European sovereign debt crisis

With yield on 2 year Portugal government bond spiked 3.2% over friday and 7% over last month, Portugal is heading toward insolvency at an ever accelerating rate. The scale of any potential bailout to counter and push down the sovereign debt yields will need to be massive and truely historical.

Standalone Greece sovereign debt (EUR 236 billion) has limited contagion effect as major debtholders: France EUR 75 billion, and Germany EUR 45 billion, still fiscally sound at this point to weather the potential impact. Portugal on the other hand with her close financial tie to Spain could potentially trigger an unprecedent shock wave through the global economy. One-third of Portugal sovereign debt (EUR 286 billion) is with Spain (EUR 86 billion). Spain with persistent high unemployment rate at 20% and economy that is likely to contract over next few years is not fiscally strong enough to withstand the potential impact from Portugal insolvency. At this very critical juncture, EU has every bit of interest (or self-interest) to safeguard Portugal from faltering. If the effort fails then the debt yield for Spain will surely accelerate and ultimately force Spain into insolvency as well. Compare to the size of debt for Greece and Portugal, the size of sovereign debt for Spain is whopping EUR 1.1 trillion. The potential impact of insolvency from Spain is almost.... too lethal to imagine

The stake is indeed extremely high not only for EU but also for the US and China. For the US, the central bankers are painstakingly trying to chart the course to offload the bloated balance sheet accumulated during the subprime crisis. The process of offloading is only feasible when the financial markets are operating in a "normal" environment, meaning healthy and liquid with many buyers stood ready and able to absorb the portfolio from the central bank. With the unfolding of sovereign debt crisis, the financial markets are anything but "normal." Crippled with bloated balance sheet, the ability of US central bank to deal with any further crisis is seriously questionable.

For China, advanced economies should pay more gratitude to China politburo for deciding to do the heavy lifting during the subprime crisis. China faced with strengthening dollar could very well allowed renminbi to devalue to remain competitive in the international trade. However such policy of competitive devaluation will invariably force many other export powerhouses notably emerging Asian countries like Singapore, South Korea and etc. onto their knee. Instead Chinese government injected unprecedent amount of liquidity into the domestic markets to artificially create "domestic demand." With banking sector still immature, the poor control and oversight invariably allowed sizeable amount of liquidity flown into speculative investment like real estate. Although the amount of loans that eventually went into speculative investment is not known, the figure so far from the central government is massive and still ringing up. Good portion of these loans will surely turn sour as central bank soaks up the liquidity to contain the real estate bubble from inflate ever larger. But if the European sovereign debt crisis deteriorates further we could expect to see the acceleration of bad loans in China banking sector.

The European sovereign debt crisis is deteriorating and spiraling out of control. The stake is so high that boil down to "save you... save me" scenario but with central banks around the globe still crippling from the subprime crisis any chance of averting this crisis will not be from ECB alone rather from a concerted effort of central banks from advanced economies. Although political meddling could complicate this much needed action.

Hong Kong

Early sunday morning 17th, I left house around 6:30am to catch an early coach to the airport. On this trip to HK, I scheduled to take 4 exams in four days. What's really getting on me is.... I haven't even touched the study manuals yet... Jesus... I have been swamped and under loads of stress about making a presentation on investment strategies for foreign exchange and equity markets in front of company exes and ceo. Well when the going gets really really tough, it does wonder to adrenaline and mental alertness. From coach til I landed and rushed to the exam site, I literally had the study papers on my hand constantly. The immigration officer must found me a bit odd as he impatiently flipped my passport and documents and looked at them very attentively. Anyway no mishap happened, I pretty much became the best buddy with my study papers. Did I say no mishap? hmmm... let me correct that... to my terrible dismay I found out that the financial calculator I brought along ran out of battery and the exam is starting soon... that mean I will have to go on the battle field commando style (naked). Blasphemous words like s*** started to butterfly around my head. The exam has 60 questions and lasts an hour and 30 mins. Well it doesn't take a rocket scientist to figure out that I probabily finished the exam dead last. I was agonizing over all those compounding problems like (1+0.078/12)^12. There is absolutely no way for me to figure out the precise solution so I had to use all the tricks and pull out all the stops to make an "educated" guess then pray really really hard. By the time the exam is over, I was very much wired as my brain has been grinding for the past 12hours straight. The invigilator asked me to sign the paper then passed me the result sheet. Out of 60 questions I got 55 correct. Phew big relief!! I hastily ate something at Delifrance then made my way over to check in at hotel. In my office wear of suit and tie, the hotel manager was very courteous and polite. To my great surprise, he upgraded my room to the top floor with an oceanview overlooking the bridge. Nice way to start my trip in Hong Kong.
[to be continue...]

Much belated Merry Xmas & Happy New Year

Nowadays I have been working around the clock. First I dropped out from MBA school to join a publicly traded corporation. The firm regularly imports multi-million dollars of raw materials like corn and soybean from overseas. These imports are potentially exposed to price increase or change in exchange rates. My role is to assist in analyzing the commodity and currency markets and devise appropriate hedging (protective) strategies utilizing financial derivative instruments. The company is also actively involve in many investments and joint ventures with oversea firms; for example, Burger King, 鼎泰豐, and Saboten... Existing and new ventures will need sound business models coupled with in depth financial analysis and projections. Second I secured some seed money to start up my own investment fund focusing in options and futures markets. Starting from scratch to build financial models, study past few years trading records and read up on trade journals & recent analysis have been a steep learning curve. Third I am scheduled to fly to Hong Kong this Jan 6 and Jan 17-20 to take HK Securities Exchange specialist licenses in securities (股票) and derivatives (金融衍生). After HK, I plan to take up the two levels of Financial Risk Management (FRM) certification... hmmm deja vu all over again... Lastly I somehow got myself into a 24 month peak physical training program in preparation for climbing Mt. Everest. On the last stretch to the summit, climber's mental faculty supposely will decline to 30% of normal capacity, hallucinations, weight loss of about 20% and possible lose of a limp or toe due to frost bite... check, check, double checks... sounds good to me sign me up please... (sarcasm.....) But I have to say I am actually making a noticeable progress in my physical conditioning. I might actually get back to my peak shape when I was running competitively for the university.... Nah i was just teasing myself... Happy New Year everyone!

北海道

函館
五稜郭公園

うに (Sea Urchin) overdose ><

のぼりべつ
登別　地獄谷

Amazing to walk on a wooden pathway that is barely lifted above the 地獄谷 where 濃い硫黄 steams upward and casts the entire area in a dreamy fog.

足の温泉

The natural 足の温泉 is super soothing; so soothing that we never thought about that we didn't bring towel before it is too late.

ファーム富田

Colorful plants stretch far beyond to the end of horizon. It feels almost like the heaven on earth.

On this trip, I brought along only my backpack with barely a week of cloth to spare. Stupid me that I thought electrical converter will be very easy to find in japan. By the time I left kyoto, my camera battery is pretty much dried. Most of the 北海道 pictures were graciously supplied from my buddy.

京都 心の旅

単独で　京都に
The start of my soul-searching journey.



















きんかくじ
金閣寺






夢の休憩所

平和な散歩

ぎんかくじ

銀閣寺

平静な風景

えいかんど　ぜんりんーじ
永観堂禅林寺
I kneel inside the temple and my senses start to collapse into a point of tangency. My mind drifts into a state of subconsciousness. Memories start to uncontrollably emerge in vivid imaginaries. In the submerged depth, I feel sharp spasm to my heart. My heart aches terribly. I clasp my palms tightly together pray in earnest to repent and wish for a heart of love & compassion.
平静な歩道

こだいーじ
高台寺

ふしみ　いなりーたいしゃ

伏見稲荷大社

At the summit of 伏見稲荷大社, I kneel and pray for a heart of love and compassion. According to the number I drew, second column is the words of wisdom for me.

東京

浅草　せんそじ (Sensoji Temple)



















美しい Tokyo 夜空


Tokyo Tower



日本棋院
ここの多くの幼年期の思い出...
Lots of childhood memories here...

友達　黄翊祖　と　私

Foundation of Basic Skills Part 2

基本图
After 白1 and 黑2 exchange, option A press becomes inappropriate as it will turn the exchange into damaging for white. Both options B and C are conceptually sound except some minor differences.

图1

After 白1 press, the marked exchange clearly favors black as white approached the corner from the wrong side.

图2
白1 and 白3 speedily form a decent shape although white needs to worry about black invading at C in the future. At this juncture, black will play either A or B.

黑：马晓春 白：常昊 Nov 3, 2007 黑+1.5目
黑：李映九 白：朴时烈 Aug 17, 2009 白+1.5目
图3
When black invades in the future, 图3 variation might be the likely outcome. If white dislikes the potential invasion then white can change strategies with initial R7 approach.
图4
白1 is a probable strategy to pincer farther away to construct a solid shape with 白3. For those players like 李世石 who painstakingly seeks out maximum efficiency, 白1 and 白3 are a bit "soft."
图5
Since
1) white might not get the maximum efficiency right away
2) right lower corner is not urgent to handle at this moment
白1 is another feasible alternative to settle the upper corner first then wait for the opportune moment to play the lower right corner to gain maximum result.

Question:

How should white respond if black pincers with 黑1?