Eldon-Online

Whatever Next?

I previously wrote that after the Economist event in Hong Kong entitled "The World In 2011" that I would share some of the thoughts I had expressed that night, because some people asked me about them - and in any case, I don't expect them to actually be published - except perhaps the last, which is a little controversial.

First an apology. More of a disclosure really. These are very largely about Hong Kong, so if you're not interested in Hong Kong, scroll down to the end for the final "prediction". 

The Economist suggested I might like to give consideration to making "a prediction", which to me meant one item. But really - if I made only one prediction I might get it wrong unless it was so glaringly obviously going to happen - and so I cheated a little - I made five. And they weren't all totally serious.

Mind you, I didn't cheat as much as Regina Ip with whom I was sharing part of the platform. She predicted that in 2011 Hong Kong would have a new political party - and two minutes later told us all she was starting a new political party in 2011! Hmm. Inside knowledge perhaps?

Anyway I started off with a disclaimer about making predictions - especially about the future! Too many people have gone down that path only to find themselves being seriously embarrassed later, and I have no wish to join them. But then, throwing all caution to the wind, off I went with a bit about currencies.

It is my prediction that in 2011 the renminbi will not be significantly revalued. It is, nevertheless my hope that at least a few politicians from outside the region (C'mon, if I said America you would accuse me of bias), would understand that the louder they demand a revaluation of the currency the lower the chances of it actually happening. I am sure that China understands the currency issue as well as, if not better than, most and they do hold rather a lot of US$ denominated paper, but there is NO WAY they are going to leave themselves open to jubilation by others who want to say "we forced China to revalue". It's not going to happen that way!

Sticking with the currency theme I moved along to the HKD peg - which some organisations and people have been suggesting is outdated and should be scrapped - sooner rather than later. Their reasons?  A falling greenback, a renminbi rising (at least in usage) and suggestions that external forces and money are contributing to a Hong Kong property bubble.  My prediction? Not in 2011. After all, do you really think there is anyone in the Hong Kong Government or the HKMA who wants to be known as the person who pulled the plug on the peg?

Moving swiftly on, but staying with the Hong Kong Government, those familiar with Hong Kong will be aware that the brand new Government Offices will be complete in 2011. In a prime piece of real estate on the waterfront. I felt compelled to predict that in 2011 land reclamation along the Central waterfront, a constant feature of our lives in recent years, would cease forever. Once again, a simple reason - no one in Government would wish to spoil their view of the harbour!

Now for Hong Kong a more serious prediction. I think it is perfectly possible that in either March or September 2011, with the publication of the Global Financial Centres Index issue 9 or 10, that Hong Kong will overtake both New York and London in the rankings.

Now, before you start sniggering think about this. Hong Kong is already only 10 points behind New York, and 12 behind London and is gaining in reputation largely due to its strengthening position as a renminbi settlement centre. Meanwhile, New York is still trying to shake off its financial hangover and London - as a result of some possibly short-sighted new tax policies - is losing ground. It is going to happen, folks, and you know what?  No one is likely to be more surprised than Hong Kong! But when it happens Hong Kong, for goodness sake make a noise about it. (A positive one!)

I chucked in a comment about the proposed Singapore and Australian stock exchange merger - which I don't think will happen, and then moved to my final prediction.

IF YOU HAVE SCROLLED DOWN THE PAGE LOOKING FOR THE LAST WORD - IT'S HERE!

My prediction relates to North Korea.

I expect the displays of North Korean aggression to increase over the following months as an ailing Kim Jong Il struggles to get his youngest son, Kim Jong Un accepted as the next leader. Something that seems to be a more difficult task than he had hoped. Perhaps some people in North Korea are unconvinced that the undereducated newest general is quite up to the task.

But my prediction is that in 2011 the "Dear Leader" will become the "Dearly Departed Leader" . The chances of the junior Kim becoming the "Dear Successor" are initially high - but there will be a subsequent and very unseemly power struggle, the outcome of which will have severe and significant repercussions for South Korea and China in particular - but will also have a major impact globally.

From my very personal perspective - and there will be many differing views - the best solution is a Hong Kong/China system for the Koreas; One Country - Two Systems. That was not in my predictions, but then everything surrounding the Koreas and a resolution to the current problems requires a whole different forum.

That was it! Five predictions - made in the hope that I get at least one of them right.

I have now, as predicted, arrived in England to spend the holiday season with the indefatigable Mary, to discover that Britain has again been surprised by the fact that winter has arrived! It looks pretty today, but it will be slush soon - and a white Christmas. Who knows - I'm certainly not going to predict that!! 

Strikes, Riots and Civil Commotions

No, not the UK this time, although it will escalate there soon enough, it seems.

In the late 1960s when I was working in Dubai, many goods were shipped there from China. Part of my job was to sign letters of credit on behalf of the importing customer in Dubai that would guarantee payment by the Bank to the shipper in China if all conditions of shipment were met and the correct documentation was produced. One such document was insurance cover for the goods for damage and other eventualities, including delays caused by Strikes, Riots and Civil Commotions - the SRCC clauses.

After we had sent the Letter of Credit to the processing bank in China which called for such clauses we would receive a very politely worded letter from the Bank saying that whilst they would arrange most of the insurance they could not cover SRCC - basically because they believed in the freedom of the workers to undertake such activities.

So far so good!

From the end of the 70s until today, the economic miracle of China has been astounding, phenomenal, meteoric - you choose. A country that has grown in 30 years what others would have taken 100 years to achieve. Alright, so it was off an incredibly low base, but it shows little sign of abating. Every newspaper or magazine that you pick up today talks somewhere about China. How its position in the world has changed. The economic juggernaut that people fear will swamp the world. The debate is not really about whether - it is about when. Comparisons are made between China and other emerging market economies - and many seem to agree that China holds most of the cards.

I am not an economist, so I have to rely on the prognostications of my learned colleagues and friends in this regard. I believe them. The leadership, and their management of the Chinese economy has been impressive. I suspect it will continue in the same vein after the change of leaders in 2012 ... but I have a niggling feeling in the back of my mind that not all is well.

China, like other places in Asia, does not always do things the Western way. The recent detention of the Nobel Peace Prize winner Liu Xiaobo is not something that many outside China would condone. Neither did people like the detention of Aung San Suu Kyi. We don't like it, but it happens - and I would say that on balance there have been more forward than backward steps in China over the last 30 years. However, and as tends to happen as countries grow and develop, more people are wanting to voice their opinions. To have their say.

And this is where Strikes, Riots and Civil Commotions reappear... and may be just the threat to the continuing economic strength of China that it does not need.

As China continues to open its doors, as it must, information not only flows in - but so does information flow out. And once again, in recent weeks, we have seen reports of unrest in various parts of China. Earlier in the year we had the problems over working conditions and wages, resulting in some significant strike action. More recently there have been reports of people protesting at corruption within the administration, and particularly the police it would seem - but it is being directed at all types of injustices - perceived or otherwise, although from the reports I have read the protests would appear to be based on facts rather than perceptions.

But remember this. Protests in China given the size of even the smaller cities are not often assemblies of 2 or 300 people. They are more like 20 or 30,000 people - and they are likely to get bigger, not smaller as people find their voices. And this, perhaps, is where the trouble starts. Not with an economy that suddenly falters in its progress, but with a social structure that is "under construction". It is a work in progress that I believe needs careful (and sympathetic) handling. Any failure to address it will be like pretending that baby alligators don't grow into adults at some stage - with huge teeth, and much harder to control.

Every country has an Achilles Heel somewhere. In terms of China, whilst its economy continues to be well-managed and growing, it needs to be wary of a social structure that is developing more independent thought which it is less afraid to vocalise, in a country where traditions suggest that Riots and Civil Commotions are perfectly legitimate.

Long Hard Road.

I am sorry I used "Now is the Winter of our Discontent..." as a Blog title some 16 months ago. It would appear to have been much more appropriate now in the context of the UK in particular.

The Coalition Government was never going to be easy, given the differences between the two conjoined parties, with the Liberal Democrats having traditionally and philosophically been closer to Labour. But they recognised that Labour at that moment in time were a "busted flush", and they were more likely to do better with the Conservatives.

They must be questioning that decision now, although if they had their time over again I hope they would still have come to the same conclusion.

Britain, under the leadership it was enduring at the time of the last election was moribund. It was inefficient, it was piling up the debt and generally going nowhere fast. It should have been a shoo-in for the Conservatives, but it didn't quite work out the way they expected, for whatever reason. With the resulting "hung" Parliament the LibDems had the swing vote, made their choice presumably by a majority knowing they would have to compromise at times, and are now in Government. And they are not finding it comfortable.

Britain has economic woes. Of that there can be no doubt - and to let them drift on unchecked would be irresponsible. But if it cannot find easier ways to raise money, in a tax environment that is already hurting some and perhaps stifling the growth of new business, then it needs to cut expenditure. The basic position understood by every household, which also knows there are limits as to how this can be done. This is not unique to Britain. It is going on elsewhere in Europe. The Greeks and the Irish have already had to introduce austerity measures - and probably one or two more European countries are going to be facing the same issues sooner rather than later. And it's not nice.

People who thought they had secure jobs and reasonable pensions are going to find themselves suddenly disadvantaged. Students who were preparing to go through University at minimal cost are now going to find it harder going - and they will have to repay their fees at some stage in the future once they have found jobs and are earning more than a certain income. 

I sympathise. I have been extremely lucky in life, but then my expectations were not so high to begin with and I just took up whatever job was available; barman, filing clerk, whatever! But I really do worry today. However, if we do nothing and take the easy options because it will be less difficult to manage, then nothing will be achieved, and the debts will pile up until they can no longer be paid back or more money borrowed. And what then?

I am not, by nature, someone given to scaremongering but the spiral will be downwards. Strikes, riots, civil disobedience, fuelling nationalism - economic and racial, and anarchy. Unless prevented, we return to the laws of the jungle. The strongest will rule by force and fear. And is that an encouraging prospect?

The Russians, the Chinese, the Cubans, the North Koreans have all tried it and I would conclude that it has not worked. It creates a lowest common denominator syndrome. And some of those countries have changed their models as a result.

All that said, should the protests be banned? No, they shouldn't. People are angry, and they have a right to be heard. I would only urge that it is two-way traffic! There seems to be a movement towards making freedom of speech a one-way street. "I must be allowed to speak freely, but I don't want to listen to your point of view" sort of thing.

But protests should not resort to senseless violence as has been witnessed in Britain recently. Where students, plenty of them rather long in the tooth it seems, have resorted to vandalism pure and simple. Acts that in some highly publicised cases have even led well-known protestors to criticise the students.

But all that said, this latest unrest is not going to be something that goes away overnight, and by using soothing rational words. It is going to be a long hard road, but it is probably by and large the right road. Of course, selectively Parliament can soften some of the measures - far easier than imposing them at a later date - but the LibDems - too often "accused" of sitting on the fence in the past, are going to have to stick with it in the interests of a Great Britain - in its broadest sense.

Never Put In Writing ...

We were always taught to never put in writing anything you would not wish to see printed in public. Of course in the modern age that has now been extended to the internet, your conversations, and pictures wherever they be. Email, snail mail, blackberries, iPhones, cellphones, and absolutely anything else, some of which I am sure I have not thought about ... oh, don't forget the hard drive!

Isn’t it amazing that no matter how “well-developed”, progressive, and technologically modern we become, the advice provided by our forebears always comes back as being somehow, sensible and appropriate. As any regular reader of this blog will know, one of my all time favourites remains the book written in 1885 by George Rae, The Country Banker, which set out with considerable accuracy the reasons that would cause the 2007/8 global financial crisis. Written, following a series of financial crises prior to 1885. So to those that seriously believe “..if you look backwards, you go backwards” – think again!

But back to the point of this blog. Wikileaks. Let me state up front that while I am all in favour of truth, openness and integrity, I am not a fan of Mr. Assange and his Wikileaks organisation. His most recent series of "leaks" leaves the media with enough to write about for months, the public with a view that equates to peering into their living room windows, and an unnecessarily unnerved world.

- If he had a simple intent to provide full, open and honest disclosure of certain and essential information to the world at large based on confidential information obtained from a disgruntled American … then perhaps he just didn’t realise the damage he could cause. But I don’t think he’s that simple.

- If for some reason he wanted to embarrass world leaders, and particularly the Americans by releasing documents that contained the personal opinions and views of individuals (a bit like someone ripping open letters addressed to you, reading them, and sending a copy to everyone), then he has certainly achieved that. 

But what if he is truly subversive – and I note he has been called a terrorist in some quarters? What if his intention is to create a level of mistrust around the world, for whatever reason? Doesn’t that play right into the hands of the seriously right wing elements of society? Doesn’t it mean that fundamentalist Islam can now declare open warfare on people they had “sort of” trusted – and now don’t trust at all?

Of course everyone is trying to play down the impact of these releases, but isn't it rather like a judge saying to a jury that has just heard something it shouldn’t, “ignore that last remark”. Do you think it slips straight out of their minds? Of course it doesn’t. Did President Ahmad Inadinnerjacket genuinely think he was well loved by all his Arab neighbours? Well if he did, he certainly knows some of the truth now but, for the sake of global peace, is that a good thing? And if the remarks attributed to King Abdulla in Saudi Arabia (who for my money is a remarkably progressive leader in a difficult environment) about cutting off a snake's head are as true as they appear to be – then the Iranian President is one snake whose head has NOT been cut off – and what does a snake do when it’s cornered? It strikes.

But then there are other aspects of this whole thing that worry me. Secretary of State Clinton, the last time I heard her on the subject before I got on my present plane journey, was referring to “these illegally obtained confidential documents”. I was always under the impression that something obtained illegally could be recovered legally. And in that case publication could be prevented. Why has that not happened? Is Mr. Assange so clever that he can prevent it from happening? Are we so technologically incompetent that even if we had grounds to do so and wanted to block or close down his website we cannot? 

Just what IS going on here?

I do believe in openness, transparency and good corporate governance. But even in the best-run organisations there are many twists and turns before you come to a conclusion. Areas for discussion that are better shared selectively while you are forming your views. Comments are often made and opinions sought on the characteristics of individuals – as you see them – particularly if you have to deal with them in the future. If HRH Prince Andrew is of the view that Americans know nothing about geography, and if the US Ambassador listening thinks Prince Andrew is rude, these are personal views. What benefit is derived from those views being aired - other than to create embarrassment? On the other hand if US operatives in the UN were being asked to obtain information about nationals of other countries with regard to credit card details and frequent flyer numbers I would say that was incorrect behaviour. 

This is going to run and run, I fear, and is not likely to have a happy ending. Someone is going to pull the trigger on Mr Assange, albeit only figuratively, although that won’t necessarily stop what he has started. Countries are going to become exceedingly cautious of their dealings with each other in future, which is likely to lead to less cooperation, at a time when the world needs agreement on some important issues like Korea, the world financial situation and important matters such as climate change.

On balance, I do not think Mr Assange has done the world many favours. He has highlighted the things we all suspect go on in diplomatic and political circles anyway, but has created an atmosphere that at best becomes unworkable – and at worst will lead to some major unpleasantness.

And all because some people forgot an old piece of wisdom.

 

It Seems Hot To You ...

It was former US President Lyndon Johnson who reportedly said of speeches on economics (and apologies for the language) “…it’s a lot like pissing down your leg. It seems hot to you but never does to anyone else”

So I fear it may be with blogs or, more accurately, their authors. Certainly this one, anyway. 

My commentaries have been absent for some time now. Due in part to a travel schedule that would have made Marco Polo’s eyes water, but which should have brought an equally big smile to Cathay Pacific whose services continue to dominate my peripatetic lifestyle. But due in other part to a period of reflection as I hit yet another chronological milestone. One where Her Brittanic Majesty’s Government have seen fit to extend to me a UK state pension (and if there are any tax sneaks out there – I’ve already checked! It’s inside the threshold), payable in Hong Kong and decidedly non-inflation proof. Nice of them, but then it was a contributory scheme so they're only giving me back my own money.

I have always maintained that when I move on in life (no, not die – that solves all decision making problems!),age and relative senility, I want it to be me that makes the decision to stop working rather than having some slightly embarrassed individual being designated to come and tell me I have outgrown my usefulness. That said, work is something of a hobby. It is why I work at keeping my contacts and my knowledge as up to date as I can so that I can be useful, but I do know a time will come when that will change and I keep it under review. A bit like HSBC keeping their choice of Head Office location under review.

Continuation of my Blog featured in my personal review.

It was started for a reason, and was meant to be for fun and for interest. I have been gratified since it started that I have developed a significant and largely supportive following, although I am also aware of a few commentators out there who are much less impressed. That’s fine. I learnt long ago that if you try to please everyone you are unlikely to be doing your job properly, and if they don’t like it – they don’t have to read it. I express my thoughts as I see them for general interest. I am very happy for you to disagree but if even one person finds my contribution useful, interesting, informative (okay, it doesn’t have to be all three at the same time!), then I’m happy.

During the last two months I have visited a number of diverse countries, kept up to date with the world news, become increasingly depressed, thought a lot and decided that I would significantly decrease the number of things I do, with a view to focusing on one or two roles only - and doing them better. But the Blog stays. At least for now.

I have thoughts to share on Korea, on Wikileaks, on Dubai and the Arab World, on Britain, China, India and Europe. Mostly in connection with how they might affect us in Asia. I also have a couple of predictions to make for 2011, but those will have to remain under wraps until next week when I appear at The Economist; “The World In ….,” event in Hong Kong. (One of them – a wild thought I shared with the Economist some months ago might actually beat me to the event, which will be a pain.)

So, that’s it.  Back to normal – whatever that is – and ...oh why is my leg feeling hot?