Yet another step

The fact that China is popularizing its RMB is not new. After HK, Singapore will have a Chinese bank clear yuan trades (clearly this is targeted towards South East Asia) according to this FT article. In 2 years, China's share of intl trade settled in RMB has grown from 0 to 7 percent. Isn't that exciting?

Take a look at USDCNY. CNY undervaluation is quite a recent thing.

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China is now the hub

According to Jim Breyer of Accel Partners,

"It's not the U.S as the hub and China as the satellite anymore. Perhaps China becomes the hub and we in the U.S. become the satellite."

see the full article here.

freedom of information and the Fed

Ok so Bloomberg used to sue the Fed for not announcing the names of banks who received its emergency funding according to the Freedom of Information Act. In my last paper for money and banking, I did argue for the Fed. In the too classic Diamond-Dybviq bank model that you should know about if you have a slight interest in central banking, a bank run can only be averted if we can allay the fears of both banks and depositors that banks are going to fail. In this case, hiding the names of the banks is one way the Fed obscures people about which banks have weaknesses. Look at the case of Northern Rock; after BoE announced its emergency funding for the bank, i.e. saying that this bank is not safe any more, depositors ran the bank even more. BoE's action is an act that aims to save the bank but nothing can prevent the irrational fear of depositors; once it comes to life, it only gets bigger and bigger and eventually it's gonna erode your bank business no matter how big the cushion the BoE can provide you.

So now 2 years after the emergency funding was given, the Fed finally said OK we're gonna give that information to you the people who demand information about the weakest banks (so that markets can run efficiently). I don't see how that act of giving information is delivering market efficiency. Rather its a smart disguise of what the Fed wants to hide (and it's better to conceal that information in my opinion). But perhaps the people who demand the information do not understand a bit of the economic answer behind it.

why people like me can't resist megabus

Finally BusinessWeek has published an article about them. A classic case about minimizing your overhead costs and wiping out everyone else. To be frank, a successful bus company doesn't need an army of offices and salespeople spread around the country. And it's not even bus companies; cheap airlines in Europe like EasyJet doesn't have people handing you tickets as you swipe your credit card either. Their customers: poor and educated customers addicted to Internet offerings (like me, a college student). People like talking about buses replacing high speed trains for short distance travel, air replacing fast trains for long distance travel, etc. Well, transportation economics can be amazingly complex, as there is no easy way to predict people's preferences for specific means of transportation before you actually have all the infrastructure installed, which is humongously expensive most times. It's not only a puzzle in America: in China people shun fast trains, opting for buses for their travel needs too. Europe is an interesting case, where people like me actually look for different things besides prices: is it a sleeper train/bus, is the travel difference worth the price difference, how much luggage do they let you carry, where is the station located, etc. And it's not always true that buses are cheaper than trains which are in turn cheaper than airplanes. Economics aside, America needs a lot more to make their train stations comparable with their counterparts in Europe (Amtrak, have an electronic board please!). And you get to figure out a way to make people like me love Megabus less. In my area students even get together, creating a Facebook group to pressure the company to open a route connecting my area with Boston because they want to wipe out Peter Pan. And you know what, Peter Pan recently lowered its price. It's always exciting to see this real life demonstration of what you learn in industrial organization, although I honestly don't know a possible way for Peter Pan to undercut Megabus. In fact in my area Peter Pan runs more frequently and their ticket is valid for one year (Megabus gives you a fixed time which you have to adhere to, and you got to anticipate about half an hour lateness). But I guess people ignore those "advantages" that Peter Pan offers and just flock to Megabus.

Is it because the happy, funky conductor - Megabus's logo - and their colorful, Wifi-available buses tell us something different from all those green and boring and Internet-less Peter Pan vehicles?

Pete Peterson

A nice read on Pete Peterson. The life of this Nebraska guy is nothing short of an adventure. Guess what you want to do after being expelled from college due to plagiarism? If that means waiting tables to pay your tuition, doing market research, producing movie equipment, running Lehman Brothers as CEO, founding Blackstone, founding the famous Institute for International Economics, advising Nixon and etc., would you like to live that life? There's even a book on Peterson, as I just figured out.

Man could this be true?

Ok so this is what Wang Huaqing, the Chinese vice chairman of banking regulator said at a conference:

"Only 9pc of the capital of the top 1000 banks in the world is Chinese, but they make 25% of the profit,"

isn't it too cool to run a bank in China now? i guess if you say that to lots and lots of Chinese students vying for a bank job in the U.S. at the moment, they simply won't listen to you.

trouble for Japan

Bad things never come at the right time, at least that's what I learn reading crisis literature. here it goes Japan which suffered from a 8.9 degree quake on Mar. 11, 2011. Now people are worrying about the meltdown of two nuclear plants in northeastern Japan as their cooling systems go broken. Should that happen, everyone will panic because Japan relies heavily on nuclear energy. A good collection of news articles on current situation in Japan: http://globaleconomicanalysis.blogspot.com/2011/03/scramble-to-avert-meltdowns-death-toll.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+MishsGlobalEconomicTrendAnalysis+%28Mish%27s+Global+Economic+Trend+Analysis%29&utm_content=Google+Reader