Wednesday, December 24, 2008

The Fundamentals are Sound

Panorama of the ridges east of Taichung city. Lots of trash and field burning in the last couple of weeks, very annoying and totally unnecessary.

Ma save us! It's just one black-and-white, unbearable story rife with bad wordplay on the arrival of the swilling bamboo, union mammals at the Taipei Zoo following on the tail of another in the international media, while reporting of ordinary news is larded with panda references. Fortunately this is a quality blog and we don't have any of those problems here at The View. Despite the wide-eyed frenzy over the pandas -- pandamania is a revolutionary advance in publicity techniques: creating public enthusiasm for bread-and-circus policies that contain neither bread nor circuses -- Taiwan's economy continues wilt faster than a Capitulationist Raccoon in Taipei summer heat.

Forbes is reporting that on the heels of our massive drop in exports, the stock market is clawing for a pawhold....

Taiwan stocks declined on Wednesday as a fall on Wall Street and gloomy November orders weighed on export-reliant tech shares such as TSMC. By 0230 GMT, the main TAIEX share index had fallen 0.9 percent to 4,367.38, extending a 6.3 percent fall in the previous two sessions.

The Taiwan dollar also fell. The collapse of export orders set new records, reflecting a general collapse of exports throughout Asia:

Orders for exports sank 28.5% from November 2007 to $22.8 billion, according to data released by the Ministry of Economic Affairs Tuesday afternoon. Analysts had been expecting a 10.3% decline, according to median forecasts in a poll by Dow Jones Newswires.

The government's data also slowed industrial production index fell 28.4% in November from a year earlier. Analysts had anticipated a decline of 15.9%.

Huang Ji-shih, a ministry official who oversees the statistics department, told reporters that Taiwan's industrial output would likely be negative for 2008 and, at best, hold near zero for 2009.

Meanwhile the fur is flying in the labor market. The Liberty Times reported that 200,000 people lost their jobs in November due to involuntary layoffs, after which everyone went to the Zoo to apply for the new jobs that the pandas and Chinese tourists are going to bring. Unemployment is pushing a five-year high. It's good that all those workers with 'voluntary' vacations can have a chance to watch the pandas eat and maybe sleep instead of wasting their time in protests. Things are so bad that the government is seriously contemplating reducing the number of foreign workers. AP reported on the unemployment:

Tuesday's drop came after the government said that the island's unemployment rate had risen for a fifth consecutive month to 4.64 percent — low by Western standards, but in Taiwan, a serious cause for concern.

The fall in orders has led to a massive production slump that also broke records, meaning that the economy is looking more and more like pandas attempting to reproduce:

Orders, an indication of shipments in the next one to three months, sank by an unprecedented 28.51 percent from a year earlier, the Ministry of Economic Affairs said in a statement today. Industrial production fell 28.35 percent in November from a year earlier, also the biggest ever drop, the ministry said.

Taiwan's economy will probably follow Japan, Singapore and Hong Kong into a recession this quarter after shrinking in the three months through September. The Cabinet this month approved $14.4 billion of spending, including a giveaway of shopping vouchers, to spur growth.

“The figures are very alarming,” said Alan Liao, an economist at Chinatrust Commercial Bank. “The economic situation is much worse than expected.” Liao is considering lowering his 1.2 percent growth forecast for 2009.

More double-digit drops in export orders are expected, too. WSJ observes that Taiwan's IT industries are being gobsmacked by the recession:

"The worst has not come yet" with the economic downturn, [Honhai chief] Mr. Gou told reporters Friday after a charity event. He said Hon Hai plans to reduce its global work force, but didn't provide details. The company's work force numbers hundreds of thousands of people, most of them in mainland China. "The problem is three times worse than everybody thinks," he added.

Hon Hai is slashing 20,000 from its global workforce.

Hard to remember but last year at this time the economy was breaking records for exports. If only the DPP had managed things in a mature, quality way like the KMT, we might have seen double-digit drops then as well. Remember in January, when Veep Vincent Siew was going to be the economic czar whose czarship would lead us to the promised land? Ma said:

To this end, I have asked former Premier Vincent Siew, with his financial expertise and abundant administrative experience, to be my running mate, to increase voter confidence in the KMT's ability to revitalize Taiwan's economy.

...and that point of view was duly echoed all over. But I could have told you, Vincent, this brave new world was never meant for one as dutiful as you......

Looking at the current situation in Taiwan, I can only say that it is a good thing we finally have the adults in charge and focused on serious issues like getting pandas for the Taipei Zoo, and ensuring that there is at least one stuffed panda for every adult human on earth being sold right now in Taiwan! But don't worry, tourists from China will save us! Because their number has increased to 3,000 a day, right? VOA reports:

Taiwan lifted restrictions on Chinese tourists in July, tripling the number allowed in each day to 3,000. But since then, the number of mainland visitors has risen to only about 500 a day, up from about 160 early in the year.

By contrast, the number of mainland visitors surged in Hong Kong in 2003 after new rules allowed more tourists from China. More than five million arrived in the six months after restrictions were lifted compared with seven million for all of 2002.

500 a day! Oops. No tourists either. Say it ain't so, Vincent Siew!


corey said...

I happened to start listening to "Beautiful" by 10 Years before reading this post...oddly enough, it was quite fitting background music, you should give it a try. Seriously, your post had that much more power because of the song, 哈哈.

Anonymous said...

Anderson School of Business UCLA predicted 8.6% unemployment rate in the US by end of 2009. The bad news, it has been off (by a lot)/wrong on its predictions for last 8 years; so if it keeps its record, we will probably see over 10% unemployment rate. If you think 2008 is bad. Just wait till the holiday season is over, I THINK there is another big dive of US stock market early January.

P.S. I think UCLA should stop forecasting, it is getting more and more embarrassing every predictions it makes.