Category Archives: Lands

Germany won’t spare Greek pain – it has an interest in breaking us

Yanis Varoufakis writes: Greece’s financial drama has dominated the headlines for five years for one reason: the stubborn refusal of our creditors to offer essential debt relief. Why, against common sense, against the IMF’s verdict and against the everyday practices of bankers facing stressed debtors, do they resist a debt restructure? The answer cannot be found in economics because it resides deep in Europe’s labyrinthine politics.

In 2010, the Greek state became insolvent. Two options consistent with continuing membership of the eurozone presented themselves: the sensible one, that any decent banker would recommend – restructuring the debt and reforming the economy; and the toxic option – extending new loans to a bankrupt entity while pretending that it remains solvent.

Official Europe chose the second option, putting the bailing out of French and German banks exposed to Greek public debt above Greece’s socioeconomic viability. A debt restructure would have implied losses for the bankers on their Greek debt holdings.Keen to avoid confessing to parliaments that taxpayers would have to pay again for the banks by means of unsustainable new loans, EU officials presented the Greek state’s insolvency as a problem of illiquidity, and justified the “bailout” as a case of “solidarity” with the Greeks.

To frame the cynical transfer of irretrievable private losses on to the shoulders of taxpayers as an exercise in “tough love”, record austerity was imposed on Greece, whose national income, in turn – from which new and old debts had to be repaid – diminished by more than a quarter. It takes the mathematical expertise of a smart eight-year-old to know that this process could not end well. [Continue reading…]

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Unless the EU can now save Greece, it will not be able to save itself

Jeffrey D. Sachs writes: The Greek catastrophe commands the world’s attention for two reasons. First, we are deeply distressed to watch an economy collapse before our eyes, with bread lines and bank queues not seen since the Great Depression. Second, we are appalled by the failure of countless leaders and institutions – national politicians, the European Commission, the International Monetary Fund, and the European Central Bank – to avert a slow-motion train wreck that has played out over many years.

If this mismanagement continues, not only Greece but also European unity will be fatally undermined. To save both Greece and Europe, the new bailout package must include two big things not yet agreed.

First, Greece’s banks must be reopened without delay. The ECB’s decision last week to withhold credit to the country’s banking system, and thereby to shutter the banks, was both inept and catastrophic. That decision, forced by the ECB’s highly politicized Executive Board, will be studied – and scorned – by historians for years to come. By closing the Greek banks, the ECB effectively shut down the entire economy (no economy above subsistence level, after all, can survive without a payments system). The ECB must reverse its decision immediately, because otherwise the banks themselves would very soon become unsalvageable.

Second, deep debt relief must be part of the deal. The refusal of the rest of Europe, and especially Germany, to acknowledge Greece’s massive debt overhang has been the big lie of this crisis. Everyone has known the truth – that Greece can never service its current debt obligations in full – but nobody involved in the negotiations would say it. Greek officials have repeatedly tried to discuss the need to restructure the debt by slashing interest rates, extending maturities, and perhaps cutting the face value of the debt as well. Yet every attempt by Greece even to raise the issue was brutally rebuffed by its counterparties. [Continue reading…]

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Srebrenica revisited

Seema Jilani writes: On July 11, 1995, a Dutch­ contingent of United Nations peacekeepers ceded control of Srebrenica, leaving the town’s civilian population — swollen with thousands of Bosnian Muslim refugees — at the mercy of besieging Serb forces. Serb soldiers and paramilitary police officers systematically executed about 8,000 Muslim men and boys, dumping their bodies in mass graves, which were bulldozed to hide the evidence.

The images most people remember today — the skeletal prisoners behind barbed wire, awaiting death in concentration camps — are only a part of the genocide. This was the worst atrocity on European soil since World War II; the entire region is dotted with mass graves.

Less well known is the history of “The Column,” a group of about 15,000 Bosnian Muslims who tried to escape the executions by walking more than 60 miles northwest through thick forests toward the safe haven of Tuzla. The harrowed survivors who reached the town were emaciated and traumatized.

To honor the memory of those who died, and to highlight the lack of justice served on those who perpetrated war crimes, hundreds of survivors and supporters this week walked the route taken by The Column in reverse. Working with the photographer Laura Boushnak, I interviewed survivors and relatives of the victims. [Continue reading…]

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Unlikely targets in cross hairs as Russia aims to expose foreign influence

TheNew York Times reports: Dmitry Zimin, the telecommunications billionaire and benefactor of a foundation known as the Dynasty Fund, was not calling for revolution or election monitors. His efforts were elsewhere: awarding grants to young Russian researchers and financing high school science camps.

But after a monthlong battle to remove the foundation from a list of “foreign agents,” the Dynasty Fund’s board announced this past week that the organization would close. The foundation has given around $7 million annually for more than a decade to programs dedicated to the sciences.

Mr. Zimin became an unlikely casualty of Russia’s campaign to expose foreign influences that President Vladimir V. Putin has deemed threatening. While some targets have been predictable, Russia’s new foreign agents include an organization that supports the mothers of soldiers and Memorial, Russia’s oldest human rights organization, founded to research repression under the Soviet Union.

Even with anti-Western sentiment at a fever pitch, the labeling of Dynasty as a foreign agent struck Russian scientists as bizarre. Founded by Mr. Zimin in 2002, Dynasty sought to reinvigorate Russian science after a devastating decade of post-Soviet budget cuts.

“In short, this man gave two billion rubles of his own money and they decided to abuse him,” said Mikhail Gelfand, a Russian biologist who had taught courses for Dynasty. “Dynasty formed around itself a community of successful and respectable people. Apparently that was seen by the government as something suspicious and dangerous.”[Continue reading…]

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ISIS comes to Russia

The Daily Beast reports: At the same time that bombs rain down on the Islamic State, and it grapples with tactical setbacks in Syria and solidifying its hold in Iraq, ISIS continues to expand its brand, this time in the Caucasus. In June, one of the most important and respected rebels in the North Caucasus pledged loyalty to ISIS.

The defection of Amir Khamzat, commander of the Chechen Vilaiyat, [territorial-administrative units that roughly correspond with the regional republics], represents a large gain to the standing of ISIS and its expansion into Russia. A statement posted [to Twitter] on June 21 read: “We testify that all Mujahideen of the Caucasus — in the Velayats of Nokhchiycho [Chechnya], Dagestan, Galgaicho [Ingushetia] and KBK [Kabarda, Balkaria and Karachay] — are united in their decision and we do not have differences among ourselves.” This statement led ISIS on June 23 to embrace the pledges of loyalty and declared the creation of a new Vilaiyat under the control of Dagestani Amir Rustam Asilderov, also known as Abu Muhammad al-Kadarskii.

Estimates of the size of the insurgency are hard to come by, as Russian official statistics are notoriously unreliable, and the autonomous nature of the insurgency means local cells’ size can fluctuate with the seasons and a revolving door of committed recruits. Despite this, an estimated 249 militants were killed in 2014 alone, and some 5,816 civilians, security officials, and militants have been killed since 2010, according to the site Caucasus Knot, which tracks the conflict in the region. Additionally, Russian officials estimate some 2,200 Russians have gone to fight in Iraq and Syria, mostly from the North Caucasus. With the presence of ISIS established, those same recruits are more likely to stay local and fight in the Caucasus. [Continue reading…]

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The deadly consequences of mislabeling Syria’s revolutionaries

Labib Al Nahhas, head of foreign political relations for Ahrar al-Sham, writes: As has become obvious, the Obama administration’s response to the Syrian conflict is an abject failure. No clear strategy has been determined; the administration’s “red lines” have not been honored. Short-term, stopgap measures informed by the Iraq and Afghanistan experiences, along with the noise generated by a media fixated on the Islamic State, have taken priority over achievable, long-term goals. The result: a death toll commonly estimated at between 200,000 and 300,000 people (though it’s certainly higher), more than 11 million displaced and numerous cities in ruins.

Nowhere is this failure clearer than in the consequence of the misguided way that Syrian revolutionaries are labeled as either “moderate” or “extremist.”

In December, Secretary of State John F. Kerry stated that “Syrians should not have to choose between a tyrant and the terrorists.” There was, Kerry declared, a third option: “the moderate Syrian opposition who are fighting both extremists and [Syrian President Bashar al-]Assad every day.” Unfortunately, this commendable view has broken down because the United States has defined the term “moderate” in such a narrow and arbitrary fashion that it excludes the bulk of the mainstream opposition. [Continue reading…]

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Bombing and heavy fighting break Yemen truce

Reuters reports: Saudi-led air strikes and heavy shelling between warring factions shook several cities in Yemen on Saturday, residents said, violating a United Nations humanitarian truce which took effect just before midnight.

The U.N.-brokered pause in the fighting was meant to last a week to allow aid deliveries to the country’s 21 million people who have endured more than three months of bombing and civil war.

A coalition of Arab states has been bombing the Iranian-allied Houthi rebel movement – Yemen’s dominant force – since late March in a bid to restore to power President Abd-Rabbu Mansour Hadi, who has fled to Riyadh.

That coalition said on Saturday that the Yemeni government in exile had not asked it to pause, according to a news flash on Saudi-owned Arabiya TV. [Continue reading…]

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Libya parties sign deal without Tripoli government

Al Jazeera reports: Some of Libya’s warring factions have agreed on a framework for a peace deal following months of talks in Morocco, the United Nations says.

Representatives of municipal councils and the UN-backed government based in Tobruk initialled a draft deal stipulating a transitional period for the establishment of a democratic state in the country.

But a key player – the General National Congress (GNC), the legally installed government in Tripoli – and its allied Libya Dawn militia were not part of the agreement. [Continue reading…]

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The Chinese stock meltdown that makes the Greece saga look trivial

Bloomberg reports: By any standard, the selloff in Chinese stocks over the past month has been epic. Here’s a look at the turmoil by numbers.

The Shanghai Stock Exchange Composite Index has lost 28 percent since its peak on June 12, the worst selloff in two decades. About $3.9 trillion in market valuation has evaporated, more than the total annual output of Germany — the world’s fourth-largest economy — and 16 times Greece’s gross domestic product. The benchmark is still up 82 percent in the past year, the most among the world’s major markets.

As shares tumbled, companies rushed to apply for trading suspension. More than 1,400 companies stopped trading on mainland exchanges, locking sellers out of 50 percent of the market. The China Securities Regulatory Commission also banned major shareholders, corporate executives, and directors from selling stakes in listed companies for six months. [Continue reading…]

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Greece seeks $59.2 billion bailout as Tsipras bows to demands

Bloomberg reports: In an 11th-hour bid to stay in the euro, the government of Greek Prime Minister Alexis Tsipras offered to meet most of the demands made by creditors in exchange for a bailout of 53.5 billion euros ($59.4 billion).

European and U.S. equity-index futures jumped on Friday after the proposal was submitted to creditor institutions late on Thursday. The package of spending cuts, pension savings and tax increases almost mirrored that from creditors on June 26, which was rejected by Greek voters in a July 5 referendum. It will face its first hurdle in the Greek Parliament on Friday.

Though Tsipras ceded ground, he insists long-term debt needs to be made more manageable to allow Greece to recover from a crisis that has erased a quarter of its economy. He has a growing support base that includes the U.S., European Union President Donald Tusk and the International Monetary Fund. [Continue reading…]

Alex Andreou writes: This is my initial reaction to the deal proposal by Greece: it is more austerity -harsh austerity at that – and many of the measures are recessionary. Distribution of the burden seems to me fairer than before. If the upside is access to a significant stimulus package (front-loaded), a smoothing of the measures (back-loaded) and substantial restructuring of debt, to make it definitively viable, it will probably be seen as worth it. It is certainly capable of being sold as worth it.

Essentially, everyone managing to keep their position/perks/income in the context of an economy which is in the middle of a death spiral, is meaningless. If the economy begins to recover, then things which were unbearable, become bearable. Austerity becomes a background noise, rather than a preoccupation and a progressive government will be able to offset the damage. It is a delicate balance.

Market confidence is a strange creature. There is a lot of money sloshing around at the moment, taken out of China which is in free-fall. Money which is bulging to be invested. All it takes is an intangible notion that Greece has hit the low point, for investment to return. Whether this package achieves that balance or not, will have to be assessed over time, as the detail of each measure becomes known and away from the adrenaline and hysteria of negotiation fever. [Continue reading…]

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East German domestic surveillance went far beyond the Stasi

Der Spiegel reports: One day in September 1987, the phone rang at the headquarters of the Volkspolizei, East Germany’s police force, in the town of Döbeln, not far from Dresden. On the other end of the line was the voice of an unknown man.

“Good evening. I have some information for you. Grab a pen!”
“I’m listening.”
“Ms. Marianne Schneider is traveling on Wednesday, Sept. 14, to West Berlin for a visit. She doesn’t intend to return.”
“And who are you?”
Silence.
“You would like to remain anonymous?”
“Yes.”
“What is the basis for your information?”
“She said so, to her closest friends.”

Then, the mysterious caller hung up. And Marianne Schneider [not her real name] had a problem. Officials immediately revoked her travel permit and began monitoring her phone and mail in addition to questioning her neighbors and friends.

This story is one of spies and informers of the kind that were largely ignored by historians of the German Democratic Republic (DDR) until recently — because they were spies and informers that were not connected to the Stasi, as East Germany’s feared Ministry for State Security was popularly known. Instead, they were totally normal citizens of East Germany who betrayed others: neighbors reporting on neighbors, schoolchildren informing on classmates, university students passing along information on other students, managers spying on employees and Communist bosses denouncing party members.

Up to now, the broad network of so-called “unofficial informants” (IMs) maintained by the Stasi has dominated the popular view of East Germany’s surveillance state. Files full of IM reports became indispensable sources for Stasi victims, politicians, historians and journalists who sought to learn more about either their own personal pasts or about DDR spying practices.

By contrast, audio tapes belonging to the Volkspolizei were largely ignored, as were written testimonials from almost every area of East German society. Government agencies, political parties, associations, companies, universities, cultural institutions: Everywhere, people reported incriminating information about those around them. [Continue reading…]

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In Ramadi, the ISIS settles in, fixing roads and restoring electricity

The Washington Post reports: Six weeks after routing Iraqi security forces from Ramadi, Islamic State militants have entrenched themselves in the city, repairing key infrastructure, managing local government and building up defenses to thwart any attacks.

Their efforts are likely to hamper government attempts to retake Ramadi, which lies about 80 miles west of Baghdad. Iraqi forces and allied militias have not yet mounted a promised offensive, and the delay, residents say, has allowed the Sunni jihadists to cement their role as overlords, supervising everything from local mosques and road repairs to fuel distribution.

The group, known for its brutality, has also long sought to portray itself as a genuine state capable of providing efficiently for its Muslim citizens. From Raqqa and Deir al-Zour in Syria to Mosul and now Ramadi in Iraq, its claim to legitimacy has rested in large part on its ability to run such a state, even as it shocks and alienates residents with punishments such as public beheadings.

When the group’s fighters entered the city, “they seized everyone’s weapons and killed opponents,” said Hisham al-Hashemi, an expert on the Islamic State and adviser to the Iraqi government. “But now there is daily life. There is food in the markets and electricity. It’s like normal.

“As long as the government operation is delayed, it will give [the militants] the opportunity to secure their positions” in Ramadi, he said. [Continue reading…]

Following a visit to the Pentagon by President Obama on Monday, the New York Times reported: The president offered no timetable for an Iraqi counterattack to reclaim Ramadi and did not announce any new steps to assist Iraqi troops in retaking the city, such as using American troops to call in airstrikes. But he insisted that the plans he announced last month were already bearing fruit. “More Sunni volunteers are coming forward,” Mr. Obama said. “Some are already being trained, and they can be a new force against ISIL.”

The assault force would be led by Iraq’s counterterrorism service and would include the Iraqi federal police and army soldiers. The effort is expected to number about 6,000 troops, according to an Iraqi war plan that has been significantly shaped by American advisers sent to Al Taqqadum, an Iraqi base east of Ramadi.

An Iraqi follow-on force of up to 5,000 tribal fighters along with Iraqi provincial police officers would be assigned to hold the city and nearby areas in Anbar Province if they were retaken from the Islamic State. [Continue reading…]

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After backing regime, Syrian minorities face peril

The Wall Street Journal reports: Ever since the Syrian revolution began in 2011, President Bashar al-Assad tried to cast it as a religious conflict with radical Sunni Islam in which he would wear the mantle of protector of the country’s numerous minorities.

The plan has worked to a great degree, with Mr. Assad’s own Alawite community as well as Shiites, Christians, Druse and, initially, even the Kurds, backing him against a predominantly Sunni rebellion that has become progressively more bloody and sectarian.

But now, as the regime is reeling under attack by the murderous Islamic State militants in the east and a rebel coalition that includes the al Qaeda affiliate Nusra Front in the north, these minorities face the growing danger of being wiped out alongside Mr. Assad.

“As bad as things have been in Syria, they could get a whole lot worse,” warned Ryan Crocker, former U.S. ambassador to Damascus and dean of the Bush School of Government at Texas A&M University. [Continue reading…]

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More than 4 million refugees have fled from Syria

The New York Times reports: The number of Syrians who have fled into neighboring countries to escape the civil war has reached more than four million, the United Nations said Thursday, and with the fighting dragging into its fifth year the number is still rising.

More than 24,000 people crossed into Turkey to escape fighting in northern Syria in June, pushing the number now sheltering in neighboring countries past four million, increasing the Syrian refugee population by one million in just 10 months, the United Nations refugee agency reported.

International aid agencies say the fighting has driven at least 7.6 million people who remain in the country from their homes.

“This is the biggest refugee population from a single conflict in a generation,” Antonio Guterres, the United Nations high commissioner for refugees, said in a statement. Mr. Guterres, once again, warned that international aid was not keeping pace with the scale of the crisis, and that many refugees were “sinking deeper into poverty.”

“Worsening conditions are driving growing numbers toward Europe and further afield,” Mr. Guterres said, “but the overwhelming majority remain in the region.”

The latest influx into Turkey raised the number of Syrian refugees there to 1.8 million, giving it the biggest refugee population in the world, the United Nations reported. As many as 1.2 million Syrians are now sheltering in Lebanon, more than 629,000 are in Jordan and close to quarter of a million have fled to Iraq.

The United Nations has appealed for $5.5 billion in aid in 2015 to deal with the humanitarian fallout of the Syria crisis. But by the end of June it had received less than a quarter of that amount, the refugee agency said. [Continue reading…]

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The U.S. must save Greece

Joseph E. Stiglitz writes: As the Greek saga continues, many have marveled at Germany’s chutzpah. It received, in real terms, one of the largest bailout and debt reduction in history and unconditional aid from the U.S. in the Marshall Plan. And yet it refuses even to discuss debt relief. Many, too, have marveled at how Germany has done so well in the propaganda game, selling an image of a long-failed state that refuses to go along with the minimal conditions demanded in return for generous aid.

The facts prove otherwise: From the mid-90’s to the beginning of the crisis, the Greek economy was growing at a faster rate than the EU average (3.9% vs 2.4%). The Greeks took austerity to heart, slashing expenditures and increasing taxes. They even achieved a primary surplus (that is, tax revenues exceeded expenditures excluding interest payments), and their fiscal position would have been truly impressive had they not gone into depression. Their depression — 25% decline in GDP and 25% unemployment, with youth unemployment twice that — is because they did what was demanded of them, not because of their failure to do so. It was the predictable and predicted response to the austerity.

The question now is: What’s next, assuming (as seems ever more likely) they are effectively thrown out of the euro? It’s likely that the European Central Bank will refuse to do its job—as the Central Bank for Greece, it should do what every central bank is supposed to do, act as a lender of last resort. And if it refuses to do that, Greece will have no option but to create a parallel currency. The ECB has already begun tightening the screws, making access to funds more and more difficult.

This is not the end of the world: Currencies come and go. The euro is just a 16-year-old experiment, poorly designed and engineered not to work—in a crisis money flows from the weak country’s banks to the strong, leading to divergence. GDP today is more than 17% below where it would have been had the relatively modest growth trajectory of Europe before the euro just continued. I believe the euro has much to do with this disappointing performance. [Continue reading…]

The New York Times reports: As Greece hurtles toward a Sunday deadline for either reaching a bailout deal or risking a hasty exit from the eurozone, the one certainty is that its economy is already on the brink of collapse.

Businesses and humanitarian organizations are warning that the social and commercial damage now evident could become deeper and longer lasting if Greece and its international creditors cannot finally come to terms on a new bailout package.

“Greece already has a humanitarian crisis, and we’ll have to prepare for a harder aftermath if a deal collapses,” Nikitas Kanakis, the president of the board of directors of the Athens chapter of Doctors of the World, a health care charity, said on Wednesday. “I’m not sure how proud we should feel about letting social destruction return within Europe.”

With banks closed and the government virtually out of money, Greece has become isolated from the international economy — a big problem for a country that relies on imports for 65 percent of its goods. [Continue reading…]

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Greece finally admits €2bn gas pipeline deal with Russia

The Telegraph reports: Greece has admitted for the first time it is planning a €2bn gas pipeline with Russia.

The move is likely to worry the US, which has stepped up its involvement in Greece’s debt talks with international creditors over fears the cash-strapped country could drop out of the single currency and come under the influence of its Cold War rival.

Panayotis Lafazanis, Greece’s energy minister, said the move would be a key part of the country’s “multi-faceted” foreign policy and would create 20,000 jobs, the Financial Times reported.

Figures released by Greece’s National Statistics Service on Thursday showed unemployment at 25.6pc in April. [Continue reading…]

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Germans forget postwar history lesson on debt relief in Greece crisis

Eduardo Porter writes: As negotiations between Greece and its creditors stumbled toward breakdown, culminating in a sound rejection on Sunday by Greek voters of the conditions demanded in exchange for a financial lifeline, a vintage photo resurfaced on the Internet.

It shows Hermann Josef Abs, head of the Federal Republic of Germany’s delegation in London on Feb. 27, 1953, signing the agreement that effectively cut the country’s debts to its foreign creditors in half.

It is an image that still resonates today. To critics of Germany’s insistence that Athens must agree to more painful austerity before any sort of debt relief can be put on the table, it serves as a blunt retort: The main creditor demanding that Greeks be made to pay for past profligacy benefited not so long ago from more lenient terms than it is now prepared to offer.

But beyond serving as a reminder of German hypocrisy, the image offers a more important lesson: These sorts of things have been dealt with successfully before. [Continue reading…]

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Explainer: What’s the turmoil in the Chinese stock market all about?

By Michele Geraci, University of Nottingham

The Chinese stock markets have experienced significant turmoil in recent weeks, with the Shanghai Composite Index – the country’s major reference – falling by 32% since June 12. But this fall was preceded by an equally sharp rise of 150% over the previous nine months. In the 20 years since I have been working in finance, I’ve never seen anything like this. So what is going on with the Chinese stock market?

There are several reasons for this unusual behaviour: firstly, when I teach stock market investment to my Chinese students, I always remind them that the Shanghai stock exchange should be thought of more as a casino, rather than as a proper stock market. In normal stock markets, share prices are – or, at least, should be – linked to the economic performance of the underlying companies. Not so in China, where the popularity of the stock market directly correlated with the fall in casino popularity.

Stocks and casinos

In China, given the low credibility of the financial statements published by listed companies, investors need to rely on other tools to predict share price performance. These tools include a heavy reliance on technical analysis and charts – a method that tends to predict future share price based purely on the company’s past performance, with no regards to its fundamentals. Even the name of the company is often neglected; all that matters is the historic price performance.

While this technique is also used in Western markets, my experience in China is that it is the predominant method for investment. Hence the disconnect between a share’s price movements and economic fundamentals.

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