The Jakarta Globe carried a story on Sep 22 where a top minister called for cuts in Indonesia's natural gas exports to Singapore, claiming that such exports were excessive and that the gas was needed for domestic use.
While I have no doubt about the ever-increasing domestic demand for natural gas in Indonesia, it is interesting to note that Singapore has been singled out even though countries such as Japan and South Korea take larger volumes of the country's gas exports in the form of LNG.
What this illustrates is that because Singapore is small, we are naturally taken as being 'easy to bully'.
As I have written repeatedly on this blog, we are moving into an era of resources nationalism, where countries with good resource endowments want to use them to gain leverage over others that are dependent on such imports. In such an era, Singapore's power relative to its resource rich neighbours will be weakened, and so we can expect more 'bullying' from them in the coming years.
Given the risks to our natural gas imports, which is used to generate electricity, we need a coherent plan to reduce reliance on imports to the greatest extent possible, even though we will always need to import. But so far, we haven't got a plan.
Thursday, September 22, 2011
Thursday, September 15, 2011
China Bailing Out the Eurozone
It's amazing what politicians will do to keep the status quo and their privileged positions.
The idea that China, a country of peasants who can barely afford to feed themselves, should put money into Eurozone bonds to bail out the fat cat bankers of Europe seems to defy common sense. And yet, the financial markets rally on the news. So much for the crap in finance textbooks known as the 'efficient market hypothesis'.
On China's part, it is merely trying to keep its mercantilist policies going, since it needs an export market for its excess industrial capacity. Global debt deflation will immediately bring China into a Kondratieff winter that will make the Great Depression look mild. Also, given the problems within China's financial system, one has to wonder where they are going to find the money to bail the Europeans out. The US$ 3 trillion in reserves that the PRC supposedly has isn't actually enough to fix the internal financial black-holes there.
As for Europe, I think the 'peasants' who still can't accept the fact that their 60-year experiment with socialism has failed will eventually rise up and revolt against the political establishment in Brussels and their respective home countries. Europeans will not likely take kindly to the prospects of their politicians selling the continent's 'crown jewels' to China. This is something that the CCP leadership appears not to have understood so far.
The idea that China, a country of peasants who can barely afford to feed themselves, should put money into Eurozone bonds to bail out the fat cat bankers of Europe seems to defy common sense. And yet, the financial markets rally on the news. So much for the crap in finance textbooks known as the 'efficient market hypothesis'.
On China's part, it is merely trying to keep its mercantilist policies going, since it needs an export market for its excess industrial capacity. Global debt deflation will immediately bring China into a Kondratieff winter that will make the Great Depression look mild. Also, given the problems within China's financial system, one has to wonder where they are going to find the money to bail the Europeans out. The US$ 3 trillion in reserves that the PRC supposedly has isn't actually enough to fix the internal financial black-holes there.
As for Europe, I think the 'peasants' who still can't accept the fact that their 60-year experiment with socialism has failed will eventually rise up and revolt against the political establishment in Brussels and their respective home countries. Europeans will not likely take kindly to the prospects of their politicians selling the continent's 'crown jewels' to China. This is something that the CCP leadership appears not to have understood so far.
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