Wednesday, October 12, 2016

Xi’s anti-corruption drive ‘doing more harm than good’

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Xi’s anti-corruption drive ‘doing more harm than good’

Xi’s anti-corruption drive ‘doing more harm than good’
Chinese President Xi Jinping’s high-profile anti-corruption campaign has fallen short of its stated goal. A new study suggests that people are blaming local graft on the central government rather than on regional authorities. PHOTO: AP
PUBLISHED: 4:00 AM, OCTOBER 12, 2016
BEIJING — President Xi Jinping’s high-profile anti-corruption campaign has fallen short of its goal and appears to be doing more harm than good to the image of China’s Communist party, according to new academic research and an analysis of official statistics.
The Chinese President’s drive against graft, now nearly four years old, is one of the most powerful and far-reaching campaigns in the country since Mao Zedong’s death in 1976. But a new study suggests that it has backfired, with citizens often blaming local graft on the central government rather than on regional authorities, while a Financial Times analysis indicates that the odds of officials being punished for corruption are slim.
“I don’t see any clear political will” to seriously punish corrupt officials at the grassroots level, said Professor Fu Hualing, a law professor at the University of Hong Kong. “Maybe they understand that is probably very destructive. If China does that in every county, every district, the whole country would probably be in chaos,” he said.
The campaign’s stated aim is to hold all levels of Chinese officials accountable for abuses of power. Many scholars of Chinese government say its underlying purpose is to make party cadres more responsive to orders from on high while burnishing the party’s image.
But the new study finds that the higher the number of reported graft cases in a prefecture, the more people in the area perceive Beijing as being more corrupt than their local government.
Study authors Ni Xing and Li Zhen, at the Institute of Governance and Public Affairs of Guangzhou’s Sun Yat-sen University, attribute this finding to the centralisation of power. “If local government is overflowing with corruption, people will gradually shift responsibility for that to the centre as they perceive the centre’s failure of management to have led to such a state of affairs,” they write.
The study, which surveyed 83,300 people nationwide by telephone, was published in the latest edition of China’s Journal of Public Administration. The findings suggest that the campaign’s scope and length may inflict lasting damage on the party leadership’s image.
Prof Fu suggested one alternative that could permanently reduce corruption is to shift the focus of anti-corruption efforts from the Communist Party to the courts.
But Mr Xi has rejected greater separation of powers in favour of maintaining the party’s leading role. Data from China’s procuratorate, the state body ostensibly charged with prosecuting corruption, show that it has ceded substantial ground to the party apparatus in confronting graft during his tenure.
The analysis of official statistics by the Financial Times also shows that, for the vast majority of China’s Communist Party cadres in the civil service, the chances of being seriously punished for corruption remain slim. In the first three years of the campaign, fewer than 36,000 party members were handed over to China’s courts for prosecution — less than 0.5 per cent of the 7.5 million working as officials in 2015.
While almost 750,000 cadres were disciplined by the party over the same period, experts on party disciplinary mechanisms stress that most such cases amount only to a warning or demerit.
Academics who have studied China’s past anti-corruption drives say that the severity of the campaign appears to be carefully managed.
Professor Ding Xueliang, a social science professor at Hong Kong University of Science and Technology, said cadres had told him that for party organisations of any size there was now in effect a requirement to discipline at least a few members. Otherwise, “the upper levels will come back to you and question why your party branch is so unique — because so many other party branches have had five, 10, 20 officials charged for corruption”.
Prof Ding dismissed the idea that the campaign is seriously intended to stamp out graft for good, estimating perhaps 80 per cent of officials had engaged in some form of corruption during their careers.
“If you have lived in China for five years or more … you would not have such expectations.”
Mr Xi vowed in July to “maintain our zero-tolerance attitude towards corruption and look into every case involving corruption, leaving no place to hide for corrupt officials within the party”, according to Xinhua, the state news agency.
Public attention has also been stoked by state media dispatches highlighting monthly statistics on officials who have been disciplined.
Four out of five Chinese citizens consider official corruption a big problem according to a Pew Research Centre poll this spring, making it of greater concern than pollution and food safety. But nearly two-thirds of respondents in the Pew survey said they thought the corruption problem would improve over the next five years.
Mr Xi has provided his own stark vision of the consequences if the party fails to clean itself up.
“If we cannot manage the party well and govern the party strictly, leaving prominent problems within the party unsettled, our party will sooner or later lose its qualifications to govern and will unavoidably be consigned to history,” he said.FINANCIAL TIMES

Tuesday, October 11, 2016

Only 22% of everyday investors know the most basic principle of bonds

Only 22% of everyday investors know the most basic principle of bonds

elementary schoolLearning the basics.woodleywonderworks/Flickr
Americans often don't know one of the most basic facts about their own investments.
There are two ways to measure the value of a bond. The first, similar to stocks, is the price you pay for it. The second is the yield, or how much an investor will make in income from the bond.
The two measures have an inverse relationship. Put simply, when the price on a bond increases, the yield falls.
This is typically one of the first things investors should know about bonds and the bond market, but according to a survey by Wells Fargo and Gallup, investors are seriously lacking in this basic knowledge.
"When the survey asked investors what happens to bond prices when interest rates go down, over half (54%) admit they don't know," a release detailing the survey said (there's a direct relationship between bond yields and the interest rates set by central banks). "Only 22% correctly identified the inverse relationship whereby bond prices typically go up when interest rates go down. Another 17% think the two move in the same direction."
Gallup and Wells Fargo asked 1,021 adults who live in a household with $10,000 or more in savings and/or investments about their financial well-being and knowledge. According to the survey, two out of every five American households are above that threshold.
Screen Shot 2016 10 05 at 9.59.44 AMOh dear ...Wells Frago
Additionally, it appears that American investors on average think they know more about bonds than they actually do.
"Underscoring the need for more education about bonds, only 31% of investors say they have a very good understanding of the difference between stocks and bonds — another 43% understand it somewhat well, while 26% say not too well or not at all," the survey said.
While knowing the difference between stocks and bonds isn't the same as knowing yield relationships, the disconnect between the 71% of people who don't know about the yield-price relationship and the 26% who actually acknowledge a lack of knowledge about bonds is striking.
Bonds are used in almost every retirement portfolio, and it appears that Americans with investments often don't know how one of the basic components of their portfolio works. So perhaps this is more of an indictment of the general financial literacy of Americans or the ability of financial advisers to educate their clients than anything.

Most people lose money when changing jobs because they forget to take one thing with them

Most people lose money when changing jobs because they forget to take one thing with them

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luggage airport travel suitcasesTim Boyle / Staff / Getty Images
Millions of Americans switch jobs every year, and that can be a good thing for those who move up the ranks to positions of better pay and more responsibility. But there’s a potential downside to mobility: the forgotten 401(k).
The more frequently workers hop around, the greater the chance they will leave behind 401(k) accounts that might be neglected or even lost over time. From 2005 through 2014, more than 25 million employees have kept at least one retirement account with a previous employer, and millions of workers have left two or more, according to Social Security Administration.
It’s easy to lose track of 401(k) accounts if you don’t take them with you. As the years go by, companies might be restructured, sold, or go out of business. As a result, their 401(k) plans might get folded or merged. At the same time, employees might change their contact information and fail to update a past employer.
“I’ve seen it happen,” said Mike Piper, a CPA and the author of the blog Oblivious Investor. “People change jobs, they never rollover [their retirement accounts] and they don’t know where their money is.”

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Leaving money behind can make sense, but out of sight shouldn’t be out of mind

It might make sense for you to keep your 401(k) with a past employer if you’re happy with your investment options and are comfortable with the fees associated with your plan.
If you choose to leave your retirement account behind, it’s important to monitor your investments and be sure they match your goals and risk tolerance as these are considerations that might change over time.
And make sure your plan has your current contact information and that you stay on top of yourpast employer’s status, writes Jeanne Medeiros, director of the Pension Action Center at the University of Massachusetts Boston. You’ll want to know if they have merged with a new company, or are facing financial difficulties.
If you aren’t up to the task of keeping up with the former account, it’s important to note that you do have other options, including rolling over your 401(k) to your 401(k) account with your new employer or to an Individual Retirement Account (IRA).

Sometimes employers will call the shots for you

Keep in mind, if you don’t stay active in monitoring your retirement accounts, a past employer might make decisions on your behalf.
If you have less than $5,000 in a previous employer’s retirement savings plan, and you don’t indicate what you want done with the money, a plan can rollover your money into an IRA, a move that may or may not make sense for you. And if you have less than $1,000 in your account, a plan can simply write you a check. This could trigger taxes and penalties.
The bottom line: “It’s your money,” Piper said. “It’s up to you to make sure you know where it is and that it’s invested appropriately.”
REUTERS

Have you lost track of a 401(K)? Here are some tips for tracking it down

If you lose track of your 401(k), you might need to do some hunting to find it.
A good place to start is with your former employer. Contact the human resources or accounting department and be ready to provide your Social Security number and your period of employment.
Most employers are required to file an annual report on their 401(k) plans—ERISA Form 5500—with the Department of Labor. Using the name of your past employer, you can do a free search for those filings on efsast.dol.gov, a search engine run by the Department of Labor.
A plan’s Form 5500 will provide the identity of the plan’s service providers, said Richard McHugh, vice president, Washington affairs for the Plan Sponsor Council of America, which represents employers who sponsor 401(k) plans.
In some cases a 401(k) plan might be abandoned or “orphaned.” This might happen because the plan sponsor has filed for bankruptcy, or a company’s owner has died or been jailed.
The Department of Labor runs an Abandoned Plan database. This site helps plan participants learn if a plan is in the process of being shuttered or has already been terminated. You can search the site for the name and contact information for a “Qualified Termination Administrator,” a custodian, such as a bank or insurance company, which might have been assigned to terminate the plan. You can then contact this party and seek help in finding your lost retirement account
Read the original article on The Alert Investor. An Alert Investor is a smarter investor. To subscribe to updates, visitwww.thealertinvestor.com. Copyright 2016. Follow The Alert Investor on Twitter.

Oil slid after the 'scariest man on earth' said no to freezing production

Oil slid after the 'scariest man on earth' said no to freezing production

Igor SechinReuters/Sergei Karpukhin
The price of oil is dropped substantially on Tuesday morning after Igor Sechin, the president and chairman of Russia's state oil company, said he saw no reason for an immediate freeze or cut in oil production.
Crude-oil prices on Monday had risen to their best levels of the year after Russian President Vladimir Putin said he hoped the OPEC cartel of oil-producing countries reached an agreement over production limits.
"Russia is ready to join the joint measures to cap production and is calling for other oil exporters to join," Putin said while speaking at an energy congress in Istanbul, according to Reuters.
Speaking with Reuters at the same conference, however, Sechin — often referred to as "Russia's Darth Vader" and once dubbed the "world's scariest man" — questioned why he would take part in a cut and said Rosneft would not cut or freeze oil production as part of any possible agreement with OPEC, of which Russia is not a member.
When asked on the sidelines of the conference in Turkey about the potential for a freeze or a cut, Sechin said, "Why should we do it?"
Sechin also cast doubt on whether some members of OPEC would even be willing to join in with a cut. "Try to answer this question yourself," he said. "Would Iran, Saudi Arabia, or Venezuela cut their production?"
Sechin is one of Putin's closest allies, but his comments are almost the opposite of what Russia's president said on Monday, suggesting potential conflicts in Russia's official stance on oil.
His words caused oil to slip a little off its best levels from Monday, with both major benchmarks lower by about 1% on Tuesday. The slide was made even worse after new data from the International Energy Agency showed that production reached its highest level, clearly showing the scale of the challenge facing OPEC as it tries to boost prices.
However, around 2.10 p.m. BST (9.10 a.m. ET), oil has pulled back from its losses and with both major benchmarks down just 0.2%. Brent crude, the international benchmark, is at $53.03 a barrel, a drop of 0.21%, while US West Texas Intermediate crude had lost 0.18% to trade at $51.26.
Here is how Brent looks:
Screen Shot 2016 10 11 at 14.11.53Investing.com
More: Igor Sechin Russia OPEC Oil 

The pound is dropping like a stone — again

The pound is dropping like a stone — again

The pound is dropping for another day.
Sterling's horrible run over the past week and a half shows no signs of letting up on Tuesday, after Britain's currency hit fresh 31-year low against the dollar in early trading, falling below $1.23 for the first time since 1985.
The currency started the day in fairly sanguine fashion, before falling off a cliff around 7:45 a.m. BST (2:45 a.m. ET), plunging to a low of $1.2285 soon before 8:15 a.m. BST (3:15 a.m. ET). That marked a fall of more than 0.6% from the open. Sterling seemed to have settled at around that level, but plunged again late morning, falling to a fresh low of $1.2260 around 11:45 a.m. BST (6:45 a.m. ET). However, since then it has bounced back somewhat to trade above $1.23, at $1.2323.
Here is how it looks so far:
Screen Shot 2016 10 11 at 14.16.14Investing.com
If you discount last Thursday night's "flash crash" — which was reportedly so bad because of low liquidity — there is still a clear downward trend for sterling, with no clear sign of the bottom.
As FXTM chief market strategist Hussein Sayed noted in an email to clients earlier: "Meanwhile the pound came under renewed pressures, extending its drop for the fourth straight session as traders continued to ignore the positive flow of economic data and focused on the price that U.K. has to pay for a hard Brexit."
HSBC's chief currency strategist David Bloom said in a note last week that he expects the pound to reach $1.20 by the end of the year and warns the currency has become a political football for "vigilante" currency traders. Deutsche Bank is even more pessimistic, with currency strategist Oliver Harvey telling Business Insider by email last week that the bank sees sterling's floor in the coming months at $1.15. Others, including noted strategist Mohammed El-Erian, think that sterling and the dollar could actually hit parity.
Sterling's fall over the past couple of weeks has been driven by prime minister Theresa May setting a firm date for triggering Article 50, which begins the official process of Britain leaving the European Union.

Foreigners are buying Chinese bonds faster than ever before

Foreigners are buying Chinese bonds faster than ever before

For all of the growing concern over China’s mounting debt levels, it wan’t enough to perturb foreign investors who bought Chinese bonds more than ever before in September.
According to ANZ, “September saw record foreign investor inflows into China bonds totalling $US11.5 billion”. $US6.2 billion of that total went directly into Chinese government bonds (CGBs), the seventh month in a row that net inflows were recorded.
If left foreign ownership of CGBs at 3.7%, the highest level on record.
The remaining amount — some $US5.3 billion — went into policy bank financial bonds, those issued by the China Development Bank, Agricultural Development Bank of China, and Export–Import Bank of China.
“While foreign ownership of PFBs rose to 2.3% from 2.0% the previous month, [they were] still shy of the high of 2.5% attained in January 2015,” notes ANZ.
The bank believes that strong inflows into Chinese debt, building on the momentum in August, could be due to the Chinese yuan’s inclusion in the IMF’s special drawing right (SDR) currency basket that occurred on October 1.
This chart from ANZ shows monthly capital flows into Chinese bonds and equities over the past three years, overlaid against monthly changes in the value of the Chinese yuan to the US dollar:
Given recent weakness in the yuan against the US dollar, it will be interesting to see whether the acceleration in bond buying will continue in the months ahead.
Read the original article on Business Insider Australia. Copyright 2016. Follow Business Insider Australia on Twitter.

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