Dead fish, Dying TPP, Empty ships, & Phone v on-line polls

Dead fish: The millions of dead fish that recently washed up on Vietnam’s central coastline have prompted mass blame on Formosa Steel and its untreated-effluent waste pipe. This plausible but unproven explanation has generated a predictable surge in nationalist anti-Chinese sentiment – never mind that Vietnamese aren’t so selective to target these feelings against the PRC, for Formosa is of course from Taiwan, a clever allIance to cultivate against Beijing, one might surmise. Rather than show any genuine concern for the environment (quelle surprise !), the only tangible response of the Vietnamese government appears to have been to recently block access to Facebook in order to disrupt organisers of anti-Chinese demonstrations. Of course their main concern is an avoidance of protests that descend into the kind seen in May 2014 in reaction to the infamous Chinese oil rig, where various foreign businesses suffered property damage and worse. Vietnam got away with the May 2014 mayhem without suffering any perceptible long term economic impact. A repeat just two years later might well not see it come out the other end so lucky. The government well understands this, hence its priorities.

Dying TPP: A just-released report from a congressional commission on the impact of the Trans-Pacific Partnership says that US long term GDP will get a paltry hike of 0.15% as a result. Moreover, it acknowledges that US low-tech and component businesses will be hurt: an area of the US economy disproportionately full of the struggling people who have driven the rise of protest politics. Of the three presidential candidates left in the race, two are hard-core against TPP and the other has flipped from for to against. With Sanders hanging on in the Democrat race till the end, a pivot by Clinton back to a TPP-supporting centre ground is looking less and less likely. Good thing Vietnam does not need the TPP for its equity and investment story to be strong – because it is becoming imprudent to rely on it ever happening.

Empty ships: A fascinating article in today’s FT discusses the long-lasting plight of the global container shipping industry, that has suffered low and/or falling freight rates ever since the global financial crisis. The trend towards bigger ships – a striking 7-8% bigger on average each year since 2001 – and alliances between major industry players does not seem to be stopping the rot. Why not? Bigger ships are only more efficient if they get filled up, and are riskier to operate in this respect; shipping alliances, as with airlines, don’t really help much if capacity is not being taken out. Meanwhile, the core macro driver of slower-than-GDP growth of world trade is now a five year old phenomenon: this represents a stunning reversal from the long-held post-second world war trend. Global trade is growing at only 1-3% per year versus industry capacity at 6%. Industry giant Maersk’s first quarter results showed an almost total vanishing of its operating profit, and it said that its revenue per 40-foot container was down 25% year-on-year. Dramatic dynamics indeed.

Telephone v on-line polling: It’s official, as far as MM is concerned – Clinton will win the presidency, and Britain will decisively vote to stay in the EU. Why so sure? Because of the big gap in both countries between on-line polls and telephone polls, where the latter are much better for Clinton and Remainers. This reflects the important “shy voter” factor: on-line, people are much more likely to “publicly vent” against the status quo, whereas one-on-one in a discreet conversation, the calm majority more easily expresses its true self. This factor was critical recently in both the Scottish referendum and the UK’s general election, and is about to be so again.


Mekong Man

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