Wednesday, April 30, 2008

U R SEOUL (Inverted)

U R SEOUL (Inverted)



Now, a Commodities Conundrum

Now, a Commodities Conundrum
By Steven Pearlstein
Wednesday, April 30, 2008

The global financial system these days is beginning to look like a giant Whac-a-Mole game -- when we think we've knocked down one speculative bubble, another one just like it pops up.

The latest is the commodities bubble -- everything from oil and natural gas to gold, copper, wheat and rice. As with the credit bubble before it, the explosion in commodities prices has its origins in a global savings glut and massive trade imbalances. Like the credit bubble, this speculative bubble in commodities has badly distorted the workings of key markets and sectors of the global economy. And as with the other, this bubble is creating vast new wealth for some, including brokers, traders and investment houses who have gorged on fees and trading profits.

The difference this time, however, is that even before it bursts, this bubble is causing economic discomfort for households and businesses around the world, and misery for hundreds of millions of hungry people who suddenly cannot afford a bowl of rice or scrap of meat. The Post's eye-opening series this week on the global food crisis has provided a grim reminder that the global economic ecosystem has become so interdependent that a drought in Australia, a tax credit in the United States, French farm subsidies and export controls in India can wind up forcing a desperate African farmer to eat his seed corn.

Although commodity prices are notoriously volatile, the price increases in the past year are off the chart: rice up 122 percent; wheat, 95 percent; soybeans, 83 percent; crude oil, 82 percent; corn, 66 percent; gold, 37 percent.

Behind each of these increases is a particular story of supply that has been constrained or demand unleashed. To varying degrees, all of them reflect the fact that the global economy has just gone through one of its strongest growth periods in a generation, one that has lifted hundreds of millions of people out of poverty and made middle-class consumers out of hundreds of millions more in places like China, India and Brazil. Given those realities -- and the long lead time required to clear farmland, drill oil wells and open new mines to meet the surging demand -- a bull market in commodities was almost inevitable.

But what turned a bull market into a bubble was the sudden arrival of large numbers of new investors and an array of new investment vehicles, many of them involving derivative instruments traded outside the confines of regulated markets.

Speculators have always played a prominent role in commodities markets, but in the past year, they have literally overwhelmed them, causing a dramatic increase in trading volume, volatility and prices and disrupting many of the normal relationships between producers and end-users.

Many of these were the same hedge funds and hot-money investors who had gorged on sovereign debt of developing countries, tech and telecom stocks, subprime mortgages and commercial real estate and now needed a new thing to focus on. Others -- including, it is said, some sovereign wealth funds -- looked to commodities as a hedge against the falling dollar. But perhaps the biggest push came from pension funds, foundations and university endowments whose managers had all gone to the same conferences and read the same academic papers, suggesting that a basket of commodity futures would provide a good hedge against stock and bond market declines.

To meet the needs of these investors, Wall Street and Chicago's commodities houses came up with all sorts of new vehicles, including exchange traded funds, index funds and structured investment vehicles -- the commodities equivalent of mortgage pools and asset-backed securities.

There are various estimates of how much of this new investment money flowed into these vehicles in the past two years. Philip Verleger, an economist who closely studies commodity markets, estimates that the inflow was running at an average of $100 million a day during most of 2006 and 2007, rising to as much as $1 billion a day during the frenzied trading days of February and March. J.P. Morgan put the amount at between $150 billion and $270 billion. And the Bank for International Settlements estimates that the value of all the derivative contracts traded on the unregulated over-the-counter markets surged from about $3 trillion in the spring of 2005 to more than $8 trillion today.

Whatever the number, it's hard to imagine that it wasn't a significant factor in skyrocking prices that have created problems for many of the nonfinancial players who rely on the commodity futures markets for selling products, assuring adequate supplies and hedging against price fluctuations. Many farmers and grain elevators are reluctant to sell their product on futures markets out of fear they won't have the cash to meet the ever-escalating margin calls, while giant users like Cargill are reportedly also cutting back on the their use of futures contracts to lock in supplies.

On many commodities markets these days, the cash or spot market are often below that of futures market -- a condition known as "contango" that usually signals that something other than market fundamentals are at play.

Perhaps the best proof of all that there's a speculative bubble in commodities that may be about to burst: ConAgra, the 147 year-old food professor, last month sold its commodity trading division to a hedge fund for $2.1 billion. Cash.

Indeed, the only people who don't believe speculation is driving a commodities bubble are the big commodity traders and the commodities exchanges, which are profiting handsomely from the soaring prices and trading volumes, and the regulators at the Commodities Futures Trading Commission, whose economists cannot seem to find statistical evidence that financial investors have had much of an impact on commodity prices.

To its credit, the commission last week decided to hold off on plans to raise the limits on how much any one fund can speculate on any commodity. Ostensibly this is out of concern, in the words of the acting chairman, "that additional speculative pressures not exacerbate the anomalies we are experiencing in these markets."

I suspect what's really going on is that the industry, which has always called the tune at the CFTC, fears a backlash in Congress that could usher in an era of tough new regulation of commodities trading as part of a broader package of financial regulatory reforms.

Tuesday, April 29, 2008

Speculators blamed for food-price crisis

Speculators blamed for food-price crisis
Futures players ‘ distorting access’ to food

The Associated Press

GENEVA — UN officials on Monday blamed market speculation for the re­cent jump in global food prices and called for a concerted effort to ensure the world’s poor can afford to feed themselves.

“We have enough food on this planet today to feed everyone," the head of the UN Environment Program, Achim Steiner, told The Associated Press in a telephone interview.

But, he added, “the way that markets and supplies are currently being influ­enced by perceptions of future markets is distorting access to that food."

“Real people and real lives are being affected by a dimension that is essen­tially speculative," said Steiner, noting that millions have found themselves unable to pay for food since prices be­gan to rise steeply at the start of the year.

Last week, the World Food Program asked for an additional US$755 million to fill the hole in its budget caused by rising prices and growing reliance on food aid among the world’s poor.

Steiner’s comments were echoed by the UN’s right-to-food advocate, who said that high food prices were destabi­lizing the world.

Jean Ziegler told reporters at the UN’s European headquarters in Geneva on Monday that the “daily mas­sacre of hunger" was being worsened by private equity companies seeking to profit from price swings on the interna­tional commodities markets.

Last week, a U.S. government regula­tor rejected the idea that speculative trading was the primary culprit be­hind surging prices of corn, wheat and other crops.

Bart Chilton, a commissioner with the U.S. Commodity Futures Trading Commission, said commodities mar­kets were functioning properly, and that shrunken harvests, smaller grain inventories and the declining value of the U.S. dollar were the reason for the all-time price highs.

But over the weekend Vietnam moved to curtail speculative buying of rice after consumers were panicked in­to buying up stocks.

State media quoted Prime Minister Nguyen Tan Dung on Sunday as insist­ing that supplies in Vietnam — the world’s second-largest rice exporter af­ter Thailand — were “completely ade­quate" for domestic consumption. He warned that any organizations and in­dividuals speculating in the commodi­ty would be “severely punished."

UN Secretary General Ban Ki-moon has called the heads of all the global body’s major agencies for a meeting this week in the Swiss capital, Bern, to discuss the food crisis. Other senior figures including World Bank Presi­dent Robert Zoellick and the director general of the World Trade Organiza­tion, Pascal Lamy, are also attending the closed gathering.

Wednesday, April 23, 2008

Rolling Stones Tunes Benefit May 3rd Club Freebird

Rolling Stones Tunes Benefit May 3rd Club Freebird

Tuesday, April 22, 2008

U R Seoul April 26th Canada Buddy II Bucheon, Seoul 11:00 PM

U R Seoul

April, 26 2008 at Canada Buddy II
Bucheon, Seoul

Monday, April 21, 2008

Oil Punches Above $117

Oil Punches Above $117

(FORBES/AP/Thomson Financial) LONDON - Oil continued its meteoric rise Monday, with the price of black gold spiking above $117 a barrel in Asian and European trading, marking a new record high.

The rise followed an attack on a Nigerian oil pipeline owned by Royal Dutch Shell on Friday and comments from an official of the Organization for Petroleum Exporting Countries (OPEC) over the weekend that suggested the cartel did not need to raise production because this would not affect oil prices.

Light, sweet crude for May delivery rose to $117.01 on Monday morning on the New York Mercantile Exchange, from $116.69 late Friday in New York.

On a day when leading European firms were trading lower, shares in oil and gas companies were up an average of 1.3% in Europe on Monday morning. Major gainers were Tullow Oil (other-otc: TUWLF - news - people ), up 2.7% in London, and Total (nyse: TOT - news - people ), up 1.2% in Paris.

Oil prices had already risen $1.83 on Friday, following an attack on a pipeline owned by Royal Dutch Shell (nyse: RDSA - news - people ) by the main militant group in southern Nigeria, the Movement for the Emancipation of the Niger Delta. Shell confirmed on Friday that explosives appeared to have caused a pipeline leak and a small quantity of production had been halted. Since early 2006, attacks by militant groups on Nigeria's oil infrastructure have slashed the country's production of petroleum by nearly a quarter.

Nigeria had 36.2 billion barrels of proven oil reserves as of January 2007, according to Oil and Gas Journal, making it Africa's largest producer of crude oil. The United States is Nigeria's main export partner, taking 42% of its crude exports in 2006.

The Nigerian government is planning to increase its proven reserves to 40 billion barrels by 2010. But the Movement for the Emancipation of the Niger Delta has promised further attacks on Nigeria's petroleum industry. Most of the country's reserves are found along the Niger River Delta, in southern Nigeria.

Meanwhile, comments from an OPEC official on Sunday are likely to keep oil prices buoyant in the coming week. OPEC's secretary-general, Abdullah el al-Badri, said that the cartel would raise production if price pressures on oil were caused by a shortage of supply but that, for the time being, he didn't see supply as the reason behind today's high prices. "Oil prices, there is a common understanding that has nothing to do with supply and demand," he said on the sidelines of an energy conference in Rome. "So there are many other factors other than OPEC."

Al-Badri is right, to an extent. Production from OPEC aside, concerns about supply and demand in the United States and the weak American dollar have also served to support oil prices in recent weeks. Crude prices rose nearly 6% last week.

Euro Rises to Near Record Versus Dollar on ECB Prices Concern

Euro Rises to Near Record Versus Dollar on ECB Prices Concern

By Lukanyo Mnyanda

April 21 (Bloomberg) -- The euro rose to within a cent of a record high against the dollar as European Central Bank officials reiterated their concern inflation is accelerating, making it more likely the ECB will keep interest rates at a six-year high.

Europe's single currency rose for the first time in three days after policy maker Klaus Liebscher said today record oil prices are starting to push up wages. The dollar also dropped as Bank of America Corp., the nation's second-largest, reported a 77 percent drop in first-quarter profit. The U.K. pound fell as the central bank unveiled a plan to swap government bonds for mortgage-backed securities to help revive lending between banks.

``ECB talk is still very much on the hawkish side and that's likely to support the euro,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, France's largest bank. ``There's still a possibility we could see a spike up to $1.60.''

The euro traded as high as $1.5921 and was at $1.5905 as of 8 a.m. in New York, from $1.5817 on April 18. The European common currency rose to $1.5983 on April 17, the highest level since its introduction in 1999. It advanced to 164.27 yen, its sixth consecutive day of gains, from 163.96. The dollar fell to 103.29 yen, from 103.67.

The pound dropped to $1.9856, from $1.9979 on April 18, as the details of the Bank of England's plan to help lower credit costs and revive interbank lending tallied with those in press reports. The bank said it will swap 50 billion pounds ($100 billion) of government bonds for mortgage-backed securities. Governor Mervyn King said the liquidity plan may exceed today's offer.

The plan will ``unfreeze the situation we've got at the moment,'' Chancellor of the Exchequer Alistair Darling told the British Broadcasting Corp. before the announcement, without specifying the size of the swap.

Aussie Dollar

The Australian dollar, also known as the Aussie, climbed as a government report showed producer prices rose by a record in the first quarter. The price increase backed the central bank's case for keeping interest rates at a 12-year high of 7.25 percent, compared with 2.25 percent in the U.S. Futures on the Chicago Board of Trade show 100 percent odds of the Federal Reserve cutting its target rate 25 basis points on April 30.

The Aussie rose to 94.22 U.S. cents, from 93.48 on April 18. It also traded at 97.32 yen, from 96.89.

Charlotte, North Carolina-based Bank of America said profit fell as job losses and falling house prices caused more people to miss payments on credit cards and home loans.

U.S. policy makers have cut their main interest 3 percentage points since September to prevent the economy from slipping into a recession amid widening financial company losses, while the ECB has kept borrowing costs unchanged since June.

Mounting inflation pressure in the euro area may even lead policy makers to consider a rate increase, the Wall Street Journal quoted ECB policy maker Erkki Liikanen as saying. His colleague, Axel Weber, who last week said policy makers will assess whether the benchmark rate of 4 percent is high enough to contain ``intolerably'' fast inflation, speaks in Munich today.

The euro zone's inflation rate rose to 3.6 percent in March, the highest in almost 16 years, a government report said on April 16.

``It's not going to be long before the euro breaks $1.60,'' said Derek Halpenny, London-based head of global currency research at Bank of Tokyo-Mitsubishi UFJ Ltd. ``It's clear the Fed has got more to do on the downside.''

To contact the reporter on this story: Lukanyo Mnyanda in London at

Tuesday, April 15, 2008

Crisis to affect markets for a decade: JP Morgan

Crisis to affect markets for a decade: JP Morgan By Richard Barley
Reuters Mon Apr 14, 10:48 AM ET

The financial crisis will affect market structure and pricing for at least a decade and lead to greater regulatory powers for central banks in areas at the centre of the turmoil, analysts at JP Morgan said.

"Market participants and regulators will focus intensely on controlling the risks that were at the core of the crisis," analysts led by Jan Loeys and Margaret Cannella wrote in a note on Monday.

These risks include lending standards in mortgages, leverage in the funding of securitized products, and the use of short-term financing for illiquid long-term assets outside of the regulated banking sector.

This will change behavior for market participants "for at least a decade," they wrote, in line with fallout from previous crises.

"We had the NASDAQ, we had LTCM, we had the various forms of emerging-market crises in the '90s, we had the real estate crisis of 20 years ago: In most of these the direct impact on the behavior of the parties involved lasted more than 10 years," Loeys told Reuters in a telephone interview. "It looks like it takes a generation for the memory to fade and for the same mistakes to be made again."

He noted, for instance, that global equity markets remained extremely cheap on all risk measures even five to six years after the end of the dotcom crash.

As a result of these changes in behavior, banks will become "bigger, safer and somewhat less profitable" as they will retain more assets on balance sheet, the analysts wrote.

Securitization will be reduced, and no longer rely on short-term funding structures that assumed liquidity as a given, although it will survive, they said.

Meanwhile, premia for term, liquidity and credit risk will be higher on average over the next cycle, they said.

JP Morgan (JPM.N) is regarded as having steered a relatively steady course through the credit crisis, turning a profit last year where others posted huge losses. It took centre stage in March as it announced a deal to buy Bear Stearns (BSC.N), averting a collapse that could have set off fresh turmoil in already battered financial markets.


The biggest change as a result of the crisis will be in regulation, Loeys said, with the focus on the off-balance sheet structures that the financial world has created.

"This looks like a recession caused by financial markets, which clearly policy makers are not going to take kindly to ... There will be a lot of follow-up," Loeys said.

"This was a run on the securitized world. The bank regulation and the structure of the supervisory system was created for a banking world of taking deposits and making loans. That world has moved towards capital markets, which were regulated from the point of view of consumer protection, but not from a systemic stability point of view," he said.

"Banks did not have the tools to try to protect the capital market from its own excesses."

As a result, central banks will be forced to take on more power as they are the entities extending support to the markets, Loeys said.

"Central banks' extension of liquidity to broker-dealers and (the) securitized world is permanent, and will be followed by regulatory control," the analysts wrote.

(Reporting by Richard Barley; Editing by Jason Neely)

S.Korea won at 2-wk low on stock deals, dividends

S.Korea won at 2-wk low on stock deals, dividends
Tue Apr 15, 2008 12:00am EDT

SEOUL, April 15 (Reuters) - The South Korean won touched its lowest in two weeks against the dollar on Tuesday on persisting foreign investor sales of local shares and pressured by dollar demand related to dividend payments to overseas shareholders. The local currency was quoted at 983.2/3.9 per dollar
as of 0336 GMT, compared with its previous closing bid of 979.3.

It fell as low as 983.6, the weakest since April 1. "The won is expected to fall further as the opening price seems to be a resistance level," said a local bank dealer. It started Tuesday's trading at 979.5. Foreign investors sold a net 180.7 billion won worth of shares in South Korea's main stock market after weak earnings
from a U.S. bank, with the benchmark KOSPI down 0.16 percent.

They have dumped a net 1.05 trillion won during the last three consecutive sessions. Some South Korean companies, such as S-Oil Corp,are scheduled to pay dividends this week with the refiner set to pay 286.4 billion won to foreign stake holders.

Currency market players are also monitoring South Korean foreign exchange authorities' stance after a finance ministry official said on Monday the government would maintain its current policy to boost domestic demand.

0336 GMT 0010 GMT prev close
Won 983.2/3.9 982.4/3.2 979.3
Yen/won 9.7001/079 9.7215/294 9.6836
KOSPI 1,743.95 1,743.98 1,746.71

(Reporting by Cheon Jong-woo and Lee Kyoung-ho; editing by
Keiron Henderson)

Oil prices rise to intraday record above $112 on US dollar, supply concerns

Oil prices rise to intraday record above $112 on US dollar, supply concerns

SINGAPORE (AP) — Oil prices rose to an intraday trading record above $112 a barrel Tuesday after the U.S. dollar fell further and crude supplies to the U.S. and elsewhere were disrupted.

The main driver of crude's rally was a decline in the greenback relative to the euro on Monday, analysts said. Crude oil's recent run above $100 a barrel has been largely attributed to a steadily depreciating U.S. currency because a weakening dollar prompts investors to seek a safe haven in hard commodities such as oil and gold.

"We've seen another swing down in the U.S. dollar so I think we saw short-term traders go back into oil as a hedge against the falling dollar," said Mark Pervan, senior commodity strategist at the ANZ Bank in Melbourne, Australia.

Light, sweet crude for May delivery rose to $112.48 a barrel on the New York Mercantile Exchange midmorning Tuesday in Singapore, surpassing the previous trading record of $112.21 set last week.

The May contract later retreated to $112.36 a barrel, up 60 cents from Monday's record close of $111.76 a barrel.

News Monday from U.S. bank Wachovia Corp. supported oil prices by making the dollar less attractive, said Victor Shum, an energy analyst with Purvin & Gertz in Singapore.

Wachovia, the fourth largest bank in the U.S., reported a hefty first-quarter loss and cut its dividend, and said it was forced to seek a $7 billion cash injection to make up for a poorly timed expansion of its mortgage business.

"This news highlights the strains in the banking sector and credit markets and that has led to more dollar selling, and so that tends to drive investors into oil and other commodities," Shum said.

He said the news from Wachovia as well as disappointing first-quarter results from General Electric Co. on Friday overshadowed concerns raised by the Group of Seven industrialized nations about the dollar's fall. The G-7 remarks were seen as a warning by some analysts that the group may be contemplating an intervention that could lessen crude's attraction as an inflation hedge and send it lower.

Crude was also supported by news of disruptions to oil supplies, though analysts said the disruptions were minor.

"They only look like temporary shutdowns but ... the combination of that and the fact that the dollar was off again was the key," Pervan said.

The Capline pipeline — the Royal Dutch Shell PLC conduit that carries 1.2 million barrels of crude each day from the U.S. Gulf Coast to the Midwest — was closed on the weekend but has since resumed operations at a slightly reduced capacity.

In Nigeria, Italian energy giant ENI reported a 5,000 barrel per day reduction in production at one of its facilities.

In other Nymex trading, heating oil futures added 1.41 cents to $3.217 a gallon while gasoline prices rose 0.82 cents to $2.83 a gallon. Natural gas futures gained 6.7 cents to $10.12 per 1,000 cubic feet.

In London, Brent crude futures rose 61 cents to $110.45 a barrel on the ICE Futures exchange.

Friday, April 11, 2008

Asian Crisis Offers Lessons as U.S. Skirts 1930s: William Pesek

Asian Crisis Offers Lessons as U.S. Skirts 1930s: William Pesek

Commentary by William Pesek

April 11 (Bloomberg) -- As the U.S. grapples with perhaps the worst financial crisis since the 1930s, many eyes are on Japan. Some analysts suggest that Japan's ``lost decade'' will offer a blueprint to officials in Washington.

More insights may be gleaned from South Korea.

Korea? What in the world could the 12th-biggest economy teach the biggest? Spend some time with Kim Yong Duk, a former deputy Korean finance minister, and it will become clear how Asia's experiences in the late 1990s could inform U.S. officials.

``A lot of the features are similar between the U.S.'s problems and the Asian crisis,'' Kim says. ``In Asia we had reckless lending, reckless investment and excess liquidity spilling over into the economy, bailouts and moral hazard risks. This time we see those same factors in the subprime crisis.''

Kim knows a thing or two about crisis. He recently stepped down from his job as chairman of Korea's Financial Supervisory Commission and was a top Finance Ministry official when the crisis began in 1997. He was nicknamed ``Mr. Won'' for his ability to move currency markets.

After Korea received a $57 billion bailout from the International Monetary Fund there was no time to waste. Weak companies and commercial banks were allowed to fail. Several merchant banks were closed and their employees were fired.

Korean Lessons

The steps created considerable uncertainty, yet Korea was the first of the Asian-crisis victims to recover and repay the IMF. While it took Latin America a decade to lure back capital after its meltdown in the 1980s, Korea was regaining investors within 18 months.

Things didn't always go smoothly. The credit bubbles that were confined to the corporate sector in the 1990s were shifted to households. That complicated the challenge of moving from a developing economy to a developed one. Still, Korea's experiences are more relevant to the U.S. than Treasury Secretary Henry Paulson may realize.

Comparing the $13 trillion U.S. economy to Korea's $970 billion one seems a reach. Its economy is smaller than Russia's, Brazil's or Spain's. The U.S. also isn't used to taking advice from anyone. You will notice the IMF isn't publicly criticizing the U.S. the way it did Asia a decade ago.

Yet for U.S. officials grasping for precedents, Korea is worth considering. Kim mentions four specific lessons: denial, investor confidence, low interest rates and the risk of so-called moral hazard that encourages reckless behavior.

In Denial

The U.S. is doing most of what it told Asia not to. It counseled higher interest rates, stronger currencies, fiscal belt-tightening, avoiding fresh asset bubbles and limits on bailing out investors. These days, the U.S. is reminding the world it's better at giving economic advice than taking it.

What concerns Kim is that by attempting a short-term fix with lower rates, the U.S. is in denial. The Bush administration has been reluctant to act boldly or provide guidelines to restore calm to Wall Street, Kim says.

``The steps so far -- like relying on more liquidity -- aren't enough to resolve the current-market turmoil,'' Kim says.

That lack of leadership is weighing on investor confidence. As Korea learned a decade ago, Kim says, investment banks need to disclose their true exposure to credit markets, write down losses immediately and shore up capital bases as fast as possible. If public money is going to be used to stabilize things, it's best to do it sooner rather than later.

``The worst thing to markets is uncertainty,'' Kim says. ``If the news is good or bad, it doesn't matter -- just get it out.''

Soros's Warnings

When I asked George Soros about all this yesterday, the billionaire investor agreed that President George W. Bush's all- regulations-are-bad mindset -- which Soros calls ``market fundamentalism'' -- may prolong the crisis. Soros's basic take on things: The U.S. isn't responding enough.

History will show whether saving Bear Stearns Cos. from collapse was the right thing to do. Kim says the U.S. needs to be careful not to make a habit of bailing out Wall Street and rewarding reckless risk-takers. Equally important are regulatory changes that will prevent similar crises down the road.

Wall Street's woes offer an intriguing comparison with Korea's family owned conglomerates, or ``chaebol.'' Much analysis has explored the ``shadow banking system'' that has emerged in recent years to subvert government regulations and allow banks to make highly leveraged bets. Many chief executive officers didn't even know how vulnerable their institutions were.

Seoul Searching

As Wall Street's speculation went wrong, losses spilled over onto the laps of government officials and average consumers. That's a lot like what happened in Korea in the mid-1990s. Are investment banks now the U.S.'s answer to the chaebol?

Korea isn't a role model for change. It's too closed to foreign investment, needs more entrepreneurship and the chaebol are still too dominant and slow the nation's efforts to break with the corruption of the past. That doesn't mean Korea's crisis playbook isn't worth a look. Rather than Tokyo, policy makers might want to look to Seoul.

``The priority is to restore confidence and fast,'' Kim says. ``Otherwise problems balloon and hurt the real economy.''

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at

China Becomes World's Biggest Gold Producer

China Becomes World's Biggest Gold Producer
(Industry Week – Agence France-Presse)

Overtaking South Africa which held top spot for 100 years, China became the world's biggest producer of gold last year, the independent precious metals consultancy GFMS said on April 9. China posted a 33 ton increase in gold output.

GFMS chairman Philip Klapwijk said China was expected to consolidate its lead in 2008, "primarily as a result of further declines expected in South Africa due to its ongoing power supply issues."

"Africa saw the heaviest regional drop at 29 tons – chiefly due to South Africa – while output in North America and Latin America also fell ... In contrast, Asia saw gains, centered on Indonesia and China, with the latter becoming the world's leading gold producer in 2007," it added.

Meanwhile the price of gold was on course to reach a record high of $1,100 an ounce in 2008 amid global financial turbulence, GFMS added in its latest annual Gold Survey.

Gold struck an all-time peak of $1,032.70 an ounce on March 17, four days after the yellow metal breached $1,000 for the first time.

Gold prices have won strong support this year from supply problems in South Africa. Stoppages by miners protesting unsafe working conditions and ongoing power cuts in South Africa have hampered supplies.

"Global mine production fell by a slight 0.4% in 2007 to an eleven year low," GFMS said.

Canada Export Centre to Host Korean Buying Mission April 17, 2008

Canada Export Centre to Host Korean Buying Mission April 17, 2008

Canada Export Centre is hosting a Korean Buying Mission on behalf of the Korean Importers Association (KOIMA) on Thursday, April 17th, 2008 in Vancouver.

The Korea Importers Association (KOIMA), with over 33 years of experience, is Korea's only private organization which deals primarily with bringing imports into Korea. KOIMA boasts 6,804 declared member firms who are highly qualified specialists in their respective fields. Taken together, KOIMA members handle slightly more than 83% of Korea's total import volume and represent over 54,000 overseas suppliers and manufacturers from over 100 countries. One of KOIMA's major goals is to promote balanced world trade.

For more information, see

India Key Market for Australian Food Companies

India Key Market for Australian Food Companies
(Economic Times, India)

The emergence of India as a major economy has led many food companies from Australia to eye the booming Indian market for cheese, wines, fruit, vegetables, meat, beef and marine foods.

India is a key market for Australian wheat and apples and efforts are now on at various levels to ensure more shelf space for Australian items in Indian supermarkets.

In the high-profile wine segment, companies like De Bortoli Wines, Domaine Chandon and Yering Station are working with industry bodies, local governments and the authorities in Canberra to boost exports to countries like India, seeking better market access through lower tariffs and wide distribution facilities.

In the case of cheese, companies like Victoria-based Jindi Cheese are working with Dairy Australia and regional governments to boost market access in Asia. Promising premium quality, these companies are seeking to bank on Australia’s image as a producer of food items free of pesticides and fertiliser residues, diseases and pollution.

“We in Australia produce some of the best wines in the world,” said Stephen Webber, chief winemaker and manager at De Bortoli Wines in the picturesque Yarra Valley. The unpolluted countryside of Australia and good weather most parts of the year help in making quality wines.

De Bortoli’s focus is on delicious wines that come with an affordable price-tag, he added. Most other wine companies in Australia are also looking at this segment, even as they continue to produce small qualities of super premium stuff, and the Indian market is one of the key priorities along with Europe, Japan and south-east Asian countries.

“India is of great interest. I would like to travel to India and bring my family along as well,” said Stuart Nettlefold, executive officer of Wine Industry Tasmania, an organisation that promotes Tasmanian wines.

Australia has emerged as a major source of quality wines, said Gorden Gebbie, commercial director at Rathbone Wine Group. Australian produce can compete aggressively in terms of quality, he said, while emphasising on emerging markets since consumption Down Under is less than the country’s production.

Cameron Murphy, business development manager in charge of Asia Pacific at Victoria-based winery of Moet & Chandon, also feels that Asian markets like India hold a lot of promise though Europe, the US and Japan are major consumers of Australian wine now.

The story is no difference in the case of cheese. Michael Dwyer, national sales manager at Jindi Cheese, is looking for a robust marketing and distribution link in India while Dairy Australia is emphasising on quality of Australian products to expand markets in Asia.

Michael Doherty, managing director of Aurora Gourmet Produce, is exporting grain-fed lamb of consistent quality to Russia and Asian countries like Malaysia. Large markets like India will be on the radar for premium products sought after by restaurants for their consistent quality, he said.

RWS International which produces premium salmon is also looking at overseas expansion while Meat & Livestock Australia is promoting meat products in various markets.

India already imports table grapes, citrus fruits, peaches, plums and cherries from Australia. In the case of apples, India is the top market for Australian produce. The Indian government was also importing wheat from Australia till drought hit production in the country.

Government officials in Australia are hopeful that production would increase sharply due to good rains during recent months and consumers like India will return to buy grain produced there. The Australian government and trade-promotion agencies are also pushing for export of vegetables and premium products like extra virgin olive oil.

Farmers in various parts of the country, including the outskirts of Canberra, are growing olives and the oil they produce now competes with premium brands from Europe. India is considered a potential market for olive oil in view of its health benefits.

India to Lower Trade Barriers for Least-Developed Countries

India to Lower Trade Barriers for Least-Developed Countries
(International Herald Tribune)

The Indian prime minister pledged easier access for exports from the world's poorest countries and called for fairer global economic and political representation as he opened a summit with African leaders Tuesday.

Hosting leaders from more than a dozen African nations as it tries to emerge from China's shadow, India is expected to offer its skills in low-cost services and manufacturing in return for access to natural resources and food supplies.

But Prime Minister Manmohan Singh was clearly also eyeing political benefits, at a time when India is pursuing a seat on any expanded United Nations Security Council to match its growing economic clout.

"No one understands better than India and Africa the imperative need for global institutions to reflect current realities and to build a more equitable global economy and polity," Singh told the assembled heads of state and ministers, among them President Thabo Mbeki of South Africa.

Singh said that products to be covered under the new export regime would include cotton, cocoa, aluminum and cooper ores, garments and industrial diamonds.

"Under this scheme, India shall unilaterally provide preferential market access for exports from all the 50 least developed countries," Singh said at the inauguration of the first India-Africa summit, adding that 34 of them were in Africa. …

Read the complete article at

China Signs Free Trade Deal with New Zealand; First with Developed Country

China Signs Free Trade Deal with New Zealand; First with Developed Country
(The Canadian Press)

China and New Zealand signed a sweeping free trade agreement Monday, China's first such pact with a developed country. The deal, signed by Commerce Minister Chen Deming and his New Zealand counterpart Phil Goff at Beijing's Great Hall of the People, will give New Zealand access to one of the world's fastest-growing economies.

"This is an historic day for China-New Zealand relations," said Premier Wen Jiabao in remarks ahead of the signing. "The agreement not only means we met goals we set two years ago for our negotiations, but it also makes New Zealand the first developed country to reach a free trade agreement with China."

When the deal goes into effect October 1, New Zealand exports to China that now face tariffs of five per cent or less will be cut to zero. There will be a staggered time frame for cuts on New Zealand exports that face larger tariffs, with 31% of New Zealand's exports to China tariff free by 2013.

New Zealand Prime Minister Helen Clark, present at the signing, was one of the first Western leaders to visit Beijing since anti-government rioting broke out last month in Tibet. "They see it as we do, a very important step in relations between our countries," Clark told reporters. "But they're also cognizant of the wide international importance of the FTA."

New Zealand has a population of 4.1 million people, miniscule compared to China's 1.3 billion.

The deal came after 15 rounds of negotiations over three years, Clark said, adding that she expects other countries will follow New Zealand. "Obviously Australia is in negotiations with China and would like to be where we are today. I think there is interest from the European Union and I think there will be broader interest at the WTO," she said.

Two-way trade between China and New Zealand currently is worth more than US$6.1 billion (3.9 billion euros) a year, with Chinese exports making up about 75%, according to Statistics New Zealand.

Tariffs on dairy products, a primary New Zealand export, will be phased out over a longer time frame, taking until 2019 when almost all of the country's current exports to China will be tariff free. "The FTA provides for elimination over time of tariffs on 96% of New Zealand's current exports to China," a New Zealand government statement said.

Beyond trade in goods, the agreement covers the services sector, from insurance and banking to education and labour supply.

The agreement also calls for up to 1,800 Chinese to enter New Zealand each year to work in areas such as traditional Chinese medicine, language teaching and food service.

New Zealand said it hopes the agreement will lead to a long-term trade partnership. "The upfront commitments on goods, services and investment and the mechanisms which provide for further development of the agreement over time should help keep New Zealand at the fore front of the evolution of trade and investment relationships with China," the government statement said.

The pact still has to be formally ratified by New Zealand's Parliament.

U R Seoul April 12th Club FF

UR Seoul are back again playing at Hongdae's premier club Funky Funky, usual business. Get in there early for free drinks 11-12!

Wednesday, April 09, 2008

US mortgage crisis to cost 945 bln dlrs worldwide: IMF

US mortgage crisis to cost 945 bln dlrs worldwide: IMF

WASHINGTON (AFP) — The International Monetary Fund said Tuesday the worldwide losses stemming from the US subprime mortgage crisis could hit 945 billion dollars as the impact spreads in the global economy.

The IMF, in a particularly stark report, said that falling US housing prices and rising delinquencies on the residential mortgage market could lead to losses of 565 billion dollars.

That, combined with other categories of loans originated and securities issued in the United States related to commercial real estate, the consumer credit market and corporations "increases aggregate potential losses to about 945 billion dollars," it said.

"The crisis is spreading beyond the US subprime market -- namely to the prime residential and commercial real estate markets, consumer credit, and the low- to high-grade corporate credit markets," the IMF said in releasing its semiannual Global Financial Stability Report.

While the US remains the epicenter, "financial institutions in other countries have also been affected, reflecting the same overly benign global financial conditions and to varying degrees -- weaknesses in risk management systems and prudential supervision."

It was the first time the multilateral institution has made an official estimate of the global losses suffered by banks and other financial institutions in the credit squeeze that began eight months ago in the United States, amid rising defaults on subprime, or high-risk, home loans.

The staggering 945 billion dollar estimate of losses, made in March, represents roughly 142 dollars per person worldwide and represents four percent of the 23.21-trillion-dollar credit market.

The IMF said that global banks likely will shoulder about half of the losses -- at 440 billion to 510 billion dollars.

Last month, ratings agency Standard & Poor's estimated global banking firms would likely write off 285 billion dollars in various securities linked to US subprime real estate, with more than half the losses already recognized. Some analysts have put the figure higher for the subprime market and related losses.

"Leading indicators point to a tightening of credit conditions across many economic activities," Jaime Caruana, head of the IMF's Monetary and Capital Markets Department, said at a news conference.

Caruana said the losses "suggest a potentially large impact on US economic growth," and that Europe may also see tightening conditions and slowing credit growth under the global financial strain.

The IMF releases its biannual World Economic Outlook on Wednesday and already has said it would slash a half percentage point off its forecast of 2008 global economic growth, to 3.7 percent.

The Global Financial Stability Report cautioned that loss estimates were imperfect and could go higher.

The unusually precise and harsh report comes ahead of the IMF and the World Bank spring meetings Saturday and Sunday in Washington.

The IMF, whose core mission is to promote global financial stability, said there was "a collective failure to appreciate the extent of leverage taken on by a wide range of institutions -- banks, monoline insurers, government-sponsored entities, hedge funds -- and the associated risks of a disorderly unwinding.

"It is now clear that the current turmoil is more than simply a liquidity event, reflecting deep-seated balance sheet fragilities and weak capital bases, which means its effects are likely to be broader, deeper, and more protracted," it said.

The report criticizes the "excessive risk-taking" and "weak underwriting" undertaken by under-capitalized institutions.

The IMF recommended a range of measures to address issues raised by the crisis, including better coordination between central banks, improved transparency from financial institutions and reform of ratings systems.

"Shoring up the confidence in financial institutions should be a priority," it said.

Think tank revises down growth forecast for Korea

Think tank revises down growth forecast for Korea
Date: April 06, 2008 (

A private think tank Sunday (Apr. 6) revised down its 2008 growth forecast for the Korean economy, citing rising oil and commodity prices and widespread concerns over a slowdown in global economy.

The Korea Economic Research Institute (KERI) forecast that the Korean economy will expand 4.5 percent this year, compared with its December projection of 5.1 percent.

The latest prediction is in line with those of many other private think tanks, which put their growth projections in the 5-percent range. It is, however, far below the government’s target of some 6 percent growth. Korea’s economy grew 5 percent last year.

The institute cited mounting concerns over global economic slowdown, rising crude oil and commodity prices as reasons for its decision to downgrade the growth target for Asia’s fourth-largest economy.

The institute also forecast that the nation’s consumer prices will rise 4.5 percent this year, up from its earlier projection of 3.4 percent on hikes in raw material prices and a weak local currency against the U.S. dollar.

According to government statistics, Korea’s consumer prices rose 3.9 percent in March, breaching the central bank’s target range of 2.5 percent to 3.5 percent for a fourth consecutive month. The Finance Ministry currently aims to keep the rate at 3.3 percent for this year.

Political apathy leads to record-low voter turnout

Political apathy leads to record-low voter turnout

By Shin Hae-in
SEOUL, April 9 (Yonhap) -- Voter apathy and a lack of policy debate between rival parties appear to have caused a record-low turnout for Wednesday's parliamentary elections, political pundits said.

Voter turnout for South Korea's quadrennial elections hit a record-low 46 percent, according to the election watchdog's early estimate, down 14.6 percentage points from the 2004 elections and 11.2 percent from the elections in 2000.

President Lee Myung-bak's conservative party was forecast to have secured a solid majority of over 160 seats in the 299-member National Assembly, according to exit polls, benefiting from lackluster voter participation.

The liberal main opposition party, meanwhile, saw a crushing defeat, gaining an estimated 80 seats, well below their target of 100.

A lower turnout generally benefits the conservative party, while liberal parties benefit from a higher turnout resulting from participation of largely progressive younger voters.

With a series of events leading up to the elections -- such as factional feuding during parties' nomination of their parliamentary candidates -- leaving overall voters with little motivation to vote, voters in their 20s and 30s appear to be the most susceptible to political apathy, experts said.

"The main cause of voter apathy is the overall public distrust of parties," said Kim Won-kyun of polling group Research and Research. "Voters, especially those in their 20s to early 30s, are running out of reasons to take the trouble of going to polling stations when they are not even interested in which party wins."
Indeed, voters complained of an absence of proper policy showdowns between different parties during the official campaign period.

"As far as I can see, there was basically no difference in policies between the liberal and the conservative candidates," said 24-year-old college student Yoon Mi-joo. "Candidates lacked time to properly advertise themselves and differentiate pledges from their rivals as parties took so much time in nominating their candidates."
"If I could cast a blank ballot, I would've gladly gone to the polling station," said internet user jacky2002 on a local web portal. "I thought it would be better to stay home rather than vote for some candidate I don't even know, let alone like."
Experts point out the need of giving voters enough decision-making time, via a sufficient campaigning spell for candidates and parties.

"A law should be enacted obliging parties to finish their nominations at least three months ahead of elections, to give voters enough time to get to know the parties and their candidates," Prof. Kim Hyung-joo of Myungji University said.

Some experts attributed the low turnout to the main opposition United Democratic Party's failure to undermine the overwhelming popularity of the ruling Grand National Party, achieved on the back of President Lee's landslide win in last year's presidential election.

"The main opposition party failed to put up a good fight with the ruling party," said political analyst Kim Myung-min. "The lack of disputable issues and policy rivalry made the election an obvious game, keeping voters away to the benefit of the ruling party."
In an unprecedented move to lure more voters to cast their ballots, the National Election Commission had even offered discounts to those who vote on the entry fees of 1,400 national cultural facilities.

South Korea is the first country to offer an incentive to voters, with about 20 countries instead imposing penalties on those who do not vote.

"I don't think the policy to offer incentives will be that effective," said political analyst Yoon Kyung-joo. "The election watchdog should seriously consider imposing penalties instead, as casting a ballot is a citizen's obligation."
Some experts attributed the trend to the country's changing political environment, pointing out that voter apathy is common in developed countries.

Voter turnout has been steadily declining over the years, from 84.6 percent in the 1985 parliamentary elections, to 75.8 percent, 71.9 percent and 63.9 percent in most recent polls.

Friday, April 04, 2008

UR Seoul April 19th Canada Buddy II

UR Seoul April 19th Canada Buddy II 11:00 PM

B.C. best placed to miss U.S. economic downturn, says bank

B.C. best placed to miss U.S. economic downturn, says bank
The Canadian Press

Canada's western-most province is better positioned than any other to withstand the economic free-fall in the United States, according to the Royal Bank's provincial economic outlook, released Thursday.

The bank's analysts say the province's Olympic boom should drive economic growth of 2.3 per cent this year and 2.9 per cent in 2009.

Relative to other provinces, B.C. has the lowest exposure to U.S. demand and the highest exposure to sales from Asian markets, but RBC chief economist Craig Wright cautioned that while firm links to Asian markets offer some protection from the U.S. downturn, they won't provide immunity.

The slump in B.C.'s forestry sector is a major concern because lumber prices are down 40 per cent compared to two years ago, the U.S. housing market remains dormant and the high Canadian dollar ties the hands of local producers, he said.

However, RBC also predicts an end to the at-par loonie by the end of this year. Bank economists believe the dollar will fall to 90 cents U.S. by the end of this year and will drop to 87 cents by the end of 2009.

Club Metro in Ilsan

Thursday, April 03, 2008

Ben Bernanke's take on the U.S. economy: risk, uncertainty

Ben Bernanke's take on the U.S. economy: risk, uncertainty

The U.S. economy is in the middle of six months of churning and readjustment that add up to no growth and maybe even shrinkage.

So said Ben Bernanke, the nation's central banker, to Congress on Wednesday. What the Federal Reserve chairman described is a cyclical episode only, not a head-turning crisis. Six months is not long, particularly if you are halfway through it. Still, he said, uncertainty is high, "and the risks remain on the downside."

Probably the nation is in a recession — and we use that word even though it has not cooled enough for the economists to grasp it. The downturn began in housing finance and cuts deepest there.

Nationwide, the building of new houses is down more than 60 percent in two years, and will fall more, Bernanke said, because there remains a glut of houses for sale. But people will buy them. Money is still available for solid mortgages, if not for wobbly stuff.

It is the same with corporations: Solid ones can borrow, but there is little demand for junk. Borrowers have to show they can pay, and fewer players in the economy can borrow solely on their good name without putting up collateral.

All this is the classic stuff of recessions. And yet, there are other signs of recession not happening, or not strongly. Interest rates are low. The stock market is down, but not hugely. American consumers have cut back, but not drastically, and foreign consumers (thanks to the cheap dollar) remain strong. American manufacturers are mostly OK,so far.

People ask: Is this all? If it is, the presidential candidates can forget the promises of economic salvation. The recession will be over before they get there. If not, the story changes, and there will be more demand for rescue by Congress and the new administration.

Currency Issues Hitting India, Thailand Sourcing Operations

Currency Issues Hitting India, Thailand Sourcing Operations
(American Shipper – Eric Johnson)

An executive with apparel manufacturer Jockey said Wednesday that currency fluctuations have severely hampered diversified sourcing operations for the Kenosha, Wis.-based company.

Speaking at the Prime Source Forum in Hong Kong, Karen Grabus Smith, vice president of eastern hemisphere sourcing for Jockey, said that sourcing in India, Thailand and Colombia has been made particularly complex by the falling dollar and strengthening currency in those nations. “Currency fluctuation is a huge issue all over the world now,” she said.

Smith also said the currency issue has her and her staff questioning where money can be freed up in the supply chain to make these countries where appreciation has taken place still viable sourcing spots. “We’re looking at how far in our supply chain we go back to negotiate on price,” she said. “Do we go back to the yarn? To the fabric? It’s getting us and our partners to an equal playing field, meaning we both have to make money.”

Meanwhile, a sourcing executive with another apparel brand told American Shipper that currency problems were so bad in India the past year that it had to significantly scale back its expected growth in the country. Exporters have been hard hit in India and Thailand, with many put out of business and others needing government export subsidies to merely survive.

The cost problems also extend to China, speakers at the forum said. Factories have been regularly closing in Guangdong province (home to manufacturing powerhouses Guangzhou and Dongguan) as labor, power and real estate costs have escalated. Exacerbating the problem are the lowering of export rebates by the Chinese government, rebates that were intended two decades ago to stoke the country’s export capabilities.

Canada Needs Gazelles If It's Going to Survive

Canada Needs Gazelles If It's Going to Survive
(Embassy – David Crane)

Some years ago an American researcher interested in the role of entrepreneurs divided the business world into his own version of the animal kingdom.

There are the elephants, David Birch said. These are the big businesses, the corporate giants. They have much strength, but may often lack the agility to quickly adjust to change or generate big new ideas that challenge their existing activities. The best managed can be innovators, but elephants can also disappear.

At the other end are mice. These are small companies that, once they have been launched, usually cease to grow. They can include pizza parlours, neighbourhood dry cleaners, shops of all kinds, restaurants, and trades such as plumbers and electricians. They obviously are important but do not drive innovation and growth.

What a dynamic economy really needed, Birch said, was gazelles – companies that start small but, fuelled by an innovative idea, go on to become new world-beaters.

Research in Motion, with its BlackBerry, is a good example.

Started as a tiny company in 1984, today it has some 7,500 employees and annual revenues of more than $3 billion.

Gazelles are the companies that create new jobs and activity. They are the positive side of what Joseph Schumpeter referred to as "creative destruction" – the need for an economy to generate new ideas and activities to replace old ones.

So an important economic strategy for Canada should be to make the country a fertile breeding ground for gazelles.

There are many factors that help encourage gazelles, starting with a country's culture as well as its openness to competition, a lack of red tape to launch and grow businesses, good schools, colleges and universities, a serious commitment to research and development, government support programs to share risk, and a tax system that helps gazelles grow.

But a key factor is the availability of money to finance risk.

Active angel investors and a healthy venture capital industry typically provide this money.

And this is a significant weakness in Canada. It means many of our promising new enterprises are likely to be gobbled up by multinationals looking for new ideas.

How to change this is one of the challenges facing the Competition Policy Review Panel, chaired by Red Wilson.

In a submission to the panel, the Canadian Venture Capital and Private Equity Association warned that Canada's private capital industry is seriously short of capital to support innovation, adding that "we need strong Canadian investors if we want to build strong Canadian companies."

Banks, insurance companies and pension funds are not providing this kind of risk capital. Last year, 41% of venture capital invested in Canada – and 53% in Ontario – came from the U.S., making our potential gazelles increasingly dependent on foreign capital.

The danger is that "company leadership and new business growth frequently migrate to their sources of capital" so that the activities of potential Canadian gazelles could end up being moved to the U.S. or sold to U.S. enterprises.

In its submission, BIOTECanada, which represents Canada's biotechnology industry, warned that "an increasingly large gap has emerged between funds needed to commercialize products and the actual investment provided."

Unless the funding system can be improved we "risk losing the biotechnology industry to competing jurisdictions."

Likewise, the Information Technology Association of Canada warned that Canada is heavily focused on small business start-ups, but much less so on "maximizing the opportunity of our domestic firms to grow into global champions."

It also added that "firms that grow from small to mid to large size contribute most to growth in employment, revenues, R&D and innovation."

If we want Canada to become a fertile ground to grow healthy gazelles and create good jobs, then that must be the focus of our government policies – with financial innovation to ensure our potential gazelles do not starve from a lack of money.

China Sees the World Differently

China Sees the World Differently
(International Herald Tribune – Alan Wheatley Reuters)

Did you know that the slide in the dollar and the surge in oil to over $100 a barrel are part of a deliberate U.S. strategy to reduce the purchasing power of China's foreign exchange reserves? That assertion was made last month at a public forum by Li Lianzhong, who heads the economic research unit of Communist Party Central Committee.

After all, no one has a monopoly on conspiracy theories.

But Li's views illustrate that despite China's integration into the global economy, a gulf in comprehension sometimes separates Beijing and the West. Indeed, mutual recriminations seem to be on the rise: What is China up to in Africa? What are the real motives of Beijing's sovereign wealth fund? Western critics want to know.

Why is Washington blocking investments by Chinese companies? Why are Western news outlets distorting coverage of Tibet? Ask Chinese skeptics.

The danger for markets is that such antagonism could erode the trust underpinning economic links, especially when slower growth is putting Western politicians on the defensive and the Olympic Games are heightening Chinese sensitivities.

"Both sides will need to learn better how to deal with each other," Jonathan Woetzel, a senior partner in McKinsey's Shanghai office, said in an interview. "There are plenty of examples on both sides of misunderstandings and inability to comprehend how the society works, which then leads to real problems when it comes to the investment process."

As Woetzel put it, Beijing's relations with the West can still be summed up at times with the Chinese saying "same bed, different dreams."

This situation could describe a visit to Beijing last week by Ángel Gurría, secretary general of the Organization for Economic Cooperation and Development, who urged closer cooperation among the 30 industrial democracies that form its membership.

Gurría said his purpose was to make the OECD more relevant and to "create a level of comfort" on both sides. The OECD is in theory well suited to ironing out wrinkles in China's relations with the West. The organization, which is based in Paris, does not lend money, so it has no conditions to impose. Rather, its members share information and establish best practice through peer reviews in what Gurría calls a "soft law approach." In short, member governments can take or leave the organization's policy advice. Perfect for Beijing.

The problem is that while China participates in a range of OECD activities, it is not a member. And Gurría, though suggesting that China might join other emerging economies in the OECD's Development Center, said Beijing had expressed no particular wish for full membership. "This is too important to be urgent, so we should let it take its own pace," he said when asked about membership prospects for China.

The U.S. Treasury secretary, Henry Paulson Jr., also says building trust with China is a marathon, not a sprint. …

Tuesday, April 01, 2008

Seoul to Lift Key Import Tariffs to Stabilize Prices

Seoul to Lift Key Import Tariffs to Stabilize Prices
(Yonhap News – Yoo Cheong-mo)

South Korea's government Thursday announced an emergency decision to lift import tariffs on 70 price-sensitive products, including wheat, corn, syrup, soybean cake and coffee cream, effective April 1, as part of its effort to stabilize local consumer prices amid soaring international prices of raw materials.

The government also unveiled a plan to freeze almost all public utility rates, including public transportation fees, and tap water charges, through consultations with provincial governments and public corporations to help tame inflation.

In addition, the government decided to increase the weekly output of aluminum, copper, nickel and other nonferrous metals by about 40% to 4,800 tons.

The package of emergency inflation-taming measures was announced after President Lee Myung-bak presided over an early morning meeting of economy-related ministers at the presidential office Cheong Wa Dae.

"Lee and economic ministers expressed concern over soaring global prices of oil and other raw materials during the two-hour meeting and agreed to file a list of 50 major products for intensive inflationary oversight," said presidential spokesperson Lee Dong-kwan.

"As part of the anti-inflationary steps, the government will lower or eliminate import quota tariffs for a total of 82 items in the categories of grains, raw materials and agricultural and petrochemical goods. Notably, the government will eliminate import tariffs on 90%, or 70, of the concerned products, effective April 1," he said.

He explained the 50 intensively monitored products will be daily necessities mostly consumed by households in the bottom 40% income bracket.

In this regard, a high-ranking government official told reporters that rice, pork, cabbage, radish, garlic, egg, milk and ramyon will be among the 50 products to be heavily monitored for price increases.

The official noted that the government will no longer be able to unilaterally push for price controls and thus will pursue market-friendly measures through the diversification of import sources and utilization of alternative goods.

Notably, President Lee has steadily paid strong attention to the rising prices of ramyon, a cheap substitute food that is particularly popular among low-income households.

"The freeze of public utility rates will be enforced through the rationalizing of public corporation management and fiscal assistance to provincial governments. Law enforcement authorities will also toughen the crackdown on price-rigging," said presidential spokesperson Lee.

The spokesperson said other anti-inflationary measures would include an overhaul of distribution channels of agricultural and livestock products and the provision of low-interest loans to low income households incapable of coping with rising housing rents.

Meanwhile, President Lee also expressed concern over South Korea's swelling tourism sector deficit, which has reached US$15 billion annually, including $5 billion won spent to educate Korean students abroad, according to the spokesperson.

"The president instructed his Cabinet to devise policy measures to divert Korean travelers' overseas consumption into domestic consumption," said the spokesperson.

Prices of 52 Daily Necessities Under Control

Prices of 52 Daily Necessities Under Control

By Yoon Ja-young
Staff Reporter

Prices of ramyeon, gasoline and soju, and cram school tuition will be monitored and controlled by the government. Tariffs on oil products, including gasoline and diesel, will be cut to 1 percent from the current 3 percent.

The government also plans to allow huge retail outlets to operate gas stations under their own brands. The most crucial part of the government's measure is to stabilize the oil prices, which the Ministry of Strategy and Finance believes could be achieved by improving distribution channels.

The ministry said it has picked 52 daily necessities whose prices will be monitored and controlled to stabilize the livelihood of the working class amid global inflation pressure. The measure comes after President Lee Myung-bak's remarks that the prices of daily necessities should be controlled.

Included in the price control list are bus fares, telecommunication and apartment utility fees.

The government said the selection was based on the analysis of shopping and spending habits of households making 2.47 million won or less on average each month. They often buy such items, spending a considerable portion of their income. Consumer groups also gave advice in selecting the items.

It first chose 26 items that had increased in price by over 5 percent over the last year. Included in the list are wheat, ramyeon, Korean cabbage, radish, tofu, garlic, red pepper paste, vegetable oil, eggs, apples, snacks, detergent, gasoline, subway and bus fares, cram school tuition, shampoo and daycare center fees, among others.

Items including rice, soju and garbage bags, which saw a 2.5 percent price hike, and 16 items that had prices rise by less than 2.5 percent were also included in the price monitoring list. The National Statistical Office will monitor price changes of these 52 items every 10 days, and they will be released with consumer prices statistics every month, the ministry said.

``The anti-inflation policy of the new administration is different from direct price control of the 1970s or 1980s. Direct price regulation on the market is impossible and we don't plan to do it,'' the ministry said.

Instead, the government plans to promote competition in the market to stabilize prices. It also plans to freeze 17 public utility costs, including those for electricity and telephones.

The government also announced that 69 items including wheat and corn that will be tariff-free.

The ministry estimated the measures will cut consumer prices by 0.1 percent and import prices by 0.7 percent.

S. Korea to Cut Tariffs on Oil Imports

S. Korea to Cut Tariffs on Oil Imports
(The Korea Times – Yonhap News)

South Korea's Finance Ministry said Tuesday that it will cut import tariffs on four oil-related products including gasoline as part of its efforts to ease mounting inflationary pressure on consumers and companies.

The Ministry of Strategy and Finance said it will reduce import tariffs for gasoline, kerosene, diesel and heavy oil products from the current 3% to 1%, starting April 1.

The tariff reduction will likely induce more market competition here, thereby pressuring four local operators, which dominate the nation's refinery industry, to cut oil product prices in the long term, a ministry official said.

The move is part of the government's intensifying efforts to tame inflation amid rising prices of crude oil and other commodities.

South Korea's consumer inflation rate reached 3.6% in February, breaching the central bank's target range of 2.5% to 3.5% for the third month in a row. The Lee Myung-bak government, which was inaugurated last month, has said that price stability is one of its most important tasks.

Meanwhile, the ministry said it will also reduce import tariffs on a total of 82 price-sensitive items including flour and corn in a bid to ease rising cost burdens for both consumers and companies.

Italy Defends Mozzarella, Japan Blocks Imports

Italy Defends Mozzarella, Japan Blocks Imports
(Reuters – Silvia Aloisi and Miho Yoshikawa)

Italy said on Wednesday only a small number of buffalo mozzarella farms had been found to be using milk tainted with cancer-causing dioxin, seeking to avert a food scare over one of its most famous culinary treats.

Japan and South Korea have suspended imports of the cheese while the European Union has asked Italy for safety assurances after reports some of the cheese was made with contaminated milk. Brussels told Rome to respond by Wednesday at the latest.

"Checks have been made on 132 producers and only in nine cases traces of dioxin have been found," Foreign Minister Massimo D'Alema told reporters, saying international alarm over the mozzarella was "totally exaggerated and unjustified".

A Japanese health ministry official said Japan had suspended imports on Sunday and was waiting for Italy to provide details. South Korea, which also halted imports at the weekend, said it would conduct its own tests to see if there was dioxin contamination.

Police near Naples were investigating whether feed given to buffalo herds, which produce the best milk for mozzarella, was tainted, possibly by gangsters involved in illegal waste disposal.

However, health officials said the presence of dioxin appeared to be linked to a garbage crisis earlier this year in Naples and the surrounding Campania region, a top producer of the cheese.

With landfills and dumping sites in the area full, locals burned piles of garbage in the streets and in open fields. Health officials say industrial waste was also set ablaze, spreading fumes that in some cases contained dioxin. …

Read the complete article at

Don't Rush Signing of South Korea Free Trade Agreement: House Committee

Don't Rush Signing of South Korea Free Trade Agreement: House Committee
(Embassy – Jeff Davis and Lee Berthiaume)

South Korean and Canadian trade negotiators are in Ottawa this week for the first time since the Asian nation elected a new president to try to hammer out a free trade agreement that has so far proven as controversial as it is elusive.

But though this will represent the 13th round of talks since negotiations started in 2004, the Standing Committee on International Trade warned the government against approving a "hastily-negotiated deal...simply for the sake of concluding an agreement" in a report tabled two weeks ago.

In fact, the report states, a trade agreement with Korea at this point in time could batter Canadian exports at a time when the economy is already hurting due to the high Canadian dollar, and given significant job losses in the forestry and manufacturing sectors in recent months.

The report adopts a decidedly defensive position, recommending a number of provisions be included into the deal to protect Canadian interests. …

China Revenue from Supply Chain Business Soars 26%

China Revenue from Supply Chain Business Soars 26%(Cargonews Asia)

China’s revenue from the logistics industry totalled US$10.68 trillion in 2007, up 26.2% from 2006, according to the China Federation of Logistics and Purchasing (CFLP).

The weight in GDP went up 0.2 percentage points to reach 6.9% over 2006.

Total logistics fee went up 18.2% in 2007 to reach $646.95 billion. Transportation fees standing at $351.97 billion, up 17.6% year-on-year, and accounting for 54.4% of the total logistics fees.

Chinese Exporters Shun Flagging Dollar

Chinese Exporters Shun Flagging Dollar
(Financial Times – Robin Kwong)

Rising numbers of Chinese exporters are shunning the U.S. dollar or devising ways to offset the impact of the falling currency as they confront rising labour and raw material costs at home.

According to, the online company that matches Chinese suppliers with international buyers, the vast majority of their almost 700,000 Chinese suppliers no longer use dollars to settle non-U.S. transactions to minimise foreign exchange risk.

“They are moving to euros, pounds, Australian dollars or even quoting prices in renminbi,” David Wei, chief executive, told the Financial Times. Moreover, he added, prices quoted in dollars were now often valid for just seven days compared with the 30-60 days common previously.

The dollar has long been the currency of choice for Chinese and other exporters around the world. However, the impact of its recent weakening has led exporters to begin questioning its place as the de facto world currency.

The renminbi, which western governments have long alleged is undervalued, thus giving Chinese exporters an unfair advantage, has appreciated 6.7% against the U.S. dollar in the past six months. Economists expect it to rise 10%-15% against the dollar in 2008. …

In financial crisis, U.S. Treasury chief turns to the Fed

In financial crisis, U.S. Treasury chief turns to the Fed
Bush administration plan would shuffle U.S. regulatory responsibilities
Last Updated: Monday, March 31, 2008 | 1:27 PM ET CBC News

With parts of the financial system crumbling around him, U.S. Treasury Secretary Henry Paulson announced a plan Monday to shuffle regulatory agencies and give the Federal Reserve responsibility for ensuring market stability.

Paulson, a former Wall Street investment banker, unveiled a 218-page "Blueprint for a Modernized Financial Regulatory Structure" aimed partly at dealing with problems caused by mutant investments developed on Wall Street.

The plan, in the works since last June, seeks to close the barn door after one of the worst financial crises since the Depression. A disaster that began with high-risk "sub-prime" mortgages has left millions of families at risk of losing their homes, littered the landscape with bad debts and led to a Federal Reserve-backed bailout of a major Wall Street firm, Bear Stearns.

Paulson said he does not "blame our regulatory structure for the current market turmoil," although the existing system "can allow important regulatory matters to fall through the cracks."

His plan, much of which would require new legislation, would combine five federal agencies that regulate deposit-taking institutions.

It would merge the Commodity Futures Trading Commission with the Securities and Exchange Commission and create a new "conduct of business regulator" to assume many of the roles of the CFTC, the SEC and insurance and banking regulators.

The Federal Reserve, the U.S. central bank, would take on a "different yet critically important regulatory role with broad powers focusing on the overall financial system," Paulson said.

"To do its job as the market stability regulator, the Fed would have to be able to evaluate the capital, liquidity, and margin practices across the financial system and their potential impact on overall financial stability," he said. "The Fed would have the authority to go wherever in the system it thinks it needs to go for a deeper look to preserve stability."

Speaking to reporters, Paulson said the Fed would try to head off new disasters caused by complicated and poorly understood investments.

He said he was "not looking to outlaw innovation" in securities markets, but he worries about "excess complexity."

Growing High-Value Trees Free Workshops And Field Trips Showcase

Growing High-Value Trees Free Workshops And Field Trips Showcase

Uneven-Aged Management

Uneven-aged management permits woodlot owners to grow high-value trees while managing their woodlands for multiple species, ages, values and benefits. In Nova Scotia, financial assistance may be available to small private woodland owners through the Association for Sustainable Forestry’s Category 7 Quality Improvement Silviculture Program.

In order to provide small private woodlot owners and contractors with information about uneven-aged management and the Category 7 program, the Association for Sustainable Forestry’s Uneven-Aged Management Outreach Project is offering free workshops and field days throughout the province.

Each educational program will include a morning workshop followed by a visit to a nearby woodlot for a look at uneven-aged management as it is being practiced “on the ground”.

The schedule of these day-long events is as follows:
• May 3: Digby County, Richfield area
• May 10: Colchester County, Earltown area
• May 24: Queens County, North Brookfield area
• June 7: Victoria County, Middle River area
• June 14: Antigonish County, St. Joseph area

Space for these free programs is limited, and reservations are required. Nova Scotia woodlot owners and contractors are encouraged to register by calling the Outreach Project telephone number (902-673-2278) or emailing the project at

The Uneven-Aged Management Outreach Project is funded by the Nova Scotia Department of Natural Resources.

Information about the Category 7 Quality Improvement Silviculture Program is available at or from the Uneven-Aged Management Outreach Project at 902-673-2278 or