Quotulatiousness

December 13, 2011

Japan’s even-worse-than-Greek debt situation

Filed under: Economics, Japan — Tags: , , , — Nicholas @ 12:13

By way of Monty’s daily DOOOOOOM post, here’s some disturbing information on Japan’s eyewatering debt situation:

It seems “debt,” “Greece,” “crepe,” or any other words that might relate to the current Euro crisis prompts a flurry of activity on stocks around the world. But if you thought Greece’s and Italy’s debts were high, there exists a country with an even higher debt-to-GDP ratio. Surprisingly, it also has some of the lowest government bond rates in the world. Let’s take a look at this macro mystery.

Japan’s 2011 gross public debt as a percentage of GDP is estimated by the IMF at 234%. Compare this to down-but-not-yet-out Greece’s at 139% and Italy’s at 119%, and the United States’ at 99%. With those numbers, you may ask how Japan hums along while investors berate Europe for their lack of strict budget controls and U.S. politicians wrestle to cut the deficit.

This is because of one main difference: 95% of Japan’s debt is Japanese-owned. Compare this to Greece, which owns 29% of its debt. The Japanese have been happy to fund their government at incredibly low bond rates, currently around 1.1% for a 10-year bond. Why don’t the Japanese invest elsewhere for higher returns? For one, Japan likes to keep its yen in the country. This is due to a natural bias to favor one’s domestic investments (home bias), the strength of the yen, and domestic institutions’ required participation in bond auctions. Also, it’s difficult to find domestic positive returns. The Nikkei, since Japan’s trouble in the early 1990s, has lost about half its value

December 7, 2011

Reason.TV: How Pearl Harbour made America a global power

Filed under: History, Japan, Military, Pacific, USA, WW2 — Tags: — Nicholas @ 13:05

A minor quibble: though Craig Shirley asserts that the only way Americans could fight overseas before Pearl Harbour was with the Chinese air force, at least 16,000 Americans were serving in the Canadian Army, the Royal Canadian Navy, or the Royal Canadian Air Force:

Long before Pearl Harbor, a steady stream of Americans had started moving northward across the border to join the Canadian armed forces. By the beginning of 1941 some 1,200 Americans comprised about 10 percent of RCAF officer strength and 3 percent of the other ranks. A U.S. influx totaling about 10 percent of RCAF recruitment continued until, at the time of Pearl Harbor, over 6,000 U.S. citizens were serving in the RCAF, of whom 600 were instructors in the British Commonwealth Air Training Plan. By the same time nearly 10,000 Americans were serving in the Canadian Army. After Pearl Harbor a reverse movement resulted in the absorption of over 26,000 Canadians into the U.S. armed forces during World War II.

From Military Relations Between the U.S. & Canada by Stanley W. Dzuiban.

Beijing’s “smog blog” at the US Embassy

Filed under: China, Environment, Media, USA — Tags: , , , , — Nicholas @ 12:04

The official line is that the smog in Beijing is merely inconvenient, while the US Embassy’s Twitter account sends out regular readings that conflict with the official story:

It was a contest over smog that was being fought across two social networks in two completely different languages between two contenders separated by the world’s biggest firewall. At stake was the authority to define “unhealthy air” and, as a result, to shape public perceptions and expectations.

On one side was an automated air quality monitoring station set up by the US embassy in Beijing that issues hourly updates via Twitter on the @beijingair account. It states the date, time, pollutions readings for ozone and PM2.5 and a terse English summary of the health implications. At 8am, it read “very unhealthy” — an improvement on the “hazardous” level of the previous day and the alarming “beyond index” of last Friday.

On the other side was the personal microblog of Du Shaozhong, the deputy director of the Beijing Municipal Environmental Protection Administration, who has taken his passionate defence of the city’s policies onto China’s most influential website, Sina Weibo. One of his most recent posts read: “It is understandable if people hate bad weather, but venting your emotions is not helpful.”

December 3, 2011

QotD: How to emulate China’s success

Filed under: China, Economics, History, Quotations — Tags: , , , — Nicholas @ 11:36

To be clear, Andy Stern believes that the United States needs a Chinese-style central plan to flourish, one that will be executed by a streamlined government.

To really learn from the Chinese, and to enjoy such staggering growth rates, we should go about things differently: let’s have a Maoist insurrection followed by a civil war that lasts for several years. Then let’s destroy most of the wealth in the country, and drive out millions of our most enterprising and educated citizens by launching systematic terror campaigns during which millions of others will die in violence or of starvation. Next, let’s have a modest economic opening in coastal regions: impoverished citizens will be allowed to launch small-scale township and village enterprises and components will be assembled in a handful of cities by our stunted descendants. Then let’s severely curb those township and village enterprises because they represent a potential political threat and invite large foreign multinationals and state-owned enterprises [let’s not forget those!] to work our population to the bone at artificially suppressed wage rates, threatening those who complain with serious reprisals up to and including death. Let us also initiate a population control policy designed to improve our dependency ratio for a few decades. As large numbers of workers shift from low-value agricultural work to manufacturing, we will experience . . . rapid growth! Mind you, getting from here to there will involve destroying an enormous swathe of our present-day GDP. And that sectoral shift from rural to urban work will run out of gas pretty fast, as will the population control policy that will guarantee rapid aging.

Reihan Salam, “Andy Stern’s Peculiar Idea”, National Review Online, 2011-12-03

December 1, 2011

Grim situation for North Korean civilians gets grimmer

Filed under: Asia, Media, Military — Tags: , , — Nicholas @ 08:58

Strategy Page reports that the North Korean government is trying to distract the population from a declining economy with talk of an invasion from South Korea:

North Korean media is taking an ominous turn. For much of the year, the big story was that everything would change in 2012, with new housing and more of everything. That failed, as it is obvious to all that the 2012 promises are not going to be fulfilled. The new pitch urges North Koreana to eat less and save food. That military is being praised, as is the artillery attack on South Korea (Yeonpyeong Island) a year ago.

The most visible aspects of the 2012 promises (and the centennial of North Korean founder Kim Il Sung) are many new construction projects in the capital. This effort is not only way behind schedule, but is putting up poorly built structures and killing hundreds of students and others who have been conscripted as unskilled labor. The government puts a positive spin on the construction, but darker views get around, despite government efforts to control the news.

While North Koreans are warned about hunger, the government is silent on why they are going to be cold. The government has greatly increased coal exports to China, meaning prices have doubled in some parts of North Korea. The government denies that exports are up sharply, but won’t say anything about the rising prices. Meanwhile, illegal tree cutting is increasingly common as people seek fuel with which to survive the cold weather. Satellite photos show the sharp difference between forestation in the north and south. Foreign aid groups believe that at least three million North Koreans are in danger of starvation. Many more North Koreans are eating less. But many North Koreans are living better. The market economy, but the legal markets and the black market, increasingly thrive.

November 27, 2011

China to address the surplus of unemployable university graduates

Filed under: Bureaucracy, China, Education, Government — Tags: , — Nicholas @ 11:47

No, not the old fashioned way of “re-education”, but by reviewing the university programs and eliminating the ones that produce the largest number of graduates who cannot find jobs:

Much like the U.S., China is aiming to address a problematic demographic that has recently emerged: a generation of jobless graduates. China’s solution to that problem, however, has some in the country scratching their heads.

China’s Ministry of Education announced this week plans to phase out majors producing unemployable graduates, according to state-run media Xinhua. The government will soon start evaluating college majors by their employment rates, downsizing or cutting those studies in which less than 60% of graduates fail for two consecutive years to find work.

The move is meant to solve a problem that has surfaced as the number of China’s university educated have jumped to 8,930 people per every 100,000 in 2010, up nearly 150% from 2000, according to China’s 2010 Census. The surge of college grads, while an accomplishment for the country, has contributed to an overflow of workers whose skillsets don’t match with the needs of the export-led, manufacturing-based economy.

November 24, 2011

US to be crushed by Oriental economic juggernaut, film at 11

Filed under: China, Economics, Japan, Media — Tags: , , , — Nicholas @ 09:27

Do any of these statements sound familiar?

  • “I don’t mean to be an alarmist, but I get the uneasy feeling that America is history”
  • “The power behind the [. . .] juggernaut is much greater than most Americans suspect, and the juggernaut cannot stop of its own volition, for [it] has created a kind of automatic wealth machine, perhaps the first since King Midas.”

This kind of statement can be found in all the prestigious newspapers, opinion journals, and magazines . . . in the late 1970s through the late 1980s. The economic juggernaut of the day was Japan. It was poised to crush the feeble remnants of American capitalism with the all-powerful keiretsu, Japan’s corporate conglomerate organizations. The strong would smash the weak, leaving America (and the rest of the Anglosphere) in the dust. Just in case you didn’t follow economic history, it didn’t happen.

Today, the economic bogeyman is China:

“We are getting our clock cleaned by Chinese state capitalism,” wrote Robert Kuttner, now editor of The American Prospect, earlier this year at The Huffington Post. Massachusetts Institute of Technology economist Simon Johnson piled on at the annual conference of the American Economic Association, declaring, “The age of American predominance is over. The [Chinese] Yuan will be the world’s reserve currency within two decades.” The conservative Citizens Against Government Waste even aired a television commercial featuring a Beijing economics class in 2030 in which a professor explains how America became indebted to China. The professor concludes, “So now they work for us.” The class chuckles knowingly.

This gloomy message of American decline relative to China appears to be seeping into popular consciousness. An April 2011 poll by Xavier University found that “a stunning 63 percent believe that the Chinese economy is more powerful than the US economy.”

“The U.S. could lose its status as the world’s biggest economic power within five years,” reported The Daily Mail in April. The Mail article was based on calculations released by the International Monetary Fund projecting that total Chinese GDP, adjusted for purchasing power, will surpass U.S. GDP by 2016.

Can that be? Let’s do the math: China’s total GDP is around $6 trillion today. Assuming 10 percent GDP growth for the next 20 years, China’s GDP would rise to $40 trillion. If the U.S. economy grew at, say, 3 percent a year, total GDP would be $27 trillion. Back in 2007, before the financial crisis, the investment bank Goldman Sachs issued a report projecting that Chinese GDP would be $26 trillion in 2030, compared to $23 trillion for the U.S. It bears noting that current Chinese purchasing power per capita is about $6,000, compared to $46,000 for Americans.

That’s not to say that it’s impossible — the longer the US government struggles to avoid cutting back, the more likely it is that the US will enter a long economic decline — but China has economic problems a-plenty.

November 18, 2011

An antidote to the “OMG! China will eat our lunches” meme

Filed under: Americas, China, Economics — Tags: , , — Nicholas @ 12:02

For those inclined to worry overmuch about the rise of China as a world power (as opposed to merely as an economic competitor):

The real importance of this story does not, however, have much to do with Brazil’s jittery nerves about Chinese investment. It is to remind us about a key Chinese vulnerability that is often overlooked by pundits: China’s growing dependence on natural resources located far from its frontiers.

Beijing’s chosen national strategy — to achieve great power status by becoming the industrial workshop of the world — locks it into a complex and difficult set of dependencies and relationships with countries and markets all over the world. Access to those resources traps China in complicated geopolitical tradeoffs that can blow up in unexpected ways — as when China had to scramble to protect its citizens in Libya. Chinese companies become the object of public anger if they are seen to be economically exploitative, unwelcoming to local labor, or environmentally destructive. And, of course, in the event of a confrontation with the United States, China’s entire supply chain and overseas investments are helpless hostages.

Strategically, the only way out of this trap would be to build a blue water navy and air force that could threaten US command of the seas. But a build up of that kind would not only trigger a massive US response; other countries like Japan, India and Australia would join together to ensure that China did not overturn a maritime status quo that is well trusted by other world powers.

H/T to Jon, my former virtual landlord, for the link.

November 16, 2011

Don’t expect China to save your economy

Filed under: China, Economics, Government, Media — Tags: , , , , , — Nicholas @ 09:19

Jon, my former virtual landlord, sent along this link which should pour cold water on the notion that China will step in to save the economies of other countries:

China’s economy has a reputation for being strong and prosperous, but according to a well-known Chinese television personality the country’s Gross Domestic Product is going in reverse.

Larry Lang, chair professor of Finance at the Chinese University of Hong Kong, said in a lecture that he didn’t think was being recorded that the Chinese regime is in a serious economic crisis — on the brink of bankruptcy. In his memorable formulation: every province in China is Greece.

The restrictions Lang placed on the Oct. 22 speech in Shenyang City, in northern China’s Liaoning Province, included no audio or video recording, and no media. He can be heard saying that people should not post his speech online, or “everyone will look bad,” in the audio that is now on Youtube.

In the unusual, closed-door lecture, Lang gave a frank analysis of the Chinese economy and the censorship that is placed on intellectuals and public figures. “What I’m about to say is all true. But under this system, we are not allowed to speak the truth,” he said.

Despite Lang’s polished appearance on his high-profile TV shows, he said: “Don’t think that we are living in a peaceful time now. Actually the media cannot report anything at all. Those of us who do TV shows are so miserable and frustrated, because we cannot do any programs. As long as something is related to the government, we cannot report about it.”

China, for all its amazing growth and rising economic prospects for (some of) its population, is still not a modern economy. The government — specifically the military — is too deeply involved at far deeper levels than other governments and the reported economic figures may or may not have any relationship with reality. When your boss is a general, he has ways of ensuring that you report the “right” results that a civilian CEO cannot match. It’s not just your job you risk by reporting unwelcome results.

I’ve ridden this hobby horse, as Jon calls it, many times over the years.

November 14, 2011

Retired Gurkha soldiers changing the face of security services in Britain

Filed under: Asia, Britain, Military — Tags: , , — Nicholas @ 12:14

An interesting article at the BBC website details how many retired Gurkha soldiers have found civilian careers in security a good follow-up to their military service:

It has been suggested that some Gurkhas are struggling to cope with the cost of living in the UK, with the British Gurkha Welfare Society saying about 25,000 of those who retired before 1997 still only receive a third of the pension of their British and Commonwealth former comrades.

But a recent study suggested that Gurkhas of working age are the most economically active and self-reliant social group in Britain.

The University of Kent research found the employment rates among Gurkha men and women are particularly high, at 95% for men under 60 and 93% for women under that age.

It also showed that security is the most popular job for male veterans. Ex-military people joining the security industry is nothing new, but security companies are capitalising on the Gurkhas’ formidable reputation.

G4S set up Gurkha Services in 2007 and it now employs at least 600 people across 27 contracts.

They are involved in guarding the UK’s “critical infrastructure”, such as power stations and railways, from vandals, protesters and thieves. Rarely a day goes by without some story about how cable theft has disrupted a train journey or caused a power outage. Now Gurkhas are the new front line against the crime wave.

November 12, 2011

Still no charges in the Gibson Guitar case

Filed under: Bureaucracy, India, Law, Media, USA, Woodworking — Tags: , , , , — Nicholas @ 11:00

An update in the Wall Street Journal just recaps the background to the case, and has an interview with Henry Juszkiewicz, the CEO.

On Aug. 24, federal agents descended on three factories and the Nashville corporate headquarters of the Gibson Guitar Corp. Accompanied by armored SWAT teams with automatic weapons, agents from the Fish and Wildlife Service swarmed the factories, threatening bewildered luthiers, or guitar craftsman, and other frightened employees. A smaller horde invaded the office of CEO Henry Juszkiewicz, pawing through it all day while an armed man stood in the door to block his way.

“I was pretty upset,” Mr. Juszkiewicz says now, sitting outside that same office. “But you can only do so much when there’s a gun in your face and it’s the federal government.” When the chaos subsided, the feds (with a warrant issued under a conservation law called the Lacey Act) had stripped Gibson of almost all of its imported Indian rosewood and some other materials crucial to guitar making.

The incident attracted national attention and outrage. Like Boeing — whose plans to locate new production in South Carolina are opposed by the National Labor Relations Board — here was an iconic American brand under seemingly senseless federal fire.

November 5, 2011

On the other hand, that may be a feature rather than a bug

Filed under: Asia, Military — Tags: , , , — Nicholas @ 11:18

Pakistan is trying to conceal the location of its nuclear weapons from US spy satellites, and the concern voiced in this article is that they’re using low-security techniques to do it. On the other hand, if you’re actually trying to get nuclear warheads into the hands of terrorists with a certain degree of deniability, this is certainly a way to do it:

Pakistan has begun moving its nuclear weapons in low-security vans on congested roads to hide them from US spy agencies, making the weapons more vulnerable to theft by Islamist militants, two US magazines reported Friday.

The Atlantic and the National Journal, in a joint report citing unnamed sources, wrote that the US raid that killed Al-Qaeda chief Osama bin Laden in May at his Pakistani compound reinforced Islamabad’s longstanding fears that Washington could try to dismantle the country’s nuclear arsenal.

As a result, the head of the Strategic Plans Divisions (SPD), which is charged with safeguarding Pakistan’s atomic weapons, was ordered to take action to keep the location of nuclear weapons and components hidden from the United States, the report said.

Khalid Kidwai, the retired general who leads the SPD, expanded his agency’s efforts to disperse components and sensitive materials to different facilities, it said.

But instead of transporting the nuclear parts in armored, well-defended convoys, the atomic bombs “capable of destroying entire cities are transported in delivery vans on congested and dangerous roads,” according to the report.

October 31, 2011

China’s increased output of scientific papers masks deeper problems

Filed under: China, Media, Science — Tags: , , , — Nicholas @ 12:01

Colby Cosh linked to an interesting press release from the Chinese Academy of Sciences, which shows a surge in published papers from China, but a significant drop in the rate at which those papers are cited:

Chinese researchers published more than 1.2 million papers from 2006 to 2010 — second only to the United States but well ahead of Britain, Germany and Japan, according to data recently published by Elsevier, a leading international scientific publisher and data provider. This figure represents a 14 percent increase over the period from 2005 to 2009.

The number of published academic papers in science and technology is often seen as a gauge of national scientific prowess.

But these impressive numbers mask an uncomfortable fact: most of these papers are of low quality or have little impact. Citation per article (CPA) measures the quality and impact of papers. China’s CPA is 1.47, the lowest figure among the top 20 publishing countries, according to Elsevier’s Scopus citation database.

China’s CPA dropped from 1.72 for the period from 2005 to 2009, and is now below emerging countries such as India and Brazil. Among papers lead-authored by Chinese researchers, most citations were by domestic peers and, in many cases, were self-citations.

Being published is very important for sharing discoveries and advancing the careers of the scientists, but it’s more important that those publications be read and referenced by other scientists. Self-citations are akin to self-published works: it doesn’t guarantee that the work is useless, but it increases the chances that it is.

Perhaps worse than merely useless publication is the culture of corruption that has grown up around the scientific community:

In China, the avid pursuit of publishing sometimes gives rise to scientific fraud. In the most high-profile case in recent years, two lecturers from central China’s Jinggangshan University were sacked in 2010 after a journal that published their work admitted 70 papers they wrote over two years had been falsified.

[. . .]

A study done by researchers at Wuhan University in 2010 says more than 100 million U.S. dollars changes hands in China every year for ghost-written academic papers. The market in buying and selling scientific papers has grown five-fold in the past three years.

The study says Chinese academics and students often buy and sell scientific papers to swell publication lists and many of the purported authors never write the papers they sign. Some master’s or doctoral students are making a living by churning out papers for others. Others mass-produce scientific papers in order to get monetary rewards from their institutions.

October 28, 2011

“The ultimate measure of this institution’s value [is] the elevation of human dignity and liberty for all their citizens”

Filed under: Asia, Cancon, Government, Liberty — Tags: , , , — Nicholas @ 09:32

Stephen Harper made a speech yesterday that expressed a lovely sentiment. It’s not clear if the other heads of government attending the meeting will be quite as taken with it:

­ If the Commonwealth continues to ignore member countries that violate human rights and ignore the rule of law and democratic principles, the 60-year-old organization will fade into irrelevance, Commonwealth leaders meeting here are being told.

It¹s a message Canada and Prime Minister Stephen Harper strongly endorses but one which is expected to produce divisions at the biennial summit of Commonwealth Heads of Government. The summit got underway Friday morning in a ceremony presided over by Queen Elizabeth II.

“The ultimate measure of this institution’s value going forward will remain the commitment asked of member governments to the elevation of human dignity and liberty for all their citizens,” Harper said in a speech here Thursday after arriving from Ottawa. “In the next few days, it is my strong hope, that the Commonwealth shall reaffirm, and reinvigorate, this great purpose.”

Member countries are typically loathe to point fingers at the laggards in the 54-country Commonwealth when it comes to human rights and democracy but not Harper.

He has already singled out Sri Lanka’s government for sharp criticism over Sri Lanka¹s failure to investigate what a United Nations panel called “credible allegations” that the Sri Lankan army committed war crimes as that country’s 25-year-old civil war was drawing to a close in 2009.

October 23, 2011

The CIA’s new boss and the new rules

Filed under: Asia, Military, USA — Tags: , , — Nicholas @ 11:53

Strategy Page discusses the new rules for the CIA under the new boss, David Petraeus:

The CIA has a new boss, David Petraeus, who formerly commanded American military forces in Afghanistan. With the arrival of Petraeus, the CIA is changing how it goes about determining the situation in Afghanistan. From now on, CIA analysts will discuss the situation with military commanders before they submit their monthly reports, rather than argue with the military leaders after the fact when people note that the military and CIA analysis comes to different conclusions. The CIA may still disagree with the military, but now they have to answer military assertions that contradict what the CIA believes.

Although this new policy was announced after Petraeus took over at the CIA recently, it was actually in the works for months. It was held up when it became clear that Petraeus was going to be the new CIA chief. Petraeus approved the new policy, which he had long been asking for.

All this came about because CIA analysts eventually noted that the military commanders were using different criteria for “success” and that often had uncovered aspects of the situation that the CIA analysts were missing. So, even before Petraeus showed up at CIA headquarters, the intelligence analysts had decided to work more cooperatively with their military counterparts, if only to ensure that all the bases were covered.

The CIA analysts always were at a disadvantage in Afghanistan, and Iraq, because the military was getting their information first hand, while the CIA often was getting it second or third hand. Moreover, the military was more aware of the fact that “success” in Afghanistan depended a lot on what you believed was possible, and what you knew was actually going on. In some cases, the CIA analysts did not appreciate what impact American field operations were having. Afghanistan, to outsiders has always been a murky place, and difficult to read.

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