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from Changing China:

China, Taiwan hold talks — hello?

Police should have brought sandwiches and sodas to the park outside a Taipei hotel where Taiwan negotiators and counterparts from old foe China held talks. Hardly anyone demonstrated against the mid-April meeting.

What's more, over the weekend, as the two sides met more formally in China to sign agreements on trade and finance, Taiwan TV viewers watched news about swine flu in Mexico and the United States or celebrity scandal reruns. Monday morning newspapers' editorials barely raised the usual spectre of Taiwan sacrificing its democratic self-rule to Communist China in exchange for lucrative trade deals.

What a change. Last year as the administration of China-friendly Taiwan President Ma Ying-jeou began meeting with Beijing after a decade of frozen relations marked by occasional war threats, Taiwan's China-hostile opposition thundered against what they saw as a sell-out to Beijing and led massive demonstrations during the second round of talks, in Taipei.

Does anyone care anymore? The short answer is "yes", but many people have accepted the idea that China, which has threatened to use force to end Taiwan's self-rule, can talk with Taiwan on non-political issues such as trade without rattling the political status quo.

"The third round of talks is just part of a process," said Wu Chia-jung, 23, a law student at National Taipei University. "I approve of this method of dialogue. Taiwan is in a weak position. No one wants to fight."

The latest, muted reaction also shows that Ma's government has learned basic public relations skills, including recent newspaper and TV ads spelling out the economic benefits of closer relations with China.

"They've certainly done a better job of communicating with the public," said Taipei-based political risk analyst Raymond Wu. "It's a start. It's something they didn't do last time."

from UK News:

Punters cash in on Darling’s budget tie choice

Smokers and top earners were clear losers in Britain's budget this year, as the government hiked taxes on cigarettes and the highest incomes.

But a lucky few must have been cheering in front of their televisions during the 51-minute speech.

Budget-watchers who bet hard cash that the chancellor of the exchequer, Alistair Darling, would wear a grey or blue tie to his address got a welcome bit of stimulus from the budget.

Betting firm Ladbrokes was giving odds of 3/1 and 16/a for a blue and grey, respectively. Perhaps aware of the odds, Darling put on a blue-gray striped one, and Ladbrokes paid out for both colours.

from UK News:

In for a penny, in for £175 billion

It may not be tax and spend exactly, but it's definitely tax and borrow.

For the best part of 12 years, Labour has pursued essentially conservative (with a small 'c') economic policies, steadily underburdening itself of the 'fiscally unreliable' tag that some earlier Labour administrations were (wrongly or rightly) saddled with.

And for most of the past 12 years, as the global economy steadily expanded and Britain's along with it, with aggregate wealth rising smoothly, Labour looked strong at the helm each time the budget came around.

But since the global economic crisis hit in late 2007,  it has become much harder for the government to keep a tight rein on the fiscal strings as growth has taken a hit, unemployment has risen sharply, and tax receipts have declined. 

Last April's budget was a tough one for Labour, but Wednesday's budget may well go down as the one that really showed the government reeling as it tries to keep a grip on the purse strings in some of the most challenging economic circumstances imaginable.

The numbers tell the story and are in some cases eye-bogglingly huge.

Finance minister Alistair Darling says the government will have to borrow 175 billion pounds this year and almost as much next year (173 billion) as it tries to plug a widening gap in its finances. WIth the Debt Management Office already struggling to raise funds (if one recent debt auction is anything to go by), the borrowing requirement could be a very big ask.

from AxisMundi Jerusalem:

His Master’s Voice

It seems that Israeli Finance Minister Yuval Steinitz knows he is just a puppet of Prime Minister Benjamin Netanyahu. Steinitz, 51, an expert on national security, holds a doctorate in philosophy and has only rudimentary knowledge of economics.

He got the job by being a confidant of Netanyahu and has the task of helping to formulate policies at a very critical time, when Israel's economy is in a recession.

In his first remarks as Israel's chief economic steward, Steinitz expressed relief that Netanyahu knows economics well.

"I am fortunate to serve as finance minister with a prime minister who understands economics, loves the field and has great experience," Steinitz said.

The U.S. educated Netanyahu is no stranger to Israel's economy. He served -- reluctantly at first -- as finance minister under Prime Minister Ariel Sharon from 2003 through 2005 and enacted a series of free market reforms and  cut Israel's economy loose from what remained of its old socialist roots.

Investors praised the steps and foreign money poured into Israel over the last few years.

But the move to market capitalism meant Israel was more entrenched in the global economy, with exports comprising nearly half of what the country produces. So, when the global economy tanked, Israel -- like many others -- followed.

from UK News:

Can MV=PT solve credit crisis for BoE?

Britain could begin a telling exercise in classical monetary theory on Thursday as the central bank gets set to test a newly minted policy of "quantitative easing".

In an effort to pump more money into the financial system and encourage banks to get lending again, the Bank of England has been given the green light to basically create more money.

 It will use the electronic funds to buy short- and long-dated gilts and a host of commercial debt in the hope that that will free up other capital to the banks, allowing them to lend more.

At root, the exercise is based on MV=PT, known as the Fisher equation of exchange and a mainstay of Keynesian monetary theory.

In the equation, M is the quantity of money and V is the velocity at which it travels around the economy. P stands for the general level of prices and T equals the number of transactions performed over a given accounting period.

In theory, V and T are more or less stable, meaning that all other things being equal, the amount of money in circulation has a direct impact on prices and/or the number of transactions.

By pumping more M into the economy (or at least making more M available), the central bank is hoping that economic activity will pick up (T will increase) and the economy will be reflated (P will pick up). In theory.

from UK News:

Are women better with money than men?

A major survey has found that women are more responsible with money than men. They're less likely to get into debt and they work hard to become financially independent.

The global Reuters Synovate survey polled some 4,500 women in 12 countries about money matters. An equal number of men were also asked several questions related to finances.

It's true enough that the rogues' gallery of bankers now being pilloried in the media for personal greed and financial failure is almost exclusively male.

But who melts all the plastic in the High Street? Surely Sophie Kinsella's book "Confessions of a Shopaholic" was such a success because it struck a chord with so many women.

Do you think women are more intelligent than men when it comes to money matters?

from The Great Debate UK:

Women entrepreneurs to dispel micro myth

- Glenda Stone is chief executive and founder of Aurora, a recruitment advertising and market intelligence company, and co-chairs the UK Women's Enterprise Taskforce established by Prime Minister Gordon Brown. The opinions expressed are her own. -

Most venture capital and angel investment tend to go to a specific breed of entrepreneur - innovative, well networked, intelligent, confident ... male. Is this the result of deep-rooted discrimination or is this simply an issue of supply and demand? Women-owned businesses are largely under-capitalised and this leads to inhibited growth.

Access to finance is cited by numerous sources as the greatest barrier to the growth of women's enterprise but "access" is only the consequence and "education" is the cause. More women need to participate in business education addressing business growth, technology, revenue models, and securing correct types of finance.

Globally women-led businesses receive less than 5 percent of venture capital. Women business owners also seek less bank loans and overdraft facilities. Regardless of country, women are more frugal - they do more with less, for less. Is this a flattering positive or is this a naive flaw that perpetuates women's relegation to micro enterprise?

I co-chair a taskforce established by Prime Minister Gordon Brown. We advise on strategy relative to increasing the quantity and scalability of women's enterprise. If women started and grew businesses at the same rate as their male counterparts, the economy would experience greater wealth and job creation and, needless to say, generate further substantial tax revenues for government.

The private sector is keen to encourage emerging markets of women entrepreneurs because this can result in an expanded customer base and vertical cross-selling opportunities. One of the biggest challenges facing the Taskforce is the disproportionate interest in micro versus fast-growth businesses, not so much from the private sector or senior experts in central government, but from business support providers and the actual women themselves. Perhaps the fast-growth female led businesses are simply busy doing business and do not view gender-based networks as relevant. In addition to government programmes and private sector support typically from finance and technology corporations, thousands of businesswomen's networking groups also exist around the world to encourage and support the rise of female entrepreneurs. Serving an important need, many of these networks provide various training programmes and events but the networks themselves usually lack revenue models and so each month many new networks launch while others simply disappear.

Although recent years have seen an emergence of women's funding networks predominantly in the US, Canada and the UK, most networks tend to focus on micro-enterprise and social networking rather than on formal business education. In addition, media coverage tends to focus on small women-owned businesses in retail that have a good story for high audience appeal rather than on the more scalable and complex business-to-business enterprises that may be of less interest to mainstream media audiences.

from The Great Debate:

Women entrepreneurs to dispel micro myth

[CROSSPOST blog: 132 post: 414] Original Post Text: - Glenda Stone is chief executive and founder of Aurora, a recruitment advertising and market intelligence company, and co-chairs the UK Women's Enterprise Taskforce established by Prime Minister Gordon Brown. The opinions expressed are her own. -

Most venture capital and angel investment tend to go to a specific breed of entrepreneur - innovative, well networked, intelligent, confident ... male. Is this the result of deep-rooted discrimination or is this simply an issue of supply and demand? Women-owned businesses are largely under-capitalised and this leads to inhibited growth.

Access to finance is cited by numerous sources as the greatest barrier to the growth of women's enterprise but "access" is only the consequence and "education" is the cause. More women need to participate in business education addressing business growth, technology, revenue models, and securing correct types of finance.

Globally women-led businesses receive less than 5 percent of venture capital. Women business owners also seek less bank loans and overdraft facilities. Regardless of country, women are more frugal - they do more with less, for less. Is this a flattering positive or is this a naive flaw that perpetuates women's relegation to micro enterprise?

I co-chair a taskforce established by Prime Minister Gordon Brown. We advise on strategy relative to increasing the quantity and scalability of women's enterprise. If women started and grew businesses at the same rate as their male counterparts, the economy would experience greater wealth and job creation and, needless to say, generate further substantial tax revenues for government.

The private sector is keen to encourage emerging markets of women entrepreneurs because this can result in an expanded customer base and vertical cross-selling opportunities. One of the biggest challenges facing the Taskforce is the disproportionate interest in micro versus fast-growth businesses, not so much from the private sector or senior experts in central government, but from business support providers and the actual women themselves. Perhaps the fast-growth female led businesses are simply busy doing business and do not view gender-based networks as relevant. In addition to government programmes and private sector support typically from finance and technology corporations, thousands of businesswomen's networking groups also exist around the world to encourage and support the rise of female entrepreneurs. Serving an important need, many of these networks provide various training programmes and events but the networks themselves usually lack revenue models and so each month many new networks launch while others simply disappear.

Although recent years have seen an emergence of women's funding networks predominantly in the US, Canada and the UK, most networks tend to focus on micro-enterprise and social networking rather than on formal business education. In addition, media coverage tends to focus on small women-owned businesses in retail that have a good story for high audience appeal rather than on the more scalable and complex business-to-business enterprises that may be of less interest to mainstream media audiences.

from Davos Notebook:

Risk Takers Anonymous

An eminent scientist who studies the brain and economics thinks that the financial industry in essence became addicted and insensitive to both risk and reward.

"The finance industry was adapting to the level or risk," said Gregory Berns a professor at Emory University in Atlanta and a leader in the relatively new field of neuroeconomics.

"It is an insidious process, and you are not aware of it. You are addicted to returns, you are addicted to risk, you are addicted to cocaine - its all the same as far the brain goes."

The part of the brain which is rich in dopamine is active in giving people a buzz when they do something they value. Getting money can give this buzz, as can taking risks. But sadly shortly after we reach a level of wealth we need more to get the same kick, just as we become used to the risk taking which formerly would have been exciting and might have caused us to trim our sails.

Berns describes the process of becoming habituated as like adjusting to a new level of light, at first it seems bright but then you adjust.

"You get used to it. The brain is constantly gauging relative amounts. The brain does not have a mechanism ever to be satisfied."

The implication he said, is that the trader, banker or even small investor needs some structure from outside to impose limits.

from Davos Notebook:

Banks to be disintermediated? or is that just replaced?

Is it actually distintermediation if the thing being disintermediated has ceased to function?

Henry Kravis of Kohlberg Kravis Roberts said in Davos that, as in essence banks aren't playing their role of intermediating debt capital for buyouts, he would be going straight to the source, doing deals directly with investors who want to fund debt for deals.

Of course many of the institutions that used to fund buyouts, CLOs and CDOs for example, no longer exist and many like hedge funds have lower appetite. He acknowledged that leverage has "come down tremendously," which might get the prize for biggest understatement of the week.

But, like Steve Schwarzman of Blackstone earlier in the week, he maintained that lower asset prices for deals originated now would help returns.

"You might be able to buy it with less leverage and you can still get the same returns because of the purchase price you are paying."

I hope he means the same returns as old-fashioned vintage deals rather than the returns of 2006/07 originated ones.

Schwarzman earlier in the week on same subject: