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Archive for January, 2016

U.S. in Crossroad

January 23rd, 2016 2 comments

I remember in early 1960s, I read a book of short stories of science fiction from Eastern Europe in which one portrayed the future of mankind as one bloated capitalist lamenting that he owned everything with robots manufacturing products which no one can afford to buy, in fact the planet is dying with him as the last one. I also read the Michael Lewis book “The Big Short”, in which few have any idea of the coming mortgage failures which triggered the 07-08 financial crisis.
This January the stock markets in U.S. are in turmoil. It’s estimated more than $2 trillion in wealth were lost. This also comes as a complete surprise to all experts. Some economists and market analysts blamed it on China, Chinese stock market, oil price drop, while others consider it normal and totally unreasonable, that is clueless. And the confusion extends to politics. On one hand Donald Trump dominating the Republican polls, with him wanting to impose 45% tariffs on Chinese imports, build a wall to keep out Mexicans and Muslims. On the other hand Bernie Sanders threatening to impose socialism policies on Wall Street and the polls have him leading Hillary Clinton on the Democrats. With Iowa Caucus 10 days away, how do we connect the dots to make any sense?
Marx in his analysis of Capital foretold the struggle between capital and labor, the spreading chasm between rich and poor, the income inequality, globalization, extraction of surplus value from labor and nature to the detriment of both, and eventually the lack of investment opportunities and diminishing return with profit as motive. Now that his predictions seem to all come to pass one by one. Wages for U.S. workers have been stagnant for the last 40 years. Supreme Court is about to deal a crippling blow to government labor unions by making union due check off no longer mandatory in those few states that allow them. People are angry and turn both to right and left. Despite some positive responses to $15 minimum wages in some cities, I suspect U.S. may be turned to billionaires ruling directly rather than proxy as Trump triumphs.

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DPP Wins in Taiwan

January 16th, 2016 No comments

The writing has been on the wall for KMT’s chances in the election this time around for some time.  As I had discussed earlier, the battle between DPP and KMT in the 2016 election is not about independence vs. status quo as it had been 8 years back when Taiwan elected Ma Ying-jeou, or 16 years ago when Taiwan elected Chen Shui-Bian.  That battle had been won long ago, with this time everyone agreeing that the status quo is the way to go.  The battle this time around is about economics, about what to do with Taiwan’s stagnant wages and rising home prices.

Of course, there are plenty of symbolism that DPP – and hence Tsai – still stands for independence.  DPP’s charter, for example, still officially endorses independence.  Tsai has also been purposely demure and vague about her stance toward the Mainland, including her public avoidance of acknowledging the 1992 Consensus on the one-China policy.

But I think it’s possible all that is just symbolism.  Given that it’s election season, and that the 1992 Consensus include details that allowed both sides to interpret things slightly differently under the broad rubric of a one China policy, I think it’s perhaps understandable Tsai want to do everything to avoid the specter of getting pinned into one specific or another interpretation.

The real reason KMT lost is because it has not properly addressed the following political trends.  Read more…

The West has Affluenza Moral Universalism: An argument for a balanced view of morality in China

January 11th, 2016 1 comment

Moral Universalism, as often headlined by “Universal Human Rights”, is the philosophical concept that some Universal moral standard applies universally to all individuals, regardless of their culture, race, religion, gender, nationality, etc.

Yet, in implementation, Moral Universalism and “Universal Human Rights” have led to a kind of twisted moral standard, where collateral damage of millions of lives in wars are justified, but giving economic aid to starving “dictatorships” is wrong.

How was this possible?  I point to no further than an example of the “affluenza teen”, who killed several people while driving drunk, and yet his defense argued “affluenza”, a medical condition that he didn’t know right from wrong.

Read more…

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China’s Obsolete Economic Strategy?

January 9th, 2016 No comments

New York Times editorial board published an editorial this morning trying to give advice that’s so laughable and I immediately wrote a comment to rebut them.

“I think NYT should have more editorials about the direction of U.S. economy and government policies than China’s. What you complain about China doesn’t really hold water.
1. Despite the trigger of stock market breakers, the Shanghai stock composite at the beginning of 2016 is little changed compare with beginning of 2015, and compare with SP500 at U.S., the performance is similar.
2. Paul Krugman has been complaining of under stimulation in U.S.. The package is insufficient for generating higher growth in U.S.. Now the high speed trains in China might not generate sufficient return in dollars. It has generated social functions unimaginable by your editorial writers. It has knitted the country together in a closer entity with reasonable fares for internal tourism. I wish U.S. has similar trains instead of all the potholes in the highways.
3. China has plenty of weapons to tackle the higher debt compare to U.S.. She can use the QE to reduce the debt cost. Unlike U.S., now with interest rate rising and debt cost rising. Of course the transition of heavy industries to green energies will take time, but I am sure in 10 years, U.S. will marvel how clean the air of Beijing will be.
4. The so called currency devaluation is more a mirage of U.S. dollar strength than a Yuan weakness. For Yuan compare with basket of currencies used by IMF it actually strengthened. It also is a temporary condition with oil in the $30 range. Don’t expect it will last.”

Space prevent me from making all the points. Here I like to expound more on the question of investing for the future. By orthodox economic theory, investing something like railroad to Tibet makes no economic sense by return of asset. Yet for military, strategic, or the need of people it’s invaluable. The same is true for all the infrastructures of highways and high speed trains. Capitalists count the dollars and cents. Is it profitable to invest in education and health? Republicans here say no, and that’s a debate NYT should be engaging.

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