Economist, Nov 23, 2013

choi

(1) Special Report : America's Foreign Policy
(a) American primacy  | If I Ruled the World. Being in charge is hard work, but it has the perks.

My comment: There is no need to read the text.

(b) China  | Keeping Watch. Economic success has given China greater weight, but not nearly enough to tip the balance.

Quote:

“With a combination of submarines, missiles, space and cyber-weapons, China hopes to thwart America’s arsenal of aircraft-carriers and foreign bases.
This is complemented by China’s diplomatic rapprochement with Russia, whose president, Vladimir Putin, chafes against American primacy and the values that come with it. He is bent on restoring Russia’s international role.

"Commerce itself is no guarantee of peace: a century ago Europe took to the trenches even though Britain was Germany's largest export market.

"as Bruce Jones, an American academic, observes in a forthcoming book, its [China's] economy depends on oil imports through the straits of Hormuz and Malacca. Both are under American control. One answer would be for China to build a blue-water navy. But that, too, is a long way off.

"In Russia, China has a useful foil for frustrating America, but not for challenging it. The Russian economy does well when energy prices are rising, but they have already increased fivefold in the past 15 years and are unlikely to double and redouble again. In future Mr Putin is likely to be short of money. He is also plagued by Islamism in the Caucasus. Russia is a discontented and declining power—’like France pining for Napoleonic glory,’ says Mr Russell Mead, ‘except bigger, uglier, meaner.’  If China really wanted to challenge America, Russia would probably take fright. For now, they vote together in the UN Security Council and sign energy deals to develop eastern Siberia together. But, observes Fiona Hill of the Brookings Institution in Washington, there are limits to how far Mr Putin will make trouble at the UN. He does not want to drive diplomacy away from the Security Council, because that is the forum in which Russia holds most power. In addition, the Sino-Russian border is an abiding source of tension: heavily populated on the Chinese side, empty on the resource-rich Russian side. Mr Putin has already seen Central Asia drift towards China. He and his successors are bound to fear Chinese designs on Russia’s far east.

choi

(2) Regional history  | The Politics of Statues; China helps South Korea honour the assassin of a Japanese colonial official.

Quote:

'The most overlooked development in north-east Asia is the rapid strengthening of China-South Korea relations,' says John Delury, a historian at Yonsei University in Seoul. In October, Mr Xi met Ms Park [Geun-hye, S Korea;s president,] again [after she called upon Xi last June in China, with a request for statue], in Indonesia, and urged that the two move forward on a bilateral free-trade agreement.

"A [Japanese] government spokesman said the move to honour Ahn with a statue in China would not help Japan- South Korea relations. But that seems to have been precisely the idea [for Park].

My comment: There is no need to read the rest.

choi

(3) Reincarnation at Nokia  | Planning the Next Bounceback. After the sale of its devices division to Microsoft, what was once the world’s biggest mobile-phone maker is reinventing itself. Again.
http://www.economist.com/news/bu ... once-worlds-biggest

Quote:

" When the deal [Nokia's selling its mobile phone division to Microsoft] is sealed early in 2014, Nokia, once the world’s biggest maker of mobile phones, and still its second-biggest [but not for smartphones], will be out of the business. Nokia has reinvented itself before. It began in pulp, in 1865. It switched into power generation, stretched into rubber goods and cables, and tuned in to televisions that in the 1980s were among Europe’s best sellers. But its consumer-electronics division fizzled, made deep losses and was sold, as were rubber and cables, in the 1990s. Mobile phones were Nokia’s future then. Soon they will be its past

"The next incarnation of Nokia ["Nokia Solutions and Networks (NSN), which sells equipment, software and services to telecoms operators in competition with" those named in the pie charts], though much shrunken after parting company with its lossmaking devices division, will be no minnow.

"The carrier-networks industry has already undergone painful consolidation. There may be more. Alcatel-Lucent, the product of a Franco-American merger in 2006, has consistently lost money. * * * If Alcatel-Lucent becomes prey, NSN could devour at least part of it. Pierre Ferragu, an analyst at Sanford C Bernstein, reckons that Ericsson and Alcatel-Lucent each have about 40% of the American wireless-infrastructure market, making the Swedes improbable buyers [Ericsson is based in Stockholm, Sweden; improbable because US Department of Justice willblock it out of antitrust concerns] . Huawei is frozen out of American networks on political grounds. So Mr Ferragu thinks a sale to NSN is 'quite likely,' but he considers it likelier that Alcatel-Lucent will survive for some years.

My comment:
(a) There is no need to read the rest.
(b) The pie chart that comes with the text:

"Getting Connected
Worldwide mobile-infrastructure sales*
Market share Jan-Jun 2013 %

Total: $201BN
Ericsson 33.4[%]
Huawei 17.6
Nokia Solutions and Networks 16.5
Alcatel-Lucent 11.2
ZTE 7.5
Others 13.8

Source: Infonetics Research                              *2G, 3G and 4G networks"
(c) If NSN should buys Alcatel-Lucent, Huawei (currently No 2) will become No 3.

choi

(4) German financial habits | Under the Mattress; Germans are avid savers, but they do not like to invest.
http://www.economist.com/news/fi ... vest-under-mattress

Quote: "AT THE beginning of 1923 the German mark stood at 7,260 to the dollar. By October, hyperinflation had pushed that rate to 65 billion. Fixed incomes and savings became worthless. But one readily available investment retained its value. According to Frederick Taylor, the author of a new history of the period, shares in German firms, by and large, kept pace with the inflation, protecting from ruin the lucky few who had invested in them. Ninety years later it is dangerously low inflation that threatens Europe. Yet one thing has not changed: most Germans still do not invest in local firms. Whereas over half of Americans own equities in some form, only 15% of Germans own shares directly, while a partly overlapping 21% own mutual funds. The omission is all the more striking since Germany’s main share index, the DAX, is at a record high and interest rates are at record lows. From the bankruptcy of Lehman Brothers in 2008 to the end of October 2013, the DAX has risen by 42%, and the MDAX (an index of smaller firms) has risen by 93%. Ten-year German-government bonds would have returned 31% over the same period, and corporate bonds 29%. Yet Germans still prefer to put their money in safe-seeming but far less lucrative savings accounts. The most common sort, the Sparbücher, earned a mere 3.1% over the past five years.

My comment: There is no need to read the rest.

choi

(5) Asian shipyards  | The Deeper the Better. Korean and Singaporean yards have adapted well to China’s challenge.
http://www.economist.com/news/bu ... lenge-deeper-better

Quote:

"It is true that China now gets more orders in terms of gross tonnage, but in the year to July 2013 South Korea produced 76.2% more than China by dollar value.

"The Koreans, and their Singaporean counterparts, are making money in a highly competitive market by focusing on complex vessels like Viking (which cost about $650m), often for the offshore market. China has failed to break out of the basic bulk-carrier market, where ships may cost as little as $30m. As a result it is China’s yards that are struggling, confined to a part of the market that is plagued by overcapacity, whereas Korean and Singaporean order books are almost full. Maersk reckons the market for offshore rigs and drill-ships is now worth $44 billion a year.

"China’s yards have focused instead on offering customers low prices and irresistible financing deals. Sometimes they demand as little as 10% of the cost on signing a contract, leaving the other 90% until delivery.

"Singapore’s two main yards, Keppel and SembCorp Marine, have also invested heavily in quality and efficiency. They specialise more in deep-sea rigs than in drill-ships and carriers.

Note:
(a) "Scafell Pike, England’s tallest mountain"

Scafell Pike
http://en.wikipedia.org/wiki/Scafell_Pike
(978 metres (3,209 ft))
(b) "Commissioned by a Danish shipping giant, Maersk, the first one has just been christened: Viking [to be used by by Exxon Mobil], appropriately enough. Described by a Maersk engineer as 'giant Black & Deckers,' these ships ['ultra deepwater' drill-ships] are designed for work in the deepest of waters, such as in the Gulf of Mexico. * * * The centrepiece of the vessel is the derrick, which is over 60 metres high. But the most advanced bits of kit are probably the six thruster engines. The engineers claim that they can keep the ship steady and drilling even in waves of up to 9 metres."
(i) drillship
http://en.wikipedia.org/wiki/Drillship
(graphic legend: Comparison of deepwater semi-submersible and drillship)
(ii) Black & Decker
http://en.wikipedia.org/wiki/Black_%26_Decker
(an American manufacturer of power tools; founded in 1910 by S Duncan Black and Alonzo G Decker as a small machine shop in Baltimore)
(iii) azimuth thruster
http://en.wikipedia.org/wiki/Azimuth_thruster
(can be rotated in any horizontal direction, making a rudder unnecessary)

(b) The expensive outfits in deep-water drilling make a start-up in that field impossible.
(c) Keppel Corporation
http://en.wikipedia.org/wiki/Keppel_Corporation

Quote:

“The name of the company Keppel was derived from a British ship captain, Captain Henry Keppel, who discovered a natural, deepwater harbour (the Keppel Harbour) in 1848.

“In 1968, Temasek Holdings founded Keppel Shipyard when Keppel Harbour was taken over from the British Royal Navy after it withdrew from the island.

(d) Corporation Milestones. SembCorp Marine, undated
http://www.sembcorpmarine.com.sg ... orporate-milestones
(founded in 1963 as a joint venture between Singaporean government and a Japanese company 石川島播磨重工業株式会社)

choi

(6) Napoleon and war  |  Blood, Sweat and Tears. How the Napoleonic wars made Britain.
http://www.economist.com/news/bo ... ood-sweat-and-tears
(book review on Roger Knight, Britain Against Napoleon. The Organisation of Victory, 1793-1815. Allen Lane, 2013)

Quote:

“THE role of Britain in the world was transformed by the Napoleonic conflict. By the time France declared war in 1793 the British empire was in decline; it had lost its North American colonies a decade earlier. But after Napoleon’s defeat at the Battle of Waterloo in 1815 Britain emerged as the world’s pre-eminent superpower.

“If British industry and shipping had been unable to supply the nation’s and the allies’ armed forces, the war could not have been won. * * * Financiers such as Nathan Rothschild helped fund the national debt, which swelled by £578m (about £36 billion in today’s money) to over 200% of GDP by the end of the war. Britain paid its allies £66m, chiefly Austria and Russia, without which they would have been unable to stay in the war.

“Mr Knight concludes that the conflict between Britain and France was a ‘total’ war.

Note:
(a) American Revolutionary War (1775–1783) ended in Peace of Paris (1783).
(b) Britain’s “production costs were cut, thanks to innovations in manufacturing. Factories that were opened in 1807 to make sailing blocks for the Royal Navy are often cited as the world’s first standardised mass-production line.

block (sailing)
http://en.wikipedia.org/wiki/Block_(sailing)