Which will mess up the most – Fed, BOJ or PBOC? – Asia Times

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Jerome Powell, the head of the Federal Reserve, may be spared a thought if anyone is currently despising their work. Owners can see how unsure Chairman Powell is regarding the US interest rate trend in real time.

The former Treasury Secretary Lawrence Summers ‘ claim that the Fed’s subsequent step will be to strengthen, not simplicity, has sparked a wave of ire among investors. The Fed’s issue is not humored by the dollar’s soaring inflation rate, the dollar’s soars, and US electioneering becoming a laughingstock.

Summers is still a dreamer, according to numerous well-known academics. Among them is Mark Zandi, chief analyst at Moody’s Analytics.

” The Federal Reserve may cut interest rates – now”, Zandi argues. ” The main bank’s present higher- for- longer interest rate plan – firmly holding the&nbsp, <a href="https://na01.safelinks.protection.outlook.com/?url=https://fred.stlouisfed.org/series/FEDFUNDS&data=05|02||e36ed482867343af9d8d08dc9b7d5bbc|84df9e7fe9f640afb435aaaaaaaaaaaa|1|0|638556209932965310|Unknown|TWFpbGZsb3d8eyJWIjoiMC4wLjAwMDAiLCJQIjoiV2luMzIiLCJBTiI6Ik1haWwiLCJXVCI6Mn0=|0|||&sdata=rjCCqmnH9a6hcIVdmcYS4IKKF67S/NZSqlJE2cDhhmI=&reserved=0″ target=”_blank” rel=”noreferrer noopener”>federal funds rate that ‘s&nbsp, immediately controlled by the Fed at a higher 5.5 % – threatens to destroy the business“.

Bill Dudley, former chairman of the Fed Bank of New York, thinks that would be a miscalculation. ” Maybe the Fed’s slogan, instead of ‘ higher for longer,’ if be’ higher continuously’ until inflation moves more persuasively in the desired direction”, Dudley wrote on Bloomberg.

Not just one central bank is in danger of making a major policy mistake, according to the Fed. In addition, the People’s Bank of China and the Bank of Japan may need some major explanations in the coming year for mistakes made today.

For instance, the BOJ has almost surely run out of time to stop quantitative easing and stabilize interest rates. Since taking over the board in April 2023, BOJ Governor Kazuo Ueda has seized every chance to change its mind to a less flexible coverage.

Then, as Japan’s economy deals – by 2.9 % in the first quarter year on year – and inflation surpasses wage growth, it’s an open question whether any climb costs will come in 2024.

As the BOJ flounders, the yen is extending its decline – over 15 % so far this year – in ways that could destroy world businesses. Another important Asian nations may experience declines in exchange rates as a result. And it might make Asia nervous to watch out for before the November US vote.

The BOJ was possibly mess up in both directions. Applying the brakes too quickly may exacerbate the yen’s surge and slam the economy into recession. Act very gently, and Japan will soon become even more entangled in the QE sand, making exiting it even more difficult.

The PBOC must perform a challenging juggling work of its own. Governor Pan Gongsheng has been slower to lower saving costs as Asia’s largest economy slows. Some economists worry that this precaution conflicts with worries about the slowing of economic development.

In June, for example, coast service action grew at the slowest rate in eight weeks. A weaker-than-expected 51.2, compared to 554 in May, was the Caixin China service purchasing managers ‘ indicator.

These data raise concerns that strong export growth is n’t translating into stronger domestic demand. Despite authorities efforts to stabilize the condition, China’s home crisis continues to ponder on growth.

Wang Zhe, an economist at Caixin Insight Group, claims that” the progress speed weakened compared to May.” The business was under tension, the “market was concerned.”

President Xi Jinping’s desire to avoid punishing poor banking decisions or reinflating asset bubbles is one factor making Pan reluctant to lower prices. Xi’s Communist Party really allowed for burst of stimulus. However, the PBOC has been far less confrontational than during earlier slowdowns.

What’s different this time is recession. As China ‘s&nbsp, home crisis&nbsp, deepens and its overcapacity woes enhance, some economists worry authorities risk letting this poor- price active take on a life of its own. Xi’s party loathes the Japan comparisons so often leveled Beijing’s way.

People’s Bank of China Governor Pan Gongsheng faces a deflation dilemma. Image: Twitter Screengrab

Of course, fears about Chinese overcapacity could be overdone. Many economists argue that unfair trade practices and increased production results are the cause of the country’s export success right now.

However, the US Fed may be the one who is most likely to make a significant policy mistake.

In its extreme focus on inflation, the Powell- led Fed risks ignoring dislocations in credit markets. Not of the 2008 Lehman Brothers crisis variety but of a magnitude the Fed’s “higher for longer” yield policy may exacerbate.

Granted, economic conditions have n’t gone to plan as employment growth and wages outpace even the most optimistic forecasts. In May, consumer prices grew at a 2.6 % annual rate. Though coming down toward the Fed’s 2 % target, policymakers are n’t ready to declare victory.

We simply want to make sure that the levels we’re seeing reflect actual inflation, Powell said on Tuesday ( July 2 ).

Last week, Mary Daly, president of the San Francisco Fed, cautioned it’s “hard to know if we are truly on track to sustainable price stability”.

The issue is that the Fed may be supporting the wrong side of the trade-off it faces. Many of the upward pressures on costs are coming from the supply side, post- Covid- 19 pandemic. Government actions to boost domestic productivity and capacity, rather than tighter credit, are more effective at addressing these trends.

The US dollar is rising in ways that are making Asia’s year more difficult and putting strains on the US commercial property sector as the Fed decides a course of action. In the wake of Covid, and the work- from- home boom it unleashed, empty skyscrapers seem sure to be America’s next financial reckoning.

Medium- size banks, meanwhile, are still reeling from the Fed’s failure to cut rates. Back in January, Powell’s team was seen easing between five and seven times in 2024. Now, some fear the higher- yield era is poised to be as indefinite as Japan’s zero- rate period.

The risk posed by high yields is illustrated by the speed with which the Silicon Valley Bank collapse in the early 2023 global markets erupted. That goes, too, for undermining the economy.

Many are taking a wait- and- see approach. &nbsp,” When you have economic growth at a pace under 2 %, that can be considered’ stall speed,'” says strategist Rob Haworth at US Bank Wealth Management. ” But we’re still seeing solid&nbsp, consumer activity, which has been the most important factor driving the economy to this point”.

But Mohamed El- Erian, president of Queens ‘ College, Cambridge, argues the US is” slowing faster than most economists expect and faster than what the Fed expected”. This “excessively data- dependent” Fed team risks keeping borrowing costs” too high for too long”.

The dollar’s “wrecking ball” tendencies, meanwhile, are shaking up global markets. It’s hoovering up outsized waves of global capital, disadvantaging emerging economies in particular. Political polarization in Washington, meanwhile, does n’t augur well for capping the dollar’s rally.

” In a divided government, there’s less ability to pass a lot of meaningful fiscal measures”, notes strategist Kamakshya Trivedi at Goldman Sachs. ” It’s fair to say that trade policies and fiscal expansion policies will be up for debate and possibly put into action for this particular election. In addition, the rest of the world faces a real risk of managing an even stronger dollar as a result.

The outlook was further muddied by US President Joe Biden’s disastrous debate performance against Donald Trump. Trump’s chances of winning the White House appear to be higher than ever.

Analysts at ING Bank write in a note that “it is now obvious that investors have made the Trump-strong dollar link.” Given Trump’s potential for lower taxes, inflationary protectionist measures, and greater geopolitical risks,” this is also how we interpret it,” we thought.

Donald Trump is being linked to an even stronger, not weaker, dollar. Image: X Screengrab

Periods of extreme dollar strength do n’t tend to go well for Asia’s export- reliant economies. Powerful dollar rallies of the kind that have taken place across the globe over the past few years have tended to squander disproportionate amounts of capital, denying Asia of desperately needed investment.

The Fed’s “taper tantrum” of 2013 is one earlier reminder of this phenomenon. The Fed tightened its last two years with an even greater degree of force than it has in the last two years, which is the real bookend for Asia.

At the time, the Fed doubled short- term interest rates in just 12 months. The tightening set in motion Mexico’s peso crisis, the bankruptcy of&nbsp, Orange&nbsp, County, California and the demise of Wall Street securities giant&nbsp, Kidder, &nbsp, Peabody&nbsp, &amp, &nbsp, Co.

Then developed Asia, which was the biggest casualty of all, arrived. By 1997, a multi- year dollar rally&nbsp, and rising US yields made Asian currency pegs to the dollar impossible to maintain.

First came Thailand’s chaos- generating devaluation in July 1997. Next, Indonesia and South Korea scrapped dollar pegs. Malaysia and the Philippines were also on the brink as a result of the turbulence. Before long, global investors began worrying Japan and China might stumble, too.

The fear was that&nbsp, China might devalue, catalyzing a fresh wave of market turbulence. Luckily, Beijing did n’t – just as it has n’t today.

Japan contributed to the drama back then when, in November 1997, Yamaichi Securities collapsed. The failure of a then- 100- year- old Japan Inc icon shook global markets. Thankfully, officials in Tokyo kept the collapse from becoming a systemic shock globally.

Now, Asia faces a giant shock from the other direction. Despite the rally, global investors are no longer confident in the dollar because it poses a greater, immediate systemic risk.

Just as the US national debt reaches the$ 35 trillion mark, the de-dollarization movement is gaining traction. What’s more, Washington’s debt burden is headed to$ 50 trillion by 2034, according to the Congressional Budget Office.

Midway through November, Moody’s Investors Service threatened to downgrade the US, shaking the dollar’s stability. That would mean the loss of Washington’s last AAA rating, which would likely send US 10- year yields skyrocketing.

Is the Fed making an epic&nbsp, mistake? Only time will tell. But it’s just one of several top central banks whose&nbsp, mistakes&nbsp, could shake the global financial system in ways few appear to see coming.

Follow William Pesek on X at @WilliamPesek

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Ukraine’s debt negotiations could decide the war – Asia Times

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As Ukraine fights against Russian invasion, it faces a battle on two fronts: military and financial. Global attention understandably focuses on battlefield developments, where Russian troops are pushing toward Ukraine’s second city, Kharkov. But Ukraine is simultaneously experiencing financial struggles.

With its economy damaged by war and the year’s defense cost estimated to be US$54.4 billion, Ukraine is on the brink of defaulting on $22.8 billion in debt. For Ukraine, debt is not an accounting exercise – it represents the ability to defend its sovereignty and secure its future.

At the onset of the war, private investors led by JP Morgan agreed to freeze Ukraine’s debt repayments. That agreement is set to expire in August. Both Ukraine and its lenders are racing to reach a last-minute debt deal to avoid default.

These debt restructuring talks are common between states and investors, but they usually last years and rarely occur in the context of war. At present, both sides remain far apart in their negotiations. Ukraine is demanding a 40% reduction in its debt obligations and investors are willing to take only a 20% loss – known in financial circles as a “haircut.”

Ukraine faces a trade-off in its debt negotiations. On the one hand, securing a larger debt reduction, or even an outright default, could free up substantial fiscal resources in the short term. This would allow Ukraine to redirect funds from debt payments to immediate war-related needs.

However, the long-term consequences of such a decision could be severe, with higher borrowing costs and longer periods of exclusion from capital markets. The outcome of these negotiations will shape not only Ukraine’s immediate defense capabilities but also its long-term economic resilience.

A country’s ability to access credit markets plays an important role in determining the outcome of a war. In previous research, which was published in 2013, I found that states with lower borrowing costs are significantly more likely to win their wars.

Debt allows states to mobilize more resources, more quickly than they otherwise could. The cheaper the debt and the easier it is to access, the more resources that country can mobilize for its war effort.

Because of the importance of debt for war, states involved in wars rarely default. The risk of losing access to credit markets is usually too high. There are, however, some notable exceptions.

Russia technically defaulted on its debt shortly after its invasion of Ukraine in 2022 because sanctions made it impossible to make debt payments. And Saddam Hussein’s Iraq defaulted amid the war between Iran and Iraq in the 1980s. But both countries had substantial natural resource wealth to draw upon, a luxury Ukraine doesn’t have.

The Russian and Iraq exceptions highlight another crucial factor in wartime finance: the nature of a country’s political system. As autocracies, Putin’s Russia and Saddam’s Iraq could impose restrictive economic measures during wartime.

The Russian government, for example, has imposed controls that make it difficult for exporters and foreign companies operating in the country to take money out of Russia.

By contrast, the Ukrainian government has to be sensitive to the domestic political pressures of war financing. Measures like those adopted in Russia would probably spark political discontent in Ukraine.

Debt allows democratic leaders to mobilize resources without relying on unpopular fiscal strategies. However, facing the prospect of reduced access to debt, Ukraine has reverted to divisive tax policies that have raised the tax burden on individuals while cutting social spending.

Taxes are important to the war effort but they risk upsetting the necessary domestic support to continue fighting. And the Ukrainian government has been accused by journalists and international watchdog groups of being too restrictive in its response to domestic discontent.

The Ukrainian domestic intelligence agency allegedly surveilled an investigative media team in their hotel rooms.

Ukraine’s financial future

There’s some good news for Ukraine’s leadership though. After much delay, US Congress passed a military aid package worth $60 billion in the spring. At the same time, the UK provided its largest aid package to Ukraine, worth more than $3.8 billion for 2024.

More recently, the G7 (which consists of Canada, France, Germany, Italy, Japan, the UK and US) agreed to use Russia’s frozen assets to finance a new $50 billion loan to Ukraine.

These additional financial resources are needed for Ukraine’s war effort. But they do not solve the immediate debt problems. The UK and US aid packages are earmarked for military equipment only and cannot be used for budgetary support. The G7 loan will be more flexible, but that money is not expected to be delivered until later this year.

Ukraine must balance the immediate needs of war financing with long-term economic considerations and domestic political pressures. The stakes could not be higher. The terms Ukraine secures in debt negotiations will affect not just its ability to fund the current war effort, but also its capacity to rebuild once the conflict ends.

Patrick E Shea is Senior Lecturer in International Relations and Global Governance, University of Glasgow

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Cryptos, gold and the end of the dollar – Asia Times

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The US federal debt, which is currently approaching US$ 35 trillion or 1200 % of GDP, is alarming a growing number of economics and financial analysts. Prior to defence spending and rights, interest payments on the debts have grown to be the most important item in the US federal budget.

In earlier June, previous US House Speaker Paul Ryan proposed that the US government may recognize stablecoins, resource- backed bitcoin, as settlement for US Treasuries. According to Ryan, the initiative would lead to an “immediate, tough increase in demand for US debts, which would lessen the chance of a missed debt auction and an ensuing financial and economic crisis.”

Ryan’s plan serves as a testament to how serious the US loan issue has grown. Cryptocurrencies were conceived as anti- stablecoins currencies. They are modern currencies that are privately issued and can be used anywhere in the world in an anonymous manner. Bitcoin, the first bitcoin, was meant to be a system for a new economic system that could start with a clean slate.

In the US, as of 2024, crypto advocates are calling for the regulation of asset-backed cryptos ( stablecoins ) so that they can be used to buy US Treasuries and pay taxes. Cryptocurrencies may be able to save the imperfect financial system that they were supposed to replace.

US Congressman Matt Gaetz introduced a bill that would allow Americans to give their federal income tax in Bitcoin two days after Ryan submitted his plan. Gaetz claimed that the dramatic change would encourage creativity, increase efficiency, and give Americans more freedom.

This is a courageous step in the direction of a future where digital currencies are essential to maintaining the US’s position as a leader in scientific development, according to Gaetz.

Is it possible for a fiat currency to survive with personally issued currencies? In the last 50 years, the dollar lost 90 % of its value, and it is still losing money annually at a rate of about 10 %.

Altcoins vary widely in price, but almost all of them are priced in dollars. They are therefore susceptible to a potential ( some economists say unavoidable ) devaluation of the dollar. &nbsp,

Bitcoin Pizza Day

A bit of bitcoin history. A computer programming using the pseudonym Satoshi Nakamoto published a report on a crypto bulletin board on October 31, 2008, to proclaim Bitcoin, the first peer-to-peer cryptocurrency. People may “mine” Bitcoins by completing complicated mathematical puzzles and receive rewards for the newly created coins.

Nakamura argued that the economic system was corrupt and benefited a tiny elite by using taxpayer money to bail out Wall Street in 2008. Bitcoin would be the person’s income, beyond the power of governments. It may make it possible to pay someone anywhere in the world almost completely for free.

Just 21 million Bitcoin could be mined, making fiat currencies defense to inflation brought on by overwhelming money stamping, a criterion found in fiat currencies.

Bitcoin is based on systems that existed, among them modern names.

In 2010, Bitcoin recorded its first commercial exchange. Who delivered two pies to his Florida residence in the form of a Bitcoin worker named Laszlo Hanyecz offered 10, 000 BTC to him?

American computer Jeremy Sturdivant accepted the offer. He had two pies delivered to Hanyecz’s house at a cost of$ 25, and Hanyecz transferred 10.000 bitcoin to Studivant’s Bitcoin budget. Bitcoin was valued at$ 0.0041 during the transaction.

Currency’s initial purchase, remembered as Bitcoin Pizza Day, generated broader involvement in the modern money. Entrepreneurs started crypto exchanges to facilitate the purchase and sale of cryptocurrencies, and they invested in server farms to stone cryptocurrencies. In a simple 15 times, Bitcoin’s cost went from almost zero in 2009 to a maximum of &nbsp,$ 75, 830 in early 2024.

Bitcoin’s potential as a pay method was unsuccessful. Just a small percentage of Bitcoin transactions are made for retail use. The remainder involves crypto investing.

Crypto companies have created a number of different kinds of altcoins. Among them are bitcoins. Some cryptocurrencies are backed by assets like real estate, corporate debts, and even other cryptocurrencies, people are backed by reserves of stablecoins assets held in bank transactions. A bitcoin named DigixDAO has a” stain backed by physical gold” that is supported by 1 ounce of silver that is stored in a bunker.

Ironic is the rise of cryptocurrencies that are gold-backed. The US government’s decision in 1971 to remove the money from the gold standard was largely responsible for the difficulties in the financial system, which allegedly contributed to the development of Bitcoin.

The consists

After WWII, the US dollars became the global reserve currency. The dollar was purged from gold at a fixed price of$ 35 per ounce under the Bretton Woods Agreement of 1944. &nbsp, The English lb, the French franc and assets of different countries were pegged to the money, and hence indirectly to silver. By limiting the amount of money that can be issued, metal resources impose fiscal discipline on nations.

In the 1960s, many European nations expressed concern that the US state was damaged financially, which was the outcome of a pricey war in Vietnam and the introduction of social plans ( the War on Poverty ). Economists in Europe speculated that the US was printing more money than gold had again.

The French state made its issues known in a serious manner. It demanded ore in exchange for sending a warship full of dollars to New York. Many other countries followed suit, albeit without ships, and they progressively drained US silver resources.

At the end of World War II, the US had 21 measurement tons of gold. In 1971, just 8.133 plenty remained. The US government announced that it would temporarily shut the so-called golden windows, defaulting on the Bretton Woods Agreement, in order to lose its remaining property.

In exchange for military protection, the US in 1974 persuaded Saudi Arabia to buy all of its oil in dollars to maintain the worldwide demand for the currency. The deal mandated that all oil-importing countries keep dollar reserves, leading to an ever-increasing demand for dollars.

The so-called petro-dollar strengthened the status of the US dollars as the world supply money. The oil trade represents only 7 % of the global economy, but it is essential to the other 93 % of the economy.

Exploding loan

The US government has quickly increased its bill, no more constrained by the restrictions imposed by the gold standard. In 1971, US debt was$ 400 billion, in 2024 it reached$ 34 trillion, or 120 % of GDP.

To fund its shortfalls, the US government issues attention- bearing Treasuries. Backed by” the full faith and credit” of the US state, Treasuries have been regarded as a risk- completely purchase. The major customers were private owners, international institutions, pension funds and insurance companies.

Silver has been replaced as the dollar system’s core by US debts.

But history is repeating itself. In the late 1960s, France was concerned about the US silver deposits. Currently, China is concerned about US Treasuries.

China developed a sizable trade surplus with the US, bringing in at one point$ 1 billion a day net as it became the factory of the world. China became the world’s largest borrower to the US with a portion of its dollar to buy US Treasuries, joining Japan and Japan as the only other country to do so.

Next came the renowned Wall Street loan and the global financial crisis of 2008. China came to the conclusion that the US lacked the desire to control its investing or overhaul its political or economic system. China eventually cut back on its US bill purchases throughout the 2010s. Also, it started to lay the foundation for an alternative economic structures.

De-dollarization

Om 2021, China, Hong Kong, Thailand and the UAE announced they were developing mBridge, a digital alternative to SWIFT ( Society for Worldwide Interbank Financial Telecommunication ). Importantly, mBridge is based on a variation of bitcoin, the technology used in most bitcoin.

The standard structures of mBridge, the BRICS solution to Smooth

mBridge is designed to work with Central Bank digital currencies and serves as the most good case study for a monetary settlement system for the BRICS nations. The Cooperation Council for the Arab States of the Gulf ( GCC), comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the UAE, has tested its own CBDC Bridge that will be connected to mBridge.

BRICS is also developing a trading forex system that could be backed in part by silver, oil, and other supplies. The biggest obstacle to the money has been a gold or oil-backed currency. Despite their strange appearance, golden and petrol have remained close to balance for more than a century. Their individual rates move within a very small area.

In 1971, when the US closed the golden window, an ounce of gold sold for$ 35. It reached$ 2, 450 in first 2024. In 1971, a barrel of oil was$ 3.60. In recent years it has traded between$ 80 and$ 100 a barrel. Measured in silver and oil, the money lost about 90 % of its value in the last 50 years.

If the BRICS introduces a coin that is pegged to gold, it might have an impact on the prices of everything from copper and gold to aluminum and the crucially important rare earths used in natural technology.

A developing BRICS will not only be the largest manufacturer of many industrial and consumer goods, but also have the ability to control a sizable portion of international assets. The latest BRICS people ‘ complete economic output has already surpassed that of the G7.

Saudi Arabia made the announcement to visit both BRICS and mBridge in June of this year. The Saudis had now begun selling non-dollar oil, but the statement made it clear that their commitment to the petro-dollar had come to an end.

The Saudi choice elicited a reaction from Michael Saylor, inc- founder of crypto big MicroStrategy. According to Taylor, the Saudis were making a error and should have chosen Bitcoin otherwise.

He wrote:” Picture a planet where 50, 000 businesses use cryptocurrency with P2P settlements with each other. Ask the Bank of Australia, the Bank of Austria, or the Bank of China if they would n’t like to have an asset that does n’t lose 7 to 10 % of its value annually. Ask them if they would n’t prefer to be able to make deals with any other banks in the world, peer- to- gaze. It’s an advancement over the existing system”.

Saylor perhaps knows better. Why do countries in the BRICS, including Saudi Arabia, China, and other BRICS nations, exchange their goods or commercial goods for dollars while deviating from the money system?

Crypto or metal?

Severe forms of economic engineering have made the US debt problem worse. Introducing bitcoin into the monetary system takes this a significant step further. Cryptocurrencies can be used secretly and across borders, making it ideal for duty evasion. It was, according to scholar Michael Hudson, change the US into” the new Switzerland”.

Hudson wrote:” The US sees acting as the place for the country’s tax evaders, criminals and others as a good regional strategy. The intention is not to criticize tax violence and more violent criminal acts, but to make money by serving as lender for these activities.

The US has three options, according to macroeconomist Luke Gromen, none of which are painless: it must reduce defence spending and privilege by at least 30 %, it is partially mistake, or it can fill the bill, barring a productivity miracle caused by AI or a breakthrough in cheap energy. Only in a national incident, which may lead to years of incredibly high inflation, are the first two options politically feasible.

Also, says Gromen, the US will have to re- flourish to reduce its reliance on foreign companies for even the most simple of items. The second US president will need to develop an commercial policy, or, better still, a national strategy to reimagine society.

In the short term, there is no reason for optimism. Donald Trump, a former US president, granted cryptocurrencies. He has pledged to chastise nations that stop using the money and that his reelection strategy accepts donations in bitcoin.

That does n’t sound like a plan. Reserve economies are on the verge of extinction. They are still present in the colonial period.

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China builds new presidential palace in Pacific’s Vanuatu

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SYDNEY: The government of cash-strapped Vanuatu will soon settle into a suite of new buildings funded by China, a move likely to reignite concerns about Beijing’s reach in the South Pacific nation. At an official handover ceremony conducted in front of a towering China Aid billboard, Vanuatu Prime Minister CharlotContinue Reading

As problem gamblers get younger, counsellors call for families to intervene sooner

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PROBLEM GAMBLERS GETTING YOUNGER

Counsellors CNA spoke to said that like Peter, those seeking help with a gambling addiction are getting increasingly younger.

They said these tech-savvy addicts are finding it easier to access illegal online gambling sites, and are lured by the promise of quick and easy money.

They mainly bet on sports like football and basketball, and play casino games on illegal gambling websites.

Singapore Pools is the only gambling service provider licensed to offer legal online gambling services in Singapore.

At Arise2Care, which specialises in helping problem gamblers, those the organisation helps can be as young as in their 20s to 30s, said its chairwoman Jolene Ong. They are also starting their gambling activities earlier, she said.

“One of the contributing factors is peer influence. The other one is that all these online platforms give them the convenience to gamble,” she said.

Illegal online gambling sites provide credits so that users do not need to come up with upfront cash, she noted.

Ms Yvonne Yuen from addiction recovery centre WE CARE Community Services – which is also increasingly seeing younger problem gamblers – said that the anonymity the platforms provide is appealing to addicts.

“That gives them even more freedom, or perceived freedom that they could indulge in it (gambling),” she said.

Both counsellors also pointed to easy access via smartphones. Temptations also come in the form of unsolicited text messages offering illegal gambling services, as well as advertisements on gaming and video streaming sites.

This is even as the Gambling Regulatory Authority has blocked more than 3,400 illegal gambling websites

NEED FOR PUBLIC EDUCATION, FAMILY INVOLVEMENT

With problem gamblers getting younger, Ms Yuen called for public education efforts to continue and for schools to play a bigger role in raising awareness about the issue.

People should learn from young that “there’s no such thing as free lunches”, she said.

“They always think of getting free money, quick money, quick bucks, and that’s where the attraction lies.”

Families should also learn to spot the problem early and intervene in the right way, said Ms Ong.

By the time young problem gamblers tell their families of their addiction, they would have typically racked up several debts, she said.

In most instances, the families would jump in to settle the debts, she added. However, given that the addiction has not been resolved, the debts would start to build up again.

“The family members need to be equipped so that they can intervene effectively and sooner, before hell breaks loose,” said Ms Ong.

She said in her organisation’s support group for young addicts, parents are also involved.

In one addict’s case, his parents took away his smartphone and laptop so that he would not be able to gamble online when he is alone in his room, when he would be most tempted.

The counsellors added that making counselling more accessible will also help to better address the issue of problem gambling.

For Paul (not his real name), who started gambling online at the age of 18, an injury escalated his habit.

“I fractured my wrist. I didn’t have the money to seek medical treatment. So that time when I actually first won in online gambling, about S$100 to S$200, I really felt like it was a gift to me. So I started to get addicted.”

Paul racked up huge debts by taking out cash advances on his credit cards, and also borrowed from family and friends to feed his addiction.

Paul eventually took his brother’s advice and sought counselling at Arise2Care, where he got help with a debt repayment plan. He has since recovered from his addiction.

“If I can really go back in time, I won’t even want to touch gambling, and just lead a normal, decent life,” he said.

“At least during the night time, I can sleep peacefully, I don’t have to worry about the debts, and about who will come and harass (me).”

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Sri Lanka to save US billion from bilateral debt deal

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COLOMBO: Sri Lanka will save US$5 billion following the restructure of its bilateral debt, much of which is owed to China, through slashed interest rates and longer repayment schedules, the president said Tuesday. The island nation defaulted on its foreign borrowings in 2022 during an unprecedented economic crisis that precipitatedContinue Reading

BlackRock tasks Yik Ley Chan to lead SEA private credit as demand increases | FinanceAsia

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Global investment giant BlackRock has appointed Yik Ley Chan to lead the firm’s private credit team in an expanded remit for Southeast Asia (SEA). 

Chan (pictured) will be based in Singapore and will become responsible for the origination and execution of private credit investments. The appointment takes effect next month in July, according to a company media release. He will also join the firm’s Asia Pacific (Apac) private credit leadership team. 

Chan has 16 years’ experience in financial services, of which more than 13 years were spent on structuring private credit and financing solutions. He was most recently Asia head of private credit at Jefferies, where he oversaw markets in SEA including Singapore, Malaysia, Vietnam, Indonesia and the Philippines. Yik Ley previously played a senior structurer role for Credit Suisse, covering SEA and frontier markets.

BlackRock’s global private debt platform manages $85 billion across the asset class. The global private debt team has over 200 investment professionals in over 18 cities globally as of December 2023.

BlackRock’s Apac private credit platform currently invests in opportunities throughout Australasia, South Korea, Japan, Greater China, India, and SEA.

Celia Yan, head of Apac private credit, BlackRock, said in the release: “SEA is an exciting region offering promising opportunities for private credit, as corporates look for ways to finance transformation beyond traditional avenues. Yik Ley’s wealth of investment experience and local insights will be of immense value to our clients, while strengthening our investment capabilities throughout developed and emerging markets in Apac.”

Deborah Ho, country head of Singapore and head of SEA, BlackRock, added: “Client demand for private markets investments has increased dramatically – a trend we believe is here to stay.”

For more FinanceAsia people moves click here. 


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China to defuse its trillion LGFV debt time bomb? – Asia Times

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China’s leadership getting scheduled for later this month could be the catalyst for policymakers ‘ development of a defused US$ 13 trillion time bomb that threatens Asia’s largest economy.

Although China’s home crisis is in the news, debt issues plaguing local governments across the country also call for immediate action.

The recent boom in local government financing vehicles ( LGFVs ) raises questions. For bill, the vast majority of it the off- balance- strip form, now nearly rivals China’s annual&nbsp, gross domestic product ( GDP ).

It’s obvious why international investors are concerned about China’s monetary foundations given the definition drama surrounding the large property developers and the glut of LGFVs, especially in a time of extreme global uncertainty.

With US&nbsp, bond yields staying increased, Japan skirting crisis and Europe walking in position, the second quarter of 2024 is n’t simply fertile ground for China to produce an export boom.

The good news, however, is Xi Jinping’s Communist Party seems ready to tackle the ticking LGFV time bomb. According to local press reports, a long-awaited economic strategy session scheduled for July 15 to August 18 will aim to find a resolution to the enormous debt load.

At the upcoming Third Plenum, Xi’s inner circle is anticipated to permit local governments to retain more of the fiscal funds that currently go to Beijing at the upcoming election. The necessary tax reforms in China’s system could be a significant step in the direction of eradicating one of the most pressing threats to financial stability.

It could also be a vital step toward investing more in high- value manufacturing sectors while stimulating&nbsp, now languid domestic consumption. The issue is that mainlanders save more than they spend because of the lack of social safety nets.

Increased revenues would reduce local governments ‘ dependence on property and land sales to stay afloat and give them more opportunity to invest in innovation and productivity-boosting industries. Additionally, they would lessen debt issuances ‘ appeal.

It’s difficult to overstate how significant a pivot could be. Fixing China’s financial cracks is only one part of the process. The other is building economic muscle that puts China on a path toward growing&nbsp, better, not just&nbsp, faster.

Since the 2008 Lehman Brothers crisis, Beijing has relied heavily on China’s 34 province- level administrative areas to fuel economic growth. Regional leaders in Beijing frequently caught attention even before that by reporting higher GDP figures than the national average.

This accounts for the nation’s infrastructure arms race. Now, the bill for all those ginormous skyscrapers, &nbsp, six- lane&nbsp, highways, international airports and hotels, white- elephant stadiums, sprawling shopping districts and amusement parks is coming due.

Local governments raced to outbuild and outgrow each other to get Beijing’s attention. Photo: Asia Times Files / iStock

“LGFVs played an essential role in funding&nbsp, China’s colossal infrastructure buildout, which has also helped drive up land prices in what was previously a virtuous growth cycle”, notes Henry Storey, an economist at the Lowy Institute think tank. Land revenue provided an ostensibly inexhaustible source of largesse for subsidies in the heady days before China’s real estate collapse.

This growth model was not without its drawbacks, Storey notes”. After decades of bingeing, he says, “LGFV debt comprises&nbsp, well over half of China’s GDP – a totally unsustainable dynamic when median return on assets has hovered around 1 %. Local governments currently invest about 19 % of their total fiscal resources in interest payments.

Over the next few weeks, Xi has a chance for a major reboot. Since taking the reins in 2012 and 2013, Xi pledged to recalibrate an economic model that he said had become “unbalanced, uncoordinated and unsustainable”.

But “despite momentous economic change since, many of the government’s stated ambitions remain the same”, says economist Diana Choyleva at Enodo Economics.

For this “vision of high- quality development” to ultimately be achieved, it will depend on “whether Xi can fully implement” reforms, Choyleva says,

Without the structural changes required to create genuine consumer demand, Choyleva goes on to say that a successful implementation of these supply-side reforms wo n’t be sufficient to put the economy on a sustainable growth path. However, the majority of those are glaringly absent from the discussion.

The weeks to come may provide this missing link and mark one of the biggest adjustments to China’s financial system since the Xi era, if not the last couple of decades. &nbsp, It would also be a major down payment on Xi’s pledges to revamp China’s$ 61 trillion financial sector.

According to Sherry Zhao, an analyst at Fitch Ratings,” We believe local and regional governments will still face challenges in supporting LGFVs due to falling land concession revenue.” Because they have more state-owned assets and financial resources for long-term debt resolution, economically stronger regions are more likely to have higher resilience.

A more active capital market would lessen boom-bust cycles, which would be less volatile. Additionally, reforms would give municipalities more room to put policies into practice so that they can spread the fruits of economic growth.

Analysts concur that significant disruption is required. ” China’s economy is not cratering, but it is definitely running at well below potential, and the government seems reluctant to do what it takes to get it up to full speed again”, says Arthur Kroeber, an analyst at Gavekal Dragonomics.

As ever, it will all come down to implementation. Over the past 13 plus years, Xi has occasionally shown to be more adept at recommending bold reforms than putting them into practice. That may be about to change, though, in foundational ways.

Last week, the party’s 24- member Politburo noted that a “resolution on comprehensively deepening reform and advancing Chinese modernization” will be circulated among the Beijing elite. By 2035, the nation should be transformed into a “high-level socialist market economy.”

According to Haibin Zhu, an economist at Morgan Chase &amp, Co., one reason for reform hope is that, unlike in the past when significant policy pivots were announced, the coming Third Plenum does not coincide with significant changes in top leaders.” This is not the case this time,” Zhu says.

Continuity, economists say, could improve the odds that reforms are implemented.

Xi Jinping, the leader of China, has a chance to fulfill his high-quality growth promise. Image: Asia Times Files / Getty

According to Robin Xing, an economist at Morgan Stanley,” The Plenum will likely support the economic framework that has taken shape in recent years: prioritizing chokepoints in supply chain self-sufficiency and tech innovation.”

Shuang Ding, an analyst at Standard Chartered, expects this month to be a key moment for Xi’s legacy as a reformer. We anticipate that the Plenum will reiterate the party’s support for the expansion of the private sector, a stronger state sector, and the crucial role that the market plays in resource allocation.

More importantly, Ding adds,” we think they’ll take steps to remove cross- region barriers, encourage innovation and green transition, and improve income distribution. Additionally, we anticipate that they will place greater value on security, addressing security risks in the financial and housing sectors, and strengthening supply chain resilience. Potential fiscal and tax reforms, which are crucial for long-term sustainability, will likely receive a lot of attention from the market.

Even though it might not significantly increase GDP in the short run, this latter push may be a game-changer for local governments. In fact, efforts to repair the local government’s finances would cause more economic turbulence in the near future.

According to Xing,” the focus on deleveraging the housing sector and LGFVs continues to put downward pressure on growth and deflation.”

LGFVs have found it much harder to issue bonds in recent months as regulators have made more effort to lessen risks in one of China’s most debated industries.

That “points to the continued regulatory tightening since the fourth quarter last year and we have n’t yet seen any signs of relaxation”, says Laura Li, an analyst at Standard &amp, Poor’s.

” This suggests that it’s increasingly difficult for low- quality, low- rated LGFVs, including those from affluent provinces such as Jiangsu and Zhejiang, to issue bonds in future”, Li added.

However, allowing local governments to keep more tax revenue could have a significant impact on incentives. As economist Jonathon Sine, author of the Cogitations newsletter, explains, Beijing in decades past wanted revenues routed through its own coffers for purposes of control, most importantly over subordinate levels of government and redistribution.

Once you realize that the central government is essentially responsible for the majority of the money, Sine explains. ” Indeed, once transfers are accounted for the oft- cited central- local fiscal gap disappears. Unfunded mandates did occur following the budget reform in 1994, but in a more nuanced way.

Locally generated income is frequently transported from the provinces to Beijing and back again. Photo: Asia Times Files / AFP

However, he claims that the “problem was – and still is – in the nature of the intergovernmental transfer system.” ” Beijing bureaucrats apportion funds to the provinces, who are in charge of apportioning funds to prefectural cities, who are in charge of apportioning funds among county-level units, and who are in charge of apportioning funds among townships,” the phrase goes.

Sometimes, Sine notes,” the provinces send funds directly to the counties, by- passing the cities. Each level also requires its own funds. And each level may take months before passing on the funds it has received. By the time funds get from top to bottom, a year or more can pass”.

China could reduce the effectiveness of the world’s second-largest economy, destabilize distorted incentive structures, and help Xi deliver on his high-quality growth promises by putting an end to this M C Escher-like financial system.

Follow William Pesek on X at @WilliamPesek

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Southeast Asia has its reasons for pivoting to BRICS – Asia Times

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The sudden reversal of Southeast Asia toward the BRICS countries is a major game-changer that some in Washington anticipated.

In recent days, Malaysia extensive its interests to visit Brazil, Russia, India, China and South Africa. Thailand and Vietnam are even interested in joining the Association of Southeast Asian Nations, which is a group of nations.

In Indonesia, there’s growing recognition that Argentina, Egypt, Ethiopia, Iran, United Arab Emirates, Saudi Arabia and another” International South” countries have a place in vying to join this burgeoning international business.

Anwar Ibrahim, the prime minister, made the declaration in an interview with Chinese media prior to Li Qiang’s attend to Malaysia, announcing his intention to re-join the union, which has grown by a whopping 2 % in the last year. That dynamic is luring the Global South countries, primarily because it provides access to funding and a political movement that is unconstrained by Washington’s influence. &nbsp,

Joe Biden, the US senator, might find the South Asian stumbling block particularly troubling. Since the Biden time, a provincial shield has been built to counteract China’s growing influence and attempts to replace the US dollars in trade and finance.

Relationships between the US and some ASEAN people are clearly deteriorating. This, at a time when&nbsp, Saudi Arabia&nbsp, is looking to step out the “petrodollar”. As China, Russia, and Iran square off against old partnerships, Riyadh is intensifying de-dollarization work.

” A gradual reform of the international financial environment may be afoot, giving way to a planet in which more local economies can be used for international purchases“, says analyst&nbsp, Hung Tran at the Atlantic Council’s Geoeconomics Center. The money would continue to be important but without its enormous influence, which would be complemented by currencies like the Taiwanese renminbi, the euros, and the Chinese yen in a way that’s proportionate to the global footprint of their economies.

Tran points out that “in this environment, how Saudi Arabia approaches the consists continues to be a significant predictor of the economic coming.”

Malaysia’s excursion tells the story. Anwar Ibrahim, the prime minister, made a world impact by supporting Western finance. That was in the late 1990s, when Anwar’s liberal tendencies clashed with Mahathir Mohamad’s stances.

Mahathir shut Anwar down. The door was opened to Deputy Premier Anwar, who was afterwards imprisoned. Anwar’s efforts to improve competition and establish equal using fields were even reversed. Capital controls were imposed by Mahathir and Malaysia Inc. were circling the vehicles.

Then it’s Anwar who’s turning away from the Adam Smith- encouraged guidelines he once championed — and toward the&nbsp, BRICS.

” We have made our plan apparent and we have made our choice”, Anwar tells Chinese internet outlet&nbsp, Guancha. The proper process will begin immediately, according to the statement. As far as the Global South is concerned, we are totally supportive”.

Anwar gave a shoutout to Argentine President Luiz Inacio Lula da Silva, who is determined to end the economy’s dominance.

” Last month, Malaysia had the highest expenditure ever, but the money was also attacked”, Anwar explains. ” Well, it has eased in the past few months. But it does n’t make sense, it goes against basic economic principles”.

Anwar documents that the question is: Why? He claims that” a coin that is completely outside the two nations ‘ business structure and useless in terms of economic activities in the country has become prominent merely because it is used as an international money.”

Among the many reasons for Anwar’s ideological reversal is China’s emergence on the global scene, providing a regional growth engine. Another: the” Western narrative” surrounding events like Hamas’s October 7 attack on Israel.

After their meeting in Beijing on March 31, 2023, Malaysian leader Anwar Ibrahim addressed Chinese President Xi Jinping in positive terms. Image: Facebook / Anwar Ibrahim

” People keep talking about October 7, which annoys me”, Anwar says. Do you want to obliterate 70 years of history by repeating one event? This is the Western narrative. You see, this is the problem with the West. They want to control the conversation, but because they are no longer a colonial power and independent nations should be free to express themselves, we can no longer accept it.

In late May, Thailand announced it’s applying for&nbsp, BRICS&nbsp, inclusion in part to boost its presence on the world stage. If approved, Bangkok would likely become the first ASEAN economy added.

According to Nikorndej Balankura, a spokesman for the foreign ministry,” Thailand believes that BRICS has an important role to play in strengthening the multilateral system and economic cooperation between countries in the Global South, which aligns with our national interests.” ” As for economic and political benefits, joining BRICS would reinforce Thailand’s role on the global stage, and strengthen its international cooperation with emerging economies, especially in trade, investment and food and energy security”.

Thailand’s bid, according to Soumya Bhowmick, an associate fellow at the Observer Research Foundation think tank, supports Beijing’s wider strategic objectives of boosting its economic influence in Southeast Asia.

” For China”, Bhowmick notes,” Thailand’s membership represents an extension of its regional influence, complementing its Belt and Road Initiative. This is in line with China’s strategic goals of fostering stronger economic ties and the creation of new infrastructure in Southeast Asia.

The first BRIC grouping was created in 2001 by Goldman Sachs economist Jim O’Neill. The members formally joined forces in 2009; A year later, they added the” S” when South Africa joined. In 2023, the BRICS doubled in size by luring more&nbsp, Global South&nbsp, nations.

Today, BRICS nations account for half the world’s population and two- fifths of trade, including top energy producers and importers. &nbsp, BRICS nations also account for 38 % of global petroleum imports, led by China and India. &nbsp,

The grouping could give the Global South a greater voice in international affairs and challenge the domination of existing institutions, according to Daniel Azevedo, an analyst at Boston Consulting Group.

BRICS , Azevedo adds,” creates a forum that, at minimum, gives&nbsp, emerging markets&nbsp, the opportunity to align on global topics and new opportunities to promote mutual&nbsp, economic development &nbsp, and growth. And it’s evolving steadily”.

Azevedo notes that as the BRICS build political and&nbsp, financial institutions&nbsp, and a payment mechanism for executing transactions,” there are important potential implications for the future of&nbsp, energy&nbsp, trade, international finance, global supply chains, monetary policy and technological research”.

Global companies will need to take these new geopolitical and economic realities into their investment strategies, according to Azevedo. They ought to also improve their ability to take advantage of opportunities and reduce risk.

The BRICS have n’t always demonstrated their viability as a bloc. Five core nations are present, with nothing else in common besides some economists ‘ imagination. The BRICS frequently seem to be focused solely on improving access to China’s rapidly expanding economy and doing little else.

Paul McNamara, investment director at GAM&nbsp, Investments, speaks for many when he observes that the&nbsp, BRICS&nbsp, is still an acronym in search of cohesive economic argument. Would most current global elites care about the BRICS without China at the core, asks McNamara?

As such, says Ian Bremmer, president of Eurasia Group, the “impotence of&nbsp, BRICS”&nbsp, makes joining the group” a low- stakes gambit with some potential upside. It may help Thailand, which is its biggest trading partner and most worrying military threat, win over China. But, if not, what has Bangkok really lost”?

Vietnam traveled to Russia earlier this month to take part in the BRICS summit. According to Deputy Minister of Foreign Affairs Nguyen Minh Hang, Hanoi is eager to collaborate with like-minded developing nations.

At a time when political dysfunction is at its worst, and all this is happening amid deteriorating American finances. As the national debt approaches US$ 35 trillion – on the way to&nbsp, US$ 50 trillion&nbsp, – Biden’s Democrats and Donald Trump’s Republicans are barely on speaking terms.

This is not appropriate for either investing in government funding in the short run or making necessary upgrades to promote innovation and productivity over the long run. Additionally, it implies the threat of a second Capitol Hill insurrection similar to the one that occurred on January 6, 2021.

That event played a direct role in the August 2023 move by Fitch Ratings to revoke Washington’s AAA credit grade. Extreme polarization, explains Fitch analyst Richard Francis, “was something that we highlighted because it just is a reflection of the deterioration in governance, it’s one of many”.

The key is now how Moody’s Investors Service, which still assigns Washington AAA, responds to the chaos caused by Trump’s campaign promises to win back control. And as Biden attempts to overthrow Trump, Biden uses new trade sanctions.

This puts US Treasury securities in a high degree of risk. Japan and China alone have US government debt totaling$ 2 trillion. Any sudden run on the dollar could trigger a fire sale, sending US yields skyrocketing.

The Federal Reserve’s reluctance to lower interest rates as was widely anticipated increases the chance of a policy error in this regard. One of the most well-known Fed errors in history was missing the subprime crisis ‘ level of distress in credit markets in 2007.

As Fed Chairman Jerome Powell’s team prolongs the “higher for longer” era for yields, developing economies are increasingly in harm’s way. That’s especially so as the dollar’s surge hoovers up global capital.

These worries fall under the umbrella of the broader BRICS’s plan to pool more than US$ 100 billion in foreign currency to absorb financial shocks. Members can use the funds in emergencies, preventing them from visiting the International Monetary Fund. Since 2015, the bank that the BRICS created has approved tens of billions of dollars of loans for infrastructure, transportation and water.

The&nbsp, BRICS currency &nbsp, project has been gaining traction since mid- 2022, when the 14th BRICS Summit was held in Beijing. Vladimir Putin, the president of Russia, stated there that the BRICS were developing a “new global reserve currency” and were willing to expand its use.

Brazil’s Lula&nbsp, also has thrown his support behind a BRICS monetary unit. Why ca n’t a bank like the BRICS bank use a currency to finance trade between Brazil and China, as well as Brazil and all other BRICS nations? he asks. Who made the decision to use the dollar as the reserve currency following the end of gold parity?

President of Brazil, Lula da Silva. Photo: Editora Brasil 247

Fernando Haddad, Lula’s finance minister, has been making a point about the more prevalent use of local currencies in bilateral trade instruments like credit receipts. The focus, he says, must be phasing out the use of a third currency.

The benefit is that trade transactions are resolved in the currency of a non-membership-based nation, he claims.

Economist Vikram Rai of TD Bank points out that” there is great potential for regionally dominant currencies and a multipolar international regime to emerge,” with the roles being “filled now by the dollar shared with the euro, a more open yuan, future central bank digital currencies, and possibly other options we have yet to see” within the next ten or two.

Analysts at Moody’s warn that the Americans going overboard on tariffs, concerns about default and weakening institutions are threatening the dollar ‘s&nbsp, reserve currency status.

” The greatest near- term danger to the dollar’s position stems from the risk of confidence- sapping policy mistakes by the US authorities themselves, like a US default on its debt for example”, Moody’s argues. The dollar’s global role is threatened by weak institutions and a political pivot toward protectionism.

It’s difficult to believe that America could lose much more than just the economic plot as Southeast Asia increasingly leans toward the BRICS.

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