Author: Mohamed Ariff
Recently, the StarBizWeek in Malaysia convened a roundtable discussion to gauge the impact of the global crisis on Malaysia, best and worst-case scenarios, and how the country can mitigate the effects of a protracted downturn while keeping an eye on addressing several structural shortfalls to ensure long-term sustainability.
The panellists are former Bank Negara deputy governor Tan Sri Dr Lin See Yan, Meridian Asset Management Sdn Bhd chief investment officer Tan Beng Ling and Malaysian Institute of Economic Research executive director Prof Datuk Mohamed Ariff Abdul Kareem. The discussion was moderated by P. Gunasegaram, managing editor of The Star.
Read more…
Author: Christopher Findlay
NZ Prime Minister John Key said in a speech last week:
We simply must ensure that decisions taken now neither undermine the future prosperity of our country nor diminish the opportunities available to this and future generations of New Zealanders.
We simply must weigh up the fiscal costs of initiatives we take now against what those costs will mean for the Government books in the longer-term.
Because I know, and you know, that if we borrow excessively to look after the taxpayers of today, we will end up saddling our children with a mountain of government debt. In the more immediate future the prospect of an excessive level of debt would swiftly bring a downgrade from credit agencies, leading to higher interest rates and lower growth rates into the future.
And that
When it comes to the recession we need a dose of reality but we also need a dollop of confidence. Read more…
Author: Amin Saikal
The region from Pakistan to Palestine to Egypt now constitutes the most volatile zone in world politics. The issues involved include the growing instability in nuclear-armed Pakistan, the out-of-control insurgency in Afghanistan, the nuclear ambitions of Iran, the imminent withdrawal of American forces from Iraq, the political fragmentation in Lebanon and the explosive Israeli-Palestinian conflict.
US President Barack Obama has promised to tackle all these issues, with an emphasis on diplomacy, confidence-building measures and friendship, predicated on mutual respect and interests.
However, the region has historically confounded expectations. One of the underlying reasons is the state-society dichotomy that has come to dominate the Muslim, especially Arab, constituent states of the region. Unless Obama comes up with a strategy that could reconcile his policies with this dichotomy, the chances of him succeeding would be at serious risk.
Read more…
Author: Barry Eichengreen
One of the least unanticipated but potentially most momentous consequences of the Great Global Credit Crisis of 2008 is the coup staged by the Group of Twenty.
The G20 has seized power from the G7/8 as the steering committee for the world economy. If you didn’t believe this before, just compare the attention garnered by the G20 summit last November with the muted response to the G7 finance ministers’ meeting in February in Rome.
R.I.P, G7
No one contemplating global financial reform thinks that the task can still be organised, much less executed, within the cosy confines of the G7. No one who seeks to reform the IMF and the World Bank thinks that the solution can still be hashed out by the G7. No one who is serious about coordinating a global monetary and fiscal response to the deepest recession since World War II thinks that this is something that the G7 can engineer. Whether the task is developing ideas, reaching consensus on their desirability, or moving from ideas to implementation, the G20 – which has working groups active in all these areas – is where the action is.
Read more…
Author: Tobias Harris
The first round of polls following last week’s arrest of Okubo Toshinori, Ozawa Ichiro’s secretary, has been released, and not surprisingly there are few bright spots for Ozawa and the DPJ.
Oddly enough, the most favorable poll for Ozawa was the Sankei/Fuji News Network poll, which despite Sankei’s having pulled out all stops to push for Ozawa to resign following the arrest found that 47.4% of respondents thought Ozawa should resign, compared with 41.4% who thought there was no reason for him to resign. The same poll did record a slight drop in support for the DPJ and a larger drop in the number of respondents who thought that Ozawa would be most appropriate as prime minister (although he still maintains a slight lead over Aso Taro).
Read more…
Author: Hyung-A Kim
South Korea’s President Lee Myung-bak arrived in Australia last week as part of a seven-day visit to New Zealand, Australia and Indonesia. Lee’s visit at this particular time, in the midst of the global financial meltdown and North Korea’s threat to test-launch a ballistic missile capable of reaching the west of the US mainland, gives a heightened significance to his summit meetings, especially the one with Prime Minister Kevin Rudd.
Indeed, the South Korean economy, especially hurt by the current economic downturn spirals, is in crisis. Its currency has fallen more than 40 per cent against the US dollar. South Korea’s GDP grew only 2.5 per cent in 2008, the lowest level of growth since 1998, and it is now predicted that Asia’s fourth largest economy will actually shrink in 2009.
In terms of inter-Korean relations between the South and North, Pyongyang has openly warned the Lee Government against pushing relations to the ”brink of war”. Read more…
Author: Hadi Soesastro, CSIS, Indonesia
East Asian members of the G20 must participate strategically in this emerging global forum. They need to make sure that the G20 can produce policies and actions that will help bring the global economy out of the current crisis as soon as possible. Existing international institutions have been helpless in dealing with the issues the world now confronts and are in dire need of major reforms. There is now no better forum than G20. Essentially, it will act as a ‘steering committee for the world economy’, as Barry Eichengreen aptly said of the G20, and this forum should now replace the G7 or G8 for good.
Yet the G20 is still very fragile. In part, this is due to its ad hoc nature. But it also suffers from problems of legitimacy in respect of how its membership is being determined. The problem has deepened with the inclusion of a few additional participants at the coming London Summit: why they and not others? The European members of the G20 are facing the greatest challenge from fellow Europeans on this issue although the EU already has a seat at the table.
Read more…
Author: Andrew Elek
Some early indications of the the new United States administration’s trade policy are emerging.
This week’s Bridges Trade News Digest summarises the new annual Trade Policy Report of the President. There are no big surprises. The document emphasises the need to ensure that firms and workers are able to adjust to change.
Willingness to complete the Doha Round is contingent on a better balance of gains and short-term costs, so offers no new hope for a speedy conclusion.
At the same time, the President has called for an end to payments to large agribusiness. Bridges Weekly welcomes the willingness to take on the farm lobby, but it is sceptical about whether the proposals will pass Congress, or whether they will have a direct effect on the Doha negotiations.
On another front, the President seems to have been able to assure the world that the “buy American” provisions in the stimulus package does not mean a reversion to protectionism. There are no reports of intents to retaliate, but economic nationalism still threatens.
Author: Andrew Sheng
We are seeing a change all over Asia. Thanks to Asian giants like Gandhi, Nehru, Mao and Deng, the revival of India and China is changing the 21st century.
If we were to take a grand macro-historical perspective, with India and China both growing at more than 8 per cent per year, whilst the G-3, US, Europe and Japan are growing at less than 2 per cent a year, the relative power between the mature economies and the emerging markets is changing dramatically.
Angus Maddison projects that, by 2018, China will overtake the USA as the largest economy in the world, with India as number 3. By 2030, he estimates that Asia (including Japan) would account for 53 per cent of world GDP, whereas the US and Europe would only account for 33 per cent.
If this were the case, the global financial architecture would have to be significantly different from the present.
Read more…
Author: Tobias Harris
There is no question now that the outlook for the next general election — which a growing number of LDP officials are reportedly arguing should be held after dissolving the Diet in May — is muddier than before. The scandal in Ozawa Ichiro’s political organization has overshadowed all else, including the re-passage this week of the budget-related expenditures bill for the second 2008 supplementary budget (and Koizumi Junichiro’s absence from the vote).
After his press conference Wednesday, Ozawa has been silent, but everyone else is talking. Everyone that is, except Prime Minister Aso Taro, who refused to comment Thursday when asked about the DPJ response that the arrest was politically motivated. As expected, Aso has decided to stay above the fray, leaving the political point-scoring to his party. Aso reportedly told his chief cabinet secretary not to be gleeful about the arrest.
Read more…
Author: Nina Hachigian, Center for American Progress
Less than a month into the new Obama administration and the Secretary of State was on the ground in Asia.
Add that to the growing list of acts, symbolic and real, that signal a major departure from the last eight years of American policymaking.
Already, ‘green jobs’ are actually being created, not just debated as a concept, and the Secretary of Energy is a Nobel Prize winning scientist who speaks forcefully about the devastating potential of climate change. Women now enjoy broader rights to sue over unequal pay, millions more American children have access to health insurance, two additional brigades are on their way to Afghanistan and the CIA can no longer torture detainees.
Asia policy is unlikely to undergo as radical a change. But the fact that Secretary Clinton was there on her very first overseas trip when Condolezza Rice didn’t even regularly attend ASEAN summits, certainly shows a different kind of appreciation for the enormous importance of the region to the US.
Read more…
Author: Peter A. Petri
What do Berlin, Germany and Hua Hin, Thailand, have in common? Not winter weather, for sure. But this week, briefly, both offer a little sunshine for the world economy. European and Asian leaders meeting in these cities are pledging hundreds of billions of dollars for international financial rescue plans.
The bad news is that their actions reflect a rapidly deepening global crisis. The ‘other shoe dropping’ in the downturn could be collapsing currencies and bankruptcy in several countries. This happened in Iceland, and it could happen soon in Hungary, the Baltic countries, Pakistan and others.
The good news is that leaders are beginning to fashion a global response to the crisis. This still faces many obstacles, but a ‘yes, we can’ attitude is starting to emerge. It could bring benefits not just in stemming the meltdown, but also on other global decisions, like trade and climate change.
Read more…
Author: Tobias Harris
Appearing at a press conference at DPJ headquarters this morning, DPJ President Ozawa Ichiro, under fire following the arrest of Okubo Takanori, his chief secretary, was defiant.
Ozawa stated that he would not step down following the arrest, and insisted that his secretary received money from Nishimatsu construction in compliance with the political funds control law.
In his press conference, Ozawa accused the Tokyo District Public Prosecutor’s Office with abusing its powers for political purposes — he described the prosecutor’s investigation as being “without precedent.” (MTC provides more detail for why this arrest may have been politically motivated.)
Even if Ozawa somehow manages to survive this affair, the damage may well have been done, both to him and his party.
Read more…
Author: Ross McLeod, ANU
Some of the world’s most reputable banks have been found to have insufficient capital relative to the risks they were carrying, and are now being taken over and recapitalised by their governments. This raises the question: should Indonesia’s regulations on capital adequacy be strengthened?
The reported average capital adequacy ratio in December 2008 was twice the regulatory minimum of 8%, so a doubling (say) of this minimum would not be a problem for the average bank.
Banks with relatively less capital would be obliged to inject new equity or to cut back their lending. Read more…
Author: Tobias Harris
Hold the debate, indeed.
Naturally Ozawa Ichiro’s top aide had to get himself arrested the day I wrote 1,000 words on what kind of leader Ozawa would be as a prime minister.
Jun Okumura has the details here.
In brief, Ozawa’s aide has been accused of receiving funds for one of Ozawa’s political support groups from Nishimatsu Construction, a construction company (not surprisingly) with some history of dubious contributions to politicians.
It is hard to see how Ozawa will recover from this: I can only imagine the glee with which Aso Taro said “no comment” to reporters this evening.
Sankei has already broken out the pictures of Kanemaru Shin, which is precisely why this is so devastating.
Read more…
