Indonesia jails pop star for sex tapes

Sex-tape scandal pop star jailed

Hundreds charged the gates of the courthouse in the city of Bandung after the verdict was read out, yelling "Too light! Too light," as he sped off in an armoured police car. Police fired warning shots to break up a scuffle between his supporters and critics.

Ariel, lead singer of the country's most popular band, Peterpan, was the first celebrity to be charged under Indonesia's strict anti-pornography law, which came into effect in 2008 despite strong opposition from the public and members of government.

It is seen by many as vaguely worded and as carrying overly harsh penalties.

Ariel insists the tapes were stolen from his house and posted online without his knowledge, but presiding Judge Singgih Budi Prakoso said the pop star did nothing to prevent them from spreading online.

He sentenced him to three-and-a-half years years in jail - well short of the maximum 12 years - and fined him £15,000.

Indonesia's stock market has enjoyed a huge rally since 2008, but the law was passed in the midst of the crisis. Note that it was introduced in 1999, in the wake of the Asian Crisis and it needed almost a full decade and another massive crisis to become law.

Some coverage of the bill's passage here: Indonesia's parliament passes a controversial anti-pornography bill

Flemish leader doesn't want to split Belgium

Flemish leader rejects splitting Belgium

"Everybody thinks I want this, but I think it's not good because we're going to lose our prosperity if we launch into an adventure in which nobody knows how it will end," he said.

He likened bilingual capital Brussels, a largely francophone city located in Flemish territory, to the glue binding the two regions. The fate of areas on its periphery is among the sticking points in the current crisis.

"To say we can cut (the country) is simplistic and dangerous," de Wever added.

For now, the Flemish are happy if they are given more local control. This is a strong version of is happening in Arizona with immigration, and many other states with Obamacare. People are turning to smaller political units closer to home.

However, one has to wonder what happens in Belgium if they do lose their prosperity. At that point, there'd be much less to lose when splitting the country.

KFC hikes prices in China

肯德基30个月来首次涨价 单项产品涨幅0.5-1元

Reports say the increase affects about half the items for sale and the increases are around 0.5 to 1 yuan. KFC items go from a few yuan up to more than 20 yuan for a meal, suggesting the hikes are probably in the 10-20% range, in line with what's happening in other fast food restaurants.

Silver longs slowly exiting, euro specs go long

China's coming crisis

I used to think China would hit the development wall at around $10,000 in per capita GDP. There's still low hanging fruit in the economy, especially in the West, but as the country develops, the reforms needed to press on with economic development become increasingly large. If the current model of development has weaknesses, however, the crisis could come earlier due to bad debts, malinvestments, or other mistakes. For instance, in the United States, it was well known that Medicare and Social Security were going to be a major crisis in the coming years, but the financial crisis of 2008 accelerated the problem. The United States faces a debt crisis today and the looming threat of entitlements has been brought forward to the present.

You may have heard the arguments of China bears such as Jim Chanos or Hugh Hendry, but Fraser Howie and Carl Walter have a new book examining the country's economic system. They previously wrote Privatizing China in 2003, an excellent book detailing the privatization of China's state-owned enterprises and the growth of the stock market. I look forward to reading their latest book, Red Capitalism: The Fragile Financial Foundation of China's Extraordinary Rise.

Asia Times has an interview with Fraser Howie, titled China not all it seems.

BAS: Does this sort of investing, absent the market forces pushing for new infrastructure versus the party deciding to pursue them, lead to overcapacity?

FH: Yes. In China, the Holy Grail for so many in local government is to go from nothing to something, so if you are a poor province or city and a factory announces it is going to get built, money all of a sudden becomes abundant. But this desire for growth before all else can and does lead to a massive misallocation of capital. But the real question is what will this overcapacity and misallocation of capital lead to? A lot of critics of China point to a property bubble collapse and say that's likely.

Sure, the property market in China may be a bubble in certain cities. But the Internet was a bubble as well and yes, it popped, but look at the Internet now - it is more powerful and central to the global economy than it ever was. Bubbles happen, the key is how you respond to them A more likely result of this overcapacity and it effects will be the upcoming test of what happens when the Chinese SOEs [state-owned enterprises] who were recipients of China's stimulus money need to start paying their loans back. It will be interesting to see how the markets respond if, in two or three years, these companies can't service their debt.

The assumption is the Chinese government will step back in if there are problems, but if investors don't get full disclosure we won't know how bad things really are. Look, we already know securitization in China is booming. Why is that? It's probably because Chinese banks are trying boost lending at any price without fully disclosing the risks, and who knows how much other off-balance-sheet activity is going on?

Asia Times also has a book review, titled The party principle.

The NYTimes has an interview with Carl Walter.

Liu Junluo: Gold crash coming

Here's my slapdash translation of Mr. Luo's latest blog post. A few sentences were left out, either because I found it difficult to translate and/or they did not have a major bearing on the main topic. I used Google Translate to speed things up, in some places the English is not fluid, but the hopefully the main ideas come through.

Note that gold is typically priced in yuan/gram in China. Gold is currently about $43 per gram, or about 283 yuan/gm.

Original post in Chinese is available here. 黄金、美国、新年好+公告
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From beginning to end, China's history is filled with "arrogance and destruction," the Ming and Qing dynasties are the model.

2011 has arrived, Goldman Sachs and Chinese economists continue to exhaustively encourage Chinese people to madly buy gold. Now the small problem: the price of gold has surged 500% in 10 years, the global gold market in the region of $ 1,300 has reached an unprecedented scale. A contract must be shared by the long and short side, if there are unprecedented long gold contracts, there must also be unprecedented short-selling. Perhaps in the Chinese market today, I am the only bearish one on gold, and I think it will drop below 300 dollars.

In March 2010, I lectured in Beijing that the time to short gold will be in December 2010. I have a friend who established a short position at 305 RMB in the Shanghai gold futures market contract 1106, all his friends and the managers at futures companies desperately opposed him, and in a panic he closed his short position in gold at 298 RMB. Explaining this small situation, it shows that Chinese peoples' psychological state is not ready for participating in globalization. In Shanghai, November 9, 2010, the 1106 gold futures contract at 310 yuan expanded by 10,000 contracts; December 1, 2010 to December 7, at 303 to 310 yuan, another 10,000 contracts; the same thing from December 27 to December 30, soon after the shorts all won and the longs all lost. Now, nobody would believe that gold will eventually be worthless, but why are there a large number of shorts, moreover shorts that are unknown to the Chinese people.

Now the market value of gold has risen to 6 trillion U.S. dollars; gold futures, paper gold, gold stocks, gold producing countries CDS (credit default swaps), etc. is at least as high as $10 trillion. The gold market could be $20 to 25 trillion in size. Gold is much greater than the U.S. national debt. Chinese economists speak about gold's beautiful future, this logic rests on one idea - the U.S. budget deficit and the U.S. debt. U.S. government debt is now close to 100% of the U.S. economy, at the same time, the Japanese government debt is 200% of GDP, so the U.S. government debt is still normal. Out of control U.S. government debt is the only force lifting the price of gold, this Americans and Chinese economists know. Then, in people's heads should be the idea that a gold crash solves the out of control debt.

Now, Bernanke, Goldman Sachs, and myself, all know that gold is in an unprecedented crash state. Today, we all know the global currency system is the dollar standard. More exactly, global trade or global debt settlement must be in U.S. dollars. During the worldwide Great Depression of 1930, gold soared against all currencies precisely because the world of 1930 was on the gold standard, at the time you had to sell your currency to buy gold, so you could participate in market settlement. Over the past 3 years, global governments and the private sector issued an unprecedented amount of debt, a total size of not less than 20 trillion dollars. More preposterous is that emerging countries, especially China, engaged in large-scale borrowing and inflation.

At 1300 U.S. dollars for gold, the United States has established a worldwide currency reservoir. QE2 U.S. monetary policy has accelerated the rise in inflation in China, the Chinese central bank can only accelerate to keep up with the Americans, in this way the currency in the gold reservoir escapes into agricultural products, coal, oil, the Nasdaq market, at last China's central bank can only desperately hike interest-rate and ultimately resulting in the global outbreak of debt settlement, the crash of the Chinese property market and the gold market. In order to complete this, to solve the U.S. debt with a gold crash, Goldman Sachs and Chinese economists need to create a gold fairy tale.

There are $13 trillion in Japanese savings, if the Japanese take half of the savings, they can put most of the world's gold in Japan. According to the Goldman Sachs' and Chinese economists' logic, that the Japanese do not buy gold now is stupid. But the next 5 years will be the Internet's truly global growth, the Internet will go from 2 billion to almost 4 billion users. After 2012, technology reserves, cultural reserves, human capital reserves and agricultural reserve will create the real boom in America's Nasdaq.

In 2011, everyone in China dreams of getting rich with houses and gold. In 1997, the ASEAN region was also full of dreams of getting rich with houses. In 1998, ASEAN regional house prices collapsed more than 70% and some currencies suffered 1000% devaluation. We Chinese should not be a global financial fool; we see that the Chinese stock market and the U.S. stock market contrast; we look at the global agricultural market and gold market contrast, China's economists are just a group of "idiots and good-for-nothings." In my book "Great Financial World," we also understand these structural problems in Japan's property market after 1992.

This 2011 Chinese New Year, Wall Street and U.S. multinational corporations have got 3 trillion dollars in cash. The most brutal time of the Great Depression was in 1932 when, if you had cash, you were king. If history repeats itself again, Wall Street and U.S. multinational companies have got 3 trillion dollars in cash and will control the world.

The mission of my current book, "Great Financial World", is to record how China was ultimately destroyed by the United States using economics and finance. In the United States now, all the best people are on Wall Street and China's economists tell us that building houses and buying gold can defeat the United States. But America's best talent is working hard to enlarge global indebtedness. It is Bernanke and Wall Street creating the global debt zoom that are idiots! Or its Chinese economists that tell us to build houses and buy gold that are idiots!


Wish My Friends a Happy New Year!

Liu Junluo January 25, 2011

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One thing I've noticed about Liu Junluo's writings and which Chinese readers have also noted, is that he's often right about the direction of things, but doesn't always explain why. There is an existing theory that fits Mr. Luo's prognostications like a glove though—deflation. Robert Prechter has predicted a much lower gold price as well and he is one of the most bearish deflationists on record.

An interesting symmetry also exists in the writings of Liu Junluo and others who share his opinion. Just as one can read about the incompetent U.S. government/economists being defeated by the wise Chinese in some quarters, many Chinese hold the inverse opinion, that incompetent Chinese government/economists are being defeated by the wise Americans.

Wenzhou overseas investment plan stopped

Wenzhou's Overseas Investment Trial Halted

The trial program kicked off two weeks ago, drawing much attention from the media. It was largely interpreted as a sign of loosened capital controls.

The State Administration of Foreign Exchange (SAFE) made phone calls to the Zhejiang provincial SAFE bureau and the Wenzhou municipal SAFE bureau, saying the trial was not approved by SAFE after media coverage, according to Outlook Oriental Weekly, owned by the state-run Xinhua News Agency.

Pets and social mood

Sleeping next to pets could be harmful, study says

There's plague (yes, bubonic plague, i.e. the Black Death); chagas disease, which can cause life-threatening heart and digestive system disorders; and cat-scratch disease, which can also come from being licked by infected cats.

Though many people love getting licked or planting a kiss on a pet, it may not be such a good idea, the authors say.

The researchers found several cases of various infections transmitted this way.

"The risk is rare, but when it occurs it can be very nasty, and especially in immuno-compromised people and the very young," says Chomel, who specializes in zoonoses, the study of disease transmission between animals and humans.

Larry Kornegay, president of the American Veterinary Medical Association, called the article "pretty balanced." These cases are "uncommon if not rare," but even so, pet owners should use common sense to reduce risks.

Outbreaks tend to occur during declines in social mood, but there's no plague outbreak. Just negative social mood drawing attention to a study on the disease risk of pets.

Social mood and technology

Society turns against technology during declining social mood. This story below is about a backlash against social networking technology and many peoples' constant use of mobile devices. The social mood perspective on the story is not that the negatives are a creation of declining social mood, it's simply that people are more likely to look at the negatives, rather than the positives, during declining social mood. Nothing has changed with the technology itself, the same negatives and positives were always there, what has changed is the mood of the people using the technology. And we have declining social mood for a reason, to balance out a period of positive social mood when the negatives were downplayed. This goes for technology, culture, politics, business, debt levels, etc.

Social networking under fresh attack as tide of cyber-scepticism sweeps US

But Turkle's book is far from the only work of its kind. An intellectual backlash in America is calling for a rejection of some of the values and methods of modern communications. "It is a huge backlash. The different kinds of communication that people are using have become something that scares people," said Professor William Kist, an education expert at Kent State University, Ohio.

The list of attacks on social media is a long one and comes from all corners of academia and popular culture. A recent bestseller in the US, The Shallows by Nicholas Carr, suggested that use of the internet was altering the way we think to make us less capable of digesting large and complex amounts of information, such as books and magazine articles. The book was based on an essay that Carr wrote in the Atlantic magazine. It was just as emphatic and was headlined: Is Google Making Us Stupid?

Another strand of thought in the field of cyber-scepticism is found in The Net Delusion, by Evgeny Morozov. He argues that social media has bred a generation of "slacktivists". It has made people lazy and enshrined the illusion that clicking a mouse is a form of activism equal to real world donations of money and time.

Other books include The Dumbest Generation by Emory University professor Mark Bauerlein – in which he claims "the intellectual future of the US looks dim"– and We Have Met the Enemy by Daniel Akst, which describes the problems of self-control in the modern world, of which the proliferation of communication tools is a key component.

The backlash has crossed the Atlantic. In Cyburbia, published in Britain last year, James Harkin surveyed the modern technological world and found some dangerous possibilities.

Euro speculators go long

The speculators' net short position in euros evaporated last week and accompanied rapid advance in the euro.

Hugh Hendry on the euro and interest rates

I believe the European bureaucrats have badly misjudged the public mood. Perhaps they are too closely aligned with the plutocracy of the financial and banking sector. Contrast the mood of the ordinary household with that of my rich hedge fund friends. Today the average European long/short fund is running its most bullish risk exposure in many years and is feeling ebullient regarding the rising tide of corporate profitability as businesses pare back employment levels. My grumble is that I suspect the omnipotent powers of my peers’ central bankers might be found wanting just when they are needed most.

For the shadow of policy error lurks once more. The European Central Bank’s president even proclaimed his satisfaction with his bank’s decision to raise rates back in the cauldron month of July 2008. I salute him for his willingness to subject the bank’s decisions to open scrutiny. But tightening monetary policy amid the deepest economic crisis of the past 50 years was perhaps not his institution’s finest hour. And with headline inflation rates being boosted by relative price rises in the commodity sector, as Chinese policymakers continue to plug 10 per cent into their GDP calculators, another poorly-timed rise in European rates cannot be so easily dismissed.

Europe risks getting it wrong again on rate rises

Chinese home prices tumbling?

Is this just bad data? This chart is showing a steep drop in prices.

Housing Prices on the Decline?

Andy Xie: Euro to replace U.S. dollar

Between a Crutch and Walking Stick

A long and good article, but here's the conclusion:

Supporting the euro is in China and Japan's best interest. They hold more dollar assets than anyone else and have a strong vested interest to safeguard the dollar's value. The only viable alternative to the dollar is the euro. If it is discredited, the Fed will be emboldened to print more money.

Down the road, China and Japan should work with OPEC countries to prepare for the post-dollar world. The three hold most dollar assets in the world. If they don't prepare an alternative, they are always at the Fed's mercy. When the Fed stimulates the economy by printing money, it dilutes their wealth. If they prepare a credible alternative, the Fed will have to think twice before it starts the printing press.

The key step for replacing the dollar is for oil to be priced in a different currency. For now, the euro is the only possibility. China, Japan, and the OPEC should begin discussions on trading oil in euros. Oil is mostly traded in London and New York now. Euro-denominated trading systems could be created in Dubai, Shanghai and Tokyo.

It's time to prepare for the post-dollar world.

What happens during inflation

A supply disruption can happen anytime, but when it happens during inflation, the results can be spectacular.

The recent disappearance of a popular tampon brand is really cramping the style of city women.

Drugstore shelves have been mysteriously empty of o.b. nonapplicator tampons since late fall, leaving the feminine hygiene product's devotees puzzled and peeved.

The popular product is in such short supply that eBay users are bidding up to $76 for three packs, which usually sell for just $8.79 a pack.

Women searching far and wide for o.b. tampons after they mysteriously disappear from store shelves

Another source says prices hit $130 a box, or $3 per tampon.

An explanation comes from an article in the New York Times: Can Johnson & Johnson Get Its Act Together?

In brief, the McNeil Consumer Healthcare division has had quality control problems and was forced to recall all manner of products. During a period of serious inflation, shortages occur due to hoarding and more importantly, distortions in the economy caused by misleading price signals. Should inflation become a serious problem, this tampon story will be repeated over and over with various products.

Lingerie signaling a rise in social mood?

Articles on fashion often have a socionomic component, sometimes just a throwaway line, because the theory about hemlines and stock prices is widespread. More importantly, the designers are aware of cycles int he industry and they see connections to past periods of social mood. They may not always nail the right time period, but they do have a good sense of the mood...if they're successful.

Women's lingerie makers say 50s-styles for the fuller figure are back in vogue

"What were the 50s? It was a post-war period," explains Caroline le Grelle, a fashion consultant for Eurovet, organisers of the lingerie trade fair, which opens on Saturday in Paris.

"Women had gone through a period of hardship. They wanted to enjoy themselves. We haven't experienced a war this time - but we have come through an economic crisis. It's the same scheme of things. We want to sweep it away and have a ball. Hence this return to retro."

So it's out with minimalist thongs and push-up demi-bonnet bras, and in with bullet bras and high-waisted briefs, particularly in black, which Le Grelle calls "the colour of reference for seduction".

"We want to sweep it away and have a ball." However, is it the 1950s post-war boom, or the 1933-1937 rebound from the first leg of the depression?

Rise of the Hans

Tribalism is making a comeback, or how declining social mood will manifest itself in the unwinding of global institutions.

RISE OF THE HANS

With China's new prominence in global affairs, the Han race, which constitutes 90 percent of the Chinese population, is suddenly the most dominant cohesive ethnic group in the world -- and it is seeking to remain that way through strategic alliances, aggressive trade policy, and attacks on racial minorities within the country's boundaries. The less tribally cohesive, more fragmented West is, meanwhile, losing out.

Almost 20 years ago, I wrote a book called Tribes that sought to trace the role of ethnicity, race, and religion in economic and geopolitical affairs. At the time, there was some skepticism about the continuing influence of ethnicity; some considered the work, frankly, regressive and racist. Now, however, my thesis from 1992 has really come to fruition. We are living in the age of tribes -- and China is just the start.

That's the introduction to the article. Here are some of the meatier portions:

This represents a major shift in the identity of the Chinese tribe, a combination of political and economic power with a very homogeneous worldview. The best way to explain China's economic and foreign policy is most accurately seen as a tribal expression of what Friedrich Nietzsche called a "will to power." Essentially, the Han has become a tribal superpower that treats other groups -- from China's non-Han minority to much of the rest of the world -- as a vast semi-colonial periphery. And with its growing economic and military might, Han China may soon be able to impose its will on some of these "lesser" cultures, should it desire.

China may be setting the underlying tone of our new world, but many other groups have responded in similarly tribal fashion. Like China, Russia has abandoned internationalist communism for a kind of Leninist state-capitalism with racial overtones, as evident both in the increasingly rough treatments of darker-skinned ethnic minorities such as Chechens and an aggressive ethnic Russian retro-imperialism -- once disguised in socialist trappings -- toward "near abroad" countries like Georgia, Armenia, Ukraine, and Belarus.

And the impact of these changes are already being felt:

Tribalism will also threaten the efficacy of international organizations, which tend to assume common interests between groups. Instead we have to think of future international cooperation in more traditional terms, balancing distinct sets of tribal interest. As tribes continue to pursue their own interests ever more zealously, the idealistic rhetoric of multinational organizations will become ever more risible. The way China and other developing countries snarled up the Copenhagen climate conference reflects this shift.

Niall Ferguson on U.S.; Jim Rogers on China

China wants more hot money

As long as it goes into the stock market.

Mini-QFII scheme set for trial run to bolster troubled A-share market

fund manager informed about the progress of the so-called mini-QFII (qualified foreign institutional investor) scheme - which allows domestic brokerages and fund houses to raise offshore yuan to invest in mainland bonds and stocks - said about 10 applicants were in discussions with authorities on the launch of the products.


An official with the China Securities Regulatory Commission said a trial programme would be launched soon because the top regulators were determined to attract fresh capital abroad to bolster the troubled A-share market. Beijing had expected to start a trial run of the mini-QFII programme before the end of last year, but the liberalisation was delayed as regulators spent more time working out supervision of the capital flow and the selection of custodian banks.

The overseas subsidiaries of mainland brokerages and fund houses such as Harvest Fund Management would raise yuan funds in Hong Kong and invest 80 per cent of them in mainland bonds, the fund manager said. The remainder could be used to buy locally listed stocks.

Several foreign institutions who have joint-venture brokerages or fund management companies on the mainland will also receive a green light to participate in the mini-QFII programme. The mini-QFII scheme was designed to bolster the yuan's internationalisation as Beijing created an investment option for offshore yuan.

If investors can participate in the A-share market, it makes the yuan more attractive to hold overseas. This is more of a step towards opening the capital account though, and the other side of the reform is the trial program in Wenzhou that allows capital to leave China.

Wage hikes coming to Guangdong

Guangdong pay pledge to drive out HK factories

The chairman of the Hong Kong Small and Medium Enterprises Association, Danny Lau Tat-pong, said Guangdong's wages would jump between 25 per cent and 30 per cent this year as a combined result of worker shortages, the need to retrain people, yuan appreciation and more requirements for workers' social welfare and insurance.

"We have even been subsidising the workers' canteen more because meat and vegetables are getting more expensive," said Lau, who runs a curtain-wall plant in Dongguan. "Factories have either to upgrade or move out of the province."

The other factor expected to impact on the future of Guangdong's exports is a stronger yuan, which Lau expected would appreciate by 5 per cent this year.

He said the number of Hong Kong factories would dwindle sharply in coming months, citing government estimate that less than 40,000 Hong Kong-owned factories now operate in the province compared with roughly 56,000 at the end of 2009.

"Some will be forced out of the business, some will be sold and some will be relocated to remoter parts of the country or even overseas."

One company is already moving production to Bangladesh; I'm sure Vietnam will also capture some business leaving China.

Now Egypt slides

Egypt Stocks Drop Most in Six Weeks on Concern Tunisia Unrest May Spread

Egypt, recently the scene of anti-Christian riots and bombings (less reported were the Muslims who, in the wake of the intial violence, acted as human shields surrounding churches to protect Christian worshipers), is now feeling pressure from Tunisia.