OFF TOPIC???
Just thought you might be interested.....
A lot of the goods that Walmart sells are made in Asia according to Walmart's specs. If Walmart wants hi-quality stuff, then they get hi-quality stuff. If Walmart wants some goods to be of "crappy" quality for cost/profit reasons, then Walmart gets to sell the "crap"!
A time was when (in the 1950s and early 60s) Japanese goods were laughed at but no longer! One of the secrets of their success was quality control. When those Chinese commies really get going, the world will sit up and notice.
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Comments, anyone?
DISSECTING THE ROOT CAUSE OF ASIAN FLU
Western World Already Handles Its Own Flu
Michael Walker (Executive Director of the Fraser Institute)
One of the things that fascinates me about economics is the short term memories that people often bring to an analysis of evolving conditions. Take for example, the "Asian flu" which has produced symptoms throughout Asia, and to some extent, sympathetic pains elsewhere on the Pacific Rim. Gabfests about the Asian situation are dominated by loud clucking sounds as self-righteous analysts condemn Asian governments for inappropriate conduct. Almost always there is a background refrain that government policy in these jurisdictions should have been operated differently in order to restrain the rapacious behaviour of corrupt officials and compliant business people.
The important thing to consider about the Asian flu is that there is nothing unusual in principle about what happened in Asia.
Most of the major industrialized countries that have experienced rapid growth have also experienced "flus" of their own. The second thing to realize is that most of the Asian economies are better equipped to resist the long-term effects of the virus than were the industrialized economies that have already dealt successfully with it.
Finally, it must be said that the underlying conditions for growth and development in most of the Asian economies are better than the average of the countries that are being called upon to finance Asian aid packages organized through the International Monetary Fund.
There is nothing unusual about countries or regions experiencing an asset price bubble related to strong economic growth and a compliant financial structure. To be really parochial about it, we had exactly those kinds of boom-bust experiences in Western Canada in the late 1970s and in Eastern Canada in the late 80s. In both cases, the bust produced bankruptcies, allegations of financial impropriety and an actual determination that financial improprieties had occurred.
The U.S. Institution Resolution Trust stands as mute testimony to the same phenomena working its way through the United States. In Sweden, two nationalised banks are that nation's monument to the difficulties that can emerge when people begin to think that prices will go to the sky. So let us not have any of this sanctimonious nonsense about the standard of morality or business ethics practised in Asia compared with those in the rest of the world.
It is also important to recognize how we resolved the difficulties in the mature industrial economies: by imposing the cost of adjustment on the general taxpayer in one way or another. This was obviously in the case of the Resolution Trust and in the Swedish bank nationalization instances, but it was also true of the deposit insurance solution adopted in Canada. At base, the question iof whether these financial shocks constitute a big hit that will further destabilize the world economy should be understood in terms of the capacity of the governments involved to stand behind their institutions one way or another.
In this respect, the major Asian governments are in much better shape than you think. The Fraser's Institute of government indebtedness shows that the debt of most Asian countries are more manageable than, say, that of the United States!
Japanese government debt amounts to only 11 per cent of their per capita discretionary income of the country. Korea's is 15.6 per cent, Malaysia's 38.4 per cent, and Thailand's is 46 per cent. (The U.S.'s is 52 per cent.) While Indonesian and the Philippines each have per capita debts at about 70 per cent of discretionary income, even they are less indebted than Canadian governments, which together have per capita debts amounting to about 73 per cent of discretionary income.
The other issue, of course, is whether the long-term prospects of these countries are permanently dimmed by the necessity in the short run to make some corrections and assume some unforeseen debt. The answer is that it depends on whether the countries adopt policies that are growth enhancing or not. Another Fraser Institute international index is useful here, and that is the Economic Freedom of the World Index, which ranks the government policies of 115 countries. Those that score well on this index also do well economically.
The Asian countries discussed above ----not including Hong Kong and Singapore, which were the two freest economies in the world in 1997 ---have an average freedom rating of 7. This places them, as a group, amongst the top ten economic performers in the world, and well ahead of the countrie like Canada, Germany, France and Italy, in whom more confidence is apparently reposed.
In short the Asian flu is a familiar virus and is likely to have few medium- and long-term implications. Asia is definitely a buy! |
