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from The Great Debate:

Let Japan help defend America — and itself

Members of Japan's Self-Defence Forces' airborne troops stand at attention during the annual SDF troop review ceremony at Asaka Base in Asaka

Japanese Prime Minister Shinzo Abe is now following through on actions laid out in his recent bold speech calling for Japan to defend allies who might be under attack.

But wait, you may ask, hasn’t the United States had a mutual security treaty with Japan for more than half a century?

Well, not quite. Yes, Washington has had a mutual defense-security treaty with Tokyo since 1951. But Japan is not committed to defending the United States or any of its armed forces. In fact, Japanese forces are prohibited from helping Washington in time of war -- even if the war is in defense of Japan.

This goes back to the postwar U.S. Occupation of Japan and the creation of the Japanese constitution. Determined that Tokyo would never again pose a threat to its Asian neighbors or the United States, Occupation leader General Douglas MacArthur and his staff were sympathetic to Japanese pacifists’ proposal to include a no-war making article in the constitution, then being written with oversight by the Occupation authorities. This worked with the policies of then-Prime Minister Shigeru Yoshida, who wanted to focus on rebuilding the Japanese economy -- without the distraction of creating a major defense force.

from Photographers' Blog:

Kids in camo

By Pichi Chuang

The Albert kindergarten and day care center in the central Taiwan city of Taichung is as joyful and vibrant as any other, with its colorful plastic slides and trampolines, but what makes it different is the children. From five to nine years old wearing camouflage uniforms they practice crawling and handstands on foam cushions in the front yard, copying the training of army special forces frogmen.

Principal Fong Yun said "I think most Taiwanese children lack confidence compared with kids from other countries." Inspired by U.S. physical therapist Glenn Doman’s theories, 15 years ago she created a series of exercises that combine military drills and gymnastics, believing that they would help children develop physical and mental strength.

from Global Investing:

Amid yen weakness, some Asian winners

Asian equity markets tend to be casualties of weak yen. That has generally been the case this time too, especially for South Korea.

Data from our cousins at Lipper offers some evidence to ponder, with net outflows from Korean equity funds at close to $700 million in the first three months of the year. That's the equivalent of about 4 percent of the total assets held by those funds. The picture was more stark for Taiwan funds, for whom a similar net outflow equated to almost 10 percent of total AuM. Look more broadly though and the picture blurs; Asia ex-Japan equity funds have seen net inflows of more than $3 billion in the first three months of the year, according to Lipper data.

from Global Investing:

Emerging markets’ export problem

Taiwan's forecast-beating export data today came as a pleasant surprise amid the general emerging markets economic gloom.  In a raft of developing countries, from South Korea to Brazil, from Malaysia to the Czech Republic, export data has disappointed. HSBC's monthly PMI index showed this month that recovery remains subdued.

With Europe still in the doldrums, this is not totally unsurprising. But economists are growing increasingly concerned because the lack of export growth coindides with a nascent U.S. recovery. Clearly EM is failing to ride the US coattails.

from Global Investing:

More EM central banks join the easing crew

Taiwan and Philippines have joined the easing crew. Taiwan cut interbank lending rates for the first time in 33 months on Friday while Philippines lowered the rate it pays banks on short-term special deposits. Hardly surprising. Given South Koreas's shock rate cut on Thursday, its first in over three years, and China's two rate cuts in quick succession, the spread of monetary easing across Asia looks inevitable. Markets are now betting the Reserve Bank of India will also cut rates in July.

And not just in Asia. Brazil last week cut rates for the eighth straight time  and Russia's central bank, while holding rates steady,  amended its language to signal it was amenable to changing its policy stance if required.

from Global Investing:

Where will the FDI flow?

For years the four mighty BRIC nations have grabbed increasing shares of world investment flows. But the coming years may not be so kind.  These countries bring up the bottom of the Economic Freedom Index (EFI) for 2012. Compiled by Washington D.C.-based think-tank The Heritage Foundation the EFI measures 10 freedoms --  from property rights to entrepreneurship -- and according to a note out today from RBS economists, there is a strong positive link between a country's EFI score and the amount of FDI (foreign direct investment) it can secure. So the more "free" a country, the more FDI inflows it can expect to receive -- that's what an RBS analysis of 2002-2008 investment flows shows.

So back to the BRICs. Or BRICS if you add in South Africa (part of the political grouping though not yet included in the BRIC investment concept used by fund managers). The following graphic shows Russia languishing at the bottom of the EFI, China just above Russia and India third from bottom.  Brazil is sixth from bottom while South Africa ranks two places higher.

from Breakingviews:

Sweat-free iPads come at a price worth paying

By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Apple scores points for pushing to improve conditions for workers in China churning out its iPhones and iPads. But change was inevitable. Yes, Apple commissioned the probe of Foxconn. But the problems uncovered at the Taiwanese company’s factories in mainland China were already well-publicised. Apple may have also jumped before it was pushed. It should now sidestep any crackdown on abuse by Beijing by prompting Foxconn - at long last - to comply with China’s labour laws.

from Breakingviews:

Taiwanese money can’t save Japan from Samsung

By Wayne Arnold

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Taiwanese money can’t save Sharp from Korea’s Samsung. Foxconn’s $1.6 billion investment buys Japan’s electronics company time. The deal gives Sharp cash and the promise of wider sales too, but does nothing to reduce a global glut in flat-panel screens. Like Sony, Panasonic and Toshiba, Sharp has for too long insisted on fighting for cutthroat markets where it’s no longer competitive. As Hitachi has shown, withdrawal may be the best option.

from Global Investing:

The haves and have-nots of the (energy) world

Nothing like an oil price spike to bring out the differences between the haves and have-nots of this world. The ones who have oil and those who don't.

With oil at $124 a barrel,  the stock markets of big oil importers India and South Korea posted their first weekly loss of 2012 on Friday.  But in Russia, where energy stocks make up 60 percent of the index, shares had their best day since November, rising more than 4 percent. The rouble's exchange rate with the dollar jumped 1.5 percent but the lira in neighbouring Turkey (an oil importer) fell.

from Breakingviews:

Taiwan voters should focus on growth, not China

By Wayne Arnold
The author is a Reuters Breakingviews columnist. The opinions expressed are his own 

Taiwan’s economy should be the winner if the ruling party clinches this weekend’s presidential and legislative elections. A big issue is how fast the island should build trade and financial ties with China. President Ma Ying-jeou wants to go full steam ahead; the opposition would ease the pace. But growth is the more immediate issue. Ma’s party, the Kuomintang, is more likely than his rivals to give Taiwan’s flagging economy the jolt of fiscal stimulus it needs.

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