Tag Archives: Different Ways

Why China Will Have an Economic Crisis | Business | TIME.com

The problem here is that prices can’t stay wrong indefinitely. There is a good reason why classical economists are always so focused on allowing markets to find the correct price level. In that way, markets send the proper signals to potential investors on where money should or should not go. If those price indicators are skewed, so is the direction of resources. The Asian model, by playing around with prices, eventually creates tremendous distortions, in which money is wasted and excess capacity is generated. Subsidized companies don’t have to generate returns in the same way as unsubsidized firms, and that leads them to make bad investment decisions to build factories and buildings that are unnecessary and unprofitable. As a result, loans go bad and banking sectors buckle. That’s exactly what happened in both Japan and Korea. Though their crises were tipped off in very different ways — the bursting of an asset bubble in Japan, an external shock in Korea — the reason both countries collapsed was the same: weak banks, indebted companies, silly investments.

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China is indulging in all of the same excesses as Japan and Korea, and then some. The level of investment in China, at nearly 50% of GDP, is lofty even by Asian standards. The usual argument made in defense of such astronomical investment in fixed assets is that China is a large developing country that needs all of the buildings and roads it is constructing. Qu Hongbin, the very smart chief China economist at HSBC, made that very argument in a recent study:

Why China Will Have an Economic Crisis | Business | TIME.com

Israel and Syria brace for regional war between mid-Dec. 2011 and mid-Jan 2012

You’ll have to make up your own mind on whether you want to believe this report or not. I can see that war is probably coming, but I don’t see the dates. I put the probability of a regional war in 2012 at 50%. I wouldn’t be surprised if it happened, and I wouldn’t be surprised if it didn’t.

The actions and words of Israeli Prime Minister Binyamin Netanyahu and Syrian ruler Bashar Assad in the last 72 hours indicate they are poised for a regional war, including an attack on Iran, for some time between December 2011 and January 2012.

In their different ways, both have posted road signs to the fast-approaching conflict as debkafile‘s Middle East sources disclose:

1.  Saturday, Dec. 3, Syria staged a large-scale military exercise in the eastern town of Palmyra, which was interpreted by Western and Israeli pundits as notice to its neighbors, primarily Turkey and Israel, that the uprising against the Assad regime had not fractured its sophisticated missile capabilities.

DEBKAfile, Political Analysis, Espionage, Terrorism, Security

‘South Korean naval base to trigger arms race’ — RT

“If this base is tied to the US missile defense system, it might be part of the US strategy to contain China,” she said. “Beijing is concerned with the US military getting closer to its territories. This deal is going to foment a regional arms race, which pits Korea in between the US and China.”

“There is a growing resentment in the two Koreas – and also in Okinawa and Guam,” she concluded. “Everywhere people are saying, ‘We have had enough of the US military occupation – it is time to close down the bases and time to find different ways for achieving security.”

‘South Korean naval base to trigger arms race’ — RT

ElBaradei Concerning Egypt: We’ll fight back [declare war] if Israel attacks Gaza | Ynetnews

Former International Atomic Energy Agency chief Mohamed ElBaradei, who had previously announced his intetions to run for the presidency of Egypt, said Monday that “if Israel attacked Gaza we would declare war against the Zionist regime.”

In an interview with the Al-Watan newspaper he said: “In case of any future Israeli attack on Gaza – as the next president of Egypt – I will open the Rafah border crossing and will consider different ways to implement the joint Arab defense agreement.”

ElBaradei: We’ll fight back if Israel attacks Gaza – Israel News, Ynetnews

Russia is a Mess

Russia and the Global Economic Crisis

Any international economic crisis afflicts different countries in different ways, but an unfortunate few experience every painful dimension of it. In the current crisis, Russia is confronting virtually all the negatives at once–sharply declining export earnings from energy and metals, over-leveraged corporate balance sheets and a chorus of bailout appeals, a credit crunch and banking failures, a bursting real-estate bubble and mortgage defaults, accelerating capital flight, and unavoidable pressures for devaluation.

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