Back in last year, when the subprime crisis began to unveil, there was an article in October by John Auther (The Short View columnist in FT) which I liked very much. It had practically predicted what was happening in the past few months. And it is still as telling as it was back in October 2007. Amidst the murky condition in the global economic outlook, it sheds some light to the road ahead. I think it is worth sharing.

Here we go.

By John Authers

Tuesday 2 October 2007

On Monday morning, as fresh news of severe losses by the giant financial groups, UBS (NYSE:UBS) and Citigroup (NYSE:C) , revealed even more damage inflicted by this summer's credit squeeze, the reaction of stock markets was clear. They rallied.

In Monday's trading, the Dow Jones Industrial Average, still the most widely watched index of the US stock market, managed to top the all-time peak itreached on July 19. This was broadly representative of the most important developed market indices. The US S&P 500 index and Germany's Dax index are within 1 and 2 per cent respectively of their mid-July highs.

It seems to be self-contradictory to claim that cutting securitization is securing the financial market and de-structuring is enforcing the financial structure. But after a craze of writedowns on the values of the structured financial tools by the major money-changers, it now appears that shaking off excessive fats may well be good for health. And the financial market is seemingly rediscovering the old proverbial phrase: “Less is more”.

While we are witnessing more inflationary pressure these days, some economists are not so much worried about the upside trend of the price levels. James Saft, a Reuters columnist, puts it this way, “Never mind inflation, the powerful and long-lasting effects of the credit crisis will rein it in soon enough”. Soon enough, the market bust will suppress the inflationary pressure and even bring in disinflationary trend when the immediate impact of the credit crunch begins to subside. 

MBIA and Ambac, the two biggest bond insurers in the US, are facing severe trouble amidst the dying down of the credit market storm. Although the tension in the credit market seems to be easing, with the Libor returning to the calm level, the insurers who backed the problematic bonds including those subprime mortgage-backed bonds are far from seeing the coast. Rating agencies had already warned that the triple-A rating of the insurers, which was the most important foundation to make the business model work, may be downgraded. With the share prices already slumped in recent months, it is not out of imagination these insurers may well be sunk in the murky water. And to make things worse, the sinking of the insurers will exert further stress on the contracting corporate bond market. We may well find more wrecks along the shoreline beside the aground MBIA and Ambac.

Well, touch wood.  

Saskia Scholtes, “Confusion increases over fate of MBIA and Ambac”, Financial Times, 19 Jan 2008, <http://www.ft.com/cms/s/0/4977267c-c634-11dc-8378-0000779fd2ac.html>

個人從來不相信選舉可以達到正義。選擧只是一種分配權力的工具，不是改變根本權力結構的方法，本土社會中的權力架構、國際權力架構不動搖，選舉只不過是原來統治階級用來操控政治權力的新手段，極其量就是將控制政治的成本擡高一點兒，加一點規範。

In the export surplus countries – especially China -- and Gulf States flushed with revenues from selling hydrocarbons, massive foreign currency reserve is accumulating. Sovereign Wealth Funds were set up to take care of the gigantic wealth. And these funds are looking forward to go shopping for quality overseas companies. Their purchases of stakes in major financial institutions in the US topped the headlines and lead stories in prominent newspapers recently. To name a few of them, China Investment Corporations, Kuwait Investment Authority, Abu Dhabi Investment Authority and Qatar Investment Authority are among the frontrunners. 

早一陣子朋友發了一個電郵給我，附件中有郎咸平教授的一份講稿，非常有趣。 

如果之前有留意亞洲周刊的話，朗教授的觀點相信大家也相當熟識了，對於開放和國有資產流失的問題，郎教授有非常獨到的看法，非常值得參考。 這次講話，有關宏觀調控對象問題的一段特別引發了我的思考： 

“我认为最有冲击力的原因是由于近几年来整个国家投资营商环境的急速恶化，因此我们企业家把应该投资而不投资的钱挤压出来形成虚拟资金打入股市打入楼市。这是我认为最重要的第一笔资金----虚拟资金。” 

香港的經濟正面臨嚴峻的挑戰和被邊緣化的危機。我認爲，香港要走出這條自己困死自己的死路，首要的，當然是要努力發展我們的高新產業，工業多元化的路沒有錯，錯的是當年制定了有關政策之後根本就沒有實施，工業多元化委員會在建了三個工業邨在大埔、元朗和將軍澳，讓蘋果日報（虧牠們還開口閉口市場經濟）、維他奶等本來就可以繼續在市區多層工廠大廈運作的企業，賣掉自己的廠房之後用廉價買來新廠房之外，沒甚建樹。

IMF最近出了一個報告，指出若然近期的信貸成本回落的話，歐洲央行可能需要重新加息。我可沒有IMF一般樂觀，次按問題對美國經濟造成的困擾，並不是一時三刻就可以過去的，市場上基本上已經預料到下個月聯儲局將會再次減息，屆時，接連三次、幅度起碼達到一釐的減息動作，將會帶動美國進入另一個長的減息周期。到時候，美元弱勢加劇，歐亞主要貨幣越強，各國的央行要加息，談何容易。