Wednesday, 23 July 2014

North Korea Wants to be Back in the Spotlight

OK folks, it's hot enough for the Silly Season to be declared open.  Jong-un the wrong 'un has decided North Korea needs to get itself back in the headlines where it belongs and, failing permision from his Chinese friends to pull any more of his 'war on America' stunts, he's decided to go for broke on the tourism front. 
North Korean authorities have announced an ambitious development project for the east coast city of Wonsan - an underwater hotel ... local authorities are now in discussions on how to build the hotel.
It's easy, chaps. First, Fat-boy inaugurates the project with a little ceremony and tells you to crack on or face the bullet.  Duly motivated, you buy an old Soviet submarine and put in some glass portholes and bunks: they've got one at Disneyland you can copy.  The missile tubes can be converted to dispense cornflakes at the breakfast buffet; and you can charge a premium for beds in the conning tower.    

 Then sit back and watch the crowds pour in - oh, and you'll need one of those complicated queueing schemes Disney uses to keep the punters happy for an hour or so as they shuffle foward to the magical experience.  Li'l Kim can personally monitor the queue from within, using the periscope.  He will be delighted by how respectful and orderly they are.

I will be happy to knock up a business plan and arrange the finance.  My fee will be strictly hard-currency and payable in advance.

ND

Update:  quite forgotten this until BE reminded me in the comments, but many years ago on another planet I had one of me turns ...
Start spreading the Juche
The D-P-R-K
wants us to be a part of it – Pyongyang Pyongyang !
The Lee Myung Bak group
Urge peasants to stray
way from the very heart of it- Pyongyang Pyongyang !

I wanna wake up in a city, that doesn't sleep
And find I’m King of the ’Ill - Kim Jong Il - top of the heap

These running-dog blues,
are melting away
I’ll make a Mangyongbong of it - in old Pyongyang
If I can make it there,
I’ll do it in Kim Il Sung Square
Its up to you - Pyongyang Pyongyang !
Yup, the silly season.  You can google all those crazy names.
  

Tuesday, 22 July 2014

The Oil-Price Dog Still Isn't Barking

Catching up with the newspapers, one might be forgiven for thinking that Armageddon looms.  But then we turn to the market data for the traditional calibration and yes, the price of oil is gently falling: we are back to $108.  The combined agonies of Gaza, Iraq and Donetsk do not register on the curve.

European natural gas prices continue to fall even more markedly.  The premium over the the US price - for several years a very scary thing for European industry and economy as a whole - is down to under 50%, the lowest it's been for a long time.  (It was more than 200% as recently as last November.)  Even more striking, Far East LNG spot-prices are back down to pre-Fukushima levels.  Of course it's a hot spell in summer right now, but this goes beyond the usual seasonal dip. 

Putin shows every sign of being personally very uncomfortable, and low prices for his primary exports aren't going to improve his humour.  What on earth will he do next ?

ND

Monday, 21 July 2014

Dollar, Donetsk and US Dominance: Ending Any Time Soon?

"The dollar's 70-year dominance is coming to an end", writes Liam Halligan in the Telegraph.  "Within a decade, greenbacks could be replaced as the world's reserve currency."

He isn't the first to predict this, and it seems to be received wisdom in some quarters.  BRIC Development Bank plans are cited in aid by Halligan, along with stats on growing BRIC GDPs, and speculation over what currency (or currencies) the big Russia-China gas deal is denominated in.

Well, people have been announcing the end of oil priced in dollars for a long time, and it really hasn't happened.  The banking crisis seems to have reinforced the dollar's standing.  Given the haste with which the Russians came to the signing-table on the gas deal (reflecting their Ukraine-based desperation to show Europe we aren't needed), the chances that they came up with a fancy new currency arrangement are rather small.

In the long run, I have no doubt China will be up there vying for the Top Nation accolade, but as often argued hereabouts their hesitancy and false-footing in foreign affairs doesn't make them likely to achieve this any time soon.  Timing is everything and "within a decade" for the end of the dollar as world reserve currency looks wildly premature.

I'd go further.  The fact of China as putative Top Nation doesn't really map one-for-one onto currency at all, any more than we'll all soon be speaking Mandarin.  'Currency' means a lot more than 'politico-economic muscle', as the Euro-bloc is painfully finding out.  A complex alignment of reliable legal system, flexibility & pragmatism of authorities, understanding of markets, ease of access, liquidity, adapatability & readiness to embrace change, lack of doctrinaire stubbornness and other factors is required - a combination not readily associated with, errr, China.   Or indeed France, another country that has perennially tried - well, perenially hoped - to be some sort of global player.  The City of London's dominance of the financial world has long outlasted the British Empire.

Changing the subject, but bringing it around to a similar conclusion, the Ukraine situation has obviously taken a very nasty turn while I was on hol.  To chuck in my 2 bits-worth: as Raedwald has suggested, it's rather probable the Americans knew what SAM kit was available to the separatists.  He asked - who did they tell ?  which is one way of looking at it.   I'd guess the USA has an absolutely top-notch vantage-point on everything in the region (just as we do in Cyprus for the Eastern Med) and could tell chapter-and-verse down to the very smallest detail.  It probably won't, though, for the time-honoured reason of not showing its hand.

Yes, it's the USA and its dollar for a while to come.

ND