Sovereign Debt and Beyond: Toward a New Magna Carta?

Source: The Globalist

Alexander Mirtchev and Norman Bailey

The global debt burden appears to have gathered an unstoppable momentum, prompting divergent reactions. The world economy cannot count on growth to solve the global debt problem — and stimulus measures are not a sustainable solution. In the second installment in the series “The Search for a New Global Equilibrium,” Dr. Alexander Mirtchev and Dr. Norman Bailey explain why the solutions currently being offered are wholly inadequate to the scale of the problem, and argue the time is ripe for a “new Magna Carta” — a redefinition of the social contract among the government, Main Street and Wall Street.

Thailand floods: Crisis 'to last four to six weeks'

Thailand's worst flooding in decades is set to last another four to six weeks, the country's prime minister has said.

Powerful earthquake strikes poor eastern Turkey

Istanbul, Turkey (CNN) -- As night fell over eastern Turkey on Sunday following the most powerful earthquake in at least a decade, citizens were using flashlights and shovels as they clambered over the rubble of collapsed buildings looking for survivors.

World Economic Forum on East Asia opened in Indonesia

JAKARTA, June 12 (Xinhua) -- The World Economic Forum on East Asia was officially opened in Indonesia's capital city of Jakarta on Sunday by President Susilo Bambang Yudhoyono, in which he stressed the importance of Asian strength in helping the world in sustaining a strong and sustainable economic growth.

Yudhoyono said that Asia's moment has come with a much brighter future lying ahead. "But we cannot take these things for granted."

Asia: Besieged by political and US economic gloom

LONDON (SHARECAST) - Uncertainty about the future of Japan’s Prime Minister Naoto Kan sent stocks in Tokyo sharply lower on Thursday.

Naoto Kan indicated that he would resign once the country's post earthquake crisis was over. He later survived a no-confidence vote after offering to step down.

Asian Currencies Rise on Outlook for Economic Growth in Region, Fed Policy

Asian currencies rose this week, led by South Korea’s won, on optimism funds will increase purchases of the region’s assets after economic data showed accelerating growth and the U.S. signaled rates will remain low.

The Bloomberg-JPMorgan Asia Dollar Index halted two weeks of declines as European Union leaders sought to resolve Greece’s debt crisis, shoring up appetite for higher-yielding assets. Taiwan’s economy grew more than initially estimated in the first quarter and Singapore raised its growth forecast for 2011.

Economic outlook: Asia

Much has been made of the ongoing inflationary issues affecting India, but this is a much wider concern with several government and central banks tightening policy again this month.

Declared earnings have been a mixed bag and JP Morgan pinpoints the consensus at around 14 per cent earnings growth in the region for 2011 and Asian valuations remain reasonable, trading close to mid-cycle historical valuations.

As China rises, geopolitical talks turn to the Asian economy and media

The economic power shift from West to East is changing priorities in the world’s geopolitical chess game, as ‘war on terror’ gives way to economic and political discussions in Asia.

As China and other new powers rise, foreign ministries, think tanks and international relations schools are focusing once again on interstate “grand strategy” in a way not seen since the Cold War.

Mind the gap: Asian income gulf shows economic model's flaws

(Reuters) - Asia should have a smile on its face. The region's economy is displaying resilience in the teeth of a structural rise in oil and commodity prices. Overheating is a greater threat than a swoon in growth.

Yet the tone of some officials' recent comments has been strikingly cautious, reflecting an awareness that Asia has failed to seize the chance during the past decade of strength to address long-standing vulnerabilities.

Gov. McDonnell, Virginia delegation on job creation, economic development mission in Asia

RICHMOND, Va. — Gov. Bob McDonnell and other Virginia officials are embarking on a job creation and economic development mission to Asia.

McDonnell’s office says the delegation began the 11-day trip on Friday. The group will meet with business leaders in Japan, China, and South Korea.

Asia Stocks Fall on Concern U.S. Economic Recovery Waning; Bharti Slides

Asian stocks declined, dragging a regional benchmark index lower for a third day, as lower-than- forecast growth in U.S. service industries and jobs sparked concern the recovery in the world’s biggest economy is faltering.

James Hardie Industries SE (JHX), the largest seller of home siding in the U.S., and Billabong International Ltd., the world’s biggest surfwear maker, dropped at least 1.6 percent. Bharti Airtel Ltd., India’s largest mobile-phone operator, sank 3.2 percent in Mumbai after posting a worse-than-estimated decline in earnings. TPK Holding Co., the maker of touch screens for computers and hand-held devices, jumped 6.9 percent in Taipei after earnings that exceeded analysts’ estimates.

India charges ex-minister, firms in telecom scandal

A former government minister in India is among a dozen defendants charged in a multi-billion-dollar corruption scandal that has rocked the country's coalition government and investor confidence in Asia's third-largest economy, federal police said Saturday.

Andimuthu Raja, a former telecommunication minister, is accused of being involved in a scheme involving the underselling of cell phone licenses at the height of India's lucrative telecom boom.

UBS to boost Asia-Pac IB headcount by 20 pct in 2011

HONG KONG, March 31 (Reuters) - Swiss bank UBS AG (UBSN.VX), the leader in equity underwriting in the Asia Pacific region, plans to double its China staff in three to four years and boost its investment banking head count in the region by 20 percent this year, two top officials said on Thursday.

UBS is betting on continued strong equity issuances in the region, led by Chinese companies. The pipeline of initial public offerings (IPOs) is stronger than last year this time, Matthew Hanning, head of investment banking (IB) for Asia Pacific, told Reuters in an interview.

Analysis: Asia braces for its date with demographic destiny

(Reuters) - If demography is destiny, as the French philosopher Auguste Comte put it, then Asia faces daunting challenges in the coming decades.

Markets understandably track the rate and composition of gross domestic product to gauge short-term economic shifts.

But it is changes to the underlying productive capacity of an economy that count in the long run. Swing factors include openness to outside capital and ideas as well as the quality of education and governance.

UPS Joins FedEx in Adding Asia Flights as Economic Recovery Stokes Demand

United Parcel Service Inc. (UPS) is adding four flights a week from Hong Kong to Europe and FedEx Corp. (FDX) will start a new nonstop route to South Korea as growth in Asian shipping demand outpaces expansion in the U.S.

Asia is “a growth market and they need to keep adding capacity and speed,” said David Campbell, an analyst with Thompson Davis & Co., in Richmond, Virginia. “If they have more direct service, they’re going to get more traffic because it’s easier for the customers there to use them.”

Economic aftershocks of Japan quake roil Asia, but Japan Inc.’s long decline cushions impact

Economic aftershocks of the devastation in Japan are rolling through Asia. It is here, among Japan’s neighbors, that the reverberations of the catastrophe are being felt hardest.

Automakers in Thailand are slowing production. South Korean electronics manufacturers face shortages of critical parts. Thousands of Japanese have canceled trips to Taiwan. Panic buying has driven up prices of Japanese cameras in China, while Indian policymakers brace for higher oil prices.

Asia’s Rise Reshapes Global Economy, Prices, RBA’s Stevens Says

Asia’s emergence as the global economy’s engine of growth is boosting prices of food, energy and minerals and inhibiting recoveries from the U.S. to Europe, Reserve Bank of Australia Governor Glenn Stevens said.

“Prices are under upward pressure because of rising demand, but it is the demand coming from a couple of billion people in Asia seeking, and in many cases rapidly converging on, the way of life that the advanced countries have enjoyed for decades,” Stevens said in the text of a speech in London today. He didn’t directly address Australian monetary policy in the remarks.

Global growth expected to slow

Global growth will fall to 3.4% in 2011, from almost 4% in 2010, according to a report released by the Conference Board of Canada.

The report, World Outlook: Global Economic Trends and Prospects: Winter 2011, identifies persistent economic woes in Europe as a key factor in the decline.

Asian Currencies Have Weekly Gain on Economic Growth, Rate-Rise Prospects

Asian currencies had their biggest weekly gain of the year, led by the Philippine peso and Thailand’s baht, as upbeat economic data fanned speculation interest rates will be raised to counter inflation.

The Bloomberg-JPMorgan Asia Dollar Index climbed after the Philippines and Taiwan announced faster economic growth than economists forecast this week, with the Southeast Asian nation also reporting a higher-than-expected inflation rate. Exports and consumer prices gained more than forecast in South Korea and Indonesia, while overseas sales in Malaysia also exceeded projections, separate data showed. Bank Indonesia unexpectedly raised interest rates today for the first time in two years.

“Asian economic growth is very solid and they are in an environment allowing central banks to boost rates to fight inflation,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The trend of Asian currency appreciation is still intact.”

The Asia Dollar Index, which tracks the region’s 10 most- traded currencies excluding the yen, climbed 0.6 percent this week to 116.49 as of 4:21 p.m. in Hong Kong. The peso advanced 0.8 percent to 43.765 per dollar, the baht strengthened 0.9 percent to 30.78 and Indonesia’s rupiah rose 0.4 percent to 8,995. Financial markets in China, Taiwan and South Korea were shut most of this week for the Chinese New Year holidays.

Philippine Prices

The peso had a second weekly gain as a government report today showed consumer prices climbed 3.5 percent in January from a year earlier, the most in four months and more than the median 3.3 percent gain forecast in a Bloomberg survey of economists. The central bank will consider the data when it reviews interest rates on Feb. 10, Governor Amando Tetangco said today. Gross domestic product rose 7.3 percent in 2010, the fastest growth since 1976, the government reported Jan. 31.

“The market is gauging how inflation threats will feed into the benchmark overnight rates,” said Bunny Bernardo-Recto, vice president for treasury at Chinatrust (Phils.) Commercial Bank Inc.

Indonesia’s rupiah reached its strongest level in four weeks after Bank Indonesia boosted its reference rate by a quarter of a percentage point to 6.75 percent. The move was predicted by six of 22 economists surveyed by Bloomberg before the announcement, with the rest having forecast no change. Inflation in Southeast Asia’s biggest economy accelerated to a 21-month high of 7.02 percent in January, official figures show.

Rupee Strengthens

India’s rupee strengthened 0.4 percent this week to 45.60 per dollar. The statistics office will predict economic growth of 8.6 percent on Monday, according to the median estimate of economists surveyed by Bloomberg ahead of a Feb. 7 announcement. A Feb. 1 report showed exports climbed 36.4 percent in December from a year earlier, the biggest increase since March.

Consumer-price gains in South Korea accelerated to 4.1 percent in January from a year earlier, the fastest pace since October, a report showed this week. President Lee Myung Bak a month ago called for “a war on inflation” and the central bank last month boosted borrowing costs for the third time since June. The Korean won fell 0.3 percent to close at 1,116.95 per dollar on Feb. 1, the last trading day this week.

Financial markets in Singapore and Malaysia were shut for the Lunar New Year holidays on Feb. 3 and Feb. 4. The Singapore dollar strengthened 0.6 percent to S$1.2734 per dollar before the break, according to data compiled by Bloomberg. Malaysia’s ringgit added 0.5 percent to 3.04 over the same period.

Source: http://www.bloomberg.com

China growth positive for Japan: Kan

BEIJING - JAPANESE Prime Minister Naoto Kan's statement 'welcoming' China overtaking his nation as the world's second-largest economy points to a positive and strong change in future China-Japan relations, according to analysts.

Mr Kan made the comment at the World Economic Forum in Davos, Switzerland, which he visited on Saturday to address the VIP gathering. In his speech, Mr Kan said 'the world faces major changes that can be likened to a tectonic shift both in the national security and economic fields', and Asia is 'the centre of major tectonic changes'.

Against this background, he said, the Japan-US alliance 'is becoming even more important' and should continue to play a key role in the Asia-Pacific region.

'For Japan, its relationship with China, which is expanding its influence in Asia as it achieves remarkable economic growth, is extremely important,' Mr Kan added.

'Both Japan and China have an important responsibility to bear in the international community, and will need to enhance cooperation in a wide array of fields such as the economy, regional stability and the global environment,' he said.

After the speech, when asked if he was worried about Japan being overtaken by China as the world's second-largest economy last summer, Mr Kan said it was 'something that is welcoming'. 'China's growth will have a positive impact on Japan, both economically and socially,' said Mr Kan.

Source: http://www.straitstimes.com