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Timor outrage

September 10th 1999 08:33
I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.

People everywhere confuse what they read in newspapers with news. -- A.J. Liebling


Asia's big bully

Around about the time that NATO and its mates nominated themselves arbiters of international humanitarian integrity and decided to bomb the stuffing out of Kosovo, an email circled the world faster than you can say Internet pointing out that not one military action under­taken by the United States since the end of World War II has resulted in a more human­itarian or more democratic gov­ern­ment being put in place. That’s a lot of military action for a zero batting average.

Having the biggest pea-shooter on the block does not guarantee sagacity in determining the distance between detente and detonate. Instead, it attracts appelations such as bully, and refer­ences to right by might.

The big guns, so to speak, may yet get a score on the board from Kosovo. The dust is still to settle, but if dis­placed Albanians return in large numbers, and if they find a better place, it will be a victoy of sorts. Perhaps they already have in the minds of many people for whom stark television images of Yugoslav-inflicted human misery are fresh. And this gives rise to an interesting question – if military intervention in Yugoslavia can be tolerat­ed, does this spell a new philosophy, an increased inclination to send troops across sovereign borders in the name of justice?


The question attaches itself to the new world centre of outrage, East Timor. Can there be any argument that the situation in East Timor features the same brutal injustices as that in Kosovo? No. Will the UN or NATO or ANZUS ride in on white chargers to redress the wrong and punish the wrongdoers? No. Not this time.

Why? Because Western politicians understand clearly what their populations may not – that Indonesia is much bigger than Serbia. Yugoslavia is in Europe’s backyard, and one of the smaller fish therein. Indonesia is in Asia’s front yard, and the fifth-most populous nation on earth.

Australia, which has been super-sensitive and very outspoken about things Timorese ever since several Aust­ralian journalists were murdered there by Indonesian troops in the 1970s, has strongly condemned Indonesia, but probably doesn’t have big enough pea-shooters to go in alone.
So far the only NATO power to shake a fist is France, which also will not go in alone.
The Americans won’t go in. As Australian Foreign Minister Alexander Downer colourfully put it, they appear all “Kosovo-ed out”. The same thing can be said for the Brits.

And anybody who does go in can bank on fierce opposition from China and probably Russia, who have very big pea-shoorters of their own.

Of course, there is another option – economic sanctions. Iraq and Cuba may be proof that this doesn’t work, but at least America has failed fewer times this way than by dropping bombs.
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Government spending

August 11th 1999 11:02
I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.

If economists could manage to get themselves thought of as humble, competent people, on a level with dentists, that would be splendid! -- John Maynard Keynes

A bureacrat and his money

If someone could explain the economic principles behind Malaysian government spending at the moment, please call me.

According to axioms expound­ed at the London School of Economics, a pub next to which I frequented for many years, the way out of a recession is to spend money. Govern­ments need to lead the way by allocating more funding for highways, technology parks and public toilet blocks.

So far so good, because that in fact is just what the Malaysian government has done, ladelling sacks-full of capital into the coffers of all government depart­ments and telling them to throw it about quick smart.

Which is exactly what they are not do­ing.

Official figures show that the govern­ment spent just 5.3% of its devel­op­ment expenditure allocation in 1Q99. Put another way, all levels of government have been given RM16bn to play with in 1999. In the first three months, they spent just RM900m of it.

Some may point to the first quarter traditionally being a slow one for spend­ing, but 1Q99 spending was 25.6% less than 1Q98 spending. Meanwhile, the economy contracted 1.3% in the quarter.

This is not new news, of course. We first wrote about it in these columns in mid-May. In case you missed it, Prime Minister Mahathir was reportedly ‘upset’ with the bureaucrats. He even called them tight-fisted. As far as an excuse for the crazy situation, he blamed ‘red tape’.
He didn’t mention that much of the government spending that did actually occur in the first quarter was ‘emoluments’ – a series of one-off cash payments to public servants and other groups which of course have nothing to do with the forthcoming national election.
We expect GNP growth of 2.7% in 2Q99, followed by 6.1% and 5.8% in the third and fourth quarters, giving 3.3% for the full year. It’s a rosy scenario far removed from the gloom of 12 months ago. And it will be achieved despite, rather than because of, goverment spend­ing.
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Investing in gold

July 23rd 1999 10:11
I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.



All that glitters ...

Many years ago, back in the good old days before the Great Asian Discombob­ulat­ion, Red Inque, young, innocent and newly arrived in Hong Kong from Australia, sat in a restaurant with a beautiful Chinese woman and watched her eat a fish head.

She did it with both dexterity and dain­t­iness, and with a relish which almost, but not quite, convinced Red to try the head.

Finally, the meal was finished. The young woman cleaned her hands, fixed him with her beautiful, almond-shaped eyes, ran her tongue across her lips, and murmured, “Do you think the price of gold will rise soon?”

Red went red, but then launched into a nervous discourse, the content of which owed much more to hoped for rewards of a non-fiscal nature than any great knowledge of the subject.
“Sure,” he blustered. “It’s been depress­ed for so long it must rise soon.”

That was eight years ago. Gold never did get it together, and neither did Red and the Chinese enchantress.

Today, of course, Red is older and wiser, and in the same position he would know to smile urbanely, fix those lovely dark eyes with his own, and murmur a seductive reply along the following lines. Gold is now at US$256 an ounce, a 20-year low and just 30% off its US$850-an-ounce peak in 1980. It has very limited downside from here be­cause:

Gold is now close to the global average cost of mining of US$230 an ounce. If gold fell below the cost of mining, new supply would cease.

For 10 years or more, the world’s banks have been driv­ing down the price of gold by borrowing it from central banks at low interest rates (currently about 1%) and then selling the gold on spot markets to gen­erate funds which can earn much more than 1%. Currently, about 8,000 tonnes of gold are on loan from global central banks to trading banks – a figure which represents 3.1x average annual gold product­ion and continues to grow as banks keep rolling over repayment of the physical gold. Now, as the price approaches its production break-even price, this trend will have to reverse. Once production starts to become unprofitable, output will decline, and central banks’ reserves will become the major source. Once that source starts to run low, trading banks will have no choice, as their gold loans fall due, but to go to the spot markets to buy the commodity. As banks start to cover their short positions, the price of gold will rebound.

Negative sentiment towards the gold price has been generated by the stated intention of the IMF, the Bank of England and Switzerland to sell 2,100 tonnes of gold over the next five years or so. In our view, this will give banks the oppor­tunity to cover part of their gold loans, but it will be insufficient to stem the reversal.

Global gold production has lagged final demand for the past five years, the difference being the lending of central bank re­serves. As we have said, we foresee this lending drying up.
There have always been two main reasons to buy and hoard gold. The first is risk insurance: gold is a hedge against any­thing from economic crisis to Y2K meltdown. The second reason to hold is speculation: precious metals are trading at 20-year lows and are overdue for a significant correction.

All of which is a great reason to read our new report on RNA Holdings (0501.HK). Anyone who doesn’t contact us for a copy needs their head read.
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Chinese embassy bombing

May 18th 1999 09:54
I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.


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Technology asset bubble 1

February 22nd 1999 04:10
I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, and in Hong Kong just after its return to Chinese sovereignty.

It's only when the tide goes out that you learn who's been swimming naked. -- Warren Buffett

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Indonesia’s lonely battle

November 16th 1998 02:53
Expendable pawns and few mates

I lived in Hong Kong for 16 years until 2007. In 1998 and 1999 I wrote a series of political, investment and social commentaries for a quirky institutional newsletter - quirky in that it was intended to be as much contentious, offbeat and humorous as it was informative. I was working as an editor, and I wrote the articles under the pseudonym Red Inque. I post them here for anyone interested in a look at life in Asia at the time, especially in Hong Kong just after its return to Chinese sovereignty.
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