The 2012 Index of Economic Freedom Is Out

We're not doing so well?  The US is out of the top tier at #10. What would Milton Friedman say?  By the way, the top tier rated "Free" consists of Hong Kong at #1, followed by Singapore,  Australia, New Zealand, and (the first non-Asian country on the list) Switzerland.  Taiwan is #18.  C'mon, guys, we can do better than that.

Taiwan: More on the Recession

OK, things are pretty bad in terms of the US economy. Nevertheless, in the grand global scheme of things, things are worse just about everywhere else. Look at Europe . . . and look at the imploding economies of Asia (check out Hong Kong, Singapore, South Korea, and miserable Japan).

I posted previously about Taiwan's economic woes, and the latest set of numbers aren't too good. The unemployment rate is the highest it's been in 6.5 years, and the Taiwan dollar is the lowest it's been in that same timeframe. The exchange rate is now $1 US = $35 Taiwan.

Silver lining in the cloud? I can get more bang for my American buck in Taiwan . . . but I actually can't afford to go back there this summer (in terms both of time and money), so I guess I'm STILL all out of luck.

Oh, I'm depressed! You too? How about a cute pink baby dolphin to cheer us up?

Recession in Taiwan: the Battered Tech-Based Export Economy

The frozen economy needs CTRL + ALT + DEL.

Tired of stimulus-a-palooza here, I look back at the "Old Country" and see an even worse picture there. The numbers are bad as reported by the Economist. Here are some of them:

Which economy has been hit hardest by the global slump? In its back pages and on its website The Economist tracks 55 countries each week. Based on industrial production, Taiwan has suffered much the biggest shock. Output fell by 32% in the 12 months to December; in the fourth quarter it plunged at an annual rate of 62%.

...Taiwan is one of the world’s most export-dependent economies, making many high-tech gadgets for Western consumers, so it has been battered by the slump in global demand. Exports plunged by a record 44% in the year to January. The slide in exports has been exacerbated by a drying up of trade credit. This partly explains why imports also fell by 57% over the period.

...The island’s electronics industry is enduring its worst-ever slump. Cheng Cheng-mount, a Taipei-based economist with Citibank, points out that Taiwan’s mainstay exports, such as flat-screen monitors and semiconductors, were in oversupply even before the global financial crisis. Now, he estimates, Taiwan Semiconductor Manufacturing Company, the world’s biggest contract chipmaker, is running at around 35% of capacity.

Falling exports have, in turn, squeezed domestic spending. Unemployment rose to a six-year high of 5% in December, and the true picture may be far bleaker. Taiwanese companies tend to wait until after the lunar new year holiday before swinging the axe. Average wages have also fallen by 5% in real terms over the past year. Many companies are ordering employees to take unpaid leave. The volume of retail sales slumped by 11% in the year to December.

Even before the financial crisis, household spending had seen the weakest growth rate among the East Asian tigers.

You know that Taiwan is heavily dependent on import-export, particularly in electronics. You'll remember that the Taiwanese government recently had to bail out computer chip manufacturers.

How bad is the downturn? Backing up the Economist, the Taiwanese government says that this is the worst slump since it started keeping quarterly records in 1961.

Add also a record fall in the Taiwanese GDP; the numbers were released just today. The latest prediction: the Taiwanese economy will shrink by 3% this year. Previous hopes had been for a 2% growth this year. Not gonna happen. And it's time to use the R-word: a recession is defined as 2 consecutive quarters of contraction.

Oh, and one more thing: the Taiwan dollar has hit a five-year low against the US dollar. The exchange is $1 US = $34.62 Taiwan. (This is actually not the most that I've seen. When I was in Taiwan right after the dot.com bubble popped, the ratio was something like $1 US = $36 Taiwan.) Then again, the Taiwan dollar could very likely drop some more.

Taiwan: Top Souvenirs for Visitors

So, you are going to visit lovely Taiwan. What should you bring home as souvenirs? A consortium of businesspeople held a massive competition that compiled a list of Taiwan's top 100 products to help you shop!

The top 3?

1. Wenshan bauzhong tea (also spelled "pouchong")
2. Traditional aboriginal Paiwan glazed beads
3. Yilan cakes
   

(And, hm, it's no accident that 2 of the top 3 items are things you can EAT/DRINK.)

Real pouchong tea is produced only in the tea-growing regions outside Taipei. It's slightly fermented, and it is liquid heaven. (See the second video on this post.)

Taiwan: $6 Billion Government Bailout for Computer Chip Manufacturers

Bailout-a-palooza finally hits Taiwan. Well, hey, everyone else is doing it, so why not the Taiwanese too?

The latest news: the government is working on a $6 billion bailout for computer chip makers. Blurb (my emphasis):

Taiwan’s government is moving closer to devising a bailout package for the country’s struggling memory chip makers, many of which face impending loan repayments amid mounting losses.

Shih Yeh-Shiang, vice minister of economic affairs, said on Monday the government had earmarked T$200bn ($6bn) in financial aid for ailing large companies, which includes producers of dynamic random access memory (D-Ram) who are the hardest hit globally among semiconductor makers.

Half of the $6bn earmarked by the government has been approved by the legislature, Mr Shih told reporters, while the other half is still under review. “All options are on the table” for how the government will use that money and what it would demand from chip companies in exchange.

Prices for D-Ram, the type of memory chip mostly used in computers, fell drastically last year as a result of chronic oversupply and falling demand due to the financial crisis.

In response Taiwan memory chip makers have slashed production but they continue to struggle because their products are still selling for below cost on the spot market.

Analysts estimate that Taiwan’s three big D-Ram companies – Powerchip, ProMos and Nanya Technology – would have to pay back about $500m in bank loans in the first quarter of this year, with a similar amount due in the second quarter. This means that a bailout would be needed soon unless banks could be persuaded to delay loan repayments.

Apparently, Bailout Fever is not only an American disease.

Also, FYI: Taiwan ranks in the top 3 chip makers in the world, along with the US and Japan.

RELATED POST:
The Italian government's bailout of the Parmesan cheese industry.

I repeat a sentiment that was bandied about last night over dinner with La Parisienne, Il Barista, and the Cine-Sib: "WHERE'S MY BAILOUT?"

Taiwan Retrospective: Top News Stories of 2008

Taiwan's CNA has its annual list of top Taiwan news stories of the year. Here's the list, and it's a mostly depressing one.

Number one: the arrest and indictment of former president Chen Shui-bian, of course.

Other highlights (or "lowlights"?) include poisoned milk from China and this little gem of financial news:

Since the May 20 inauguration of the KMT administration, Taiwan's stock index plunged from more than 9,200 points to far below the 10-year average of 6,560 and even continued its downward spiral toward a low of 4,000 points before rebounding to hover around 4,300 points.

Gee, what was that Ma said about boosting Taiwan's economy if he got elected?