China is highly unlikely to suffer a currency crisis like what happen to Indonesia and South Korea during the 1997-8 asian financial crisis due to their massive US treasury holding. But i am concern about their unemployment rate, its potential for social unrest and subsequent implications is very scary.
“In previous meetings it has seemed like there was a tension between the U.S. pushing a more expansionist monetary policy and European governments favoring austerity measures. Is that tension still there?”
Sweden’s finance minister, Anders Borg:
“For us to say that we would ever be over-expansionary, would be very difficult. The U.S. can be very expansionary. You have 10 percent deficit and interest rates are still hovering around 1,2,3, percent. It’s basically only the U.S. that could behave that way. For everybody else it would mean huge bond spreads. To my mind, the U.S. is saying to the rest of us that we should be more expansionary, but we’re also on top of a huge U.S. debt. The markets will not punish the U.S., they will punish everybody else standing on top of that debt. I would be very cautious about running a huge debt like the U.S. because we are a small vulnerable country. That is true of many of these European countries.”
Wouldn’t it make more sense that the “confidence fairy” punishes both the US bonds as well as currencies that is backed by large sum of US debt, namely, China, Japan, Taiwan etc?
The causes of the 2008 Financial crisis wasn’t new to me, i understood them. The Wall Street personalities behind the crisis wasn’t particularly disgusting to me, was kind of expecting it, given their incentives structures. But i was surprised and disgusted to hear scholars like John Y. Campbell (Chairman of the Economics department at Harvard) and Glenn Hubbard (Dean of the Graduate School of Business at Columbia) say that their profession dont need to disclose their financial interest in the institution they write about. What?!?
Inside Job (2010) ★★★★
I was once asked by a friend “is there a strategy for getting a girl friend?” and “yes” i responded “there is a strategy for everything”. And now i am putting my answer to him on the web for all boys and girls (the same strategy work for girls too, just switch the sexes below). Continue reading
From Mark Regnerus’s Slate article Sex is Cheap:
“[M]en want sex more than women do. Call it sexist, call it whatever you want—the evidence shows it’s true. In one frequently cited study, attractive young researchers separately approached opposite-sex strangers on Florida State University’s campus and proposed casual sex. Three-quarters of the men were game, but not one woman said yes. I know: Women love sex too. But research like this consistently demonstrates that men have a greater and far less discriminating appetite for it.”
The conclusion drawn fromt the cited research is at best sloppy at worst wrong. Continue reading
The end of history
Francis Fukuyama’s The End of History thesis famously argued that liberal democracy is the final form of government. Its key premise: successful industrialization will inevitably create an large educated middle class that demands democracy. An indicator of how far along industrialization will liberal democracy emerges, as noted by Francis Fukuyama, is when the country have around USD6,000 purchasing power (in 1992 PPP USD). This premise has largely been correct since its pronouncement, with the exception of Singapore and a handful of resources-rich states where purchasing power could raise without creating a large educated middle class.
Since China enter WTO in 2001, China’s purchasing power has ballooned to USD4,700, after adjusting inflation and purchasing power parity, closing in on the USD6,000 milestone. However the size of its educated middle class is far from the average of countries considered free fry Freedom House.
While China is not a free country by any standard, there is some low-level movement towards democracy. Freedom house gave China the exactly the same score in 2002 and 2010: political rights 7 and civil liberty 6 (7 being least free, 1 most free). Some have suggested (as have Fukuyama) instead of democracy, Chinese communist party (CCP) might push towards a soft-authoritarian political system akin to Singapore, the only industrialized exception to the stated premise. Continue reading