China and the Olympics

It's just fantastic what we hear from Beijing during these Olympic Games. I personally would like to know who the fuck is "Chinese Taipei"? Why can't our craven media call them Taiwan? Why do we have to sit through hearing athletes from "The People's Republic of Korea" and "Korea" when everyone knows these countries as North and South Korea? Why does our idiot team of TV commentators then insist on calling the Czech Republic "Czechoslovakia"? Why not call Georgia the "Soviet Union"? Or would this be just too wrong?

But this post is about putting the boot into China.

First of all, we heard that the footage of the fireworks for the Olympic broadcasts from the opening ceremony were faked. Nice. China, the land that invented fireworks couldn't be arsed to do it properly themselves.

Then, we heard that not only was there a good reason why seven year old Lin Miaoke, the little cherub who won over our hearts with her rendition of "Ode To The Motherland", appeared to be miming: She didn't even sing the tune that she was miming to. Another seven year old named Yang Peiyi had recorded the song for Lin to mime to. But, because her adult teeth were starting to come through, she simply wasn't photogenic enough for the Chinese.

Now, we hear that all the kids representing the ethnic minorities of China were, in yet another instance of Beijing pissing all over the rest of the country, Han Chinese. The Han are, of course, the ethnic majority.

Let's put this in perspective. It's 2012 and London is hosting the games. Imagine if they decide to have a bunch of kids from all over the country, and the little tyke representing some Welsh coalminer's daughter turns out to be someone named Trace from Essex. The resulting riots would end the Olympic movement for good.

Of course, we're not going to see riots in China. Oh no, the limitations on all the foreign journos have put paid to that. We're not going to see Tibetans, Uighurs, or any of the other Chinese minority peoples protesting. China is still a vastly communist country when it comes to law and order, even if it isn't much anymore from an economic perspective.

Wang Wei, the Executive VP of the Beijing games organising committee is on record as having accused the foreign media of "nitpicking" over these, and other controversies which have dogged the games so far. While Wang's refreshingly un-Chinese touch of 'tude is to be admired, one can't help but notice the question that it begs: Exactly how big does a controversy need to be to raise it above the status of petty "nitpicking"?

In case you were wondering

Yes, I've been away.

And after two weeks of serious Thai carnage, I'm back and hopefully will be blogging away again soon.

And I'd like to put this question to you all:

Why is China White heroin so called when it normally comes from the Golden Triangle, and would therefore be either Thai, Burmese or Laotian?

This has got me wondering. Shouldn't it be something like "Myanmar White"?

And why are drug runners on flights from Bangkok to Melbourne so easy to spot?

Is this why the police are winning the battle against "Haitch" but doing so poorly against Crystal Meth (i.e. what the media likes to call "Ice"), Speed and Coke?

This is just more of the inane bullshit that I'd like the answers to. I promise that my next post will be better thought out. You can probably guess what the target will probably be.

Carnage!

Yessireebob, there has been some carnage on the markets over the past week.

And on the whole, I have to applaud the sensible handling of this issue by the media. It was about six years ago that the infamous Tech Wreck happened, and some markets (for example, NASDAQ) around the world still haven't clawed back the ground that they lost during this time.

You may recall that the media fanned the flames caused by the fallout of the Tech Wreck by suggesting in no uncertain terms that investors were 'cutting their losses' by selling up.

Well, there has been none of this irresponsible talk in the media this time around, at least, in the Australian media, anyway. Most of the media commentators I've read are taking a pretty philosophical approach.

So what caused this?

Ostensibly, it appears to have been caused directly by a large slide on, of all places, the Shanghai Stock Exchange. This was a fall of about 9% on the back of fears that the People's Bank of China was about to introduce capital controls to limit speculation by hedge funds.

The fact that markets around the world were spooked by this is a pretty sad indictment on investor confidence generally.

For starters, the SSE has a total market capitalisation of only about CNY 7.2 trillion, which equates to AUD 1.2 trillion or USD 915 billion.

Compare this with these stock exchanges to see how piddly and little this is (all USD):

NYSE = 15.4 trillion
NASDAQ = 3.9 trillion
Tokyo = 4.6 trillion
LSE = 3.8 trillion

(Source - Wikipedia)

In fact, all the world's big stock markets are massively bigger than Shanghai.

Even the Australian Stock Exchange (ASX), which is not all that big, holds a healthy USD 1.1 trillion, which makes it larger than this tiddler.

Of course, the Shanghai Stock Exchange (SSE) is growing at a furious rate. Much faster than it's little brother the Shenzhen one, and faster still than Hong Kong, which was tipped to be THE stock exchange of China.

Here in Australia, though, the media has been relatively muted on the subject of the markets.

This could be partially due to the fact that the ASX has been one of the world's best performing bourses for three years running. Perhaps that has contributed to the general mood of the media which appears to have taken the attitude that this was a slide that was inevitable.

The ASX has been going gangbusters for some time, and was probably overdue a correction.

But should the concern over the slide in Shanghai have crossed over to the rest of the world's markets in the way that it has? This blogger thinks that the attention that Shanghai is getting is just a little idiotic.

More importantly, though, would restrictions on hedge fund movements in and out of China be a bad thing?

During the South East Asian currency crisis of the late 1990s, the then Malaysian government of Mahathir Mohamad imposed currency controls in order to stem the flow of money out of the country. Commentators everywhere decried this move against a 'free market', but in the end, things worked out well for Malaysia, which came out of the crisis largely intact, as opposed to some of the other member of the SE Asia bloc.

I remember very well at the time Mahathir accusing George Soros of ruining Malaysia with currency speculation.

Fast forward to today, and it appears that there is still paranoia in Asia over hedge fund activity.

The Chinese are being incredibly hypocritical if they are considering capital controls - the People's Bank of China (PBOC) now currently possesses roughly USD 1 trillion of foreign currency reserves. This makes it a powerful player in it's own right.

And it's not immune to its own brand of currency speculation. About this time last year, it engaged in a massive forward contract on the AUD in USD. The AUD was about to sink below USD 0.70 and it became in PBOC's interest to enter the market and short the AUD in order for their deal to pay off.

Meanwhile, the PBOC has kept the renminbi (CNY) at unfeasibly low levels against the rest of the world. It's really no wonder that all this foreign cash if flooding into China.

But as yet, China is not an economic powerhouse. Market reactions around the world to this are patently immature. Maybe in a few years time when the Chinese economy really has some clout, then this scenario would make more sense.

Standard but necessary disclaimer: This is not advice. Only a complete idiot would think that any of this constituted advice. It's not even vaguely reasonable to consider this to be advice. If you are in any doubt as to the content of this, see a good, independent financial adviser immediately. They do exist.