BofA Divests China Construction Bank Stake to Boost Capital, Not Declining Confidence in China

Bank of America's latest move to further divest its shares in the Chinese bank is more to lock in investment gains and take profits than a signal of loss confidence and an impending hard landing in the Chinese economy.


Where else can and should investors take their capital to if not China, India and smaller Asian economies?
Certainly not USA and Europe?


Quote :

Chief Executive Officer Brian T. Moynihan, 52, is selling assets to replenish Bank of America's capital and meet regulatory requirements for risk buffers after faulty mortgages led to about $40 billion of expenses. The lender joins Goldman Sachs Group Inc. in paring stakes in China's two biggest banks by tapping the stocks' biggest one-month rally in four years.

“We view this announcement positively for CCB as it removes a significant overhang from its shares,” Mike Werner, an analyst at Sanford C. Bernstein & Co. in Hong Kong, wrote in a research report. “This is especially true as the market was aware that BofA was seeking to improve its struggling capital adequacy ratios.”

http://news.businessweek.com/article.asp?documentKey=1376-LUNJLL6K50XS01-6V6EUMOEAT4U2F1PGK5CVJJIL5

US-Australia strategic and economic alliance vis-a-vis China : shifting goalposts in world trade and arms race

US and Australia's message to China : Do what you're told but don't follow what we do.
Obama has brought American imperialism to a higher level, expanding across the Pacific despite its economic woes. 
The blame game is on : currency manipulation pretext is an old trick used by politicians disregarding innocent poor and middle class enjoying cheap Chinese goods.  
US trade deficit could easily be resolved by exporting more high technology to China, if they are serious to match words with deeds.  Can Americans trust the Chinese and Iranians the way like you trust the Israelis to take ownership of strategic know-how? 
Why would Australia want to have a part of this conspiracy?


QUOTE :

Barack Obama's visit to Australia carries an invitation. It's an invitation to take America's side in its rivalry with China.

In one vital way, Australia has already chosen. Julia Gillard has intensified the strategic and military alliance with the US emphatically, and more deeply than the Australian public has yet grasped.

In another way, Australia is only partially and gingerly taking America's side. The US President comes to Australia fresh from his latest argument with the Chinese over trade and currency. His visit to Canberra will carry an implicit invitation, and perhaps even an explicit one in closed-door talks, to take America's side more fully here, too. It's an invitation Australia should politely, but firmly, refuse.

The strategic and military deals are already made. Gillard has presided over two major decisions in recent months.

Australia and the US have written a new clause into the ANZUS treaty giving cyber attacks the same weight as bombing raids and invasions. That revision to the treaty, a world first, happened in September. And Australia and the US have agreed to give the US a significant new military presence in northern Australia, the details to be announced during Obama's visit next week.

As the Herald revealed last week, Obama and Gillard will announce that the US will begin rotating marines through an Australian base in Darwin, in a permanent new military presence.

Australians, generally speaking, like Americans and favour the alliance. The alliance has had majority public support since it was signed 60 years ago, even during the darkest days of the invasions of Vietnam and Iraq.

But two new polls suggest the public has little appetite for intensifying it. The Herald-Nielsen poll reported in today's paper asked whether respondents thought the US-Australia alliance relationship was too close, not close enough, or about right. The answer is that 71 per cent of adults think it's about right; 24 per cent say it is too close; a scant 3 per cent say it is not close enough.

Another survey by Essential Media presented Australians with a list of nine countries and asked the same question. The country that topped the list as the one Australians would like to draw closer to was China at 35 per cent. The US was eighth at 18 per cent.

So why is the Gillard government clutching Uncle Sam ever tighter to the national breast? The reason is straightforward. China's recent conduct has disturbed all the capitals of the Asia-Pacific. It has revived maritime territorial claims it had earlier left dormant.

But the US trade and currency agenda with China is another matter altogether. The wise and far-sighted US policy for the past couple of decades was to work hard to bring China into the global rules-based system. Rather than having a rising giant outside the system breaking the rules, Washington wanted China in the system, playing by the rules.

It worked. China signed up to, among other things, the World Trade Organisation. But now the Obama administration is seeking to shift the ground rules, moving the goalposts.

A bizarre contrast presented itself in Hawaii at the APEC gathering at the weekend - the Chinese President, Hu Jintao, argued world trade agreements should be based on the global WTO system, while the US president recruited other countries, including Australia, for his little regional trade sub-group, the Trans-Pacific Partnership.

The WTO's latest round of negotiations is moribund and the US should be reviving it. Instead, it is rounding up the TPP countries that take all of 6 per cent of US exports. It's insignificant as a trade bloc.

It's a posse to get China, which is not a member. "It's all about China," says an American trade expert, Bruce Stokes, of the German Marshall Fund in Washington. "The White House is hoping that if this thing gets big enough, China will one day want to join. The hidden agenda is that they will only admit it if China accepts a high standard of policing for its state-owned enterprises."

Australia signed up to the TPP in the Bush years; it's a done deal. But Canberra should not sign up to the next US agenda item, which is to threaten China over its managed currency, accusing China of currency manipulation to win unfair export advantage.

The global rules-based system in no way bans countries from pegging or managing exchange rates. Indeed, the US was the centrepiece of the global fixed exchange rate system until the early 1970s.

And the US has not stopped manipulating its currency; it's just got subtler. One of the aims of the US Federal Reserve in flooding the world with $US1.8 trillion in US dollars in the past three years is to devalue the currency. It's devaluation by hyperliquidity.

Beijing has allowed the renminbi to appreciate by 30 per cent in recent years against the US dollar. This has solved none of America's problems. The US campaign against China's currency policy is misguided. Australia has remained aloof so far and should remain so, even under the hypnotic power of the high-beam smile of a US president in person.

In strategic and military matters and trade and currency matters alike, the world has a deep interest in keeping China in the global rules-based system. If the Americans occasionally lose sight of this in the economic realm, Australia should not abet its lapses. We are an ally, not an accomplice.

Peter Hartcher is Sydney Morning Herald international editor.

Extracted from :

http://www.nationaltimes.com.au/opinion/politics/no-reason-to-get-even-closer-to-uncle-sam-20111114-1nfgn.html

Lessons for Occupy Wall Street - Remembering America's Tiananmen - Kent Campus massacre

OK, perhaps the London riots and looting by sympathisers of a rogue killed in an unclear scuffle with the police and opportunists who exploited the mayhem may not be suitable comparison with shooting at unarmed innocent students by the police and military.

So American, British or European students who do not read history or show disinterest in world affairs and prefer to rely on hearsay and biased news reports, think again and consider carefully before you plan to embark on a campaign that could disrupt the government for a prolonged period of time.

My sympathies and concerns go to the current worldwide Occupy Wall Street that if they persist, tragedy may befall them.

That the Jasmine Revolution would not happen in democratic and well endowed democratic countries is a myth. The fact is that democracy supports participatory decision-making, which has so far been muted due to apathy and indifference, and the predominance of corporate power.  The people have awakened. Capitalist and incestuous collaboration of politicians, military and corporations need to be questioned if not challenged by the people, for the people.

What really happened?

http://dept.kent.edu/sociology/lewis/lewihen.htm/history-world.org/

http:/kent_state_shootings.htm

QUOTE :

On May 4, l970 members of the Ohio National Guard fired into a crowd of Kent State University demonstrators, killing four and wounding nine Kent State students. The impact of the shootings was dramatic. The event triggered a nationwide student strike that forced hundreds of colleges and universities to close.



WHAT ARE THE MOST IMPORTANT UNANSWERED QUESTIONS ABOUT THE MAY 4 SHOOTINGS?
Although we have attempted in this article to answer many of the most important and frequently asked questions about the May 4th shootings, our responses have sometimes been tentative because many important questions remain unanswered. It thus seems important to ask what are the most significant questions which yet remain unanswered about the May 4th events. These questions could serve as the basis for research projects by students who are interested in studying the shootings in greater detail.
(1) Who was responsible for the violence in downtown Kent and on the Kent State campus in the three days prior to May 4th? As an important part of this question, were "outside agitators" primarily responsible? Who was responsible for setting fire to the ROTC building?
(2) Should the Guard have been called to Kent and Kent State University? Could local law enforcement personnel have handled any situations? Were the Guard properly trained for this type of assignment?
(3) Did the Kent State University administration respond appropriately in their reactions to the demonstrations and with Ohio political officials and Guard officials?
(4) Would the shootings have been avoided if the rally had not been banned? Did the banning of the rally violate First Amendment rights?
(5) Did the Guardsmen conspire to shoot students when they huddled on the practice football field? If not, why did they fire? Were they justified in firing?
(6) Who was ultimately responsible for the events of May 4, l970?


WHY SHOULD WE STILL BE CONCERNED ABOUT MAY 4, 1970 AT KENT STATE?


In Robert McNamara's (1995) book, "In Retrospect:The Tragedy and Lessons of Vietnam" is a way to begin is an illustration of the this process. In it he says that United States policy towards Vietnam was "... terribly wrong and we owe it to future generations to explain why."
The May 4 shootings at Kent State need to be remembered for several reasons. First, the shootings have come to symbolize a great American tragedy which occurred at the height of the Vietnam War era, a period in which the nation found itself deeply divided both politically and culturally. The poignant picture of Mary Vecchio kneeling in agony over Jeffrey Miller's body, for example, will remain forever as a reminder of the day when the Vietnam War came home to America. If the Kent State shootings will continue to be such a powerful symbol, then it is certainly important that Americans have a realistic view of the facts associated with this event. Second, May 4 at Kent State and the Vietnam War era remain controversial even today, and the need for healing continues to exist. Healing will not occur if events are either forgotten or distorted, and hence it is important to continue to search for the truth behind the events of May 4th at Kent State. Third, and most importantly, May 4th at Kent State should be remembered in order that we can learn from the mistakes of the past. The Guardsmen in their signed statement at the end of the civil trials recognized that better ways have to be found to deal with these types of confrontations. This has probably already occurred in numerous situations where law enforcement officials have issued a caution to their troops to be careful because "we don't want another Kent State." Insofar as this has happened, lessons have been learned, and the deaths of four young Kent State students have not been in vain.



That was in Ohio, an obscure state in the Midwest, not the centre of power and wealth. The best advice anyone could give to both sides : be flexible and willing to compromise. Avoid confrontation and hardline bargaining that would get nowhere but disastrous consequences. Because we know that it is not beyond the police and military to in America to fire at innocent and unarmed citizens engaging in peaceful demonstrations, sit-ins and protests.  Anything could be justified even in the land of liberty, if the authorities are forced by circumstances. Tiananmen could happen anywhere, and it did.

Tiger Mum Amy Chua not representative of Chinese parenting - moderation the best policy

The controversial book has thrown up more uproar. The is no one single Asian / Chinese mothering style.

I suspect Amy Chua with all her impressive qualifications is really a "banana" mother who tried to resist the overly relax parenting style and strived to summon some of the good old traditional parenting style.

 She came with her parents at a young age to America and thus is considered a westerner in all her ways but she values the cultural traits and values that her parents had inculcated in her. I believe she is married to a Jew as she had threatened her youngest daughter with no Hanukkah if she did not put in all her efforts.

Seriously! Do you actually believe it was hell all the way? Amy Chua must have exaggerated and spiced up her stories and presented them tongue-in-cheek.. I can't believe any Chinese parents living in western countries would do all those horrible and evil things to their kids they love. Child abuse? The jury is out there.

Arguments for

The average kids are alot tougher than you think. They should be trained to be tenacious and able to take hard knocks in life. Kids are kids. If you let them be, they will choose to have the easy way. Do they know what is good for their future? Children given too much freedom don't know what they want to do. Parents need to identify the children's strengths, encourage and nurture them to bring out the best and push them to realise the full potential. The hard fact is there is no gain without any pain.

All these talk about self esteem is ridiculous. This make belief self esteem that democratic parents give to young children too much freedom. Don't western horse breeders break the animals before they could be trained and do useful work? Do you know what sort of military training commandos and marines go through before they can considered the best fighting force? Don't make our kids "si-sis".  Most children who have endured strict discipline masters in school and at home actually turned out be quite grateful when they realise the benefits from hindsight.

Kids growing up in western societies have a lot, in fact, way too much freedom ...not only of choices in studies, free time and ample cash to spend. If not properly guarded and given a structured life, they will slack and eventually lose out to kids from families who know how to guide their young ones. Statistics have already indicated the poor performances of American and European kids as compared to kids from Asian countries like China, Korea, India and Singapore. Economic competitiveness is sufficiently important to merit our attention for the long term viability of any country, the government and citizens included.

I have personally known of some parents who have raised successful kids who are either forgetful or in denial. They tried to hid the fact that they had been strict enforcers of draconian rules on curfews, long hours of studies, music lessons, exam coaching, and no boyfriends or girlfriends. I challenge those who claim that totally non-Asian parenting produced high rate of success to come clean with how they deprived or provided for their children during their growing up years.

If you build up children's ego with undeserving praises, it will turn them into spoilt brats and delay the problems. When the time comes and they find study or job opportunities lacking, they will grow up and learn about life the hard way, a rude shock that shatters their big ego.


Consider this likelihood that being lenient may not be helpful, it's just hiding and postponing the harsh realities from your beloved kids.

How to land your kid in therapy : Why obsession with our kids’ happiness may be dooming them to unhappy adulthoods --  A therapist and mother reports  (by Lori Gottlieb)

http://www.theatlantic.com/magazine/archive/2011/07/how-to-land-your-kid-in-therapy/8555/

Arguments against

On the other hand, not every child could take the rigour and stringent regime. It could make or break different personalities. The difficulty is finding out the unique characteristics of your kid to get the right balance of prescriptions. There is not one certain fool proof way in parenting, arguably, the most challenging process in one's life time.

Solution?

There's no simple answer to parenting. I think the author was deliberately overstating her case to make a point. In the end, there's no single answer I guess. Every child is different and needs an approach tailored for him/her. But a couple of common sense principles probably hold no matter what - set clear and firm parameters. Within those parameters, give kids the leeway to explore and discover. The tough part is figuring out the parameters."

Chinese parents themselves have taken issue with the book. There are disagreements with her methods among the Chinese community, not just in areas where Chinese assimilated with western and indigenous cultures, but in East Asia where Confucianism has strong influence on family relations.

http://www.ctv.ca/CTVNews/TopStories/20110112/tiger-mothers-chua-110112/

Parents would give up anything for their children and do not love them any less regardless of their cultural backgrounds.  The results of many "western" style parenting are cut both ways, just like the Tiger mum method. Children growing up in relaxed environment learn through trial and error, a mix bag of good experiences, hard knocks that go into lessons in life. To be sure, not everyone is academically inclined, musically talented, or motivated to make it to the roll of honors. But hey, I think they have a happier childhood, more interesting personalities and social skills. Success depends on networking and good fortune as well.

The main setback is making up for lost time. If most of us have an average lifespan of 70 years, each individual should come across opportunities to make up for lost time or errors in our upbringing. Parents too have chances to make amends. It is just a matter of working harder in later life to catch up. Again, the outcomes vary.

Finally, not every child is the same. Some improve and thrive under pressure. But there are a minority who will break down under stress. Parents must be sensitve to their children's needs and not push over the limits. What is the ideal balance? There is no magical formula. We have to try and find out what suits us and our children best. There is no one size fits all formula. Parents must be perceptive to know what parenting style suits each child. Some children may not understand and think that parents show favouritism. 

Chinese and Jewish parents have very much in common. A broad stroke judgemental casting the good and bad of East versus West and which is better is too simplistic.There is no easy solution and a challenge to find the right balance. You reap what you sow. Let us see who has the last laugh. You don't know till you reach old age.

Declaration of currency and trade war - new economic weapon of mutually assured destruction?

War or cooperation. Take your pick.

Nouriel Roubini of New York University and Richard McGregor of the Financial Times

http://www.charlierose.com/view/interview/11941

Hypocrites who blame China for American troubles need to address fundamental productivity and structural problems

This columnist succinctly sums up the fallacies behind US politicians who blame China for its economic woes. William Pesek's Commentary in Bloomberg : `Made in China’ Tag Makes Hypocrites of Us All


Let the truth be told. Many of us should be aware that the blame game masks quick-fixes to satisfy personal vested interests which could be disastrous to citizens led astray in the long run. I won't chastise some American workers who have no interest or do not have a good grasp of economics being misled by rightists. However, I was really surprised to have met a couple of highly educated Americans were chanting the same mantra. They were studying international economics no less. Hopefully, the course and some of us who are widely read would have tempered their radical thinking. So work out the pros and cons and calibrate our responses before more of Americans join the bandwagon of hypocrisy to blame those who have succeeded under the very framework, terms and rules of the game established by the advanced economies. 

Quote : 

Hypocrisy is the defining element in all the wrangling over China’s currency.

October 11, 2011

The debate seems deceptively simple: As China booms and America implodes, how much blame does Beijing’s undervalued currency get for chronic U.S. unemployment? China says none -- it’s a developing nation and needs to create the hundreds of millions of jobs to keep the peace and satisfy its citizens. A vocal chorus in Washington says China’s trade advantage hogs all the growth.

The trouble with these disparate views is that they are both partly correct. The yuan does hinder growth, as Federal Reserve Chairman Ben Bernanke points out. It’s “blocking what might be a more normal recovery process in the global economy,” he said last week. Meanwhile, the risks of social upheaval in China are rising. Subsidizing exports is an obvious way to avoid it.

The real question is: What can Americans do? Three things: Blame the Jon Huntsmans in their midst, focus on trade access and rediscover their entrepreneurial soul.

The doublespeak from Corporate America is breathtaking, and few personify it better than Huntsman, the Republican presidential candidate. As Huntsman pledges to create millions of American jobs and touts his business acumen as proof he’ll deliver, the namesake Huntsman Corp. (HUN), a chemical maker, downplays the central role that cheap Chinese labor played in building a fortune partly “Made in China.” After the U.S., China is Huntsman’s biggest market.

Naming and Shaming

Sure, Congress can slap tariffs on Chinese goods. More success may come from naming and shaming the politicians, business leaders and companies making piles of money by moving jobs to China and, out of the other side of their mouths, demanding lower taxes and denouncing President Barack Obama as an economic simpleton. The U.S. long championed the globalization model that it now blames for its woes.

Hypocrisy is also at play in how Bernanke and his Chinese counterparts are embroiled in a race to the bottom.

“It’s pretty evident that a weaker dollar is part of U.S. policy, so they are hardly in a position to throw the first stone,” says Simon Grose-Hodge, head of investment strategy for South Asia at LGT Group in Singapore. “Even though China overtly manages its currency, a stronger yuan isn’t going to bring back the jobs American companies willingly exported.”

Perhaps the real indignity for Washington is that, as it ponders a trade war with its biggest creditor, China is winning the currency war. Lawmakers facing re-election next year will find China a convenient scapegoat for bad economic data. For all its growth, China’s model isn’t benefiting the world as some had anticipated.

Market Access

Market access, not exchange rates, is the critical issue. If the yuan jumped 30 percent tomorrow, Germans would sell more cars, French more wine and cheese, Italians more shoes and handbags, Australians and Canadians more raw materials. The U.S. would sell China more soy, corn, cotton and apples. What kind of wealth does this trade create as companies move jobs to China?

Apple Inc. (AAPL) would love to sell more iPads and iPhones in China. But then, much of the content in these products is made by low-wage workers there who can’t afford the finished goods. And Americans would lose it if the cheap wares they gorge on suddenly shot higher in price. Corporate America will just shift jobs to India and Vietnam if costs in China go up.

Here, it’s worth noting a recent report from the San Francisco Federal Reserve Bank. Economists Galina Hale and Bart Hobijn argue that “Made in China” isn’t taking over U.S. consumption as much as believed. Of every dollar U.S. consumers spend on a Chinese-made product, about 55 cents pays for services in the U.S. Think about it, when you spend $90 for a pair of Nike sneakers, only a fraction of it flows to China and even less to workers there.

Valid Concerns

The real issue is U.S. companies creating jobs at home and gaining access to Chinese markets. It’s challenging for U.S. corporations to compete in China, bid for contracts and protect intellectual property. China lavishes advantages and subsidies on national champions and limits access of foreign financial firms. Corruption complicates business.

Valid concerns all around and none of them hinge on the dollar-yuan rate. If the U.S. could compete on even terms, there would be ample money to be made in China and jobs would be created back home. Sadly, Congress is more obsessed with exchange rates than trade talks that might actually boost job growth.

China’s ascent should spur and motivate the West. Earlier this year, Obama called China’s rise another “Sputnik moment,” recalling how the Soviet Union’s 1957 space launch unnerved America. The U.S. needs to relocate the entrepreneurial passion that made it the biggest economy and created some of the best companies.

The extraordinary reaction to the death of Apple’s Steve Jobs reminds us how America loves its innovators. China’s growing influence should be a call to arms to do what the U.S. has typically done best. Rather than being inspired to think big or forced to reconsider their unreflective policy stands, many U.S. lawmakers are pointing fingers eastward.

It’s hypocritical to blame China for what ails America’s economy. If you think currency rates alone are going to restore U.S. prosperity, think again.

(William Pesek is a Bloomberg View columnist. The opinions expressed are his own.)

To contact the writer of this article: William Pesek in Tokyo at wpesek@bloomberg.net

US moves to punish Chinese yuan will increase cost of living for average Americans and has not effect on job creation

Some US senators are bulldozing for the Currency Exchange Rate Oversight Act. This bill, however, has limited support among the House of Representatives and the White House who know better not to risk more hardships for ordinary Americans, antagonise a major trade partner, without achieving the said objective of effectively reducing the trade deficit and creating more jobs. 


Some economists said they understood the politics of the debate but questioned whether the bill would bring back American jobs or prod China to move faster on currency reform.

"We consume a lot. The Chinese save a lot. We're going to run a trade imbalance with them," said Derek Scissors of the Heritage Foundation.   

An editorial from the  Washington Post claims the bill is counter-productive and does more harm than good. It is mere political rhetorical to project a "symbolism" with limited practical impact.


"But would it really create hundreds of thousands of jobs in the United States, as the bill’s advocates suggest? The verdict from an April briefing paper from the Federal Reserve Bank of St. Louis is: “probably not to any meaningful degree.” Overall U.S. employment is indeed a function of the U.S. balance of trade. While it’s true that the United States has been running a trade deficit for decades and that its deficit with China is a growing share of it, ending the trade deficit with China would not necessarily cure the overall U.S. trade imbalance. That’s because other low-wage countries that do not artificially depress their currencies could easily take China’s place. The components of many “Chinese” goods are already made elsewhere, imported by China for assembly and then reexported to the United States. Only 20 to 30 percent of the value of Chinese goods in the United States would be affected by a stronger currency.



Why risk costly Chinese retaliation for the sake of a measure whose practical impact could be so easily nullified anyway?

If Congress really wants to help American workers, it will end the stalemate and move these growth-enhancing pacts to final passage. The world economy has enough problems without adding a US-China trade rift to the list," 

"According to a US Treasury Department report, China made its exchange rate flexible last June due to its high inflation rates. On an inflation-adjusted basis, the appreciation is rising at an annual rate of more than 10 percent."

Strong opposition to the Bill from American business interests backed by the  powerful US-China Business Council will be a major stumbling block. With their profits and long-term interests to protect, corporations will ensure that their lobbyists get the message across to the majority of representatives not to vote


Nobel prize winning economist  Paul Krugman's contention has softened somewhat despite continuing to join in the xenophobic chorus as a clever diversion tactic to focus attention on a foreign bogeyman instead of addressing urgent and vital economic reforms in the USA.

"Holding China accountable won’t solve our economic problems on its own, but it can contribute to a solution — and it’s an action that’s long overdue."

More attention should be paid on  promoting US niche businesses and cooperation with Chinese state enterprises for mutual benefits which Americans will get to enjoy. 

First things first.  Get the house in order before criticising and pressuring others when one has limited leverage and effective solutions.