The crisis of China's table salt

Japan’s nuclear crisis is fueling panic in China, where shoppers have spurred a run on salt in attempt to prevent radiation-related illnesses and to secure uncontaminated salt sources.

China’s top economic agency, the National Development and Reform Commission, warned consumers Thursday against hoarding salt, and said it would work with local authorities to maintain price stability and market supply. Grocery store shelves have been ransacked over the past several days.

Consumers in cities along the China’s coastline, such as Shanghai and Guangzhou, and even in inland capital Beijing, began stockpiling table salt after problems at Japan’s Fukushima Daiichi nuclear-power complex sparked concerns that radiation would spread to China by air and sea, possibly contaminating the land and future food sources.

While iodized table salt does contain healthy, nonradioactive iodine, health authorities say it doesn’t contain enough to protect the body against damage from radioactive iodine that may be released during a nuclear event.

Further, only a fraction of China’s salt for consumption comes from the sea, said Song Zhangjing, a spokesman for industry organization the China Salt Association. “In China, most salt are from salt mines.”

China’s salt-buying rush is a sign of widespread fear that Japan’s nuclear woes will have far-reaching implications beyond the island. News of Fukushima’s nuclear leaks have stirred up memories of Ukraine’s nuclear accident at Chernobyl in 1986 and fears that nuclear disaster will not be contained.

xperts and Japanese officials have said it is highly unlikely Fukushima’s problems will be as bad as Chernobyl’s, and Chinese officials have said they don’t expect the radiation in Japan to cause harm in China. On Thursday, the U.S. Embassy in Beijing distributed a message to American citizens saying: “Based on information from authoritative sources in the U.S. and throughout the region, there is currently no evidence to suggest that nuclear events in Fukushima, Japan will have any health impact on individuals residing in China.”

Fears of a salt shortage also spread to Hong Kong, where many supermarkets ran out of salt early Thursday as nervous shoppers stocked up on supplies. In several supermarkets in some of Hong Kong’s busiest shopping districts, supermarket staffers said they didn’t know when new shipments would arrive.

The government’s top food safety official called the salt run “totally unfounded.” York Chow, Secretary for Food and Health, said in a statement that salt supplies won’t be affected by contamination around Japan’s waters because “the sea water around Japan will be much diluted or washed off after some time, and he said there’s no reason to take iodine tablets because they’re only used for people are in close contact with high levels of radiation. Buying salt for its iodine content is “totally totally unfounded, both scientifically and medically,” he said.

Chinese parents have also begun to stock up on Japanese-produced infant formula, assuming that future supply will be limited or contaminated. Citizens in Shanghai, about 1,800 kilometers west of Fukushima, have filled their medicine cabinets with iodine pills. People are also circulating over email a doctored map that shows Northeast Asia under a pink cloud of radiation seeping from Japan.

Concerns about transborder radiation are reaching far beyond China, as people in countries as distant as Singapore and the Philippines struggle to understand the effects of nuclear disasters.

Hong Kong, Singapore, Malaysia and South Korea have announced plans to monitor fresh produce for signs of contagion. Thailand authorities said they are prepared to test all Japanese goods.

Chinese authorities have been intensifying efforts to reassure citizens that radiation leaks in Japan pose no imminent threats. The Ministry of Environmental Protection published on its website Wednesday a chart of radiation in 41 cities across China, declaring that “radiation levels have not been affected by the Japanese nuclear power accident.”

Still, many consumers here are in panic mode. Liu Jia, a 36-year-old office worker, was afraid after trying unsuccessfully to buy salt at a Beijing grocery store, where signs that said “No More Salt” hovered above the salt section of the store.

“If you don’t move quickly, you won’t be able to buy any clean salt without radiation,” Ms. Liu said.

Many shoppers in China are also buying up sea salt instead of typical table salt out of fear future sources will be depleted and unsafe, according to China’s state-run Xinhua service.

Standing next to Ms. Liu was a crowd of others who were also looking to buy salt. “It’s always safe to do what the majority are doing,” said Michael Zeng, a 21-year-old college student in Beijing.

A Wal-Mart store in the Yangpu district of Shanghai is considering limits on salt buys.

Some in China are making light of the fright. Taobao.com, the online marketplace of e-commerce giant Alibaba Group Holdings Ltd., is advertising free salt packets with the purchase of a pair of shoes.

(Quote from The Wall Street Journal)

China's table salt crisis actually happened for a few times, but in china, salt is not a free trade good, it is controlled by government, so the situation didn't become worse until now, and people is becoming come back to normal. Street government intervene make Chinese people's life didn't affect too much by the crisis. And also, the speculators got huge influences, many of them have hundreds of tons of salt in their reserve, and majority of this salt's cost is times of normal price. This situation make me think that free market may not suit for China. China has too many people, so the demand of China is too huge, a little change will make the situation even worse in China.

EC to introduce new banking practices

The European Commission unveiled plans today to ensure the practices, that led to the irresponsible behavior during the housing bubble, of the banks become more transparent to the consumer. The EC aims are for clearer advertising and more comparable "pre contractual information" and tougher measures in the ability of borrowers to repay the loans they have applied for. The plan aims to avoid the granting of loans to high-risk borrowers and that borrowers are properly informed about the possible implications and risks involved in taking out the loan.

These new measures will allow a easier and clearer way to understand the terms of a loan offered by banks to consumers and allow consumers to compare the different terms to find the best loan for them. The new measures should also reduce reckless loans given out by the banks as defaults and negative equity rises in the European states as tougher measures in the ability of borrowers to repay will be introduced, although banks still have the final say in offering loans to borrowers who may be classed as high-risk.

"Borrowers will have to provide necessary detail about their ability to pay and lenders will be obliged to assess a customer's ability to repay."

The draft directive is still under review and negotiation of E.U governments.This plan when introduced may force further foreclosures as banks may become more uneasy about loaning to struggling businesses and People looking for a mortgage will have to prove they can repay the loan under this draft European Union law. But in the long run these new measures should ensure that reckless granting of loans will not occur again in the European states.

"We strongly believe that such provisions will lead to an unbalanced shift of liability to the lender and to even more legal uncertainty and litigation, which in turn will result in a restriction of access to credit for an increased range of prospective borrowers, notably first-time buyers, the self-employed, those with a lower income," Ms Lambert EMF Secretary General said.

Irish Banks Still Ailing

In an article by Landon Thomas in the New York Times on the 30th of March 2011 outlines the deepening problems and the bottomless black hole that is the Irish banking system. Months after the initial rescue package of €85 billion further stress tests which will be released today are expected to show that our national banks “may need another €13 billion to cover bad real estate debt”. Some specialists say the final tally could be closer to $140 billion, an extraordinary amount for a country whose annual output is $241 billion. Thomas talks to Dermot O’Leary, chief economist for Goodbody Stockbrokers in Dublin who outlines that Ireland can no longer afford the burden of its banks with national interest payments set to rise 13 % of government revenue by 2012. He believes that “You need burden-sharing with the bondholders. Without that, the debt becomes unsustainable” If the country defaulted on its external debt then we would be ostracised from financial markets. Capital flows to Ireland would stop. Also the IMF would step in to restructure the debt to ensure that private debt holders lose as little as possible. We would become, effectively, left out of the world economy/political system until we agreed to pay the debt back which is not really a possible scenario however can we afford this debt? Given the new government which is in place has become “more vocal in arguing that $29 billion in unsecured senior debt which is not tied to an asset and as a result is deemed riskier from the start is ripe for restructuring because the banks that issued it, like Anglo Irish, have essentially failed and been taken over by the government. So the government should not be obligated to keep paying interest. A major problem is out line by Thomas “banks account for a much larger share of national economies in Europe than they do in the United States with Irish bank assets been 2.5 times the size of its economy” which shows the importance of a healthy banking system. In conclusion the stark reality outlined Ireland has 100 billion euros in irrecoverable bank loans which is something that we will have to accept sooner rather than later..

Easons plans to invest €20m in expansion

Irish owned retailer Easons is planning to invest €20 million over the space of the next 3 years, which has beem hit hard during the recession. Its aim is to reconstruct the business by reducing its cost bas by €8 million a year. Easons loses halved to €10 million in the 12 months up to the end of January 2010. Managing director Conor Whelan said that the cost reduction programme would probably involve job cuts those being both voluntary and compulsory redundancies. Easons employs just under 1,000 staff but the cost reduction programme would also involve a store closure programme. Conor Whelan said he wants to maintain as much of the store network as possible, "We will look at it on a case by case basis, as we always do" Despite this,Easons is still Irelands biggest book store and there are still talks of opening stores in the near future in Balbriggan Co. Dublin, Mullingar in Westmeath and in Carlow. Mr. Whelan said that the €20 million investment programme would involve the renoavtion of a number of its shops, new IT systems, an upgraded online retail experiance and a new marketing and brand strategy. It will also reconstruct its bank debt. Easons turnoveraccounted to €193 million last year. The franchise is a family run business, run by 5 families, and they appointed 3 outsiders to non-executive positions last year. It has approximately 200 shareholders.

Scientific research around the world

Britain's Royal Society, the world’s oldest scientific academy have been published a report with the conclusion “Science is becoming bigger and more global.” Emerging scientific nations are gaining influence, as measured by how often their researchers get cited in peer-reviewed journals.

The picture was coming from the daily chart on the Economist web. It shows the percentage of the global citation in scientific journals. Compare with 1999 ~ 2003, the percentage of the global citation in scientific journals of the United State has decreased 6.4%, however, it still published the most number of the scientific journals in the world. The second largest percentage country is Britain, which is 8.1%. However, the number is far lower that the United State’s. The top two countries still account 38% of global citations in 2004~2008, down from 45% in the previous five years. China and Spain, with 4% and 3% of global citations in 2004-2008 respectively, and also pushed Australia and Switzerland out of the top ten for the previous five years.

“Boffins the world over are also citing more eagerly, on average, than they used to. Citations grew by 55% between 1999-2003 and 2004-2008. Meanwhile, the number of published papers grew by just 33%.” The news said. The growth in citations could be partly down to an increase in the proportion of published papers that are the product of international collaboration to 35% of the total, up from 25% 15 years ago.

http://www.economist.com/blogs/dailychart/2011/03/global_science_research

Enda's Challenge

The challenge facing our new Taoiseach, Enda Kenny, in sorting out our banking mess is spelled out by Arthur Beesley in the Irish Times. The scale of our banking problems is daunting. Two and a half years on since the controversial blanket bank guarantee was given, the Irish banks are on severe life support.

• Anglo Irish Bank, Irish Nationwide and EBS are wholly nationalised and are to be wound down.


• Allied Irish Banks is 96% owned by the state and is humiliatingly now listed on a little know secondary index of the already tiny Irish stock exchange.


• Bank of Ireland is still in minority state ownership (at 36% state owned) and has the proud distinction of being the best looking horse in the glue factory.


• The only bank that looked like it was going to escape the clutches of Merrion St. was Irish Life and Permanent, but reports today signal that it too will fall into majority state ownership this Thursday following the banks latest, and most comprehensive, round of stress tests.

Unable to fund itself at any level, the Irish banking sector is reliant on short term funding from a reluctant European Central Bank. This is not sustainable as it means every two weeks the Irish banks have to go to the ECB for funding, undermining depositors confidence in them, which has led to a massive flight of deposits in the past year, but particularly in the last few months before Christmas.

In short, the banks are wholly reliant on the broke Irish state for solvency and on the reluctant ECB for liquidity. Sort that one out Enda.

Despite all the talk of stimulus, NewERA policy documents and getting people back to work during the general election, sorting out the banks is the biggest problem facing the country. Without a working (or even a semi-working banking system) businesses will continue to be starved of credit, expansion plans won't go ahead, start-ups won't get anywhere. All this while undermining the solvency of the entire state, which has pushed us into the arms of our boss, Mr Chopra. This banking crisis is the biggest impediment to attempting to sort out the jobs crisis at the moment.

The new government is seeking movement from the EU and the ECB (the IMF lads are our friends it seems) on a number of issues to alleviate the banking problem.

1. It is seeking the ECB to provide medium to long term funding for the Irish banking sector. This seems to be sown-up and will provide a bit of breathing space to the banks as they sell off many assets in an attempt to downsize and, thus, reduce its dependence on the ECB .


2. It is seeking to have the sell-off of bank assets to be done over a longer period, as current fire-sale prices would impose losses that would require taxpayers money to fill.


3. It is looking for a reduction in the interest rate Ireland has to pay for the funds it's getting from the bailout fund. This has still to be hammered out but it seems like we will get a 1% reduction.


4. It is looking for a level of bondholder burden sharing to cover Irish bank losses. reports this weekend suggest that another €18-€23bn is required to capitalise the banks. This could be tough negotiating (and least likely of these 5 goals to be achieved), as EU countries (read France and Germany) have said that it (they) doesn't want burden sharing anytime before 2013.


5. All this, while fighting off Nicolas Sarkozy's demands for us to increase our 12.5% corporation tax rate. Kenny, it seems, has won this fight.

The best of luck to him. If he attains the 5 goals set out above, Kenny will have scored a significant political goal, and have reduced the current, as well as future costs of this banking crisis.

But is the damage already done? Has the level of indebtedness and losses in our banking system undermined the solvency of the Irish state in such a comprehensive way that is beyond the capability of our new government? My answer is that I don't know. But I'd like to hear what others think...

Different Party, Same Politics?

Since the onset of the financial crisis, at least one thing has become apparent: crony capitalism has, and has had, adverse affects on economic growth.

This is evident in the recent cosy relationships between Fianna Fail and head bankers and property developers which undoubtedly contributed to bringing the Irish economy to its knees. Political accountability has subsequently been the cry of the leading opposition throughout the recession and recent election campaign. Now in government, Fine Gael face its first test of its commitment to reform in the political system given the emergence of Michael Lowry's alleged participation in illegal activities. The Moriarty Tribunal found that the former Communications Minister assisted businessman Denis O'Brien's consortium Esat Digiphone in acquiring a mobile phone licence in the mid-90s. The report also found Mr Lowry received £420,000 sterling from Denis O'Brien to complete the purchase of English properties. Taoiseach Enda Kenny's response to this situation will determine the party's allegiance to reform in Irish politics and may help restore the trust and confidence which has long been lacking.

Are we on the brink of political reform, or will Fine Gael follow the same trajectory as Fianna Fail: different party, same politics?

European Motor Industry Hit By Japanese Earthquake

Economists are all to familiar with the notion of exogenous shocks and how these unpredictable events can have devastating effects on an economy. When Japan suffered an earthquake, earlier this month, it not only affected the Japanese economy but also affected European countries. The European motor industry is a prime example of an industry that has been adversely affected by the quake. According to an article by Chris Reiter, that appeared in the Irish Examiner on Saturday March 26th, European car makers have been negatively affected by the earthquake in Japan as supplies of Japanese parts, for example semiconductors, become more scarce. Reiter states that "Volkswagen, PSA Peugeot Citroen and other European car makers may be forced to halt production in the coming weeks as component suppliers in earthquake-ravaged Japan struggle to restart factories." The head of Clepa car suppliers association, Lars Holmqvist estimates that this may result in "billions of euro" of lost revenue in the motor industry. Holmqvist also suggests that it may take "months" for normal productivity levels to resume. European workers in car production facilities are also feeling the effects of the quake. According to the article by Reiter "Peugeot , Europes second-biggest automaker, is temporarily reducing its workforce to reflect production cuts of as much as 60% resulting from a shortage of Hitachi Ltd diesel engine parts..." The article also reports that Opel were forced to cancel shifts in Spanish and German production plants. Carlos Ghosn, the chief executive of Renault and Japanese partner Nissan Motor Co. reported that some 40 Japanese auto-parts makers have been affected by damaged factories and transport routes. http://www.irishexaminer.com/business/car-makers-face-production-woes-as-quake-hit-japan-suppliers-struggle-149432.html

Forever in your DEBT!!!

http://www.guardian.co.uk/football/2011/mar/22/manchester-united-record-loss-debt?intcmp=239
Source: Getty Images


In 2005, Manchester United were taken over by American Tycoon Malcolm Glazer, and since that moment United enjoyed massive success on the field of play. 3 Premiership trophies, 1 European Cup and a couple of Carling Cups paint the image of a club on the cusp of an extraordinarily progressive wave. However as I have continually documented, this success has been in spite of The Glazers restrictive reign as opposed to a credit to their management. In fact it is fair for United fans to ponder the thought that had these owners not purchased the club, it is logical to assume that United would be fair and away the most dominant force in the Premiership and Europe. The team has continually competed with minimal investment and has in recent times been forced to sell their most prized assets whilst replacing these players with bargain bin purchases.

Today the Glazers parent company, Joint Football Ventures announced a record loss of £104.6m for the financial year ending June 2010. The owners accredit this loss to a lack of player sales. This is extremely worrying for Manchester United fans when the club owners blame a lack of player sales as the reason they are hemorrhaging money on a constant basis. Surely a club of Manchester United’s stature should not be forced to sell players in order to compete. According to Forbes, Manchester United are the most valuable sports brand in the world and this only adds to the unsatisfactory financial position of the club. Add to this the fact that the Glazers refuse to entertain offers then one wonders what motive the Americans have. They have been offered over £1 billion for the club yet remain stead fast in their refusal to sell. The Glazers appear happy to milk their cash cow for all it has and this can only be at the detriment of the team, the fans and the players.

Unfortunately the continued support of Alex Ferguson for the Glazers has disguised the financial standing of the club and until he speaks out in opposition of his bosses then the club will continue to hemorrhage cash and be forced to sell their prized assets to make ends meet. These men must go soon!!! Love United, Hate Glazer!!

Effects of Nature

Japan is till suffering from the earthquake and tsunami that struck its North-East coast on the 11th of March. The earthquake reached a world-record of 9 on the Richter Scale. The Japanese government are currently struggling to prevent a nuclear distaster with technicians working inside an evacuation zone in the Fukushima Daiichi plant, where they have attached power cables to all six reactors and started a pump at one of the reactors in an attempt to cool overheating of the nuclear fuel rods.

Provisional estimates released by the World Bank on the 17th of March accounted for 15,214 people either death or missing, nearly triple the figure of their 1995 earthquake. The economic damage resulting from the disaster is approximately 235 billion which is around 4% of GDP.

Fuelling concerns emerged last week as a result of the crisis, where world economy may suffer becasue of disrupted supplies to the auto and technology industries. Howeveer help was quickly prompted by the G7 group of rich nations to stailise the yen.

On a lighter note, billionaire investor Warren Buffett said the earthquake and tsunami were an "enormous blow" but should not prompt selling of Japanese shares. Instead, he called the events a "buying opportunity". He continued by saying that this disaster would not affect the economic future of Japan.

The impact of natural calamities on global economy

It is obvious that the impact of bad weather and natural calamities on economy, especially in the age of globalization, the regional calamities can influence the other countries and related industries. From 1970s to 1980s, the various global natural calamities caused the economic losses more than hundred billions.

In Dec 2009, temperature of the US was the lowest level since 2000. As the consumption in heating grew significantly, the energy price was rising, oil price increased 10% and natural price increased 15%. In Jan 2011, the Eastern Australia occurred the most serious floods during the 50 years, the torrential rain inflict devastating damage to the region of producing coking coal which support two thirds of the world.

“Hurricane Katrina, that hit New Orleans in August 2005, around 400,000 jobs were lost, economic growth for the second half of the year was trimmed by a full percentage and oil supplies were severely affected. On the day Hurrican Katrina hit Louisiana, August 29th 2005, crude oil prices on the New York Mercantile Exchange closed at $67.20 a barrel, up 1.6 percent, after touching a high of $70.80 a barrel in earlier electronic trading.”
— Jessica Hartogs and Antonia Oprita,CNBC

“The biggest earthquake on record to hit Japan in 140 years sent stock markets across the globe sharply lower, while the yen and oil prices also fell. The quake was followed closely by a 10-metre tsunami that killed hundreds of people and swept away everything in its path. The death toll is expected to rise. Auto plants, electronics factories and oil refineries were shut across large parts of the country. Several airports, including Tokyo's Narita, were closed and rail services halted. All of the country's ports were closed.”
— Jessica Hartogs and Antonia Oprita, CNBC

Such of these natural calamities are influencing the global economy.

The events in Japan over the last few days are showing us how it influences the other countries’ economy. Firstly, Japan’s nuclear power plant issue increase the other countries’ fear for nuclear power, if some countries close their nuclear power plant, the other energy price(including petroleum) will sharp rise, and then involve the global economic trend. Specially for Asia, Japan‘s 54% export and 45% import are related to Asia, and 19% export and 22% import are for China. Japan’s import and export are stagnated after calamity, this will bring negative effect to Asia’s economy. Secondly, Japan’s economy highly depend on foreign countries, especially the large export of IT and cars, meanwhile large amounts of imports, so Japan’s calamity can negatively affect global economy in a short term. For instance, the crops and fishes cannot be eaten as the nuclear radiation, hence Japan has to import vast amounts of these products which did not need to import before.

http://www.cnbc.com/id/42075689/Busch_Natural_Disaster_in_Japan_Follows_Historical_Pattern

http://www.cnbc.com/id/42026484/How_Recent_Disasters_Affected_Markets_and_Economies

Death and Income tax.

Benjamin Franklin famously opined that "in this life nothing is certain except for death and taxs". In Ireland it seems we may have proved 'ol Benjie wrong on this count, at least when it comes to income tax.

I have written before on this blog about how our state was for years reliant on a myriad of unsustainable consumption based taxs which collapsed during the recession. However another more pressing concern is the state of income tax returns in Ireland and the land of eternal dreams in which many people exist on the matter.

Its important to note before reading this article by Ronan Lyons entitled "a little quiz on Irelands income tax" that income tax does not include PRSI(which is insurance), consumption based taxs(such as VAT) or the income levies introduced by our previous government.

The article contains a quiz in which I got one of the questions right. Its a real eye opener in terms of who pays what in terms of income tax. When compared with the following chart again from Lyons the issue becomes even more stark.

This graphic shows the all in tax rate of Irish average wage workers in comparison to the US, UK and OECD. According to Lyons:
"The graph below shows the average “all-in” personal income tax rate levied on people who earn the average industrial wage, for a range of economies including Ireland, from 2000 on. The figure given is an average tax rate for four stylised households (a single worker with no children, a single worker with two children, a married couple with one earner and no children and a one-earner couple with two children). The figure for each economy includes family cash transfers, paid in respect of dependent children between five and twelve years of age. All figures come from the OECD."

This graph shows that between the period 2000 and 2007 effective income tax rates for the above families on the average industrial wage had dropped to somewhere below zero.
The incoming government face some big issues the bank(and possibly soverign) default which looks likely to come in the next five years, the excessive wages and spending we can no longer afford, fights with unions from consultants and teachers to the public service and political restructuring on a large scale but somewhere in all of this we need to look at a reformed tax system.

In this article Constantin Gurdgeiv makes some interesting suggestions on changes that could benifit our tax system and indeed social welfare such as a 15% flat tax rate and capped (7 year) lifetime welfare benifits not including pensions or disability benifits. As yet I am not sure what I think about either but when people demand "radical" changes to our society and the way we govern ourselves some very radical suggestions to the issues such as these should be considered. It would be far and away preferable to at least put these issues on the table rather than the stock "not on my patch" consensus built disaster we have sleepwalked ourselves into in the last ten years.

Sony's Struggle

Sony is an extremely successful multinational firm. The company was established in Tokyo in 1946 as a telecommunications and measuring equipment reseach and development firm. It adopted the Sony Corporation name in 1958 and is now located in several countries worldwide. Its focus is now on four sectors: electronics, game, entertainment and financial services. Sony is now famous for products such as the Sony Playstation and Sony brand televisions. It is a firm affiliated with high quality products.

This success however does not make Sony invulnerable to outside threats. Sony faces constant competition from other electronics based firms. An example of this is Microsoft. Sony and Microsoft are the core competitors with regards next generation gaming consoles i.e. Playstation 3 and Xbox 360. However competition can become excessive and this can become negative for both firms involved.

Sony has just been involved in a case with LG, another high quality electronics producer, in which Sony lost. This led to a ban on imports of Sony Bravia HD Televisions and Sony Playstations into Europe. Thousands of Playstation 3's were seized and impounded before they could arrive at retailers. The supply of Playstations already in Europe however was enough for the demand within the 10 day ban. Luckily for Sony, the ban was lifted and trade could continue. However the patent issue which the case is based around is still ongoing according to Stuart.

Sony faces more problems this week with the coming of an earthquake measuring 8.9 which led to a tsunami sweeping Japan. Shares in Sony have fallen by over 8% according to The Irish Times. Economic disruptance and market competition have weakened Sony during the past year but many other firms are facing the similar issues. Sony needs to focus on bringing the firm out of the recession as a strong rather than a weakening multinational. Constant negative news in the press may lead to a brand weakening which in turn will damage brand loyalty.