Thursday, 26 August 2010

Japan's priorities shifting?

Yesterday (25-08-2010), Japan's Foreign Minister Okada issued a new policy to shift 100 diplomats from the developed countries to new emerging countries. The re-focus away from traditional western powers towards the likes of India, South Africa, Brazil and Turkey will be manifested institutionally in the creation of a "Emerging Countries Bureau" at the Ministry of Foreign Affairs.* In particular, the Japan's embassy in the EU (economic branch) is to have its numbers reduced to make way for increases elsewhere.

Citing the development of the G20 as a forum in which emerging powers are holding great sway Okada said, "as a power shift in the world economy occurs, so too does the Ministry staff. Moving quickly is very important."**

There is also movement to bring in the influential (but not ministry-level) institutions of JETRO, JBIC, and JICA under Foreign Affair's control by bundling them in with the other embassy functions.

See article here.

* Not the first Bureau that Okada has set up, also the 'FTA Promotion Bureau' has been significant.

** "世界経済のパワーシフトに応じて、外交の人員も変えていく。迅速に行っていくことが非常に大事"

Wednesday, 11 August 2010

Status and Saving

The house-hold saving rate in the US is soaring, up from about 1% prior to the crisis to nearly 6.4% this quarter. Without dwelling too much on whether this is sufficient, the mechanics of why the rate is changing is worth thinking about.

Indeed, a crisis is usually associated with growing debt. No doubt the US government is doing so on behalf of households, but it does not follow necessarily that the household sector saving rate would automatically increase. Indeed, in a globalized world it is possible that US government, firms and households might all opt to save less.

I am beginning to think that house-hold rate increase in the US is only in part a rational response to economic conditions (i.e. increased uncertainty), rather a more sociological phenomena. To whit, people are starting to save as an expression of their status, identity and morality.

Whereas before, as the US became a society of leisure and consumption became a conspicuous marker of status, the new marker of high status is reserved to 'saving.' Saving can be thought of as conspicuous in terms of the goods and services foregone. Saving is now a marker of moral fiber (aka high status) whereas before it was scoffed at. Indeed, as one bank ad claims, "saving is the new spending."


(Quite why a bank is promoting this, and people following another avenue for thought).

Moreover, the new savers are not in general the lower class I imagine - but rather aspirant middle class. These new savers in the US are also likely to be well educated and highly skilled, circumstantial evidence for which might be found below.


My thoughts concluded, saving as a social activity? The concept certainly challenges the rational model and suggests that there is an extra social variable in determining when the US pulls itself out of its current economic problems.

Thursday, 5 August 2010

I dug this chart out of data360 looking for something else, it shows the cost of torts relative to the US economy.



At nearly 2%, the US has to be the world's most litigious society.

Australia seems be heading the same way, discussion of tort costs outstripping GDP growth (no evidence on the site). Peter Gordon's blog further quotes from the Fin Review a comparison with other countries (2004);

Denmark 0.4
UK 0.6
France 0.8
Canada 0.8
Japan 0.8
Switzerland 0.9
Spain 1.0
Australia 1.1
Belgium 1.1
Germany 1.3
Italy 1.7
U.S. 1.9

Interesting, eh?

Thursday, 29 July 2010

The US, ASEAN and China: a new alignment emerging?

In November of last year, President Barack Obama pledged that he would be a “Pacific President.” While the audience in Suntory Hall may have wondered about the content of that statement few in attendance doubted the sincerity or conviction of the President. As relationships between the US, ASEAN and China have been re-drawn, especially after latest series of ASEAN hosted diplomatic meeting in Hanoi, the meaning of a Pacific President is starting to become clearer. Three sites of change in particular warrant special mention; the East Asia Summit, the South China Sea and the Korean Peninsula. In all three cases, the United States and ASEAN states are becoming closer, while China is finding itself distanced from decision-making. Put more directly, the early 21st century phenomena of China-ASEAN relations being closer that US-ASEAN is reversing itself.

This realignment can firstly be seen in the United States advancing its claim for a seat at the East Asian Summit. Last week the US received an expression of general support from the Foreign Ministers after the Informal Consultation Meeting and Singapore’s Foreign Minister George Yeo later indicated that ASEAN has already decided to include the US in the EAS. Hilary Clinton’s determination to return to Vietnam in October for the EAS together with Obama being scheduled to attend the next year’s EAS in Indonesia suggests that the US is confident that its accession is assured over the medium term. As a part of this process, ASEAN Ministers also welcomed the decision to include the US in the first ASEAN Defence Minister's Plus with Eight Dialogue Partners scheduled for October.

Unsurprisingly perhaps, the only player to not greet increased US involvement in the region warmly was China. China’s Foreign Minister Yang Jiechi was quoted as saying that China "took notes with open attitude" of the ASEAN proposal for an expanded EAS and "look[ed] forward for consultations" with ASEAN on subject (the Nation, July 22). But while China is dissatisfied with the direction the EAS is taking; this is a battle it already knows it has lost. As Wu Jianmin (a member of the Foreign Policy Advisory Group) observed last year, ‘We know that China could not stop the US if it really wants to join the EAS.’ Indeed, according the declaration establishing the EAS, membership is determined by ASEAN alone – and while China is influential it simply can not veto a proposal (unlike in UNSC).

Moreover, China has seen the US and ASEAN draw closer on an issues of major interest to it, the territorial disputes in the South China Sea. Secretary of State Clinton’s identification of this issue as a “pivot” of regional security brings the United States back as a player after more than a decade of diplomatic passivity (to China’s notable discomfort).

The emerging US-ASEAN-China realignment can also be seen in Clinton’s proposal (together with 12 other Asian nations, including the host Vietnam) for a dispute resolution mechanism to be established. Such a mechanism would build on (or over) the 2002 Declaration on the Conduct of Parties in the South China Sea signed between ASEAN and the PRC. This Declaration can essentially be interpreted as a response to the 1992 ‘Law on the Territorial Waters and continuous Area‘, and reflects an agreement to shelve the issue rather than resolve it – hence the lack of a dispute resolution mechanism. ASEAN efforts to move from ‘shelving’ to ‘resolving’ this issue have been systematically thwarted by China, and so it unsurprising that China would again register dissatisfaction. China’s Foreign Minister Yang Jiechi noting, “turning the bilateral issue into an international, or multilateral one, would only worsen the situation and add difficulties to resolving the issue.” (WSJ China rebuts Clinton). Perhaps Yang meant to add “for China.”?

China’s 1947 Map: basis of the South China Sea Claim: fat dotted lines as limit of territory.

Lastly, this re-alignment can be seen in US-South Korea relations and posturing in the ARF over the sinking of the South Korean corvette, the Cheonan. Again China and the US found themselves in opposite corners over this issue, China reportedly working to remove references to the sinking as a North Korean attack. This disagreement over wording caused adoption of the Chairman’s statement to be delayed a day. Korea’s growing frustration with China’s role in diplomatically supporting the North has, similarly to ASEAN, caused South Korea to look to its traditional security provider, the US. This week’s war games off the Korean peninsula, while clearly focussed on the North, have caused concerns in Beijing. Yet notwithstanding the repositioning of the nuclear powered aircraft carrier the George Washington on the East side of the peninsula, the US and Korea have been willing to disregard China’s warnings. Intriguingly, Japanese officers are observing the joint U.S.-Korean exercises.

In conclusion, a realignment is underway in East Asia. Increasingly, ASEAN (and Korea) are moving closer to the geographically distant US, while China is finding itself surprising distant from its neighbours.

Fedfail Australia - RB Success!

Further to the previous post on the US federal reverse failing its own targets, and a comparison to the Australian experience. This graph show inflation back within the target zone. Which together with Australia's unemployment rate of nearly 5% indicates a 'Fed (rb) success.'


Graph from Peter Martin's Blog.