Singaporeans upbeat on death

The Lien Foundation has successfully launched its “happy coffins” campaign, with 733 coffin designs submitted from 37 countries by the dying. Said Lien Foundation CEO Lee Poh Wah: “We are turning the coffin from a supreme negative symbol of death into a creative canvas for reflection, inspiration and the positive celebration of life.” He added, somewhat ominously, “We’d also like to be a conduit for interested parties to explore further possibilities.” Bull market psychology is clearly in place in Singapore.

ADB raises Asian growth forecast to 8.2% for 2010

The Asian Development Bank has increased the forecast for Asia ex-Japan from 7.5% to 8.2%. China is forecast at 9.6%, India at 8.5%. Singapore’s forecast has been raised from 6.3% (April) to 14% (today.) (Straits Times, Sept. 29, 2010) This will lead to a gradual acceleration in Europe and the US.

African growth ‘miracle’

Africa’s economies are expected to grow 5% this year. It is interesting that both resource-based and other countries are growing.

Net worth of American households still low

Household net worth peaked at $65.8 trillion before the recession. It bottomed at $48.8 trillion and is now $53.5 trillion. There is still a long way to go.

Asian consumers: the future engine of global growth

Workers across Asia are demanding big pay increases. (The Straits Times, Sept. 20, 2010) A massive strike in the Cambodian garment increase has followed worker rejection of a 20% pay increase; they are demanding +50%, from US$ 61/month to $93. Bangladesh’s three million garment workers have rejected an 80% increase and are striking for more. Independent trade unions are banned in Vietnam, but there have been 139 strikes so far this year. Similar stories are coming from India, China, and Indonesia.

Health insurance in California goes up double digits

The California Dept. of Insurance has approved increase in monthly premiums of 15% to 29%. Anthem Blue Cross’ request for a 39% increase is under review. The department attributes these increases to a number of factors, primarily the requirements of the federal health care bill. In addition to its increase, Blue Shield has announced that it is no longer guaranteeing its rates for a full year but will review them as required. http://insurancenewsnet.com/article.aspx?id=226528&type=newswires (A good health insurance plan for a young family of four is about $1500-$2000/month before the increases.)

22% unemployment rate in China?

China’s Ministry of Human Resources and Social Security has issued a white paper reporting that the unemployment level in China is not the 4.3% reported for urban unemployment but 22% if rural populations were included. This means that 220 million of China’s 1 billion workers are without jobs. This is the first time this has been reported and the data is probably being released to reinforce the government’s view that the currency should not be revalued upward that and restrictions on Chinese exports should not be imposed. (Straits Times, September 11, 2010)

More gold bangles in Bangladesh?

The IMF just announced that it has sold 10 metric tons of gold to the central bank of Bangladesh. This adds to the 212 metric tons sold to the central banks of India, Mauritius, and Sri Lanka in the past year. They seem to like gold in South Asia more than in Washington.

India: Long term stock market outlook

There has been considerable talk in recent days about the Goldman report predicting that emerging markets will total 55% of world stock market capitalization in 2030 compared with 31% today. The largest markets are then predicted to be China, the US, and India, in that order, with China growing from today’s $5 trillion to $41 trillion (n.b. all three markets are valued at about 100% of GDP presently.) This would be an impressive 8X increase. Even more interesting, however, is the position of India as 2030’s 3rd largest market in the forecast. Since India’s population will soon be the same as China’s, and China’s demographics are much less favorable (the workforce will begin declining in 2014,) it is reasonable to think that India will play a bit of catch up. In that case, if its market capitalization reaches $17 trillion in 2030 (my estimate, assuming GDP/capita is only 25% of China’s then compared to 50% today, which may be too conservative) then the increase will be 13X from today’s $1.3 trillion. Of course, twenty years is a long time, and long term investors should remember that life on earth may be destroyed by a giant meteor collision before then, depressing valuations.

Debottlenecking, Chinese style

After the crash of a Henan Airlines plane, Chinese authorities have stumbled on the fact that over 200 commercial pilots have falsified their licenses and other requirements. In response, they have launched a probe to see if this problem is widespread. There is a severe shortage of qualified pilots in China; therefore, creative solutions are to be expected. After all, what are the chances that the copilot will actually have to fly the plane? (The Straits Times, Sept. 7, 2010)

US housing: Not cheap enough?

According to the New York Times, 5% of new federally-insured mortgages made in 2009 at the depth of the crisis and to borrowers with higher credit scores on average than in recent years are already in default. http://www.nytimes.com/2010/09/06/business/economy/06housing.html

The end of fiat currencies - continued

In Malaysia, the Sultanate of Kelantan, one of the states, has introduced “Islamic” currency: gold dinars containing 4.25 grams of gold, and the dirham containing 3 grams of pure silver. Civil servants may choose to receive up to 25% of their salaries in dinars and dirhams. The uptake has been enthusiastic and some local merchants and cab drivers are exhibiting a preference to being paid in gold and silver coins, although they are not yet “legal tender.” (The Business Times of Singapore, September 6, 2010)

China: The Christian peril

There are about 75 million Christians in China today, up from 2.5 million thirty years ago and about the same number as members of the Chinese Communist Party. At the present rate of growth, Christians will equal over half the Chinese population in under 20 years. (special section in Straits Times, September 5, 2010)

Chinese reserves subterfuge

The composition of Chinese reserves is a state secret, so it was of considerable interest when China released its $2.45 trillion reserve composition last week. The official China Securities Journal “revealed” the composition as follows:
1. 65% US dollars
2. 26% euros
3. 5% pounds
4. 3% yen

China imports from the following countries for 2009:

1. United States $298 billions
2. Japan $229
3. Hong Kong $175
4. South Korea $157
5. Taiwan $106
6. Germany $106

Chinese reported statistics are often false, and it is reasonable to assume that the dollar holdings are overstated. (If the numbers were accurate, why would they release them?) The point China is trying to make is probably that their dollar reserves are consistent with recent years as a percentage of the total and that therefore nothing has changed. But it is widely known that China has accelerated its buying of Japanese yen and Korean bonds. It is also a buyer of gold. The Chinese are no doubt trying to support the dollar as they exit their positions.

A vice governor of the People’s Bank of China separately expressed concern about the depreciation of the country’s reserve currencies and its concentration in dollars. It has also been reported that China has been absent from recent treasury auctions, with the Fed assuming the role of biggest buyer. It looks like China is bringing its reserves more in line with its imports. This risk to the dollar is that China will cease to offset its US exports with purchases of US bonds. (source: Report in Reuters printed in The Business Times of Singapore, September 4-5, 2010)

How to succeed in business without really trying

The collapse of Kabul Bank, due largely to doling out $100’s of millions in loans that were never repaid to the persons and families of President Karzai and Vice President Fahim, many of whom have left the country, illustrates W.C. Fields’ three rules for succeeding in business:

1. Find out what they got;
2. Git it; and,
3. Git.

(http://www.nytimes.com/2010/09/03/world/asia/03kabul.html )

Divine Intervention?

Under pressure from the American Gathering of Holocaust Survivors, the Mormon Church has just agreed to refrain from converting posthumously those killed in the Holocaust. (New York Times: http://www.nytimes.com/2010/09/02/us/02brfs-MORMONSHOLOC_BRF.html)

The Rastafarians, meanwhile, have made no such demands and are relying on the spirit of Emperor Haile Selassie to help their dead keep the faith. On the other hand, the liberal United Church of Christ believes that their dear departed should be allowed to choose their own religion, arguing that they have more information.

Are Americans abroad becoming financial pariahs?

The Business Times of Singapore reported on Sept. 2 that that US tax investigators have set up an office in Hong Kong and are in Singapore to set up one here “as they tighten the noose around US citizens and Asian green card holders. . . as part of increasing scrutiny of Asia-based financial institutions and individuals for tax evasion.” The article added that many financial institutions are dealing with this by simply refusing to deal with American citizens.

Another reason to worry about the US$

The Wall Street Journal says: “But China is shifting some of its $2.4 trillion in reserves into Japanese yen and Korean won, which in part explains the recent runup in those currencies.”