Voices and Visions:Ukraine Crisis Update

Both the Standard&Poor's and Fitch credit rating agencies have put Russia on credit watch negative,while keeping the credit rating itself at the second lowest level of BBB.Russia's annexation of Crimea and the resultant threat of Western sanctions may cause companies to avoid investing in Russia,and those already invested there may withdraw,S&P said.Banks may also be reluctant to lend to Russian companies,causing the economy to slow further,Fitch pointed out.Russia's growth slowed to 1.3% in 2013 and investment is contracting.*
The EU has imposed asset freezes and visa bans on 33 prominent Russians in response to Russia's move in Crimea,while the US has done the same to 31 leading Russians.Russia's stock market has fallen more on the news of the imposition of sanctions,and the ruble has declined in value as well.*
Although some impact of Western disapproval of Russia's actions is being felt,the next phase,economic sanctions,will be more difficult to impose.Slovakia's Deputy Prime Minister and Foreign Minister,Miroslav Lajcak,said he is wondering whether the EU and US are willing to share the pain of more sanctions.Sanctions are painful;but they cannot be painful for Russia only.Are we willing to bear the burden?Mr.Lajcak asked.
Russia is not the enemy,in Slovakia's view,but it has violated the rules,Slovak Foreign Minister Miroslav Lajcak explained.Slovakia borders Ukraine,but Slovaks watch Russian TV,and so hear Russia's point of view,he pointed out.*
I expressed my very strong,grave concerns about what is going on,said UN Secretary General Ban Ki-Moon of his visit to Moscow, where he met with Russian leaders.The political emotions have hardened,he observed.
Meanwhile,President Barack Obama added that Russia has positioned its forces in such a way that it can move into Eastern and Southern Ukraine as well.In consequence,he has signed an executive order enabling him to impose sanctions on key economic sectors,should Russia invade those regions as well.*
Russian troops continued their takeover of Ukrainian military bases in Crimea,seizing Ukraine's Black Sea warships.Shots were fired,but no one was injured.The Ukrainian naval commander had been detained earlier when naval headquarters was seized,but was released unharmed.About 25,000 Ukrainian troops and their families must be evacuated from Crimea and reassigned.

Asia This Day:Bernanke Succession;Syrian Framework

Asian markets were cheered by developments in the US and Geneva Monday morning,sending the MSCI Asia Pacific index up 0.55%.The withdrawal of former US Treasury Secretary Larry Summers from consideration to head the Federal Reserve is being seen as a definite plus by Asia,as it will supposedly make the tapering of supportive Fed policies a little less severe.
We're seeing the rally as being based on Summers being a litle more agressive on tapering,said Philip McNicholas,ASEAN economist at BNP Paribas.Broadly speaking,we do see down side risks to the region with this tapering.We actually think Malaysia is more sensitive.Malaysian markets are closed for a national holiday today.
In the Philippines,the government is being more effective in its spending.That process is still ongoing and showing improvement.Overall,the fundamental story is still there.In Indonesia,the government was able to implement fuel price reform in June.We do think that Thailand can ride this out.
Markets are expecting the Federal Reserve to make an announcement on tapering this week.Mr.Summers' prospective nomination to be Fed Chairman had become highly politicised,and even Democrats opposed him in an open letter supporting the nomination of Janet Yellen,who has become the consensus candidate.
Bill Gross of PIMCO tweeted that Summers' exit makes Monday a huge day for the risk-on trade,i.e.,the buying of equities.
Another positive influence on world markets is the agreement in Geneva on Saturday of a framework for Syrian chemical weapons disarmament by the US and Russia.This will now go to the UN for the final formulation of a Security Council resolution spelling out the details.The framework gives Syria one week to provide a complete inventory of its stockpile;stipulates the first inspection of the weapon sites in November;and the destruction of all the weapons by mid-2014.
US forces will remain on standby in the region to back the agreement up with military action.

Syria:What the President Must Do

A new report coming out of Syria says that the Bashar al-Assad regime dropped an incendiary bomb such as napalm on a school playground,inflicting more horrible injuries on its own people.The focus of the international community,however,remains on its alleged chemical weapons attack of August 21,which killed up to a thousand Syrians.A team of UN inspectors remains in Syria tonight,collecting blood samples from the victims and interviewing them.They are planning to leave on Saturday and deliver their report next week.*At the same time,the US government will be releasing its own report based on the intelligence it has been gathering about the attack-probably on Friday.Reportedly this includes intercepts of conversations about the chemical weapons attack.We don't have the crib notes of Assad to his commanders,said Congressman Mike Rogers,R-Michagan,Chairman of the House Intelligence Committee,but when you put it all together,it is very clear that Assad was responsible.We know how the command and control works in these units.It was clear there was some degree of command and control being exercised.Looking at all the levels and the different pieces,the answer is definitely yes.*Under the War Powers Act,I don't believe there has to be a vote on military action,but you have to have these discussions with Congress.You have to bring the members in.I think the administration is obligated to do that,Congressman Rogers indicated.The president does not have to get Congress' approval for miltary action,added Senator John McCain,R-Arizona,an elder statesman on national security issues,but he is required to consult with Congress,and it would be in his best interest to conslut with Congress,rather than act in a unilateral fashion,the senator advised.*In that spirit,the Obama administration held a 90 minute conference call with members of Congress Thursday evening.Partcipating were Secretary of State John Kerry;Defense Secretary Chuck Hagel;National Security Advisor Susan Rice;and Director of National Intelligence James R.Clapper.According to a member of Congress on the call,the admisitration said it has no doubt the Syrian government was behind the attack,but no decision has been made on military action,and there is no timetable.They have a broad range of options.Both action and inaction on Syria carry risk and consequence,Defense Secretary Chuck Hagel reportedly said on the conference call.

Rice Crop Hindered By Flooding

The UN is warning that flooding in Southeast Asia may result in food shortages.Rice paddies have been devastated in Thailand,Cambodia and Laos.In Thailand and Cambodia,12.5% of the rice has been lost.Thailand,the world's largest rice exporter,may lose up to 25% of its harvest.These losses may cause a 17% price increase.
The Stock Exchange of Thailand is closed today,Monday,for the Chulalongkorn Holiday,which honors the death of a revered king.
In South Korea,the Pohang Iron and Steel Company,or POSCO,has reported a 75% drop in profits.This is because of both less demand and lower steel prices.POSCO is the world's third biggest steel producer.
Taiwan's Yani Tseng won the inaugural LPGA Taiwan Championship on Sunday,shooting a six under par 66 at the Sunrise Golf and Country Club in Yang Mei.It was Tseng's seventh LPGA Tour win of the season as she was cheered on by a large crowd of supporters in her native land.She donated 100,000 dollars of her prize to Taiwan junior golf.
In Bangkok on Monday,it was 88F under scattered clouds.The wind was NE at 6 mph,and the humidity was 58%.
POSCO(PKX)

A Shift In Tone

Our military push will secure the August elections in Afghanistan,Mr.Obama pointed out.At the same time,we will shift emphasis to training Afghan security forces.The additional U.S. troops,to eventually total an augmentation of 21,000,have already increased our training capacity.Every American unit will be partnered with an Afghan unit in this push to turn security over to Afghan forces.The Afghan economy is undercut by a booming narcotics trade.We need to send more agriculture specialists,engineers and lawyers.There must be a substantial increase in civilians on the ground from us and our allies,as well as the UN.Our efforts will fail if we don't invest in the Afghans' future.Aid saves us an enormous amount of money in the long run,the President explained.

East Asia Feels Crisis

The World Bank says that challenges facing East Asian economies in 2008 have multiplied,which will result in hard times for 2009.From an April forecast of 7.4% 2009 growth in the region,the World Bank now thinks East Asia is likely to grow 5.3% in 2009 and 6.5% in 2010.The region's exports are down on slowing demand from the West.The World Bank produces a semiannual forecast for East Asia and the Pacific,excluding Japan,Australia and New Zealand.It is a U.N. agency that provides loans for industrial development and the encouragement of international commerce.Founded in 1945,its official name is the International Bank for Reconstruction and Development.