Shuttle Atlantis, mission accomplished, leaves station

KENNEDY SPACE CENTER, Fla.--The shuttle Atlantis undocked from the International Space Station on Sunday, wrapping up a week of assembly work to install a new Russian module, a backup Ku-band antenna, six new solar array batteries, and more than three tons of other equipment and supplies.

With pilot Dominic "Tony" Antonelli at the controls, the shuttle's payload bay docking mechanism disengaged its counterpart on the space station's forward port at 11:22 a.m. EDT as the two spacecraft sailed 220 miles above the southern Indian Ocean southwest of Perth, Australia.

The shuttle Atlantis pulls away from the International Space Station on Sunday after a week of assembly operations.

(Credit: NASA TV)

 

"Houston and station, from Atlantis, physical separation," shuttle commander Kenneth Ham radioed.
"Space shuttle Atlantis, departing," flight engineer Tracy Caldwell Dyson said, ringing the ship's bell in the Harmony module as the shuttle drifted away.

"Atlantis, station is now in attitude control," flight engineer Timothy Creamer radioed a few moments later. "Hock, I've gotta tell you, you guys were consummate professionals with a great sense of humor, we were so glad to see you, loved working with you. See you soon, brother. Stay safe."

"Copy all, T.J., and same comments right back at you, brother," Ham replied.

Atlantis slowly pulled away to a point about 400 feet directly in front of the station where Antonelli began a 360-degree photo-documentation loop around the lab complex.

"I get to fly the separation," he said before launch. "I'll do a one-lap fly around of the space station. We train that a lot in the sim. It turns out the view is much better for real and the flying is more fun when you can actually feel the vehicle moving around."

The astronauts beamed down spectacular views of the space station as the shuttle looped up, over and behind the lab complex as the two spacecraft sailed above Mexico and the central United States on a southwest-to-northeast trajectory.

During a week of docked operations, the astronauts installed the 17,760-pound Russian mini-research module known as Rassvet and staged three spacewalks last Monday, Wednesday and Friday to install a backup Ku-band antenna system, an equipment mounting platform and to replace six batteries in the port-6 solar array.

The astronauts also delivered 2,192 pounds of equipment and supplies that were carried up in the shuttle's crew cabin, along with 1,300 pounds of fresh water generated by the ship's fuel cells. Some 1,763 pounds of equipment and experiment samples were transferred from the station to the shuttle's crew cabin for the trip home.

Altogether, the Atlantis astronauts carried 28,792 pounds of equipment and supplies to the space station. Total cargo being carried back to Earth, including the old P6 batteries and the cargo pallet holding them in place, came to 8,229 pounds.

The space station, approaching the Great Lakes, during a pass above the central United States shortly after the shuttle Atlantis undocked.

(Credit: NASA TV)

 

The Atlantis astronauts plan to carry out a final heat shield inspection Monday before packing up and testing the shuttle's re-entry systems Tuesday. Landing back at the Kennedy Space Center is targeted for 8:48 a.m. Wednesday morning, weather permitting.

Three hours before undocking, the two crews gathered for a brief farewell ceremony in the forward Harmony module.

"This is time when we have to say goodbye to our friends, our colleagues, the excellent crew of shuttle Atlantis that did an excellent job performing three EVAs, installing the new Russian module, having good fun, enjoying living on station and working in space," said Expedition 23 commander Oleg Kotov.

"They show good example of friendship, professionalism and classic attitudes in their behavior. ... So again, thank you Ken, for excellent job. We enjoyed working with you."

"Well Oleg, we are one happy shuttle crew," Ham replied. "And we are happy because of all of your effort, too. I think through our entire docked timeframe here we were a 12-person crew that operated together. And that was the only way we got everything done. ... So we are happy. But this one is to friends we're going to leave behind, and new friends that we've made, close friends. We've had a great time together.

"We are going to close the hatch shortly and we're going to depart," Ham said. "And of course, as always, it'll be a little bit sad. But we'll see you all on the surface of planet Earth again soon."

Kotov, Creamer, and Japanese astronaut Soichi Noguchi plan to follow the Atlantis astronauts back to Earth in nine days, departing June 1 (U.S. time) aboard the Soyuz TMA-17 capsule for a landing in Kazakhstan to close out a six-month stay in space.

Cosmonaut Alexander Skvortsov will take command from Kotov, remaining aboard the station with Caldwell Dyson, and Mikhail Kornienko as the Expedition 24 crew. They will be joined by cosmonaut Fyodor Yurchikhin, Douglas Wheelock, and Shannon Walker, who are scheduled for launch aboard the Soyuz TMA-19 spacecraft on June 15.

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by William Harwood

 

Bill Harwood has been covering the U.S. space program full-time since 1984, first as Cape Canaveral bureau chief for United Press International and now as a consultant for CBS News. He has covered more than 115 shuttle missions, every interplanetary flight since Voyager 2's flyby of Neptune, and scores of commercial and military launches. Based at the Kennedy Space Center in Florida, Harwood is a devoted amateur astronomer and co-author of "Comm Check: The Final Flight of Shuttle Columbia." You can follow his frequent status updates at the CBSNews.com Space Place, where this story was first published.

Fabulously 50-ish and free to splurge on fun?

OLD is the new young. Middle and old age are traditionally seen as times of conformity, responsibility, risk aversion and settling down.

Yet instead of retiring with slippers to listen to the classics, many of the “new old” are still pursuing the rock 'n' roll lifestyle of their youth.

“New old” consumers

A quarter of Americans over 50 play video games - up almost threefold since 1999 - and the average “frequent game purchaser” is 39 years old, according to the Entertainment Software Association.

Recording Industry Association of America data shows that the over 40s are the only age group whose music purchasing has risen in the last decade.

The average motorcyclist is 47 years old, according to J.D. Power and Associates, and other Pew Research Center data shows that three-quarters of baby boomers own mobile phones and nearly a third have created a social networking profile.

The National Council on Aging claims singles aged 55 and older are the fastest growing group of online daters.

Something very different is occurring. At the other end of the age divide, it seems to be cool to be aged and gets even better when one has money to enjoy it.

Recently, Procter & Gamble, the US consumer goods giant, extended its partnership with NBC Digital Networks, the online publisher, to create a range of websites tailored specifically for “boomers”.

“Knowing that more than a third of all Internet users are adults between 45 and 64 years old, we saw an opportunity to work with Procter & Gamble to create a site network that can actively fuel this age group,” Devin Johnson, VP, NBC Digital Networks, said.

Mintel research studies show that around 10% of female boomers currently buy cosmetics and beauty goods online.

Members of this group spend around 13 hours a week surfing the Internet at present and typically favour the e-commerce services of major retailers like Wal-Mart, Target, CBS and Walgreens.

“Female baby boomers are one of the largest beauty care segments, known for their spending power, proactive health habits and dedication to product research,” said Kat Fay, a senior analyst at Mintel.

“Innovations like virtual makeovers, new product Tweets and online-only sweepstakes draw in consumers and provide them with benefits and discounts they can't find in an actual brick-and-mortar store.”

Overall, Mintel predicted that the number of female boomers purchasing skincare brands such as Procter & Gamble's Olay and Unilever's Dove via the web will rise by 30.9% from 2005 to 2015.

Ageless consumerism

According to a recent Synovate PAX study that covers the top 30% most affluent and influential consumers across 10 markets of Asia Pacific, the 50+ group have a higher likelihood than younger (25~49) consumers of owning financial and investment products, offshore investments and real estate, but there's more - even in home entertainment, they show their spending power.

The Asia-Pacific consumer market is transforming. There seems to be an ageless consumerism where the “new old” is indulging in consumer products and services that are meant for younger generations.
With such attitudinal and behavioural shifts, it's time to reassess your retirement planning.

Obviously not every boomer conforms to these new typologies. But statistics suggest more and more do. It's time to start thinking about your future spending.

If you think you are a “new old” consumer, you need to grow your money if you want to enjoy the fun and benefits of these “age-less” products and services. I'm already talking to my clients about it!

COMMENT BY CAROL YIP
>Carol Yip is a personal financial coach and also founder and CEO of Abacus for Money.

Solving the Sime Darby equation

A QUESTION OF BUSINESS BY P.GUNASEGARAM

THERE are two parts to solving the problems at Sime Darby Bhd and they have to start simultaneously, although it will take longer for one.

The first is to understand completely the reasons why one division - energy and utilities or E&U - had massive cost overruns, needlessly undermining the good showing of the others.

From that the Sime Darby board must do two things - decide who was responsible and take appropriate action against them. Next, it must lay down the policies, rules, checks and balances to ensure that such a thing does not happen again. These have to be done publicly to restore faith and confidence.

 

It will require close, coordinated work and effort by chairman of the board, Tun Musa Hitam (second from left), his board, particularly the head of the working group investigating the cost overruns, Datuk Seri Panglima Andrew Sheng (left) and acting CEO Datuk Azhar Abdul Hamid (second from right).

 

The second - the more important and more difficult - is a task for Sime Darby management, guided by the board which will set policy, oversee management performance and insist on corporate governance standards.

That is the complex and difficult task of how to create value within the Sime Darby group across all the five operating divisions (six if we include other businesses such as China and Health) without undue risk.

It will require close, coordinated work and effort by chairman of the board Tun Musa Hitam, his board, particularly the head of the working group investigating the cost overruns, Datuk Seri Panglima Andrew Sheng, and the newly appointed acting CEO, Datuk Azhar Abdul Hamid.

Calls for Musa and the board to resign must be studiously ignored until the full investigations of the working group are revealed and responsibility for the various misdeeds ascertained - the board has a responsibility to complete what it started.

Most board members have had distinguished careers and reputations - a former deputy prime minister, a former chief secretary to the government and chairman of the Employees Provident Fund, a former head of Hong Kong's Securities and Futures Commission and former Bank Negara adviser, a former head of an international accounting firm, a former director-general of the Education Department, the chairman of Permodalan Nasional Bhd and so on.

The board should be given a chance to put matters right. One can be forgiven for thinking that they would have had good grounds to do what they did, that is to ask the previous CEO to go on a leave of absence prior to the expiry of his contract.

While thoroughness of investigations is important, speed too is of the essence especially since it has been seven months since the working group was set up to investigate the problems.
Sime Darby has found out that mere merger will not create value - what is much more important is what you do after the merger. Synergies can be destroyed by risky moves into areas where the group has no core expertise.

By the same token, any move to break up Sime Darby just three years after the merger will be too premature and will mean that best value for the various parts will not be obtained in any sale.

Among the first things that Sime Darby has to evaluate is its risk management. Have the risks in a project been measured as much as that is possible and could the risks have been mitigated?

Large returns almost always come with large risks. The larger the size of the project, the greater is the risk to the entire group. If risky projects must be undertaken, then it must be done in a way which insulates the group from the effects. That's not easy to do in practice.

Whatever prompted Sime Darby to get into the Bakun project? It has no core expertise in building dams, it does not have civil construction expertise apart from fabrications and Bakun was a project fraught with problems right from the start. Bakun was fundamentally a wrong decision.

Sime Darby needs to reappraise some of its investments in China - a port and a water supply project - in both of which it has no core expertise. That's a sure way for projects to go down the tube.

Feasibility studies are just that and can be engineered to show anything good or bad. The difference is the amount of expertise and competence you can bring to bear on a project. If you have no such expertise on board, stay away until you do.

Nobody - unless for reasons of patronage and corruption - gives away projects with great returns for little or nothing, even if the parties are considered to be friendly. A healthy scepticism should surround projects which look too good.

Sime Darby needs to scrutinise each of its divisions to see how value can be added and to ensure that value which is already there is not diluted but protected and enhanced.

Even within the now notorious E&U division, there are gems such as the power producers and fabrication yards which are doing well and have the potential to do better. A strategy of careful related diversification, never at any time biting off more than be chewed, can yield good returns.

The plantation division holds valuable land in prime areas near urban centres in Peninsular Malaysia. The way that these are transferred to the property division and then developed must be closely watched. Selling land cheaply, although these give great returns because of the low original cost, is a no, no. Better to keep the land and develop it in-house to earn more money.

Instead in some instances, properties have been sold into joint ventures at less than market prices to be developed by expertise from the other parties. It is not even clear what further expertise they bring to Sime Darby which has in the past developed whole townships.

With tens of thousands of hectares of land with development potential, probably the largest among any company in Malaysia, the board and management must ensure that they are carefully developed with maximum benefit to the group.

That's by way of flavour of what can be done. But for that and much more to take place, there is one over-riding requirement - the right people in the right places being allowed to do the right things. This is not about agendas, it's about running a business well.

The Government should resist all attempts to politicise this issue and turn it into something that it is not. The simple fact of the matter is that cost overruns have ballooned to nearly RM2bil and resulted in nearly as much provisions over the years with a near RM1bil provision for the current year ending June 30. That has to be explained and the responsibility for that established.

The Government should steadfastly give its full support to the board and management to clean the company up, run it professionally and competently, and yes, create value throughout all its operations without any interference from vested interests.

The benefits from such moves will be tremendous - it will help restore Sime Darby as the company with the largest value on Bursa Malaysia and more importantly provide a steady and growing return to its major shareholder, Permodalan Nasional Bhd which operates units trusts in which many millions of Malaysians have invested.

Sime Darby's success is important for Malaysia and Malaysians. Let's not hinder, wittingly or unwittingly, the measures that need to be taken to put this conglomerate back on the path of growth, profitability and prosperity.

>Managing editor P Gunasegaram believes that neither a merger nor a de-merger adds value. They merely highlight or downplay value already there.

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Relevance of a conglomerate
In search of closure

Need to be wary of brewing asset bubble

THESE days a mere few months will make a lot of difference and this is obvious even in the property market.

The stronger economic rebound in the region is once again threatening asset bubbles in various Asian cities.

One of the obvious reasons for the jump in residential property prices is the big movement of people around the globe these days. Foreigners are making up a big group of the buyers in major Asian cities from Shanghai to Singapore.

It will be just a matter of time before the trend catches up in the other cities, including Kuala Lumpur.

Penang's popularity as the choice for foreign participants of Malaysia, My Second Home programme is already seeing a big jump in foreign buying interest in its property market.

The high savings rate among Asians and their yearn for property as an investment asset is also another factor.

The under-performing equity markets and low bank savings rates are also not providing people with spare cash to invest with other better viable choice.

To the layman, creeping property prices mean more expensive homes and higher costs of living. The lower-income group will be the most hard hit by fly-away property prices.

To curb overheating, China and Singapore have already imposed higher downpayment requirements for mortgages.

There is a high correlation between property prices and liquidity, and to avoid excess liquidity in the system, their governments have no choice but to tighten credit lending and raise interest rates. These measures will also aid in stabilising inflation.

China has recently raised downpayment for first-time homebuyers to 30% (from 20% previously), while second-home borrowers have to pay a 50% downpayment. To curb speculative activities, it has also re-imposed the 5.5% transaction tax for properties held for less than five years.

Malaysia also has to be wary of the possibility of an asset bubble brewing although the Government had also acted by imposing a 5% real properties gains tax.

Given the strong surge in property demand in the last six months or so, this has not acted as a big deterrent to curb buying and selling activities.

As developers are still continuing with their housing packages and allowing low downpayment of between 5% and 10%, entry cost is still very low for property buyers.

Moreover, they will only have to start servicing their loan only upon vacant possession of the property.
While those who have built up a comfortable portfolio of property assets will benefit from the value appreciation of their assets, many Malaysians are finding it hard to buy reasonably-priced landed property these days.

Kuala Lumpur and Klang Valley folks are certainly among those feeling the pinch. Penangites have also seen one of the more pronounced property price increases as land on the island is really getting scarce and the number of landed housing projects is getting fewer.

New condominiums there are averaging RM600 to RM700 per sq ft, semi-detached houses and even terraced houses with some land are priced at more than RM1mil while bungalows are from RM3.5mil to RM4mil.

No wonder many island folks have no choice but to opt for medium-cost apartments. The liberalisation of the local property market has opened up a bigger catchment customer base and created more opportunities for industry players.

In the process, there have been many new developments and project launches that are mostly targeted at the high-end market.

There are fewer affordably-priced properties unless one is prepared to travel as they are mostly located in places further away from the city centres.

To assist those who find private housing way beyond their means, the Government should work towards a holistic and concerted plan to appoint a dedicated agency to undertake the overall planning on the actual need for affordable public housing in the country and have them built in easily-accessible places.

The Singapore model, where all the public housing projects with good community facilities are within a stone's throw from the mass rail transit stations, is a sure winner.

It will overcome the problem faced in the country where many low-cost housing projects are not occupied because they are located in very far-away places that do not have convenient public transport link.

THE REAL ESTATE BY ANGIE NG

·Deputy news editor Angie Ng believes all Malaysians deserve to live in secure, well planned and managed housing estates, whether they are private or public housing.

Legacy of an organised man

From receipts to official documents, Tun H.S. Lee left a priceless hoard that will serve as a window to a historic era.

DURING his lifetime, Tun H.S. Lee methodically filed away every little scrap of paper. As eldest son Douglas says, “Our father was a hoarder. He never threw away anything and saw value in everything, even a 20-cent car park receipt.”

Tun Lee, one of the founders of the MCA and the Alliance Party, lived in momentous times. Surprising then that he did not write his autobiography.

Another son, Thomas, adds: “We offered to engage a writer for him and to tape record his conversations and memories. He never gave a reason but simply would not do it.”

Tun H.S. Lee (left) with Tun Tan Siew Sin, the man who would take over from him as Finance Minister in 1959. 

 

All is not lost though. Now, 22 years after his death, 180,000 private papers of Tun Lee are finally available for public viewing. His sons, Datuk Douglas Lee, 87, and Datuk Thomas Lee, 72, handed over the papers to the Institute of Southeast Asian Studies (Iseas) in Singapore on May 5. A third son, George, could not attend the ceremony.

With the donation, Douglas says, a burden has been lifted from the family’s shoulders as they did not know what to do with their father’s vast collection, kept in over 140 boxes in a storeroom at his home in Kuala Lumpur.

A meeting in 2003 set in motion a series of events which culminated in the papers being put in Iseas for safe-keeping.

Historian Dr Lee Kam Hing recounts how he advised Douglas against throwing away any of his father’s less important documents such as bills and receipts. “I told the family that every shred of information was important as things like club receipts and bills tell us what the cost of living and social life were like then.”

Dr Lee put Douglas in touch with Iseas librarian Ch’ng Kim See, who flew to Malaysia to advise the family on indexing the documents.

Iseas Board of Trustees chairman Prof Wang Gungwu says the Lee family’s generosity will help fill a lot of gaps in our understanding of a critical period of the country’s history, from 1945 to 1960. “Tun H.S. Lee’s life story has not been fully told.”

A liquor receipt from India dating back to 1942 forms part of the Tun H.S. Lee collection.

 

An international conference on Lee is planned for next year at Iseas.

From tin to politics

Henry Lee Hau Sik was born in Hong Kong in 1901 and studied in Cambridge, Britain, where he came to know the future King George VI.

Lee came to then Malaya in 1924 to pursue business opportunities, in particular mining.

His years in Malaya were very eventful. He was involved in Kuomintang politics and anti-Japanese activities. During WWII Lee escaped to India with his family as the Japanese had put a price on his head. He had the distinction of being appointed a colonel in the Chinese army, then based in Burma. He was also made a colonel of the British army in India during the war years, when he liaised btween the two Allies.

Lee played a key part in forging an electoral alliance with Umno in 1952 that later became the Alliance Party (now Barisan Nasional). He was part of the Alliance team led by Tunku Abdul Rahman that held independence talks in 1956 in London and was the only Chinese signatory to the Malayan independence agreement.

He was Transport Minister from 1953 to 1956 and was appointed the first Finance Minister of an independent Federation of Malaya in 1957. Two years later, he resigned his post due to ill health.
Lee’s other major role was helping to set up the Malayan (later Malaysian) Chinese Association in 1949, with the support of Chinese business groups and educationists.

Lee was also the recognised leader of the Guangdong and Gaozhou community, says Thomas.

“I was amazed when someone came up to me and identified himself as being from Guangdong. He said his family came from Raub, which was full of Gaozhou people. He told me that even today, the people there know of Lee Hau Shik.”

Lee founded or was actively involved in many institutions and organisations, including Bank Negara Malaysia, the Lady Templer Hospital, China Press, the Olympic Council of Malaysia, and the Malaysian Golf Association, just to name a few.

After retiring in 1959, Lee started the Development and Commercial Bank, now known as RHB Bank.

Datuk Thomas Lee (left) and Datuk Douglas Lee looking at some of their father’s documents at Iseas in Singapore.

 

He died in 1988 in Kuala Lumpur. Jalan Bandar – originally known as High Street – was renamed Jalan Tun H.S. Lee in his honour.

A son’s memories

Thomas reveals that his father played golf until ill health stopped him. He would end his game at the 19th hole, for drinks.

“Even in old age, he enjoyed his drink. The secret, he told me, is to alternate your drinks. Whisky one day, brandy the next.”

Thomas says he and his late brother Alex hardly saw their father before they left for further studies in England in 1952.

“My father never had time to visit us in England but we did see him on two occasions in London, when he went for government talks. He wrote us a letter about once a month but it was always quite formal,” Thomas recalls.

Lee was also a workaholic and a stickler for punctuality. As the oldest child in his family, he had a strict upbringing in China.

Thomas recounts an incident that illustrates Lee’s character. He had reported for work in his first job as a government servant, only to find his boss playing mahjong and not wanting to be disturbed. “After this continued for three days, my father quit government service and found a job with a bank in Hong Kong.”

He adds that one of Lee’s bitterest moments was his defeat in the Selangor MCA presidential election, a loss he attributed to friends turning against him.

“My father was not one of those politicians who would bend or adapt as the wind blew. He was unable to deal with people who schemed against him. He was of the heroic mould and would rather be knocked down than change. He never spoke again to those friends who betrayed him.’’

Thomas saw more of his father after the latter quit politics. In fact, he served on the boards of China Press and D&C Bank when his father was the chairman.

Thomas shares his father’s passion for golf, and recalls that “some of the happiest times we had with him were during family reunions in Cameron Highlands.

“He was a very organised person. We were all told, breakfast at 7, golf at 8, lunch at 1, tea at 4, cocktails at 7 and dinner at 8.”

Stories by SIMRIT KAUR
starmag-feedback@thestar.com.my

Related Story:
A painstaking effort

Commodity and asset prices are up

Can inflation be far behind?

IN a previous column, I wrote on how ironically the sovereign-risk “shoe” is now on the other foot (“The Kiss of Debt”, Feb 27). Historically, sovereign-risk concerns reflected profligacy in emerging market economies - Russia, Argentina and Pakistan were notable examples. Today, the money printing machines in the United States, Euro-zone, UK and Japan are running overtime to assume the “crown.” We all know there is no such thing as a free lunch. This time, severe crisis took their toll on those with a history of high living and fiscal indiscretion, ignoring reforms in good times. What a difference a generation makes.

The contrast is provided by BRIICs (Brazil, Russia, India, Indonesia & China). A year ago, with their fiscal and financial houses in good order, BRIICs were busy stimulating their economies. Their main worry then was to push for a “fairer global economic order.”

But, one year on, their situation is ironic: they share 3 things - they are big and growing fast, they have inflation, and they have strengthening currencies thrust upon them. These days, their concerns are on rising commodity prices, overheating, asset bubbles and inflation.

Workers dry cocoa beans in Makassar, Indonesia's South Sulawesi province. Last year, cocoa prices were at a 30-year high. - Reuters

 

Paradox of a symmetrical recovery

Now more than ever, the Greek tragedy points to gathering risks in the global economic outlook. As of now, global recovery remains anaemic, uneven, and in need of policy support. It is as though the world is still dichotomised but with a big twist. In developed economies, recovery is there but growth remains modest with high unemployment and large fiscal deficits. Having been at the epicentre, sluggish growth in the US can gather strength, but Europe will now come out of recession more slowly.

Of concern is excess global liquidity which will now grow even more, lifting commodity prices, bloating risky assets, and adding to inflationary pressure. Worse, scars of battered consumers remain in the face of strained and stressed fiscal dilemmas.

In emerging economies, especially BRIICs, the picture is amazingly different. Most are in a V-shaped recovery and many approaching normalcy. Asia ex-Japan is slated to grow 8% this year and prospects are for good times to continue. Despite it all, they have recovered with impressive speed.

China persisted and grew by 8.7% in 2009 (13% in '07); and by the 1Q'10, growth was already back up to 11.9%, prompting concerns of over-heating. India - the more self-contained of the lot, managed 7.2% in '09 and should comfortably clear 8% this year. As a result, inflation is gathering strength in many parts of Asia ex-Japan and in other BRIICs. Inflation in India is already up 10%; China, 3%; Brazil, 10%; Russia, 8%; Indonesia, 4%. Asset prices have also surged, earning the attention of policymakers especially in China and India. China would do well to keep inflation no higher than 5% in '10, and India, less than 8%.

Yet, in the lead-up to recession, emerging economies were already becoming increasingly hitched up to the US and European “shopping cart.” Asia's exports share of output rose to 47% (from 37%) over 10 years pre-crisis. This shows their growing dependence on external demand, not less. When much of this demand disappeared overnight at end '08, it didn't take Asia too long to be back exporting again. So much for decoupling. But this time, Asia found options.

Commodity exporters like Brazil, Indonesia, Russia & Australia, and commodity-importers, China, Japan, Europe and South Korea, found opportunities to reinforce one another. Such feed-back loops built greater interdependence. It seems Asia was only unruffled - not shaken, just stirred.

Commodities

Commodities posted in 2009 the biggest annual gains in four decades, led by doubling in copper, sugar and lead prices. Oil prices gained 78%. The S&P Index of 24 raw materials rose 50% in 2009, the highest since at least 1971. Many attribute this rapid price rise to the “super-cycle”, fanned by abundant global liquidity & strong demand from China and India in the face of 20 years of under-investment in raw materials production. The weak US dollar also played a part. Good times ended abruptly with the financial crisis. But the conundrum became more complicated when prices rebounded strongly, lifted by higher production costs and strong economic growth in BRIICs.

Prices of food commodities were also higher. According to experts, the food crisis has moved, from lunch and dinner to breakfast. Among the “breakfast commodities” only milk prices remained low. Last year saw tea prices at all time high; cocoa at 30-year high; sugar, 29-year high; coffee, near 11-year high; and orange juice, highest in 18 months. Sharp increases in these “soft commodity” prices contrast with relatively depressed prices for most agricultural commodities, including wheat, rice, soyabean and corn. Price divergences reflected fundamentals at play. Supply disruptions, not demand, were driving the rally. But longer term, food prices are on a rising trend, driven by compelling fundamentals: years of under-investment because of low prices prior to early 2000s; structural rise in demand because increased population demanded a diet richer in meat; and onslaught of biofuels.

With economic recovery, high food prices are here to stay. Unlike oil and base metals, supply response of agricultural commodities to high prices is speedy: farmers react each planting season. Farmers say there is no better fertiliser than high prices. In 2008, farmers prompt response was aided by good weather; consequently wheat, corn and soyabean output expanded and prices halved!

Until May this year, the Economist's overall commodity price index was up 22%, with food prices staying quite flat. Industrial commodities had risen 61%, non-food agriculture, 74%, and metals, 56%. The Greece crisis temporarily halted the rising trend. Experts say that over the next 18 months, commodity prices will resume rising with economic recovery, lots of cheap money, and rapid BRIIC growth. Like it or not, high commodity prices will persist.

Asset bubbles

In emerging countries, there is growing concern about too much liquidity (domestic and global) driving asset prices, which can lead to bubbles and inflation. So much so Brazil and Taiwan introduced capital controls to better manage capital inflows. The International Monetary Fund (IMF) had since concluded advanced countries may be responsible for creating bubbles in stock markets in emerging nations: its studies found (i) a positive link between domestic liquidity (money) and stock values; and (ii) an even stronger relationship between stock values and global liquidity (hot money). There is also a strong link between liquidity (money) and house prices in all countries. However, role of foreign money inflows doesn't appear significant. Hot money has little to do with China's frothy property market; it's homemade, it seems.

As someone who knows the going-ons in China, my friend Prof Fan Gang (National Economic Research Institute, Beijing) expressed concern about rising commodity prices and food supply disruptions, even though he views the inflation outlook with limited immediate risk. Consumer prices rose 2.2% in 1Q'10 and 2.8% in April. But real estate prices are more worrisome - land prices more than doubled in 2009 and property prices, up 12.8% in April 2010. China's massive stimulus plus explosive credit expansion resulted in a 31% rise in money supply in April. Even so, liquidity conditions are expected to remain easy. Simply because balance sheets of consumers and enterprises remain healthy, with prudent leverage, even though more savings have moved into real estate. Most observers regard properties as not yet bubbly.

Even so, Chinese authorities raised banks' reserve requirements (ratio of deposits kept at central bank) three times to moderate bank lending. Also, directives were issued to calm markets, including prohibiting developers from accepting deposits on uncompleted properties. China is not alone in this. Countries like Canada, Australia, India and Singapore have similar concerns. In emerging economies, central banks readily use non-traditional “macro-prudential tools” to do the job, including credit allocation, arm-twisting (moral suasion), and favouring some with credit and discriminating against others. There is no shortage of ideas to fix property bubbles.

Inflation and the quantity theory of money

Over the past 30 months, the global economy has been subject to two major shocks: (i) the build-up of enormous unutilised capacity. Global output had fallen by 5%-6% since 2008. As expected, inflation in developed nations fell from about 4% in '08 to less than 1% in '09. It has since started to act up with rises in commodity prices. IMF still thinks global inflation will remain low in '10. (ii) But, the crisis also injected enormous amounts of low-cost liquidity (money) into the global system. Fiscal stimuli and quantitative easing (printing money) in the United States, Europe, Japan, China and India together pumped-in liquidity estimated at 4%-5% of global GDP. Isn't all this money inflationary?

Many are familiar with the Quantity Theory of Money (QTM) - this principle states simply that the general price level will rise in proportion to the increase in supply of money (i.e. cash and bank deposits in private hands). So if money supply rose by (say) 5% last year, inflation is likely to increase by about 5% this year (i.e. with a lag). But Lord Skidelsky (a noted Keynes biographer) reminds us that QTM only works at full employment. If there is unutilised productive capacity, part of the rise in money supply is absorbed to produce new goods and services, instead of spending on existing output. That is non-inflationary.

Furthermore, flooding the economy with lots of central bank money does not necessarily mean private deposits (generated from spending or bank lending) will rise by the same proportion. Japan in the 1990s had lots of money pumped into the economy; yet, money supply rose by only 7%-8%. Hence, the lost decade of no growth and no inflation (even deflation). We see similar trends in recent experience with quantitative easing in the United States and Europe.

The lesson is clear: what matters is not the printing of money but spending it. Once spent, the bundle of paper money is activated to produce goods and services. Any central bank can create money but it can't ensure money will be spent or loan-out. Private money locked up in banks doesn't increase the needed money supply; new money simply replaces the old sterilised by recession. So, pump priming should be allowed sufficient time to work through the real economy; first, to use up existing capacity (hence, little or no inflation) and then, build new capacity to propel new growth. That is why any premature exit of fiscal stimuli just damages the recovery process.

We already see results of successful money creation in BRIICs and many others. Asymmetrical recovery demonstrated that, away from the epicentre, emerging economies were able to translate money they print into money spent. At this stage of the growth cycle, presence of significant output gaps means there is little pressure on resources, since firms can readily raise output and look to higher volumes instead of prices. Rising Asia is experiencing the “sweet spot” of the cycle as output and profits rise, while inflation remains under wrap.

As recovery proceeds, monetary policy needs to tighten, removing loose policy settings put into place during recession. Rising interest rates should not constrain the performance of risk assets driven in an improving economy. As I see it, risk of policy error tends to be “too little too late,” erring on the side of policy that is too loose for fear of choking off recovery prematurely, or unsettling markets (and vested interests) ill equipped to handle change.

WHAT ARE WE TO DO 
BY TAN SRI LIN SEE-YAN
>Former banker Dr Lin is a Harvard educated economist and a British chartered scientist who now spends time writing, teaching & promoting the public interest. Feedback is most welcome; email: starbizweek@thestar.com.my.

2010 Fifa World Cup: Is Africa football's unheralded star?

Why for all the hype is the World Cup shaped by, and in the interests of, a European elite?

A fan arrives for a friendly match in preparation for the World Cup. Photograph: Siphiwe Sibeko/REUTERS

The arrival of the World Cup – the showpiece for the world's most lucrative pastime – in Africa, the world's poorest continent, is clearly an event of deep symbolism. But symbolic of what? For Thabo Mbeki, who as South African president was at the forefront of the bid to host the tournament, this is the moment when Africa finally arrives on the global stage. In African Soccerscapes: How a Continent Changed the World's Game, one of a number of recent books celebrating "Africa's" World Cup, Peter Alegi quotes the letter Mbeki sent to Fifa's president, Sepp Blatter, setting out his country's ambitions: "We want, on behalf of our continent, to stage an event that will send ripples of confidence from the Cape to Cairo . . . We want to ensure that one day historians will reflect upon the 2010 World Cup as a moment when Africa stood tall and resolutely turned the tide on centuries of poverty and conflict." Even by the standards of the hyperbolic guff that always surrounds major sports events, this is setting the bar pretty high. In reality, sports tournaments rarely do much to transform the fortunes of the countries that host them – at least not for the better – let alone change the fate of whole continents. But they can tell us a lot about where power really lies.

What the 2010 World Cup clearly shows is that Africa is now a serious player in the world of football. This represents a remarkable turnaround in a relatively short period of time. Africa had no real presence at the World Cup until 1974, when Zaire (now the Democratic Republic of Congo) became the first black African team to take part in the finals. (South Africa had planned to send an all-black team to Mexico in 1970, but that was vetoed on the same grounds as the plan to send an all-white team to England in 1966.) Zaire lost all three of their games, scoring no goals and conceding 14. In Brian Glanville's The Story of the World Cup, now in its fifth edition for 2010, Zaire barely get a mention, apart from Glanville noting that Scotland should have beaten them by more than 2-0, but the Scots wilted in the heat. Yet the African team's real mark on the tournament was made during their match against Brazil, when the Zairean defender Mwepu Ilunga ran out of a defensive wall at the sound of the referee's whistle to boot away the ball that had been placed for a Brazil free-kick, while the opposing players looked on with a mixture of amusement and horror.

This became a defining moment for that long-standing cliché of western football commentary: the charming "naivety" of African football. The players were assumed to be skilful, but hopelessly ill-disciplined and childish. When it was subsequently rumoured that Ilunga might have panicked because the Zairean dictator Mobutu had warned the team that if they lost to Brazil by 4-0 or worse he could not guarantee their personal safety (it was 3-0 at the time), this hardly helped the world to take African football seriously. Naivety, it was assumed, went along with deep and sometimes terrifying political consequences.

These lazy assumptions persisted through the 80s and 90s, even as African teams started to win games and to suggest that they might one day even win the tournament. In 1990 Cameroon came within a few minutes of knocking England out at the quarter-final stage (in which case there would have been no tears from Gazza and perhaps no football boom on the back of them), before losing to two late penalties. David Goldblatt, whose superb The Ball Is Round (2006) remains the one indispensable guide to global football, simply records that "in cup football the better team does not necessarily win . . . Cameroon were still the better team". But for Ron Atkinson, commentating on ITV at the time, the match confirmed that African teams were always likely to fall short at the highest level for all the traditional reasons – too excitable, not enough discipline. Lovely fellas, though.

The fact that it is impossible to imagine someone like Atkinson commentating on this year's World Cup – especially not Atkinson himself, whose racist comments caught on an open mike a few years ago all but finished his career – is a sign of how far we have come. No one in their right mind would now dare to patronise African football or footballers, who include some of the best players to be seen anywhere (Didier Drogba, Samuel Eto'o, Michael Essien). On planet football, Africa has become a force to be reckoned with, and South Africa 2010 is the ultimate symbol of this changing order.

But still, the football world is not the same as the real world. For a tournament that is meant to signal how much has changed, there is still something curiously old-fashioned about the make-up of this year's World Cup finals. There will be six African teams taking part – Algeria, Cameroon, Ivory Coast, Ghana, Nigeria and the hosts, South Africa – but the rest of the world's rising powers will almost all be absent. There is no China, who somewhat surprisingly failed to qualify, and no India, who as usual did not even come close. Indeed, of the BRIC countries, only Brazil will be there (Brazil are always there); Russia also missed out, in a play-off to little Slovenia. But nor will there be teams from many other of the world's most populous nations: no Indonesia, no Philippines, no Pakistan, no Bangladesh, no Vietnam, no Iran, no Iraq. If you add them all up, that's over half the world's population who will have to be supporting someone else's national team.

Yet it is China's absence that is really noteworthy. This is an African tournament taking place without the continent's dominating force. Ironically, China had a much bigger presence at the Africa Cup of Nations, which took place in Angola earlier this year, than it will have at the World Cup. In Angola, it was the Chinese who provided the infrastructure (including building four new stadiums) in return for the usual raft of trade and mineral concessions. That probably offers a better glimpse of the future for the rest of the continent than anything that happens in South Africa this summer.

By contrast, Fifa's showpiece still conjures up a vanished world in which Europe is at the heart of everything. This is not just because half of all the teams taking part are European. It's also because many of the leading South American players, and almost all the leading African ones, play in Europe. The fact is that the decaying powers of Europe remain the driving force behind the global game. Countries that are watching their real economies totter – Spain, Italy, England – are still sustaining vast, bloated football economies that fuel the planet's appetite for the sport. Africa is now a part of this money machine, but it has little or no control over it.

As a result, this is a tournament shaped by, and for, the interests of the European elite. Having it in Africa means it's in the right time zone for European TV audiences. Having it in South Africa means that it's also got the right climate for European teams to thrive. Africa's first World Cup will also be the coldest on record – a genuine winter tournament for the winter game. The Europeans will be playing in conditions they feel comfortable in, staying in hotels they feel comfortable in, travelling to stadiums they feel comfortable in. Normally, home advantage, or at least continental advantage, is decisive in World Cup finals: Brazil is the only country ever to have won the tournament outside of its home continent (in Sweden in 1958 and South Korea in 2002). Therefore this should be Africa's moment, not just to host it but to win it. But that seems unlikely. Ivory Coast are currently the leading African fancies according to the bookmakers. But ahead of them are Portugal, France, Italy, Holland, Germany, Argentina, England, Brazil and Spain. Everything is being done to ensure that these teams will feel at home.

However, the real obstacle to South Africa 2010's delivering on home advantage is the state of South African football itself. Were the tournament being held in, say, Nigeria, it's easy to imagine the home side romping to victory on a wave of local support and with the help of local conditions, as all the better-fancied sides wilted in their alienating surroundings. But those surroundings are one of the reasons why Fifa would never dream of holding a World Cup in Nigeria. South Africa will have passionate local support, but the comfortable setting means that the national team needs to be good to take advantage. Unfortunately, the team is not very good at all. The bookmakers rank Uruguay, Denmark and Serbia as more likely to win than the home nation. Instead, they risk becoming the first home side ever to fail to make it out of the group stages.

Why has the hosting of the World Cup not done more to galvanise South African football? The answer, which is touched on by Steve Bloomfield in his entertaining travelogue Africa United: How Football Explains Africa, says a lot about why the transformative dreams of Thabo Mbeki are likely to be disappointed. During the apartheid years, South African football was treated as a "black" sport (though many whites played), in contrast to the exclusively "white" sports of cricket and rugby. That meant it was starved of resources, but it also meant that it had a great deal of autonomy, because the South African government was happy to let it organise itself. It's the autonomy that has subsequently been the problem. The South African Football Association (Safa) got used to treating itself as a state within a state. As a result, increasing resources have tended to be squandered by a deeply inefficient and corrupt organisation. "It's jobs for life at Safa," Bloomfield is told. "There is no accountability – it's nonexistent." The prospect of hosting the World Cup hasn't sorted this problem out. It's just made it worse.

The great hope behind holding big sporting events in developing countries is that the glare of international publicity will drive the process of reform. But it doesn't work like that, because the incentive structure is all wrong. Corruption tends to become more entrenched, since everyone knows that only two things are certain: first, there will be plenty of money washing around, and second, everything will have to be finished on time, come what may. So rather than reform, the local organisers hold out for short-term injections of funds, often to bail them out of crises of their own making. The Athens Olympics of 2004, which may in the long run have helped to bring the global financial system to its knees, is the role model here. The Greek economy wasn't bankrupted by the cost of hosting the games. But Greece's promises to reform its way of doing business, to meet the criteria of euro membership, had to be put on hold in the desperate rush to get the facilities built on time. An unbreakable deadline, with the world watching, means more backhanders being paid, not fewer, more black-market labour, more dodgy accounting practices, more skimming off the top. Hosting the Olympics made Greece more Greek.

The 2010 World Cup is unlikely to shake global capitalism to its foundations, but it is following a familiar pattern. Very recently Fifa injected an emergency $100m into Safa, to ensure training facilities are ready on time. The stadiums are magnificent, but as Alegi shows, most of the employment generated to build them has been short-term contract labour. There is little evidence of what their lasting legacy will be: so far, all that an event that has generated $3.3bn in revenue for Fifa has produced for grassroots football in South Africa is 27 artificial pitches. The stadiums themselves will probably have to revert to rugby or cricket to pay their way. A lot of people are going to become very rich as a result of the tournament. But once it is over, it's going to be hard for most South Africans to know where all the money has gone.

In Why England Lose, and Other Curious Football Phenomena Explained, Simon Kuper and Stefan Szymanski describe why big sports tournaments rarely give the host country the economic boost that the organisers always promise – all those extra tourist dollars and investment benefits simply don't materialise. What these events do achieve is a short-term boost in national happiness – for a few months, people are cheered up by having something to distract them. Is that what South Africa needs? "About a third of all South Africans live on less than $2 per day," Kuper and Szymanski drily note. "These people need houses, electricity, holidays, doctors."

Yet the perennial problems of spreading the wealth of vastly lucrative sporting events does not, by itself, explain why South Africa hasn't got a better national team. In 1996, in the first flush of the post-apartheid era, the country hosted and won the Africa Cup of Nations, which seemed to promise glory days ahead. The game began to prosper at the local level. But the problem is that South African football prospered too much at the local level, at least relative to the rest of the continent. It now represents one possible model of football development: the corporate model, where home-sponsored teams support a functioning league system, and home-grown players have an opportunity to make a living in their own country. The majority of the South African squad play in their own Premier League, for teams such as Kaizer Chiefs and Mamelodi Sundowns. The league is competitive but also almost certainly corrupt – there was a major match-fixing scandal in 2004, which led to plenty of arrests but very few convictions. It has produced almost no internationally recognised players. South Africa now has a good enough league system to maintain the national game, but not a good enough one to improve it.

The other model is the one that holds in the rest of Africa, including in more successful footballing nations such as Ivory Coast and Ghana. This is the raw free-market system of human trafficking, where entrepreneurs set up football academies to train up young African players and then trade them on to clubs in Europe. As Bloomfield describes, there are now hundreds of these academies scattered across Africa, and governments in weak or failing states often welcome their presence since they offer facilities and opportunities that the states can no longer provide themselves. They also offer players the prospect of serious riches if they can find their way to the top European sides. This is the route that most members of the Ghanaian and Ivorian national teams have taken. Both squads consist of players who play almost exclusively in Europe. The superstars – Drogba, Essien, the Touré brothers, Kolo and Yaya – make very considerable fortunes by European standards, and unimaginably vast ones by African standards.

The fruits of this system will be on display at the World Cup, but so will its pitfalls. The best African teams have to be put together from players who are scattered more or less at random across Europe and often have few links back home. Some places get lucky and produce a small nexus of superstars: this is often because the arrival of one outstanding player breeds interest from agents sniffing around for the next big thing. But success also breeds greed and corruption, and leads the caravan to move on to look for untapped (and cheaper) sources of talent. Almost nothing gets put back into the infrastructure of the African game, so no country can plan for the future. Ghana could win this World Cup if the team had any halfway decent strikers, but Ghana has become known for its midfielders, so that's what the system has produced. African countries have to make do with what the rich world wants to extract from them.

But there is another side to this system that will not be on display in South Africa. The vast majority of African players do not end up as superstars at Chelsea or Barcelona. They arrive in far-flung corners of Europe and then move around, traded for small sums by cash-strapped clubs looking for value. They are what Alegi, in African Soccerscapes, calls the lumpenproletariat of professional football, with few rights, fewer privileges and no security. Many arrive very young (in 2003 the average age of African imports to European leagues was 19, compared with 24.5 for imports from elsewhere in Europe) and wind up in deeply unfamiliar places where racism is still rife and the climate is often uncongenial. African footballers now make up the majority of professionals in Romania, and more than a third in countries such as Switzerland and Ukraine. In 2006, over a fifth of all transfers between European clubs were of African players. Cheap African labour is the now the staple diet of the lower reaches of the European game.

Some of the more responsible clubs have tried to buck this trend. Ajax of Amsterdam have set up a feeder club in South Africa to try to produce players for their own first team in a more responsible and less exploitative way. But so far it does not appear to have worked – the general mediocrity of the South African league seems to be holding them back. Instead, the more exploitative system practised elsewhere on the continent suits the trend in world football, which is towards an ever greater focus on the tiny elite of superstars and super-rich clubs at the expense of the rest. Football is an increasingly individualistic game, in which clubs can make vast sums out of the image rights and merchandising of their best-known players (it is said that Ronaldo has already earned back the £80m Real Madrid paid Manchester United for him in just this way), much of it from Asia. Africa offers the possibility of finding such stars for next to nothing. It is treated as a potential goldmine, which suggests that not so much has changed after all.

All this is hard to square with Mbeki's hopes for a South African World Cup. Fifa is determined to put on a good show, and the expectation is that we will see the best of Africa, or at least Fifa's definition of it: an efficient, well-organised event that need frighten none of the sponsors or merchandisers or money-men for whom the game now exists. The facilities will be ready on time, the contractors will have been paid off, the corruption will have been swept under the carpet. There will be plenty of local colour and no doubt lots of attractive football. New superstars will be born, some of them African, maybe even some of them South African, whom the European clubs will snap up once the tournament is over. There will be a vast audience in Asia for the matches, among fans whose interest is not in any particular country but in seeing the stars of the European leagues, the Ronaldos, the Rooneys, the Drogbas. In the African countries that have a chance of doing well in the tournament there will be huge excitement and scenes of euphoria, which Fifa and the world's media will milk for all they are worth. Then, when it is over, Fifa will feel it has done its bit for Africa. No one will be left in any doubt that the world now takes African football seriously. But the real power lies elsewhere. On the rotation policy, the tournament is due to come back to the continent in 2026. But there is already talk that by then India will be ready to make a bid.

By David Runciman guardian.co.uk, Friday 21 May 2010 23.54 BST

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