Tuesday, December 23, 2008

Current issues...

Current issues with respect to trade and commerce on which the federal and provincial governments are not cooperating, and will ultimately need to re-think their current power-sharing arrangement:

On the west coast, water export trade laws appear confused in terms of regulatory agreement regarding disputes concerning water as an exportable product or not under terms of NAFTA or federal regulatory measures versus inter-provincial disagreements.

Disagreements exist between various levels of government on proposed legislations for the cutting of greenhouse gas emissions whereby Quebec and Ontario would like to skirt regulatory oversights by trading credits internationally without Ottawa's permission.

Battles over joint management of Newfoundland and Labrador Fisheries continue seemingly endlessly as do lingering animosities surrounding the federal versus Newfoundland and Nova Scotia Atlantic Accord where one party believes transfer payments should be paid back while the others believe it is part of the constitutional agreement.

Current negotiations for a Canadian-EU Free Trade agreement are stymied by provincial bickering described in, "Does the Canadian Federal System Undermine its Foreign Trade? " by Julia Bognar, MA and Thorfinn Stainforth, MA at the Institute for European Studies at UBC.

On a practical level, does the question of whether a law is federal or provincial make any difference to the average business person? Why even bother investigating?

It should make every difference to international trade minded business people as Canada's current federalism in terms of trade policy makes some developing countries look good ("Trade Policies Made in Canada "). There appears no more radical a concept than continuous improvement where Canada's trade regulatory system is concerned. It should be easy to illustrate the benefits of cooperation on an economic level where provincial and federal laws intersect, intertwine and interlope.

Efficiency and effectiveness would cost jobs. Whose jobs? Perhaps federal or provincial civil servants and lately UAW union members and parts suppliers, hangers on, etc. Investigation should be bothered with because it often becomes clear whose politics dictate which laws are enacted and which regulations are created due to vested interests versus common interests. Whose tax dollars pay for it all?

In Canada it often appears common interests come second even if over the long term everyone might be better off for it. Sometimes I think the average business people left Canada a long time ago.

Concerning corporations...

Concerning corporations...

If a corporation, having the legal capacity of a natural person, is itself owned by just one (natural) person, do you think it is fair that the owner cannot be made personally liable for the company's debts?

It appears fair according to the debates surrounding incorporation since the middle of the 19th century. However it really depends upon which side you favour concerning what you may believe a company should be according to Micklethwait and Wooldridge in, "The Company: A Short History of a Revolutionary Idea."

For instance if you lean towards the stakeholder image then a single person owned corporation would not fulfill the interests of a wide number of people either shareholders, the public or social groups at large. Thus you might be tagged a bleeding heart liberal.

If you hold the shareholder ideal as many of my instructors have in the past then the concept of a single shareholder looking out for his or her own best interests with the protection of limited liability should be the purvue of every self-respecting individual in the world's democratic capitalist countries today. Especially when it comes to profits. Is it actually legal? What about married couples? Why is not the institution of marriage carte blanche to limited liability incorporation?

Is it fair that the corporate tax rate applies?

If it is a legit business it should be fair. However if our single natural person is Ebenezer Scrooge then it would not be fair as there is no trickle down effect from his self-interest prior to his being reborn upon Christmas Day. No social groups benefited from his wealth prior to that time.

Why does this form exist?

This form of business exists for many reasons. Incorporation has proven according to economists as the best historical support for massive infrastructural developments and growth as well as securing the risks of underwriting banking systems which rely upon paper currency units rather than mercantilism and laws of incorporation rather than plain good behaviour.

What are a director's non-financial obligations to the company?

We should expect a general interest to the company's well being as in a director should not engage in any business activities which will harm the interest of the company.

What are a director's liabilities?

In all ways a director must seek to navigate costly liabilities such as insolvency by: employing competent auditors, book keepers and accountants (what wrecked Arthur Andersen), fully disclosing the nature and state of corporate debts to creditors ( a lot of US banks roiling in a pot of boiling lava over this), ensuring dividends and yields are not transferred to shareholders from creditors (a ponzi scam), avoiding breech of trust (in a word Madoff), employing due diligence (Greenspan's curse), securing honest accounts of corporate activities (the subprime fiasco with FBI rummaging various offices at Bear Stearns), protecting the environment ( the Bohpal disaster), refusing to employ illegal immigrants (probably hard to do in California), and not soliciting contracts for imports and exports of prohibited list products (Gerald Bull).

Where does one look this up or find out about it?

One may retain consultancy with lawyers or engage the legal systems and documents themselves be they federal, provincial or municipal. Legal documents for consultation include: the Constitution Act, the Charter of Rights and Freedoms, the Income Tax Act, the Canadian Criminal Code, Sales of Goods Acts, International Sale of Goods Convention, Personal Property Security Act, etc.

The Department of Justice Canada engages "Corporations Canada - Guide to Federal Incorporation."

Wednesday, December 17, 2008

S Korea's inventory-shipment ratio hits 10-year high in October

S Korea's inventory-shipment ratio hits 10-year high in October
www.chinaview.cn 2008-12-15

SEOUL, Dec. 15 (Xinhua) -- South Korea's manufacturing inventory-shipment ratio hit a 10-year high in October indicating a drop in both domestic and overseas demand, a government report said Monday.

According to the National Statistical office (NSO), the ratio increased 17.6 percent from a year ago, posting 1.187 in October, the highest since 1.214 tallied for February, 1999.

After reaching 1.078 in June, the ratio has been steadily rising due to slowdown in the global economy, the NSO said. In September, the ratio stood at 1.151.

The figure came out as South Korean firms struggle to sell products as consumers around the world have tightened their consumption in the wake of a liquidity crunch and overall uncertainties about the future.

MSCI May Delay Korea’s Upgrade to Developed Country for Indexes

MSCI May Delay Korea’s Upgrade to Developed Country for Indexes
By Saeromi Shin

Dec. 17 (Bloomberg) -- MSCI Inc., whose stock indexes are tracked by investors with $3 trillion in funds, may delay its decision to reclassify South Korea as a developed country beyond its original June 2009 timeframe.

MSCI, which now places South Korea in its emerging-market index, said more time will be needed for authorities to act on its feedback, including the “limited convertibility” of its currency, the New York-based company said in a statement.

South Korea is the third-largest developing nation in MSCI’s stock benchmarks, representing 13.1 percent of the MSCI Emerging Market Index as of June. South Korea was raised to “developed” status from the FTSE Group in September and will be upgraded from its “advanced emerging” rating in September 2009.

“Investors mentioned both the lack of an offshore currency market for the Korean won and the operational difficulties in dealing with the currency in the onshore market” as concerns over changing South Korea’s status, MSCI said late yesterday.

Commentary: It appears as hard to convert Korean won for investors as it is for tourists at airport exchange counters? I would love to know what those operational difficulties are? Could they be excessive delays in cash or currency conversions locally or banks rates which are unfavourable regardless of volume totals?

South Korean equities have a total capitalization of 596 trillion won ($450 billion) as of yesterday, according to data by the Korea Exchange, making it the fifth-largest Asian stock market. The Kospi index, the nation’s benchmark, has dropped 38 percent this year, as most investment funds track indexes in developed markets, considered less risky amid the global credit crisis. The MSCI AC Asia Pacific Index fell 43 percent.

A final decision on Israel, which is also under review for a potential upgrade to a developed market, will be made no later than June, MSCI said, which cited the “relatively short” settlement cycle for equities as the key concern for the Tel Aviv Stock Exchange. It will also conclude consultations for potential upgrades of Kuwait, Qatar and United Arab Emirates to emerging- market indexes by June.

To contact the reporter on this story: Saeromi Shin in Seoul at sshin15@bloomberg.net

Rethinking and Re-energizing the Canada-South Korea Relationship

Rethinking and Re-energizing the Canada-South Korea Relationship
(Asia Pacific Bulletin)
December 15, 2008

Meeting for the first time since 2002, negotiators representing Seoul and Ottawa convened last month in Vancouver to discuss a bilateral open skies agreement. No agreement was signed, although a wide-ranging deal is expected to be finalized in a second round set to take place in the New Year. Despite lingering uncertainty over a Canada-South Korea FTA, the air services talks serve as an important reminder that Canada-Korea relations are moving forward.

In a rapidly changing global order in which giants like the US, China and India have cornered Canadian attention, relations with mid-sized Asian countries are easily overlooked. In a March 2008 national opinion survey conducted by APF Canada, only 37% of Canadians saw South Korea as important or very important to Canada's prosperity, and fewer than 1% saw the country offering the greatest market potential for Canada in Asia. Only 40% supported a free-trade agreement (FTA) with Seoul compared to 41% who opposed it. When asked about the state of bilateral relations compared to two years ago, 10% saw them as better, 7% worse, 56% the same, and a significant 27% did not know. Clearly, the picture of Canada’s relationship with Korea, or what it could become, is underdeveloped and unclear. Yet now is the time that Canada should refresh and re-prioritize collaboration with countries such as South Korea.

Entire article available at Asia Pacific Foundation of Canada.

Commentary: Obviously it would make sense for more Koreans to realize that gaining entry to new trading partners and markets in Canada is often about more than having a basic understanding of the English language. Also for Canadian exporters some greater reciprocal work opportunities would assist building the trade bridges to greater volumes of shared profits. As the article indicates of the estimated 15,000 Canadians in Korea around 10,000 of them are here teaching English so a total of 66.66% are present in the country but not participating in any way in developing import/export partnerships. The degree of collaboration between Canadian and Korean companies is of interest to me however I have yet to engage the networks of Canadian businesses here or Korean businesses interested to develop new relationships with Canadian companies as I feel the time will come, when I am properly prepared to be called upon for assistance.

I have maintained in previous posts that the technical "non-profit" category for foreign educational university establishments in Korea does preclude the necessary first entrant position which may then be followed by a perhaps easing of regulatory frameworks to permit profits to be reinvested in the educational trading relationship. While the LG-Nortel JV may be an early example of Canadian investment in Korea it might not be the best to trumpet at this time when its share prices in terms of Nortel are dismally positioned. I have also commented previously that Canada's primary aim in opening free trade with Korea should be the early establishment of Canadian university branch campuses here to draw from the surrounding nations and attract more Canadians to study in Korea in institutions which they trust will provide a qualified and globally reputable education rather than securing positions for American owned car companies which may cease to exist in the next six months.

My own university employer here is setting massive local investment into a new technology and innovation incubator. My training qualifies me quite well to offer liaison services in local research should Canadians come forward with any degree of interest. For example, if local university institutions were to offically partner with Canadian ones they might find thousands of Canadians willing to relocate to Korea for the chance of a similar education with either lower overall costs or shorter terms of study.

Whatever the results of Canada and Korea's FTA negotiations they should complement each other particularly due to their similar US relationship and it should be quite clear to each party what steps need to be taken to make a deal. It would probably need to be quite sweet and I suspect Korean negotiators may be unaccustomed to swinging certain markets such as financials and education wide open to foreigners. As well Canadians appear to be stuck in terms of failing to realize that forcing American made dinosaur-type cars should not be the focal element of their proposals.

Vietnam Approves Plan for New Port City Hub

Vietnam Approves Plan for New Port City Hub
(Cargonews Asia)
Friday, December 12, 2008

Prime Minister Nguyen Tan Dung has approved a master plan for transforming the Chan May-Lang Co Economic Zone in central Thua Thien Hue Province into a modern international commercial hub by 2025, Thai News Service reported.

According to the plan, the 27,108 ha Chan May-Lang Co Economic Zone will become a port city providing deep-water port services. It will serve as an important transit point for the delivery of goods in Vietnam's central economic region.

Under the plan, Chan May port will be located in Chan May Dong cape with a size of 370 hectares. It will be used as a container, and goods trading port. A Centre for Logistics and Commercial Service will be situated at the intersection between National Highway No 1A and the road to Chan May port. Chan May's commercial and financial services area will be located alongside the Bu Lu and Thua Luu rivers and the base of Phuoc Tuong mountain.

In addition, about 4,570 ha is set aside for developing high-quality ecological tourist and service areas. A non-tariff area, which is allowed to use land flexibly, will include a post-port and hi-tech industrial service. The plan also covers the road and rail network.

East Asia to See Slower Growth in 2009: World Bank

East Asia to See Slower Growth in 2009: World Bank
(The Canadian Press – Tomoko A. Hosoka, Associated Press)
Wednesday, December 10, 2008

East Asian economies are far better prepared to tackle the latest financial turmoil than they were during their own crisis a decade earlier, but they nonetheless face growing dangers as the global slump deepens, the World Bank said Wednesday.

The bank also praised "quick action'' by policy makers in the region to respond to the crisis, saying the moves should help East Asia stabilize global economic growth.

Amid falling exports and slowing business investment, real gross domestic product growth in East Asia – a region that includes China but excludes Japan – will slow to 5.3% in 2009 from an expected 7.0% this year, the bank said in a new regional report.

In contrast, the developed economies of the U.S., euro zone and Japan are all projected to contract.

East Asia will contribute about a third of total global growth in 2008, according to the World Bank.

“Thanks to the quick action of policy makers from virtually every East Asian country, banking systems have been able to deal with the crisis so far and in a number of countries, economic stimulus packages are being put in place,” said Jim Adams, World Bank vice president for the East Asia and Pacific region, in a statement. “These actions are helping East Asia continue to play a key stabilizing role and act as a growth pole for the global economy.”

The Asian financial crisis of 1997-98 helped strengthen the region over the last 10 years, the World Bank said. Public finances, external balances and corporate balance sheets are more sound thanks to smarter macroeconomic policies, tighter bank supervision and better risk management systems.

To better position themselves during the current crisis, Asian countries should work to maintain macroeconomic stability, shift exports to faster-growing regions, strengthen domestic demand, and continue structural reform efforts, the report said.

“Despite the difficult road ahead, those countries that sustain the sound policies pursued thus far and tackle new challenges decisively will be the ones to emerge in a strengthened position when the global economy begins to recover,” said Vikram Nehru, the World Bank's chief economist for East Asia and the Pacific.

Canadian Companies Least Corrupt in World: Report

Canadian Companies Least Corrupt in World: Report
(Canwest News Service – Peter O’Neil)

Companies from Canada and Belgium are viewed as the least likely to engage in corrupt practices in their overseas business dealings, according to a new report issued Tuesday.

The two countries were tied for first in a survey by Berlin-based Transparency International of the perceived business activities of companies from the world's top 22 countries in terms of international trade and investment.

Russia ranked last, just behind China, Mexico, India and Brazil. The U.S. was tied for ninth place with France and Singapore.

The index "provides evidence that a number of companies from major exporting countries still use bribery to win business abroad, despite awareness of its damaging impact on corporate reputations and ordinary communities," said TI international chair Huguette Labelle, the former president of the Canadian International Development Agency and current chancellor of the University of Ottawa.

"The inequity and injustice that corruption causes makes it vital for governments to redouble their efforts to enforce existing laws and regulations on foreign bribery and for companies to adopt effective anti-bribery programmes," she said in a statement.

Canada ranked fifth in each of the three previous corruption indexes, released in 2006, 2002 and 1999. However, TI cautioned against making comparisons because previous surveys used different methodology.

TI based the 2008 index on responses from 2,742 senior corporate executives in 26 countries that are both major importers and significant recipients of foreign direct investment.

"To assess the international supply side of bribery, senior business executives were asked about the likelihood of foreign firms, from countries they have business dealings with, to engage in bribery when doing business in their country," TI explained in a news release.

Shanghai Port to Spend $2.9b on Expansion

Shanghai Port to Spend $2.9b on Expansion
(Cargonews Asia)
Monday, December 8, 2008

Shanghai, already the world's second-busiest container port, completed the third phase of its deep-water and will spend roughly US$2.9 billion on further expansion despite the global economic crisis, the South China Morning Post reported.

With the end of construction of the third phase of the Yangshan Deepwater Port, its total capacity would be 9.3 million TEUs a year, with 16 berths stretching over 5.6km.

The further expansion, from next year, aims to surpass Singapore to become the world's largest container port. The city overtook Hong Kong last year.

Still, Shanghai has cut its target for container traffic to 28.5 million TEUs from 30 million as the global crisis has hit the city's shipping industry. It still expects to retain its position as the world's number two container port based on TEUs. Shanghai's port handled around 26 million TEUs of cargo last year, up 20.4% from 2006.

Work on the western part of the Yangshan port, due to start next year, will include 10 to 12 additional berths capable of handling seven million TEUs of cargo a year after its completion in 2013.

Shanghai was aiming for Yangshan port to have nearly 30 berths by 2020, almost half of the capacity of the Yangtze Delta area. At present, Yangshan contributes around 30% of the city's total port capacity.

Coalition of Industry Groups Endorses Canadian Chamber Call to "Put Canadians Ahead of Politics"

Coalition of Industry Groups Endorses Canadian Chamber Call to "Put Canadians Ahead of Politics"(Canadian Chamber of Commerce)Thursday, December 4, 2008

A broad coalition of organizations representing a cross section of Canadian business and industry today [Wednesday] strongly endorsed the Canadian Chamber of Commerce's call for all political parties to focus on the public interest above all other considerations during this economic crisis.

In a statement issued [Tuesday], the Canadian Chamber expressed dismay with recent actions taken by all federal political parties. The coalition agrees that all members of Parliament must set partisan manoeuvring aside and focus instead on measures to bolster investor and consumer confidence and restore economic growth. Canada needs a strategy that will do more than allow us to tread water during an economic storm. The Government should be looking ahead to economic recovery and growth. Such an approach will not only help Canada cope in these times, but set us up for greater success when the economic tides turn.

Canada Australia Chamber of Commerce
Canadian Airports Council
Canadian Association of Management Consultants
Canadian Association of Oilwell Drilling Contractors
Canadian Association of Petroleum Producers
Canadian Chemical Producers' Association
Canadian Industrial Transportation Association
Canadian Shipowners Association
Canadian Steel Producers Association
Certified General Accountants of Alberta
GS1 Canada
Mining Association of Canada
Petroleum Services Association of Canada

Read the Chamber’s statement at http://www.chamber.ca/cmslib/general/ReleaseBoardStatement021208.pdf

Sunday, December 14, 2008

Balance Of Trade.Kim.Ji.Hee.Kim.Ha.Neul

One of a voluntary group of students who agreed to allow me to post their slidecasts to the web following Daejin University Department of International Trade and Management Fall 2008 Presentations.


One of a voluntary group of students who agreed to allow me to post their slidecasts to the web following Daejin University Department of International Trade and Management Fall 2008 Presentations.
View SlideShare presentation or Upload your own. (tags: investment foreign)


One of a voluntary group of students who agreed to allow me to post their slidecasts to the web following Daejin University Department of International Trade and Management Fall 2008 Presentations.


One of a voluntary group of students who agreed to allow me to post their slidecasts to the web following Daejin University Department of International Trade and Management Fall 2008 Presentations.
View SlideShare presentation or Upload your own.


One of a voluntary group of students who agreed to allow me to post their slidecasts to the web following Daejin University Department of International Trade and Management Fall 2008 Presentations.
View SlideShare presentation or Upload your own.

Saturday, December 13, 2008

Canadians fear rise of BRIC nations

Canadians fear rise of BRIC nationsMISSISSAUGA, ON, Dec. 11, 2008 (Canada NewsWire)
Study shows two-thirds say emerging economies direct competitive threat to Canada

A recent study of Canadians' attitudes towards globalization has revealed two-thirds of respondents believe the emerging economic powers of Brazil, Russia, India and China (the BRIC nations) represent a competitive threat to Canada's economy with disparate opinions between have and have-not provinces.

Commentary: I am not surprised.

The Angus Reid study, commissioned by UPS Canada, shows Canada's strongest regional economies are most fearful of the rise of emerging nations overseas, while still maintaining that Canada plays a significant role in the global marketplace.

Commentary: Canadians and Canadian companies need to wake up to new global economic realities and growth trends.

Canadians living in the country's western prairies - which have recently emerged as one of Canada's strongest regional economies - are particularly leery of the BRIC nations with almost three quarters (73 per cent) citing the rising economies as competitive threats. British Columbians, who have experienced heightened economic activity in the past few years, fuelled partially by the excitement surrounding the 2010 Olympics, were second in line with 70 per cent seeing the BRIC economies as a competitive threat.

Commentary: The economic participation of Canadians whose origin are in BRIC countries might be providing evidence of greater productivity and desire to succeed in these regions?

Conversely, Canada's traditionally weaker economies in the Atlantic Provinces are the least concerned about the BRIC nations, with only 53 per cent expressing concern.

Commentary: This would make sense as proportionally fewer BRIC immigrants settle in these areas. It would be clearer to see the competitive drive of BRIC immigrants and their contribution to economic growth in these regions if there were more of them.

"What we're seeing is a split between the have and have-not provinces in terms of their level of insecurity when it comes to the BRIC nations," said UPS President Mike Tierney. "With Brazil giving Saskatchewan's agriculture industry a run for its money and China's booming manufacturing sector hurting Canadian exports, it stands to reason that those with the strongest economies and most opportunity appear to be the most fearful of the economic damage that could be caused by the emergence of the BRIC nations."

Commentary: Canada has several competitiveness indexes and national think tanks contributing recommendations for infrastructural and regulatory reforms necessary for Canadians and Canadian companies to participate in the global economy in a winning position. It depends upon who is listening and it appears that Canada's political elites are more interested in national politics rather than national competitiveness.

A little more than 60 per cent of central Canadians believe Canada plays a major role in the global economy, while 58 per cent of British Columbians and Albertans also perceived Canada to be a top player. Meanwhile, Quebeckers and Atlantic Canadians were the least inclined to lend significance to Canada's global economic contribution.

Commentary: Canada's regional nature is a real thorn in its side for developing national concensus in global positioning as seen in Australia. A new social framework needs to be implemented which provides equitable advancement for all regions. It appears to be more of a disparity of communication and negotiation skills more than anything else. Have Canadians burned out their ability to build national cohesiveness in terms of economic growth?

"Despite recent reports highlighting the decline of Canada's significance in global commerce, Canadians in prosperous regions remain optimistic about our contribution," said Tierney. "However, the key will be to couple that optimism with actions that will ensure the prosperity is maintained, particularly given the recent challenges facing our economy."

Commentary: Perhaps there is a national in-group delusion that Canada is doing what needs to be done to improve global competitiveness and coupled to a national character of risk-aversion national politics provides the ideal method of deferring implementation of recommended sweeping reforms which are painful and do not maintain traditional positions of power and influence for those Canadians and Canadian companies which would suffer from greater local competitiveness needed to provide a more favourable environment for new businesses, incubation, research and development and global best practices business start-up programs.

Tierney added that the key to overcoming overseas competition emerging from the BRIC nations will be a steady focus on big-picture entrepreneurship that will involve leveraging opportunities in the global market and investing in new technologies and innovations, rather than restricting activity to regional trade and old systems.

Commentary: New ways of doing things in Canada apparently do not come quickly?

"Part of the reason the BRIC nations have seen such an exponential surge in their middle classes is the heightened use by entrepreneurs in those countries of opportunities outside of their comfort zone, and they've been quite successful in doing so," he said. "By mimicking that spirit of ambition, Canadian businesses could stunt the inevitable intrusion into the Canadian market by these new players."

Commentary: I like this quote as it is well said and I would really encourage Canadians and Canadian companies to do more research into the methods of success in any growing global economies as it should be a duty and requirement of Canadian political and business leaders to act on accumulating an economic knowledge of global business structures which refine global best practices and change management with a revolution in Canadian quality improvement never before witnessed in world business practices. It will be painful for fat cats.

The Angus Reid Strategies poll was conducted between August 27 and 28, 2008, and surveyed 1,012 people. It has a margin of error of +/- 3.1 per cent, 19 times out of 20.

Wednesday, December 10, 2008

'Highway to Hell'? No, it's 'Ride On'

'Highway to Hell'? No, it's 'Ride On'

Korea's currency has collapsed and looks set to fall further, American banks are going bust, but we refuse to cry wolf.
What to tell fretful expats that you don't already know? Hold on to your hats, folks we ain't seen nothing yet? Batten down the hatches? Dig a hole, burry your cash? Hands up - give me all your money? Don't buy stock - any stock?

Try these bits of advice:

Armor your thoughts with facts rather than wooly conjecture; aim your exertions to more fruitful mental toils. Yawn your way through this crisis. Study, read - do something constructive. Instead of reading the Business section, pick up a novel.

Whatever you do, don't check the Dow or the KOSPI more than once every couple of weeks - or just check back next summer.

As banks drop like flies, it's pretty clear they have no idea what to do with your money. You might as well start putting yourself first.

If your heart is drawn to art, then buy art. If you pine for gold, then buy gold. If you crave cheap wine, then by all means gorge on cheap wine.

These are all investments, to varying degrees. Remain in corporeal good humors despite the current economic turbulence and respond to every reflex check as if you were indeed economically sound yourself. As well as you can, maintain a sense of sanguinity, even if you are up to your neck in debt and bad investments - c'est la vie. Most people are. Take solace in your willingness to chip away at it.

Those of you that are monitoring this madness probably feel squashed. But squashed is better than flat-out broke.

Buying opportunities abound, if you are brave - or foolish - enough, according to whichever analyst you choose to revere.

As long as you have picked a vehicle that you have researched well enough (with a long-term approach) you are probably putting your money in the right place.

And despite newspapers' crisis-screaming headlines and Korea's very own economic Nostradamus forecasting doom (if Nostradamus were a blogger, that is), there is still money to be made all around us.

For the buyer who bought and sold Citibank at the right time, you were bequeathed 41 percent gains on rumors it would soon become Metro Goldman Sachs.

To forge ahead, one must at times block out bad news.

Avoid extremes of thought, with pitched market plunges courtesy of Bloomberg, et al. Otherwise you may succumb to undue frustration, exhibited by Max Keiser's demand that Hank Paulson's head be seen bouncing down the steps of Congress.

Bouncing heads would sorely be a constructive solution to a global crisis. However, who would want the job after that? As appetizing as revolution might seem, stave off such dreary ends, at least in the short- and mid-terms where we may all remain in the opening, and perhaps fleeting, stages of the world's latest financial meltdown.

Don't pay any attention to economic pundits that have "Dr. Doom" or "The Master of Disaster" in parenthesis. Yes, this is a reference to Nouriel Roubini, the bass-baritone chairman of Roubini Global Economics and an economics professor at New York University's Stern School of Business. Everything he paints looks dark and reminds of Francisco Goya. Whatever he says, take it with a grain of salt.

Separate what you have been told by the media from reality.

It is in fact an extremely difficult task to separate what you have read, what you have been told, and what you already should easily relate. It is a fuddle. Digressions and soliloquies might best do it. Just try to chew your way through it all.

Separate fear from fact.

Market volatility is worsened by fear. Make market and company analyses based on tangible facts and data.

Don't buy or sell equities because that's what everyone else seems to be doing.

Never lose your cautious optimism.

Imagine this painting: A collection of small fishing boats near a rocky coast. The sea shimmers in its luminescent grace, rocking the boats gently in the shallows. The distant horizon is wide and unknown, uncharted and beyond scope as a dark flannelette foreboding sea. In the middle distance, glints of moonlight pierce the dark, imminently breaking through to change the entire view.

The office painting is wrapped in a beautiful gold gilded frame and it speaks of cautious optimism. Do not allow market fluctuations to dictate your investment decisions.

Otherwise you are, in reality just a speculator. Avoid spectulative pitfalls.

But to be sure, only short-lived fishermen go out to sea before, or in the middle of, a storm. Such fishermen face the risk of going under and losing everything.

Never listen to anyone that says "never." Or something like that.

A lot of Wall Street suits represent sales plays and vested interests already outed by the short shrift they gave economically challenged mortgage holders with the sub-prime motto, "the value of your house will never decrease, you can use it as a cash machine indefinitely."

In commodities, they spouted the motto, "Dig up as much as you can - demand will never cease and prices will never fall."

To trade credit buyers, the motto was once, "You'll never be denied credit." To consumer markets, the motto appears to be, "You'll never get lower prices."

Pick up a copy of "Devil Take the Hindmost: A History of Financial Speculation" by Edward Chancellor. Read it cover to cover to get a sense of the leverage busts and booms of old and new financial instruments.

So as this latest economic crisis plays out around the world, is the theme song "Highway to Hell" or "Ride On"? Make up your own mind, but we prefer the latter.

By Daniel Costello and Matthew Lamers

To contact Daniel, visit his website at http://crossculturalreviews.blogspot.com. To comment on this column, e-mail mattlamers@heraldm.com - Ed.


Wednesday, November 26, 2008

I am not a links spammer!

I am not a links spammer. I am collecting information relevant to international trade and cross cultural management behaviour. Perhaps some bankers are unhappy about that? Boo hoo.

For example, it is my opinion that market fundamentals in BRIC countries are quite good at the moment regardless of how broke banks appear to be in western countries.

Their cash reserves are quite high even in the west especially the excess of 7 trillion USD the US government has promised so far to bail so many US banks out right now.

Whether or not they choose to extend credit to their foreign trading partners has not often been written into the contract of the bail out and at this time cyclical demand is determining a slowdown. However trade credit requests are not being publicized.

While BRIC banks hold lots of cash reserves it is not for bailing out western banks either in my opinion it is needed to confirm credit issuances on import and export orders.

For what other purpose would banks hold cash reserves in excess of requirements?

Tuesday, November 25, 2008

Chinese economic growth slowed - 15 Nov 08

Chinese economic growth slowed - 15 Nov 08

While this video describes the Chinese economy has slowed the OECD predicts no slower than 8% growth in 2009.

Insight, Outlook For Russian Economy

Insight, Outlook For Russian Economy

How could Russia be in serious economic straits if it has the working capital to bail out Iceland which registers the only other worst performing currency than the Korean won? Will the Russians come to the rescue here as well?

Brazilian economy booming in spite of global credit crunch

Brazilian economy booming in spite of global credit crunch

While Brazil may be flying low it appears all may be going fairly well there?

India Economic Opportunity

Video: India Economic Opportunity

A glowing list of record achievements in the Elephant Economy of India. It is obvious form the video that India contains a large and growing consumer populace.

Monday, November 24, 2008

Canadians in often-overlooked Korean War held their ground

Canadians in often-overlooked Korean War held their ground
Soldiers faced some of the most brutal battles in history
Gerald Vander Pyl, For Canwest News Service
Published: Tuesday, November 11, 2008

While the bravery of Canadian soldiers during the First and Second World Wars has been well-documented, many people know relatively little about the role Canada played in the Korean War.

Yet it was during that conflict when Canadians faced the most dire circumstances imaginable -- vastly outnumbered and completely surrounded by the enemy -- but still managed to defeat their foe.

The story of the battle at Kap'yong remains one of the most heroic in Canadian military history; and it occurred only a few short years after the end of the Second World War.

In 1950, the Communist forces of North Korea invaded South Korea and the United Nations Security Council responded by declaring war. Canadians once again found themselves heading for battle in an unfamiliar country far from home.

William Johnston, a historian with the Directorate of History and Heritage at National Defence Headquarters, says the war had already seen several ebbs and flows by the time the Canadian Army Special Force arrived. At one point the North Koreans had battled all the way south to Busan, but were then were pushed back almost to the border with China. Eventually the dividing line settled near the 38th parallel, just north of the Kap'yong River Valley.

By April of 1951, the Canadians had been involved in several successful operations and had turned over those positions to other forces in order to rest and regroup at Kap'yong.

But that rest would be short-lived as a huge army of Chinese "volunteers" -- who had earlier poured across the border into Korea -- launched a new offensive against the UN forces on April 22.

Johnston says the initial wave of the attack was aimed at Seoul, but then a Chinese division stormed down the Kap'yong River Valley, where the Canadians and Australians defended separate hills west and east of the river, while British and New Zealand regiments guarded the rear position.

Hub Gray, a veteran of the battle at Kap'yong and author of Beyond the Danger Close: The Korean Experience Revealed, says the resulting battle was brutal.

Only 22 years old when he served as a lieutenant with the 2nd Princess Patricia's Canadian Light Infantry's mortar platoon, he says the attacking Chinese resulted in thousands of South Korean soldiers retreating en masse. Enemy forces gained kilometre after kilometre of territory.

"A panicked army is something you never want to see," says Gray.

Directly in the path of the attacking Chinese and North Koreans at Kap'yong, the Australians were taking a beating and eventually called in an air strike, which resulted in disaster as the bombs hit their own positions.

Staggered, they were forced to withdraw on the evening of April 24, leaving the Canadians alone and slowly being encircled by enemy forces as darkness fell.

Outnumbered almost eight to one, Hub says the Canadians faced wave after wave of Communist soldiers throughout the night of April 24 to 25. He says any attacking soldier felled by the Canadians quickly had his place taken by another.

At one point, the Chinese, who Hub says wore rubber-soled shoes rather than the traditional army boots, managed to quietly sneak almost 500 soldiers up Hill 677 where the Canadians were dug in to make a final stand. Discovered at the last possible moment, the Canadians opened fire with eight machine guns and averted disaster.

Johnston says the attacks continued against the Canadian companies that stood their ground until the enemy was finally repelled for good at Hill 677 midday on April 25, and the story of the Canadian bravery at Kap'yong still resonates to this day.

Commentary: I wonder if "The Battle of Kap'yong" is fully recounted in Korean history books? This article is the first I heard of it. As soon as the Royal Military College started linking to this repost of the Vancouver Sun article (which itself is a rebuttal to the article on lack of educational qualifications for foreign ESL instructors in Korea) google plans to suspend my blog and nearly three years of links, commentary, photographic or otherwise on the topics of my greatest interest. Let me tell you about the time I was shortlisted for English content editor at Google India or perhaps the time that Google wrote to me requesting a free referral to a local Korean HR Representative recommendation?

Half of Seoul's Native English-Speaking Teachers Not Qualified

Half of Seoul's Native English-Speaking Teachers Not Qualified

SEOUL, Nov 24 Asia Pulse - Half of the native English-speaking teachers placed at elementary, middle and high schools in Seoul do not have teaching degrees or certificates, a government report said Monday.

Among 810 native English-speakers who teach as assistants in the capital city, only 166, or 20.5 per cent, have education certificates, according to the report submitted to city councilman Nam Jae-kyong by the Seoul Metropolitan Office of Education.

Those who hold certificates for Teaching English to Speakers of Other Languages (TESOL) total 303, accounting for 37.4 per cent.

There are 44 teachers, or 5.4 per cent, who have both education and TESOL certificates.

There were 136 instructors who majored in English education and 106 others who studied education.

Forty-eight per cent of the teachers, or 385 people, do not hold either education certificates or TESOL certificates, the report said.

With English proficiency seen as the key for success in school and in society, demand for native English speakers in South Korea has been rising in recent years.

The number of native English-speakers in South Korean schools jumped to 3,800 this year from 146 in 2000. There are currently about 2,800 more foreign teachers working at private institutes, according to a tally made by Ministry of Education, Science and Technology earlier this year.


Commentary: It would appear a selective sin of omission to yet again berate the general qualifications of Korea's labouring esl instructors. While such statistics may prove accurate no where is it mentioned in the article that Korea's own E-2 regulations require nothing more than a BA Degree. Until Korea's press and education departments treat its non-Korean instructors as guests according them all the civilities and welcome of travelling ambassadors of their own nations, and as partners rather than servants, the incidence of commitment to professional self-development will continue to appear lacking. It would be hard to find BEd teachers willing to work at hagwon salaries currently around 18,000 USD with current exchange rates.

Air Quality in Seoul Gets Worse

Air Quality in Seoul Gets Worse
(English Chosun)November 24, 2008

The air quality in the Seoul metropolitan area has become worse than before 2006, when it began trying to improve it. The government has spent W1.5 trillion (US$1=W1,501) over two years on the program.

The Metropolitan Air Quality Management Office under the Environment Ministry on Sunday announced the result of a campaign against smoke-belching old diesel vehicles by three local governments in Seoul, Incheon and Gyeonggi Province in 2006 and 2007. An average of 58㎍ fine dust particles per 1 cubic m of air were detected in Seoul in 2007, except during dust storms, up 2㎍ from 56㎍ in 2005, the year before the project.

Other pollutants such as nitrogen dioxide, ozone and sulfurous acid which harm the respiratory and cardiovascular organs increased by 1 to 4 ppb as compared to 2005.

(englishnews@chosun.com )

Commentary: All I have to say is, "wheez, cough."

Sunday, November 23, 2008

“BRIC played crucial role at G-20 summit”

“BRIC played crucial role at G-20 summit”
Vladimir Radyuhin

The Hindu

MOSCOW: Taking a joint stand on the global crisis the BRIC nations, Brazil, Russia, India and China (BRIC), secured a greater voice for emerging economies at the G-20 summit in Washington, a Russian Minister has said.

Commenting on the outcome of the Washington summit, Deputy Finance Minister Dmitry Pankin said the BRIC leaders played a crucial role in reworking the U.S.-drafted G-20 communiqué.

“The initial draft made no mention of the need to give the emerging nations a bigger say in the international financial institutions,” said Mr. Pankin on Monday. The final communiqué stated that emerging and developing economies “should have a greater voice and representation” and called for an urgent expansion of the Financial Stability Forum (FSF) to give “a broader membership of emerging economies.” India, China and Brazil will now join the FSF board, the global economic policy powerhouse, which to date has been the bastion of the G-8. Mr. Pankin said the BRIC leaders also successfully pushed for the G-20 to agree on closer coordination of macroeconomic policies. “The G-20 summit showed that if we [BRIC] act in concert we have a very good chance of having our voice heard,” he said.

Ahead of the summit, the BRIC nations issued a joint statement demanding a bigger role in shaping the new global financial architecture.

Commentary: All I can say is, "Bully! I agree Smedley! I agree!"

BRIC economies withstand global financial crisis
Author: Media Eghbal Date published: 5 Nov 2008 Euromonitor International

"The global financial meltdown of 2008 has not left the economies of Brazil, Russia, India and China, known as the BRIC club, unscathed. As the developed world faces recession, BRIC growth is inevitably set to slow. Yet strong foreign exchange reserves and growing domestic demand will allow BRIC to withstand the crisis and continue growing, strengthening their position as a major consumer market."

Commentary: I think this is a lovely report which should get more publicity. Sorry if my review appears rather armchair, Media. At least I am reading?

The Financial Crisis and the Developing World

An Interview With Jomo K.S.

"Jomo Kwame Sundaram, better known as Jomo K.S., is the assistant secretary-general on economic development for the UN Department of Economic and Social Affairs. He is a visiting senior research fellow for the Asia Research Institute, National University of Singapore, and professor in the Applied Economics Department, University of Malaya, Kuala Lumpur. He is founder and chair of IDEAs, or International Development Economics Associates. Jomo K.S. would like to thank his colleagues Rob Vos, Pingfan Hong, Richard Kozul-Wright and Alex Izurieta for their contributions to these responses." The Financial Crisis and the Developing World

Commentary: Who should more equitably represent developing (and thus BRIC) economic outlooks better than General Jomo himself?

Wednesday, November 19, 2008

The Ultimate Charlie Rose!

"'Charlie Rose' by Samuel Beckett"

September 2003 Charlie Rose - FRIEDMAN / KRUGMAN

September 2003 Charlie Rose - FRIEDMAN / KRUGMAN

World freight prices collapse amid financial crisis

World freight prices collapse amid financial crisis(November 19th)

LONDON (AFP) — Freight shipping prices for transporting dry raw materials collapsed in November, slammed by the global financial crisis, slowing economic growth and falling commodity prices, industry experts said.

Commentary: This is what they are saying however is it really the financial crisis which is to blame?

The Baltic Dry Index, an indicator of economic trends which tracks the cost of moving goods such as coal, iron ore and grain across the oceans, has slumped over the past five months.

Commentary: I am certain demand at this time would be higher for many commodities at current throw-away prices. However they are not being shipped.

The index hit a record high of 11,793 points in May but has since fallen back to earth, hitting just 815 points last week -- the lowest level since the end of 1999.

Commentary: This followed the speculator fueled price hikes on commodities and the subsequent abandonment of these markets for US Treasury Bonds, gold certificates and any where else cash could be multiplied more securely.

"The freight market has borne the brunt of both the financial sector crisis and the ensuing economic downturn," said analysts at British-based emerging markets bank Standard Chartered.

"Anecdotal reports suggest a significant part of this has been due to difficulty in arranging trade finance as a result of the credit crunch rather than lack of demand," they said

Commentary: Why are these reports merely anecdotal? Do not commercial trade banks keep a record of credit references, requests and denials?

"Demand for commodities has also undeniably slowed, particularly for iron ore into China, which has an overwhelming impact on the dry freight market."

Commentary: If this is true then why are the Chinese readily able and actually willingly gobbling up parts of commodities producers in Australia for example?

Meanwhile, the Baltic Panamax Index, comprising of seven dry bulk routes, nosedived to 662 points last week -- the lowest level since its creation in 1998 and compared with a record high 11,425 points five months ago.

Commentary: Is there any evidence to suggest shippers are finding/have found more economical routes other than these to deliver their essential goods? For example, are bulk goods carriers suddenly back in favour? Are a number of charter businesses suddenly taking over the shipping routes off the books? For example have many shippers exporters and importers simply returned to standard bulk carriers on tramp routes to save cash? Would this have been one of the global trading world's ways of escaping commodities priced dry bulk shipping costs in the last couple of years?

Georgi Slavov, head of dry freight research at ICAP Shipping in London, said freight prices sank because steelmaking companies, hit by falling prices, have sought to slash their transportation costs.

"The first trigger for the collapse of dry bulk freight rates was the sharp sell-off across the commodity sector, the most important for the short-term freight market being the steel price," Slavov told AFP.

"The fall, which began at the beginning of June, squeezed first the profit margins of producers since they faced fixed high raw material costs and falling prices for their finished products.

"This was followed shortly by a squeeze of freight (costs) as they tried to pass the pressure from the profit margins to the freight market."

Commentary: It appears the freight markets are unwilling to swallow producer-based losses and neither are importers willing to purchase over-priced goods. It therefore appears the producers of commodities may have simply exceeded their own supply costs by 50% on many stockpiles of commodities which remain unsold.

Meanwhile, the chronic global financial crisis and slowing economic growth have ravaged demand for cargo ships.

Sverre Svenning, director of Fearnley Consultants shipbrokers, said demand has been slashed because the global credit squeeze made it very difficult for buyers to attract funding.

"The buyers don't get credit, so they can't buy the commodity ... (and) they don't need any ships," Svenning said. "It's definitely a reflection of the crisis affecting the real economy."

Commentary: Indeed however with the heavily unionized clout of commodities suppliers in North America why is the only issue in the public eye US automakers bailouts? How many commodities producers will need similar loss compensations packages due to the fact that up to three months of leveraged credit orders and inventory have been cancelled all processed at up to 50% higher costs than at present?

The UN Conference on Trade and Development (UNCTAD) said earlier this month that the financial crisis had begun to affect international trade, noting sharp falls to key shipping indices.

Commentary: Surely more than a few shippers had found alternate routes to delivery of over-the-top commodities in the last two years of record rising bulk rate costs?

The UN agency said in its annual maritime transport review that the world's merchant fleet had expanded to a record 1.12 billion deadweight tons, with the order book for new vessels reaching a peak of 10,053 ships in 2008.

However, from mid-2008, companies were cancelling new ships on order.

Commentary: How many companies would bee defaulting on orders not based on commodities prices alone but on currency exchange pegged futures? How many orders would also be cancelled because the builders were losing as well?

Svenning said "it's a lack of demand. Lots of people are stuck with high (commodity) inventories with high costs and they are simply sitting tight at doing nothing right now.

Commentary: I cannot resist.

"So there has been an imbalance between supply of transportation capacity and demand for this transportation capacity."

Looking ahead, Standard Chartered analysts predicted that freight prices could rebound in the coming months.

"As inventories are run down over the next few months, particularly in the steel industry, a rebound in freight will become more possible," they said.

Commentary: How many bankruptcies will ensue between then and now offering the only opportunities to unload inventories at throw-away or even currrent prices?

"Growing reports of cancelled orders for new vessels increase the risk of extreme upward pressure on freight rates once more as the global economy begins to recover from this cyclical downturn in 2010."

Commentary: Whoa, who decided this was all ending in 2010? Are we playing optimist now?

Paul Krugman: How did a few failed banks add up to a financial meltdown?

Paul Krugman: How did a few failed banks add up to a financial meltdown?

Saturday, November 15, 2008

Commerce becalmed over letters of credit

Commerce becalmed over letters of credit
(The Times)
Carl Mortished, World Business Editor
November 3, 2008

The credit drought is undermining international trade in goods and raw materials with savage increases in the cost of funding for exporters. At the same time, buyers of goods are being denied access to letters of credit - the banking instruments that are the nuts and bolts of global trade.

Commentary: I love this nuts and bolts analogy as this is the exact topic I have been studying and teaching about for nearly three years.

HSBC, a leading trade finance bank, has said that the cost of guaranteeing a letter of credit, a routine instrument used for payment of goods, has doubled. Concern is growing in the shipping industry that business is foundering because of failures in trade finance, and Pascal Lamy, director-general of the World Trade Organisation, has given warning that the credit crunch is affecting global trade, particularly in the emerging markets of Brazil, India and China. He said: “Trade finance is being offered at 300 basis points above the London Interbank Offered Rate and even at this high price, it has been difficult for developing countries to obtain.”

Commentary: Other reports state these costs have tripled.

Mr Lamy has called a group of trade finance banks, including HSBC, Royal Bank of Scotland, JPMorgan and Commerzbank, to a meeting on November 12 with the IMF and World Bank to consider the trade finance problem.

Commentary: Yes it is old news but all news to me!

Lack of trade finance is having a disastrous effect on shipping. In a report issued on Friday, Maersk Broker, a subsidiary of the Danish shipping group, blamed logjams in the banking system for the slump in the dry bulk cargo market: “Banks’ refusal to offer letters of credit has resulted in very few fresh cargoes reaching the market, which is adding to the owners’ woes.”

Commentary: It appears bankers suddenly least trust other bankers at this time. It appears prudent from a cash in hand basis and those with ready cash will be largely unaffected however they only appear to represent about 10% of all global trade buyers.

A collapse in the trade of raw materials such as grain and iron ore, after years of frantic activity, is causing havoc. The Baltic Exchange Dry Index, which measures the price of voyages and the cost of chartering vessels, has plummeted. Rates for the largest transporters, known as Capesize, peaked in May at $230,000 a day. It is estimated that the daily cost of running the ships, including depreciation, is about $15,000 but at the end of last week, rates had fallen to $5,982 a day.

Commentary: It would be interesting to examine which of two factors, purchases made at record high commodities prices which were cancelled at a loss thus throwing trade credit at the top of bankers' risk assessments or the actual sudden re-evaluation of trade credit transactions consumption of bankers' short-term debt uncertainties which more heavily impacted the crash in commodities prices. Speculators might easily be blamed but how many buyers and sellers of real, tangible commodities actually participated in the speculative investments in supply costs?

According to HSBC, there has been a surge in customer requests for trade tools that can guarantee payment.

Commentary: This appears questionable and confusing as some reports state that only 10% of world trade relied on letters of credit previous to commodities price crash versus a majority which relied on sellers government guaranteed credit which in terms of Canadian exporters generally only covers 90% of the total export value. Did all of these exporters suddenly perceive 10% of their uninsured value would be lost and is that 10% often representative of their profit margin? Thus for the sake of profit margins nearly 90% of global trade has ground to a halt? Is this a fair conclusion and where and when will the public be informed of it?

Stuart Nivison, an executive in the bank’s trade finance division, said companies that two years ago might have been happy to deal on the basis of simple orders from customers are now insisting on documentary credit.

Commentary: In the Middle East it is my understanding that much of its inter-company trade has been on a cash only basis as a standard of small businesses without bank support.

Anxiety about payment was pushing companies to ask for greater security, Mr Nivison said, and in such transactions, fees were soaring. He pointed to a recent case of a shipment of industrial equipment from Britain to India, where the confirmation and discounting of a letter of credit, which would normally cost 0.5 per cent of the value of the goods, had risen to more than 1 per cent. “These are big moves and reflect the nervousness in the market. People want to be sure they are paid,” Mr Nivison said.

Commentary: If companies have rushed from government sponsored credit insurance payments perhaps it is due to sudden increased demand in commodities which perhaps have doubled in volume compared to the fifty percent drop in prices which would be impossible for most companies to fulfill?

Distrust of banks is compounding the problem. “We have received requests to guarantee the credit of top-tier banks and we have also seen cases of exporters in China saying to their UK buyers which banks they will or will not accept,” Mr Nivison said. He added: “Trade finance is the oil that keeps the wheels of commerce going. Without it, everything grinds to a halt.”

Commentary:It would appear global exporters may be trying to support higher prices for commodities based upon actual demand which has fallen out of favour as the speculators have left the building for the moment. At the same time importers may be demanding suddenly increased volumes of commodities beyond the inventory and supply capabilities of exporters. I suspect the letters of credit option is being "played" as a means to insure complete export risk coverage to maintain minimum 10% profit margins which government sponsored export insurance programs do not secure. At the same time, importers knowing this are attempting to secure lower cost letter of credit terms because 1-3% of their profit margins are suddenly being shaved off by the banks. That is the way it appears to me. Am I far off base here?

'Credit crisis tsunami' threatens world trade

'Credit crisis tsunami' threatens world trade
Published: October 29, 2008, 23:43

Washington/Los Angeles: Richard Burnett's lumber company had started loading wood onto ships heading for China. More was en route to the docks. It was all part of an order that would fill 100 40-foot containers.

Then Burnett got a call from his buyer at Shanghai VIVA Wood Products Co. The deal was dead. He told Burnett, president of Cross Creek Sales LLC in Augusta, Georgia, he couldn't get a letter of credit (LC) to guarantee payment for at least six months.

"It was like a spigot got cut off," Burnett said, recounting the transaction that fell apart in July. The inability of buyers in China and Vietnam to get letters of credit has cost his company as much as $4 million (Dh14.68 million) this year, a third of projected revenue, forcing him to lay off 15 of 35 employees, he said.

Suppliers of oil, coal, grains and consumer products from Chicago to Mumbai are losing sales as the credit crisis spreads beyond financial institutions, and banks refuse financing or increase the fees for buyers. Coupled with declining demand, the credit squeeze is threatening international trade, one of the lone bright spots in the global economy.

"It's like standing on a beach watching a tsunami, knowing that it's coming," said Scott Stevenson, manager of the International Finance Corp.'s Global Trade Finance Programme. IFC is the World Bank's private lending arm.

Emerging markets such as Brazil, Vietnam and South Africa are particularly vulnerable because buyers have more trouble proving their financial strength. The slowdown is also damaging the US, the world's largest economy, where exports accounted for almost two-thirds of the 2.1 per cent growth in gross domestic product in the 12 months through June, according to the US Trade Representative's office.

Shipping rates fall

Another sign of trouble: The Baltic Dry Index, a measure of commodity shipping costs that banks watch as an economic indicator, fell below 1,000 yesterday for the first time in six years, dropping it 89 per cent for the year.

Global trade volumes may sink next year, their first decrease since 1982, according to Andrew Burns, a lead economist at the World Bank. While there is still uncertainty over future prospects, trade may contract by as much as 2 per cent, after annual increases of 5 per cent to 10 per cent over the past decade.

"We only see this kind of shock when we have outbreaks of war, or maybe the oil shocks of the 1970s," said Kjetil Sjuve, a commodities shipbroker at Lorentzen & Stemoco in Oslo. "This lack of credit was a shock to the entire economy. We were hit second after the banks."

Of the $13.6 trillion of goods traded worldwide, 90 per cent rely on letters of credit or related forms of financing and guarantees such as trade credit insurance, according to the Geneva-based World Trade Organisation.

Commentary: An important detail I have sought for a few weeks now.

Letters of credit are centuries-old instruments that allow far-flung partners to complete large transactions. An importing company gets its bank to issue the letter, guaranteeing payment for a delivery. That bank provides the letter to the exporter's bank, which then guarantees payment to the exporting company. The system breaks down when banks don't trust one another and are unwilling to accept a letter of credit as proof that payment is coming.

Cost triples

From 2000 through last year, the use of letters of credit declined to about 10 per cent of global trade transactions, the IFC's Stevenson said. Over the past six months, they began "roaring back into fashion" as sellers sought to guarantee payments from buyers they no longer trusted, he said. At the same time, liquidity problems caused banks to increase charges.

Commentary: It would appear the maxim of "building trade relationships" means little when your bank looks ready to falter.

The cost of a letter of credit has tripled for buyers in China and Turkey and doubled for Pakistan, Argentina and Bangladesh, said Uwe Noll, director of country risk sales at Deutsche Bank AG. Banks are now charging 1.5 per cent of the value of the transaction for credit guarantees for some Chinese transactions, bankers say.

"The whole global trade production line relies on letters of credit," Matt Robinson, an analyst at Moody's Economy.com wrote in an October 23 report. "No letters of credit, no transactions - and no transactions mean no international trade."

Seaspan predicts cancellations as Evergreen slumps

Seaspan predicts cancellations as Evergreen slumps
Janet Porter and Sandra Tsui - October 31, 2008
(From Lloyd's List)

ORDERS for big containerships will be cancelled, delayed, or converted to other ship types if the industry downturn is prolonged, Seaspan chief executive Gerry Wang predicted as the box trades took another pummelling and Evergreen joined the casualty list.

Evergreen Marine Corp, the Taiwan-listed arm of Evergreen Group, reported a 94% slump in third quarter net income following the crash of Asia-Europe freight rates to record lows and declines on other routes.

Commentary: Would this indicate that virtually 94% of all ocean going freight delivery orders are contingent on letters of credit transactions which have been either cancelled due to questionable bank liquidity or due to cancellations due to virtually halved commodities prices which buyers in Asia would now need to absorb as netlosses?

Evergreen, one of the few global carriers not to have ordered super-sized box ships, said net income in the latest three months was down to NT$291m ($8.8m) from NT$5.2bn a year earlier.

Cumulatively, Evergreen achieved net income of NT$1.5bn in the first nine months of 2008 compared with NT$6.8bn in the corresponding period of 2007 as revenue fell from NT$21.bn to NT$17.4bn, according to a filing to the Taiwan Stock Exchange.

In New York, containership owner Seaspan posted a third quarter net loss of $5.1m on net earnings of $42.6m, compared with a $38.6m deficit in the corresponding period of 2007, and reflecting a non-cash unrealised loss from interest rate swaps rather than the underlying business.

A coalition of industry interests including shipowners, liner operators, banks and shipbuilders would probably orchestrate a reduction in the record high orderbook in a variety of ways, while a number of marginal or greenfield yards will almost certainly have to withdraw from some of their commitments, said Mr Wang.

Commentary: Would this coalition represent an offical or unofficial freight convention?

Seaspan’s shares have been battered in recent weeks in line with other shipping stocks, falling from around $25 in August to $11 at the end of last week and forcing Mr Wang to tell investors that its business bore no relation to the Baltic Dry Index or the letters of credit crisis that has hit the drybulk trades, and stress that the company is a shipowner, not a liner operator.

Commentary: How can the Baltic Dry Index and letters of credit crisis not be related to a 94% drop in freight volumes irregardless of shipownership? Would not losses then be on cancellations of projected charters or future contracts?

The New York-listed company which has 33 ships on long-term hire to boxship majors, and another 35 on order against firm charter deals, believes it should be relatively immune from the market downturn because of these fixed employment commitments.

In a conference call to analysts, Mr Wang said Seaspan had not picked up any hints of charter defaults, or received requests to renegotiate charterparty agreements.

With its ships only fixed to bluechip companies, Mr Wang said the risk of that happening was low. The average duration of current charter contracts is seven years, said Mr Wang who went on to express confidence that options which come up for renewal in four years’ time would be exercised.

Commentary: Are the financial management operations of bluechip companies not somehow similar to investment banks?

He also predicted an upturn in scrapping activity and a continuation of slow steaming, despite a drop in oil prices.

Reduced speeds are helping to absorb tonnage capacity, and Mr Wang said that, even at lower fuel prices, it still made commercial sense to run ships more slowly.

“Slow steaming will be here for some time,” he forecast.

Seaspan’s chief financial officer Sai Chu said the company’s bank relationships “remained strong” and that there had been no problems over recent drawdowns or credit rollovers.

For the industry overall, Mr Wang said a long recession would probably lead to more consolidation.

But Seaspan could benefit if liner operators outsource during these difficult times and prefer to take tonnage on long-term charter rather than have ships on their balance sheets.

Container lines are now enduring some of the worst conditions ever as supply races ahead of demand and some decide to put vessels into full lay-up.

Just days before Evergreen released its latest figures, China Shipping Container Lines posted a net loss of Yuan272m ($39.8m) for the third quarter.

Singapore’s Neptune Orient Lines expects to suffer its first operating loss in six years in the fourth quarter.

Meanwhile, Taiwan’s export orders, an indicator of actual shipments over the next one-to-three months, increased by the lowest level in more than six years in September, as demand from China and the US fell, according to Taiwan’s Ministry of Economic Affairs.

Commentary: How much of demand losses actually represents sudden letters of credit transaction cancellations?

Joint Business Group Luncheon With Guest Speaker: Lubna Al Qasimi

Joint Business Group Luncheon
With Guest Speaker:
H. E. Sheikha Lubna Al Qasimi, UAEs Minister of Foreign Trade

The British Business Group together with the American, Australian, Canadian and Swiss Business Councils are pleased to announce a Guest of Honour Speaker with Her Excellency Sheikha Lubna al Qasimi, the UAE’s Minister of Foreign Trade. Her Excellency will speak on the subject of the UAE’s perspective on International Trade with some focus on the World Trade Organisation, Free Trade Agreements and the legislative framework. This is a unique opportunity to learn first hand of current developments here in the field of international trade at this interesting time.

Date: Wednesday, 19th November 2008
Time: 12:00pm - Registration and Networking, 12:30 - Speeches & Lunch
Venue: InterContinental Hotel, Liwa Majlis
Cost: Members AED 200 & 250 for Non-members.

Friday, November 14, 2008

Globalinks Tutors Recruitment fairs 2009

Globalinks Tutors Recruitment fairs 2009

Globalinks Tutors now represents over three hundred international schools from all over the world. We now have offices in London, UK and have just opened up a new office in Pennsylvania, USA. Our list of clients is growing daily and, to accommodate this increased demand for teachers, we will be hosting a series of Recruitment Fairs throughout 2009 to recruit teachers for a variety of positions in international schools. Contact me now for information: website www.globalinkstutors.com email andrew@globalinkstutors.com


London, UK - 7th/8th February 2009,
London, UK - 25th/26th April 2009
Dublin, Ireland - 18th/19th April 2009
Manchester, UK - 23rd/24th April 2009
Birmingham, UK - 14th/15th April 2009
Bath, UK - 16th/17th April 2009, Edinburgh, Scotland - 21st/22nd April 2009


New York, USA – 14th/15th February 2009
Seattle, USA - 21st/22nd March 2009,
Denver, USA - 28th/29th March 2009
San Francisco, USA - 7th/8th February 2009
New Orleans, USA - 20th/21st February 2009
Chicago, USA - 14th/15th March 2009,
Boston, USA - 7th/8th March 2009


Toronto, Canada - 24th/25th January 2009
Vancouver, Canada - 31st/1st January/February 2009


Dubai, UAE - 27th/28th February 2009


Shanghai, China - 17th/18th January 2009
Bangkok, Thailand - 3rd/4th January 2009,
Bangkok, Thailand - 21st/22nd March 2009
Hong Kong - 10th/11th January 2009

Thursday, November 13, 2008

Asian markets tumble on grim US corporate news

Asian markets tumble on grim US corporate news
By STEPHEN WRIGHT – November 13, 2008 (AP)

BANGKOK, Thailand (AP) — Asian stock markets tumbled Thursday as more signs of a sharp downturn in the U.S. economy spurred investors to dump shares of exporters like Sony and Samsung.

Investors also reacted nervously to U.S. Treasury Secretary Henry Paulson's announcement that the government's $700 billion financial rescue package won't purchase troubled assets from banks as originally planned. The Treasury will instead rely on buying stakes in banks and encouraging them to resume more normal lending.

Japan's benchmark Nikkei 225 stock average fell 480.92 points, or 5.5 percent, to 8,214.59 and Hong Kong's Hang Seng index dived 6.6 percent to 13,015.28 points.

Markets in Australia, South Korea and Taiwan all fell more than 4 percent.

"The negative corporate and economic news flowing out of the U.S. is what markets have been expecting and it doesn't change the picture investors have, which was already bad," said Porranee Tongyen, head of research at Asia Plus Securities in Bangkok.

In Asia, only the Shanghai Composite Index traded in positive territory, up 1.7 percent as the Chinese government's $586 billion economic stimulus package announced Sunday continued to underpin sentiment.

Grim news from companies weighed on U.S. stocks overnight with the Dow Jones industrial average falling 4.7 percent to 8,282.66, its third straight loss. Department store chain Macy's Inc. said it lost $44 million in the third quarter as sales fell more than 7 percent, and consumer electronics retailer Best Buy Co. slashed its fiscal 2009 guidance on fears that consumer spending will erode even further.

That's bad news for Asia's exporters, which depend on American consumers to buy their products.

Japanese exporters were also hit by a strengthening yen, which erodes the value of their overseas earnings when converted back to the local currency. The yen was trading at 95.58 to the dollar in Asia, versus 97.98 yen a day earlier.

Sony Corp. slid 8.2 percent to 2010 yen. Another electronics maker, Sharp Corp., fell sharply on news it agreed to pay $120 million after pleading guilty to conspiring with two other companies to fix prices of LCD screens in the U.S. Its shares were down 6.2 percent to 683 yen.

South Korea's main index slid 6.5 percent to 1,051.38 as bellwether Samsung Electronics Co. sank 4.3 percent.

Oil prices continued their decline after the U.S. Energy Department said Wednesday it expects U.S. consumption of petroleum to next year drop more severely than any time since 1980.

Light, sweet crude for December delivery was down 81 cents to $55.35 a barrel, after falling as low as $55.03, in electronic trading on the New York Mercantile Exchange by midmorning in Singapore.

Wednesday, November 12, 2008

The Korean Won’s Current Woes

The Korean Won’s Current Woes
(Never made through the pipeline in April)

NINJA (no income and no job) mortgages and The Economist’s perpetual warnings regarding the US housing market bubble for the last five years are well served by an anonymous Korean investment manager who told me a few weeks ago, “We don’t need any more forecasts.” There is blood in the streets. The website motleyfool.com suggested nearly 25% of US mortgages could turn into “jingle mail” where owners send the keys in for foreclosure because paying a mortgage on a house that is worth considerably less than its mortgaged amount is not a good investment. Some owners would prefer bankruptcy to pay rolling US banks’ risky and speculative losses on the housing market.

At the same time it is very difficult to separate Korean economics from the current US economic quagmire. Korea ’s exports depend on commodities pricing in oil, iron ore and steel and are more expensive to make and ship abroad because of what is happening to S.S. America at this time. Consumers appear to be tightening their belts. This means they are buying fewer new cars and household goods stamped Hyundai, Samsung or LG. Koreans are locally fixing prices on a number of staple items in a sort of national battening down of the hatches in the event of rising inflation or “stagflation” where the won valuation may continue to fall but prices keep rising.

In “The Lexus and the Olive Tree” Thomas Friedman warned that the future of economic crises in the globalized world is perpetually the fault of issuing bad loans to bad borrowers. Further he noted due to increased economic interconnectedness one should be prepared for more frequent global economic crises. Does that mean a bottom can be painted on current US dollar values which affect the Korean won so heavily? For some weeks now the US Federal Reserve has been attempting to do that. Is there a global recession at this time? We may observe the US dollar and Korean won exchange has displayed recessionary-type indicators lately for reasons relating to how interconnected the US economy is with Korea and most of the globe. Jay and Gar, Canadians living in Daegu wrote that they were quite worried about these current exchange rates and are there any recommendations to be made considering wiring money home? Well, unless you are paying off debts at home you might consider keeping it here in a term deposit hovering around 5% annually depending on your bank and also however long you plan to stay here. The more US dollars or foreign currency you purchase the lower the value the Korean won is pushed. Conversely the more Korean won you refuse to sell in exchange the higher the value the won may rise.

Even the longest recessionary cycles in recent times since 1945 have not exceeded 10 months and since 1919 (including The Great Depression) this average period increases to 14 months. My best buddy (a wild and crazy day trader) suggests that the current exchange rates may also be impacted by dividend season at Korean stock exchanges with foreign investors converting their gains to US dollars. Thus some of the current rates may be part of a periodic annual event at this time of year which coincides with the US sub-prime correction. So depending on your time in country you might like to locally invest in the interest of waiting out the current exchange rates. However, if you have an investor’s mindset already, you might also paradoxically seek to purchase US dollars in the hopes that they may rise again sometime in the next year and a half. J.P. Morgan said, "Any man who is a bear on the future of this country will go broke." Buy low sell high? Have we reached the bottom yet? Let us hope this also applies to the Korean won’s current woes.