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  • Oct 1, 2014
  • Updated: 10:28am
Lai See
PUBLISHED : Wednesday, 17 April, 2013, 12:00am
UPDATED : Wednesday, 17 April, 2013, 4:56am

Hong Kong travel to Philippines surges despite government's black alert


Howard Winn has been with the South China Morning Post for two and half years after previous stints as business editor and deputy editor of The Standard, and business editor of Asia Times. His writing has also been published in the Far Eastern Economic Review, the Wall Street Journal, and the International Herald Tribune. He writes the Lai See column which focuses on the lighter side of business.

Recent events have highlighted the absurdity of the government's attempts to give sensible advice on outbound travel. There are now some 16 countries that warrant an amber alert on the government's outbound travel alert website. This advises travellers to "monitor the situation and exercise caution". The list includes Malaysia, India, Pakistan, and Thailand. Egypt and Lebanon are given a red alert, which advises avoiding non-essential travel. A black alert warns to avoid all travel.

Here we find Syria which is undergoing a vicious civil war and the Philippines, which in the opinion of our government, is just as dangerous. This makes nonsense of the travel alert since the Philippines is nowhere as dangerous as Syria.

It gets a black alert because of a one-off event in Manila when a badly handled hostage-taking incident in August 2010 resulted in the deaths of seven Hong Kong tourists and their tour guide. Interestingly, there is no warning to avoid the US after the Boston bombing.

Despite the dire threats of thermonuclear war from North Korea's Kim Jong-un, our government has not offered any advice. Nor have people been advised to steer clear of Shanghai and its environs where bird flu lurks. Fortunately, the travelling public is able to take a more realistic view of risk in the Philippines. We see that foreign visitors there hit a record high of almost one million for the first two months of the year, up 15 per cent on the comparable period last year. Visitors mainly came from Korea, the US, Japan and mainland China. Interestingly visitors from Hong Kong for the period soared 98 per cent over last year to 23,000. It is surely time to stop this irresponsible, politically motivated farce and drop the black alert for the Philippines.


A meeting of minds

We are waiting with some anticipation for the public forum on Thermal Technology for Waste Management in Metropolises on May 7 where the case for incineration will be put. There will be five speakers including Dr Lee Potts, technical manager (energy) for AECOM, which is the consultant to the Hong Kong government on waste. He has argued in favour of incineration over other technologies such as plasma gasification.

However, elsewhere his firm evidently thinks differently. AECOM has announced that it is to design, build and operate a plasma gasification plant in Britain. In the US, AECOM has declared its enthusiasm for plasma gasification.

It will also be interesting to hear what Professor Umberto Arena has to say. He is a specialist in waste to energy from Second University of Naples. A primary school teacher from Naples has just been announced as one of the winners of the 2013 Goldman Prize for his campaign to oppose incinerators in Naples. As an organising member of Zero Waste International, his campaign to encourage recycling and waste reduction has led to 117 municipalities across Italy closing incinerators and committing to zero-waste strategies. He even persuaded a bishop to declare the use of incinerators to burn waste was "immoral".

Then there's Peter Simoes, technical director of Afval Energie Bedrijf. His company operates the world's largest incinerator which was ranked the 484th most polluting facility in the 2011 European Energy Association report on environmental pollution. It should be an interesting forum.


A Freudian slip

What should we make of the euro crisis? Only recently José Manuel Barroso, the president of the European Commission declared "the euro crisis is over". The newsletter of Aktiva Fonder Asset Management makes the dismal observation that the European banking system is almost as leveraged as Lehman before it collapsed. It reflects that the circular nature of various "rescue schemes" is almost surreal.

"These are nothing more than a confidence trick based on the idea of selling insurance against one's own default." The situation is one of bankrupt countries underwriting bankruptcy insurances on themselves and on each other. The rescues are just comforting illusions, and commend themselves to us because as Freud observed, "they save us pain and allow us to enjoy pleasure instead". Unsurprisingly Aktiva believes the crisis has merely begun.


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This article is now closed to comments

One word sums up the HKSAR gov't in pretty much all matters these days: impotent
@"It gets a black alert because of a one-off event in Manila when a badly handled hostage-taking incident in August 2010 resulted in the deaths of seven Hong Kong tourists and their tour guide."
We all know there's a bit more to this. Bowtie got ruffled when President Aquino declined to accept his phone call ....... more or less saying "who the h....ll is Tsang?" This is all about face....... and Hong Kong still doesn't have its demanded "apology".
Hong Kong should actually share some of the blame for the bungled hostage rescue attempt. . The situation was made worse by the presence of TV cameras and floodlighting used while this incident was being broadcast live, and spurred on by Hong Kong's local TV stations. This media circus encouraged the deranged hijacker to become even more agitated and start killing hostages. Hong Kong should have cut the broadcasts and used all of its connections to persuade the press to withdraw from the scene. With the press and crowds kept away and the camera floodlights turned off, the hijacker would have probably calmed and be willing to listen to negotiators.
John Adams
Howard: You are firing from 3 barrels today . Well done and keep firing !
Barrel 1 is ( as usual ) total govt BS ( what's news?)
Barrel 2 is a cause worth demonstrating for vs total govt BS squared/ cubed .
The EPA is a farce.
But Barrel 3! ... I have just read "Currency Wars" by James Rickards. You may care to discuss this book with Tom Holland, whom I am sure will give you sound advice as to whether it is BS or the real thing, If the real thing it is FRIGHTENING !
Quote from this book (paper back) page 174
"As of 4. 2011 the Fed had a net worth (= capital) of approx US$60 billion and assets approaching US$3 trillion ( I assume all in US govt bonds) . If the Fed's assets declined in value by 2 % , a fairly small event in volatile markets, the 2% decline applied to US$3 trillion in assets produces a US$60 billion loss - enough to wipe out the Fed's capital. The Fed would then be insolvent"
If true , it sounds to me that the Fed ( which is independent of the US Govt) is as susceptible as the PBOC to a tiny fall in US bond prices, considering that the PBOC holds a huge amount of its assets in US govt bonds and that the PBOC's capital is equally small.
Barrel 3 needs priming for some very big shells ( unless N Korea nukes us first)
I can spare Tom the trouble, and tell you it is BS right here, for the following reasons:

(1) The Fed does not mark its portfolio to market. Any unrealised loss on value of its assets will not be reflected in its balance sheet. And for now the Fed actually sits on a huge unrealised gain (some USD 250 billion, and that is on top of profits of abt 80bn per year already remitted to the Treasury) since most of the bonds it has purchased have rallied (the chief reason for which is the Fed's own buying).

(2) The only situation in which the Fed would be forced to realise losses on its portfolio would one that demands for sudden and strong quantitative tightening. It is hard to imagine what situation that could be. Not even one with (high) inflationary pressures would fit the bill, as the Fed's most effective and most likely weapon to combat inflation remains simply the raising of the short-term interest rate.

While the Fed has indicated that the selling of some of its portfolio could be part of a QE exit strategy, it was always last on the to-do list. The most likely outcome is that most of these securities will be left to mature.

(3) Even if the Fed would in some way realise losses on its portfolio, the most likely solution is to simply create a line on the assets site that reads 'Deferred Assets.' It would be a sort of claim on future earnings, money that would normally go the Treasury. This is the beauty of a central bank: it can create things out of thin air.
John Adams
@ jve : thanks for the input, and doubtless true.
But meanwhile the Fed is writing IOUs to the US Treasury for all the bonds it is buying with printed new money . And even more alarming (see page 135 of Currency Wars) because most of the newly-minted $ end up in China and China has pegged the RMB to the US$ at an artificial rate "the more money the Fed prints , the more more China has to print to maintain the peg. China's policy of pegging the yuan to the dollar was based on the mistaken belief that and misplaced hope that the Fed would not abuse its money printing privileges. Now the Fed is printing with a vengeance"
Thus the US is deliberately exporting its Quantitative Easing inflation to both China ...... and to the whole world, eventually
I think this is something for Tom Holland - seriously !
That is more or less true, although I don't think there is much to worry about there either.

The point about dollar-price inflation for commodities was very clearly visible a couple of year's back, during QE1 and early QE2, when prices of soybeans, oil, copper and so on firmed up, leading to inflation in EM. And inflation was seen as the new US export, forcing through price rises in EM, thereby making the US relatively more competitive.

However, it is completely normal that countries in a recession devalue their currency (directly or indirectly through monetary policy) and thus regain competitiveness. The effects were only accentuated in an abnormal way because the dollar is a major reserve currency, and most commodities are priced in dollars.

As for the RMB - the managed exchange rate to the dollar is entirely China's choice. True, they probably did get an extra incentive to let it appreciate by this dollar-price commodity inflation and that might have been on Obama/Bernanke's objectives list, but probably not near the top.

China's UST holdings are merely a result of their policy of keeping the RMB down. If you want to keep a currency down, you need to oversell it, and that means you need to buy something in return: mainly USD in this case. They know very well that this will ultimately lead to paper losses (in RMB terms): it is the only possible outcome if they continue their 'gradual appreciation' policy of the RMB.

See also Tom's column today!


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