April 2013 – gz64

A Yen for yield could rock U.S. REITs

yield on the Vanguard REIT exchange-traded fund: 3.2% or 2.7% in yen terms; while the largest Japanese REIT fund, the Shinko U.S.-REIT Open Fund, sports a yield of 17.5%;
They distribute not just the dividends their REIT holdings generate, they also base payouts on what can be unrealized capital gains in the REIT shares; So if U.S. REIT shares rise, the Japanese funds pay out all or some of those gains to investors, even though they may not have sold their holdings.
The danger is that, if the music stops playing, the Japanese funds could be in a precarious position: Say prices of the U.S. REITs stop rising, and the yen stabilizes. Then the Japanese funds will no longer be able to pay such generous dividends without selling off some of their holdings. This could depress some U.S. REIT shares. And that could provoke more sales in following months as the Japanese funds sought to continue the dividend payouts.

Following the money with Apple’s apps

Example of Pandora: quarter sale $16m, $12.7m via mobile services (mostly through Apple); Apple keeps $3m – not a lot;
total amount paid to developers since the July 2008 opening of the App Store was $8 billion;
Apple’s cut before paying that amount to developers would amount to around $3.4 billion;
While Iphone sales last quarter was $31 billion.

China’s economy is best of a bad bunch

First quarter 2013: year-on-year 7.7%;
weak global demand is a factor;
wasn’t all bad news: consumption contributed 4.3%, more than 2.3% from investments — long-awaited rebalancing towards domestic consumption;
considering what’s going on elsewhere, doesn’t look shabby: U.S., lowest job creastion in March since June 2012; Europe, crisis isn’t over; Japan, embarked on a high-risk course of monetary and fiscal expansion;
question now: whether China’s new leaders will move aggressively following the latest GDP data? should not accelerate, “In the global economic beauty pageant, China’s still the least ugly.”

Gold’s glory days come to an end

just above $1,360 an ounce;
confirmation that Cyprus is considering selling some of its gold reserves to reduce its debt burden has triggered fears other euro-zone countries with larger reserves;
Gold’s problem is that it yields no interest, making it inherently difficult to value. That leaves it reliant on sentiment;

洪灏：黄金暴跌预示股市波动性上扬

贵金属的波动大致来自于市场对资金流向的预期；金价上周的大跌反映了市场对黄金极端悲观的情绪；在过去40年里仅在1976年、1983年、1998年及最近出现过5次类似的极端悲观情况；
金价波动率持续上升显示股市波动率即将飙升；
没有货币竞争性贬值的市场似乎在承担货币战争的代价：上海处于风口浪尖，香港在2010年11月美国第二轮量化宽松政策以来一直未能再创新高；但美国和日本的股市却表现出色；

陆庭龙：银行股成果为何难分享

中国的银行股普遍在业绩公布后下跌；
四大内地银行在决策上并不单纯是回报股东投资收益的考虑；

安邦：如何改革中国政府的债务问题？

中国政府债务是否过重，取决于对政府责任的界定；日本债务远比希腊高，但是希腊是外债，日本是内债；
中国体制的特殊性：很容易将债务问题分摊到全社会；
也绕不开对经济发展模式的讨论：若房价真的下跌，地方政府债务首先吃不消；土地抵押 – 从银行借贷 – 房价上涨 – 通过土地财政予以覆盖；2009至2012年，只要房价稍微有下降的意味，个地方政府便出台政策救市；

刘利刚：中国如何面对日本新一轮量化宽松？

日本对美元的汇率可能在今年年底达到110-120的水平；
中国贸易竞争力会出现下降；
汇率政策需要作出变化：不是简单跟随美元，而是钉住一揽子货币（应为6.65而非现在的6.20）；
加快推进以利率市场化为核心的金融改革；（短期）做到境内外资本双向流动，不能让资本账户开放改革成为新一轮资本流入的起点。

Chapter 1: Democracy Goes in to Reverse

Weakening trend of democracy began to materialize in 2001:

the weakening of American power;
both Russia and China begin to consolidate their leadership transitions;
broadband Internet began to become available;
also saw a height of antiglobalization movement and the questioning of the Washington consensus;
initial signs of conservative, middle-class revolts against electoral democracy;

The middle class acquiesced democracy for a number of reasons:

fear that democracy would produce chaos, corruption and weak growth;
anger at the rise of elected populists who disdain the rule of law;
worry that their own power will be diminished.

Chapter 2: How We Got Here

Huntington and other proponents of the modernization theory:

economic development would create sizable middle class, an educated populace, and greater integration with the rest of the world;
Huntington placed bet on the middle class as the primary moving force: they build networks of business and society outside the control of the state;
as they gain more education, build more ties to the outside world of democratic ideas, they demand more social, political and economic freedom;
in addition, development would promote higher level of interpersonal trust, seen as critical to civic engagement in politics, to open debate and to forming, to forming the opposite political parties;

The third wave and America’s democracy promotion

Clinton for the first time institutionalized democracy promotion in the U.S. foreign bureaucracy;
few had predicted the Soviet collapse, but in its wake a Western triumphalism quickly emerged;
post cold-war haughtiness even filtered into bilateral relations with powers like Russia and China, … , ignoring warnings from experts that Russian nationalism had hardly just vanished, and that Russians and Chinese might resent this dramatic American intervention in their backyard;

Chapter 3: The Fourth Wave

Fareed Zakaria’s notion of illiberal democracy

democratization and illiberalism are directly related – eroded separation of power, undermined human rights, and corrupted longstanding traditions of tolerance and fairness;
this was not that they were insufficiently democratic, but too much democracy – the only solution was authoritarian rule, or at least a kind of oligarchic rule by the “best people;”
it make sense: democracy means more than simply elections;
yet: impossible to find a clear link between autocracy and growth; those elected autocrats never left their nations more repressive than they had been under previous true dictatorships; in appropriate examples in his book;

The fourth wave and the economic liberalization

many third wave nations actually pursued highly state-directed strategies of economic growth;
but in the fourth wave, caught up in a kind of post-Cold War hysteria; (Fukuyama) the liberal democracy and market economics represented the direction in which the world would inevitably evolve;
But: the hard sell of democracy barely took account of the uncertainty about the actual conditions for growth in developing nations;
(Stiglitz) proponents of (World Bank) reforms made little effort to tailor its prescriptions to individual countries and even if it produced growth, actually paid little attention to whether that growth alleviated poverty or really addressed inequality at all;
quick transformations and a kind of economic shock therapy – resulted in a period of capital flight and economic policies that saddled Latin American and African nations with greater debts and a death spiral of underdevelopment and isolation from the global economy;
example of Malawi;

Chapter 4: It’s the Economy, Stupid: The Consensus Fails

Democracy delivered economic growth?

some did, but many — including Taiwan, South Korea and Chile — already had been succeeding under authoritarian rule, and so continued growth did not help much in selling the public the merits of democracy;
financial crisis reversed many economic gains in young democracies like Russia, Argentina and East Asia; much of Latin America and sub-Saharan Africa’s growth wound up being absorbed by rising costs for pandemic disease;
former Soviet states, rapid economic liberalization frequently led to the stripping of state assets and other dubious type privatization;

Paradox of growth without prosperity

(Peter Lewis, JHU) many citizens judged two “goods” together – if democracy could not deliver economic performance AND public well-being, its strengths had been greatly oversold;
people living in countries that had experienced previous serious downturns and that seemed to have lowered expectations for the relationship between democracy and growth, were less dissatisfied with the downturn of the late 2000s and early 2010s;
Malawi example continued: romanticize the past Banda’s era – a country with very little economic inequality, or the inequality was far less visible (because people can talk more than in the past);
like many other postcolonial leaders, Banda could rely on his credentials as an independent hero; while his successors, rested much of their legitimacy on the explicit link between growth and their political system;
working classes, rather than middle classes and elites, more associated with failures with democracy, even though economic globalization, changing terms of international trade, or many other factors could explain weak growth;
satisfaction with democracy had dropped, and particularly those from lower-income households thought that transitions to democracy had brought no improvement to their lives;

Chapter 5: The Middle Class Revolts

Philippines

large scale street protests to push Estrada out: “People Power Two”;
it took fifteen years for the urban middle class to move from leading the country’s battle for democracy to leading the battle against democracy;
Huntington’s theory been turned on his head: sizable middle class actually became an impediment to democratic consolidation;
middle class not constitute a majority of population – democratization empowers the poor more than it empowers the middle class;

Taiwan

first generation of elected leaders so often regressed;
holding an opposition movement in the face of a repressive regime requires a high degree of cohesion, even autocracy, within that movement; Taiwanese DPP leader exhibited the same traits – tight control of his parties and paranoia regarding outsiders;
rapid transition, leave little opportunity for former opponents to forgive the crimes and mistakes of the past;
by comparison, in a more gradual transition, Spain after death of Franco in 1975, opponents had more time to build trust and agree on the norms and rules that would govern Spanish democracy;

Venezuela

Chavez’s populist economic policies, jettisoned most of the advisers who had links to middle class urban businesspeople, thrown out many foreign investors;
did help slashed poverty significantly, but also hurt the overall macroeconomic environment;
middle class opponents, backing the coup, stepping up the number of street protests to force Chavez out, also showed little care for the institutions of democracy;

Arab uprisings and to sum up

for many Arab middle classes, a military-backed counterrevolution, does not look like a bad idea – been more conflicted about whether to continue supporting democratic reform, or putting their trust once again in the armed forces;
the middle classes’ intervention can prove utterly destructive: potentially undermine civil/military relations for generations and sets the stage for the army to undermine civilian leaders repeatedly;
middle class uses protests to oust an elected leader popular with the majority poor – working classes themselves become more politically engaged and convinced that only street demonstrations rather than democratic institutions can work to fight back;
the middle class further alienates working classes;

Chapter 6: Graft, Graft and More Graft

Indonesia and how political opening leads to the liberalization of corruption

in theory, more open politics should reduce corruption, by throwing sunlight onto the actions of politicians;
may be true in the long run but in the short run, as country democratize, it significantly increases the amount of money in the political system, and more actors have access to important government information that could be sold;
even when graft might not actually be getting worse, the openness of new democracies often leads to the perception among the general public that it is;

Rising corruption (or even perceptions) add to popular alienation with democracy

perception of corruption heighten economic uncertainty, making private companies even more uncertain about whether investments would be protected;
in the fourth wave, with the Internet and social media, the reach and scope of media outlets is far greater and faster;
in Africa, corruption is the major obstacle to building popular trust in state institutions;
in Pakistan, Thailand or Egypt where the public today has low levels of trust in political parties, middle class citizens instead often have put their trust in the army;

Darwinian struggle for political survival and money politics

without an established tradition of tolerance for opposition parties, the first three elections turn into zero-sum battles, in which no party can afford to lose, and so all parties are willing to use most dramatic and even violent tactics to triumph;
money politics has become the norm during campaign seasons in Indonesia; disbursements of money;

Chapter 7: China Model

Economic liberalization without political liberalization

devoted significant resources to primary education; created highly favorable environment for foreign investment; a hybrid form of capitalism;
what’s more: this type authoritarian capitalism is utilized to strengthen the power of the ruling regime and China’s position internationally – not possible in a free market democracy (Obama cannot convince American companies to invest in Indonesia);
now Chinese officials (in the training program) far more confident than even ten years ago, would compare with investments in India or even wealthy democracies;
(discussions in Davos) shifted to more specific conversations about some of the failings of Western economic models exposed by the global economic crisis;
people in many Southeast Asian countries share a willingness to abandon some of their democratic values for higher growth and the kind of increasingly state-directed economic system;

Chapter 8: The Autocrats Strike Back

Beijing and Moscow developed explicit strategies to undermine democracy

tried to delegitimize the color revolutions by arguing that the color revolutions were not genuine popular movements but actually Western attempts at regime change that violated the sovereignty of independent countries;
SCO, attempting to be the embodiment of a new set of values and norms governing the future development of Central Asia;

Chapter 9: Failure of Emerging Powers

Big emerging democracies has not become regional champions of democratization

India, Thailand, and Indonesia, implemented no sanctions, and enjoyed sizable trade and security relationships with the Burmese junta;
South Africa provides Zimbabwe with electricity, food aid, and other lifelines;
Brazil’s increasingly powerful economy, now have greater influence over many South and Central American leaders, particularly those from socialist backgrounds;
Poland: exception, had used its influence to support reformers in other Central and Eastern European nations;

The policies of these emerging democratic powers made some sense

principles of nonintervention and sovereignty, resonated intensely with the new powers; many of them felt extremely uncomfortable joining any international coalition that sought to undermine other nation’s sovereignty.
they still worried about maintaining its own territorial integrity, like India (Kashmir), Indonesia, and Turkey, want to avoid criticism of their own human rights abuses;
new democratic powers, less secure in their regional environments, are more willing to live with stable but autocratic neighbors than to risk destabilizing their regions;
in long-established democracies, business’ relationships with authoritarian regimes are balanced by the advocacy of human rights groups, organizations, muckraking journalists, etc., which are lacking in younger democracies;
fear of losing out to China on business and strategic deals if focused too much on promoting democracy; case in Burma, Sri Lanka, sub-Saharan Africa;

Chapter 10: Failure of the West

The failure of electoralism

Allies did not win the WWII because they were democratic; Soviet Union collapsed not primarily because of its lack of political freedom — weak foundations of third- and fourth-wave democracies, leads to far more vulnerable reversals;
focused too much attention on whether countries hold regular elections; only about half Egyptians thought it important, nearly 80 percent believed “a fair judiciary” and over 80 percent believed “improved economic conditions”;
alternative model exists: a model that can enjoy economic benefits without allowing political freedom; that allow the conservative middle classes to maintain their businesses and wealth without having to deal with the popular power of the working classes;

Obama (or Bush) administration’s problem in democracy promotion

failing to work with developing nation’s leaders to manage their citizen’s expectations of what democracy would actually do for them; counterexample: Mandela of South Africa, made a serious effort to manage expectations;
further alienated working classes critical to successful democratization; United States did not care to support democratization if elections did not lead to outcomes Washington felt comfortable with;
too rhetoric, not matched by resources, or at least wise use of resources;
Obama inclination toward pragmatism and consensus — Jeffersonian tradition: “reduce America’s costs and risks overseas by limiting U.S. commitments and believe that the United States can best spread democracy and support peace by becoming an example of democracy at home.”

Illusion of the spread of new technology

impact is great, both for activists and for authoritarian governments;
simply the spread of Internet access certainly has not ensured freer politics or democratic consolidation;
weak bonds built by technology’s new tools often wilt under pressure from governments, and are not strong enough to keep citizens coming back to the regular, more mundane institutions of civil society critical for a democracy;
text messaging, e-mails – particularly sent from strangers and not from friends or relatives – are relatively ineffective in voter mobilization;

Chapter 11: Prescriptions for the Future

Month: April 2013

【拜仁4比0巴塞罗那】豺狼虎豹

【拜仁6比1沃尔夫斯堡】效率制胜

阅后即焚（二十二）

Joshua Kurlantzick – Democracy in Retreat

【拜仁2比0尤文图斯】完胜