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In recent times, we saw problems in China with Tibet and Indonesia with Timor. Now, the problem which is more glaring is the EU. The EU is different in that it is made up of different countries. These countries have given up their own currencies to embrace a common currency. This, effectively, surrenders some of the individual countries' control over their economic destinies. This is probably a reason why Baroness Margaret Thatcher, then Prime Minister, refused to have the UK join the EU.
In The Straits Times on 29 April, I read with concern as an article reported that there is little danger to Asia because of our little trade exposure to the EU. It said that the EU consumes 19.8% of China's exports, 12.4% of Korea's, 11.9% of Japan's, 11.9% of Thailand's, 10.3% of Taiwan's and just 4.9% of Singapore's. These numbers are based on a 12 month average ending March.
What should be considered, in my opinion, is the missing multiplier effect. If China loses 19.8% of her export market in any substantial way, we can imagine them importing less from other countries and this will impact other countries' trade figures in total. Same goes for Japan, Korea and also Singapore. The fallout will have earth moving consequences for us in Asia.
Unfortunately, there is no end in sight to the EU's problems, it would seem.
Blame Germany, Galbraith Says:
"Extreme Brinkmanship" Imperils Europe
Posted Apr 30, 2010 03:43pm EDT by Aaron Task
In sum, the Greek bailout may alleviate the immediate crisis but is far from a "permanent solution," the economist says. European officials will be "fighting fires continuously until they address the constitutional problem" of the EU.
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