Wednesday, May 07, 2014

Manus Manum Lavat

Sun Moon Lake

The Ma Administration's strong support from the financial sector was on display this week as a couple of firms rushed to condemn the student uprisings as bad for the economy, thus supporting the Administration narrative. ANZ slashed its growth forecast from 3.6% to 3.1%, blaming the political problems caused by the students (FocusTw):
Following the student campaign against a trade-in-services agreement with China and the anti-nuclear protests, "the heightened political risk is bound to curtail business and consumer confidence, which will likely drag capital expenditure and household spending in the second and third quarters," ANZ said in a research note.
The students make a convenient whipping boy, but it is more likely that the swelling slump in China coupled with the austerity madness in Europe and the US will be the source of slowing growth in Taiwan than protests, which after all happen frequently. If readers recall, the KMT-led anti-Chen protests caused foreign investors to dump assets -- perhaps another, hidden reason for their prolongation, since they enabled locals to buy up foreign-held Taiwan assets -- but it seems unlikely that the same thing will happen this time.

Credit Suisse also issued a report claiming that shutting down the nuke plant will lead to higher electricity rates that will hurt Taiwan's corporate sector. Let's recall that both the Chen and Ma Administration have raised electricity prices. Ma raised them in 2012 the rescinded some of the hikes, for example, another example of his habit of proposed big policies and then folding in the face of opposition.

The China Post noted that Barclays also cut its growth forecast from 4.0 to 3.6%, but more rationally cited the slow recovery in the local economy, while Standard and Chartered remain optimistic at 3.9%.

Color me skeptical, because growth in China appears to be slowing this year, and China is rapidly displacing Taiwan's exports with its own domestic production. So don't look for anyone to explode the housing bubble here in Taiwan. I think by the end of this year we'll be lucky to come in at 3%.
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Readin said...

"...coupled with the austerity madness in Europe and the US... "

If massive deficit spending is "austerity", what is a stimulus?

Michael Turton said...

What the economy actually needs, far too little was spent, and deficits are being spent on the military and on corporate subsidies. Needed services for ordinary people are being slashed.

That's austerity. Transferring wealth to the rich while moaning about how much we're spending.

Readin said...

According to Wikipedia,"In economics, austerity describes policies used by governments to reduce budget deficits during adverse economic conditions." Deficit spending then is by definition NOT austerity regardless of what it is being spent on.

According to Merriam-Webter "austerity" is "a situation in which there is not much money and it is spent only on things that are necessary" In your explanation you say that deficits are being spent on corporate subsidies (which unlike the military are not necessary) so again, what is going on in America and Europe isn't "austerity".

I hate to be snarky, but in fact you are a university English teacher and should be capable of doing much better in choosing your words.

As for what is going on, in modern English I believe the word for high spending on transfers of money from people who earn it to people who don't combined with government intervention in the markets to choose favorites and victors is called "liberalism" and has been the dominant form of government in America since the great depression (and perhaps before that) as it is widely practiced by both Republicans and Democrats.

Conservatives seeking small government have been largely locked out of politics for a long long time in both Europe and America.