I want to share a few things in the paper today that evoke strong reactions from me:
1. “The Apple in His Eye“
This article talks about the significance of Steve Jobs’ role in the innovation of Apple products, including the Ipad. The greatness of Apple’s products lies in that they are “edited products that cut through complexity, by consciously leaving things out — not cramming every feature that came into an engineer’s head, an affliction known as ‘featuritis’ that burdens so many technology products.” This observation recalls to my mind all these mp3 players that I saw being sold in HK. Even as they tried to mimic the outward appearance of Ipods, the programs in the ipod-look-alike players are saddled with many programs, which not only burdened the capacity of the gadget, but in the end, has a high probability of being dysfunctional. Also, this observation recalls to my mind Google’s layout — also simple and functional (by the way, I noticed that Baidu’s layout is conspicuously like Google’s).
Finally, I really identify with the following quote from Steve Jobs on style:
Great products, according to Mr. Jobs, are triumphs of “taste.” And taste, he explains, is a byproduct of study, observation and being steeped in the culture of the past and present, of “trying to expose yourself to the best things humans have done and then bring those things into what you are doing.”
I had written in previous entries about my love for looking at beautiful things (I use beauty and style interchangeably). So I have often wondered myself, why is it that as with age I increasingly appreciate looking at beautiful things. The above passage in NYTimes puts my fascination into words. The appreciation of beauty and style does require periods of STUDY. And looking at it does make my heart go soft with admiration with the human capability. (Note that this is different from say, trying to make MYSELF beautiful; all I am talking about is my fascination with LOOKING at beautiful things…eventually, things that I would have the resource to collect)
2. Thomas Friedman’s column “Never Heard That Before“
I have always found Friedman’s columns and books to be exaggerating, shallow, and alarmist. He is the quintessential sensational journalist, following wherever the wind blows (high noise). It’s unfortunate how much clout he holds in public opinion. While I would dismiss his usual writings, his column today sounds off alarm in my head as I ponder the possibility that it could be true (what makes it true is if many people think it’s true). He wrote that in Davos forum, delegates from Europe and Asia are asking if the United States is experiencing political stability. Furthermore, he received this question: “Is the ‘Beijing Consensus’ replacing the ‘Washington Consensus’?”
Ring – Ding – Ding- DINGGGGGG!!!!! Okay, that’s pause with that question right there. If that does not send chills down your spine, it does to mine. Here is Friedman’s explanation of the Beijing Consensus:
The Beijing Consensus, says Bennhold, is a “Confucian-Communist-Capitalist” hybrid under the umbrella of a one-party state, with a lot of government guidance, strictly controlled capital markets and an authoritarian decision-making process that is capable of making tough choices and long-term investments, without having to heed daily public polls.
Let me explain why I am so agitated from reading this question. Lately I have been having heated debates with some friends (and parents) regarding China’s economic policy. The debates usually get “heated” because the victimization and nationalistic tone of a typical Chinese (even Chinese Americans) would take on upon hearing criticisms of the Chinese government really ticks me off. As I try to be objective by pointing out how the Chinese leadership violates international commercial law and affects other developing countries, a typical Chinese / Chinese American would take on the argument in this way: If the Chinese Government is lifting 500 million above poverty, I don’t care if it is the Mexicans who are hurt. Then I would point out what I think is the core of the issue: it is that by cheating the international community, China would risk shutting down the international trade channel (as well as other, such as constructive dialogue), which would reduce the economic pie (as Econ 101 would teach you) and everybody lose, including China. Inevitably, the person I would have this debate on (who usually don’t have economic training but think that they know the issue) would not try to understand this explanation and continue with the victimization tone (“China had been bullied by the West 100 years ago…”) But let me not go into details on that one.
Anyway, back to the Beijing Consensus. What is really alarming to me is, if China’s economic growth based on its growth model at this time would lead short-sighted national leaders of developing country to consider resorting to one-party, authoritarian rule.
If national leaders started thinking that China’s political model and growth is the magic formula to growth in their country, we now have a justification for cracking down on human rights.
I don’t want to talk about politics nowadays because I realize that it alienates people and we never compromise. But somethings NEED to be talked about because it is very important. In this case, I felt that the increasing “successful” Chinese economic regime has become a justification for the existence of political oppression. I am happy that China’s economic growth has improved the lives of so many Chinese people, but I am also deeply troubled by how their growth experience would lead to the spread of their political doctrine to the rest of the developing world, who is still trying to figure out their growth formula.
Another reason why I am agitated is that I seriously question why newspapers nowadays constantly scream that “the power is shifting to the East,” as if it’s a foregone conclusion. I am stunned by the short-sightedness of pundits and politicians. This is mad hysteria. Of course, I don’t believe this is the truth. Here is why: China runs only a partly capitalistic system. In key area, it is still a command economy. For example, in the lending area. When the government wants to heat the economy up, it tells local government and banks: Here is your quota for production and lending, now go do it. And the local government and banks would do as they were bidden. Do you see the problem here? Recall what happened in the socialist production system? The result is a bunch of low-quality goods, many dysfunctional. In today’s Chinese economy, there might be more complicated economic products, such as financial loans. But the result is still the same: crappy loans. Bad quality loans. Another characteristic of the economy system due to the one-party system? Limited information and corruption (due to lack of check and balance). As outsiders, we do not know the bad stuff that is going on within that country because the media is not allowed to talk about it. But you can be sure that something bad is brewing. In Charles Kindleberger’s Financial Manics and Crashes, he reviews the financial crises in history dating back to several centuries ago. A common feature of Crashes is that the seed from them is laid during good times, and then as times went bad, there would be an eruption of news about corrupt company. Even in a country of mostly free information such as US, Enron took awhile to get out. In a country such as China, you can bet that something similar will come out some day. In the past year the government showered liquidity in its economy (the seed of trouble). You may see growth now, but I predict that something bad will inevitably leak out eventually and send shock waves to foreign investors.
Finally, I want to make a point about what constitutes “power shift” in economics term. Is it by the absolutely about of GDP figure? Or by the growth percentages? While people are amazed by the production power and figures, I ask, who is buying Chinese products? My answer: China and US are partners in crime. The Chinese government should be grateful to the low saving rate of the Americans for keeping them in power. It is the American consumerism that fuels the export growth in China (and export growth is what fuels its production figure). It takes 2 to tango. It is wrong to say that America alone caused the Financial crisis, because China also caused it. It caused it by keeping its exchange rate artificially low and fixed to the US dollar by avaricely buying up US Treasuries, allowing the US interest rate to be so low (in the mean time, the US government happily continues to spend), and consequently fueling world wide loose liquidity since 2002.
Conclusion: Okay, I see that growth is high in China while it is dismal in the rest of the developed world. Also, just because in this financial crisis, China is still having a high growth rate and the West is not — does not mean that the power has shifted. Economic growth is intimately related to the political system. Without checks and balance, without freedom of information, without a truly invisible hand, China will just remain a volatile, and unsustainable growth example that is a shining star for a brief moment.
If China is in a world of itself, it’s fine, because then the bad consequences will just be limited to itself. But its action affects the world (of course in both positive and negative way…but in this post, I am focusing on the negative), and it needs to be responsible for it. At least, recognize its responsibility and stop being arrogant.
One last point, and on a personal note: I may sound like a China hawk in this post, but let me say that I am not your typical china-bashing, imperialistic or brainwashed, Western observer who just want to see China wither. No — an emphatic NO. Several years ago (2001), when I was still in college, I was an enthusiastic student of Chinese history, political science, and economy. China has not even entered WTO then. There was so much possibilities for it to finally lay off its decades of humiliation by rising in the world. Then, I read a book written by Nicholas Lardy and it is titled “Integrating china into the World Economy.” The book placed China is a positive light, discussing how China is such a responsible player in the world economy, reducing tariffs earlier than it was supposed to. I was proud. China was playing according to rules of the world economy, being a cooperative player. Several years later, what I saw is: China has cheated its way to growth, and now being arrogant about its short run success. Readers of Chinese history probably knew that in previous dynasties of China, whenever foreigners conquerors conquered China, they would be willingly absorbed by the Chinese way of doing things (rather than the other way around). It seems that this is the expectation of how things should be conducted in China nowadays. I find myself much less hopeful for this country than 9 years ago.
Filed under: Politics
After Obama’s win, I tried to find international reactions. The American media, esp NYT, seemed to report lop-sided international reactions (all joyful). So I sought for the reactions in UK and Chinese media. The reuters UK had this video “postcard” series that are short interviews with people on the street in foreign countries. They asked these people, “What do you think about Obama’s victory and what should he do looking ahead?” The interview with a middle age man on the street of Bejing was hilarious, and very typical of a Chinese – that he had bought a lot of stocks and he wished Obama will restore the value of the stocks.
In Hong Kong’s MingPao, there is a forum open for discussion on Obama’s win. Here is one from 方太
我为我的股票投资重生而喝采。
(translation, “I am cheering for the revival of my stocks.”)
Where was I on November 4? Grant Park. The park was packed and there was a palpable sense of festivity everywhere I look. It felt more like a New Year’s Eve celebration than a night of election. I arrived at 6:30pm, and stayed until it was over, which was about 11:30pm. They put up screens of CNN everywhere. In the beginning, everytime a new projection came out that Obama leads a state, everybody cheered. In fact, cheers just eruped randomly everywhere. I kept looking toward where the cheers from, kinda glueless as to what was happening.
The cheers was loudest when Pennslyvania was projected to be Obama’s. When North Carolina and Florida came out, the cheers were even louder.
Towards the end (I wasn’t aware at that time that it was the end), when Virginia’s final results came out, and it had turned blue, everybody was just going nuts. Within seconds after that, the CNN anchor said that within seconds, the west coast states would close, and they had this timer that counting down. All of a sudden, everybody was counting down — 10, 9, 8, 7…….I had no idea why they were counting down — then, 3, 2, 1 — then suddenly everybody was hugging each other and was going majorly nuts — I looked up to the CNN screen and saw that Obama’ s electoral counts had increased to 287 from 232 (due to California) and in large bold letters — OBAMA ELECTED! The CNN screen showed Oprah at the frontline. Everybody cheered.
And when Obama finally came out to give the speech, all the people in front of me and behind me were weeping. The whole crowd was silent. And people were putting the hands up high — as if in church, saying hyms. It was a sight to behold.
At the end, the crowd dispersed orderly. I read in another blog of an attendent at the rally that he felt this crowd was different from any other crowds he had seen—that this crowd was reverential. I couldn’t agree more with this adjective to describe the crowd. Keep in mind that this is a huge crowd in tight space, and many of them are African Americans. However, there was no fighting, no commotion, nothing chaotic from beginning to the end. When there was victory, the crowd cheered, but they did not go out to unleash their wild joy by destruction (like in some post-victory sport games). This crowd has a sense of groundedness to it, even after the victory. While the joy in the air is like a New Year’s Eve party, it was also nothing like New Year’s Eve party. People were not drunk, and they don’t jumped on tables. People just came, wept, cheered, and went back home. Just like that. Very orderly. Phenomenal.
Here are some pictures from the scene.
Yep, that was us that the CNN screen is showing….
A sea of people stretching into the horizon.
Filed under: Politics
Just when people think that Hillary’s Campaign is dead and Obama is sounding more arrogant, Hillary does it again. She rebounces. This tough woman’s history in politics has been that of climbing back from dead again and again.
But I like what she said to her voters in Columbus (excerpt from CNN):
For everyone here in Ohio and across America who’s been ever been counted out but refused to be knocked out, for everyone who has stumbled but stood right back up, and for everyone who works hard and never gives up — this one is for you,” Clinton said before supporters in Columbus.
A continuation of that speech, excerpted from NY Times:
“No candidate in recent history, Democratic or Republican, has won the White House without winning the Ohio primary.” The crowd chants: “Yes she will!”
That’s nice. I actually admire this woman. Though I am not voting for her. But you know what’s the wierd thing? Despite the growing notion in the press that Clinton’s campaign is dead, I find more and more people around me are supporting her, staunchly too. Yes, it’s a small sample. But it is a sample in places where Obama is suppoesd to do well.
Let’s look at the Iowa Market again:
| Date | Contract | Units | $Volume | LowPrice | HighPrice | AvgPrice | LastPrice |
| 03/01/08 | CLIN_NOM | 310 | 39.337 | 0.123 | 0.131 | 0.127 | 0.126 |
| 03/01/08 | DROF_NOM | 149 | 2.121 | 0.014 | 0.018 | 0.014 | 0.014 |
| 03/01/08 | EDWA_NOM | 157 | 0.336 | 0.002 | 0.003 | 0.002 | 0.002 |
| 03/01/08 | OBAM_NOM | 735 | 632.061 | 0.851 | 0.870 | 0.860 | 0.859 |
| 03/02/08 | CLIN_NOM | 837 | 132.985 | 0.128 | 0.181 | 0.159 | 0.181 |
| 03/02/08 | DROF_NOM | 312 | 4.575 | 0.014 | 0.018 | 0.015 | 0.018 |
| 03/02/08 | EDWA_NOM | 669 | 1.278 | 0.001 | 0.002 | 0.002 | 0.002 |
| 03/02/08 | OBAM_NOM | 512 | 422.857 | 0.788 | 0.859 | 0.826 | 0.810 |
| 03/03/08 | CLIN_NOM | 1,719 | 314.846 | 0.135 | 0.236 | 0.183 | 0.181 |
| 03/03/08 | DROF_NOM | 223 | 4.031 | 0.014 | 0.024 | 0.018 | 0.014 |
| 03/03/08 | EDWA_NOM | 157 | 0.377 | 0.002 | 0.003 | 0.002 | 0.002 |
| 03/03/08 | OBAM_NOM | 1,240 | 991.465 | 0.785 | 0.844 | 0.800 | 0.825 |
Interesting. Although Obama is still highly favored to win the nomination, the number actually has declined!
Why is there such a big price differential between the Clinton and Obama bets when the actual delegate vote count differential is so tiny? Maybe the Obamamania has swept through the Iowa Market also!
All eyes are now on Texas.
The front page article in the printed version of Wall Street Journal today reports on what is the latest development in the backlash against Sovereign Wealth Funds in Washington DC.
A couple points:
1. I am glad to see that IMF is playing a coordination role in this. IMF’s mandate in today’s world of no financial crises indeed is to disperse information. By drawing up a voluntary code of conduct for SWF, which I hope and imagine would be along the lines of the voluntary SDDS as well as international reserves templates (which were drawn up after the Asian Financial Crisis, except that this SWF code will be BEFORE any crisis), IMF is precisely playing the role that it should be playing.
2. But wait a minute, will there be disclosure plans? And will those plans be optional (like SDDS, where disclosing the information is to the benefit of that country, via lowering costs of external financing and improving country ratings)? Are the incentives sufficiently enough to make these SWF want to disclose anything? In any case, I do not expect sovereign wealth funds to disclose the geographical allocation of their portfolio in any disclosure plans that IMF might have. If I remember correctly, so far only 25-27 central banks/monetary authorities report the currency allocation of their portfolio for their international reserves. Not even Japan, the supposedly most transparent Asian country, does this. And none of the Middle Eastern countries do this. Most of reserves disclosure central banks are in Europe. If they don’t even do it for international reserves, I see little chance they do it for sovereign wealth funds.
3. On a side note, it is a shame that the US central bank cannot coordinate with other major central banks for monetary policy, opening now possibilities of crazy dollar movements
4. The most informative and reliable source about sovereign wealth funds I find is from Edwin (Ted) Truman from Peterson Institute. He and his score card of 32 SWF are cited in this WSJ article. Everybody should look at it and read his testmonial to the Senate Banking and Finance Committee.
5. Some questions to ponder: On the issue of disclosure, what is the optimal amount of information that SWF should disclose? (without hurting itself and scaring off national governments) Does there exist a stable and unique equilibrium where such funds would not take political advantage of their stake?
Filed under: Politics
Last time I checked, the Iowa market is saying that Hillary will win the nomination. And the numbers then (night before Super Tuesday) did not change much from about 9 months ago when I checked. Now, about a week from Super Tuesday, look what the numbers are saying — Obama will win! For people who believed in Obama a year ago, here is your monetary reward!
| Date | Contract | Units | $Volume | LowPrice | HighPrice | AvgPrice | LastPrice |
| 02/04/08 | CLIN_NOM | 2,211 | 1,185.263 | 0.512 | 0.578 | 0.536 | 0.539 |
| 02/04/08 | DROF_NOM | 1,056 | 5.361 | 0.005 | 0.006 | 0.005 | 0.006 |
| 02/04/08 | EDWA_NOM | 1,298 | 2.004 | 0.001 | 0.002 | 0.002 | 0.002 |
| 02/04/08 | OBAM_NOM | 2,878 | 1,374.083 | 0.433 | 0.500 | 0.477 | 0.488 |
| 02/05/08 | CLIN_NOM | 9,049 | 4,460.622 | 0.344 | 0.630 | 0.493 | 0.591 |
| 02/05/08 | DROF_NOM | 2,732 | 17.621 | 0.004 | 0.011 | 0.006 | 0.004 |
| 02/05/08 | EDWA_NOM | 4,585 | 5.332 | 0.001 | 0.003 | 0.001 | 0.001 |
| 02/05/08 | OBAM_NOM | 8,708 | 4,201.841 | 0.367 | 0.649 | 0.483 | 0.398 |
| 02/06/08 | CLIN_NOM | 4,834 | 2,444.418 | 0.420 | 0.590 | 0.506 | 0.440 |
| 02/06/08 | DROF_NOM | 2,878 | 18.498 | 0.004 | 0.012 | 0.006 | 0.007 |
| 02/06/08 | EDWA_NOM | 1,505 | 2.314 | 0.001 | 0.003 | 0.002 | 0.002 |
| 02/06/08 | OBAM_NOM | 6,751 | 3,350.593 | 0.405 | 0.570 | 0.496 | 0.542 |
| 02/07/08 | CLIN_NOM | 2,275 | 935.970 | 0.378 | 0.442 | 0.411 | 0.442 |
| 02/07/08 | DROF_NOM | 405 | 2.810 | 0.006 | 0.009 | 0.007 | 0.008 |
| 02/07/08 | EDWA_NOM | 2,286 | 6.352 | 0.001 | 0.004 | 0.003 | 0.004 |
| 02/07/08 | OBAM_NOM | 2,993 | 1,737.428 | 0.543 | 0.650 | 0.580 | 0.565 |
| 02/08/08 | CLIN_NOM | 1,211 | 511.676 | 0.405 | 0.442 | 0.423 | 0.407 |
| 02/08/08 | DROF_NOM | 4,310 | 65.132 | 0.008 | 0.020 | 0.015 | 0.019 |
| 02/08/08 | EDWA_NOM | 256 | 0.916 | 0.002 | 0.004 | 0.004 | 0.002 |
| 02/08/08 | OBAM_NOM | 743 | 418.661 | 0.548 | 0.585 | 0.563 | 0.585 |
| 02/09/08 | CLIN_NOM | 2,822 | 1,070.910 | 0.325 | 0.444 | 0.379 | 0.350 |
| 02/09/08 | DROF_NOM | 765 | 12.881 | 0.015 | 0.021 | 0.017 | 0.015 |
| 02/09/08 | EDWA_NOM | 1,066 | 2.614 | 0.001 | 0.004 | 0.002 | 0.002 |
| 02/09/08 | OBAM_NOM | 2,542 | 1,522.894 | 0.560 | 0.650 | 0.599 | 0.621 |
| 02/10/08 | CLIN_NOM | 1,999 | 630.716 | 0.282 | 0.368 | 0.316 | 0.299 |
| 02/10/08 | DROF_NOM | 218 | 3.995 | 0.015 | 0.022 | 0.018 | 0.018 |
| 02/10/08 | EDWA_NOM | 278 | 0.725 | 0.002 | 0.003 | 0.003 | 0.002 |
| 02/10/08 | OBAM_NOM | 2,168 | 1,429.178 | 0.624 | 0.700 | 0.659 | 0.693 |
Filed under: Politics
Up to the day before Super Tuesday, the Iowa Politics Gambling Market says Hilary will win. Here’s the price history in recent days:
| Date | Contract | Units | $Volume | LowPrice | HighPrice | AvgPrice | LastPrice |
| 02/01/08 | CLIN_NOM | 1,225 | 719.259 | 0.550 | 0.599 | 0.587 | 0.584 |
| 02/01/08 | DROF_NOM | 582 | 2.938 | 0.005 | 0.009 | 0.005 | 0.005 |
| 02/01/08 | EDWA_NOM | 740 | 1.493 | 0.002 | 0.003 | 0.002 | 0.002 |
| 02/01/08 | OBAM_NOM | 1,320 | 559.877 | 0.390 | 0.470 | 0.424 | 0.418 |
| 02/02/08 | CLIN_NOM | 951 | 565.253 | 0.575 | 0.609 | 0.594 | 0.605 |
| 02/02/08 | DROF_NOM | 397 | 1.985 | 0.005 | 0.005 | 0.005 | 0.005 |
| 02/02/08 | EDWA_NOM | 236 | 0.472 | 0.002 | 0.002 | 0.002 | 0.002 |
| 02/02/08 | OBAM_NOM | 2,121 | 829.889 | 0.340 | 0.417 | 0.391 | 0.374 |
| 02/03/08 | CLIN_NOM | 2,194 | 1,295.714 | 0.550 | 0.664 | 0.591 | 0.560 |
| 02/03/08 | DROF_NOM | 359 | 1.901 | 0.005 | 0.007 | 0.005 | 0.006 |
| 02/03/08 | EDWA_NOM | 378 | 0.786 | 0.002 | 0.003 | 0.002 | 0.002 |
| 02/03/08 | OBAM_NOM | 1,725 | 734.056 | 0.380 | 0.450 | 0.426 | 0.425 |
Filed under: Politics
1. John McCain
2. Rudy Giuliani
3. Barak Obama
(in that order).
Since there were so many endorsements over the weekend, I have decided to throw in mine into the blogosphere as well.
If the race is between McCain and Obama, I will vote for McCain.
(It then naturally follows that if the race is between McCain and Hillary, I’ll vote for McCain)
If the race is between Rudy and Obama, I will vote for Rudy.
(It then naturally follows that if the race is between Rudy and Hillary, I’ll vote for Rudy)
If the race is between Huckabee/Romney and Obama, I’ll vote for Obama.
If the race is between Huckabee/Romney and Hillary, I’ll vote for Hillary.
If the race is among other people, I will not vote.
Why are my top candidates Republican? (To think that in 2004 I was canvassing for John Kerry in Virginia, knocking on doors in a red district to convince people not to vote Republican, or rather, Bush) Just because I like McCaine and it’s easy to see that he is a good and honest man. Why Rudy? Because the moment I saw him on NBC when the twin towers crumbled I liked him, and it doesn’t hurt that he is pro gay, pro abortion, and pro gun laws.
Alright, the real reason is Iraq and national security. Is it inconsistent of me to be anti-war in 2001 (protested in anti-war protest at Hippie College) and support continuation of occupation candidates in 2008? (wow this war has been going on for 7 years?!!) No, I don’t think. It does not strike me as right to march into someone’s country then leave it in a worse place than it was, especiallly now that the last surge has demonstrated to be effective. Given that the world is a rather crazy place right now (though not crazy as in 1980s), we need someone that inspires confidence. McCain does it for me.
Why Obama is not my first? He’s cool, but McCaine gives me more confidence.
Why not Hillary? Because that would mean that my schools’ grads will never be hired as white house economics advisers and only those from salt water would :). It’s personal.
