Showing posts with label United States. Show all posts
Showing posts with label United States. Show all posts

Wednesday, August 29, 2012

How Ben Bernanke triggered off the Great Depression - Heleen Mees

Heleen Mees
Economist Heleen Mees is making her first inroads into the US media with her PhD, blaming Chinese savings as the basis for the current financial crisis. But they got help, explains Heleen Mees in CNBC, as Ben Bernanke, chairman of the US Federal Reserve, triggered of aggressive rate cuts from the early 2000s.

CNBC:
The study, which compared financial market responses to U.S., Chinese and German quarterly GDP from 2006 through 2009, shows that the Chinese have been saving more than half of their GDP during that time. Those savings were heavily skewed towards fixed income assets like government bonds and depressed interest rates worldwide from 2004 on. 
This allowed for interest rates around the world to fall, and sparked a boom in the U.S. housing market due to the availability of cheap money. 
The study also argues that Ben Bernanke, chairman of the U.S. Federal Reserve, set the world up for the Great Recession by providing the “intellectual backing for the aggressive rate cuts in the early 2000s.”
More in CNBC.

Heleen Mees is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.
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Thursday, August 23, 2012

China's savings, not banking products, caused the financial crisis - Heleen Mees

Heleen-MeesThe first summaries of economist Heleen Mees' PhD in Dutch media caused already a little uproar this week. Not evil banking products, but China's high savings rate  are the base of the ongoing financial crisis, is the short story. The whole story is slightly more complicated. 

Heleen Mees:
Chapter 2 proves the central thesis of this thesis, namely that China’s boom caused the 2008 financial crisis and ensuing recession. It builds on the work by Taylor (2008), Obstfeld and Rogoff (2010), Bernanke (2005), Greenspan (2011) and Warnock and Warnock (2009). Its main  contribution is that it shows that the built-up of total debt securities, rather than foreign purchases of U.S. Treasuries, depressed 10-year Treasury yields from 2004 on. In addition, I show that the Fed, with its excessively loose monetary policy in the early 2000s, contributed to a large extent to the housing bubble and current debt overload of U.S. households.
That global drop in interest rates was caused by China's huge savings. China's savings were not high as a percentage of its total GDP, because that is comparable to other developing countries. But because of its size a huge amount of cheap capital was available, says Heleen Mees. Problematic mortgages in the US did not cause the financial crisis, since they were less than five percent of the total amount of mortgages between 2000 and 2006.

The increase wealth in China, and the capacity to save, is partly caused by the American spending habits, Heleen Mees added. She does not support the suggestion China had a deliberate policy of undermining US and European economies.

Heleen Mees' PdH "Changing Fortunes - How China's Boom Caused the Financial Crisis" will be available online next week.

Heleen Mees is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers' request form.
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Saturday, August 18, 2012

The fragile bridge, on conflict management - Review

When you are about to order, or even read, Andrew Hupert's latest book "The Fragile Bridge: Conflict Management in Chinese Business", there is a fair chance you are too late. Hupert skilfully explains the differences in dealing with conflicts between US and European managers on one side, and their Chinese partners on the other side.
Emotions are running high, accusations fly during heated debates. MBA-educated managers might see that as a tool to resolve conflicts, in China it means you have already entered the end game. 
At the start of his book, Hupert sets the stage:
Conflict serves a different purpose in the West than it does in China. Americans in particular believe in the idea of “creative destruction.” They think that controlled conflict can be an important communication tool. It is a great way to surface new ideas, argue for your point of view, and resolve lingering disagreements. Chinese will tell you that harmony is the way to go and that disputes are unnecessary – and they may well believe it. Conflict, however, actually serves an important role in relationship-oriented Chinese business. It is often the fastest and most efficient way of terminating a partnership that is not paying off or has already served its purpose.
Traditional Western models of conflict management usually focus on improving communications between participants and finding ways to allocate value fairly. Using the language of “win-win negotiation”, Westerners focus on how to best divide the pie of potential gains and remove roadblocks.
These tactics are designed to improve interaction, spark ideas for joint problem solving, find compromise, and maximize mutual benefit. While there is nothing wrong with any of this, international managers should understand that several obstacles make these “common ground” techniques less effective – or even counter-productive – in China. First, these are tactical responses designed to keep existing negotiations on track, whereas many Western-Chinese business conflicts are structural in nature and require a more strategic response. In other words, you don’t need to tweak the engine or adjust the speed – you need a new locomotive on a different track. Furthermore, a last minute burst of communication and friendliness can strike the Chinese side as confusing or crass, since they may very well feel that the Westerner side has been refusing their earnest attempts to build a relationship since the very first meeting. The most significant shortcoming of traditional international conflict management, however, is that it takes as its starting position the assumption that both sides are committed to preserving the deal or partnership. All too often by the time the Western side becomes aware of a conflict, the Chinese party has already begun extricating himself from an arrangement that he feels has already either failed or outlived its usefulness.
From there, a wealth of experience and anecdotes follows, to support this key concept, but the story remains the same. While many might perceive Hupert's arguments as convincing perusing through the book, when a conflict is taking over emotions, rational arguments might not work anymore.
Hupert's analysis focuses on business cases, but observers might see a pattern that is also valid outside business. International politics, cross-cultural marriages and even often cool-headed academic disputes all show the features Hupert describes. 
I'm afraid it does not help when you are in a heated debate with your Chinese partners already; it might help to avoid all-too-common pitfalls in cross-cultural relations, when you read it before you get yourself into trouble.

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Sunday, August 05, 2012

Does Taiwan need tanks? - Wendell Minnick

Wendell Minnick
Taiwan can take over cheap  US main battle tanks, left over from the war in Iraq, but that has sparked off an old debate. Does Taiwan need tanks for its defense? Military analyst Wendell Minnick reports in Defense News.

Defense News:
The announcement renewed debate over the need for a heavy MBT, said a Defense Ministry source, “but they are cheap and available now.” The deal would include refurbishment, but not an upgrade, he said. In 2011, Vice Defense Minister Chao Shih-chang was quoted by the local media saying the Army needed 200 new MBTs. 
Since the 1996 Taiwan Strait missile crisis, Taiwan has focused on improving air-sea battle capabilities, and the Army has watched its grip on power and influence slip since the end of the Cold War. The Army maintained a large invasion force to retake mainland China during the Cold War. 
Local defense analysts argue there are other pragmatic reasons for not procuring bigger and heavier MBTs. The island is composed of rugged interior mountains notorious for landslides. The coasts are either rice paddies, fish farms or are urbanized. Coupled with narrow roadways and anemic bridges, the island seems an unlikely home for a 60-ton tank 12 feet wide. 
“The bridge piece of it is a real key, since you only have one shot to get a 60-ton tank across a 35-ton bridge, and then you have no bridge,” a U.S. defense analyst said. The M1A1 limits the choice of routes, but so does the “speed aspect,” he said.
More in Defense News.

Wendell Minnick is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.
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Monday, July 23, 2012

US-Taiwan ties strained despite deal on F-16 upgrade - Wendell Minnick

Wendell Minnick
Taiwan and the US Air Force closed a US$ 3.7bn deal on upgrading the island's F-16 fleet after two years of negotiations. But the deal did not really improve the US-Taiwan relationship, writes Wendell Minnick in Defense News.

Wendell Minnick:
Under the deal inked July 13 in Washington, the U.S. Air Force will pick the upgrade package Taiwan will have to live with — and pay for — and will exacerbate the country’s fighter shortfall for a dozen years starting in 2016 as Block 20 A/B aircraft are pulled from frontline duty for modernization. The first upgraded jets will be delivered starting in 2021. 
BAE Systems, Lockheed Martin, Raytheon and Northrop Grumman are competing for segments of the upgrade program, with the winner to be picked by the Air Force. Lockheed has emerged as the frontrunner, however, after striking an exclusive deal with Taiwan’s leading aerospace contractor, Aerospace Industrial Development Corp. (AIDC).
Taiwan has left too much of the upcoming decision in US hands, critics say:
[T]he letter of offer and acceptance (LOA) doesn’t allow Taiwan to recoup the non-recurring engineering (NRE) costs of the installation of the new radar to replace the mechanically scanned APG-66 system... “I can’t believe the Taiwanese are allowing the U.S. Air Force to make the decision for them,” said one U.S. defense executive involved in the competition, expressing a widespread Taiwanese viewpoint.
More about the concerns about this deal on the Taiwanese side in Defense News. 

Wendell Minnick is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.
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