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Daily Archives: November 22, 2008


Image   The Hong Kong Exchange Fund made a record loss of 48.3 billion Hong Kong dollars (6.19 billion US) in the third quarter, as the city was hit by the global financial crisis, officials said yesterday.
The figure follows a 20.4 billion dollar loss in the second quarter and brings the Fund’s losses for the first nine months of the year to 83.3 billion dollars, the Hong Kong Monetary Authority said. Joseph Yam, chief executive of the city’s de facto central bank, said they were facing “unprecedented challenges” in managing the fund in the financial crisis and warned of further losses. “The situation in October was indeed very bad. As a result, I expect losses will continue to be incurred in the fourth quarter,” he told lawmakers yesterday. “This means that it will not be surprising to have an overall loss [for the year] of more than 83.3 billion dollars.” The fund’s losses from January to September were mainly due to its stock investments. It lost a total of 56.9 billion dollars on local stocks after the benchmark Hang Seng Index fell 35 percent during the nine-month period. It has also lost 43.2 billion dollars to its overseas stock investments, according to Dow Jones Newswires. But its in bonds generated a profit of 30.6 billion dollars over the same period. The fund posted record earnings of 142.2 billion dollars in 2007, up from 103.8 billion dollars in 2006. The fund, which is made up of a variety of assets including stocks and bonds, amounted to 1.426 trillion as of September 30. It is used by the Monetary Authority to maintain the Hong Kong dollar’s peg to the US dollar and ensure financial stability in the territory.

Use of nuclear weapons more likely in future: US intelligence

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by Jim Mannion*

The use of nuclear weapons will grow increasingly likely by 2025, US intelligence warned Thursday in a report on global trends that forecasts a tense, unstable world shadowed by war.
"The world of the near future will be subject to an increased likelihood of conflict over scarce resources, including food and water, and will be haunted by the persistence of rogue states and terrorist groups with greater access to nuclear weapons," said the report.
"Widening gaps in birth rates and wealth-to-poverty ratios, and the uneven impact of climate change, could further exacerbate tensions."
Called "Global Trends 2025 — a Transformed World," the 121-page report was produced by the National Intelligence Council, a body of analysts from across the US intelligence community.
Officials said it was being briefed to the incoming administration of president-elect Barack Obama. A year in the making, it does not take into account the recent global financial crisis.
"In one sense, a bad sense, the pace of change that we are looking at in 2025 occurred more rapidly than we had anticipated," said Thomas Fingar, deputy director of National Intelligence.
One overarching conclusion of the report is that "the unipolar world is over, (or) certainly will be by 2025," Fingar said.
But with the "rise of the rest," managing crises and avoiding conflicts will be more difficult, particularly with an antiquated post-World War II international system.
"The potential for conflict will be different than and in some ways greater than it has been for a very long time," Fingar said.
The report has good news for some countries:
— A technology to replace oil may be underway or in place by 2025;
— Multiple financial centers will serve as "shock absorbers" of the world financial system;
— India, China and Brazil will rise, the Korean peninsula will be unified in some form, and new powers are likely to emerge from the Muslim non-Arab world.
But the report also says some African and South Asian states may wither away altogether, organized crime could take over at least one state in central Europe; and the spread of nuclear weapons will heighten the risk they will be used.
"The likelihood that nuclear weapons will be used will increase with expanded access to technology and a widening range of options for limited strikes," it said.
The report highlighted the risk of a nuclear arms race in the Middle East where a number of countries are thinking about developing or acquiring technologies that would be useful to make nuclear weapons.
"Over the next 15-20 years, reactions to the decisions Iran makes about its nuclear program could cause a number of regional states to intensify these efforts and consider actively pursuing nuclear weapons," the report said.
"This will add a new and more dangerous dimension to what is likely to be increasing competition for influence within the region," it said.
The report said it was not certain that the kind of deterrent relationships that existed for most of the Cold War would emerge in a nuclear armed Middle East.
Instead, the possession of nuclear weapons may be perceived as "making it safe" to engage in low intensity conflicts, terrorism or even larger conventional attacks, the report said.
The report said terrorism would likely be a factor in 2025 but suggested that Al-Qaeda's "terrorist wave" might be breaking up.
"Al-Qaeda's weaknesses — unachievable strategic objectives, inability to attract broad-based support, and self-destructive actions — might cause it to decay sooner than many people think," it said.
"Because history suggests that the global Islamic terrorist movement will outlast Al-Qaeda as a group, strategic counterterrorism efforts will need to focus on how and why a successor terrorist group might evolve during the remaining years of the 'Islamic terrorist wave.'"
The report was vague about the outcome of current conflicts in Iraq, Afghanistan and nuclear armed Pakistan.
In 2025, the government in Baghdad could still be "an object of competition" among various factions seeking foreign aid or pride of place.
Afghanistan "may still evince significant patterns of tribal competition and conflict."
"The future of Pakistan is a wildcard in considering the trajectory of neighboring Afghanistan," it said.