GOOD NEWS: TURKEY, YAHOO, SWF
1. Iraq, Turkey to Jointly Combat PKK. What does that mean? That Turkey is not about to invade Iraq for the purpose of clearing out PKK bases. How come? Erdogan's election victory enables him to frustrate the nationalist (and secularist) backed military's wishes for such an incursion. While it is difficult to decipher the long term consequences of his Islamist party victory, its immediate consequences are beneficial.
2. First came the law suit and now truly honorable Congressman Tom Lantos is going to demand Yahoo come clean on its despicable role in helping China jail Shi Tao following the emergence of some new documentation:
“This new documentation suggests that Yahoo’s Beijing office was at least aware of the general nature of the crime being investigated in the Shi Tao case even if it was unaware of the specific circumstances or the name of the individual involved,” said Joshua Rosenzweig of the Dui Hua Foundation, a human-rights organization. “One does not have to be an expert in Chinese law to know that ‘state secrets’ charges have often been used to punish political dissent in China. We must remember that before Shi Tao there were three other Chinese dissidents about whom Chinese police obtained user information from Yahoo in Beijing. If we assume that law-enforcement agencies investigating these cases followed the same procedures to obtain that information, three other notices would have been provided specifying investigations into subversion or incitement–crimes of a more unambiguous political nature.”
A scathing indictment and one that may mean Yahoo is finally called to answer for its conduct in China. “It is bad enough that a wealthy American company would willingly supply Chinese police the means to hunt a man down for shedding light on repression in China,” said Tom Lantos, the Democratic chairman of the House Foreign Affairs Committee. “Covering up such a despicable practice when Congress seeks an explanation is a serious offense. For a firm engaged in the information industry, Yahoo sure has a lot of secrecy to answer for. We expect to learn the truth, and to hold the company to account."
3. There is some progress on tackling State Capitalism or Sovereign Wealth Funds (SWF) though not thanks to our Fed Chairman, Ben Bernanke who is either incapable of distinguishing private enterprise and mega funds controlled by unsavory governments (e.g. Wahabi Saudi Arabia or Communist China) or does not wish to do so despite Chinese hints they may try to sink the Dollar.
Luckily, while MSM remains silent, Western governments are beginning to act. EU, Germany and Canada are considering legislation and the US has asked the IMF and the World Bank to come up with some appropriate rules on the matter. It could have done, better and it is a start. The same can be said of Jeffrey Garten's suggestions in today's FT:
Among the principles that Washington and Brussels ought to consider are these:
Transparency is the key. In order to be treated as normal investors, SWFs should be obliged to publish internationally audited reports on their entire portfolios at least twice a year. They should disclose the precise mechanisms by which they themselves are regulated in their home countries - including the specific individuals charged with that oversight. From the SWF disclosures we should know the fund's investment philosophy, its corporate governance process and its risk management techniques.
Reciprocity should be required. If western host countries are going to treat SWFs like any other market participant, the economy of the SWF's home country must be as open as the country in which the SWF aspires to invest. In addition, if a sovereign fund was established because of currency manipulation in the host country that led to excess reserve creation (China), or if it is the result of strident resource nationalism (Russia), or if it is due to monopolistic pricing practices (Saudi Arabia), then consultations should be initiated between the two governments to reduce these policy distortions.
Ownership guidelines are essential. SWFs should not own more than 20 per cent of any company in the US or Europe, without a decision of the host government to go higher. The underlying premise must be that SWFs are political entities and should be treated as such.
Also worth reading is William Pesek: Thatcherism Is Out as China Vindicates Galbraith
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