Quotulatiousness

May 21, 2011

President of TEPCO falls on his sword a few months late

Filed under: Environment, Health, Japan, Media, Technology — Tags: , , , , — Nicholas @ 11:04

The president of the Tokyo Electric Power Co. (TEPCO) has resigned:

In a business practice that recalled the ritual seppuku suicides of samurai warriors, the president of Japan’s largest power company resigned Friday to assume responsibility for the world’s worst nuclear disaster since Chernobyl.

At a nationally televised news conference, Masataka Shimizu bowed deeply in an exhibition of remorse and declared, “I am resigning for having shattered public trust about nuclear power and for having caused so many problems and fears for the people.

“I want to take managerial responsibility and bring a symbolic close.”

Whether it’s a hearkening-back to Samurai ethos or not, he should have resigned long ago, as soon as it became clear that the company he headed was doing everything it could to conceal the extent of the actual damage both from the media and from the government.

There is a widespread feeling the government and TEPCO officials did not disclose all they knew during the early days of the crisis and have been less than forthcoming since.

In the first weeks after the earthquake, TEPCO officials received 40,000 complaints a day about the lack of information. Police had to be assigned to guard the company’s offices from anti-nuclear protesters.

This week, TEPCO released documents showing it was dealing with three simultaneous nuclear meltdowns, while reassuring people the fuel rods were safely intact in all the reactors.

“Why did it take two months to get to this point?” demanded a Wednesday editorial in the Nikkei business newspaper.

“Even a rough calculation of conditions inside the reactors would have helped in choosing the best response.”

Public confidence was shaken further when it emerged engineers at Fukushima were so unprepared for the disaster, they had to scavenge flashlights from nearby homes and used car batteries to try to reactivate damaged reactor gauges.

Nobody with an ounce of sense is criticizing the workers at the plant for their reaction to an earthquake that was far in excess of the design for the reactors, or a tsunami that was much higher than anything the designers had foreseen. Shit happens, and it was the daily double of fantastically unlikely natural disasters that struck the plant.

The company, however, deserves more than just a light dusting of shame for the way they appear to have been actively preventing the real state of the plant becoming known to the international nuclear community and the national government. A nuclear disaster is everyone’s business, and there were resources available to TEPCO that they signally failed to draw upon. Saving face is not an acceptable reaction to this kind of catastrophe.

May 20, 2011

Only one high speed rail line in the world is profitable

Filed under: Economics, Government, Japan, Technology, USA — Tags: , , , — Nicholas @ 09:39

Babbage looks at the economics of the various high speed railway lines both in service and planned:

Of all the high-speed train services around the world, only one really makes economic sense — the 550km (350-mile) Shinkansen route that connects the 30m people in greater Tokyo to the 20m residents of the Kansai cluster of cities comprising Osaka, Kobe, Kyoto and Nara. At peak times, up to 16 bullet trains an hour travel each way along the densely populated coastal plain that is home to over half of Japan’s 128m people.

Having worked for many years in Tokyo, with family in Osaka, your correspondent has made the two-and-a-half hour journey on the Tokaido bullet-train many times. It is clean, fast and highly civilised, though far from cheap. It beats flying, which is unbearably cramped by comparison, just as pricey, and dumps you an hour from downtown at either end.

The sole reason why Shinkansen plying the Tokaido route make money is the sheer density — and affluence — of the customers they serve. All the other Shinkansen routes in Japan lose cart-loads of cash, as high-speed trains do elsewhere in the world. Only indirect subsidies, creative accounting, political patronage and national chest-thumping keep them rolling.

California’s planned 800-mile high speed rail route cannot possibly earn a profit, for many reasons (not least of which is that the first segment of the network won’t even run high speed trains until the entire system is built). It’s going to cost an eye-watering amount of money even to build that first section:

Between them, the federal government, municipals along the proposed route and an assortment of private investors are being asked to chip in $30 billion. A further $10 billion is to be raised by a bond issue that Californian voters approved in 2008. Anything left unfunded will have to be met by taxpayers. They could be dunned for a lot. A study carried out in 2008 by the Reason Foundation and the Howard Jarvis Taxpayers Association put the final cost of the complete 800-mile network at $81 billion.That is probably not far off the mark. Last week, the state’s Legislative Analyst’s Office came out with a damning indictment of the project’s unrealistic cost estimates and poor management. The bill this legislative watchdog put on the first phase of the high-speed rail project alone is $67 billion — and higher still if the project runs into trouble gaining route approval in urban areas.

If the latter number is correct, then the first phase of the system is clocking in at nearly $1 billion per mile. And this is the “cheap” section running through mostly thinly populated farming areas. If, somehow, the more expensive sections of the planned network don’t cost much more, the total construction bill will top $800 billion. The original plan had the entire system costing $43 billion.

Cost overruns are an expected part of major government construction projects, but that’s insane.

May 18, 2011

China facing recession?

Filed under: China, Economics — Tags: , — Nicholas @ 12:03

At risk of setting my hobby horse to full gallop, reports like this one are starting to sound a few mild alarms about the real state of China’s economy. But accepting official Chinese government statistics like this isn’t going to help:

The Chinese central bank has responded to overheating in its economy by raising interest rates four times since October 2010. Inflation has subsequently cooled, slowing to 5.3 percent in April, but the economy is still roaring with a 9.7 percent increase in gross domestic product for the first quarter.

The rate moves have raised questions about whether the government is going too far to slow things down, and whether the country can accomplish its desired transition from an export-driven economy to growth based more on internal consumption.

As I’ve said several times before, you can’t trust these kinds of numbers because they’re not independently generated from reliable data. They’re numbers that range from kinda-sorta in the same ballpark as reality all the way out to the lower stratosphere. The people providing the numbers are subject to rather more risk than just losing their jobs if they displease the government. Honesty is not a virtue when your life may depend on providing the “right” answer.

As Monty puts it:

I’ll keep hammering this point as long as I’m able: The Chinese “economic miracle” is mostly a sham. The Chinese are awash in cheap Western money, essentially, and when that money dries up (which it is doing right now), the Chinese don’t have much of a domestic market to fall back on. Plus, in case anyone forgot, they’re still run by Communists who don’t really believe in that whole “capitalism” thing.

I’ve ridden this hobby horse many times before. I don’t doubt that I’ll be riding it many times again in the future.

May 15, 2011

US had prepared to fight Pakistan over Bin Laden raid

Filed under: Asia, Military, USA — Tags: , , , , , — Nicholas @ 12:16

Strategy Page reports that the US military had made contingency plans to cover Pakistani military intervention in the raid that killed Osama bin Laden:

On May 2nd, the United States was prepared to go to war with Pakistan. The American raid on that day, which killed Osama bin Laden and seized a huge mass of al Qaeda data from his Pakistani hideout, was carried out without informing Pakistan beforehand. Although Pakistan had years earlier agreed that the U.S. could enter Pakistani territory in hot pursuit of terrorists fleeing Afghanistan, or to grab high ranking al Qaeda leaders, it was always assumed that the U.S. would let the Pakistani military know what was coming. But because the Pakistani government was full of bin Laden fans, the U.S. did not inform Pakistan about the raid until it was underway. Apparently, that message included a reminder that if the U.S. troops in the bin Laden compound were attacked by Pakistani forces, there would be instant, and far-reaching, consequences.

The extent of those consequences have since been pieced together, from unclassified information. By May 2nd, the U.S. had assembled a huge naval and air force in the region, that was pointed at Pakistan. This force would attack any Pakistani troops or warplanes that went after the U.S. forces in the bin Laden compound, or who might be able to do so. The U.S. had assembled three aircraft carriers, hundreds of air force aircraft in Afghanistan and the Persian Gulf, and dozens of helicopters, and thousands of troops, in Afghanistan. Most of these troops didn’t know what they were alerted for. Such alerts happen all the time, often for no reason (as far as the troops are concerned.) But this time, as word of the bin Laden raid got out, it became obvious (at least to those who know how these things work) that the alerts throughout the region were to prepare for the possible need to quickly get the American raiders out, and destroy any Pakistani forces that sought to interfere.

May 13, 2011

Will China’s rise eclipse the United States?

Filed under: China, Economics, History, USA — Tags: , — Nicholas @ 09:49

Jon sent me this link, suggesting that it was good “hobby horse bedding”. It starts with the notion that the pattern (and method) of China’s rise to economic superpower status actually follows that of the United States:

The last time a rising power came bursting onto the international scene and successfully supplanted the existing dominant power was when the United States was a boisterous upstart with a stampeding economy. Back then, America employed its own ruthless political machinations to advantage economic production — slavery and Andrew Jackson’s Indian removal policies made cotton king, while the three-fifths compromise ensured southern political control of Congress.

Meanwhile, we stole designs of British factories for replication here, jump-starting our own industrial revolution. And we forced Britain into a two-front war in the midst of its cataclysmic fight with Napoleon. To outside appearances, America orchestrated political, military, and economic power in ways that shrewdly upended existing rules to our advantage.

Just enough historical parallels to make an interesting story. But the Chinese are not (yet) in a position to actually supplant the Americans, and much of the reason for that isn’t so much economic as it is political:

America is the democracy that those people living under authoritarian regimes choose whenever they get the opportunity. It is a democracy often mistaken in the short run, with the best means of correcting itself, and by its sheer existence, a reminder to others of what they might make for and of themselves. The international order is genuinely different because of the rise of an economically and politically liberal American polity. The Chinese model doesn’t have the kind of advantages that make for success competing against the American one. There’s no reason to believe Chinese citizens aren’t yearning for what Americans get to take for granted. To the contrary, there are many signs that the Chinese are increasingly agitating for it.

American power is robust and enduring because it is built on the strength of ideals that foster our advantage. China is banking on prosperity reducing the desire for political rights, on centralized control by elites that will make “better” choices than individuals would make for themselves, on nationalism and grievance to trump the appeal of values we claim to be universal, on mercantilist foreign policies and the threat of force making them preferred allies. It didn’t work for Palmerston in a much more conducive age and it is unlikely to work for China’s leaders.

A quick search of the blog will come up with lots of posts on China and its economy. This is what Jon refers to as my “hobby horse”.

May 12, 2011

Afghanistan isn’t a “state”

Filed under: Asia, Military, Politics — Tags: , , , , — Nicholas @ 10:01

Much of the problem with current expectations about the eventual outcome of the Afghan mission rest on the notion that Afghanistan is a country in the same way that Hungary or Denmark is a state. It’s not a state:

While the foreign troops are in Afghanistan to deal with international terrorism and the heroin (90 percent of it comes from Afghanistan), most Afghans see all this foreign intervention as a splendid opportunity. It’s as if Afghans were saying to foreign troops, “to you it’s a war, to me it’s an opportunity.” This is an ancient Afghan attitude. Afghanistan may appear to be at the corner of no and where, but it is actually astride the primary invasion route from Central Asia to India (including Pakistan which is still, historically and culturally, part of India). The Afghans have long since learned to step aside as the foreign invaders move through. Actually, many Afghans would join the invaders, so much so that these invasions, and the loot and stories the survivors brought back, have become a major part of the Afghan collective memory. Most Westerners have not got a clue about this cultural tradition, and how much it influences the behavior of most Afghans. Such culture shock is not unusual, but because of the greater isolation of Afghanistan from the rest of the world, there is more of it.

Part of the culture shock is the realization that Afghanistan is not a country, at least not in the Western sense of the world. In Western terms, Afghanistan is a feudal monarchy. That means that the “king” (president Karzai) serves, and survives, at the sufferance of the local barons (warlords, drug gang leaders, provincial governors, tribal leaders). Until the last few centuries, this was how things worked in the West. But in many parts of the world, and especially in Afghanistan, the medieval mind, and form of government, is alive and well.

While many residents of Kabul (the capital and largest city) would like a modern (efficient and much less corrupt) Western style government, the “rural aristocracy” (corrupt local leaders) have no interest in this kind of central control. Thus the rural leaders do whatever they can to prevent an the creation of efficient national army or police force. Local leaders will attempt, often successfully, to corrupt the military and police units in their neighborhood. National level politicians also like to “own” army or police units, and if they can’t do that, they will try to steal money meant for the security forces. So NATO commanders have come to evaluate the effectiveness of Afghan police and army units based on the honesty of the commander, and his ability to deal with all those officials who want to buy him off. There are not many Afghan unit commanders who make the grade. To do so means you must behave in a decidedly unconventional manner.

This is why the whole notion of “nation building” is the right title for the wrong idea. Afghanistan needs a nation to be constructed, but it will take much more than just suppressing the Taliban and the heroin trade. No nation can go from a feudal/tribal level to nation-state in a generation — at least, no nation ever has, and there’s no chance that Afghanistan will be the first to do so.

May 2, 2011

Location of Bin Laden’s hideaway difficult for Pakistan to explain away

Filed under: Asia, Military — Tags: , , , — Nicholas @ 09:59

From the BBC News website:

More details are emerging of how al-Qaeda leader Osama Bin Laden was found and killed at a fortified compound on the outskirts of Abbottabad in north-west Pakistan.

The compound is a few hundred metres from the the Pakistan Military Academy, an elite military training centre, which is Pakistan’s equivalent to Britain’s Sandhurst, according to the BBC’s M Ilyas Khan who visited the area.

Earlier reports put the distance at about 200 yards (182 metres). Pakistan’s military says the compound is 4km (2.4 miles) away from the academy.

But it lies well within Abbottabad’s military cantonment — it is likely the area would have had a constant and significant military presence and checkpoints.

Pakistan’s army chief is a regular visitor to the academy for graduation parades.

Someone very well placed in Pakistan’s army or intelligence organizations had to have been aware of, and actively protecting Bin Laden’s hideout. There’s no way he could have lived that close to high security military establishments without active collusion with high-ranking officers or intelligence chiefs.

April 25, 2011

Grameen Bank cleared of “irregularities”, but Yunus will not be re-instated

Filed under: Asia, Economics, Law, Liberty — Tags: , , , , — Nicholas @ 11:06

The Bangladeshi government has completed their investigation into financial irregularities at microfinance specialist Grameen Bank, but the founder, Muhammad Yunus, will not be brought back:

Yunus, 70, was dismissed by a central bank order — upheld by the high court and supreme court — on the grounds that he had overstayed in his position and refused requests to quit.

Yunus, winner of the 2006 Nobel peace prize, set up Grameen, which means village in Bengali, and had been the bank’s managing director since 2000.

Lauded at home and abroad by politicians and financiers as the “banker to the poor”, he has been under attack by the government since late last year, after a Norwegian documentary alleged the bank was dodging taxes.

Yunus denied any wrongdoing and a Norwegian government investigation later also cleared him of any malpractice.

Taliban tunnellers re-enact the “Great Escape”

Filed under: Asia, Military — Tags: , , , — Nicholas @ 10:41

This is going to hurt:

The Taliban has staged a jail-break from a high security prison in Afghanistan, freeing 541 prisoners through a network of tunnels that took five months to dig.

In scenes reminiscent of war film The Great Escape, insurgents constructed a 1,050-foot (320m) route into Sarposa Prison, in Kandahar.

Diggers finally broke through into the site last night and hundreds of prisoners, including around 100 Taliban commanders — streamed through the tunnel to freedom over four-and-a-half hours.

They were met by a fleet of cars which whisked them away to freedom. The breakout was completed at around 3.30am.

April 19, 2011

WikiLeaks exposes Chinese espionage unit

Filed under: China, Military, Technology, USA — Tags: , , — Nicholas @ 09:15

Strategy Page points out that it’s not just American and allied secrets that have been exposed by WikiLeaks:

Chinese Cyber War units have been plundering foreign government and military online data for over five years now. But thanks to Wikileaks, and several other sources, the identity and location of the main Chinese Cyber War operation is now known. The Chinese Chengdu Province First Technical Reconnaissance Bureau (1st TRB) is a Chinese Army electronic warfare unit located in central China (Chengdu), and is the most frequent source of hacking attacks traced back to their source. The servers used by the 1st TRB came online over five years ago, and are still used. The Chinese government flatly refuses to even discuss the growing pile of evidence regarding operations like the 1st TRB.

The 1st TRB is part of the Chinese Army’s Third Department, which is responsible for all sorts of electronic eavesdropping. But given the praise showered on the 1st TRB, a lot of valuable data has apparently been brought to Chengdu, and then distributed to the appropriate industrial, diplomatic or military operations. The hacking operation has been so successful, that it has obtained more staff and technical resources. As a result, in the last five years, detected hacking attempts on U.S. government and corporate networks has increased by more than six times. Most of these hacks appear to be coming from China. Not all the hacking is done by 1st TRB personnel. A lot of it appears to be the work of Chinese freelancers, often working for pay, but sometimes just to “serve the motherland.”

Reuters has a special report on “Byzantine Hades”:

According to U.S. investigators, China has stolen terabytes of sensitive data — from usernames and passwords for State Department computers to designs for multi-billion dollar weapons systems. And Chinese hackers show no signs of letting up. “The attacks coming out of China are not only continuing, they are accelerating,” says Alan Paller, director of research at information-security training group SANS Institute in Washington, DC.

Secret U.S. State Department cables, obtained by WikiLeaks and made available to Reuters by a third party, trace systems breaches — colorfully code-named “Byzantine Hades” by U.S. investigators — to the Chinese military. An April 2009 cable even pinpoints the attacks to a specific unit of China’s People’s Liberation Army.

Privately, U.S. officials have long suspected that the Chinese government and in particular the military was behind the cyber-attacks. What was never disclosed publicly, until now, was evidence.

U.S. efforts to halt Byzantine Hades hacks are ongoing, according to four sources familiar with investigations. In the April 2009 cable, officials in the State Department’s Cyber Threat Analysis Division noted that several Chinese-registered Web sites were “involved in Byzantine Hades intrusion activity in 2006.”

April 18, 2011

The real secret weapon of the “China economic miracle”

Filed under: China, Economics, Government — Tags: , , , , — Nicholas @ 10:35

Chriss W. Street thinks the Chinese banks are about to suffer a crisis moment:

It is ironic that China is demanding greater control of the World Bank and International Monetary Fund, just as the nation’s banking system is about to be devastated by the white hot flames of inflation.
From a distance, China’s economy seems to be the poster child of sustainable growth. Recent government reports show the economy expanding by 9.7%, retail sales up a blistering 17.4%, foreign reserves at $3 trillion, and inflation only 5.4%. But these statistics mask a dark side; Chinese communist authorities have been artificially holding down fierce inflationary pressures by subsidizing consumer prices.

[. . .]

The less known and far more important secret-weapon of the “China Economic Miracle” is the absolute control of the banking industry by China’s four largest state-owned banks (“SOB”); Industrial and Commercial Bank, Agricultural Bank, People’s Bank of China and Construction. Since the government does not provide adequate social welfare programs and restricts its citizen’s investment options to bank accounts, about 40% of Chinese household income is deposited in SOBs each month. The SOBs then leverage the deposits by ten times and loan 75% of this massive amount of cash at extremely low interest rates to state-owned-enterprises (“SOE”). The other 25% of lending is allocated to real estate development.

China is no stranger to bankers making risky loans to communist party officials and their crony real estate developers. During the Asian Financial Crisis of the mid-1990s, it is estimated that 40% of all SOB loans were non-performing and most were written off. The Chinese paid for the SOB losses with a 76% devaluation of their currency that crushed the people’s buying-power by 76%. From 1997 to 2004 Chinese frivolous lending was somewhat restrained, but since 2003 the bureaucrats have mandated a massive expansion of lending. In comparison to the U.S. and Europe where bank lending is flat, SOBs have been expanding loans by 25% annually.

H/T to Jon for the link.

Malinvestment the next big problem for China?

Filed under: China, Economics, Government — Tags: , , — Nicholas @ 09:54

Nouriel Roubini thinks that the Chinese central planners are missing the clues about overinvestment in their infrastructure binge:

China’s economy is overheating now, but, over time, its current overinvestment will prove deflationary both domestically and globally. Once increasing fixed investment becomes impossible — most likely after 2013 — China is poised for a sharp slowdown. Instead of focusing on securing a soft landing today, Chinese policymakers should be worrying about the brick wall that economic growth may hit in the second half of the quinquennium.

Despite the rhetoric of the new Five-Year Plan — which, like the previous one, aims to increase the share of consumption in GDP — the path of least resistance is the status quo. The new plan’s details reveal continued reliance on investment, including public housing, to support growth, rather than faster currency appreciation, substantial fiscal transfers to households, taxation and/or privatization of state-owned enterprises (SOEs), liberalization of the household registration (hukou) system, or an easing of financial repression.

China has grown for the last few decades on the back of export-led industrialization and a weak currency, which have resulted in high corporate and household savings rates and reliance on net exports and fixed investment (infrastructure, real estate, and industrial capacity for import-competing and export sectors). When net exports collapsed in 2008-09 from 11 percent of GDP to 5 percent, China’s leader reacted by further increasing the fixed-investment share of GDP from 42 percent to 47 percent.

Thus, China did not suffer a severe recession — as occurred in Japan, Germany, and elsewhere in emerging Asia in 2009 — only because fixed investment exploded. And the fixed-investment share of GDP has increased further in 2010-2011, to almost 50 percent.

The problem, of course, is that no country can be productive enough to reinvest 50 percent of GDP in new capital stock without eventually facing immense overcapacity and a staggering nonperforming loan problem. China is rife with overinvestment in physical capital, infrastructure, and property. To a visitor, this is evident in sleek but empty airports and bullet trains (which will reduce the need for the 45 planned airports), highways to nowhere, thousands of colossal new central and provincial government buildings, ghost towns, and brand-new aluminum smelters kept closed to prevent global prices from plunging.

H/T to Publius for the link.

April 17, 2011

China’s real estate bubble

Filed under: China, Economics, Government — Tags: , , , — Nicholas @ 09:24

April 10, 2011

A world always at war

Filed under: Africa, Americas, Asia, Europe, History, Military, Pacific — Tags: , , , — Nicholas @ 10:38

This is an interesting site:

The screencap above shows the significant sites in the Mäntsälä rebellion in Finland in 1932 (no, I’d never heard of it either). Use the slider at the bottom of the screen to choose the time in history, and the map will show you the known conflicts for that period.

April 6, 2011

India’s educational triumphs and hidden flaws

Filed under: Economics, Education, India — Tags: , — Nicholas @ 11:00

India has vastly increased the numbers of students who go on to post-secondary education, and strives to keep tuition low and entry open to as many prospective students as possible. This great success in enrollment hides some pretty nasty deficiencies in the actual quality of education being offered:

Call-center company 24/7 Customer Pvt. Ltd. is desperate to find new recruits who can answer questions by phone and email. It wants to hire 3,000 people this year. Yet in this country of 1.2 billion people, that is beginning to look like an impossible goal.

So few of the high school and college graduates who come through the door can communicate effectively in English, and so many lack a grasp of educational basics such as reading comprehension, that the company can hire just three out of every 100 applicants.

[. . .]

Business executives say schools are hampered by overbearing bureaucracy and a focus on rote learning rather than critical thinking and comprehension. Government keeps tuition low, which makes schools accessible to more students, but also keeps teacher salaries and budgets low. What’s more, say educators and business leaders, the curriculum in most places is outdated and disconnected from the real world.

[. . .]

Muddying the picture is that on the surface, India appears to have met the demand for more educated workers with a quantum leap in graduates. Engineering colleges in India now have seats for 1.5 million students, nearly four times the 390,000 available in 2000, according to the National Association of Software and Services Companies, a trade group.

But 75% of technical graduates and more than 85% of general graduates are unemployable by India’s high-growth global industries, including information technology and call centers, according to results from assessment tests administered by the group.

There’s no easy solution to this problem: by lowering educational standards, you reduce the employability of your existing graduates. If you raise standards, you increase the cost of education, both to students and to the government. Privatization may be the answer, but it won’t come cheap, and therefore will be politically dangerous to implement.

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