Sunday, November 29, 2015

Will Turkey’s Shooting Down Of A Russian Plane Destabilize The Global Economy?

Though the economic backlash may not be felt for months, will Turkey’s shooting down of a Russian plane eventually destabilize the global economy?

By: Ringo Bones

Unlike what happened back in August 2, 1990 when the then Iraqi strongman Saddam Hussein forcibly annexed Kuwait and made it an Iraqi province, it seems that that the global economy had become immune from the knock-on effects of recent geopolitical shenanigans and military adventurisms. Even though the global market price for crude oil peaked for a few hours following the shooting down of a Russian jet after accidentally straying into Turkish airspace after running bombing sorties in Syria in support for the Assad regime, it seems that recent military adventurisms – i.e. Russia’s “invasion” of a separatist region in Georgia back in 2008 and the recent “military intervention” of Donetsk region of the Ukraine and Crimea last year - only resulted in a “localized” economic destabilization, and largely due to EU sanctions for Russia’s failure to adhere to accepted international laws and conventions. 

Even though Russian President Vladimir Putin’s action via bombing sorties over Syria aimed on Daesh / Islamic State is largely in response to the downing of the Metrojet Flight 9268 back in October 31, 2015 which Daesh claims responsibility, Putin’s loyalty to the despotic Assad regime only complicates matters on the international efforts to destroy Daesh’s ability to launch more terror attacks. But when a Turkish F-16 plane shot down what looks like a MiG 23 Flogger back in November 27, 2015 as it strays into Turkish airspace initiated this ongoing tension between Turkish PM Recep Tayyip Erdoğan and the Kremlin complicates matters further still. But will the current Russo-Turkish conflict result in a widespread economic destabilization unseen since the 1990’s Operation Desert Shield? 

4.5 million Russian tourists visited Turkey in 2014 and form the bulk of Turkey’s tourism revenue and Turkey is currently the biggest consumer of Russian natural gas thanks to ongoing EU sanctions. A senior advisor of Russian President Vladimir Putin even said a few days ago that every Turkish tomato bought by Russians means money for rockets to shoot down our pilots. In total, 33 billion US dollars worth of trade from Russia and most of their energy will be affected. But will the Russian crackdown on the Turkish economy eventually hurt its own economy? 

During the last few days, Russian Prime Minister Dmitry Medvedev already drafted economic sanctions against Turkey that will take effect in January 1, 2016. A leading Russian travel agency already cancelled tours to Turkey a few days ago. Visa free travel by Turkish citizens to Russia will be suspended starting next year and the Turkish-Russian 20 billion nuclear power plant project and the Turkmenistan gas pipeline project will likely be cancelled. 

Thursday, November 19, 2015

The November 13, 2015 Paris Terror Attacks: An Attack On The French Economy?

Even though the terrible terror attacks at Paris by Daesh / Islamic State had a “relatively limited” casualty rate, will its lasting impact be on the French tourism economy? 

By: Ringo Bones 

Thanks to the swift action of French law enforcement which limited casualties to 129, and the hospitalization of 352, the November 13, 2015 terror attacks on Paris and the northern suburb of Saint-Denis timed by Daesh / Islamic State on the evening of Friday the 13th for maximum impact, it still managed to impart a state of dread to everyone who view the Parisian nightlife as the best in the world. But was the primary purpose of the terrible terror attack by Daesh / Islamic State primarily aimed at the French tourism industry? 

During the Monday opening of the Eurozone markets, Air France KLM stocks fell by 6-percent. And given that the Yuletide Season and springtime is usually the peak of the city of light’s tourist season, many economists view that the long-term impact of the Friday the 13th terror attacks might severely impact the French tourism industry in the coming months. Though Paris’ nightlife had more or less returned to normal given every visiting tourists sense of solidarity to the resilience of the French people since the Charlie Hebdo attacks of January 2015, the forecasts for the French tourism industry in 2016 is still somewhat filled with uncertainty. 

Is anyone heavily invested in the French tourism industry still hoping that the economic impact of the Friday the 13th terror attacks in Paris will be not as severe as the economic pundits say it should? Well, given that Paris is the must go to destination in the springtime and especially during Valentine’s Day and those fortunate enough to afford to have their honeymoon in the city of lights, it still makes good economic sense to hope for the best. 

Wednesday, November 4, 2015

Japan Post IPO: Economically Viable?

Given that every working class Japanese view it as more than a mail / parcel service, does the recent Japan Post IPO prove to be very economically viable?

By: Ringo Bones 

Even though it’s proposed stock listing dates back to when Junichirō Koizumi was still Japan’s Prime Minister, the recent Japan Post IPO managed to create enough Asian stock market buzz that today, November 4, 2015, that Asian stock markets managed to close higher despite of the lingering concerns over the Mainland Chinese economic slowdown. But is the recent Japan Post IPO really economically viable? 

In actuality, every working Japanese see Japan Post as more than just a “mere” mail / parcel service provider. Most of them actually had significant amounts of money deposited and invested in Japan Post that every tenured economist view Japan Post as the “world’s largest commercial bank”. Japan Post’s recent stock listing allowed its shares to surge 1.3 percent higher on the Nikkei Stock Exchange a few hours ago, though eventually, Japan Post hopes to raise 11.6 billion US dollars on the stock market. Not bad given that the Japanese government only sold 10-percent of its stake at Japan Post and most of the stock purchasers are seasoned institutional investors – although it is actually the biggest asset sell-off by the Japanese government of the last 30 years. Could the world’s largest bank eventually grow bigger?