Sunday, December 07, 2008

Sunday Economic Shorts

Well, George Bush certainly went out with a bang, perhaps the most complete failure ever to hold public office in a major democracy: two lost wars, a savaged constitution, a major city wiped out, and an exit crowned with national economic collapse and global depression. Not since Japan's political elites attempted to plunge it into war with four of the most powerful nations in the world, all at the same time, has a nation been so completely used and betrayed by its political classes. Thanks George.

Unfortunately the madness of King George has left its mark even here in Taiwan, where the global mess is ravaging the island. In Tainan word has it that chemical and LCD giant Chimei is tottering on the brink. Several of my acquaintances here whose primary business is with companies that do business with Chimei have lost their jobs. My wife went up to Taipei to meet her old classmates from primary school 40 years ago, and in addition to the usual tales of divorce and cancer, a new sadness overthrew them all: people getting laid off left and right, families reduced to one underemployed bread-winner.

As always, dislocation creates new opportunities. At 6:00 am at the Youth Park, (青年公園), Gate 3 (三號門) in Taipei, the bus companies who used to do a rousing tourist business come by one after another. There they display the month's schedule offering impromptu day trips to tourists who pay $100 or $200 to take a day trip to some place within a couple of hours of Taipei. As soon as the bus is full of day-trippers, off it goes. My aunt says she's been to Lukang ($300) several times to shop and eat oyster scrambled eggs...weekends offer 2-3 day trips...

Leaving the micro for the macro, Taiwan and South Korea are the only countries that make DRAM chips and Taiwan's DRAM firms are US$11.6 billion in the red and demanding a bailout. Since the South Korean won has plummeted, competition is fierce. Speaking of debt, Kaohsiung city wants the central government to forgive its debt, since the government holds so much land in the city, hampering its development. Kaohsiung's debt currently stands at over US$1 billion and climbing. The government's chief economic planner says he'll resign if voucher plan doesn't work at least 50% as well as he predicts. Will he pay the extra useless debt too? The local stock market regulatory chair does not expect the stock market to recover until the end of 2009. Chinese firms are to be permitted to invest in the local market, but not to trade on the margin or sit on boards of local firms. Of course, originally slated for over US$1 billion, the expected investment is just US$200 million. Good news as last week China Petroleum handed out the largest gasoline price cut in its history, nearly 40%. Ah, but despite the fact that it has lost tons of money this year, all employees are getting their bonuses and then some. In Hsinchu last week the Science Park director was saying that there was no clear trend of layoffs, but with the news of massive layoffs in the US, layoffs here will probably follow. Several major companies are forcing employees to take unpaid days off, or work only a few days a month, will salary suitably reduced. It is going to be a grim New Year's for many next year.....

10 comments:

Anonymous said...

I am just imagining the newly unemployed getting dressed for work in the morning, leaving the house as usual.. and traveling to Lu Kang all day, only to be home in time for dinner... to tell the wife about the busy day at the office.

Mu said...

Michael,

Great post. The stuff about Kaohsiung is particularly amazing...I had no idea! I thought Kaohsiung was probably doing quite well from the investment the DPP had made into it. FWIW, some of the links to sources aren't working.

There's not much room to followup in the comments box, so I put a medley of further comments at my blog

Direct link: http://www.taoyuan-nights.com/archives/248

Mu

Arty said...

Brief CV of Tain-Jy Chen

1983 - 1985 Assistant Professor, Dept. of Economics, University of Mississippi U.S.A.
Translation: I didn't get a tenure, and my contract was up i.e. fired.
1985 -1986 Associate Research Fellow, International Division, Chung-Hua Institution for Economic Research
Translation: Got a short term job back at home through connection!?.
1986 - 1987 Assistant Professor, Dept. of Economics, Drexel University U.S.A.
Translation: Is it really assistant professor or just a visiting scholar?

Never the less, if Taiwan economic policy is in control of someone like him...Taiwan is doomed. No wounder that Taiwan's economic policy is focused so much on what's been hyped on the news media i.e. supply side, Reaganomics, tax cuts. Probably because the person at the wheel is not really "qualified." The so call supply side economy has never been proven to work i.e. tax cuts, vouchers, etc. This been said, "Keynesian" shouldn't be too happy either because the fix that Keynesian has to offer are usually followed by low economic growth plus uncontrollable inflationary pressure historically speaking.

The time is going to be tough. I think we are looking at a L shape recovery (I am biased too much leverage on shorts), although most economists are hoping for a U shape. Tomorrow (Monday US) is actually the most important day for the stock market. If the S&P can't stays at 860 or above, the L shape is almost for certain.

Bill said...

BDS lives on and on and on. Could you be any less objective? I cringe to think what your students hear.

Michael Turton said...

Arty, I'm in agreement with you.

Michael

Michael Turton said...

BDS lives on and on and on. Could you be any less objective? I cringe to think what your students hear.

What is "BDS"? And what do you mean by "objective"?

I don't talk about Taiwan politics with my students. With the US of course I give my opinions and the facts I know, if they ask.

Michael

Anonymous said...

Facts? Are you kidding? This is comedy right? You could not possibly be an adult and take your comments seriously. Everyone is entitled to an opinion, but please try to draw the line between facts and opinions.

"two lost wars, a savaged constitution, a major city wiped out, and an exit crowned with national economic collapse and global depression. Not since Japan's political elites attempted to plunge it into war with four of the most powerful nations in the world, all at the same time, has a nation been so completely used and betrayed by its political classes."

Where has the Democratically dominated Congress been the last two years? Blaming all the world's problems on Bush is so simplistic that only a caveman would do it. I hope you don't think that blogging means you are now an accomplished journalist. Invest in a fact checker before you post such trash.

Philip said...

"BDS lives on and on and on."

I don't know what "BDS" is.

"Could you be any less objective?"

Think about it. That's actually a great compliment!

Michael Turton said...

I think maybe you should read more closely anon, for I blamed our entire political class for the insanity of the last eight years. But irrespective of the fecklessness of the Dems -- and I could go on all day about that -- no leader of a western democracy has ever failed his nation so completely, in so many aspects of performance, as Bush failed his.

Michael

Anonymous said...

"Facts? Are you kidding? This is comedy right? You could not possibly be an adult and take your comments seriously."

"Blaming all the world's problems on Bush is so simplistic that only a caveman would do it. I hope you don't think that blogging means you are now an accomplished journalist. Invest in a fact checker before you post such trash."


Ha!

Anon attacks you... calls you all sorts of names... attempts to insult your intelligence... insinuates you are being an uppity amateur way out of his league and should leave the real opining to vetted pundits...and then fails to deliver the goods with an alternative argument.

All he comes up with is a little rhetoric in the form of a question.

WHERE'S THE BEEF?!

LOL

This is Michael's blog... he is the editor. I would think that would give him the right to editorialize...