Opinion

The Great Debate

China cuts Treasury holding to fund foreign deals

wei-gu.jpg– Wei Gu is a Reuters columnist. The opinions expressed are her own —

Please don’t call it a liquidity crunch, but it rather looks as though China might have had to sell a sliver of its vast hoard of U.S. Treasury paper to fund its private sector’s big overseas foray.

China’s holding passed $800 billion in May, sparking speculation that it could reach $1 trillion within a year, but the net June figure, published on Monday, showed a 3.1 percent drop to $776.4 billion, the biggest percentage fall in nearly nine years.

It’s clear that China has been keen to use more of its reserves to secure strategic resources supply overseas, as well as diversifying them into emerging markets such as Africa to help create demand for Chinese exports. The unwinding of global imbalances also means China might have fewer dollars to invest, as its July trade surplus more than halved from a year earlier.

In the past, almost all outflows from China come from the government, which by default put the money into U.S. Treasuries. But now the private sector needs more foreign currency.

HP has to look beyond cost cuts soon

EricAuchard.jpg– Eric Auchard is a Reuters columnist. The opinions expressed are his own —

The stock price seems to be the only thing growing at Hewlett-Packard, the world’s largest computer company. HP shares have risen 75 percent this year, despite few signs of a revival in technology spending.

The company, best known as a supplier of computer printers, has suffered a 19 percent drop in sales of hardware and ink supplies. In good times, this produced the bulk of HP’s profits, but it’s the financial engineering under Mark Hurd, the company’s chairman and chief executive, that seems to be the main driver now.

Human bargaining chips in deals with Iran

Bernd Debusmann (Bernd Debusmann is a Reuters columnist. The opinions expressed are his own)

Seven summers ago, in a crowded conference room of a Washington hotel, an Iranian exile leader gave the first detailed public account of Iran’s until-then secret nuclear projects at the cities of Natanz and Arak. It greatly turned up the volume of a seemingly endless international controversy over Iran’s nuclear intentions.

The disclosures, on August 14, 2002, did little to earn the group that made them, the National Council of Resistance of Iran (NCRI), merit points from the U.S. government. A year later, the Washington office of the NCRI, the political offshoot of Iran’s Mujahideen-e-Khalq (MEK) resistance movement, was shut. The State Department placed the group on its list of terrorist organizations. (The MEK, also known as the People’s Mujahideen Organization of Iran, had been given that designation in 1997).

Now, another five summers later, two dozen MEK supporters are on hunger strike across from the White House to exhort the U.S. government to stick to promises to protect some 3,500 members of the organization in a camp north of Baghdad. Iraqi forces stormed Camp Ashraf in late July and the MEK says nine residents were killed in the initial assault. Two have since died of their injuries.

Japan: The mother of all miserable recoveries

jamessaft1(James Saft is a Reuters columnist. The opinions expressed are his own)

Investors met the news that Japan’s economy has emerged from a bone-breaking recession calmly and rationally: they sold shares quickly and in large amounts and made bets that consumer prices are going to be falling for years to come.

That’s because Japan’s recovery, coming as it does after a global bubble in the production of what I call, for lack of a more technical term, “stuff,” is really not sustainable.

The fact that the consumer portion of the recovery is only a reflection of income transfers from government to individuals isn’t very encouraging either.

China’s banks, running hard to stand still

wei-gu.jpg– Wei Gu is a Reuters columnist. The opinions expressed are her own —

Chinese banks are like enthusiastic runners on an accelerating treadmill. The weakening economy means poor lending decisions are threatening to catch up with them, but the banks are sprinting ahead by expanding their loan books ever faster. They cannot keep this up for ever.

For now things still look fine. China Banking Regulatory Commission (CBRC) this week claimed that Chinese banks were managing credit risk sagely, pointing to record low non-performing loan ratios. Given the massive increase in the number of loans outstanding — up 24 percent since the start of the year — it’s not surprising that the proportion of them that are non-performing at large commercial banks, which accounts for 60 percent of the lending, has declined from 2.4 percent to 1.8 percent in the past six months.

Are women paid less than men?

Diana-FurchtgottRoth.jpg — Diana Furchtgott-Roth, former chief economist at the U.S. Department of Labor, is a senior fellow at the Hudson Institute. The views expressed are her own. –-

One of the concerns of working women is the “pay gap” – the alleged payment to women of 78 cents for every dollar earned by a man.  But there are more behind these numbers than first meets the eye, because women work different hours, major in different subjects, and choose different careers.

The 78 percent figure comes from comparing the 2007 full-time median annual earnings of women with men, the latest year available from the Census Bureau.  The 2007 Department of Labor data show that women’s full-time median weekly earnings are 80 percent of men’s.

National cyber security leadership starts now

enrique_salem_300dpi1– Enrique Salem is president and CEO of Symantec Corp. The views expressed are his own. –

We recently had the privilege of hosting Melissa Hathaway, cyber security chief at the National Security Council, at Symantec’s Government Symposium, our annual conference for public sector customers and government officials.

In one of her first appearances following the White House announcement of the 60-day cyber review results, which examined the country’s preparedness against cyber attacks, Ms. Hathaway outlined the report’s recommendations to help the United States achieve a more reliable, resilient, and trustworthy digital infrastructure for the future.

A simple fix for healthcare?

Stephen M Davidson

– Stephen M. Davidson, a Boston University School of Management professor, is author of the forthcoming book, “In Urgent Need of Reform: Saving The U.S. Healthcare System.” The views expressed are his own. —

Polls suggest the president is losing some popular support for his health care reform efforts apparently because people worry about some of the possible secondary effects. They fear that quality of care would decline, their out-of-pocket costs and taxes would increase, and they would not be able to choose their own doctor. The fact that there is little reason for these worries is beside the point.

Ordinarily, when a problem arises, we try to figure out what the cause is and fix it.  With legislation, especially something as complex as healthcare, we don’t do that. Instead, we impose constraints that are unrelated to the diagnosis. In this case, Congress is trying to fix the problems using private insurers, without raising taxes, and keeping a limited role for government. So, leaders try to fashion a bill that accomplishes at least the main goals of reform – reducing the numbers of uninsured and containing costs – are at a considerable disadvantage. Partly as a result, it is much harder to persuade the American people that the complicated plans they come up with will do the job without harming them.

Europe loves Obama. Does it matter?

Bernd Debusmann- Bernd Debusmann is a Reuters columnist. The opinions expressed are his own –

Barack Obama’s star may be fading slightly at home but it is still so bright in Europe that  he outshines the leaders of Germany and France in their own  countries, according to a poll that shows a remarkable global  shift in attitudes towards the U.S. since he took office.

The question is: does it matter?

First, the statistics. The latest Pew Global Attitudes  Project, a widely-respected survey that has tracked  anti-Americanism around the world since 2002, polled 26,397  people in 25 nations in May and June and found that the image of  the United States had improved in all but one (Israel),  reflecting, it said, “global confidence in Barack Obama.”

Rebalance China’s two financing legs

Wei Gu– Wei Gu is a Reuters columnist. The opinions expressed are her own —

Chairman Mao believed the economy needs to run on two legs, but when it comes to corporate financing, China is advancing in a series of giant hops. Its banks are flooding the market with credit, while equity markets actually supply less capital as a proportion of the whole.

Chinese banks lent out a whopping 7 trillion yuan ($1 trillion) during the first half of this year, tripling the amount during the same period last year. In comparison, new capital raised through the stock market was merely 10 million yuan ($1.46 million), down 50 percent from last year.

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