A smattering of news on this and that:
Posts Tagged ‘China’
LinkSwarm for October 6, 2011
Thursday, October 6th, 2011Cruz, Dewhurst Trade Punches
Tuesday, October 4th, 2011I think it’s safe to say that Ted Cruz now has David Dewhurst’s attention.
First came the Chupacabra ad, then news of the National Review cover. Then yesterday, the Cruz campaign noted that Dewhurst floated the idea of a wage tax (i.e., a thinly disguised income tax) back in 2005.
Today the Dewhurst campaign stepped down from the Ivory Tower to punch back, calling attention to a story that Cruz, in his career as a private appellate lawyer, represented a Chinese firm in a patent dispute with an American firm, and to an interview with Laura Ingraham in which he expressed opposition to a Senate bill that seeks sanctions against China for currency manipulation. (A complete transcript of the Ingraham show appearance can be found here.)
Here’s the exact language from Steven Cheung of Dewhurst for Texas:
The day after Texas Monthly’s Paul Burka reported on Ted Cruz acting as legal counsel to a Chinese company accused of patent infringement against an American inventor, Cruz again showed his true colors by again defending China’s interests on the Laura Ingraham Show. To check out our latest video that has highlights, please click here.
By standing on the same side as President Barack Obama, a fellow elitist, Harvard attorney with zero business experience, Cruz and Obama strongly oppose a bill that would curb China’s predatory trade and currency practices in a time when they are taking over ownership of the American economy.
“It’s about holding China accountable for what China is doing that is completely without integrity and subverting the principles of free trade,” said Ingraham. Moments later, Ingraham correctly declared, “Obama’s with you on this bill!”
At a time when millions of Americans are without jobs, why does Ted Cruz consistently put the needs of China before America?
To my mind, this is fairly weak sauce by the Dewhurst campaign, and the tone is overreaching. Representing clients is what lawyers do, and it’s not like Cruz is working pro bono for convicted terrorists.
And I happen to be on Cruz’s side on the China bill, as are (as far as I can tell) the vast majority of conservitive commentators and economists. Sure, China manilpulates it’s currency…but so do we, Europe, and just about everyone else. Protectionism is still loser economics, and starting a trade war in the midst of a recession is not a great idea.
Whether these criticisms will play with Republican primary voters is another question. Tom Leppert’s been using the lawyer line of attack on Cruz without any notable effect for months now, but China bashing is seldom unpopular; it’s also, as far as I can tell, seldom an effective wedge issue, either.
But it’s interesting to note that the gloves have finally come off for the Dewhurst campaign. I don’t think his soi distant Ivory Tower approach was going to tide him over until he could carpet-bomb the primary with big direct mail and ad buys. Despite Dewhurst’s status as presumptive frontrunner, Cruz continues to make noise and rack up conservative endorsements both locally and nationally.
The Dewhurst campaign seems to have finally realized they have a fight on their hands.
More Greek Default Rumblings
Sunday, September 25th, 2011Actually, less rumblings than the roar of an approaching train. And since I temporarily seem to be ahead of the latest Ace of Spades Doom roundup, I’m going to try and give you a nice clear view of the coming crash.
“No longer a question of if, but when – that is the tone of discussions over Greece which has dominated the summit of finance ministers in Washington over the weekend.” Former Britain’s former finance minister Alistair Darling agrees, calling default “only a matter of time.”
The talk now is of how to put in a “firewall” to prevent the contagion of an inevitable Greek default from spreading throughout the European banking system.
The Euroskeptics have been completely vindicated:
Very rarely in political history has any faction or movement enjoyed such a complete and crushing victory as the Conservative Eurosceptics. The field is theirs. They were not merely right about the single currency, the greatest economic issue of our age — they were right for the right reasons. They foresaw with lucid, prophetic accuracy exactly how and why the euro would bring with it financial devastation and social collapse.
I think at this point UK residents should be feeling vrey glad indeed that they didn’t abandon the Pound for the Euro.
Bret Stephens talks about the long line of deceit and fraud that lead Europe to the current crises. “What is now happening in Europe isn’t so much a crisis as it is an exposure: a Madoff-type event rather than a Lehman one.”
Mark Steyn, using the ever popular music and political metaphor gambit, compares the breakup of the Eurozone with the breakup of R.E.M. while bringing the usual Steyn goodness: “Attempting to postpone the Club Med welfare junkies’ rendezvous with self-extinction will destabilize internal German politics (which always adds to the gaiety of nations).” And this:
As its own contribution to the end of the world as we know it, the Obama administration has just released a document called “Living Within Our Means and Investing in the Future: The President’s Plan for Economic Growth and Deficit Reduction.” If you’re curious about the first part of the title — “Living Within Our Means” — Veronique de Rugy pointed out at National Review that under this plan debt held by the public will grow from just over $10 trillion to $17.7 trillion by 2021. In other words, the president’s definition of “Living Within Our Means” is to burn through the equivalent of the entire German, French, and British economies in new debt between now and the end of the decade. You can try this yourself next time your bank manager politely suggests you should try “living within your means”: Tell him you’ve got an ingenious plan to get your spending under control by near doubling your present debt in the course of a mere decade. He’s sure to be impressed.
Germany is near the limit of their willingness to bail out Greece.
There may even be a taxpayer revolt brewing in the Aegean.
And if the other PIIGS are doing better than Greece, it is only a matter of degrees: “Italy is the new Lebanon, Portugal the new Venezuela, Spain the new Vietnam, Ireland the new Argentina and nothing is more risky than Greece, according to today’s credit default swap market.”
But it’s not just Greece and Europe that are hitting the wall. China’s housing bubble may finally be bursting. Worse still: “growth in China may be zero [and] China has ‘European kind of numbers’ when it comes to debt.”
And the Chinese housing bubble isn’t just affecting China. It’s also affecting Canada.
And at least one observer has drawn parallels to a certain hopemonger currently residing in the White House:
Obama has no intention of really solving the debt crisis. And that brings us back to Greece. That government has been doing the same thing for a decade and the chickens have now come home to roost. Greece’s debt is 150 percent of its Gross Domestic Product. Our debt has just reached 100 percent of GDP and the debt is accumulating faster than it ever has. If we were looking out the windshield down the road, we could see the crash that’s just up around the bend.
But rather than put on the brakes, the president has chosen to pick a fight with the other passengers in the car he is driving. Talk about distracted driving! He is gambling that this fight will convince the passengers to let him stay behind the wheel for another four years. But we certainly can’t wait that long. He’s turned up the radio in hopes we won’t hear the ambulance sirens.
It looks like its going to be another rough week for world markets…
Wealthy Entrepreneurs Leaving China?
Tuesday, June 7th, 2011According to this Forbes piece, yes. This seems to be partially a reaction to the government pouring more money into the public sector.
What does that mean? Hell if I know. But it makes sense. After all, if you could get out of China, wouldn’t you?
But between this and China’s housing bubble, it goes a long way to show that China’s “economic miracle” is a lot more fragile than the likes of Thomas Friedman would have you believe…
Update on the Coming Euro Collapse (and Our Own)
Monday, June 6th, 2011Andrew Lilico in the Telegraph (via McArdle, via Insta) has a sobering look at what will happen when Greece defaults (“It is when, not if”). It starts out:
Every bank in Greece will instantly go insolvent. The Greek government will nationalise every bank in Greece. The Greek government will forbid withdrawals from Greek banks.
And then gets even less pleasant, including martial law and the European Central Bank going insolvent. The real European crisis hasn’t happened yet, and when it does, it will probably be much worse than the current U.S. recession.
Meanwhile, Greeks continue to protest long-overdue austerity measures. I am doubtful Greece is willing to actually implement real austerity. After all, the Greek government only recently decided that it might want to stop paying pensions to the dead. instead of solving the problem of an out-of-control welfare state, the ECB and the IMF have decided to let Greek slip even further into debt in exchange for implementing reforms and austerity they’ve shown no signs at all of being willing to implement; in other words, to kick the can down the road and hope that gives the other PIGS time to get their respective houses in order before the Euro collapses.
Meanwhile, Ireland’s crisis is so severe that not only are they going to start taxing private pension funds, they’re actually going to start fining trustees that don’t hand over pensioner’s money. “Threatening scheme trustees with huge fines that are not covered by trustee indemnity insurance if they refuse to or cannot collect the levy, is a guaranteed way to stop anyone coming forward to be a trustee. I expect the other consequence of the Finance Bill (no 2) 2011 will be the resignation, post-haste of hundreds of scheme trustees.”
The chances that various transnational and euro bureaucrats will succeed in rescuing all the PIGS (and thus the Euro) is slim to none: “The ‘troika’ [ECB, IMF, EU] is doubling down on its losing bet in Greece and is playing with the dice loaded against them.”
How bad is it going to get?
Austerity is going to mean hellishly bad deflation, high and rising employment, and depression in the indebted countries.
There is $600 trillion in derivatives now loose in the world. Who knows which banks have written them and to whom? Who are the counterparties? We did not fix this with the last political fix. The next crisis has the potential to be just as bad or worse than 2008, which is why I think Europe’s leaders are so dead set on avoiding a day of reckoning. If you look under the hood, as they most assuredly have, it must be frightening. And with pushback from voters?
Contagion, thy name is Europe. And with the US economy slowing down, it might not take much to push us over the edge
And that’s the best case scenario, the one where the PIGS actually bite the bullet and implement austerity. It’s entirely possible that one or more of them will reject austerity measures and, in doing so, set off a run on the Euro.
Also via Insta comes news that China has divested itself of 97% of its holdings in Treasury Bills. As Mark Steyn has pointed out, where Greece is now is where Obama wants to take us, with ObamaCare as just the down-payment on a full-blown European welfare state. We’re not nearly as far along as Greece is to financial collapse, but our debt is already starting to look like a bad bet.
Certainly we’re not so far along that we can’t turn back, but the Paul Ryan Roadmap is probably the minimum we need to be doing to get our debt under control. Less than that and we’re asking for serious trouble. It’s already looking like Carter era stagflation is here.
As the recent Texas legislative session showed, it is in fact possible to actually shrink the size of government, not just slow the rate of increase. Or at least it’s possible when you have Republican Supermajorities in the House, Senate, and Executive branch. By contrast, the Obama administration and Harry Reid’s Senate have shown no sign of being willing to address the problem, or even to admit it exists. They too want to kick the can down the road and keep piling blocks of debt onto the backs of your children. But, as the Euro crises shows, such actions have a way of catching up with you sooner rather than later.
You can only kick the can down the road so far before you run out of road.
May 1st: Victims of Communism Day
Sunday, May 1st, 2011Today I join forces with The Volokh Conspiracy and others in proclaiming May 1st as Victims of Communism Day. The fact that communism killed somewhere in the neighborhood of 100 million people is not acknowledged nearly as often as it should be.
And given that communists are still in charge of North Korea, Vietnam, China, and Cuba (which launched a crackdown against dissidents today), Communist repression is still ongoing, with more victims every day.
(Hat tip for Cuba: instapundit.)
A Question for Mark Steyn
Sunday, January 23rd, 2011Mark Steyn is justly famous for many things: His stalwart opposition to Jihad, his grasp of demographics, his clever and eminently readable prose, and his once (and future?) gig on the last page of National Review (currently held by the also-formidable James Lileks). He’s also known for stating that China, thanks to its one-child-per-couple mandate, will get old before it gets rich.
However, on reading this Lawrence Solomon piece on China’s inevitable collapse, something occurred to me. Particular in response to this part:
Like the Soviet Union before it, much of China’s supposed boom is illusory — and just as likely to come crashing down
In 1975, while I was in Siberia on a two-month trip through the U.S.S.R., the illusion of the Soviet Union’s rise became self-evident. In the major cities, the downtowns seemed modern, comparable to what you might see in a North American city. But a 20-minute walk from the centre of downtown revealed another world — people filling water buckets at communal pumps at street corners. The U.S.S.R. could put a man in space and dazzle the world with scores of other accomplishments yet it could not satisfy the basic needs of its citizens. That economic system, though it would largely fool the West until its final collapse 15 years later, was bankrupt, and obviously so to anyone who saw the contradictions in Soviet society.
The Chinese economy today parallels that of the latter-day Soviet Union — immense accomplishments co-existing with immense failures. In some ways, China’s stability today is more precarious than was the Soviet Union’s before its fall. China’s poor are poorer than the Soviet Union’s poor, and they are much more numerous — about one billion in a country of 1.3 billion. Moreover, in the Soviet Union there was no sizeable middle class — just about everyone was poor and shared in the same hardships, avoiding resentments that might otherwise have arisen.
In China, the resentments are palpable. Many of the 300 million people who have risen out of poverty flaunt their new wealth, often egregiously so. This is especially so with the new class of rich, all but non-existent just a few years ago, which now includes some 500,000 millionaires and 200 billionaires. Worse, the gap between rich and poor has been increasing. Ominously, the bottom billion views as illegitimate the wealth of the top 300 million.
How did so many become so rich so quickly? For the most part, through corruption. Twenty years ago, the Communist Party decided that “getting rich is glorious,” giving the green light to lawless capitalism. The rulers in China started by awarding themselves and their families the lion’s share of the state’s resources in the guise of privatization, and by selling licences and other access to the economy to cronies in exchange for bribes. The system of corruption, and the public acceptance of corruption, is now pervasive — even minor officials in government backwaters are now able to enrich themselves handsomely.
In light of that: What if “one child per couple,” like paying taxes for members of the Obama administration, is just for the little people? What if the upper crust of China feels such rules don’t apply to them? Assume both that the Chinese ruling class can pop out offspring to their heart’s content and still manages, somehow, to avoid the explosion Solomon posits. (Dictatorships can run a whole lot longer than you think possible. Just ask Saddam Hussein or Kim Jong-Il.) Just how much cheating would it take for China to put off its demographic crash until they do get rich?
LinkSwarm for Sunday, January 23, 2011
Sunday, January 23rd, 2011A few links of potential interest for a lazy Sunday:
- Here’s a Boston Globe piece wondering why people don’t want to move to Massachusetts, and concluding that regulations make it too hard to build more housing. Well, that probably doesn’t help. But it takes a Harvard economist to miss the obvious truth that commentors point out directly below: People don’t want to move to the expensive, corrupt, failing People’s Republic of Taxachusetts. Why would anyone want to suffer with Massachusetts’ state income tax when they can move to Texas or Florida, pay no state income tax, and afford a house?
- Krauthammer on ObamaCare: everything begins with repeal.
- How China managed to corner the rare earth market, mainly because rare earths aren’t really rare and no one else wanted to.
- William A. Jacobson over at Legal Insurrection had made BattleSwarmBlog his blog of the day. Thanks!
More on China’s Housing Bubble
Tuesday, December 28th, 2010Last week I mentioned that China’s Housing bubble is already worse than America and Japan’s respective bubbles.
Today the Wall Street Journal provides even more confirmation:
It’s impossible to say definitively that a market has strayed into bubble territory until after the collapse. But prices rising out of the reach of average buyers is one indicator. Housing prices in the U.S. peaked at 6.4 times average annual earnings this decade. In Beijing, the figure is 22 times.
The figures get even worse when you consider that the “shadow market” (i.e., banks making “off book” loans) means the bubble is even worse than it seems:
Local governments and banks have set up off-balance sheet vehicles to conceal loans and keep the spending boom going. Fitch Ratings estimates that not only did banks exceed the central bank’s 7.5 trillion yuan ($1.1 trillion) cap on lending for this year, they made an additional three trillion yuan of these shadow loans.
Something that can’t go on forever won’t. That’s especially true of a housing boom in a country aging as rapidly as China (which Mark Steyn famously said “will get old before it gets rich”); and don’t forget that a rapidly aging populace was also a factor in Japan’s own “lost decade.”
The big question is whether China’s housing bubble or Europe’s Sovereign Debt Crisis pops first. The aftershocks of both will certainly be felt in our own economy…
Interesting Piece on Korea, Japan, and China
Friday, December 24th, 2010From Belmont Club. Covers not only the recent Korean artillery exchange, but also the strategic implications of China’s shipping lanes. Worth a read.