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Showing posts with label German. Show all posts
Showing posts with label German. Show all posts

Tuesday 28 July 2015

American FBI's China accusation spurred by finance, not a good idea to spy on friends!


On Thursday last week, the FBI released a film entitled The Company Man: Protecting America's Secrets, which targets economic espionage. The 35-minute film features two Chinese economic spies who try to bribe a US employee with money, attempting to acquire insulation technology from the latter's company. The two were later prosecuted and caught in the net of justice. According to media reports, the video has already been shown nearly 1,300 times at US enterprises.

An FBI official publicly voiced that "China is the most dominant threat we face from economic espionage … The Chinese government plays a significant role."

The official also declared that economic espionage has caused losses of hundreds billions of dollars annually to the US economy.

How much is "hundreds of billions of dollars?" Say $300 billion, about 2 percent of US annual GDP.

Since the FBI believes that there has been a 53 percent surge in economic espionage in the US, and 95 percent of US companies suspect that China is the main culprit, does it infer that China has stolen 2 percent of US GDP?

Some people may ponder that given the Cold War is over, Osama bin Laden and Saddam Hussein were eradicated and the war on terror is seemingly not that urgent for the moment, and in light of US federal budget constraints, the FBI needs to find new strategic reasons for more funds. Therefore, the "position" of "Chinese economic spies" has been greatly elevated.

What the FBI has done is bound to injure Sino-US relations. But it is US society that will suffer the most. Many Americans will hence think that their economy is fine, their companies have no problems at all and the only issue is the threat from Chinese economic espionage.

It looks to them like Chinese intelligence services and civilian business spies are much more powerful than the FBI, CIA and other non-governmental intelligence forces combined. China is not capable in every category except for spy technology. This is the logic of the FBI.

If we take a good look at China's overall development in this changing world, you will see that one-third of global new technical patents are now created by Chinese companies every year. Innovation has also become China's national slogan. China will eventually be able to challenge the West's dominance in high technology.

China is well aware that it should learn from the West, especially the US, in terms of technology. But this is not stealing.

US universities are also attracting students from all over the world, yet this brings more benefits than losses to the nation due to the dissemination of knowledge.

Someone who always claims that his house was robbed and feels free to suspect his friend or neighbor is the thief is very annoying, and that is what the US is doing right now. The whole world knows that US intelligent agencies are the most notorious regarding this issue.

We hope that the often-silent Chinese intelligence services could expose some hard evidence of espionage by US spies, and make a spy movie featuring US espionage, providing it with a mirror to look at itself.- Global Times

Not a good idea to spy on friends

THERE's been so much dramatic news these days – from Greece's miseries to Iran, China from blowhard Donald Trump – that the shocking story of how America's National Security Agency has been spying on German and French leadership has gone almost unnoticed.

Last year, it was revealed that the NSA had intercepted Chancellor Angela Merkel's cell phone. She is supposed to be one of Washington's most important allies and the key power in Europe. There was quiet outrage in always subservient Germany, but no serious punitive action.

Brazil's president, Dilma Rousseff, was also bugged by American intelligence. Her predecessor, Luiz Lula da Silva, was also apparently bugged.

This year, came revelations that NSA and perhaps CIA had tapped the phones of France's president, Francois Hollande, and his two predecessors, Nicholas Sarkozy and Jacques Chirac. Hollande ate humble pie and could only summon some faint peeps of protest to Washington. Luckily for the US, Charles de Gaulle was not around. After the US tried to strong-arm France, "le Grand Charles" kicked the US and Nato out of France.

Last week, WikiLeaks revealed that the NSA had bugged the phone of Germany's foreign minister, Frank-Walter Steinmeier, for over a decade. Imagine the uproar and cries "the Gestapo is back" if it were revealed that German intelligence had bugged the phones of President Barack Obama or Secretary of State John Kerry.

A lot of Germans were really angry that their nation was being treated by the Americans as a northern banana republic. Many recalled that in the bad old days of East Germany its intelligence agency, Stasi, monitored everyone's communications under the direct supervision of KGB big brother at Moscow Centre.

The National Security Agency and CIA claim their electronic spying is only aimed at thwarting attacks by anti-American groups (aka "terrorism"). This claim, as shown by recent events, is untrue. One supposes the rational must be a twist on the old adage "keep your enemies close, but your friends even closer".

Ironically, the political leaders listed above – save perhaps Brazil's da Silva – are all notably pro-American and responsive to Washington's demands.

Why would the US risk alienating and humiliating some of its closet allies?

One suspects the reason is sheer arrogance … and because US intelligence could do it. But must US intelligence really know what Mr Merkel is making Mrs Merkel for dinner?

Until WikiLeaks blew the whistle, some European leaders may have known they were being spied upon but chose to close their eyes and avoid making an issue. Raising a fuss would have forced them to take action against the mighty US.

Besides, British, Italian and French intelligence are widely believed to have bugged most communications since the 1950's. But not, of course, the White House or Pentagon. The only nation believed to have gotten away with bugging the White House was Israel during the Clinton years. The Pentagon was bugged by a number of foreign nations, including Israel, China and Russia.

Humiliating Europe's leaders in this fashion is a gift to the growing numbers of Europeans who believe their nations are being treated by the US as vassal states.

There is widespread belief in Western Europe that US strategic policy aims at preventing deeper integration of the EU and thwarting a common foreign policy or a powerful European military. Britain serves as a Trojan horse for America's strategic interests in Europe.

Way back in the 1960's, then German defence minister Franz Josef Strauss, an ardent proponent of a truly united Europe, thundered that Europeans would not play spearmen to America's atomic knights. But, of course, that's just what happened.

The US still runs and finances Nato in the same way the Soviet Union commanded the Warsaw Pact. Washington calls on Europe for troop contingents in its Middle East and south Asian colonial wars in the same way that the Persian Empire summoned its vassals to war.

Many Germans and French, both right and left, would like their leaders to react more forcefully to NSA's ham-handed spying. However, Merkel and Hollande are both political jellyfish eager to evade any confrontation with Big Brother in Washington. Maybe he has too much dirt on them.

But a confrontation is inevitable one day if Europe is to regain its true independence that was lost after World War II.

By Eric S. Margolis who is an award-winning, internationally syndicated columnist. Comments: letters@thesundaily.com

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Monday 27 January 2014

US Fed tapering of bond purchases, a new economic boom or bust cycles?

Is a new economic crisis at hand?

The two-day sell-off of currencies and shares of several developing countries last week raises the question of whether this is the start of a new financial crisis.

AT the end of last week, several developing countries saw sharp falls in their currency as well as stock market values, prompting the question of whether it is the start of a wider economic crisis.

The sell-off in emerging economies also spilled over to the American and European stock markets, thus causing global turmoil.

Malaysia was not among the most badly affected, but the ringgit also declined in line with the trend by 1.1% against the US dollar last week; it has fallen 1.7% so far this year.

An American market analyst termed it an “emerging market flu”, and several global media reports tend to focus on weaknesses in individual developing countries.

However, the across-the-board sell-off is a general response to the “tapering” of purchase of bonds by the US Federal Reserve, marking the slowdown of its easy-money policy that has been pumping billions of dollars into the banking system.

A lot of that was moved by investors into the emerging economies in search of higher yields. Now that the party is over (or at least winding down), the massive inflows of funds are slowing down or even stopping in some developing countries.

The current “emerging markets sell-off” is thus not explained by ad hoc events. It is a predictable and even inevitable part of a boom-bust cycle in capital flows to and from the developing countries, coming from the monetary policies of developed countries and the investment behaviour of their investment funds.

This cycle, which is very destabilising to the developing economies, has been facilitated by the deregulation of financial markets and the liberalisation of capital flows, which in the past was carefully regulated.

This prompted bouts of speculative international flows by investment funds. Emerging economies, having higher economic growth and interest rates, attracted investors.

Yilmaz Akyuz, chief economist at South Centre, analysed the most recent boom-bust cycles in his paper Waving or Drowning?

A boom of private capital flows to developing countries began in the early 2000 but ended with the flight to safety triggered by the Lehman collapse in September 2008.

The flows recovered quickly. By 2010-12, net flows to Asia and Latin America exceeded the peaks reached before the crisis. This was largely due to the easy-money policies and near zero interest rates in the United States and Europe.

In the United States, the Fed pumped US$85bil (RM283bil) a month into the banking system by buying bonds. It was hoped the banks would lend this to businesses to generate recovery, but investors placed much of the funds in stock markets and developing countries.

The surge in capital inflows led to a strong recovery in currency, equity and bond markets of major developing countries. Some of these countries welcomed the new capital inflows and boom in asset prices.

Others were angry that the inflows caused their currencies to appreciate (making their exports less competitive) and that the ultra-easy monetary policies of developed countries were part of a “currency war” to make the latter more competitive.

In 2013, capital inflows into developing countries weakened due to the European crisis and the prospect of the US Fed “tapering” or reducing its monthly bond purchases.

This weakening took place just as many of the emerging economies saw their current account deficits widen. Thus, their need for foreign capital increased just as inflows became weaker and unstable.

In May to June 2013, the Fed announced it could soon start “tapering”. This led to sudden sharp currency falls, including in India and Indonesia.

However, the Fed postponed the taper, giving some breathing space. In December, it finally announced the tapering — a reduction of its monthly bond purchase from US$85bil (RM283bil) to US$75bil (RM249bil), with more to come.

There was then no sudden sell-off in emerging economies, as the markets had already anticipated it and the Fed also announced that interest rates would be kept at current low levels until the end of 2015.

By now, however, the investment mood had already turned against the emerging economies. Many were now termed “fragile”, especially those with current account deficits and dependent on capital inflows.

Most of the so-called Fragile Five are in fact members of the BRICS, which had been viewed just a few years before as the most influential global growth drivers.

Several factors emerged last week, which together constituted a trigger for the sell-off. These were a “flash” report indicating contraction of manufacturing in China; a sudden fall in the Argentini­an peso; and expectations that a US Fed meeting on Jan 29 will announce another instalment of tapering.

For two days (Jan 23 and 24), the currencies and stock markets of several developing countries were in turmoil, which spilled over to the US and European stock markets.

If this situation continues this week, it may just signal a new phase of investor disenchantment with emerging economies, reduced capital inflows or even outflows. This could put strains on the affected countries’ foreign reserves and weaken their balance of payments.

The accompanying fall in currency would have positive effects on export competitiveness, but negative effects on accelerating inflation (as import prices go up) and debt servicing (as more local currency is needed to repay the same amount of debt denominated in foreign currency).

This week will thus be critical in seeing whether the situation deteriorates or stabilises, which may just happen if the Fed decides to discontinue tapering for now. Unfortunate­ly, the former is more likely.

 Contributed by Global Trends  Martin Khor
> The views expressed are entirely the writer’s own.

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Fed Slows Purchases While U.K. Growth Picks Up: Global Economy   

The global economic expansion is speeding up, data this week are projected to show. In the U.S., a gain in fourth-quarter gross domestic product probably completed the strongest six months of growth in almost two years for the world’s largest economy. The pickup combined with progress in the labor market means Federal Reserve policy makers meeting this week may ease up again on the monetary accelerator.

Across the Atlantic, the U.K. economy may have grown over the past 12 months by the most in almost six years, while in Germany, business confidence probably improved to the highest level since mid-2011.

This week also includes central bank meetings in Mexico and New Zealand. In Mexico, monetary officials may keep the benchmark interest rate unchanged as more government spending reduces the need for stimulus. Such a decision is less clear in New Zealand, where odds of an interest-rate increase have climbed.

U.S. ECONOMY

-- Gross domestic product advanced at a 3.2 percent annualized rate in the fourth quarter as spending by American consumers climbed by the most in three years, economists forecast the Jan. 30 figures will show. Combined with a 4.1 percent inventory-fueled gain in the prior period, GDP in the second half of the year was the strongest since the six months ended March 2012.

-- “A substantial acceleration in private sector demand led by stronger consumer spending and a significant pickup in exports after weakness through the first part of the year should drive a second straight quarter of near 4 percent real GDP growth even with an expected drag of 0.5 percentage point from federal government spending, largely reflecting lost work hours during the government shutdown,” Ted Wieseman, an economist at Morgan Stanley in New York, wrote in a Jan. 17 report.

-- “The first cut of Q4 GDP will be more about the internals of the report than the headline,” economists at RBC Capital Markets LLC, led by Tom Porcelli, wrote in a research note. “While we look for a 2.8 percent annualized advance in top-line growth, the details should seem even brighter with real personal consumer consumption rising 4 percent. We anticipate that the inventory swing will hold growth back a full percentage point.”

FOMC MEETING

-- Ben S. Bernanke will chair his final meeting of Federal Reserve policy makers on Jan. 28-29 before handing over the reins of the world’s most powerful central bank to Janet Yellen. Bernanke and a different cast of regional Fed bank presidents who’ll vote on the Federal Open Market Committee are projected to reduce the pace of Treasury and mortgage-backed securities purchases by a total of $10 billion to $65 billion as the economy improves.

-- “We expect the Fed to announce another $10 billion taper and possibly strengthen its guidance,” Michael Hanson, U.S. senior economist at Bank of America Corp., said in a research note. “The Yellen-led Fed will see numerous personnel changes in 2014, but we still expect a patient and very accommodative policy stance.”

-- “The FOMC will likely upgrade its summary of current economic conditions in its policy statement,” BNP Paribas’ Julia Coronado, a former Fed Board economist, said in a research note. “The Q4 performance is expected to be driven by final demand, in particular a surge in consumer spending on goods and services. The January FOMC statement could acknowledge this better performance by stating that ‘economic growth picked up somewhat’ of late.

‘‘The confirmation of their long-held optimistic expectation for stronger economic growth and tranquil financial markets will likely lead the Committee to announce another ‘measured step’ in the tapering process. We expect another $10 billion cut in the pace of QE asset purchases.’’

U.K. ECONOMY

-- Britain will be the first Group of Seven nation to report gross domestic product for the fourth quarter when it releases the data on Jan. 28. Economists forecast growth of 0.7 percent, close to the 0.8 percent expansion in the prior three-month period. From a year earlier, GDP probably rose 2.8 percent, driven by domestic demand, which would be the best performance since the first three months of 2008.

-- ‘‘To date, the recovery has been somewhat unbalanced, led by consumption, so we remain skeptical about the sustainability over the medium-term,’’ said Ross Walker, an economist at Royal Bank of Scotland Group Plc in London. ‘‘Still, there is clearly sufficient momentum in the short-term data to underpin trend-like rates of growth.’’ Walker sees the economy expanding 2.7 percent this year, just above the Bloomberg consensus estimate of 2.6 percent.

GERMAN BUSINESS CONFIDENCE

-- German business confidence is heading for its highest reading in 2 1/2 years, underlining the strength in an economy that’s helping to power the euro-area recovery. Economists in a survey, set for release on Jan. 27, see the business climate index increasing to 110 in January from 109.5 last month. Germany will continue to outpace the euro area this year, with the International Monetary Fund forecasting 1.6 percent expansion, compared with 1 percent for the currency region.

-- Thilo Heidrich, an economist at Deutsche Postbank AG in Bonn, said the ‘‘mood in the German economy is likely to have brightened at the start of the year.’’

-- ‘‘The near-term outlook remains one of cautious optimism,’’ Bank of America economists including Laurence Boone said in a note. ‘‘Domestic demand, in particular, should support growth in coming years.’’

JAPAN TRADE

-- Japan’s trade deficit narrowed to 1.24 trillion yen ($12.1 billion) in December from a month earlier, even as import growth probably accelerated, according to a Bloomberg survey of economists before data due Jan. 27. A record run of monthly deficits shows the cost of the yen’s slide against the dollar and the extra energy imports needed because of the nuclear industry shutdown that followed a disaster in 2011.

-- ‘‘Throughout the year, few manufacturers believed that the yen would stay weak, let alone depreciate further,” Frederic Neumann, Hong Kong-based co-head of Asian economics at HSBC Holdings Plc, said in a research report. “As a result, (dollar) prices charged for goods sold overseas were not cut amid fears that such a move would have to be reversed once the currency strengthened again, something that few firms like to do. All this meant nice profits for Japanese firms (higher yen earnings for their shipments) but no gain in export market shares.”

NEW ZEALAND RATES

-- Economists and markets are split on whether the Reserve Bank of New Zealand will increase the official cash rate for the first time in 3 1/2 years at its Jan. 30 meeting. Governor Graeme Wheeler said late last year the RBNZ will need to raise interest rates in 2014 as growth and inflation accelerate and unemployment declines. While only three of 15 economists predict Wheeler will lift the rate by 25 basis points to 2.75 percent this week, markets are pricing in an almost 70 percent chance he will do so.

-- “The lists of reasons are long for both the ‘why wait’ and ‘why not’ sides of the fence,” Nick Tuffley, chief economist at ASB Bank Ltd. in Auckland, said in a research report. “The RBNZ can justify either outcome, and we put the chances of a rate hike as 1 in 4. That is to say, not our core view, but a significant risk.”

MEXICO RATE DECISION

-- Mexico’s central bank on Jan. 31 may keep the overnight interest rate unchanged at a record-low 3.5 percent in its first decision of 2014 as increased government spending stimulates the economy.

-- “There’s no need to reduce the rate any more” after 0.25 percentage-point reductions in September and October, Marco Oviedo, chief Mexico economist at Barclays Plc, said in an e-mailed response to questions. “The economy has shown signs of recovery.”

-- Policy makers have “sent the message that they’re comfortable with the current level of interest rates,” said Gabriel Lozano, chief Mexico economist at JPMorgan Chase & Co. With sales tax increases fanning inflation, “real interest rates are temporarily negative, but the central bank will be confident this is a transitory situation that will correct in the second half of the year” as inflation slows.

Contributed b Bloomberg