Wednesday, December 10, 2008

Are we really depending on the Communist Party?

Here in Hong Kong I am thinking that the economies of the US, the UK and almost certainly mainland Europe are dependent on governments printing money and planning major infrastructure projects to lift them out of recession. The UK government is bankrupting the country and crucifying the currency. The US will have to wait for plans, environmental protesters and probably lawsuits before words can be translated into action. The Europeans are still arguing about the merits of the procedure. let alone the details. China, we are told, is the most efficient country at putting plans into action. Why? Because it already has cash so doesn't have the problem of finding buyers of bonds to be issued, and it is a one party state so there's nobody to disagree. The theory is fine. Will it work in practice? Thousands of workers have been and are being laid off in the Pearl River Delta, the heart of the export business, as global trade is slowing. Many more factories will close for Chinese New Year at the end of January and will tell the workers not to come back. The unemployed are already protesting. 1000 migrant workers staged a demo in Shanghai yesterday which was broken up by police, resulting in violence. How quickly can the factory workers be reemployed digging roads or building railways and will they settle for this outdoor work instead? People tell me that China must ensure 8% GDP growth to prevent social unrest. Many economists are now predicting growth of 5-6%. My observation is that political risk must be increasing in China, unless the unemployed are being swiftly reemployed as soldiers or riot police.

Friday, December 05, 2008

Cow economics

You have two cows.
You go on strike, organise a riot, and block the roads, because you want three cows.

You have two cows.
You re-engineer them so they live for 100 years, eat once a month, and milk themselves.

You have two cows, but you don't know where they are.
You decide to have lunch.

You have two cows.
You count them and learn you have five cows.
You count them again and learn you have 42 cows.
You count them again and learn you have 2 cows.
You stop counting cows and open another bottle of vodka.

You have 5000 cows. None of them belong to you.
You charge the owners for storing them.

You have two cows.
You have 300 people milking them.
You claim that you have full employment, and high bovine productivity.
You arrest the newsman who reported the real situation.

You have two cows.
You worship them.

You have two cows.
Both are mad.

Everyone thinks you have lots of cows.
You tell them that you have none.
No-one believes you, so they bomb the **** out of you and invade your country.
You still have no cows, but at least now you are part of Democracy

You have two cows.
Business seems pretty good.
You close the office and go for a few beers to celebrate.

You have two cows.
The one on the left looks very attractive.

No leave, no life

This the is message from Martin Ferguson, Minister for Tourism in Australia who is urging Australians to use their average of 11 days each of paid leave yet to be taken this year. I am taking him at his word and am going to Hong Kong and Australia for some business but more holiday so blogging will be sporadic. Happy surfing!

Thursday, December 04, 2008

Killing machines

Not content with controlling drones from Nevada to kill people in Iraq and Afghanistan, the US is now researching the use of robots instead of men on the front line. One scientist involved in this project said it was very difficult to progamme robots to have a moral code. One solution to prevent them from killing civilians by mistake is to input some instruction like, "if in military uniform, kill; if in civilian clothes, do not kill" but this is clearly inadequate when dealing with insurgents.
I was thinking that such killing machines could be put to good use when dealing with pirates attacking oil tankers. They could be lined up around the tanker and programmed to shoot any person attempting to board the vessel while it is in motion.

Wednesday, December 03, 2008

Anything for cash

After last month's lambasting for arriving in Washington in their corporate jets to beg for funds, the CEOs of GM and Ford have now promised to sell them and instead will drive to Washington this week in hybrid cars. Alan Mulally, CEO of Ford, is saying that he would be willing to draw a salary of $1 if Congress gives his company a $9bn bridging loan. What a joke! There is no mention yet of the proposals of the CEO of Chrysler, Bob Nardelli, nor of his means of transport.

Tuesday, December 02, 2008

Report from Bangkok

This is the assessment from one of our Thai brokers:

" A client remarked last week that people on the street here in Bangkok don’t smile so much anymore. I think that this is a fair comment as ordinary citizen here are finding it tough not only to cope with maintaining their jobs as foreign firms start to scale back investment and a 3 year long political stale-mate that does not seem to show any sign of ending. Thailand will be counting the costs of this year’s unbelievable actions by what is essentially “mob rule” for years to come. If you go to Japanese restaurants in Bangkok today you will find the sushi counters are empty of imported tuna from Japan; there is no FT delivery and DHL and Fed-EX seem to have stopped altogether except some (which had to travel by road from Malaysia). Earlier in the week I had to help charter a private aircraft from a friend to leave from the Vietnam-era U-Tapow airport (where the B-52 bombers were stationed) to fly out 5 clients. This weekend commercial jets were “evacuating” stranded tourists out of the same airbase. Since it is a military base the terminal was far too small and crowded to handle passengers boarding 5 Boeing 747 aircrafts at the same time.

Who is in charge of this country? An elected Prime Minister is prevented from landing in Bangkok when he returned from representing Thailand at an APEC conference; the Head of the Army refuses to do anything; the police made a weak attempt at removing the protesters. The only thing that Thais seem to hope for is an intervention by HM the King on his annual Birthday speech on the 4th December. This is NOT a country that has anyone at the helm of the driving seat. It’s drifting dangerously into a state of anarchy (civil war is now a term used quite regularly in the news paper – when I used it in my note back in August people thought I was being too dramatic).

1. Bangkok middle class are hopeful that there will be a coup, but to me this is ALREADY a coup.

- The head of the army General Anupong is refusing to intervene to remove the protesters and telling the PM to resign on TV.
- The Head of police then did the same and was dismissed last week. The new Head of police is also refusing to storm the airport (except a mere little skirmish on Saturday).
- We Thais now have a government including the PM sitting powerless up in Chiengmai (Thaksin’s support base) afraid of returning to the capital.
- Who is ruling Thailand? A foreign investor will surely wonder this question?
- If this impasse does work out (even with the King’s intervention) people are talking about diving the country into north and south.

2. As much as 2 weeks ago I wrote that risk was rising due to political risk and warned travellers to stay away (although I did not imagine that 2 of our capital’s airports will be shut down completely).

- I mentioned that you can tell about confidence when the Thai Baht starts to depreciate. Today it’s THB 35.6/ US$ (i.e. weakening again).
- Although the Bank of Thailand makes it more difficult for Thais to take money, it is not altogether impossible.

3. It is difficult to see how this impasse can end peacefully (if this country is to be kept undivided by north and south) and now 200,000 Thaksin supporters have entered Bangkok.

- Andrew Stotz went to interview them this weekend and he was told they weren’t paid to protest.
- Thaksin himself is apparently on an island in Cambodia (next to the Thai border) where there is a large investor in a casino project.
- I attended a dinner party of a friend who has at least 3 listed companies and he said that there is a list that is going around to show which business family is Pro-Thaksin and which isn’t. The lines are being drawn up to the very highest in the land.

4. Airlines that have their aircraft stuck here have had to ask the PAD (who have seized the control tower) to let their planes leave whilst THAI airline tries to find a safe airport to park their planes.

- We have been helping friends and families out of Thailand all week.
- So far if you can not afford a private jet, then the only option is a 3 hour trip to U-Tapo airbase and then onto Phuket or Samui and out to HK or Singapore.
- The train and buses still work all the way to the south (the most comfortable being the E&O).
- Thais who are stuck abroad who have to return home urgently have to fly to KL and then take a bus all the way to Bangkok.
- Imagine the lawsuits that will be filed and who will eventually pay the bills? I presume that the airline will sue the AOT (for not securing airport and safety) but I can hardly imagine AOT successfully suing the PAD!.
- As I said before, Thailand will be re-assessed as a more “militant” place (the image of “Land of Smile” is damaged) and this will impact direct investments for years to come. At least the Tsunami was a natural disaster that people were willing to forget, but imagine that your holidays being ruined by a bunch of protesters will surely remain on tour operators’ reassessment of doing business here in a climate when long haul travel is declining fast."

Monday, December 01, 2008


The Dean of Winchester, the Very Reverend James Atwell, always gives interesting sermons. Yesterday he said that the Greeks have two words for time: chronos (as in chronology) which referred to the linear progression of time and chairos which referred to the quality of time ie life changing moments. He described one such chairos of a man whom he'd met. This man had been a submarine captain and the submarine had become stuck on the seabed with only 30 minutes of oxygen left. The crew was rushing about in a mad panic. The captain called on everybody to stop what they were doing, to be silent for two minutes and for the Christians among them to pray to God for salvation. During that time, a thought struck the captain: if the whole crew were to stand at one end of the submarine, the collective weight might dislodge the other end from the seabed. The men followed his instructions, there was a jolt and the vessel began to float upwards. This experience changed the captain's life, so much so that he later became ordained.