QE3: Get ready for influx of cash!


QE3 set to boost confidence but experts warn against simply loading up on equities.

A RIVER of cash is likely to wash over the global financial system soon, thanks to decisions by major central banks to unleash their monetary “bazookas” on the faltering global economy.

The money-printing ball started rolling last month when the European Central Bank (ECB) said it would make “unlimited” purchases of bonds from countries such as Italy and Spain.

The US Federal Reserve was next, announcing that a third round of asset purchases, known as quantitative easing (QE3), would start at the rate of US$40bil (RM122.5bil) a month until the job market recovers “significantly”.

It was soon followed by the Bank of Japan, which said it would extend its asset-purchasing scheme by 10 trillion yen.

A big chunk of that excess liquidity will likely flow into Asian financial markets as investors search for better returns, given the low interest rates in most countries.

It is tempting to think investors can simply load up on equities and ride a rally like previous rounds of quantitative easing but this is not so, say experts.

They believe that while QE3 will boost confidence and support markets, the euphoria will be checked by the reality that the real economy is in the doldrums.

The list of worries is long: China is decelerating fast, Europe remains mired in recession, and many US consumers are still looking for jobs.

With countervailing forces at work, wealth managers and analysts have plenty of ideas on what to buy and what to avoid.

Buy
> US, Asian equities 

Analysts believe the flood of money will do much to support markets, but not all will do equally well.

UBS Wealth Management regional chief investment officer Kelvin Tay believes defensive bourses such as Singapore and Malaysia will do less well than markets such as Taiwan, Hong Kong and China.

He added that what is also likely to boost shares in Asia, outside of Japan, is simply that some stock markets look cheap, based on a metric known as price-to-earnings ratio. Shares could rise 12% from current levels, he said.

DBS regional equity strategist Joanne Goh said the bank recently recommended an “overweight” for Chinese and Hong Kong stock markets, indicating that investors should buy into these markets. These markets are likely to do well because they are large, open and undervalued, she added.

Analysts’ views were slightly more mixed about US equities, with some believing they will get a boost from QE3, while others warned that the impact would be limited.

Matthew Rubin, Neuberger Berman’s director of investment strategy, said American shares do look relatively cheap compared with investment-grade bonds.

“The additional liquidity should further support a rise in prices,” said Rubin, who helps set strategy at the fund, which manages assets of US$194bil (RM593.9bil).

But Sean Quek, Bank of Singapore’s head of equity research, said past experience shows that US equities benefit less from quantitative easing.

“Also, current valuations are less attractive versus previous QE periods as well as global peers,” he said, adding that he has a neutral rating on American shares.

> Gold

Most analysts believe stocking up on gold and gold-related assets is a good move.

First, with the amount of cash expanding in the system, there could be the risk of higher inflation. And with the value of the currency likely to fall due to the huge amounts of cash flowing about, investors will want “real assets” to protect themselves.

Rubin noted: “Real assets such as precious metals will act as inflation hedges and are per­ceived as diversifiers to holding fiat currency.”

Chew Soon Gek, head of strategy and economic research for the Asia-Pacific at Credit Suisse Private Banking, believes precious metals will outperform other commodities.

“They are the most sensitive to monetary easing, inflation expectations and real interest rates,” she said.

She tips gold to hit US$1,850 (RM5,663.80) per ounce in a year, from the US$1,760 (RM5,388.40) now.

> High-yield securities

With interest rates likely to stay near zero for the next two years, analysts believe that the demand for high-yielding securities will remain strong.

In particular, companies that pay a good dividend and have strong balance sheets are likely to attract investors, say analysts.

“With the QE expected to suppress yields and the Fed’s commitment to keep interest rates low until mid-2015, dividends will remain an important driver of total returns,” said Quek.

He noted that firms giving investors good payouts have generally performed better in the past two years when rates have fallen.

Rubin also believes that high-yield corporate bonds as well as real estate investment trusts are good places to park money.

“The search for yield in a low interest rate environment will continue,” he said.

Avoid
> US dollar 

If there is one asset class that most analysts believe is to be avoided, it is the greenback.

The flood of US dollars into the system through QE3 will lead to what analysts term a “debasement” of the currency – essentially a depreciation. In fact, Rubin believes that cash, and not just the greenback, should be avoided.

“QE3 increases potential for inflation and depreciation of the dollar,” he said.

This may also affect Singapore investors who have taken positions in US equities, as the currency may erode gains or increase losses due to the exchange rate. Likewise, investors might want to avoid the euro.

The poor economic outlook and flood of cash into the market will likely send it down against Asian currencies such as the Singdollar.

Uncertain
> European equities

For investors who take a riskier approach to investing, European stock markets do offer an option. After all, some of the best bargains are made when everyone else is deserting them, said Henderson Global Investors.

The asset management firm said that even though the outlook is gloomy, many firms remain healthy, with global operations.

But Quek is cautious on the region, simply because many question marks over the overall health of the economy remain.

A recent run-up in share prices there, as a result of the ECB’s unlimited bond purchase decision, has also made European stocks more expensive and less attractive, he noted. “As such, we are maintaining a negative stance on Europe.”

> Property 

While previous rounds of quantitative easing may have been one of the causes of property price inflation, this may not be repeated with this latest round.

Singapore has introduced the additional buyer’s stamp duty of 10% that foreigners incur when buying homes. Tay thinks that while QE3 may keep property resilient, price rises will be capped.

But QE3 could still end up boosting the appeal of US property, says Dr Lee Boon Keng, head of the investment solutions group for Singapore at Bank Julius Baer, noting that the housing conditions were improving and rebounding from historical lows.

“The US economy continues a moderate recovery, aided by rising property prices which should have a multiplier effect on consumption and investment,” he said. — The Sunday Times/Asia News Network

By AARON LOW

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QE3 triggers fear of new currency wars! What it means?
New global currency wars warning!  QE3 triggers fear of new currency wars! What it means?

Fearful of China’s rise?


PETALING JAYA: China may overtake the United States as the biggest economic power in the next four to six years but this does not mean that it will instantly become the world’s superpower, says a leading expert on China.

Dr Martin Jacques, 67, author of the global bestseller When China Rules the World: the End of the Western World and the Birth of a New Global Order, said it would take several decades, from between 2030 and 2040, before it could even achieve developed state status.

“It’d be a long way to go as a superpower,” he said at a talk on “China As Global Superpower: What It Means For Asia and The World”, hosted by the Asian Centre for Media Studies, based in Menara Star.

The second edition of his book was released recently and 40% of its content was new.

“This includes an extensive chapter analysing events after the 2008 financial crisis,” he said.

Expert on China: Dr Jacques presenting a talk hosted by the Asian Centre for Media Studies at Menara Star.

His first was shortlisted for two major literary awards.

Dr Jacques said Westerners were fearful of China’s rise due to scant knowledge and understanding of China and that it was a communist country.

They fear the country might throw its weight and its military power around.

However, Dr Jacques pointed out that China had no major interest in developing military power after Deng Xiaoping took over the country from the late 1970s to 1990s.

On fears that a communist country was not democratic, he argued that being democratic had not stopped Europeans from conquering others.

“Although China has a lot of problems now, it doesn’t mean that it can’t be humane and more democratic,” said Dr Jacques.

“Maybe, it will develop universal suffrage without following the Western way.”

Dr Jacques pointed out that the China Development Bank and China Export-Import Bank gave loans of more than US$110bil (RM338.415bil) to other developing countries in 2009 and 2010 while the World Bank only made loan commitments of US$100.3bil (RM307.65bil).

Dr Jacques, a Senior Visiting Research Fellow at the London School of Economics (University of London), visiting professor at Tsinghua University, Beijing, and Fellow at the Transatlantic Academy, Washington DC, was the former editor of Marxism Today, deputy editor of The Independent and a co-founder of the think tank Demos.

Fresh insight on China

PETALING JAYA: China continues to grab world headlines and dominate international news for many reasons. The world’s second largest economy is now expected to be the biggest in only a few years, with many far-reaching implications to follow.

World-renowned author and academic Dr Martin Jacques (pic) will be presenting a fresh look at the new China in a talk at Menara Star in Petaling Jaya at 2pm on Thursday.

His talk titled “China As Global Superpower: What It Means For Asia and The World” is hosted by the Asian Center for Media Studies, based at Star Publications (M) Bhd.

Dr Jacques is the author of the global bestseller When China Rules the World: The End of the Western World and the Birth of a New Global Order, which has been translated into 11 languages, shortlisted for two major literary awards and described as the best book on China in many years.

To keep track of the rapid changes in China, Dr Jacques has just released the second edition of his book, incorporating the latest data and an extended analysis which includes a new section.

The discussant for the talk will be Dr Lee Poh Ping, a Senior Research Fellow in the Institute of China Studies at Universiti Malaya.

Dr Lee has written and published extensively on East Asian affairs and presented university seminars on Dr Jacques’ work.

The talk will be moderated by The Star‘s associate editor Bunn Nagara.

The event at the Cybertorium in Menara Star is open to the public free of charge, with no registration required

 The Star/Asia News Network

QE3 triggers fear of new currency wars! What it means?


A man watches the foreign currencies exchange rate in Rio de Janeiro, Brazil

Fear has crept into the foreign exchange markets: fear of central banks. Currency traders are rapidly shifting assets to countries seen as less likely to try to weaken their currencies, amid concern that the fresh round of US monetary easing could trigger another clash in the “currency wars”.

Fund managers are rethinking their portfolios in the belief that “QE3” – the Federal Reserve’s third round of quantitative easing – will weaken the dollar and trigger sharp gains in emerging market currencies. Such moves would cause a headache for central banks worried about the domestic impact of a strengthening local currency, leading to possible intervention.

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Some investors are allocating money towards countries with beaten-up currencies, such as India or Russia, or those with more benign central banks, such as Mexico, that do not have a history of frequent forex intervention.

Currencies whose central banks have either intervened or threatened to intervene since QE3 have been underperforming the US dollar as investors have steered clear.

The Czech koruna is the worst-performing major currency against the dollar since QE3 was launched this month, according to a Bloomberg list of expanded major currencies. The governor of the Czech central bank last week raised the prospect of forex intervention as a tool to stimulate the economy.

The Brazilian real is also weaker in the past two weeks after Guido Mantega, finance minister, made it clear that the government would defend the real from any fresh round of currency wars sparked by the Fed’s move.

Even the Japanese yen is weaker against the dollar overall since the Fed’s move, despite having clawed back all its losses after the Bank of Japan’s move to add to its bond-buying programme last week.

Currency desks at Baring Asset Management and Amundi are avoiding the Brazilian real, which the country’s central bank keeps managed at around R$2 against the US currency, and are instead buying the Mexican peso, where the central bank has signalled it is happy for the currency to appreciate further.

James Kwok, head of currency management at Amundi, said: “Mexico is an emerging market currency many managers like as they believe the central bank won’t intervene. The Singapore dollar and the Russian rouble are managed by a range, instead of one-way direction, and so are also good candidates for QE play.”

He is concerned that another “big scale” intervention from Tokyo is on the cards after the BoJ failed to weaken the yen substantially this month, and is avoiding the currency as a result.

“We definitely take the intervention risk into account when investing in a currency,” says Dagmar Dvorak, director of fixed income and currency at Barings. “In Asia, intervention risk is fairly high. We have still got positions in the Singapore dollar but remain cautious on the rest of the region.”

Other investors are opting for currencies that have weakened substantially this year. Clive Dennis, head of currencies at Schroders, says: “Russia and India have currencies with strong rate support and levels which remain well below their best levels of the last year, hence pose less intervention risk. I like owning those currencies in a US QE3 environment.”

Some currencies are strengthening on a combination of Fed easing and domestic factors. While the Indian central bank is not seen as likely to intervene to stem any appreciation in the rupee, the currency has also been popular this month due to a reform package from the Indian government aimed at stimulating the economy.

Commodity currencies including the Russian rouble are responsive to expectations of a rise in commodity prices fuelled by Fed easing, while investors view the Mexican peso, along with the Canadian dollar, as a play on any economic recovery in the US because of their strong trade links.

However, some investors believe the QE3 effect could be lower this time. They argue that central banks in emerging markets face a tough decision over whether to weaken their currencies to help struggling exporters and stimulate growth, or allow them to strengthen to offset the impact of rising food prices.

In fact, the US dollar has shown signs of resilience since QE3 as fears over the health of the eurozone continue.

While flows into EM debt and equity funds rose substantially last week, according to data from EPFR Global, Cameron Brandt, research director, says this week’s flows looked more muted: “There’s a certain amount of reaction fatigue setting in.

By Alice Ross, FT.com

What QE3 means for China and rest of Asia?

China recently announced plans to boost spending on subways and other transportation infrastructure to boost its economy. But China may not be as aggressive with stimulus as the Federal Reserve and European Central Bank.

NEW YORK (CNNMoney) — Peter Pham, a capital market specialist and entrepreneur with expertise in institutional sales and trading, is the author of AlphaVN.com, an investing blog focusing on Vietnam and other markets in Southeast Asia
 
Now that most of the developed world’s major central banks have all committed to some form of open-ended quantitative easing, we can start to make some concrete predictions about the effects this will have in Asia.

In general, QE is being undertaken in the West to stabilize debt markets that are deflating. So this may do little to actually stimulate sustainable economic growth. But, the uncertainty as to whether the central banks would act aggressively kept a lid on many emerging growth markets for months. Here’s what may happen next.

China has been lowering interest rates but it cannot afford to do print money to buy bonds like other central banks have done. China’s central bank can still announce more fiscal stimulus due to its strong trade surplus. The recent plan to spend $156 billion on domestic infrastructure is significant, but compared to the amount of money the Federal Reserve and European Central Bank may wind up spending, it might was well be $156.

The political situation in China is proving to be more volatile than we may have originally thought as the response to Japan’s buying the Senkaku islands seems completely out of proportion with the level of threat or even insult this is represents. It speaks to a party that needs to redirect anger at its own mishandling of the economy.

That this is coming just a few months after Japan and China signed the most sweeping currency and trade agreement of any that China has signed with another country seems very odd.

Japan’s response to the QE announcement by the Fed was to extend their existing QE program another 10 trillion Yen (~$128 billion US). That may sound like a lot but it’s even less than China’s most recent stimulus program.

This suggests that the Bank of Japan is uninterested in printing to oblivion at the same rate as the Fed and ECB, and that Japan will manage the yen’s rise while shifting its focus towards more regional trade. Japan and China are each other’s largest trading partners, which makes this row over the Senkaku Islands seem manufactured to force the Japanese to choose a side in the growing cold war between the U.S. and China.

So far, Japan has been trying to work with both sides. It is helping to internationalize China’s yuan currency and is giving China a clear alternative to U.S. Treasuries with its own bonds. At the same time, Japan has stepped up its purchase of Treasuries, buying more than $200 billion’s worth in the past 12 months.

I expect the Bank of Japan to continue to try and position the yen as an alternative regional reserve currency as other Asian nations like Thailand, Malaysia and Indonesia try to lessen their reliance on the U.S. economy.

By keeping the yen strong versus the euro and the dollar, Japan can attract capital from overseas and use it to deploy it around Asia. There should be enough money sloshing around the region so that Asian nations can continue their trade with the West at current levels while also focusing more on regional growth.

The economies of Indonesia, Thailand and Malaysia are already growing above expectations this year despite volatility in their currencies because of the fear over Europe. With worries about Europe starting to wane, these countries, as well as the best companies in them, should have little trouble raising capital through bond sales.

The wildcards for Asia are Hong Kong and Singapore. We’re already seeing signs of a property bubble in Hong Kong thanks to the Fed’s four-year old policy of interest rates near zero. That’s because Hong Kong’s dollar is nominally pegged to the U.S. dollar.

Now that the Fed has implemented a program that will further debase the dollar — and expand its already bloated balance sheet — Hong Kong is being forced to reassess its currency peg. If they do not make changes, this could result in an even bigger property bubble. That would lead to loan problems for Hong Kong banks similar to those plaguing those in the U.S., Europe, China and, to a lesser extent, Singapore.

Since the Monetary Authority of Singapore (MAS) pegs its interest rates to that of the Fed, its economy is vulnerable to a property bubble like the one in Hong Kong. Inflation is currently above 4% and has recently been above 5%. While Singapore’s banks are all very well capitalized and their foreign exchange reserves are higher than their annual GDP, the Fed’s QE3 policy will put pressure on an economy already dealing with sluggish growth.

But all in all, the latest round of QE is mostly bullish for Asia as it creates some certainty after the past 12 months of extreme uncertainty. Even though the actions by central banks in the West appear to indicate that their economies are worse than the headlines make it seem, the mere fact that the Fed and ECB have acted should reassure investors throughout Asia.

By Peter Pham @CNNMoneyInvest
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Pussy Riot and Malaysian foreign-funded NGOs


Bizarre as it seems, two prominent Malaysian NGOs have something in common with Pussy Riot – the support of the US National Endowment for Democracy.

WHO loves Pussy Riot? Paul McCartney, Red Hot Chili Peppers and Sting are in the long list of celebrities supporting the so-called Russian feminist punk rock outfit.

But Madonna appears to have made the biggest impact with her brazen display of endorsement.

Midway through her 1984 hit Like a Virgin during a concert in Moscow last month, she stripped to exhibit the words “Pussy Riot” written across her back.

Her show did little to prevent three members of the group – Maria Alyokhina, Nadezhda Tolokonnikova and Yekaterina Samutsevich – from being jailed for two years.

They were found guilty of hooliganism and inciting religious hatred in an orthodox Moscow cathedral.

There has been much global media frenzy over their perceived persecution.The international condemnation has come from Amnesty International, the White House, the European Union, the British and German governments and an assortment of human rights groups.

Among the latest to join the chorus are Yoko Ono, wife of ex-Beatle John Lennon, and Myanmar opposition leader Aung San Suu Kyi.

The story as being spun by the mainstream global media is that of three young innocent women who were merely expressing their freedom being jailed by the dissent-silencing president Vladimir Putin (ex-KGB, remember?) and as such, need the support from all the outraged freedom-loving, justice-seeking and human rights-embracing people of the world.

After presenting the Lennon Ono Grant for Peace award to Tolokonnikova’s husband, Ono said: “I thank Pussy Riot in standing firmly in their belief for freedom of expression and making all women of the world proud to be women.”

Oh yeah? Let’s look at what they did to earn such an honour. On Feb 21, they stormed the altar of Cathedral of Christ the Saviour wearing balaclavas and bright outfits to “perform” what has been reported as a “punk prayer to the Virgin Mary”.

In reality, it was a grossly blasphemous parody of a Latin hymn, the English lyrics of which read: Holy, Holy, Holy, Lord God of Hosts 

Heaven and earth are full of your glory. Hosanna in the highest, Blessed is he who comes in the name of the Lord. Hosanna in the highest

What they yelled during their “performance” was this:

Holy s***, s***, Lord’s s***! Holy s***, s***, Lord’s s***! St Maria, Virgin, become a feminist …*Patriarch Gundyaev believes in Putin *(The Russian Orthodox Church’s Patriarch Kirill of Moscow and All Russia, whose secular name is Vladimir Gundyaev)
B****, you better believe in God!

The group is an offshoot of another known as “Voina”, or “War” in Russian, which has since 2008 staged several offensively shocking events in the name of “performance art”, including painting a mural of a penis on a bridge, having group sex in a museum, throwing live cats at workers of a McDonald’s outlet, overturning of police cars and firebombing buildings. They also stole a chicken from a supermarket and performed a lewd act with it.

It’s highly doubtful that the information would be revealed by the Western media when the case comes up for appeal on Oct 1.

Imagine the repercussions if such a group entered a mosque, church, or a Hindu or Buddhist temple in Malaysia to similarly “express their freedom”.

People who commit such acts in the US or in most European countries would also be arrested, charged and jailed, so what’s the big deal about these women?

For one thing, they seem to have powerful backers, in the form of the US National Endowment for Democracy.

Yes, the same entity supporting Bersih and Suaram, which is now being probed over its sources of foreign funding.

According to conspirazzi.com, Pussy Riot and Voina have open links to the NED through Oksana Chelysheva, who is deputy executive director of the Russian-Chechen Friendship Society funded by the NED and George Soros-funded outfits.

The NED was created in 1983, seemingly as a non-profit-making organisation to promote human rights and democracy but as its first president Allen Weinstein admitted to The Washington Post in 1991, a lot of what it does overtly used to be done covertly by the CIA.

In the words of ex-CIA officer Ralph McGeehee, it subsidises and influences elections, political parties, think tanks, academia, publishers, media and labour, religious, women’s and youth groups.

Russia has since introduced a new Bill to label NGOs that get foreign funds and are involved in politics as “foreign agents”, with their accounts subject to public scrutiny.

Paul Craig Roberts, a former Assistant Secretary of the Treasury, says the US, too, has laws which require foreign interests to register as foreign agents but this does not always apply to all Israeli lobby groups.

“There are no political parties in the US that are funded by foreign interests. No such thing would be permitted. It would be regarded as high treason,” he was quoted as saying by Pravda.

So, if outsiders are not allowed to fund and interfere in US politics, why should we allow its agencies to meddle in ours?

ALONG THE WATCHTOWER
By M. VEERA PANDIYAN

> Associate Editor M. Veera Pandiyan sees the wisdom in this quote from Danish philosopher Soren Kierkegaard: People demand freedom of speech as a compensation for the freedom of thought which they seldom use.

Related post
Sep 22, 2012

New global currency wars warning!


The recent money-pumping measure by the United States has been criticised by Brazil as a protectionist move which will adversely affect developing countries.

THE recent announcement by US Federal Reserve chief Ben Bernanke that the United States would be renewing its pumping of money into the banking system has been acclaimed by some parties as a move to revive its faltering economy.

But the Fed’s measure to revive “quantitative easing” is not being welcomed by all. It has instead caused anxiety in some developing countries.

Their fear is that a large part of the massive amounts of money being unleashed into the financial markets may fail to boost the US economy but will find its way as unwanted capital flows into some developing countries.

Bernanke announced that the Fed would purchase US$40bil (RM124bil) per month of mortgage-linked assets from the market, and do so continuously until the jobs situation improves.

The hope is that cheap and abundant money will encourage entrepreneurs and consumers to spend more and spark a recovery.

However, previous rounds of such quantitative easing did not do much for the US economy.

A large part of the extra funds were placed by investors not in new US production but as speculative funds in emerging markets or in the commodity markets, in search of higher returns.

In developing countries that received the funds, adverse effects included an inflation of prices of property and other assets, as well as appreciation of their currencies which made their exports less competitive.

On the other hand, the US dollar depreciated because of the increased supply of US dollars and the reduced interest rates, making US exports more competitive.

Brazil has been in the forefront of developing countries that are critical of the US money pumping. Last week, the Brazilian finance minister Guido Mantega called the US Fed measure a “protectionist” move that would re-ignite global currency wars.

Mantega told the Financial Times that the third round of quantitative easing would only have a marginal benefit in the United States as the already high liquidity in the United States is not going into production.

Instead, it is really aimed at depressing the dollar and boosting US exports.

Japan has also decided to expand its own quantitative easing programme in response to the US move, and this is evidence of tensions and a currency war, said Mantega.

In previous rounds of liquidity expansion in recent years, Brazil has been one of the developing countries adversely affected by sharp currency appreciation, which reduced its export competitiveness and facilitated import increases.

Recently, Brazil’s currency, the real, has weakened from the high of 1.52 real to the dollar to the present two real, which has improved its competitiveness.

But the new liquidity expansion in the United States may again cause a flood of funds to enter Brazil and reverse the currency trend.

In such a situation, Brazil may be forced to take measures to stop the real from appreciating, said the minister.

Previously, the country had taken capital controls to discourage inflows of foreign funds.

What has irritated Brazil even more is an accusation by the US Trade Representative Ron Kirk that Brazil has become protectionist in raising some tariffs, even though the Brazilian measures were within its rights in the WTO framework.

Brazil’s Foreign Minister Antonio Patriota last week wrote to Kirk pointing out the unfairness of a protectionist US accusing Brazil of protectionism.

“The world has witnessed massive monetary expansion and the bailout of banks and industrial companies on an unprecedented scale, implemented by the United States and other developed countries,” said Patriota.

“As a result, Brazil has had to cope with an artificial appreciation of its currency and with a flood of imported goods at artificially low prices.”

He pointed out that the United States was a major beneficiary, as it almost doubled its exports to Brazil from US$18.7bil (RM58bil) to US$34bil (RM105bil) from 2007 to 2011.

“While you refer to WTO-consistent measures adopted by Brazil, we, on our side, worry about the prospect of continued illegal subsidisation of farm products by the United States, which impact Brazil and other developing countries, including some of the poorest countries in Africa.

“The US has managed in a short period to remarkably increase its exports to Brazil and continues to reap the benefits of our expanding market. But it would be fairer if those increases took place in an environment not distorted by exchange rate misalignments and blatant Government support”.

As the quantitative easing from the United States and Japan is only going to take effect in future, it remains to be seen whether history will repeat itself – it will have minimal effect on the United States and Japanese economic recovery but will cause problems for developing countries – or whether it will be different this time.

GLOBAL TRENDS By MARTIN KHOR

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Japan should drop its sense of superiority and tricks over China, Asia


Sept. 18 – Eighty-one years have passed since the Japanese invasion of China‘s northeast. But now, it is time for Japan to drop its sense of superiority regarding China and Asia in general.

Japan has to recognize that China is no longer weak and poor as it was in the 1930s, when it suffered great disasters brought by Japanese militarism. The balance of power between the two countries has drastically changed.

Sept. 18, 1931 is a day of disgrace in Chinese history, as it marks the day Japan launched an invasion of China’s northeast and occupied the whole region four months later. The incident was followed by Japan’s invasion of Pacific Asia in 1941, leading to one of the greatest disasters in the region.

The anniversary this year is quite different from before, as it coincides with Japan’s “purchase” of part of the Diaoyu Islands, triggering fierce anti-Japan sentiment in China.

Japan’s arrogance and provocation regarding the Diaoyu Islands is in line with its complex formed over one century ago, when it proclaimed superiority over China and Asia.

The two countries became rivals over the last 500 years, with Japan catching up with and defeating China in the late 19th century. Even its defeat in World War II could not break its sense of superiority, as Japan considered China’s victory to be a present from the United States and the Soviet Union, turning a blind eye to the Chinese people’s heroic resistance.

Japan has been heavily influenced by China and learned a great deal from Chinese culture. China enjoyed comprehensive superiority over its neighbor in all fields, including military strength, at that time.

However, China experienced decline since the late Qing Dynasty (1644-1911), while Japan rose as a world power in the late 1860’s, when the country completely reformed its political and social structure by using European powers as models.

During the Meiji Restoration, Japan adopted a policy of breaking away from Asia and merging with Europe. It viewed China at that time as an antiquated and decaying country.

Its fear of China died with Japan’s overwhelming victory in the First Sino-Japanese War (1894-1895). The defeat also obliterated China’s first attempt to modernize.

Japan subsequently established its superiority over China, both in actual strength and in mentality, as it no longer viewed China as a teacher.

During its expansion, Japan forced China to cede Taiwan in 1895 and annexed the Korean Peninsula in 1910. In the early 1940s, Japanese aggression saw little resistance in Asia and reached its peak after the attack on Pearl Harbor in December 1941.

Japanese militarists called for a “Greater East Asia Co-Prosperity Sphere” in the 1930s, attempting to create a bloc led by the Japanese and free of Western powers.

Although Japanese militarists and war criminals’ pipe dreams ended with the country’s unconditional surrender to Allied powers, Japan’s sense of superiority continued due to the U.S. desire to contain the Soviet Union and China.

But 60 years after World War II, the situation has completely changed. China has maintained rapid economic development and in 2010 surpassed Japan to become the world’s second-largest economy. The strength of China’s national defense has grown accordingly.

Japan is now suffering from a long-term economic downturn, along with an aging population.

China’s rise has touched the nerves of some Japanese, who have resorted to tricks to disturb China’s peaceful development. This may be the cause of the tension experienced after a short friendly period in the 1980s.

The present China is not the same as the China of years past. Japan should face the situation, drop its obsolete sense of superiority and take a constructive attitude to solve disputes.

This is the only way to achieve common development in both countries and Asia as a whole.

By Xinhua writer Ren Ke

Gangnam Style, like the Korean Psy?


Psy Breaks Down Greatest Assets Of ‘Gangnam Style’ Vid

‘I want to tell you the reason why for the first time in the United States: honestly, I love butt,’ Psy tells MTV News.

Psy‘s “Gangnam Style” doesn’t seem to be slowing down anytime soon. In less than a month, Psy has appeared at the Video Music Awards, the “Today” show, appeared in the season premiere of “Saturday Night Live” and currently has the #1 song on the iTunes charts.

In what was meant to be a music video just for Psy’s Korean fanbase, the clip’s infectious dance moves soon sparked an Internet firestorm, with nearly 200 million people on YouTube watching the colorful, spontaneous and sometimes ridiculous music video that was shot over the course of 48 hours in July.

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“With this video and director we kept on focusing on to be ridiculous as possible, that was our point,” Psy recently told MTV News about the video. “So we were so serious thinking to be ridiculous.”

With so many unexpected twists and turns throughout the four-minute clip, we had Psy break down his favorite scenes and explain the thought process behind the “dress classy and dance cheesy” phenomenon.


Beach Turned Playground

The video kicks off with Psy lounging in style at the beach, but as the camera zooms out, one can see that Psy is sunbathing at a local playground and is joined by an extremely talented child dancer.

“This is playground for kids, and it looks like I’m sitting at the beach,” Psy said. “See this kid he is 5 years old. As you have ‘America’s Got Talent,’ we have ‘Korea’s Got Talent‘ and he was from there, so I picked him, and he did all the Michael Jackson moves when he was 3 without any education.”


Sleeping in the Sauna

Rapping and dancing for 48 hours straight can take a lot out of you, which is what happened to Psy. Once they began filming the final scene at the sauna, the Korean star was out of creative ideas and opted to nap instead.

“This was the very last scene of filming so me and all the staff was totally exhausted and too ridiculous for 48 hours without sleeping, it’s awful and we were all exhausted,” Psy said. “We were getting panic like ‘What were we doing all these two days?’ and everybody is like ‘what are we going to do in the sauna?’ and let’s just go in and play music and as you can see I was so tired.”


Psy’s Favorite Part of a Woman

When creating this video there was one thing that Psy just couldn’t ignore — a woman’s butt. In the scene where a group of women seem to be toning their bodies, Psy yells at them, but he promises, it’s all in good fun.

“I’m yelling at her butt,” Psy said. “I want to tell you the reason why for the first time in the United States: honestly, I love butt. I’m sorry, but I literally love butt. Honestly, what can I say?”


Dirty Dancing in the Elevator

For one of the most-talked-about scenes in the video, Psy enlisted friend and Korean comedian Noh Hong-cheol to step in, even if he had no idea what he was getting in to.

“He is a huge comedian in Korea and he didn’t expect even filming this, he just came to the scene and he was there because he’s a good friend of mine and he was there to cheer me up,” Psy said. “We were suddenly getting on the elevator to move and to the next spot and I asked him ‘Hey, why don’t we make some film in the elevator?’ and he did the dance move. This move is really dirty and really famous in Korea so I said, ‘I’m gonna go underneath between your legs,’ so it was really ad-libbed.”


Toilet Talk

In what looks to be a close-up shot of Psy fiercely rapping the lyrics to “Gangnam Style,” the camera quickly pans out to reveal Psy in an awkward position.

“The purpose of this music video was just for fun, just for entertaining, but the director said ‘Hey Psy just for one scene let’s be serious let’s make something look good so,” Psy said. “They filmed this and I said, ‘All right, I’ll do this to satisfy you and then I’m going to take off my pants, and then you’re going to zoom out and it’s going to be a toilet.’ Isn’t this lovely? I love this scene.”

What is your favorite scene in “Gangnam Style”? Let us know in the comments.

By Christina Garibaldi (@ChristinaMTV)  
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