The Lack of Safe Places to Invest

  • There’s a dark cloud building behind the world’s best period of synchronous growth among developed and emerging economies this decade — one that in time could rain down volatility in global markets.
  • The problem, identified by strategist and hedge fund manager Stephen Jen, is a deepening imbalance in the lack of new safe-haven assets as the world’s output expands.
  • China and other developing nations are accumulating wealth, but failing to create sophisticated local markets that feature their own risk-free instruments. That’s left a dangerous reliance on U.S. Treasuries, according to Jen’s argument, perpetuating a bond bubble and pushing investors into riskier assets.
  • The continued growth of emerging markets while their financial systems lag behind produces “a situation whereby the genuine safe-haven assets such as the U.S. Treasuries, German bunds, and the British gilts become increasingly rare and in short supply,” they wrote.
  • … emerging markets haven’t yet been able to develop assets that investors are willing to hold as stores of value and collateral when times get tough. Doing that requires strong levels of confidence in the rule of law, equitable regulation and belief that money can be withdrawn by the investor whenever needed. » The Bloomberg article -By Chris Anstey and Enda Curran – June 13, 2017
  • Links between trade and currency values (Jupiter images)


    Global banks admit guilt in forex probe, fined nearly $6 billion

  • Four major banks pleaded guilty .. to trying to manipulate foreign exchange rates and, with two others, were fined nearly $6 billion in another settlement in a global probe into the $5 trillion-­a-­day market.
  • The settlements .. stood out in part because the U.S. Department of Justice forced Citigroup’s main banking unit Citicorp, and the parents of JPMorgan, Barclays and Royal Bank of Scotland to plead guilty to U.S. criminal charges.
  • The investigations are far from over. Prosecutors could bring cases against individuals, using the banks’ cooperation pledged as part of their agreements. Probes by federal and state authorities are ongoing over how banks used electronic forex trading to favor their own interests at the expense of clients.
  • Citicorp will pay $925 million, the highest criminal fine, as well as $342 million to the U.S. Federal Reserve. Its traders participated in the conspiracy from as early as December 2007 until at least January 2013, according to the plea agreement.
  • Traders at Citi, JPMorgan and other banks were part of a group known as “The Cartel” or “The Mafia,” participating in almost daily conversations in an exclusive chat room and coordinating trades and otherwise fixing rates. » The Reuters article – BY Karen Freifeld, David Henry and Steve Slater – May 21, 2015.

Stricter Regulation of Foreign banking in the the U.S.

  • Federal Reserve Governor Daniel Tarullo defended the central bank’s rules requiring stricter supervision of foreign banking companies operating in the U.S., saying the global financial crisis made it clear that regulation needed to be expanded.
  • “The most important contribution the United States can make to global financial stability is to ensure the stability of our own financial system,” Tarullo said in a speech today to a Harvard Law School symposium in Armonk, New York.
  • Foreign bank reliance on short-term wholesale liabilities such as commercial paper to fund longer-term securities created instability in 2008 as sources of cash grew tight. The Fed provided backstop loans to both domestic and foreign bond dealers through the Primary Dealer Credit Facility, and to foreign banks directly through the discount window.
  • The Fed “provided substantial liquidity to the broker-dealer affiliates of the bank holding companies, as well as to the primary dealer subsidiaries of foreign banks,” Tarullo said.
  • The biggest borrowers from the discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record.
  • Under the rule issued in February, foreign banks with non-branch assets of $50 billion or more must hold their subsidiaries in holding companies that are subject to capital and liquidity standards applied to U.S. banks, and meet special risk management standards. » The full Bloomberg article – By Craig Torres and Susanne Walker – March 28, 2014

News from Wall Street

Image source – The Globe and Mail
    “Laws, like sausages, cease to inspire respect in proportion as we know how they are made.”
    John Godfrey Saxe, American poet and lawyer, 1869

  • Add bond ratings to that list. » More in this New York Times article – By Floyd Norris November 8, 2012.

S&P found guilty of misleading investors

  • Standard & Poor’s misled investors by awarding its highest rating to a complex derivative product that collapsed in value less than two years after it was created by ABN Amro, an Australian judge has ruled, in a landmark case that paves the way for legal action in Europe.
  • In a damning verdict the Federal Court of Australia ruled S&P and ABN Amro, now owned by RBS, had “deceived” and “misled” local councils that bought triple-­A rated constant proportion debt obligations (CPDOs) from an intermediary in 2006. » The full Financial Times article – By Neil Hume in Sydney – November 5, 2012.

  • Bank Investors Dismiss Moody’s Cuts as Years Too Late

    • Moody’s Investors Service suffered a downgrade of its own as markets responded to the company’s rating cuts of 15 of the world’s largest banks by bidding up the value of their stocks and bonds.
    • “We view the Moody’s downgrade as another overhyped story of 2012,” David Trone, analyst at JMP Securities LLC, wrote to his clients. “The corporate market thinks for itself and credit rating agencies are often lagging indicators.” » The full Bloomberg article – By Dakin Campbell and Michael J. Moore on June 22, 2012.
    • Looking back
    • A report by the Senate’s Permanent Subcommittee on Investigations said that S&P, Moody’s and Fitch Ratings helped trigger the financial crisis when they cut thousands of mortgage securities they rated AAA to junk status. The raters had engaged in a “race to the bottom” to win business, lawmakers said.
    • Even after Congress included rules in the Dodd-Frank Act last year designed to cut reliance on ratings, S&P and its competitors remain a key part of the financial markets. Pension and mutual funds often require minimum ratings to buy debt securities. Banks are generally required to hold less capital to back higher rated bonds as regulators including the Federal Reserve have yet to find an alternative. » The full Bloomberg background article – By Zeke Faux and Jody Shenn – Sep 1, 2011

    • The New York Times – Learning Network – Examining Key World Economies and Comparing Their Current Volatility
      Overview: Students review key economic terms and ideas necessary for understanding world economies. They then research the economies of countries in the Group of 10 and present how their economies have changed over the past five years and how the relationships among these countries affect each other in light of world events.  Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – Understanding Credit Cards and Credit Card Debt
      Overview: Students examine and learn the basics about credit cards and credit card debt, then create an informational brochure for young students. Go to this Economy and ESL Lesson.

    Updated – September 15, 2015: Worries about Investing in Asia continues

    China’s Problem Isn’t Its Markets

    • There are many good reasons to be spooked about economic stability in China—but the performance of its markets isn’t one of them.
    • Clumsiness is out of character for a government that has confidently worked through every economic crisis it has faced over the past three decades, including the 2008 global financial meltdown.
    • But this is different. There are no easy fixes for an economy growing at its slowest rate in a quarter of a century, burdened by debt, swamped in industrial overcapacity and in the throes of an economic transition that Premier Li Keqiang admitted just last week at the World Economic Forum would be “painful and treacherous.”
    • Money is fleeing the country. Among foreign investors, the most closely watched number in China today is not the Shanghai stock market index, or the exchange rate, or the price per square meter of a Shanghai apartment. It is the figure for capital outflows reflected in the decline of the country’s foreign- exchange reserves.
    • They’re still massive but they’re dwindling fast. The reserves fell by a record $93.9 billion in August. If that’s a proxy for confidence in the government – which many believe to be the case — repression isn’t helping. » The WSJ Article – By Andrew Browne – September 15, 2015.

    This Is Why So Many Chinese Companies Are Suspended

    • At least 1,331 companies have halted trading on China’s mainland exchanges, freezing $2.6 trillion of shares, or about 40 percent of the country’s market value, Bloomberg News reports today.
    • The unwinding of margin loans is adding fuel to the fire. Individual investors, we all know by now, have used generous margin financing terms to enter the stock market and then build up their portfolios. Less known is that Chinese companies have been doing the exact same thing by using their own corporate stock to secure loans from banks.
    • That means that they stand to lose a lot when those share prices start trending dramatically lower.
    • This vicious circle described above also explains why China’s central bank has quickly moved to support the market in an effort to limit its impact on the wider economy. » The Bloomberg article – By Tracy Alloway – July 8,2015.

    New Laws in China and Thailand a thin legal veneer to repression in the name of national security

    • China’s growing paranoia about national security has rattled American and European companies with a raft of new laws creating rising uncertainty for foreign investors, business leaders and diplomats say.
    • repression in the name of national security » Image source and article

    • The security clampdown reflects President Xi Jinping’s concerns that foreign forces are intent on overthrowing China’s Communist Party, propagating dangerous Western values such as democracy and free speech, and inspiring a popular uprising or “color revolution,” experts say.
    • Human rights groups have already come out strongly against the new laws, arguing that they will be used to silence critics and give a thin legal veneer to repression in the name of national security. » The Washington Post article – By Simon Denyer – June 10, 2015

      The 2006 and 2014 coups are examples in Thailand where poor governance, unreliable laws and biased courts increase the risk of investment

    • This week: The ruling coup military junta has shut down a Foreign Correspondents’ Club of Thailand (FCCT) event for the second time this month.
    • The FCCT said in a statement Monday afternoon that it had cancelled a discussion scheduled to take place Wednesday on Thailand’s draconian else majesty law after it received a verbal order from police.

      The use of Article 112 has long been controversial, and has increased markedly since the coup. We believe the law is a legitimate subject for discussion, not only for Thais, but also for foreigners who live or invest in Thailand. Our discussion would, we believe, have been constructive. The FCCT statement

    • Authorities refused to give a written order to shut down the event, saying it might damage their reputation.
    • “The NCPO has now told us they will not issue such a letter because they fear it would be used in the media to damage their image,” the FCCT said The full Statement
    • Earlier this month the ruling junta blocked a panel discussion on human rights in post-coup Thailand scheduled to take place at the same venue. » The Asian Correspondent article – June 15, 2015.

    The Thai Justice system Thai coup (AFP)

    • Looking back to the 2006 coup: Giles Ungpakorn, (who left Thailand and is now in exile in the UK after the Abhisit government filed les mageste charges against him) was a political scientist at Chulalongkorn University and said the whole justice system should be overhauled, from the police to judges to bureaucrats. He advocates trials by jury and elections for judges to increase public accountability.
      “The constitution (sponsored by the military) has a problem right from the start,” he said. “Giving power to unelected civil servants who tend to be very conservative is a step backwards.” – The Asian Sentinel article – By Daniel Ten Kate – May 11, 2007.
    • Prinya Thaewanarumitkul, one of the country’s leading constitutional lawyers, (said) the practice of coups in Thailand is a bad habit that needs to end. “If we didn’t have this coup the Thai people could have learned more about democracy and politics and about how to develop,” – Quote from: News Analysis: Democracy, Thai style – Ban the politicians – By Thomas Fuller International Herald Tribune – Published: October 6, 2006.

    Frustrated with doing business in China and looking elsewhere in Asia – investors find the same patterns

    • Burma: Good investment Daw Aung San Suu Kyi, the leader of Myanmar’s democracy movement, stared down an audience of corporate executives (in Thailand) on Friday and urged them to avoid “reckless optimism” and to be aware of the pitfalls her country still holds for investors.
    • “Would-be investors in Burma, please be warned,” she said, referring to the country by its former name. “Even the best investment laws would be of no use whatsoever if there are no courts that are clean enough and independent enough to be able to administer those laws justly. This is our problem: So far we have not been aware of any reforms on the judicial front.” » The full New York Times article – By Thomas Fuller – June 2, 2012.

    15 years later the risks throughout Asia remain:

    • Sustainable economic growth requires efficient capital markets, and today these markets are global. They consist of myriad shareholders and creditors who each take small stakes in many different companies. If investors are confident that their rights are well protected, they open their wallets; if they fear that majority shareholders, managers or governments might fleece them, they hold back.
    • The “Asian miracle” ended in July 1997, abruptly turning into what is now known as the “Asian crisis”. Investors were badly burnt, and those who could get out did so in a hurry. Suddenly the lack of transparency, of good corporate governance and of legal protection rose to the top of the agenda.
    • Doing BUsioness in Asia Image and article source – The Economist April 5, 2001


    Updated: June 16, 2017 – Controling what the public sees and hears

    Soldiers Remove Artworks from Bangkok Gallery

    • BANGKOK — Soldiers visited two art galleries in downtown Bangkok Thursday and ordered one to remove three photographs from an exhibition without citing any reason.
    • Held in two adjacent art galleries, one exhibition depicted the lives and memories of political prisoners while the other was an homage to the 2010 military crackdown on Redshirt protests which left more than 90 people dead.
    • It’s the latest effort by the military to micromanage their ban on political activities, in place since the May 2014 coup. Soldiers have previously blocked film screenings, academic seminars and even university football parades. » The Khaosod english article – By Teeranai Charuvastra – June 16, 2017

    Suppressing free press is ‘how dictators get started’: Senator McCain

    • The international order established after World War Two was built in part on a free press, McCain said in an excerpt of an interview with NBC’s “Meet the Press” that was released in advance of the full Sunday morning broadcast.
    • Senator John McCain, defending the media against the latest attack by President Donald Trump, warned that suppressing the free press was “how dictators get started”.
    • “I hate the press. I hate you especially,” he told interviewer Chuck Todd from an international security conference in Munich. “But the fact is we need you. We need a free press. We must have it. It’s vital.”
    • “If you want to preserve – I’m very serious now – if you want to preserve democracy as we know it, you have to have a free and many times adversarial press. And without it, I am afraid that we would lose so much of our individual liberties over time. That’s how dictators get started,” he continued.
    • “They get started by suppressing free press. In other words, a consolidation of power. When you look at history, the first thing that dictators do is shut down the press. And I’m not saying that President Trump is trying to be a dictator. I’m just saying we need to learn the lessons of history,” McCain said. » The Reuters article -m February 19, 2017

    .. with no light in view amid burgeoning uncertainty and continuing junta oppression.

    • After the May 2014 military coup, the palace was the only part of Thai society the military didn’t claim control over. Section 44 of the post-coup constitution grants the junta leader a legal carte blanche for any deed necessary to ensure “reform in any field and … national peace and harmony” and to suppress anything harmful to security, the monarchy, the economy, or the government. This section, which enshrines the junta’s right to dictatorship, does, however, implicitly exclude the monarchy from military control.
    • The media is crammed with propaganda heralding the return of happiness under the junta’s leadership. A new constitution (which would replace the post-coup 2014 one), set to be enacted before Thailand’s return to formal electoral rule, predictably passed on Aug. 7 by referendum after the military squelched any sign of opposition. The draft charter enshrines a whole set of new powers for the military, most notably immunity to civilian oversight of its personnel and budget and a 20-year plan impervious to later government intervention.
    • The next general elections are scheduled to take place in late 2017 or 2018. But despite all the junta’s attempts to keep power, it faces an array of potential threats to its longevity.
    • Indeed, it’s easy to imagine the scenarios that keep the generals up at night. The political turbulence following the 2014 coup has contributed to the distancing of investors from Thailand, slowing growth. The death of the king, followed by the crown prince’s decision not to immediately take the throne, could extend this uncertainty to a point where the economy plummets — along with public confidence in the generals. » The Foreign Policy Magazine article – By Paul Chambers – October 31, 2016.

    How Thailand’s military junta has cracked down on dissent

    • Police and soldiers in Thailand have committed at least 74 cases of torture and other ill treatment since the military seized power in a 2014 coup, according to an Amnesty International report released on Wednesday.
    • “Empowered by laws of their own making, Thailand’s military rulers have allowed a culture of torture to flourish, where there is no accountability for the perpetrators and no justice for the victims,” said Rafendi Djamin, Amnesty International’s Director for South East Asia and the Pacific, in a statement accompanying the report’s release.
    • “An officer gets punished if he doesn’t get results,” a former junior commander told Amnesty International. “In the army, people use force to control, not thought. An order is final…. If you don’t get results, you will be punished.” » The Christian Science article

    Donald Trump, Vladimir Putin and the Thug Theory of Leadership

    • There have always been people in this world who get weak-kneed at the first whiff of authoritarianism. They think that the bullying bluster of self-styled strongmen makes them great leaders. They mistake heat for light.
    • Governing often requires dealing in gray areas, principled compromises that achieve a greater good. Particularly in geopolitics, it requires a balance between hard power and soft power. From Ike to George H.W. Bush to Bill Clinton and Barack Obama, this wisdom is sometimes mistaken for weakness.
    • “Noise and impudence” is certainly one way to describe The Donald’s campaign style. Its nationalist, know-nothing appeal is emotional. Especially in times when people feel out of control—for example, when the forces of globalization are shaking every old tribal certainty—some folks gravitate to the guy who is strong and wrong. They are soothed by tough-guy theatrics that divide the world into us against them. They take comfort in the bully because they believe he’s got their back.
    • In a frightening world, thugs believe that raw power is the only way to get respect and terror is a tactic to that end. Putin learned it from the KGB. Trump learned it, at least in part, from his McCarthyite mob lawyer Roy Cohn: “Always attack, never apologize.” » The Daily Beast article – By John Avalon – September 10, 2016. »

    State of denial: Thailand

    • The trial of two Uighur men accused of the Erawan Shrine bombing in Bangkok a year ago begins today in a military court. The bomb killed 20 people, mostly Chinese and other Asian visitors, and came a month after Thailand’s junta shoved 100-odd asylum-seeking Muslim Uighurs in black hoods on a plane to China.
    • The generals deny any link; they blame unhappy human-traffickers.
    • The trial follows a fresh attack on the Thai state: a string of bombings in southern provinces culminating on August 12th, the queen’s birthday.
    • The junta has ruled out terrorism and blames politicians it ousted in 2014.
    • Just about everyone else, including the national chief of police, thinks the culprits are Malay-Muslim rebels, long locked in a deadly fight with Thai rule.
    • Democracy, growth and sensible policing once doused extremism. Under the current dictatorship, none of these is on offer.
      » The Economist Article – August 23, 2016.

    Thai junta accused of exploiting (recent) bombings for political ends

    • Critics of Thailand’s military government accused it on Sunday of taking advantage of last week’s spate of deadly bombings and arson attacks to crack down on its opponents.
    • Anthony Davis, a writer for Jane’s Defence Weekly, told The Associated Press that the Patani-Malay National Revolutionary Front separatist group was the sole opposition force that could carry out such a well-planned, well-coordinated operation in Thailand’s southern region.
    • With the Red Shirt movement being closely monitored by the security forces, “the theory that they could have organized such a complex operation under the noses of the military government makes no sense,” he said.
    • He added that if the supposed motive was anger over the recent referendum outcome, “the planning and preparation for these attacks would have had to take place within three days. And that makes even less sense.” » The AP article – August 14, 2016.

      Election Commission Report Shows 67% of eligible Thai voters did not vote for the Coup written Constitution, while 33% Voted “Yes”

      Coup written constitution vote

    • The country’s over 95,000 polling stations opened at 8am, and closed at 4pm. Though the EC predicted a turnout as high as 70 percent, this referendum reported a turnout even lower than the 2007 charter referendum, with only 55 percent out of 50.5 million eligible voters going to the polls compared to 2007’s 57.6 percent. » The Asian Correspondent article – August 8, 2016

    • More than 100 people who tried to campaign against the referendum on social media have been thrown in jail, and open criticism has been made punishable by up to 10 years in prison.
    • “If people cannot speak their minds freely or take part in political activities without fear, how can they meaningfully engage in this referendum,” said Josef Benedict, Amnesty International’s deputy director for Southeast Asia and the Pacific. » The AP article – August 7, 2016.

  • Critics argue the constitution, to replace one torn up by the military after the coup, will entrench military rule.
  • The junta and the military-backed constitution writing committee say it is not aimed at perpetuating military rule.
  • Under the proposed charter, which would be Thailand’s 20th since the military abolished absolute monarchy in 1932, a junta-appointed Senate with seats reserved for military commanders would check the powers of elected lawmakers. » The Reuters article By Amy Sawitta Lefevre and Panarat – Thempgumpanat – August 5, 2016

  • Thailand: 8-year-old girls charged for tearing voter list because they liked ‘pink paper’

    • Police told local media on Friday they had advised election officials in the central province of Kamphaeng Phet to press charges against the girls, who tore the paper off a board in Vachirasansuksa School.
    • According to Khaosod English, provincial police chief Maj. Gen. Damrong Phetphong decided to charge the girls with vandalism after receiving complaints from the local election commissioner that they had destroyed commission property.
    • He was quoted saying: “There is no such thing as excessive enforcement of the law. The law has different punishments for adults, children, and drunk people. We follow regulations. The judge will be the one who decides.”
    • Damrong said the girls, who now have a criminal record, would be further questioned to determine if they had any criminal intent.
      » The Asian Correspondent article – July 24, 2016.

    Thai journalist detained while covering referendum

    • In the referendum, Thai citizens will vote to either accept or reject the draft, which many have criticized for being “undemocratic”.
    • In Article 61 of the Referendum Act, it is illegal to publish or disseminate “false”, “vulgar”, “inciteful”, or “intimidating” information regarding the referendum.
    • Those found convicted of breaching the ban can be punished with a maximum jail sentence of up to 10 years, fined up to 200,000 Baht, and have their electoral rights suspended for five years.
    • Despite identifying himself as a journalist, Taweesak was still detained by police. He is the first journalist to be arrested under a new law criminalizing criticism of the referendum. » The Asian Correspondent article – July 7, 2016

    Thai military court orders release of student constitution protesters

    • Thai people will vote in August 7’s referendum on a constitution drafted under the military government that took power in a May 2014 coup.
    • Critics say the draft is undemocratic, but are restrained from campaigning against it by very restrictive laws that could send them to prison for up to 10 years.
    • Election Commission Report on Referendum

      Coup leader warns opposition not to monitor upcoming referendum Image source
      SEVEN student protesters who were arrested last month for distributing leaflets urging people to vote against a proposed new constitution in a referendum next month were due to walk free this morning after a military court ordered police to release them.

    • More than two years after Prayuth Chan-ocha’s military junta seized power, there is still no clear roadmap for a return to democracy. Elections have already been pushed back a number of times, and will now take place in 2017 at the earliest. » The Asian Correspondent article

    Thai Junta Leader Warns Opposition Not to Monitor Upcoming Referendum

      Coup leader warns opposition not to monitor upcoming referendum Image source

    • The generals have imposed rules banning campaigning over a new constitutional.
    • General Prayut Chan-ocha,the leader of Thailand’s ruling military junta has warned so-called “red shirts” that they must not set up centers to monitor for electoral fraud when the country goes to the polls to approve a new constitution on Aug. 7.
    • Thais are to vote on whether to accept a new charter, which critics say will entrench the military’s power. The generals have imposed rules banning campaigning on the constitutional plebiscite, both for and against. » The Time article – June 20, 2016.

    Moving away from military dictatorship

    • Naypyidaw (Myanmar) (AFP) – US Secretary of State John Kerry Sunday hailed Myanmar’s transition from army rule to a civilian government steered by Aung San Suu Kyi as a “remarkable statement” of support for global democracy.
    • Kerry applauded the process as a “remarkable statement to people all over the world”.
      As a reward for holding the peaceful election, Washington last week lifted a host of financial and trade embargoes.
    • But it has kept the backbone of its sanctions as well as a blacklist of cronies and businesses close to the former junta as leverage.
    • Suu Kyi said she welcomed the “scrutiny” inherent in the remaining sanctions.
    • The army retains significant economic interests and political clout under a charter it scripted — including a quarter of all parliamentary seats and control of key security ministries. » The Yahoo news article – By Phyo Hein Kyaw – May 22, 2016

    Burma’s new president vows to release political prisoners

    • The statement described the pardon as designed to “make people feel happy and peaceful, and [promote] national reconciliation during the New Year,” reported Agence France-Presse.
    • Htin Kyaw recently took over as head of Burma’s (Myanmar’s) first freely elected government after more than 50 years of often brutal military domination or control.
    • In its first official act at the end of March, the new government freed more than 100 political detainees awaiting trial just before the new year holiday. It isn’t clear exactly how many still remain.
    • In a televised address to the nation, Htin Kyaw said, “In the New Year, in order to give satisfaction to the majority of the people, we will continue to try to release political prisoners, political activists, and students facing trials related to politics.”
    • “We also have to try to avoid such arrests in the future,” he said, according to the Associated Press. » The full Asian Correspondent article – April 17, 2016.

    Foreign investment in Thailand plummeted last year

    • … official data showed, the latest sign that the kingdom’s once-vibrant economy continues to falter under prolonged military rule.
    • Total investment applied for by foreign companies between January and November 2015 plunged 78 percent from a year earlier to 93.8 billion baht ($2.62 billion), according to figures from Thailand’s state-run Board of Investment (BoI) sent to AFP late Tuesday.
    • It also faces stiff competition from increasingly attractive neighbors like Vietnam, Cambodia and Myanmar.

    • EU investment also plunged from 86.7 billion baht in 2014 to just 2 billion baht last year. Investment from the United States was also heavily down, while Chinese investment was only down slightly.
    • Nearby Vietnam, on the other hand, reported a record number of foreign investment in 2015 and the fastest growth rate in five years at 6.68 percent.

  • Earlier this month the World Bank forecast that Thailand’s GDP growth rate would slip from 2.5 percent in 2015 to just 2 percent this year, by far the gloomiest regional prediction.
    » The AFP article – January 13, 2016
  • Election in Burma also known as Myanmar sees Aung San Suu Kyi triumph

    • Aung San Suu Kyi pledged to pay “special attention” to ties with China when her party takes office after its election triumph, and said foreign investments would need public support to help improve relations.
    • China was Myanmar’s lifeline for two decades when sanctions prevented most Western businesses and financial institutions from engaging with the country during military rule from 1962 to 2011 that left the nation underdeveloped.
    • But the stakes are now far higher for Beijing, with business competition heating up and the NLD’s anticipated sweeping-out of the last remnants of the old military guard with which Chinese firms enjoyed a close bond.
    • Many European and U.S. companies are expected to set up shop after the clear mandate for change in the Nov. 8 election, the first free poll in a quarter century. » The Rueters article – By Hnin Yadana Zaw and Antoni Slodkowski – November 18, 2015.

    Thai cop who implicated officials in trafficking seeks asylum

    • The police general who led Thailand’s probe into human trafficking said Thursday he was seeking political asylum in Australia, after fleeing the kingdom fearing for his life for implicating senior officials in the grim trade.
    • “I am asking for asylum because living in (Thailand) at this time is very dangerous,” Paween told AFP Thursday.
    • Speaking to the Australian Broadcasting Corporation in Melbourne in comments broadcast Thursday, he said he felt “deeply sad” about the situation.
    • “There are some good soldiers, but in the police and the military, there are some very bad ones involved in running the human trafficking,” Paween said.
    • “I feel deeply sad. It is so unfair that people who did these things will not be punished.”
    • Paween’s unit was disbanded and he was transferred to Thailand’s three insurgency-hit southernmost provinces, and the probe was declared complete in early October.
    • He resigned from the police rather than take up a new post, after allegedly receiving death threats.
    • The belated Thai crackdown came after the United States last year relegated the kingdom to the bottom rung of an influential report ranking nations on their anti-trafficking efforts.
    • It has remained on the bottom tier for a second year in a row, alongside nations like Iran, Libya, North Korea and Syria. » The AFP article – December 10, 2015.

      AP investigation prompts new round of slave rescues

    • Authorities in Papua New Guinea have rescued eight fishermen held on board a Thai-owned refrigerated cargo ship, and dozens of other boats are still being sought in response to an Associated Press report that included satellite photos and locations of slave vessels at sea.
    • The men are part of a seemingly inexhaustible supply of poor migrants from Myanmar, Cambodia and Laos who are forced to fish for the Thai seafood industry. When workers run away, become sick or even die, they are easily replaced by new recruits who are tricked or coerced by false promises of jobs in Thailand.
    • journalists followed their slave-caught fish back to Thailand and linked it to the supply chains of major U.S. food sellers, such as Wal-Mart, Sysco and Kroger, and American pet food companies, including Fancy Feast, Meow Mix and Iams. The businesses have all said they strongly condemn labor abuse and vowed to take steps to prevent it. » The AP article – By Margie Mason and Martha Mendoza – July 30, 2015.
  • Thailand has hit back after being blacklisted in a US report for the second consecutive year for not combatting modern-day slavery, arguing it has made serious steps to tackle human trafficking.
  • In recent weeks, testimony from survivors, human rights groups and the media have exposed appalling practices in Thailand’s export-oriented seafood business, suggesting the human trafficking trade is still in operation. Link to Video
  • The US report said the Thai government was not making significant efforts to comply with the minimum standards for the elimination of trafficking.
  • “Thailand investigated and prosecuted some cases against corrupt officials involved in trafficking, but trafficking-related corruption continued to impede progress,” the report said. » The Guardian article – July 28,2015.
  • Special Report: Inside Thailand’s trafficking crackdown

    • Police Major General Thatchai Pitaneelaboot, who led early anti-trafficking efforts in southern Thailand was told his investigation was damaging Thailand’s image, though he declined to be more specific about who was telling him that.
      “No one cared,” he said.
    • The trials could be lengthy and convictions are far from certain, police said.
    • On June 16, three men were arrested for intimidating a witness not to testify in the trials. Other witnesses have been threatened by “subordinates” of the accused against testifying, said Aek, the deputy national police chief. “The suspects are powerful people,” he said.
    • the scores of arrests so far may only represent a fraction of those involved, police say. “There could be hundreds of people involved, including many officials,” Thatchai said.
    • And despite the investigation and crackdown that began in late April, the traffickers’ finances seem largely intact. The United Nations estimates people-smuggling across the Bay of Bengal has generated about $250 million since 2012. Thailand has so far seized assets worth only $3.5 million.
    • Aek said Thai authorities “only froze assets of those we suspected of wrong-doing”.
    • Sheltering in the backroom of a provincial Thai police station is a 35-year-old street vendor who triggered a human trafficking investigation that has reverberated across Southeast Asia.
    • The roti seller dares not leave his new home in the provincial police station. He recently stopped praying at a nearby mosque after he heard that some men had turned up to look for him there.
    • Many known traffickers remained at large, which was why he hoped to be relocated to another country after the trial. “Otherwise,” he said, “I will be killed.” » The Reuters article – By Amy Sawitta Lefevre and Andrew R.C. Marshall – July 9, 2015.

    Thailand misses aviation safety deadline

    • The U.N. body regulating world air traffic says Thailand has failed to meet a deadline for addressing safety concerns about its oversight of its airlines, so it has been added to a list of nations whose aviation authorities fall short of international standards.
    • ICAO audited Thailand in January, and in March gave Thai authorities 90 days to rectify shortcomings it had found. Thailand failed to meet the deadline and joined 12 other nations found deficient in managing their airlines. » The AP article – June 20, 2015.

    Thai year-old coup imposes superficial calm but little else

    • The problem, critics argue, is that the junta may be sowing the seeds of more conflict by building that future on its own terms — with reform committee, a rubber-stamp legislature, and no input from the Pheu Thai party it toppled or their supporters, who likely still represent a majority of the electorate.
    • Thailand’s ruling junta has blocked a panel discussion scheduled to take place this evening on the state of human rights in post-coup Thailand.
      The event was organized by Thai Lawyers for Human Rights (TLHR), with Khaosod English reporting that it was still going to send its members to the event at the scheduled time, 6pm. » The Asian Correspondent article – June 4, 2015.

    • “Our differences have just been pushed under the rug by a junta that prohibits freedom of expression. Nothing has been done to address the root causes of Thailand’s deep divide,” said Sunai Phasuk, a senior researcher for Human Rights Watch.
    • Last week, the military government announced it would subject the draft to a referendum. Sunai said that posed a dilemma. “If you vote yes, you end up with a Frankenstein constitution that undercuts liberal democracy.
    • If you vote no, they’ll have to go back to the drawing board, and Prayuth will just stay in power longer.” » The AP article – By Todd Pitman – May 23, 2015.

    Seafood from slavery: Can Thailand tackle the crisis in its fishing industry?

    • A chartered plane from Ambon, in eastern Indonesia, carried 125 men to Yangon on Thursday evening.
    • It was the biggest group repatriated following an Associated Press investigation that exposed labor abuses in the fishing industry involving hundreds of men being tricked or sold onto Thai boats and brought to Indonesian waters where they were forced to work nearly nonstop under brutal conditions. » The AP article – By Margie Mason – May 15, 2015.

    • But the problem of modern day slaves fishing for seafood that ends up on dinner plates on the other side of the world goes much further than these tiny Indonesian islands
    • The extent of the situation is hard to gauge. Thai government figures state that there are 145,000 working in its fishing industry, with 80% of those migrant workers, mainly from Myanmar, Cambodia and Laos. However, activist group Raks Thai Foundation suggests there are in excess of 200,000 trafficked, unregistered workers.
    • Crew manifests were not previously required.
    • “For the Marine Department we can check only a certain type of vessel, a certain size, too. But now the government is trying to reduce the size (of the vessel) that allows that we can check them,” said Chula Sukmanop, director-general to the Marine Department.
    • He added that enforcement is made more difficult because all too often ships will change crew once they leave port. » The CNN article – By Dean Irvine, Saima Mohsin, and Kocha Olarn – May 11, 2015.

    The Costs of Thai coup keep going up

    “There has been no sign of a strong economic recovery,” Benjarong Suwankiri, an economist at TMB Bank in Bangkok told Bloomberg News.

    “Growth will continue to be sluggish, as only the government’s spending has showed signs of picking up, while consumption, investment and exports are still very weak.” » The AFP article – May 18, 2015.


    • The country’s seemingly endless turmoil also finally seems to have deterred investors, who for years continued to pour money into the kingdom because of its natural attractiveness and history of liberal investment policies. At the same time as Thailand stalls, other countries in the region, like the Philippines, Myanmar, Vietnam, and even Indonesia have promoted policies that have made them more attractive to foreign investment.
    • Japanese investors, the biggest group of foreign investors in the kingdom, have begun to shift new investments to Vietnam and other countries in the region. Other foreign investors have become increasingly cautious in approving new Thailand projects.
    • Thailand’s gross domestic product expansion has been about half that of its neighbors through much of the period amid political turmoil, including a coup last May and martial law since. » Bloomberg article – By Lee J. Miller
    • Household debt is particularly worrying in Thailand and Malaysia, but the official data may not capture the full picture for families around the region.
    • In Thailand, for example, household debt climbed to a record 85.9 percent of gross domestic product (GDP) by the end of 2014, data from the central bank showed.
    • The household debt of low-income earners is expected to surge this year, as the glum economic conditions and relatively high cost of living will lead them to rely more on both organized and unorganized loans. » The Thailand Business news article – By Boris Sullivan – May 4, 2015.

    Coup leader takes absolute power

    • The U.N. High Commissioner for Human Rights Zeid Ra’ad al-Hussein said on Thursday that the Thai military government had replaced martial law “with something even more draconian” and called for a return to civilian rule.
    • The nation’s coup leader has said he will invoke a special security measure in its place that critics say gives him unchecked authority over all three branches of government and absolves him of any legal responsibility for his actions. » The AP article – April 2, 2015.
  • The U.N. High Commissioner said the decision “leaves the door wide open to serious violations of fundamental human rights” and “annihilates freedom of expression”.
  • Freedom of assembly also remains severely curtailed, with heavy punishment for protesters who gather in groups of more than five, he added.
  • “In effect, this means the sweeping away of all checks and balances on the power of the Government, rendering the lifting of martial law meaningless.” » The Reuters article – BY Stephanie Nebehay – April 2, 2015.
    • Human Rights Watch said the move “will mark Thailand’s deepening descent into dictatorship.”

    • “Thailand’s friends abroad should not be fooled by this obvious sleight of hand by the junta leader to replace martial law with a constitutional provision that effectively provides unlimited and unaccountable powers,” said Brad Adams, the group’s Asia director. » The Ap article – By Jocelynn Gecker – April 1, 2015.
  • “Article 44 essentially means Prayuth is the law. He can order the detention of anyone without charge, without having to put the person on trial and for as long as he desires,” Pravit Rojanaphruk, an outspoken columnist for The Nation newspaper, wrote Tuesday.
  • Thai media have referred to Article 44 as “the dictator law.” Under a similar law in the 1960s, a Thai dictator carried out summary executions.
  • The measure gives Prayuth power over all aspects of government, law and order, and absolves him of any legal responsibility for his actions.
  • The Geneva-based rights group, the International Commission of Jurists, expressed strong reservations about Article 44.

    “Article 44 violates the fundamental pillars of the rule of law and human rights, including equality, accountability, and predictability,” the group’s secretary general, Wilder Tayler, said in a statement posted on its website. He said the statute would not be a real improvement over martial law, which he said should be lifted in favor of returning to civilian rule. » The AP article – March 31, 2015


  • Human trafficking and Slave Labor

    • The AP reported earlier this week that slaves — some of them beaten and locked in cages — are forced to fish, and their catch ends up in the supply chains of American supermarkets and restaurants. The migration agency said Friday that the report follows several years of close work with Indonesian authorities to rescue hundreds of fisherman identified as victims of trafficking.
    • Many of the stranded are men from Myanmar who went to neighboring Thailand in search of work. They were taken by boat to Indonesia, which has some of the world’s richest fishing grounds. Others left behind on the islands are Cambodian and a few from the poorer parts of Thailand.
    • Major leaders in the U.S. seafood and retail industries sent a letter to the ambassadors of Thailand and Indonesia this week, demanding to know what will be done to free slaves in the seafood industry. Phil Robertson, deputy director of Human Rights Watch’s Asia division, also urged Thai authorities to tackle the scourge.
    • “The Thailand government has made repeated verbal commitments to get tough with traffickers but every time real follow-up has been lacking,” Robertson said in an email. “The question now is whether the revelations in AP’s article will finally be enough to push Thailand to take long overdue action against fishing vessels that are systematically using slave labor to catch the seafood ending up in America’s kitchens.” The AP article – By Margie Mason and Robin McDowell – March 28, 2015.

    Coup government criticized

    • In a speech to students at Chulalongkorn University on Monday, Daniel Russel, the U.S. assistant secretary of state for East Asian and Pacific affairs — America’s highest-level diplomat to visit Thailand since the coup — said the perception of fairness is important to justice.
    • “I’ll be blunt here: When an elected leader is deposed, impeached by the authorities that implemented the coup, and then targeted with criminal charges while basic democratic processes and institutions are interrupted, the international community is left with the impression that these steps could be politically driven,” Russel said.
    • Russel also expressed concern over “significant restraints on freedom of expression” in Thailand today, and said the country’s political process does not represent “all elements of Thai society” — a reference to reforms, including the writing of a new constitution, which are going ahead without input from the popularly elected former ruling party. » The AP article– January 28, 2015.

    • “Thai democracy has died along with the rule of law,” Ms Yingluck, whose administration was ousted by the military in a coup last May, said in a statement posted on her Facebook page. “I will fight until the end to prove my innocence, no matter what the outcome will be.
    • “And most importantly, I want to stand alongside the Thai people. Together we must bring Thailand prosperity, bring back democracy and truly build justice in Thai society,” she added. » The Strait Times article – By Tan Hui Yee – January 23, 2015.

  • Yingluck defended the (Rice Subsidy Program) in an almost hour-long address on Thursday, and disputed all the charges against her.
  • “Banning me for five years would be a violation of my basic rights,” Yingluck said at the third and final hearing on her case on Thursday at Thailand’s National Legislative Assembly (NLA).
  • “This case that is aimed solely against me has a hidden agenda, it is politically driven.”
  • Yingluck said the rice scheme, which paid farmers above the market rate for their rice, was good for the economy. “It helped those with lower incomes earn more,” she said. “Farmers are the backbone of the country.” » The Reuters article – By Amy Sawitta Lefevre and Aukkarapon Niyomyat – January 22,2015

      UN warns world could have 40 percent water shortfall by 2030

    • The U.N. is warning that the world could suffer a 40 percent shortfall in water by 2030 unless countries dramatically change their use of the resource.
    • Many underground water reserves are already running low, while rainfall patterns are predicted to become more erratic with climate change. As the world’s population grows to an expected 9 billion by 2050, more groundwater will likely be used in farming, industry and for personal consumption.
    • In a report issued in India on Friday, the U.N. says if current trends don’t change, the world will have only 60 percent of the water it needs in 2030, and demand will rise 55 percent by 2050.
    • The shortfall could cause crops to fail, industries to collapse, ecosystems to break down, and trigger violent conflicts over water rights. » The AP article – March 22, 2015

      Domestic stockpiling of rice as in Thailand and India wins US support

    • India won U.S. support for a massive domestic food stockpiling scheme on Thursday, rescuing the biggest global trade deal in two decades and giving new Prime Minister Narendra Modi a victory without major concessions.
    • Under the pact with Washington, India will lift a veto on a global agreement on streamlining customs rules that is likely to add $1 trillion to the world economy as well as 21 million jobs – 18 million of them in developing countries.
    • In talks to break the deadlock, India stressed the importance of ensuring that its 1.25 billion people, many of them poor, have enough to eat. It won an open-ended commitment from Washington to protect its food purchase and distribution scheme from any challenge under WTO disputes procedures.
    • Without the clause, India could have been vulnerable to attack by trade partners over exports of any surplus grain stocks accumulated in government warehouses.
    • India refused to bow to calls to scale back its scheme to buy wheat and rice from its farmers, despite criticism that this encouraged overproduction. A food security law passed by the last government actually expanded the number who were entitled to receive cheap food grains to 850 million. » The Reuters article – By Manoj Kumar and Krista Hughes – November 13, 2014.

      Editor:

      The Thai rice program under the Yingluck government did not loose money as alleged by political opponents.

    • Farmers that received payment for their rice helped the domestic economy as they spent what they had earned.
    • As the rice stockpiled is sold, the difference between the sales price and the amount paid to the farmers will determine how much the Thai government program will have subsidized the farmers.
    • Governments throughout the world provide subsidies to their farmers. The subsidies try to keep farmers farming to insure there is enough food on the table for the farmers and the rest of the world.
      • When farmers grow more food and earn more income, they are better able feed to their families, send their children to school, provide for their family’s health, and invest in their farms. This makes their communities economically stronger and more stable. » the full report from the Bill and Melinda Gates Foundation

    • The New York Times – Learning Network – Running Out of Rice?
      Overview of Lesson Plan | In this lesson, students learn about the reasons for Australia’s rice shortage and its impact on the rest of the world. They then individually identify the causes and effects of another agricultural commodity’s recent changes in the global marketplace. » The Science and Economy Lesson.

    Planting paddy rice in Laos Image credit – Photographer: Stuart Ling
    In Laos, an agriculture official recently said the method, called the System of Rice Intensification, or SRI, had doubled the size of rice crops in three provinces and would spread to the whole country because it had provided greater yields with fewer resources.

    • Related Background: Get More From Less With System of Rice Intensification (SRI) –
      Using SRI, India, Indonesia, Cambodia, Vietnam, and the Philippines have all recorded increases in rice yields from 60% to over 170% » The World Bank article and guide to planting.
    • The New York Times – Learning Network – Addressing Hunger Around the Globe
      Overview | In this lesson, developed in recognition of World Food Day, students consider the definition of hunger and where and how hunger most affects people, including children. They then consider the fact that hunger is “solvable” and create action plans to inform and engage their communities. Go to this Science and Economy Lesson.

    How to deal with global deflation risks

    Domestic spending can only increase when more people have money to spend

    • Janet Yellen has a message for European central bankers struggling to decide whether more bond purchases are needed to stave off deflation: Do whatever it takes.

      Japan’s stimulus spending target will finally reach the average Japanese worker

    • Massive monetary and fiscal stimulus inaugurated by Prime Minister Shinzo Abe over the last two years have mainly benefited big corporations and wealthy investors.
    • In the first nine months of 2014, profits for companies on the broad Topix exchange were more than double the same period two years earlier.
    • The government added to the push with another $29 billion fiscal stimulus approved Saturday, including spending vouchers and coupons for consumers, welfare checks for low-income families with small children and heating-oil subsidies. It’s all meant to put more spending power in the economy. » The Wall Street Street Journal article – By Aaron Back – December 29, 2014.

  • As crude oil leads a collapse in commodity prices, a German gauge of the outlook for inflation over the next five years has fallen below zero. With no increases in consumer prices in sight, bondholders’ interest and repayments are worth more, inflaming demand for fixed income. The longest maturities are setting the pace from Europe to the U.S.
  • Adding to the momentum is the prospect that central-bank measures to rekindle inflation would involve efforts to keep down borrowing costs, including so-called quantitative easing from the European Central Bank. » The Bloomberg article – By David Goodman – December 13, 2014.
    • Yellen, who succeeded Ben S. Bernanke in February as Fed chair, said the global crisis and slow recovery have underlined the importance for governments of improving their finances in good times so they can spend money stimulating their economies during downturns.
    • Another lesson, she said, was the importance of a stable financial industry backed by “effective regulation and supervision.”
    • Yellen was optimistic about the economic outlook, saying that “headwinds associated with the financial crisis will wane.”
    • As central banks step away from extraordinary policies, markets may see more volatility.
    • “The Federal Reserve will strive to clearly and transparently communicate its monetary policy strategy in order to minimize the likelihood of surprises that could disrupt financial markets,” she said. » The Bloomberg article – By Christopher Condon November 7, 2014.

    American Growth Fueled by U.S. Consumers, Businesses Despite Concerns on Overseas Economies

    • One question now is how the economy will fare amid a global growth slowdown that has strengthened the dollar, hurting U.S. exporters, even as a broad swath of industry and consumers benefit from falling oil prices.
    • Thursday’s report showed that trade during the third quarter strongly boosted the economy, adding 1.32 percentage points to GDP growth, as imports fell and exports rose.
    • The 18-nation eurozone risks entering its third recession in five years, while concerns are also mounting about a slowing Chinese economy and Japan’s struggle to escape decades of stagnation. » The WSJ article – By Nick Timirads and Eric Morath – October 30, 2014.

    Yellen resists pressure to tighten monetary policy more quickly

    • Federal Reserve Chairwoman Janet L. Yellen said there was no “simple recipe” for central bank policymakers in deciding when the labor market had improved enough to handle a rise in interest rates.
    • She expressed continued concern about the job situation and said that the sharp drop in the unemployment rate over the last year “somewhat overstates the improvement in overall labor market conditions.”
    • Yellen cited as negative factors the “sluggish pace” of wage growth, the large number of people who can find only part-time jobs and the historically low level of the working-age population that is employed.
    • “There is no simple recipe for appropriate policy in this context,” Yellen said.
    • Fed policymakers “will be closely monitoring incoming information on the labor market and inflation in determining the appropriate stance of monetary policy,” she said. » The Latimes article – By Jim Puzzanghera – August 22, 2014.

    Global economic activity should strengthen but momentum could be weaker than expected

    • because potential growth is weaker and investment … remains subdued,” IMF chief Christine Lagarde told an economic conference in southern France.
    • Lagarde made a plea for more public investment, saying the “investment deficit” in both the public and private sectors was dragging down growth in most countries.
    • “We must therefore take steps to boost efforts to strengthen growth,” she added. “This is the opportunity in a number of countries to relaunch investment, without threatening the viability of public finances.” » The Reuters article – By Ingrid Melander and Alexandre Boksenbaum-Granier – July 6, 2014.

    Here are five reasons the United States is outpacing other major economies:

    • An Aggressive Central Bank
      “The Federal Reserve acted sooner and more aggressively than other central banks in keeping rates low,” says Bernard Baumohl, chief global economist at the Economic Outlook Group.
    • Stronger Banks
      The United States moved faster than Europe to restore its banks’ health after the financial crisis of 2008-2009. The U.S. government bailed out the financial system and subjected big banks to stress tests in 2009 to reveal their financial strength. By showing the banks to be surprisingly healthy, the stress tests helped restore confidence in the U.S. financial system.
    • A more flexible economy
      Economists say Japan and Europe need to undertake reforms to make their economies more flexible — more, in other words, like America’s.
    • Less budget-cutting

      Weighed down by debt, many European countries took an ax to swelling budget deficits. They slashed pension benefits, raised taxes and cut civil servants’ wages. The cuts devastated several European economies. They led to 27 percent unemployment in Greece, 14 percent in Portugal and 25 percent in Spain. The United States has done some budget cutting, too, and raised taxes. But U.S. austerity hasn’t been anywhere near as harsh.

    • A roaring stock Market

      The Fed’s easy-money policies ignited a world-beating U.S. stock market rally. Over the past five years, U.S. stocks have easily outpaced shares in Europe, Japan and Hong Kong. That was one of Bernanke’s goals in lowering rates. He figured that miserly fixed-income rates would nudge investors into stocks in search of higher returns. Higher stock prices would then make Americans feel more confident and more willing to spend — the so-called wealth effect. » The AP article – By Paul Wiseman – July 4, 2014.


    The risks of chasing higher interest rates

    • Federal Reserve Chair Janet Yellen said so far the Fed doesn’t see a “systemic threat” from the high-yield loan market since broad measures of credit growth don’t suggest excessive debt, and improved capital and liquidity positions at banks “should ensure resilience” against losses.
    • Yellen delivered a comprehensive salvo in the global debate among central bankers over whether interest rates should be a first-order tool to curb financial excess, saying supervision should be “the main line of defense” against turmoil.
    • Yellen and her Fed colleagues are debating when to raise the benchmark lending rate for the first policy tightening since 2006. The long period of low interest rates may have increased risk in the financial system as investors seek higher returns. » The Bloomberg article – By Craig Torres and Jeff Kearns – July 3, 2014.

    Bank Stress Tests Original image source

    The International Monetary Fund cut its growth forecast for the United States

    • In its annual health check of the U.S. economy, the IMF also urged the United States to boost the minimum wage, which is below most international standards, to fight poverty, which lingers above 15 percent.
    • “Given the substantial economic slack in the economy, there is a strong case to provide continued policy support,” the IMF said.
    • It said its forecasts show the U.S. economy would only return to full employment by the end of 2017, with inflation remaining low, suggesting the Fed could keep rates at zero for longer than the middle of 2015.
    • The IMF urged the United States to increase spending on infrastructure and education and change parts of its tax system, including boosting the federal gasoline tax and reinstating the tax credit for research and development, to help spur growth. » The full Reuters article – By Anna Yukhananov – June 16, 2014.

    “Only a strong economy can deliver persistently high real returns to savers and investors.”

    • Federal Reserve Chairman Ben S. Bernanke signaled he will keep the Fed’s target interest rate low to support the economy, even as some colleagues warn the policy risks triggering financial market instability.
    • “Premature rate increases would carry a high risk of short-circuiting the recovery, possibly leading — ironically enough — to an even longer period of low long-term rates,” Bernanke said. » The full Bloomberg article – By Joshua Zumbrun & Aki Ito – March 2, 2013.

      Looking Back:

      Links between trade and currency values (Jupiter images)

    • Mexico. Brazil. Argentina. Mexico, again. Thailand. Indonesia. Argentina, again. And now, the United States.
      The story has played itself out time and time again over the past 30 years. Global investors, disappointed with the returns they’re getting, search for alternatives. They think they’ve found what they’re looking for in some country or other, and money rushes in.
      But eventually it becomes clear that the investment opportunity wasn’t all it seemed to be, and the money rushes out again, with nasty consequences for the former financial favorite. That’s the story of multiple financial crises in Latin America and Asia. And it’s also the story of the U.S. combined housing and credit bubble. These days, we’re playing the role usually assigned to third-world economies. Read the Column » By – Paul Krugman, New York Times – January, 2008

    • The New York Times – Learning Network – Examining Key World Economies and Comparing Their Current Volatility
      Overview: Students review key economic terms and ideas necessary for understanding world economies. They then research the economies of countries in the Group of 8 (20) and present how their economies have changed over the past five years and how the relationships among these countries affect each other in light of world events. » Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – Nowhere to Go but Up? Analyzing Economic Measures in a Downturn
      Overview | How do we know when the economy is in a recession? How do key economic indicators perform in a downturn? In this lesson, students create graphs of various economic measurements, using quantitative and qualitative reasoning skills to compare, contrast and correlate the performance of measures like gross domestic product, unemployment and personal income. » Go to this Economy and Society Lesson.

    Updated August 22, 2105: Causes of Market Turmoil

    Threat is greatest to emerging-market economies, where the China effect looms largest

    • While the short-term outlook for the U.S. and most of the rich world is still relatively benign, it also is fragile. One reason: Long-term underlying growth is being undermined by an aging population, slowing growth of the workforce and a puzzling slump in the growth of productivity—how much output each worker produces.
    • A second reason the rich world’s outlook is fragile is that inflation is stubbornly stuck below the 2% level that the Fed, ECB and Bank of Japan all target. The recent slump in oil prices and China’s devaluation, which will push down prices of everything that it sells, will nudge inflation even lower. When inflation is low, so are interest rates, which gives central banks less ammunition to bolster growth. That lack of ammunition worries policy makers, and it should worry investors who have often assumed central banks would help put an end to bear markets.
    • But in a world of low inflation and tepid underlying growth, even a modest increase in (interest) rates could pose headwinds. » The Wall Street Journal Analysis

    China moves to devalue the Yuan and factories contracted

    • Given that China’s currency, the yuan, is linked to the dollar’s value, it has risen as well against the euro and many emerging market currencies, weighing on Chinese exports.
    • Analysts don’t see China’s move as sparking a wider currency war, but rather as an indication that exchange rates will continue to play a central role in efforts by policy makers to protect fragile economies.
    • Links between trade and currency values (Jupiter images)

    • Analysts said they would be eyeing other Asian economies to see whether China’s move has ripple effects. If policy makers in these countries take steps to weaken their currencies to maintain competitiveness with China, it could spark a more global trend toward easier monetary policies. » The WSJ article – By Brian Blackstone – August 11, 2015…. Updated August 19, 2015: Vietnam devalues its currency by 1% » The AP article.

    Global banks admit guilt in forex probe, fined nearly $6 billion

    • Four major banks pleaded guilty .. to trying to manipulate foreign exchange rates and, with two others, were fined nearly $6 billion in another settlement in a global probe into the $5 trillion-­a-­day market.
    • The settlements .. stood out in part because the U.S. Department of Justice forced Citigroup’s main banking unit Citicorp, and the parents of JPMorgan, Barclays and Royal Bank of Scotland to plead guilty to U.S. criminal charges.
    • The investigations are far from over. Prosecutors could bring cases against individuals, using the banks’ cooperation pledged as part of their agreements. Probes by federal and state authorities are ongoing over how banks used electronic forex trading to favor their own interests at the expense of clients.
    • Citicorp will pay $925 million, the highest criminal fine, as well as $342 million to the U.S. Federal Reserve. Its traders participated in the conspiracy from as early as December 2007 until at least January 2013, according to the plea agreement.
    • Traders at Citi, JPMorgan and other banks were part of a group known as “The Cartel” or “The Mafia,” participating in almost daily conversations in an exclusive chat room and coordinating trades and otherwise fixing rates. » The Reuters article – BY Karen Freifeld, David Henry and Steve Slater – May 21, 2015.

    Stricter Regulation of Foreign banking in the the U.S.

    • Federal Reserve Governor Daniel Tarullo defended the central bank’s rules requiring stricter supervision of foreign banking companies operating in the U.S., saying the global financial crisis made it clear that regulation needed to be expanded.
    • “The most important contribution the United States can make to global financial stability is to ensure the stability of our own financial system,” Tarullo said in a speech today to a Harvard Law School symposium in Armonk, New York.
    • Foreign bank reliance on short-term wholesale liabilities such as commercial paper to fund longer-term securities created instability in 2008 as sources of cash grew tight. The Fed provided backstop loans to both domestic and foreign bond dealers through the Primary Dealer Credit Facility, and to foreign banks directly through the discount window.
    • The Fed “provided substantial liquidity to the broker-dealer affiliates of the bank holding companies, as well as to the primary dealer subsidiaries of foreign banks,” Tarullo said.
    • The biggest borrowers from the discount window as the program reached its crisis-era peak were foreign banks, accounting for at least 70 percent of the $110.7 billion borrowed during the week in October 2008 when use of the program surged to a record.
    • Under the rule issued in February, foreign banks with non-branch assets of $50 billion or more must hold their subsidiaries in holding companies that are subject to capital and liquidity standards applied to U.S. banks, and meet special risk management standards. » The full Bloomberg article – By Craig Torres and Susanne Walker – March 28, 2014

    News from Wall Street

    Image source – The Globe and Mail
      “Laws, like sausages, cease to inspire respect in proportion as we know how they are made.”
      John Godfrey Saxe, American poet and lawyer, 1869

    • Add bond ratings to that list. » More in this New York Times article – By Floyd Norris November 8, 2012.

    S&P found guilty of misleading investors

  • Standard & Poor’s misled investors by awarding its highest rating to a complex derivative product that collapsed in value less than two years after it was created by ABN Amro, an Australian judge has ruled, in a landmark case that paves the way for legal action in Europe.
  • In a damning verdict the Federal Court of Australia ruled S&P and ABN Amro, now owned by RBS, had “deceived” and “misled” local councils that bought triple-­A rated constant proportion debt obligations (CPDOs) from an intermediary in 2006. » The full Financial Times article – By Neil Hume in Sydney – November 5, 2012.

  • Bank Investors Dismiss Moody’s Cuts as Years Too Late

    • Moody’s Investors Service suffered a downgrade of its own as markets responded to the company’s rating cuts of 15 of the world’s largest banks by bidding up the value of their stocks and bonds.
    • “We view the Moody’s downgrade as another overhyped story of 2012,” David Trone, analyst at JMP Securities LLC, wrote to his clients. “The corporate market thinks for itself and credit rating agencies are often lagging indicators.” » The full Bloomberg article – By Dakin Campbell and Michael J. Moore on June 22, 2012.
    • Looking back
    • A report by the Senate’s Permanent Subcommittee on Investigations said that S&P, Moody’s and Fitch Ratings helped trigger the financial crisis when they cut thousands of mortgage securities they rated AAA to junk status. The raters had engaged in a “race to the bottom” to win business, lawmakers said.
    • Even after Congress included rules in the Dodd-Frank Act last year designed to cut reliance on ratings, S&P and its competitors remain a key part of the financial markets. Pension and mutual funds often require minimum ratings to buy debt securities. Banks are generally required to hold less capital to back higher rated bonds as regulators including the Federal Reserve have yet to find an alternative. » The full Bloomberg background article – By Zeke Faux and Jody Shenn – Sep 1, 2011

    • The New York Times – Learning Network – Examining Key World Economies and Comparing Their Current Volatility
      Overview: Students review key economic terms and ideas necessary for understanding world economies. They then research the economies of countries in the Group of 10 and present how their economies have changed over the past five years and how the relationships among these countries affect each other in light of world events.  Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – Understanding Credit Cards and Credit Card Debt
      Overview: Students examine and learn the basics about credit cards and credit card debt, then create an informational brochure for young students. Go to this Economy and ESL Lesson.

    The American Election 2012

    In an assertive State of the Union address that fleshed out the populist themes of his inauguration speech,

    • Mr. Obama declared it was “our generation’s task” to “reignite the true engine of America’s economic growth — a rising, thriving middle class.”
    • “Every day,” he said, “we should ask ourselves three questions as a nation: How do we attract more jobs to our shores? How do we equip our people with the skills to get those jobs? And how do we make sure that hard work leads to a decent living?”
    • “It is our unfinished task to restore the basic bargain that built this country,” he said. “The idea that if you work hard and meet your responsibilities, you can get ahead, no matter where you come from, what you look like, or who you love.”
    • “It is our unfinished task to make sure that this government works on behalf of the many, and not just the few,” he continued. “That it encourages free enterprise, rewards individual initiative and opens the doors of opportunity to every child across this great nation of ours.”
    • He urged lawmakers to act on immigration, climate change, budget negotiations, and, above all, on gun violence, delivering an emotional appeal for stricter controls that drew on recent tragedies like the schoolhouse massacre in Newtown, Conn. &#187 The full New York Times article – By Mark Landler – February 12, 2013.

      The election victory

    • It was a strong endorsement of economic policies that stress job growth, health care reform, tax increases and balanced deficit reduction — and of moderate policies on immigration, abortion and same-sex marriage.
    • It was a repudiation of Reagan-era bromides about tax-cutting and trickle-down economics, and of the politics of fear, intolerance and disinformation.
    • Mr. Romney’s strategy of blaming Mr. Obama for just about everything, while serenely assuring Americans he had a plan to cut the deficit without raising taxes or making major cuts in Medicare, simply did not work. » The full New York Times Editorial – November 6, 2012

    Republican presidential team looks back


    • The New York Times – Learning Network – Election 2012: Teaching Ideas and Resources » Go this Building a Healthy Society Lesson.
    • The New York Times – Learning Network – The Political is Personal
      Overview | Students explore their own personal political philosophies by identifying events, people and experiences that have helped shape their beliefs and writing an essay. » Go to this Building Society and ESL Lesson.

    Cash, Charge or Save? – Warren Buffett stars in children’s cartoon

    Secret Millionaires Club » Original Guardian image and article source

      Nebraska-based Buffett has built a vast army of US followers who admire his flair for picking successful investments and acquisitions. His fortune is estimated at $37bn (£22.5bn), ranking second only to Bill Gates’s $40bn on Forbes magazine’s annual ranking of the world’s richest people.
      Buffett said the credit crunch served as a reminder of the need to teach children about money: “What better time to help educate our kids about financial responsibility.” From this Guardina article » By Andrew Clark.


    • The New York Times – Learning Network – Preparing an Annual Budget
      Overview | Students play a game to determine if they know the costs of common items. As consumers, they then develop their own personal finance budgets to determine how they might reduce their personal spending.Go to this Economy and ESL Lesson.
    • The New York Times – Learning Network – Understanding Credit Cards and Credit Card Debt
      Overview | Students examine and learn the basics about credit cards and credit card debt, then create an informational brochure for young students. Go to this Economy and ESL Lesson.

    American political drama continues

    Cliff Analogy Overstates Immediate Economic Harm

    • The term “fiscal cliff,” the common phrase describing more than $600 billion of U.S. tax increases and spending cuts scheduled to take effect in January.
    • Over the cliff

    • “Cliff conjures up Wile E. Coyote, and January comes, and all of a sudden you plunge into a deep recession inevitably and it all happens fast,” said Chad Stone, chief economist at the Center on Budget and Policy Priorities in Washington. “That’s not the way things would unfurl.”
    • “It’s very effective if you in fact can convince people that going past it would be catastrophic,” said Martin Medhurst, a professor of political science at Baylor University in Waco, Texas, who studies political communication. “If it gets to the point where it does go past the deadline, then you could always recalibrate and adopt a different metaphor.” » The full Bloomberg article – By Richard Rubin & Alexander Kowalski – December 7, 2012

    Stronger U.S. growth is beneficial for the entire global economy

    • “Monetary easing that supports the recovery in the advanced economies should stimulate trade and boost growth in emerging market economies as well,” Federal Reserve Chairman Ben S. Bernanke said, echoing comments by Fed Vice Chairman Janet Yellen at the IMF meetings.
    • “An easing in financial conditions and greater public confidence should help promote more rapid economic growth and faster job gains over coming quarters,” Bernanke said.
    • “Any costs for emerging market economies of monetary easing in advanced economies should be set against the very real benefits of those policies,” the Fed chairman said.
    • Slowing growth in emerging market economies this year in part results from decelerating exports to the U.S., Europe and other advanced economies, he said. » The full Bloomberg article – By Craig Torres – October 14, 2012.

      Global Financial Stability Report released today.

    • IMF wrote: “Restoring confidence among private investors is paramount for the stabilization of the euro area.”
    • Failure to implement fiscal tightening or set up a single supervisory system in the timing agreed could force 58 European Union banks to shrink assets, the IMF said.That would hurt credit and crimp growth by 4 percentage points next year in Greece, Cyprus, Ireland, Italy, Portugal and Spain, Europe’s periphery.
    • While the European Central Bank’s plan to purchase bonds of debt-burdened countries bought governments time to act, divisions over a banking union and Spain’s reluctance to ask for a bailout threaten to boost borrowing costs. » The full Bloomberg article – By Sandrine Rastello – October 10, 2012.

    Protecting Investors

    Europe Needs a Federal Reserve

    • Since 2008, hardly any banks have been shut down in the euro zone, while American regulators have closed hundreds of institutions.
    • Bank “stress tests” in countries like Spain continue to underestimate the true extent of bad loans. Greek banks were deemed solvent — and therefore eligible for loans from Greece’s central bank — even as nervous depositors withdrew hundreds of millions of euros.
    • Only the European Central Bank, not national regulators, should have the power to decide if a bank is financially sound, and eligible for central-bank loans.
    • If the European Central Bank were to gain this power, it could shut down insolvent (zombie) banks, limit excessively high levels of central-bank credit, and make it clear to the euro zone’s members that help from Frankfurt cannot go on forever. » The full New York Times Op-Ed – By Aaron Tornell and Frank Westermann – June 20, 2012.

    The Problem With Europe Is Not Just the Euro

    • Put differently, if Europe wants first-class infrastructure and a comprehensive welfare state without piling up ever more debt, governments need to shake up working habits to generate the growth that spins off tax revenue.
    • But Marc Chandler, an economist with Brown Brothers Harriman in New York, said globalization would have squeezed the less sophisticated economies on the southern fringes of Europe in any event.
    • “The rise of China and emerging markets more generally have challenged unskilled labor around the world, not just in the periphery of Europe, but in the U.S. and U.K. too,” he said in a report.
    • The challenge is one that the West is struggling to meet. Computers have compounded the “China effect” by eliminating a wide range of traditional jobs, whether bank tellers or lathe operators.
  • Another set of problems that Europe would have to confront with or without the euro crisis has to do with rapid aging. The crisis has at least had the virtue of prodding politicians to propose ways of tackling ever-rising bills for pensions and age-related health care. » The full New York Times article – By Allen Wheatley (Reuters) – May 28,2012.

    • So what does ail Europe?

    • The truth is that the story is mostly monetary. By introducing a single currency without the institutions needed to make that currency work, Europe effectively reinvented the defects of the gold standard — defects that played a major role in causing and perpetuating the Great Depression.
    • More specifically, the creation of the euro fostered a false sense of security among private investors, unleashing huge, unsustainable flows of capital into nations all around Europe’s periphery. As a consequence of these inflows, costs and prices rose, manufacturing became uncompetitive, and nations that had roughly balanced trade in 1999 began running large trade deficits instead. Then the music stopped.
    • If the peripheral nations still had their own currencies, they could and would use devaluation to quickly restore competitiveness. But they don’t, which means that they are in for a long period of mass unemployment and slow, grinding deflation. Their debt crises are mainly a byproduct of this sad prospect, because depressed economies lead to budget deficits and deflation magnifies the burden of debt. » The full New York Times commentary – By Paul Krugman – February 26, 2012.

    Bernanke pursued new stimulus last year to create jobs, defying critics who said his record accommodation would spark inflation.

    • Federal Reserve Chairman Ben S. Bernanke’s focus on growth “has helped signal to the markets that if we have temporary blips in inflation, the Fed isn’t going to go crazy and try to stabilize the price level at any cost to the economy,” Mark Gertler, a professor at New York University who has co-authored research with Bernanke. Gertler said.
    • Now, with U.S. growth accelerating and the euro area on the brink of a second recession in three years, Bank of England Governor Mervyn King and European Central Bank President Mario Draghi are showing they also are willing to spur their economies while inflation exceeds their goals. » The full Bloomberg article – By Caroline Salas Gage – January 23, 2012.

    A crucial mechanism linking financial players in the United States to the problems in Europe involves credit default swaps,

    • those insurance-like products that did so much damage during the 2008 financial crisis. (Think American International Group.)
    • Billions of dollars in swaps have been written on sovereign debt, guaranteeing that those who bought the insurance will be paid if Greece or other countries default.
    • But since these instruments trade in secret, investors don’t know who would be on the hook — as A.I.G. was in its ill-fated mortgage insurance — should a government default or a bank fail.
    • Measuring the loans made to European banks against their deposits tells the story. Across Europe, according to Autonomous Research, loans to banks exceed their deposits by 6 percent. Among French banks, loans exceed deposits by 19 percent. In Greece, they swamp deposits by 32 percent.
    • In the United States, by contrast, banks are borrowing less than 90 percent of their deposits, on average.
    • This is why it is becoming such a problem for European banks that so many short-term lenders are declining to renew when loans come due. Money market funds, traditionally big investors in short-term paper issued by European banks, have been reducing exposures. » The full New York Times article – By Gretchen Morgenson – Published: September 17, 2011.

    The history of nearly all markets is that customers suffer if dealers are able to keep them ignorant of what is actually going on.

    As Mary L. Schapiro, the S.E.C. chairman, put it, in the old system “the market participants with the best access to the markets” — New York Stock Exchange specialists and Nasdaq market makers — “were subject to significant trading obligations that were designed to promote fair and orderly markets and fair treatment of investors.” “These traditional obligations,” she added in a speech to the Economic Club of New York this month, “have fallen by the wayside.
    More transparency is needed, and it will take rules to accomplish that. But some of the other rules being considered might not be necessary if the S.E.C. took what might be called a “principles-based approach.” » The full New York Times article – By Floyd Norris – Published: September 23, 2010

    Protecting Investors

    • Declines in index futures convinced traders a “cataclysmic event” was pushing down equities on May 6, leading them to abandon the market and triggering the biggest crash in a quarter century, federal regulators found. » the full Bloomberg article – By Nina Mehta and Whitney Kisling – Oct 2, 2010
    • No such trades happened at the New York Stock Exchange, which had rules to slow down trading and let someone with a brain look first when trading got out of hand.
      Much of Wall Street wanted the S.E.C. to penalize the Big Board for slowing things down, which they thought was unconscionable in a modern world where trades should be executed within milliseconds of being sent to a market. » The full New York Times article – By Floyd Norris – Published: September 23, 2010

    • The New York Times – Learning Network – Examining Key World Economies and Comparing Their Current Volatility
      Overview: Students review key economic terms and ideas necessary for understanding world economies. They then research the economies of countries in the Group of 8 (20) and present how their economies have changed over the past five years and how the relationships among these countries affect each other in light of world events. Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – A Plan for Recovery
      Overview: Students examine the “who, what, where, when, why and how” of the proposed stimulus plan for the U.S. economy; they then write their own proposal outlining how stimulus funds might benefit their community. Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – Exploring the Impact of Keynesian Economics During a Recession
      Overview: Students define and examine the role of Keynesian economics during recessions and depression, then write a memo to President Obama advising him on how to put Keynesian principles into practice. Go to this Economy and Society Lesson.

    GOP’s only idea is tested

    GOP Republican control

    Republican Party’s empty threat – image source
    • “There is a false sense of complacency among some in the market that somehow things will be always solved at midnight,” Sperling, the director of Obama’s National Economic Council, told Bloomberg News reporters and editors.
    • “Unless sensible people in the Republican Party are willing to take back control of their party,” he said, “there is a much more serious risk of a negative economic and financial event.”
    • “This shutdown is about rolling back our efforts to provide health insurance to folks who don’t have it,” Obama said at the White House yesterday.
    • “I know it’s strange that one party would make keeping people uninsured the centerpiece of their agenda, but that apparently is what it is.” » The full Bloomberg article – By Richard Rubin, Kathleen Hunter & Roxana Tiron – October 2, 2013.

    IMF warns U.S. not to scale back stimulus too soon

    • “In our assessment, there is no need to rush to exit from monetary accommodations, given the still large output gap, given the subdued growth that we have and given the well-anchored inflation expectations,” IMF Managing Director Christine Lagarde said.
    • The IMF also criticized U.S. fiscal policy, calling for the repeal of the automatic federal spending cuts, known as the sequester, and urging lawmakers to act promptly to raise the nation’s debt limit. » The full Los Angeles Times article – By Jim Puzzanghera, Los Angeles Times – June 15, 2013.
    • The U.S. budget deficit in June was 4.3 percent of gross domestic product, down from 10.1 percent in February 2010 and the narrowest since November 2008, when Obama was elected to his first term, according to data compiled by Bloomberg from the Treasury Department and the Bureau of Economic Analysis. » The full Bloomberg article – By Richard Rubin, Kathleen Hunter & Roxana Tiron – October 2, 2013.

    U.S. Federal Reserve ties interest-rate outlook to unemployment and inflation

    • Federal Reserve Chairman Ben S. Bernanke called the current state of the labor market, with unemployment at 7.7 percent, “an enormous waste of human and economic potential” and said the benefits of more bond buying outweigh the potential risks.
    • “A return to broad-based prosperity will require sustained improvement in the job market, which in turn requires stronger economic growth,” Bernanke said yesterday.
    • Bernanke said tying the outlook for interest rates to economic variables is a better way to communicate the policy outlook than using a time horizon because markets can “infer how our policy’s likely to evolve.” » The full Bloomberg article – By Caroline Salas Gage & Craig Torres – December 13, 2012.

    Facing Down the Bankers

    • Dennis M. Kelleher, president of Better Markets, a nonprofit organization, does not work for banks. He works against them.
    • “What is at stake is whether the American people are at risk of another Great Depression,” Mr. Kelleher, who is 54, said in a recent interview. “We exist to fight back against the forces trying to make us forget just how bad it was.”
    • “It’s a battle in which the Wall Street lobbying and public-relations machine will have a decisive advantage,” said Mr. Kaufman, the former Delaware senator. “With the regulators, you don’t have to win. You just have to gum them up. And that is exactly what Wall Street has done.” » The full New York Times article – By Annie Lowrey – May 30, 2012.

    News from Wall Street

    Another day on Wall Street – The Globe and Mail

    Private Equity Industry Attracts S.E.C. Scrutiny

    • While the largest private equity shops receive the most publicity, the industry is vast, with several thousand firms and more than $1 trillion in assets under management.
    • One area of focus is portfolio valuation. Private equity managers use varying, complex methodologies to value their holdings, which are often private companies bought using debt. Because there are no easily ascertainable market prices for private companies, subjective judgments play a significant role in their valuation.
    • Earlier this month, federal prosecutors charged three former Credit Suisse executives with inflating the value of their mortgage-bond holdings to secure higher bonus payouts.
    • In announcing the initiative, the S.E.C. emphasized that it was interested in assessing returns across Wall Street. » The full New York Times article – By Peter Lattman – February 22, 2012.

    • The New York Times – Learning Network – Examining Key World Economies and Comparing Their Current Volatility
      Overview: Students review key economic terms and ideas necessary for understanding world economies. They then research the economies of countries in the Group of 8 (20) and present how their economies have changed over the past five years and how the relationships among these countries affect each other in light of world events. Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – A Plan for Recovery
      Overview: Students examine the “who, what, where, when, why and how” of the proposed stimulus plan for the U.S. economy; they then write their own proposal outlining how stimulus funds might benefit their community. Go to this Economy and Society Lesson.
    • The New York Times – Learning Network – Exploring the Impact of Keynesian Economics During a Recession
      Overview: Students define and examine the role of Keynesian economics during recessions and depression, then write a memo to President Obama advising him on how to put Keynesian principles into practice. Go to this Economy and Society Lesson.

    Update October 9, 2015: “Entrenched elite” in Thailand and Egypt continue blocking dissent to control power

    Nobel Peace Prize awarded to National Dialogue Quartet in Tunisia

    • The Norwegian Nobel Committee hailed the group known as the National Dialogue Quartet for its “decisive contribution to the building of a pluralistic democracy in Tunisia” in the five years since a popular uprising toppled a longtime authoritarian ruler — and helped set off similar upheavals across the Middle East.
    • ..the committee appeared to argue that Tunisia’s model of pursuing inclusive democracy offers a powerful counter-narrative to the collapse into chaos of countries such as Syria and Libya — or the reversion to authoritarian rule in Egypt in the aftermath of region wide revolts. » The La Times article – October 9, 2015.

    While in Thailand:

    Another Thai constitution to be drafted

    • Kan Yuenyong, an analyst at Siam Intelligence Unit think tank, said the junta’s aim of a constitution that gives the military overarching powers remained unchanged.
    • “At the end of the day, the junta has the same aims it did before, namely, it believes the political system doesn’t work and they need an umbrella organization to oversee the country and to weaken the electoral process but how they will do that and make it more palatable to people remains to be seen,” he said.
    • Deputy Prime Minister Wissanu Krea-ngam said Meechai Ruchupan, an adviser to the junta, would head the new committee.
    • Meechai led a junta-appointed panel that drafted the 2006 constitution, dubbed the “anti-Thaksin” charter because it appeared aimed at preventing the return of ousted former Prime Minister Thaksin Shinawatra. » The Reuters article – By Amy Sawitta Lefevre and Panarat Thepgumpanat – October 5, 2015.
    • Related: Democracy in Thailand – “It’s my country/I can do what I want!”LFS Lesson Simplified Mock Trial

    Coup government plan to send all internet traffic through one choke point

    • Protesters have blocked access to several Thai government websites over a plan to route all Internet traffic though a single gateway, which would make it easier for the military junta to monitor and censor communications.
    • The websites of the Ministry of Information and Communication Technology and other agencies were temporarily knocked out Wednesday and Thursday after activists accessed them repeatedly, overwhelming their servers. » The AP article – October 3, 2015.

    EU calls on Thai gov’t to allow critical voices to be heard

    • “Only a full and free public debate in which also critical voices can be heard will allow for true reform and reconciliation,” the EU delegation in Thailand said. » The AP article – September 24,
    • 2015.

    Pro-democracy protesters defy Thai junta with rare rally

    • Saturday’s protest also appeared designed at least in part to embarrass the current leader, army chief-turned-Prime Minister Prayuth Chan-ocha, who is scheduled to make an address this month at the U.N. General Assembly in New York.
    • Critics at home and abroad say the junta has made little effort toward reconciliation, and has focused on clamping down on dissent and civil liberties.
    • After initially promising quick elections to restore democracy, Prayuth now says polls will not be held until at least 2017. » The AP article – September 20, 2015.

      Thailand’s reluctant leader prolongs his grip on power

    • He repeatedly presents himself as a reluctant leader, and yet Thailand’s Prime Minister Prayuth Chan-ocha is now on track to become his country’s longest-ruling strongman since the 1970s.
    • Prayuth seized power in May 2014 to, as he put it, rescue his turmoil-racked nation and “return happiness to the people”.
    • puppets Image source

    • But the scuttling of a draft constitution this month has prolonged military rule and cast further doubts on the former army chief’s professed allergy to high office.
    • It could also erode rather than consolidate Prayuth’s power, say experts, as public discontent grows with a junta that has curbed basic freedoms and failed to energize the economy. » The Reuters article – By Andrew R.C. Marshall – September 15, 2015.

  • A Learning Foundation Lesson – Similarities and differences between Egypt and Thailand – Go to this ESL Compare and Contrast Lesson.

  • respect-my-vote

    Thai Voter trying to reach the poll for the February, 2014 election – Image source and article

    Bombing the latest of many challenges for Thailand’s ruling military junta

    • Charles F. Keyes, an American anthropologist who has studied Thai culture for half a century, says military leaders, in alliance with other conservative forces, seek a throwback to the “despotic paternalism” of the past.
    • “It is becoming clear that the vast majority of people in upcountry Thailand and the majority in Bangkok are not willing to be compelled to accept a hierarchical order such as existed through the 1950s,” he said, predicting that such opposition could “lead to more political turmoil in the kingdom of nolonger- smiling Thai.” » The Ap article – By Denis D. Gray – August 22, 2015 –
      Denis Gray has covered Thailand for more than 30 years.

    Five years after a bloody military crackdown on Thailand’s pro-democracy ‘Red Shirts’

    • relatives of those killed say unrepentant army rulers have failed in their promise to heal the country’s deep divisions.
    • Red Shirts are also alive to the reality that those “who had their hands in the killings have today returned to rule the country,” says Pavin Chachavalpongpun, a Thai politics expert at Kyoto University in Japan.
    • Simmering with anger, the movement remains in lockdown. But relatives of the those killed remain defiant and say they are not finished yet.
    • As Suriyan Pholsrila, whose husband Chanarong was gunned down on May 15, 2010, puts it: “Silence does not mean defeat.” » The AFP article – By Jerome Taylor- May 13, 2015

    Updated August 29, 2015 – Egypt:

    Politics in Egyptian Court rulings

      Egyptian court sentences three Al Jazeera journalists to prison

    • An Egyptian court sentenced three Al Jazeera TV journalists to three years in prison on Saturday for operating without a press license and broadcasting material harmful to Egypt, a case that has stirred an international outcry.
    • Amnesty International called Saturday’s verdict “farcical”.
    • “The fact that two of these journalists are now facing time in jail following two grossly unfair trials makes a mockery of justice in Egypt,” said Philip Luther, Amnesty’s Director for the Middle East and North Africa. » The Reuters article – By Ahmed Aboulenein – August 29, 2015.

  • CAIRO (Reuters) – The prosecution’s evidence in a trial this month of 51 alleged Muslim Brotherhood supporters in Egypt relied on the testimony of one police officer, Human Rights Watch said on Sunday.
  • HRW said the prosecution had presented little evidence to show the defendants did anything other than spread news about a mass sit-in in Rabaa square in 2013 and organize peaceful protests.
  • The court on April 11 had condemned 14 men to death and 37 others to a life sentence for their actions in opposition to the ousting of Islamist president Mohamed Mursi in 2013 by the military under Abdel Fattah al-Sisi, who is now president.
  • HRW’s criticism of Egypt’s judiciary comes two days before a separate trial involving Mursi in which he could face a possible death sentence. » The Reuter article – April 19, 2015.
    • An Egyptian court’s decision to sentence 14 men to death and jail 37 others accused of ties to the outlawed Muslim Brotherhood was “politically motivated” and “blatantly unjust”, Human Rights Watch (HRW) said on Sunday.
    • “It appears that the case against Muslim Brotherhood members leading to death sentences of 14 men is politically motivated,” Sarah Leah Whitson, HRW’s executive director for the Middle East and North Africa, calling it a “a sham proceeding”.
    • “The fact that those who publicized the mass killings of 2013 could go to prison for life while those who did the killings receive official accolades perfectly symbolizes the abject failure of transitional justice in Egypt,” she said. » The Reuters article _ By Sylvia Westall – April 13, 2015.

    • An Egyptian court sentenced a prominent activist to five years in jail on Monday for violating limits on demonstrations, part of one of the toughest crackdowns on dissent in Egypt’s history.
    • After the verdict was read out, chants of “Down, down with military rule!” rang out from supporters of Alaa Abdel Fattah crowded into the courtroom.
    • The blogger and software engineer is one of several activists to have been jailed since the army overthrew Islamist president Mohamed Mursi in mid-2013 and launched a crackdown not only on his Muslim Brotherhood but also on secular democracy activists. » The Reuters euronews article – By Shadi Bushra and Ali Abdelaty – February 23, 2015.

    • Egypt killings were ordered by top officials – report

    • The killing of hundreds of Egyptian demonstrators at two protest camps last year was systematic, ordered by top officials and probably amounts to crimes against humanity, Human Rights Watch said on Tuesday, calling for a UN inquiry.
    • Hundreds of supporters of Mursi’s Muslim Brotherhood have been killed and thousands arrested since he was ousted, with the largest number of deaths taking place during the storming of two protest camps by security forces on August 14, 2013.
    • The report said 817 protesters were killed during the clearing of the Brotherhood sit-in at Cairo’s Rabaa al-Adawiya and compared it to the 1989 massacre of protesters around China’s Tiananmen Square.
    • The report called on the U.N. Human Rights Council to establish an international commission of inquiry to investigate ‘‘the mass killings of demonstrators since June 30, 2013’’.
    • ‘‘Criminal charges should also be brought against those implicated in these acts, including in courts that apply the principle of universal jurisdiction,’’ it said.
    • The report calls Sisi (the current Egyptian president) a ‘‘principal architect’’ of the violence, sitting at the top of the army’s chain of command. » The Reuters article – By Maggie Fick – August 12, 2014.

    • The Islamic character of Egypt’s ousted government should not obscure the way the country resembles Argentina, Venezuela, Turkey, Thailand and other developing nations in which free elections after decades of autocracy have brought a new elite to power. The new rulers typically represent previously disenfranchised poor and rural populations, who often don’t share the cultural values of the capital’s middle and upper classes.
    • Applauders of military coups have in common two illusions: that the generals share their agenda and that their hated opponents, despite their electoral victories, can be politically nullified. Invariably, neither turns out to be true. Armed forces aren’t good at convening roundtables or implementing liberal platforms; they are good at using force. Even if they don’t torture and kill, they sweep up nonviolent political leaders, shut down media they regard as troublesome and try to impose political rules protecting their own political and economic interests.
    • Oh, and by the way, those removed from power sooner or later have returned. » The full Washington Post Opinion article – By Jackson Diehl – July 04, 2013
    • Related article: Thailand, Egypt, and the “good coup” – By the Bangkok Pundit – updated: August 16, 2013.

    Thailand should drop charges against 4 anti-coup activists

    • Brad Adams, Asia director at Human Rights Watch, said all charges should be dropped immediately.
    • “The Thai military junta should immediately stop arresting and prosecuting peaceful critics and end the trial of civilians in military courts. Every arbitrary arrest shows Thailand descending deeper into dictatorial rule,” he said.
    • He added: “The rolling crackdown on civil and political rights in Thailand continues without letup. Promises to respect human rights and restore democracy are constantly contradicted by the junta’s actions.” » The Asian Correspondent article – March 17, 2015

    Thailand’s post coup troubles grow

    • The Thai economy, Southeast Asia’s second-largest, is stagnating.
    • It grew just 0.2 percent in the first nine months of this year. The central bank has cut its economic forecasts for 2014 and 2015.
    • Thailand is still under martial law following the coup, something that has kept visitors away and dented tourism, which accounts for around 10 percent of the economy.
    • Earlier this week the U.S. called a plan to delay a Thai general election to February 2016 “unwise and unjustified”. » The Reuters article – By Amy Sawitta Lefevre – December 25, 2014.
    • Shipments abroad, which make up the equivalent of about 70 percent of the economy, have shrunk in six out of nine months this year and will probably contract in 2014, according to the central bank.
    • “It’s possible that exports will lag behind other countries in the region like Vietnam, Malaysia and the Philippines which used to trail us in the past,” said Santitarn Satirathai, a Singapore-based economist at Credit Suisse Group AG. “We have obsolete technology and other structural problems that we must fix. The question is, can Thailand do enough to keep attracting foreign and domestic investment. It is quite worrisome.”
    • Thailand’s ranking for innovation in the World Economic Forum’s Global Competitiveness Index fell to 67 in 2014 from 33 in 2007, even as the Philippines, Indonesia and Malaysia rose.
    • Foreign direct investment applications approved from January to October fell 38 percent from a year earlier, according to the Board of Investment. » The Bloomberg article – By Suttinee Yuvejwattana and Supunnabul Suwannakij – November 17, 2014.

    Thailand’s coup-leader-turned-premier Prayuth Chan-ocha and 25 of the 33 military appointed cabinet are also millionaires

    • Asset disclosures by members of Thailand’s military-dominated post-coup Cabinet reveal they are quite well-off, a trait shared with the civilian politicians they accused of corruption.
  • The state National Anti-Corruption Commission on Friday released the asset declarations of the 33 Cabinet ministers, 25 of whom are millionaires in dollar terms.
  • Prime Minister Prayuth Chan-ocha, who as army commander led a May coup d’etat, listed 128.6 million baht ($3.9 million) in assets and 654,745 baht ($20,000) in liabilities. He also reported the transfer of 466.5 million baht ($14.3 million) to family members. » the AP article – November 1, 2014.
    • The new council is dominated by people close to the country’s traditional ruling elite. It shuns supporters of former Prime Minister Thaksin Shinawatra, who challenged the elite and dominated Thai politics for much of the past 13 years.
    • The new National Reform Council was officially endorsed by King Bhumibol Adulyadej. » The Associated Press Article – October 6, 2014.

    • “The interim constitution attempts to give legal justification to the sweeping and unaccountable power taken by the military junta,” said Brad Adams, Asia director at Human Rights Watch.
    • “Instead of paving the way for a return to democratic, civilian rule, the Thai junta has granted itself unchecked authority to do almost anything it wants, including committing rights abuses with impunity.”

  • Since the military coup on May 22, Human Rights Watch has documented numerous violations of human rights by junta.
    • Red-shirt activist Kritsuda Khunasen reveals military tortured her to link Thaksin to hard-core red shirts

    • In the interview via Skype, Kritsuda said she was blindfolded and her hands were bound on the first seven days of the detention. During this period, a female officer would help her when eating, taking a bath, and when she wanted to go to the toilet. She said while she was naked during taking bath, she heard a male voice. “I consider this sexual harassment.”
    • (…) She said she was beaten several times during the interrogation. She was also suffocated when a plastic bag and a piece of fabric was placed over her head until she lost consciousness.
    • She added that on 15 June she was forced to sign a paper stating that she had asked the military to allow her to continue staying in the camp for longer than the period allowed under martial law for pre-charge detention, and she had to also state that she felt safer inside the camp. “I had to write that statement because I wanted to survive.” » This Prachatai.com link of the transcript and video still seems to be available in Thailand. – By Taweporn – August 2, 2014S.
  • The NCPO, which consists of all branches of the armed forces and police, has enforced widespread censorship, detained more than 300 people—most without charge, banned public gatherings, and issued repressive orders targeting activists and grassroots groups.
  • Section 47 of the interim constitution legalizes those abuses by providing that all announcements and orders of NCPO since the coup are deemed to be “completely legal and constitutional.” » Human Rights article – July 25, 2014.

  • Looking Back

  • BANGKOK (AP) — Police in Thailand arrested eight people Sunday for demonstrating against the nation’s increasingly repressive military junta, including a man who was dragged away by undercover officers for reading a copy of George Orwell’s “Nineteen Eighty-Four” outside one of Bangkok’s most luxurious shopping malls.
  • The arrest was the first known case of anyone being detained for reading as a form of protest since the military seized power last month. » The AP article – By Thanyarat Doksone and Todd Pitman – June 22, 2014.
    • Hunger Games salute becomes symbol of Thai resistance

      Anti-coup protesters flash a three-finger salute on June 1 in Bangkok. (AFP Photo)
    • The gesture has become the unofficial symbol of resistance against a military regime that has suspended democracy and severely curtailed freedom of expression.
    • The military — which has imposed martial law, controls on the media and a night-time curfew — has warned that people flashing three fingers could face arrest under its ban on public protests.
    • The army has warned protesters that they — and even their families — face punishment under strict martial law, which has imposed sweeping curbs on freedoms.
    • The harsh response “reveals a totalitarian mindset that discounts respect for human rights as a hindrance to exercise of power,” said Brad Adams, Asia director of New York-based Human Rights Watch.
    • “The Bangkok street protesters’ three-fingered Hunger Games salute is a symbolic act of peaceful defiance by those who recognize — like those in the rebellious districts in the movie — that they face overwhelming odds but decide to bravely raise their voices nonetheless.” » The full AFP article – By Daniel Rook – June 3, 2014.
    • Last week, Amnesty International also condemned what it called the “systematic and widening crackdown on key human rights” by Thailand’s military.
    • In statement, the London-based group said the army’s course of action in arresting critics “is looking increasingly like a purge.” » The full VOA article – June 11, 2014.

      Thai troops detain gov’t minister who blasted coup

    • Armed troops detained a Thai Cabinet minister who defiantly emerged from hiding on Tuesday to condemn last week’s military coup and urge a return to civilian rule, in the first public appearance by any member of the ousted government.
    • When the news conference was finished and Chaturon was being interviewed by a group of Thai journalists, soldiers entered the room, surrounded him, and escorted him out through a crowd of reporters. He was calm and smiling as he was taken away.
    • Before being hustled into an elevator, Chaturon said: “I’m not afraid. If I was afraid, I wouldn’t be here.”
    • “I still insist to use my own rights and liberty to call for returning the country to democracy,” he said. » The full AP article – By Todd Pitman and Thayarat Doksone – May 27, 2014.

    WSJ: Royalists who can’t win an election stage a judicial coup (then a military coup) – Confirming again: “Laws mean whatever we want them to mean!”

    • Royalist forces struck another blow against Thai democracy Wednesday when the country’s Constitutional Court staged a judicial coup and removed Prime Minister Yingluck Shinawatra from office. Her supposed crime: having impure motives when she transferred a bureaucrat three years ago. For the third time in a decade, this unaccountable institution controlled by the aristocracy has removed an elected leader for dubious reasons.
    • That leaves the aristocracy with institutional power centers guaranteed by an undemocratic constitution created by the military junta in 2007. The Anti-Corruption Commission and several other bodies can also stymie the will of the voters, but the Constitutional Court is the key because it has blocked all attempts so far to revise the constitution. » The full Wall Street Journal Editorial – May 7, 2014

    Ex Prime Minister Abhisit Vejjajiva did not have history on his side in the election he lost.

    Abhisit’s coup sponsored government, even after loosing the election, continues to undermine democracy in Thailand:

    • Thai Inquiry Into Violence against protesters Falters: Teera Suteewarangkurn, a law professor at Thammasat University in Bangkok, said the military leadership feared it would face a public outcry if it admitted that soldiers had killed civilians.
    • “The legal process here has had unusual delays,” said Jaran Cosananand, a professor of law at Ramkhamhaeng University in Bangkok. “Political power undermines the law in Thailand.”
    • The military’s refusal to cooperate in the investigations underlines the ascendance of military power in Thailand.
    • The military’s budget and overall influence in Thai politics have risen sharply since 2006, when the army took power in a coup, removing the prime minister at the time, Thaksin Shinawatra, and angering his millions of supporters. » The full New York Times article – By Thomas Fuller – Published: January 24, 2011

    Thai Legal Maze After Coup Delays Investments

    • “This just highlights the economic cost of the coup and the legacy of military rule that the country is still paying for,” said Andrew Yates, head of foreign sales at Asia Plus Securities Pcl, Thailand’s third-biggest brokerage by market capitalization.
    • The biggest loser is the customer.”Government and policy instability were cited as the biggest concerns for doing business in Thailand among 13,000 executives surveyed in the World Economic Forum’s 2010- 2011 Global Competitiveness Report. » The full Bloomberg article – By Daniel Ten Kate – Published September 23, 2010.

    • WWS – World Wise School – The Blind Men and the Elephant
      Overview | Students will develop sensitivity to others’ points of view.
      – Students will understand the importance of having as much information as possible before coming to conclusions. Go to this Building Society Lesson Worksheet.
    • The Learning Foundation Making Good Laws: “Is the Thai Constitution credible?”
      Go to this Building a Healthy Society and Law Lesson.
    • The New York Times – Learning Network – Examining Military Coups Around the World
      Overview | Students consider military coups and their aftermaths, research famous coups… illustrating those events, and write letters from the perspectives of ousted leaders examined during class. Go to this Law and Society Lesson.
    • The New York Times – Learning Network – Democracy in Action
      Overview | Students consider words that reflect their knowledge and opinions about democracy. Go to this Building a Healthy Society and ESL Lesson.