London’s Irish Exiles Turn Failing Economy Into Sporting Success

London’s Irish Exiles Turn Failing Economy Into Sporting Success

Ireland’s troubles are London’s opportunity, at least when it comes to Gaelic football.

The U.K. capital’s team will play Leitrim in the semifinal of the Connacht Championship next month after winning its first game in the competition since 1977. The tournament is a gateway into the All-Ireland Championship, which will climax in September with a final in front of 80,000 people in Dublin. Most of the 15-man group arrived in London during the last four years, many as a result of Ireland’s near financial collapse, said Declan Flanagan, a spokesman for the club.

“We have definitely seen an upsurge,” said Flanagan, originally from Monaghan in the northeast of Ireland. “The economic downturn has had a significant impact. We’ve seen a lot more professional, better-educated guys arrive.”

The exodus follows the implosion of Ireland’s real-estate bubble, which plunged the country into its worst recession on record. In all, about 300,000 people left the country of 4.6 million in the four years through April 2012, according to the country’s statistical office. Many are devotees of Gaelic football, which is a cross between soccer, rugby and basketball. Read more of this post

Investors who have lent money at low rates this year to high-profile, deep-pocketed U.S. companies got a good look at the down side of that strategy

May 28, 2013, 7:28 p.m. ET

When Model Borrowers Bite Back

By MIKE CHERNEY

Investors who have lent money at low rates this year to high-profile, deep-pocketed U.S. companies got a good look Tuesday at the down side of that strategy.

The prices of bonds issued by Apple Inc., AAPL -0.83% Merck & Co., MicrosoftCorp., MSFT +2.19% Nike Inc. NKE +0.78% and McDonald’s Corp. MCD +0.95%tumbled along with U.S. Treasurys, underscoring the risk of purchasing high-rated corporate bonds at a time when interest rates are near record lows. These high-grade companies have raised nearly $27 billion in the past month on bonds that often yield within a percentage point of U.S. government debt. Read more of this post

NYSE Margin Debt Rises To New All Time High As Net Worth Slides To Record Low

NYSE Margin Debt Rises To New All Time High As Net Worth Slides To Record Low

Tyler Durden on 05/28/2013 18:28 -0400

With everything else in uncharted territory: central bank balance sheets, the stock market, global debt, it was only a matter of time before that old-school indicator of exuberance – margin debt – also joined the ranks of things that are “off the charts.” Never one to disappoint (except when Waddell and Reed dumps a “massive” 75,000 ES trade which promptly kills its liquidity replenishment points of course), the NYSE has reported that April margin debt, as expected, hit all time records, just in time for the S&P’s own all time high fireworks spectacular.  Rising from the just shy of summer of 2007 levels posted in March, or $380 billion, April margin debt not surprisingly rose to a record high of $384 billion. Additionally, even when netting out account credit metrics, such as Free Credit Cash and Credit Balances in margin accounts, total investor net worth just hit an all time record low of ($106) billion.

In short: investors have never been more levered. Read more of this post

Presenting The Full Impact Of Stock Buybacks On S&P 500 “Earnings”

Presenting The Full Impact Of Stock Buybacks On S&P 500 “Earnings”

Tyler Durden on 05/28/2013 14:23 -0400

There has been much speculation in the recent past over what the bottom-line impact of surging stock buyback activity has been on the overall S&P earnings: after all, by removing shares from circulation, the denominator in “per share” calculation gets smaller and smaller with every incremental buyback. Courtesy of JPM we finally have a definitive answer to this long-running question. Of the change in S&P TTM operating earnings between Q3 2011 and the just completed Q1 2013, a stunning 60% or $2.20, of all “gains” of $3.70 have been the result of buybacks. The remainder: a tiny $1.50 is due to actual organic growth. This means that nearly 60% of the bridge between the LTM operating earnings of $94.60 as of Q3 2011 to $98.30 at Q1 2013 has come from corporate management teams engaging in shareholder friendly activity.

Read more of this post

What can you do with a DSGE model?

Monday, May 27, 2013

What can you do with a DSGE model?

When the Bank of England invited me to give a talk at their workshop on macroeconomics, I wasn’t sure if they wanted me to provoke (i.e. troll) them with the kind of skeptical stuff I usually write on this blog, or to talk about my own research on artificial markets and expectations. So I did both. Now, this is a central bank event, which means secrecy prevails – so I can’t tell you what the reaction was to my talk, or what other people said in theirs. But I thought I’d reproduce part of my talk in a blog post – the part where I talked about DSGE models. (In other words, the provocative part.)

“DSGE” is a loose term. It usually implies much more than dynamics, stochastics, and general equilibrium; colloquially, to be “DSGE” your model probably has to have things like infinitely far-sighted rational expectations, rapid clearing of goods markets, certain simple types of agent aggregation, etc. So when I talk about “DSGE models”, I’m loosely referring to ones whose form is based on the 1982 Kydland & Prescott “RBC” model. Read more of this post

India is considering letting its business houses run banks. It should think twice

India is considering letting its business houses run banks. It should think twice

May 25th 2013 | MUMBAI |From the print edition

BANKING in India is a vast problem and a huge opportunity. Only 35% of adults have formal accounts. A grim reminder of the risks for the 600m-odd unbanked folk came in April. A multi-billion-dollar, barely regulated, “chit fund” in Kolkata collapsed, destroying the savings of hundreds of thousands of poor people. Up to a dozen committed suicide, one by immolation. Precisely because the banking market is so underpenetrated, it should offer lots of growth. Although there are 196 domestic banks, a majority are state-controlled and stodgy. Lending margins are high. So when new licences for private players are granted, fortunes are made. The last two permits, awarded in 2003-04 when the industry was recovering from bad debts, have helped make $10 billion for their backers. Now the Reserve Bank of India (RBI), the central bank, plans to issue new licences. Applications are due by July 1st and a frenzy is building. Vikram Pandit, the Indian-born ex-boss of Citigroup, an American bank, has teamed up with a local outfit. There could be up to 100 entries for perhaps ten licences, reckons a banker.

Read more of this post

Why Myanmar’s military rulers are giving power to the people; Why investors still need to proceed with caution

Why Myanmar’s military rulers are giving power to the people

May 25th 2013 |From the print edition

MYANMAR’S TRANSITION HAS been a top-down affair. This, more than anything, distinguishes it from other recent upheavals such as the “people power” revolutions of the Arab spring, the fall of communism in Europe and the toppling of Indonesia’s President Suharto. At crucial moments the threat of mass protests hurried the process along. Government advisers concede that in 2011 they were afraid of an Arab spring on the streets of Yangon. The army had mercilessly oppressed protests such as the aborted “saffron revolution” in 2007, led by monks, and the pro-democracy uprising in 1988 that had first propelled Miss Suu Kyi to national prominence. Those 1988 protests led to elections in 1990 which were won by the NLD but annulled by the government. For the main part, though, Myanmar now stands as a rare example of an authoritarian regime changing itself from within. Read more of this post

Indonesia’s Weak Institutions Spark Nostalgia for New Order; power abuse by elites and uneven growth has left people yearning for Suharto

Indonesia’s Weak Institutions Spark Nostalgia for New Order

A jurist and an economist say power abuse by elites and uneven growth has left people yearning for Suharto

By Ezra Sihite on 8:55 am May 27, 2013.

President Suharto’s image can be found on posters around Indonesia in increasing numbers, as people seek the stability that his often-brutal leadership brought to the country. (JG Photo/Ali Lutfi)

Many Indonesians believe that life in the New Order era under President Suharto was better than today and that social elites dominate modern politics and law, according to a senior former jurist.

Speaking at a forum in Jakarta, former Constitutional Court chief justice Mahfud M.D. said that Indonesia is blighted by an oligarchy of elites that prioritize their interests over the public interest and do not abide by social rules, causing disillusionment and a lack of confidence in the law.

“Don’t be surprised to see people today wanting to see the military back [in power] because of oligarchic [conditions]. In Yogyakarta, you see stickers on cars with picture of a smiling Suharto reading, ‘Wasn’t it good during my time?’ ” Mahfud said. Read more of this post

The Ultimate Resume-Booster: Communist Party Membership; How China maintains interest in its ruling party, even as communist belief fades away

May 27, 2013 | by Lotus Yuen

The Ultimate Resume-Booster: Communist Party Membership

How China maintains interest in its ruling party, even as communist belief fades away

Zhang Xi’en, professor from the School of Politics and Public Administration at Shandong University, recently suggested that the Chinese Communist Party (CPP) should limit the number of its incumbent party members to 30 million and maintain a “moderate scale” of 51 million members in the future. Professor Zhang deemed this necessary because:

Various people, speculators included, have attempted to make personal gains in the name of being a ruling party member. They swarm into the Party, rapidly expanding its scale, and bringing tremendous danger to the Party.

The CCP, the largest political party in the world, had over 82 million party members as of 2011, 2.33 million more than in the previous year. It takes up around 6% of the total population of mainland China, and the total number is increasing by an average of one million people each year. Read more of this post

Corrupt Chinese officials turn to paying ‘black’ PR firms who claim to help them vanish from sight, with all negative stories about them scrubbed from the internet

Corrupt Chinese officials turn to ‘black’ PR

In the middle of the biggest anti-corruption campaign for years, crooked Chinese politicians are paying to vanish from sight, with all negative stories about them scrubbed from the internet.

The black PR firms are claiming “We can clean your name from blogs, forums, news websites, Weibo [China’s version of Twitter], everything,”  Photo: ALAMY

By Malcolm Moore, Beijing

5:46PM BST 26 May 2013

“It does not matter how big or sensitive the story is, we can make it disappear,” promised a manager at Yage Times, China‘s largest and most notorious “black” public relations (PR) firm. Dozens of Chinese officials have been put under investigation in recent months, and Communist Party members at every level are genuinely worried, according to the children of two senior cadres. In particular, they fear the internet, where stories about corrupt officials often go viral, putting pressure on the Communist party to launch a high-profile investigation. Read more of this post

Following defaults, Chinese Banks Cut Back on wealth-management products which grew from close to zero a few years ago to $1.2 trillion has rung alarm bells about growing risks for banks and retail investors

Updated May 27, 2013, 5:53 p.m. ET

Chinese Banks Cut Back on Wealth-Management Products

BEIJING—New rules aimed at reducing risks in China’s financial-services industry have dented the appeal of high-yield alternatives to deposits and threaten to crimp profits for banks.

Bank issuance of wealth-management products—retail investments that offer some of the security of deposit accounts but higher yields—dropped 8.8% in April from March, according to Cnbenefit, a research firm in the city of Chengdu. The average yield edged down to 4.3% in May from 4.4% in March, Cnbenefit said.

A default on a product sold by Huaxia Bank last year fanned concerns over inadequate disclosure and opaque investment structures.

China’s banking regulator introduced strict new rules in March governing where wealth-management products can be invested, how assets are managed, and standards of disclosure to investors. The rules give China’s banks until the end of the year to reduce the share of wealth-management products invested in illiquid assets to 35% of wealth products, or 4% of total assets. If they don’t, they could be forced to make moves that reduce their profitability, such as allocating more capital to back those assets.

The prospect of lower growth in the sector, combined with reduced returns and higher management costs, gives China’s banks with an unpalatable choice: reduce returns to investors and risk losing market share, or keep returns high and accept lower margins.

Smaller banks could be particularly hard hit. Small and medium-size banks collectively have a 60% share of the wealth-management market, and 15% of their products are in breach of the new rules, according to estimates from Bernstein Research. Read more of this post

Power struggle in Beijing leaves China Investment Corp (CIC) leaderless; Empty chair in sovereign wealth fund’s corner office worries investment industry observers and casts shadow over economic reform plans

Power struggle in Beijing leaves CIC leaderless

Monday, 27 May, 2013, 12:00am

George Chen george.chen@scmp.com

Empty chair in sovereign wealth fund’s corner office worries investment industry observers and casts shadow over economic reform plans

China’s US$480 billion sovereign wealth fund may well have to wait a few more months before it gets its new chairman, thanks to a power struggle in Beijing.

The chairman’s office at China Investment Corp (CIC) has been empty for about three months since former chairman Lou Jiwei , who helped establish CIC in 2007, was promoted to become finance minister as part of the Communist Party’s once-a-decade leadership transition earlier this year. Read more of this post

As the economy slows and midtier brands lose favor with consumers who are switching to premium brands and to shopping online, China’s retail sector is changing

Updated May 27, 2013, 11:07 a.m. ET

Change Afoot for Investors in China’s Retail Sector

By CHAO DENG

As the economy slows and midtier brands lose favor with consumers who are switching to premium brands and to shopping online, China’s retail sector is changing. The result is that private-equity firms that once bet on sky-high consumer growth are now buying into restructuring situations or into companies that cater to more-sophisticated tastes. “Going from a founder focused on growth to a team focused on modern management techniques is a hard curve for Chinese companies,” said André Loesekrug-Pietri, chairman of private-equity firm A Capital, which has invested in the sector. “Retail is not only about branding and fast growth but about efficient inventory management and logistics.” Read more of this post

South Korea’s Plastic Surgery Fad Goes Extreme

South Korea’s Plastic Surgery Fad Goes Extreme

By Jung Ha-Won on 10:56 am May 27, 2013.

Seoul. South Korea’s obsession with plastic surgery is moving on from standard eye and nose jobs to embrace a radical surgical procedure that requires months of often painful recovery. A stream of celebrities boast on TV shows how it gave them a “new life,” while advertisements extolling its cosmetic benefits are everywhere from street billboards to subway stations, magazines and popular Internet sites.

But there’s nothing really “cosmetic” about double-jaw surgery. A radical solution to congenital facial deformities or for people unable to chew properly due to excessive over or underbite, the operation involves realigning the upper and lower jaws. Read more of this post

Korean chaebols including Samsung tense over economic bills; restrictions of shareholders’ voting rights could have a major impact on its web of cross shareholdings among affiliates

2013-05-27 17:10

Chaebol tense over economic bills

By Jun Ji-hye
Ruling Saenuri Party and main opposition Democratic Party (DP) will open an extraordinary session on June 3 to handle bills on key economic issues.
Conglomerates and financial firms are paying keen attention on which bills will be legislated into laws as they will influence their business substantially.
Both parties have in principle agreed to handle bills aimed at removing unfair business practices by chaebol. However, they have yet to narrow differences on key issues before passing them.
One of the sensitive bills on “economic democratization” is the one to restrict voting rights of major shareholders of financial companies if they are caught embezzling corporate funds. Read more of this post

Korean chaebol CJ, Home Plus and other large companies received the lowest rating in terms of relationship with SME

2013-05-27 17:03

Home Plus, CJ among worst in SME relationship

By Yi Whan-woo
Home Plus and seven other large companies received the lowest rating from a corporate watchdog on Monday in terms of relationship with smaller business groups.
Also on the list were CJ O Shopping, Hyundai Home Shopping, Hyundai Department Store, KCC Corp., STX Heavy Industries, LSIS and Kolon Global.
The National Commission for Corporate Partnership (NCCP) made the evaluation of 73 firms on the basis of a survey of some 9,500 small- and medium-sized enterprises (SMEs).
They were the subcontractors of those large firms. Read more of this post

Why Turkey is Thriving; There is nothing flashy about Turkey’s rise, which has been based on fundamentals, rather than bubbles or resource discoveries

Jeffrey D. Sachs, Professor of Sustainable Development, Professor of Health Policy and Management, and Director of the Earth Institute at Columbia University, is also Special Adviser to the United Nations Secretary-General on the Millennium Development Goals. His books include The End of Poverty and Common Wealth.

Why Turkey is Thriving

27 May 2013

NEW YORK – A recent visit to Turkey reminded me of its enormous economic successes during the last decade. The economy has grown rapidly, inequality is declining, and innovation is on the rise.

Turkey’s achievements are all the more remarkable when one considers its neighborhood. Its neighbors to the west, Cyprus and Greece, are at the epicenter of the eurozone crisis. To the southeast is war-torn Syria, which has already disgorged almost 400,000 refugees into Turkey. To the east lie Iraq and Iran. And to the northeast lie Armenia and Georgia. If there is a more complicated neighborhood in the world, it would be difficult to find it. Read more of this post