Monday, March 11, 2013

(Politics) China Military and Energy Spending: A Cause for Concern?







Much has been made of China apparent rise and the factors, consequences and potential outcomes possible attached to its growth, but so far, much of it has been negative and with the rate that China is expanding it’s military capabilities and importing oil, pessimists towards China’s growth as a international player have a solid argument as to why the glass is half empty.

While China may be in a region where it is next door neighbor is a nuclear police state in North Korea and is less than pally with it’s even less than favorite neighbor in Japan, It safe to say that China are increasing their military prowess at a alarming pace with its navy “now second in size only to the US in terms of raw numbers”[1].  This is possible thanks to massive spikes in China’s defense budget with it’s leadership revealing a massive 11.2 percent boost in 2012 alone following “a long term trend of double digit percentage increases in annual spending” [2].

While it might not entirely clear just how much China is spending to build up its military power, according to Pentagon estimates, Security has no price in Bejing as spending could be “between $120 billion and $180 billion”[3]. While China massive defense spending hikes would send a shiver down any  neighboring nation's spine, China’s less than cordial behavior towards it’s  neighbors  does nothing to ease the real fears of how China will act when it completes it’s ascent to become the world’s foremost superpower.

China has been super assertive towards it’s neighbours, particularly Japan, over small disputed islands  which both sides claim to be theirs to the point that both sides have already named the island as China has named lands (currently in dispute with Japan) in the East China Sea ‘Diaoyu’ while Japan refer to the lands as ‘Senkaku’[4]. China, none to shy asserting itself, has land disputes with regional neighbours “Philippines and Vietnam, as well as Taiwan, Brunei and Malaysia, over territory in the South China Sea”[5]

While you may now be thinking why China would kick up such a fuss in its region over  minuscule islands you would struggle to locate with Google Earth ,  the fact that the islands are, wait for it, “resource-rich” may ease your  search for an answer. China are also trying out it’s naval power in the form of “patrols and exercises” in these “contested waters” because China will eventually seek to make the islands theirs and there will be little it’s neighbours can do about it.

The news of China surpassing Uncle Sam in oil imports may have come as a shock to most due to the US’s well documented reliance on middle east oil and the even better documented foreign policy implications of relying on oil from the Middle East, but it shouldn’t have to a shock to anybody.

China has a big oil demand due to it’s population size and a slowed but still growing economy but maybe  the  concern of China becoming the world’s foremost buyer of oil was over the historical  need for oil for nations to fight sustained wars. While there is no indication that China is looking for a military confrontation with anybody, when a nation buys oil at a rate China is, the political classes of all countries involved watch closely with trepidation as there is only two real reasons for such an influx, a growing economy with a big oil demand or the preparation and possible execution of sustained military campaign.

China’s oil buying, defence spending and it’s new assertiveness in the region has a number of nations spooked, especially Japan.  Japan uneasiness over China’s growth as a military threat had made Japan increase  it’s own defence budget increase (it’s first in over a decade) by a meagre (in comparison to China’s at least) 0.8 percent and its “coast guard budget” by 1.9 percent “ in response to  China’s “incursions”[6]. It might have been more but Japan are in no position to assert itself against China as Japan is hamstrung by it inability to “service  record debt “ and a “decades old informal military spending limit of 1 percent of gross domestic product”[7].

China’s other neighbour, India are also less than comfortable with it’s  rise signalled  by it’s recent nuclear show of force and an increase of its defence budget to the tune of  $37.7 billion[8] . Both India and Japan have sought to establish stronger ties with each other with Japan  being “the largest donor of official development aid to India” [9].

Both nations, encouraged by the US especially and more importantly, have been long looking to contain the rise of China with a conspicuous increase in trade between the countries as trade between India and Japan was only $6.5 billion in 2005 but jumped to $18.5 billion just six years later[10]. However, all this minor positioning and balancing on the part of China’s regional rivals is the work of  the United States, who see China as a threat to it’s previously unparalleled global dominance.

In Sum, China rise in military and economic might was always going to scare neighbours and concern rival but the pace over the thirty has been phenomenal  and now we are only now starting to see how the world responds to what now looks like  China are looking to assert themselves more as nation of their size and stature has, and as China’s political leadership might argue, should.



[1] D. Lague and T.Y. Jones, 2013, China Defence spending seen rising as territorial rows deepen,  http://www.reuters.com/article/2013/03/01/us-china-defence-idUSBRE9200HH20130301
[2] Ibid
[3] Ibid
[4] Ibid
[5] Ibid
[6] I. Reynolds, 2013, Japan Defense Budget to Increase for First Time in 11 Years, http://www.bloomberg.com/news/2013-01-29/japan-s-defense-spending-to-increase-for-first-time-in-11-years.html
[7] Ibid
[8] S. Choudhury, 2013, India Increase Defense Budget to $37.7 billion, http://online.wsj.com/article/SB10001424127887324662404578331762186925312.html
[9] T. Kitazume, 2013, Japan urged to help build India’s Infrastructure,                                                                               
[10] Ibid

Saturday, March 9, 2013

Rory McIlroy Faces Questions As Majors Season Nears

There were more than a few raised eyebrows early in 2013 when Rory McIlroy was announced as the new front-man for Nike. The deal seemed symbolic of McIlroy's replacing Tiger Woods at the top of Golf, but early in the 2013 season, questions are already being raised about that after a bizarre withdrawal from the PGA National last week.



The 23-year old from Northern Ireland signed a deal to become Nike's new ambassador in a move that makes him one of the highest paid sports stars in the world. There have been no official figures released on the worth of the deal, but reports place it between £62m and £77m over the course of five years. Those estimates man that McIlroy could be making more than £30,000 per day.

Besides the tremendous amount of cash that this deal nets McIlroy. Perhaps even more interesting was the fact that McIlroy's sponsorship deal with the brand effectively saw him replace Woods as Nike's new front man. A fact that went hand in hand with McIlroy replaces the 37-year old at the top of the Golf World Rankings.

Tiger may have been much maligned over the past few years both for his performances off and on, but he is established as one of the great golfers of all time. He has also dominated and brought the sport of Golf into limelight like no other player in the sport's history. McIlroy's effective acceptance of taking over his mantle was major statement for a 23-year old with two Majors to his name, whether it was intention or not.

It's pretty easy to understand the infatuation with McIlroy. He has won two Major championships in the past two seasons, each by a landslide. He set a record 16-under par when he won his first career Major, the 2011 US Open. The victory margin of eight strokes encapsulated the absolute dominance that he enjoyed in that competition.

One year and two months later he proved that dominance was definitely no fluke. He was simply unstoppable running away with the 2012 PGA championship, setting a record with an eight-stroke victory margin once again.

The concern and question surrounding McIlroy's game is his performance when he isn't dominating the competition. In past two seasons he has failed to post even a decent score missing six halfway cuts. This is a player whose mental toughness is questionable when his game isn't on.

The early withdrawal the PGA National will have done nothing to ease concerns that mental toughness and might ultimately be the factor that prevents McIlroy from reaching the giddy golfing heights that Woods managed.

He pulled out less than halfway through the second round of the PGA National under the strangest of circumstances. There was no discussion of a specific injury. The only suggestion was that he wasn't in a good place mentally. There were genuine concerns voiced by many over what McIlroy might be going through.

In the end it was revealed that McIlroy had withdrawn due to a toothache. That's no joke. A wisdom tooth hurting is a painful experience and would certainly stop most amateur golfers in their tracks on a Sunday.

Still, it's concerning that it seems to have effected McIlroy so badly and it is also concerning that he wasn't open and honest about his reasons for leaving the tournament early.

McIlroy ultimately apologised and stated that there was no excuse for his pulling out of the competition. The problem is that his apology doesn't address the concerns that many hold about his game. Ultimately, the 23-year old can probably win one major per year for the next decade simply by winning the competitions where everything is going right.

If he does that then his talent will be rewarded in terms of being regarded as one of the better golfers in history. Still, his endorsement deal and recent comparisons with Tiger, not to mention his fantastic talent, suggest that just maybe McIlroy has the potential to achieve more. Only time will tell whether McIlroy can develop the mental toughness to enjoy the sort of success that his Nike deal suggests he is destined for.

Friday, March 8, 2013

(News) Bill O' Reilly Meltdown: Bill O' Reilly has an adverse reaction to the facts on Fox News




Three Thoughts Post Man Utd's Loss To Real Madrid



Tuesday night saw a much anticipated Champions League second leg match-up between Man Utd and Real Madrid end in drama. United were dumped out of the competition after a controversial refereeing decision losing the leg 2-1 and the tie 3-2.

Three days after the drama, the dust has settled, but the effects are still being felt. Here are three thoughts on the story lines that have sprung up in the aftermath of one of the most dramatic results in football this season.




How Does Sir Alex Ferguson Get Away With It?


Ferguson is one of the greats of the game. The 71-year old was appointed as the manager at Old Trafford in November 1986. Since then he has made Manchester United into the most successful football club in the modern both nationally and internationally. During his tenure, Man Utd have won 12 Premier League titles, five FA Cups and two Champions League successes.


However, time and time again, Ferguson has shown a disrespect to the media and his duties as a statesman of the game and has been given a free pass. This isn't referring to punishments in terms of fines or FA slaps on the wrist. This is reference to moral condemnation that most characters in professional sports undergo.

Personal differences between him and the BBC meant that Ferguson did not speak on Match of the Day or on any of the BBC's coverage between 2004 and 2011 with no repercussions. This is Ferguson's responsibility as an ambassador and leader of the sport.

Once again on Tuesday night, he ignored that responsibility favoring his own frustration over offering proper media representation for his football club.

Time and time again it seems like both in terms of fan reaction, media support and FA sanctions; Ferguson has been given a free pass. Time and time again over the past 26 years Sir Alex has unleashed a rant upon a referee and been allowed to get away with it. Few people could argue that the red card for Nani on Tuesday was controversial to say the least. However, that doesn't give Ferguson the right to completely disrespect the system and boycott the media because of his frustration. In fact, it is his responsibility to answer questions in some sort of measured way.

Perhaps the answer is that Ferguson has been doing this for a long time, he may not be a Premier League manager for that much longer, he may just keep getting away with it for the rest of his career.

Will Wayne Rooney Leave Man United?

The Premier League title is wrapped up, the FA cup isn't as important in comparison with the Champions League. There's little doubt that the game on Tuesday was the biggest game in Man Utd's season so far and yet Rooney was left out of the line-up in favor of Danny Welbeck and Nani.

Robin Van Persie has scored 19 goals in EPL play and has been an instant star for United. He has captured the hearts and minds of the Old Trafford fan base and with a deep group of attacking players including Welbeck, Nani and Javier Hernandez, there have been questions raised about Rooney's future in Manchester.

There are a couple of sticking points in this case. Rooney is costing Man Utd a lot of money and he is currently unfit and seemingly being outplayed by his fellow strikers. He won't be content not featuring in the team's regular first 11; it seems that a parting of the ways is becoming inevitable. 

The fact is though that selling Rooney won't be easy. The financial climate is changing in European football and Rooney's wage is huge. Ferguson won't be interested in sending Rooney to a rival Premier League club, but it's hard to find a fit financially and in terms of 'a team' that would invest in signing Rooney for a reported £20 million fee and then pay his £250,000 per week wages.

Will Jose Mourinho Win A Third Champions League Title?

Lost in the controversy of Nani's red card and even Rooney's omission from the starting line-up was that Real Madrid manager Jose Mourinho has positioned yet another team in a very winnable Champions League draw. Mourinho is chasing down a third Champions League title in three different countries as a manager, an achievement that may never be repeated.

The potential quarter-finals for the Champions League looks very winnable. Barcelona are in serious trouble against AC Milan already 2-0 entering the second leg. Meanwhile, the likes of Juventus, PSG and Dortmund possess only a questionable level of threat. There's a definite opportunity for Mourinho's star-studded line-up to add the Champions League title that he was ultimately expected to bring.











Thursday, March 7, 2013

(Business) Bank Of England QE program: B of E vote against increasing level of QE programme





The news that the Bank of England will not increase current Quantitive Easing levels of investment should be a cause for praise for members on the monetary policy committee who voted against expanding the £375 billion QE programme but what would have been much news would be the reduction or freezing of the programme all together.

Ever since the financial crisis of 2007-2009, banks across the globe have implemented similar programs of lending cheap money to banks in the hope that it will sink into the real economy but the results, in Britain at least have been less than successful to say the least.
The reason behind why the QE programme has not been a great success  is that what is considered success by its supporters is not really success at all. This is because, contrary to what most media outlet will tell the public,  QE is just a another word for publicly funded corporate welfare ensuring that the taxpayer funds banks that do not lend and are still making very large losses.

The news of RBS still making heavy losses despite the taxpayer being heavily invested in the bank coupled by the reasons behind those losses and the latest news of a computer crash to add to growing list similar instances has left many questions as to why the Bank of England chooses to pump money into banks that are so poorly run to the point that it would make the average observer think they were doing on purpose.

A recent computer malfunction (one in a long line of similar instances) inconveniencing its large base of customer goes to show that RBS are a state as same thing happened less than a year ago  leaving customers unable to   “withdraw cash from ATMs or check their accounts online, customers were also unable to use their card in electronic transactions”[1]The whole debacle has left the bank exposed to “compensation claims” running into millions and has provided another blow to a once proud bank[2].

If the stories do not convince readers of this article (meaning you whoever ‘you’ is) the number will leave no doubt as depressingly:

The bank posted an annual loss of more than £5bn and Stephen Hester, its chief executive, admitted 2012 had been a "chastening" year after its £390m Libor rigging fine. Its total losses since the 2008 bailout have now topped £34bn. However, the bank is still paying out £607m in bonuses in the coming weeks[3]
Seeing that RBS is faltering and looking for a private buyer,  the Bank of England seems to be coming to its senses as Governor Mervyn King in front of the Banking Commission supported  the idea of “full nationalization” of RBS in order  to split the bank “into two: into a “bad bank” of troublesome loans and “good bank” that can make fresh loans to cash-strapped businesses”[4]. While this idea not the worst idea and can actually work,  The Guardian’s Jill Treanor rightly pointed out that the idea of full nationalization is “five years too late”[5].

In sum, news of the Monetary Policy Committee voting against an increase of quantitive easing given to banks is encouraging but nowhere near how encouraging the actual end of pumping public money into private institution that are badly run and thanks to lax regulations and mickey-taking bonuses, are encouraged to continue the bad work.



[1] J Thompson and E. Moore, 2013, Computer fault anger RBS customers, http://www.ft.com/cms/s/0/faf97d50-8718-11e2-bde6-00144feabdc0.html#axzz2MsSB2TXl
[2] S. Read and S. Anderson, 2013,  ‘#Naffwest’: Fresh compensation claims face RBS and Natwest as customers pledge to abandon bank after SECOND  computer glitch lock them out of their accounts, http://www.independent.co.uk/news/business/news/naffwest-fresh-compensation-claims-face-rbs-and-natwest-as-customers-pledge-to-abandon-bank-after-second-computer-glitch-locks-them-out-of-their-accounts-8523685.html
[3] J. Treanor, 2013, RBS boss admits ‘chastening’ year as losses breach £5bn, http://www.guardian.co.uk/business/2013/feb/28/rbs-losses-chastening-year-stephen-hester
[4] J. Treanor, 2013, Mervyn King backs RBSbreakup – five years too late,  http://www.guardian.co.uk/business/blog/2013/mar/06/mervyn-king-bank-nationalisation-too-late
[5] Ibid

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