The falling Japanese yen is having a complex effect on Taiwan, with some industries feeling nothing while others are getting pinched... (FocusTaiwan):...Since the beginning of this year, the yen has fallen 14.72 percent against the U.S. dollar. The magnitude of the depreciation during the period of April 4-19, in particular, hit almost 7 percent on the back of more fund injections from the Bank of Japan (BOJ) to boost the economy.WantChinaTimes, the rabidly pro-Beijing rag, took a slightly different slant:
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Acer Inc., the world's fourth largest PC vendor, agreed with the argument of little impact from the yen's weakness, saying as Japan is not the major competitor to Taiwan in the world's PC market, a weakening yen is unlikely to affect Taiwan's global standing in the business.
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HSBC Securities analyst Lai Hui-chuan said as Japan is not a major supplier of components to Taiwan's PC manufacturers, a falling yen is unlikely to affect Taiwanese PC makers' operating costs.
Some of local light-emitting diode (LED) firms' global competitiveness, however, has been eroded as they have encountered competition directly from their Japanese rivals which are taking advantage of a falling currency, LEDinside analyst Chu Yu-chao said.
Export orders from Japan received by Taiwanese companies fell by 15.6% in March on an annual basis, the steepest decline among orders from Taiwan's major trading partners, according to statistics released by the country's Ministry of Economic Affairs on Monday.Some articles pointed out that major international firms had slowed orders, waiting to see how far the yen will fall. On the other hand, Taiwan's moribund auto market might get a kick since prices will fall if the yen falls; Mazda announced a cut in prices last month. Many Taiwan firms rely on parts from Japan, whose prices will fall, or they hold their debt in Japanese yen, meaning that it is easier to pay back since yen are now cheaper.
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The weak yen affected mainly export orders for information and telecommunication products, as well as electronics products, which fell by 8.6% and 18.0%, respectively, in the first quarter of this year, compared with the same period last year, Lin said.
Hard to say what the overall effect on economic growth will be, but as long as the US and Europe remain committed to devastating their economies and the futures of their peoples through austerity, don't expect too much here in Taiwan.
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Daily Links:
- Government to promote the odious habit of tipping. What a bunch of feckless idiots.
- J Michael on the Huangkuang protest. The fourth paragraph is heartbreaking. The final one is excellent.
- Billions of bucks flee Chinese stocks as fears of slowdown mount; Taiwan industrial output fell 3.28% last month.
- Haha. Even the tepid capital gains tax is now being dialed back.
- Water rationing concerns remain
- First bird flu outside China found in Taiwan
- Healey at Huffpost: Chen Shui-bian is being killed in slow-motion state violence .
- Full court propaganda press by Cabinet in favor of the fourth nuke plant
- Fishing pact analysis from the Japan Times
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7 comments:
http://www.bbc.co.uk/news/technology-22166606
Samsung probed in Taiwan over 'fake web reviews
Fair-trade officials in Taiwan are looking into reports that Samsung paid people to criticise rival HTC online.
Taiwan should not worry about the falling Japanese yen. And Taiwan should be thankful it's island dispute is with Japan and not SK.
The Senkakus would be occupied by Japanese military, hundreds of Taiwan boats would have been seized,Taiwanese fishermen killed and thousands imprisoned.
"as long as the US and Europe remain committed to devastating their economies and the futures of their peoples through austerity"
Deficit spending is like a drug - short term gain but with diminishing returns each time you use it plus long term damage to the whole body.
High spending combined with high taxes isn't as bad, but it still saps energy from the system.
Austerity is like going through withdrawal. It's painful but it's necessary for breaking the cycle of ever higher debts and ever deeper recessions.
Of course America isn't actually doing austerity. We're still deep in deficit spending and high taxes. The sequestration only hits a tiny portion of the budget and is unnecessarily focused on legitimate government functions. The airline delays don't represent deep cuts, they represent unthoughtful cuts.
I just heard on the news that the Senate has passed a bill to move funds from other transportation expenditures to cover the cost of putting all the air traffic controllers back to work. If so kudos to them! When I heard they were going to try to get the controllers back on the job I assumed it would be with more deficit spending. If it turns out they actually are paying for it somewhere else it will be quite the pleasant surprise. Here's hoping it survives the House and President!
In a Bloomberg interview earlier this month Columbia University's Joseph Stiglitz was blunt about the historical record. “There is no instance of a large economy getting to growth through austerity," he said. "Austerity leads the economy to perform more poorly. It leads to more unemployment, lower wages, more inequality.”
"There is no instance of a large economy getting to growth through austerity..."
Well perhaps that's because such "austerity" programs feature only cuts in the rate of growth of State spending, rather than real cuts in State spending. The large states of Europe showed increased State spending from 2008/2009 through to 2011, despite allegedly following various forms of "austerity" programs.
A second point would be that although Stiglitz dismisses data from the "small" states that followed austerity programs (i.e. Latvia and Estonia) due to their high dependence on exports, the fact is that these states had comparatively lower spending and debt to GDP ratios to begin with. In a country like Britain, genuine cuts in state spending would put half the people out of work because so many of them are employed by the State - which would be electoral suicide. In regions such as the south-west and north-east of England there are more people employed by the State than there are in the private sector.
Just to be sure we're talking about the same thing, I googled for a definition of "austerity" and this is what I found: "Sternness or severity of manner or attitude. Extreme plainness and simplicity of style or appearance", which isn't a very precise definition for economics.
By "austerity" I mean low spending and taxes that are similarly low - basically pulling government back to a narrow reading of its traditional American role as enforcer of peace and justice.
Is there any example of an economy becoming large with a solid base through any method other than austerity? America's taxing and spending for most of its history would be considered "austerity" when compared with today's taxing and spending. Did Taiwan or Japan have a large welfare state when they industrialized? Russia did and we can see what happened to it.
Once a country industrializes and becomes wealthy it can afford to suffer the reduced growth that the welfare state leads to so long as the country pays its way rather than becoming dependent on borrowing as America has.
The debt saps available credit and leads to loss of confidence in the country. Interest payments on the debt sap money that could otherwise be invested in growth.
Austerity on its own doesn't lead to growth in much the same way that staying off drugs doesn't lead to happiness. Drugs can bring temporary happiness just like deficit spending brings temporary growth. But the drugs wear off and the recessions hit and the bills come due. So the addict figures the way back to happiness is more drugs and the way back to growth is more deficit spending. And the drugs wear off again, the recessions hit again and the lows are even lower than before. It's a vicious cycle.
That problem has already been solved Readin - it's called "prohibition", I believe. ;-)
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