democrat-Repub­li­can bitter battles of the last few years will return at the start of Obama’s second term.

If so, the United States’ political paralysis will be reflected in economic policy deadlocks.

The economic crises in the United States, and how they play out, will have a big impact on 2013 worldwide, especially since Europe is already in the midst of a recession.

With the uncertainties in the major developed economies, and the softening of the economies of China, India, Brazil, most developing countries will face economic difficulties this year but the extent of this is to be seen.

On the political front, the ongoing economic turmoil will lead to political changes in many European countries, and the future of the European Union and the Eurozone will themselves come under significant strains.

The next chapter of the Middle East drama is quite unpredictable. Israel, with its right-ward tilt, is expected to become even more aggressive, as its recent plan for more settlements in Jerusalem shows, and this may increase its isolation further.

But whether the Palestinian parties can unite and take advantage of its strong resistance in Gaza, its new UN-adopted status as a state, and the decline in Israel’s international support, is to be seen.

The Iran nuclear issue will continue to occupy news attention, with the Western countries having to decide whether to negotiate with Iran or intensify the sanctions (or both) or prepare for a military attack (thankfully, this does not seem likely).

The Syrian civil war will still dominate the TV channels as it enters another phase and perhaps an end-game, while the continued struggle for Egypt’s future political and social system will also have major effects on the region and the world.

In Asia, the world will watch closely whether the final stage of China’s leadership change-over to the new President Xi Jinping and Prime Minister Li Keqiang in March will begin a new era or continue the policies of the past decade.

Malaysia will have its place in the global spotlight with the general election, which will most likely take place in March.

Whatever the results, this closely contested election will be a watershed in the political life of the nation.

India, too, is in a state of significant political and economic flux, and 2013 will be used by the political parties and forces to prepare for the climax of the general election in 2014 and it is anybody’s guess who will come up on top.

Even as politics and economics continue to occupy the most attention, 2013 will remind us with greater force that Nature forms the bedrock of our societies and our civilisation.

The passing year brought its share of natural disasters to rival those of the previous recent years, and 2013 could even see worse extreme weather events around the world.

Global greenhouse gas emissions continue to increase despite greater awareness about the dangers of climate change.

Last week’s big floods in Malaysia’s east coast states could be a harbringer of worse to come in the country and the region.

The Philippines, having suffered a typhoon in its southern region in early December, had to cope with another big storm in its central region last week.

These are reminders that each country should improve its natural disaster preparedness as well as finalise its national strategy to address climate change.

And there are many other environmental issues to give high priority to, including water scarcity and quality, deforestation, biodiversity conservation, toxic chemicals and wastes and pollution of all types.

It will be an interesting year ahead.

Happy New Year to all readers of Global Trends!

Global Trends By MARTIN KHOR

 Related posts:
US Fiscal Cliff poses threat to economy worldwide! 
Cliff‘ worries may drive tax selling on Wall Street

China’s leadership changes


China’s new Politburo standing committee, from left, Xi Jinping, Li Keqiang, Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli. Photo: Reuters

Ruling Communist Party unveils new seven-member Politburo Standing Committee that will govern nation for next decade.

State media says Xi Jinping is to take the reins of China’s all-powerful Communist Party in a leadership transition that will put him in charge of the world’s number-two economy for the next decade.

Xi, the current vice president and successor to President Hu Jintao, assumes power at an uncertain time with the party facing urgent calls to clean its ranks of corruption and overhaul its economic model as growth stutters.

His long-expected ascension as head of the ruling party took place at 0400 GMT along with the unveiling of a new Politburo Standing Committee, the nation’s top decision-making body.

According to tradition, the members marched out before the media in a pecking order agreed after years of factional bargaining, a process which intensified in the months leading up to the five-yearly reshuffle.

China Spotlight
In-depth coverage of China’s Communist Party congress

Xi will consolidate his position at the apex of national politics by being named China’s president by the rubber-stamp legislature next March, for a tenure expected to last through two five-year terms.

The standing committee, which had nine members under Hu has been slimmed to seven and includes Vice Premier Li Keqiang, which would set him on the path to be be appointed premier from next March.

Other members include Zhang Dejiang, Yu Zhengsheng, Liu Yunshan, Wang Qishan and Zhang Gaoli.

They will be tasked with addressing a rare deceleration of economic growth that threatens the party’s key claim to legitimacy – continually improving the livelihoods of the country’s 1.3 billion people.

China also bubbles with localised unrest often sparked by public rage at corruption, government abuses, and the myriad manifestations of anger among the millions left out of the country’s economic boom.

The communists have a monopoly on political power in China and state appointments are decided within the party.

The process began with behind-the-scenes horse-trading and political deals.

It was essentially finalised on Wednesday when the party ended a week-long congress by announcing a new Central Committee of 205 people.

On Thursday, the Central Committee approved the higher leadership bodies, including the elite Politburo Standing Committee.

Factional politics

Observers believe two main factions have been jockeying for power, one centred largely on proteges of former president Jiang Zemin and another linked to allies of Hu.

Xi is considered a consensus figure who leans toward Jiang, while Li has long been seen as a Hu protege.

Analysts say that despite rivalries between the two camps which are largely divided on patronage lines, they broadly agree China must realign its economy away from a dependence on exports, while maintaining a firm hand on dissent.

The government has ramped up security in Beijing and on the nation’s popular social media sites to prevent any criticism during the gathering.

The run-up to this year’s congress was unsettled by events surrounding Bo Xilai, a political star seen as a candidate for a top post until a scandal in which his wife was convicted of murdering a British businessman.

The sensational affair torpedoed Bo’s political career, he will face trial for charges of corruption and abuse of power, and added to the intrigue in the run-up to the transition.

Agencies
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China is the main show


Martin Jacques shares his views on the growing clout of the world’s second largest economy.

AUTHOR and academic Dr Martin Jacques released an updated and expanded second edition of his widely acclaimed book, When China Rules The World: The End Of The Western World And The Birth Of A New Global Order, earlier this year.

During a recent visit to Kuala Lumpur when he attended an Asian Centre for Media Studies event, Jacques (pic) spoke to The Star about his book and its approach to the subject. Some excerpts:

How is the second edition different from the first?

Time. Because China is growing so quickly, China time is fast. There’s been a lot of updating throughout the second edition.

When I wrote the first edition, the 2008 (US-centred) financial crisis had just happened. The last chapter is about the crisis, which was little commented on before.

The second edition looks at the beginnings of a Chinese economic world order.

How far is the second edition a response to critics of the first?

I don’t think what I’ve done is a response to the critics. The inaccuracies in the first edition were very few, and I’ve certainly responded to those.

There was a bit of a jump in the argument between the rise of China and its relations with other countries.

Here I look at not just China-US relations, but the rise of developing countries generally, of which China is a part.

I use the phrase “rule the world” as a metaphor. I’ve learned a lot from meetings and discussions.

There was never much in the first edition I wanted to change. The structure of the book is basically the same.

Do you see China’s rise as continuing into the future?

Yes, definitely. Along the lines of the book, without any doubt whatsoever.

How might a new China-centred tributary system emerge in East Asia?

There are echoes of a tributary system. The most obvious return to that is the rise of China.

East Asian economies today are much more China-centric. There’s the fact we’re now moving to a new China-centric system.

China is probably the most important market for countries in the region, for trade and investment, with its high-speed rail links, and so on. Getting on with China will be absolutely crucial for countries in this region.

Can economic dominance translate into clout in other spheres?

If China is economically dominant, that gives it a great deal of influence over other countries.

The draw of China will be that much greater. China will be a huge cultural presence in the region.

Lots of people in this region will study in Chinese universities. Beijing will be a tremendous draw.

You can see that in the flight patterns of Malaysia Airlines, for example. Previously, Malaysians travelled to Britain, not so much to other East Asian countries; it would be interesting to see the changes.

The attraction of Shanghai will be that of a big city like New York. People are attracted to power.

We’ll be much more familiar with Chinese governance and institutions. From being a mystery, they’ll be familiar; we were used to the United States before, but much more with China (in future).

What of Greater China, the mainland, Hong Kong, Macao and Taiwan?

All the ties will get stronger.

Hong Kong will remain very much as now, I don’t expect it to change. It will become increasingly integrated (with the mainland) and Sinicised, and (still) in many senses not very Chinese.

I would expect Taiwan to move ever closer to China. Taipei feels it has nowhere to go except closer to China.

There are already a large number of Taiwanese working in China. There has been growing economic integration.

Over the next 20 years, Taiwan will probably accept Chinese sovereignty. It will come because it is absolutely the logical step.

What of the prospects of China’s collapse, as some predict?

There are gradations on the scale. China isn’t going to sail into the sunset without problems. But what I’m extremely sceptical about are predictions about the problems leading to economic meltdown and Armageddon.

Some day China may see a multi-party system, although unlikely. China may be more open, but it will still be very much Chinese.

A collapse is not impossible, but extremely unlikely.

Can China’s economic power translate into cultural influence?

It will take a long time. China is still a poor country.

Rich countries don’t aspire to be like a poor country; economic power is the basis (of cultural influence).

The Beijing Olympics is an example: China was unable to stage it 10 years before.

Since the rest of the world is not familiar with Chinese culture, the process of feeling comfortable with China culturally and politically will take a long time.

Because Chinese culture is so different from Western culture, it will take a century for the West to be familiar with it. I’m sceptical that it won’t happen.

How is China’s rise regarded by India?

India has a big problem with China, as it has a very strong view of China. India is a long, long way behind (in growth).

Indians are traumatised by China; their relationship with China is erratic, fickle and fearful. Because of the border wars, China looms very large in the Indian imagination.

The issue doesn’t disturb the Chinese, but for Indians it’s an issue. India is so far behind that the thought of overtaking China (economically) is the talk of fantasists in dreamland.

India needs to learn as much as possible from China and pursue a strong relationship with it. It needs a clear strategy in dealing with China.

India should stop this petty rivalry. At the moment there’s not much of that happening.

What of China’s relations with South-East Asia?

In historical terms for this region, 100 years (since the end of China’s dynastic rule in 1912) is not such a long time.

There is a familiarity with China in this region that is not found in other parts of the world.

This marks out relations with China as different here. Countries in this region relate with China in a multifarious process.

Laos, Cambodia, Vietnam, Myanmar are dealing (economically) with China mostly through Chinese provinces closest to them.

It’s a situation most nation states don’t allow in their regions. But Chinese provinces close to these countries will deal more with them in future.

As for relations with the United States?

It will take the US at least 10, maybe 20 years from now to treat China as an equal.

It will happen in a series of baby steps here and there, for example by treating China as a partner in the region, rather than as a problem like now.

But it won’t happen within 10 years. In certain circumstances it may happen quicker, such as a (Western) financial crisis, or it would take longer.

And Europe?

There’s been poor coverage of China in the rest of the world, mainly from ignorance. Coverage tends to be Eurocentric.

Soviet reforms under Gorbachev with glasnost (openness) and perestroika (restructuring) were well received in Western Europe. But the Soviet system could not be reformed.

China’s communist revolution had better historical roots than the Soviet’s.

What remains of the ‘Washington Consensus’ (ie, US-style economic doctrine)?

It’s dead. In the developing world, China is the main show. Why look at America?

China is actively doing (the alternative): there are general lessons in its emphasis on infrastructure, the importance of the state, of political stability, and so on.

Will there be a third edition?

I probably won’t do a third edition. It was hard work with the (second edition), being governed by the framework of the existing book.

I’d probably work on something fresh. More on the lines of “understanding China,” so that people can understand the conceptual thinking.

By BUNN NAGARA The Star/Asia News Network

  Related posts:

When China Rules The World: The End Of The Western World And The Birth Of A New Global Order   

Fearful of China’s rise? Sep 28, 2012
Dawn of a new superpower Jul 08, 2012

When China Rules The World: The End Of The Western World And The Birth Of A New Global Order


Book review: China is still ascendant

Author: Marc Jacques
Publisher: Penguin, 848 pages

SKEWED as they may be, reactionary Orientalist perspectives of East Asian realities remain the norm in Western punditry and news reports. The problem has become prevalent in both conservative and liberal circles.

The problem for the West itself is that such a persistent misperception of modern China may undermine Western interests further. Martin Jacques’ When China Rules The World: The End Of The Western World And The Birth Of A New Global Order is intended largely as a corrective, looking at the historic phenomenon of China’s grand return to the global stage in China’s own terms.

My review of the first edition of Jacques’ book appeared earlier in China awakens (Star Bizweek, Oct 3, 2009). The present consideration is of the second edition published by Penguin earlier this year.

The first edition was subtitled The Rise Of The Middle Kingdom And The End Of The Western World. The second edition, suggesting an evolution, is subtitled The End Of The Western World And The Birth Of A New World Order.

Jacques and Penguin are just as grandiose now as before. The titling remains as presumptuous and alarmist, at least to Western conservatives, and no apologies are tendered in that regard.

The title itself can be a problem for those who judge a book by its cover. Jacques does not believe that China or any other country can “rule” the world today, only that China and things Chinese would predominate globally.

The second edition contains new data and a new section in the Afterword. For Jacques, international developments in the three years between the two editions only confirm and strengthen his central themes.

His chief arguments remain intact: that China will be dominant economically and culturally, it will not essentially be Westernised, and China will be ascendant despite multiple challenges.

This rise, mainly economic but also in other spheres later, is of epochal proportions. China’s ascendancy would result from both its own efforts and the decline of the West simultaneously.

The 2008 recession in the United States, followed by economic doldrums there and the European sovereign debt crisis underline the situation impeccably. In contrast, China’s GDP growth continues, affected only minimally.

Like many others, Jacques believes that China’s current growth model based on cheap labour and global raw materials is unsustainable. For example, China would need to stimulate more domestic demand to compensate for a slackening of overseas markets.

The latest data show that more and more countries have now made China their main trading partner. And as with trade, increasingly so with investment.

Thus, China’s economic gravitational “pull” is becoming unerring and compelling. Not only has China swiftly replaced Japan as the world’s second-largest economy, its relationship with the United States has replaced Japan’s as the most important bilateral relationship across the Pacific and in the world.

Analysts impressed with China’s economic growth once expected it to surpass the US economy in a couple of decades. But that timeframe has shrunk.

In 2009 Jacques cited the Goldman Sachs prediction that China’s economy would overtake the US’ by 2027. Sceptics scoffed.

In this second edition, he cites The Economist’s projection that the Chinese economy will become the world’s biggest by 2018. Now the International Monetary Fund predicts the year will be 2016.

But even when that happens, China will still be a developing country with vast human resources yet to reach peak productivity. That means when China’s standard of living approaches that of the US, with a comparable GDP per capita, its economy will be two to four times that of the US today.

Unlike many China pundits, particularly critics, Jacques believes China will not succumb to the weight of its own promise. He does not accept that China has to Westernise or democratise before it can fully develop and prosper.

Jacques also rejects the alarmist Western notion that today’s China is re-arming aggressively. He finds Chinese defence expenditure as a proportion of GDP falling between the 1970s and 1990s, and since then only keeping pace with GDP growth.

As expected, the very people he seeks to inform are often those who spurn his information. Jacques attributes this Western stubbornness to a mixture of unfamiliarity, ignorance, prejudice, denial, stereotyping, racism and Cold War ideology against a non-Western country that is communist, at least in name.

With such unwieldy baggage, the nuances and subtleties about China are naturally lost on the bigots. For Jacques, China is a continent-sized civilisational state whose history has seen upheavals and expansion on its Asiatic land mass, but not military adventurism in a littoral and archipelagic East Asia.

In response to critics of an increasingly powerful China, Jacques does not see China as a global superpower. He finds China historically absorbed in its own internal governance as it is a very difficult country to govern, its trajectory will continue to be tempestuous, but it is still a complex and sophisticated state and the home of statecraft, so it cannot simply be dismissed with an epithet like “authoritarian”.

For example, while critics fret over the People’s Liberation Army and the PLA Navy, it is China’s Coast Guard rather than the military that is a key player in the disputed island claims. Jacques finds no less than seven uncoordinated Chinese agencies involved over these claims.

A key question in the book is whether the United States will allow China the space to be a major player in Beijing’s own regional backyard. Jacques finds that unlikely, while also convinced that US efforts, such as its “pivot” to contain China, will ultimately fail.

This book still has major gaps that need filling. A central theme is that China’s coming predominance will be different from that of Western colonialism, but how different and in what ways?

Jacques also envisages an updated revival of the tributary system in East Asia, in which all the smaller countries acknowledge their junior status with regard to China. But what form will a revised tributary system take?

Another key point is China essentially being a civilisational state rather than just a nation state like other countries. But what can this mean in practical policy terms, particularly in China’s relations with other countries?

Such answers are essential to an intelligent understanding of a rising modern China. But we may have to wait for a new book by the author for further illumination, because any answers are unlikely to be accommodated by the structure of the present work, notwithstanding its already intriguing insights.

The first edition was already a vast interdisciplinary work of far-reaching implications, and the second version even more so. Few analysts as authors have achieved what Jacques has: combining the depth and rigour of academia with the readability and vigour of journalism in a single volume on a subject of great topicality.

The result is a serious and interesting textbook which, despite its 800+ pages, has sold a quarter of a million copies (and counting) in a dozen languages in its first edition alone. His critics have yet to match that kind of appeal in whatever they have to say.

Review by BUNN NAGARA
star2@thestar.com.my

> Bunn Nagara is an associate editor at The Star.

 

Related posts:
Fearful of China’s rise? Sep 28, 2012
Dawn of a new superpower Jul 08, 2012

Taman Manggis land issue in Penang, a ‘Robin Hood story’ or soap opera?


The twists and turns in the Taman Manggis land issue in Penang is starting to resemble a soap opera but it has also raised the question of whether the legal procedures are observed in the sale of state land.

THE showdown over a plot of land known as Taman Manggis or “mangosteen garden” in the heart of George Town is about to erupt in another slanging match on Nov 3.

Dubbed by some as the “Robin Hood story”, the Taman Manggis land has become one of the most controversial issues in Penang.

It has also become a rather entertaining saga of gamesmanship between Chief Minister Lim Guan Eng and his political secretary Ng Wei Aik on one side and the state Barisan Nasional Youth on the other.

The 0.4ha of land had been designated for affordable housing but before the project could take place, Barisan was toppled.

Lim’s administration has since reportedly sold the land for RM11mil to a Kuala Lumpur company that is planning to build a health tourism facility that includes a private dental hospital and hotel on the site.

That was how the Robin Hood thing came about, but with a twist where Barisan is accusing the Pakatan Rakyat government of being a distorted version of Robin Hood by taking land meant for the poor to give to the rich.

When Barisan accused the state government of selling the land at below market rate, Lim challenged it to buy the land for RM22.4mil. Lim probably thought Barisan would not take up the dare. After all, RM22.4mil is not small change.

But Barisan agreed and announced that it had set up a special purpose company to buy and develop affordable homes on the land.

Caught on one foot, the state government was forced to respond and Ng issued an offer letter to Barisan. And that was when the soap opera began.

The Barisan side led by its State Barisan Youth chief Oh Tong Keong proceeded to pay 1% earnest money as is called for in such transactions.

The next step, as anyone would know, is for the lawyers from both sides to draw up a sales and purchase (S&P) agreement.

Once that is signed, the buyer would pay the balance of the requisite 10% and depending on the terms and condition, the full amount is usually paid within three months or more.

This is to enable the buyer to raise funds or secure a loan from the bank.

However, following the 1% payment, Lim demanded that the Barisan pay up the rest of the amount within a month.

The outlandish demand saw a few jaws drop on the Barisan side. First, it is not possible for Barisan to cough up that kind of money in so short a time.

Another was the audacity of the demand.

“There is no S&P agreement in sight and the seller is demanding the full amount. Do they understand the laws of transaction? Without an S&P agreement, no one would want to pay RM22.4mil,” said architect Khoo Boo Soon.

Khoo, who was the former building director of the Penang Island Municipal Council (MPPP), is quite appalled at the frivolous way that state property is being treated.

He is incredulous that state land is being sold based on an offer letter by a political secretary on the instruction of the Chief Minister.

“I have been a government servant for more than 17 years. As far as I know, land transactions have to be discussed and decided by the state exco, the state legal adviser has to be consulted, the state secretary has to be involved. It cannot be a one-man decision, both parties need to sign an S&P agreement,” said Khoo.

The Barisan side was more direct. “This is government land, it belongs to the people. The land does not belong to the Chief Minister’s grandfather. We are not buying a bicycle or a car, this is about public land costing millions of ringgit,” said Oh.

The Barisan side had on Oct 3 written to the state government requesting for an S&P agreement before they proceed to pay up the rest of the money.

On Oct 8, the state secretary wrote back asking them to refer to the offer letter and to pay up within a month.

To compound this half-past-six state of affairs, rumours abound that the land has actually been sold to the Kuala Lumpur company.

No one can tell for sure because the state government has been tight-lipped about the issue.

Requests for information on the actual status of the land has run up against a stone wall.

On top of all that, the house that Lim is renting in Penang reportedly belongs to the wife of the major stakeholder of the Kuala Lumpur company.

The lady is also the cousin of state exco member Phee Boon Poh. The implication of all this is unclear but it does add spice to the story.

Many people following this soap opera are quite confused but that is what makes soap operas so addictive – there are lots of twists and turns.

The more discerning think Lim has no intention of selling the land to Barisan, hence the conditions and obstacles put in the way.

Some suspect the delay tactics are aimed at making Barisan give up.

But it would be a blow to Lim’s administration if the Barisan people actually purchased it and proceeded to build low-cost housing.

Lim would lose face, particularly given that his administration has failed to build any affordable housing since coming into power.

To make matters worse, this is happening amid an inflated property market on the island and where house prices have soared beyond the reach of 80% of wage earners.

Lim should be transparent about the issue. If the land has been sold, he should admit it.

If it is still in the state’s hands, then he should do the decent thing and use it for its original purpose.

Instead he is angry at being criticised and is punishing those who want to build affordable homes by doubling the price of the land.

A Penang lawyer said he is not surprised about the “Robin Hood issue”.

“What shocks me is the silence on the part of the Penang NGOs. They used to be so vocal on issues affecting public interest,” said the lawyer.

In the meantime, the countdown to Nov 3 has begun.

ANALYSIS BY JOCELINE TAN The Star/Asia News Network

 

P/S:  Landlady of CM’s residence is not wife of company stakeholder

Regarding the Taman Manggis land, the Star and State exco member Phee Boon Poh clarified yesterday that the woman in question is his cousin, she is not married nor is she the wife of the company stakeholder. “My cousin and the stakeholder are just business partners,” he said.

The Taman Manggis land which had been designated for low-cost housing by the former Barisan Nasional government, became an issue when the Lim administration decided to sell it to a Kuala Lumpur company to develop a health tourism facility that includes a private dental hospital, hotel and multi-storey car park.

Related post:

Land sold for a song? Aug 11, 2012

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