Will China’s Trusts Get ‘TIC’ed?

Sara Hsu

As China’s economy rapidly changes, we ask: Will the trust companies that currently operate in the shadows undergo the dramatic restructuring that the country’s Trust and Investment Companies (TICs) have experienced in the past twenty years—will they get ‘TIC’ed?

China’s trust companies are wily institutions. They currently hold over nine trillion renminbi (RMB) in assets under management, and they are quite apt at skirting regulation. Before 2010, trusts gladly removed risky bank loans from bank balance sheets and repackaged them as securities for banks to sell to customers. When this practice was banned, trusts continued to extend loans themselves or through third parties and sell them to banks to bundle as wealth management products. Many borrowers are companies that are too risky to qualify for a bank loan—not a good sign.

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Hypocrisy takes center stage at WTO meeting

Timothy A. Wise

Re-published from the Global Post.

BALI, Indonesia — A tense and acrimonious four-day standoff ended Saturday morning at the World Trade Organization meeting in Bali.

A last-minute objection by Cuba and three Latin American allies held up the agreement Friday night, with Cuba objecting to the hypocrisy of a “trade facilitation” agreement – one part of the so-called Bali package – that ignored the United States’ discriminatory treatment of the island nation under the US trade embargo.

Overnight, text was added to reflect Cuba’s concern even if it did nothing to resolve the issue. Call it the story of the WTO.

Leading up to this week’s meeting, the US and other rich countries had attempted to declare India’s food security program in violation of the WTO’s archaic and biased rules and sought to discipline the program as “trade distorting.”

India and other developing countries fended off the challenge to these programs, which support small farmers and help feed the hungry. But the final agreement is no green light.

Countries considering such programs would not be protected by the “peace clause” that will shield India and some others for the next four years. And onerous reporting requirements put the onus on the developing country to prove that its stock-holding program is not “trade distorting.”

In return for the modest protections for food security programs, and a vague package of reforms for the least developed countries, developing countries also agreed here to a trade facilitation package that could benefit some of them but might demand more than they can give.

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Why the WTO Needs a “Hypocrisy Clause”

Timothy A. Wise

A top ten list of hypocritical US statements on India’s food security program

I ended a recent article on the US government’s objections to the food security proposal of India and other developing countries at the World Trade Organization meetings in Bali with the provocative statement that what the WTO needs is not a “Peace Clause” – a four-year cease fire on WTO suits – but a “Hypocrisy Clause” – an agreement to reduce or eliminate the trade-distorting hypocrisy that is preventing a Bali agreement. I called for immediate reductions by the “most developed hypocrites.”

In a subsequent talk, I was asked to elaborate. I offered my “top ten” examples of the US government’s most trade-distorting hypocrisy:

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"Loss & Damage" beyond charity, into solidarity, and suffused with Climate Justice?

Patrick Bond

An important article about one facet of the Warsaw Conference of Polluters 19, “Loss & Damage”, was published last week in The Star (Malasia) by the very highly-regarded political-ecologist/economist [and regular TCB blogger] Martin Khor (New climate deal on loss and damage). As always, the South Centre and Third World Network provide invaluable information, and Martin has taught me incalculable amounts since we first met in Johannesburg in 1990.

Good reading. Yet from the outset I must propose, with full respect, that Martin is absolutely wrong here: “There were two other pieces of good news – the adoption of a programme for reducing emissions from forest-related activities (known as REDD-plus) and pledges from developed countries up to US$100 million for the adaptation fund whose resources had dried up after the drastic fall in carbon prices.”

The March 2013 World Social Forum in Tunis witnessed the establishment of a No-REDD-in-Africa network, which was extended at a conference in Maputo hosted by Justica Ambiental in September: http://www.redd-monitor.org/2013/09/25/no-redd-in-africa-network-maputo-statement-redd-does-not-reduce-emissions-redd-does-not-halt-deforestation/. The activists there, and in many other countries suffering REDD attacks, will be surprised to hear that UN confirmation of REDD+ is ‘good news’.

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“Loss & Damage” beyond charity, into solidarity, and suffused with Climate Justice?

Patrick Bond

An important article about one facet of the Warsaw Conference of Polluters 19, “Loss & Damage”, was published last week in The Star (Malasia) by the very highly-regarded political-ecologist/economist [and regular TCB blogger] Martin Khor (New climate deal on loss and damage). As always, the South Centre and Third World Network provide invaluable information, and Martin has taught me incalculable amounts since we first met in Johannesburg in 1990.

Good reading. Yet from the outset I must propose, with full respect, that Martin is absolutely wrong here: “There were two other pieces of good news – the adoption of a programme for reducing emissions from forest-related activities (known as REDD-plus) and pledges from developed countries up to US$100 million for the adaptation fund whose resources had dried up after the drastic fall in carbon prices.”

The March 2013 World Social Forum in Tunis witnessed the establishment of a No-REDD-in-Africa network, which was extended at a conference in Maputo hosted by Justica Ambiental in September: http://www.redd-monitor.org/2013/09/25/no-redd-in-africa-network-maputo-statement-redd-does-not-reduce-emissions-redd-does-not-halt-deforestation/. The activists there, and in many other countries suffering REDD attacks, will be surprised to hear that UN confirmation of REDD+ is ‘good news’.

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U.S. Unprepared To Limit Swings in Food Prices

Kevin Gallagher

Cross-posted at The Globalist.

The United States has left the world’s poor at the global trade negotiating table.

After more than a decade in gridlock, world trade negotiators had high hopes of closing a final deal at the World Trade Organization (WTO), which is to hold a ministerial in Bali, Indonesia, Dec. 6-13.

But the U.S. is not prepared to let developing countries protect their poor from the harmful swings in world food prices. That is all the more unfortunate as these price swings are increasingly caused by U.S. policy in the first place.

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The Big Casino

Doug Orr, Guest Blogger

Speculators may do no harm as bubbles on a steady stream of enterprise. But the position is serious when enterprise becomes the bubble on a whirlpool of speculation. When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done. — John Maynard Keynes (1936)

Every night on the evening news we hear something like this: “In economic news, the Dow is up by 1.5%, the S&P is up by 1.2% and the NASDAQ is down by 0.3%, based on ….” Reporting these numbers so prominently and giving a supposed link to the events of the day gives the impression that the stock market plays a central role in moving the economy forward and that everyone has a stake in these daily changes. In fact, the movement of these stock indices on a day-to-day basis has almost nothing to do with the actual economy and, except in times of economic crisis, the stock market has almost no impact on the lives of most Americans. Fewer than half of American families own a single share of stock, and only about a third own shares totaling more than $5000. The stock market is the realm of the elite, and for the past several decades has had a negative impact on the real economy.

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The Eurozone Balanced Budget Disaster

Philip Arestis and Malcolm Sawyer

In the immediate aftermath of the financial crisis, most European governments allowed the automatic stabilisers to kick in and implemented some mild discretionary measures, despite the strictures of the Stability and Growth Pact (SGP). But it was not long before the siren calls for “fiscal consolidation” arose, spurred on by spurious claims of “expansionary fiscal consolidation” and the now discredited claims that debt ratios threatened the economy. This has been followed by claims that it was failures to constrain budget deficits in the mid 2000s, which were to blame for the debt crisis and which placed limits on the ability of governments to respond to the Great Recession. Within the eurozone, fingers were pointed at the failures of the SGP, which had been intended to keep national budget deficits below 3% of GDP at all times, to have budgets which balanced over the business cycle, and to keep debt-to-GDP ratios below 60%. In the years 2002 to 2007, budget deficits averaged around 2% of GDP, the 3% limit was breached on numerous occasions, and, even in 2007, seven countries (of the then 12 members) had debt ratios of over 60%.

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Future of Public Climate Finance: What Should Happen to the Climate Investment Funds?

Dario Kenner, Guest Blogger

As storms like Typhoon Haiyan shockingly reminded us, developing countries urgently need climate finance. As defined by the UN, this is the transfer of public funds from developed to developing countries to support them in reducing greenhouse gas emissions and adapt to the impact of climate change. But much of this money does not look like it is going to arrive anytime soon because the main global mechanism to manage and transfer climate finance, the Green Climate Fund (GCF), only has $7.5 million deposited in its accounts. Established at the 2010 Cancun climate change summit, the GCF is supposed to be operational from 2014 and could channel $100 billion a year from 2020. To the dismay of developing countries no major new pledges (unless you count $45 million from Sweden) were made by developed countries to the GCF at the UN climate change negotiations that ended in Poland last week.

In the GCF’s absence, one of the main mechanisms to distribute public climate finance continues to be the Climate Investment Funds (CIFs), which has deposits of $6 billion. This is for investment plans in 48 developing countries, including up to 100 projects with a focus on clean technology, resilience to climate change, reducing deforestation, and renewable energy. Housed at the World Bank, the CIFs transfer public climate finance from 14 developed countries through multilateral development banks, such as the Inter-American Development Bank and the Asian Development Bank.

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Typhoon Haiyun and a Global Strategy for Protecting Coastal Populations

Edward Barbier

Typhoon Haiyun has killed more than 4,400 people in the Philippines and displaced at least 900,000. Around 12 million Filipinos have been affected by the consequences of the storm, which is one of the deadliest coastal disasters on record.

Given the scale and frequency of recent coastal disasters—Typhoon Haiyun, Hurricanes Sandy, Katrina, and Rita, the Fukushima and Indian Ocean Tsunamis—it is time to develop a global strategy for protecting coastal populations. There should be two elements to this strategy: a short-run emergency response and investments in long-term global adaptation.

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