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Time traveling back to the major screwups of 2015

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Barron's Asia

One of the joys, or hazards, of long flights is the chance to see movies you might ordinarily avoid. In no other setting, for example, would I subject myself to Tom Cruise’s “Mission Impossible” vehicles or the latest Jennifer Aniston RomCom. But on a recent Tokyo-New York journey, I caught a couple of programs that proved oddly thought-provoking in the context of the global economy.

First: “About Time,” the latest from Richard Curtis, the director of “Four Weddings and a Funeral” and “Love Actually” fame. It’s about a British family whose men can travel in time and right wrongs from the past. Next, a few episodes of BBC’s “Doctor Who,” a SciFi reboot of the adventures of time travelers who fix history’s errors.

I couldn’t help but fantasize about journeying back to undo many of the policy missteps. Really, what if economic officials could revisit those fateful moments and do things differently? Japanese officials could return to the late 1980s to avoid a massive asset crash. Thai authorities could reconsider their disastrous 1997 devaluation. Indonesians could head back and pick less calamitous post-Asian-crisis leaders. Americans could revisit 1999 and not repeal Depression-era safeguards that would’ve kept the 2008 from happening.

Nick Lesson could reverse the 1995 bet on rising Nikkei stocks that brought down Barings, a 232 year-old bank that financed the Napoleonic Wars and held an account for Queen Elizabeth. John Meriwether could go back to 1998 and make money from Russia’s default instead of being undone by it. George Soros could add a zero to the $2 billion he made betting against the Bank of England in 1992. Alan Greenspan could rephrase his cryptic “irrational exuberance” comments a few years later and avoid the whole tech-stock bubble.

The last 12 months also offer many instances where economic Doctor Who’s could travel back in time to save the day.

China’s botched devaluation: It’s called “8/11” in financial circles, that August day when Beijing shook the world by shaving a tiny 3 percent off the yuan’s value. A little Doctor Who action would afford President Xi Jinping and central bank Governor Zhou Xiaochuan a do-over. The completely un-telegraphed and poorly explained devaluation smacked of panic in Beijing and, thus, panicked markets. A better-executed step would’ve scored points with the Group of Seven nations and hedge fund managers alike, enabling Beijing to weaken the yuan even further to support exports if it so chooses.

Prime Minister Shinzo Abe’s trade bet: In his bid to boost growth, Abe put most of his proverbial eggs in the Bank of Japan’s basket. The rest went into U.S. President Barack Obama’s. Abe bet it all on the U.S.-led Trans Pacific Partnership prying Japan’s notorious closed agricultural, technology and auto sectors. But Obama’s TPP is hopelessly bogged down in partisan politics and electioneering. If only Abe could return to January and announce his own package of tariff reductions. Rice duties, for example, are as high as 778 percent. Lowering them even to just 500 percent would’ve buttressed his reformist bona fides, which, let’s face it, had a dismal 2015.

Australia’s environmental about-face: In Paris earlier this month, 196 nations made history agreeing to limit carbon emissions. Sadly, though, 2015 was also the year when a developed nation with the most loose from increased heat, droughts and storms — yes you, Australia — went the other way. If only Australians could travel back and undo then-Prime Minister Tony Abbott’s assaults on wind, solar and other renewable energy sources. By doing the bidding of mining companies, Abbott allowed not just Obama to grab the mantle of climate leadership from Canberra, but China’s Xi, too. When Abbott was booted from power in September, Canadian environmentalist David Suzuki quipped: “I thought ‘my God, I’m not a religious man but you’ve answered my prayers.'”

Buying Southeast Asia more time: On Dec. 31, the long-awaited “Economic Community” created by the 10-member Association of Southeast Asian Nations, or Asean, becomes reality. Or not. This common market for about $2.5 trillion of gross domestic product keeps getting delayed, and delayed — and delayed. Far from being the “EU moment” Asia sought, the region’s integration is descending into punchline territory. So much for a boom in cross-border employment as Chinese growth slows. If only trade ministers could transport themselves back to Jan. 1 and make Dec. 31 a reality. Six hundred million Southeast Asians would have something huge to celebrate.

China’s stock fiasco: If 2015 was the year of anything in Asia, it was the year of Beijing’s surreal battle with short-sellers. Self-defeating, too. Now, every time Shanghai and Shenzhen shares slide, punters will test Beijing’s tolerance. Beginning in June, the government bought shares and strong-armed banks to do the same; cut interest rates; suspended initial public offerings; loosened margin rules; nudged the state media to run don’t panic stories; and even allowed day traders to put up homes as collateral to buy shares. Beijing officials might want to transport themselves back to June to let the market fall. Now, on top of debt and credit bubbles, they must maintain the world’s biggest pyramid scheme. If that isn’t a job for Doctor Who, what is?

William Pesek, executive editor of Barron’s Asia, is based in Tokyo and writes on Asian economics, markets and politics. www.barronsasia.com

  • CLJF

    History will judge who were the brave in having the courage of their convictions and who were the sheeple.