Economic Nerves

Feeling a bit weird...My Tigers are in the playoffs, and the Browns are over .500 so late in the season, and Detroit and Buffalo are both 3-0. Is the apocalypse upon us?

It's good to talk about something other than F-16s for a change. Yes, let's talk instead about that deteriorating business climate.....

Taiwan Institute of Economic Research (TIER), a private economic research body, released a report yesterday (Sept. 26) showing that the business climate of both the service industry and the manufacturing industry deteriorated in August.

The service industry’s business index plunged to a level which is the lowest since July 2009, while the share of manufacturers with a gloomy business outlook surged.

Chen Miao, director of the business forecast center of TIER, predicted that Taiwan’s business climate will decline further. Although stock market crash in August had yet to affect private consumption, further decline of the stock market, which already broke the 7,000-point mark yesterday, will impact consumption sentiment, as people begin to feel the shrinkage of their assets.

...............

While the share of manufacturers with a gloomy outlook surged, the business index of the manufacturing industry only suffered a minor decline, as manufacturing lines with higher weight didn’t deteriorate. Prices of consumer electronics, semiconductor, foundry, and DRAM, for instance, remained steady, while FPD manufacturers switched to small-sized models for use in tablet PCs, such as iPad.

The number of manufacturing lines with a gloomy outlook increased, including petrochemical materials, machinery equipment, machine tool, industrial machinery, securities, auto parts, plastics, transportation equipment, motorcycle and parts, and bicycle and parts.

Other economic indicators are also gloomy. The China Post reported today....

Luo Wei, researcher with Fubon Financial, said the global economy is going through a downturn that has affected Taiwan's exporters, with export orders decreasing. This will lead to a slowdown of GDP growth in the fourth quarter.

However, the island's economy should be able to grow at least 4.5 percent, close to the 4.81 percent estimate given by the Directorate General of Budget, Accounting and Statistics (DGBAS).

Luo also commented on the recent depreciation of the New Taiwan dollar, which he said came as a result of a migration of funds into the U.S. dollar and the Japanese yen, in the midst of escalating economic concerns.

According to Luo, a depreciation of the local currency is a double-edged sword. While it is positive for exporters, whose products will now be more competitive in the international markets, it will expedite a withdrawal of funds from Taiwan, destabilize the market and weaken local stocks, he said.

A number of financial firms have revised GDP growth downward for the 4th quarter. With the crisis in Europe, the abdication by both the US Congress and the Administration of any desire to undertake sensible economic policy, and China's growth also slowing, Taiwan is likely to take a hit.

As the NT dollar declines, inflationary pressure will also increase, meaning that with the election upcoming, Taiwan's voters will take a double hit from increasing inflation and a slowing economy. Then there are the high housing prices -- especially poignant here because the current practice is that for a man to get married, he must have a job, a car, savings and a house -- stagnant incomes, and worsening income inequality. No small wonder that President Ma said this week he would make the economy a key theme in the KMT's election platform.

Never mind that moving closer to China was the magic answer that would take care of all our problems. Where are our airplanes, loaded the promised Cargo? Meanwhile, over in the magic economic wunderland of China, secret detention is the number one fear of Taiwanese businessmen, according to the rabidly pro-Beijing WantChinaTimes, accounting for 60% of the more than 4,000 cases appealed to the Straits Exchange Foundation for help.....
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Daily Links:

• I only have this to say to this kind of apologetics for Beijing: 
  --What has he to do with Livilla?
  --He's her lover.
  --Sejanus is married with children!
  --What kind of world do you think we're living in?!
• Terrifying, but this seems like an actual KMT party song for the election
• Is moving water from Tibet to northern China a fantasy? If so, is there another nearby territory whose annual rainfall exceeds its needs by a 4-1 ratio? 
• Dan Blumenthal asks whether the US cares about the Taiwan Relations Act.

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