Posts Tagged ‘economics’
Perry Anderson has an excellent round-up of some recent books on the rise of China in this fortnight’s London Review of Books.
These days Orientalism has a bad name. Edward Said depicted it as a deadly mixture of fantasy and hostility brewed in the West about societies and cultures of the East. He based his portrait on Anglo-French writing about the Near East, where Islam and Christendom battled with each other for centuries before the region fell to Western imperialism in modern times. But the Far East was always another matter. Too far away to be a military or religious threat to Europe, it generated tales not of fear or loathing, but wonder. Marco Polo’s reports of China, now judged mostly hearsay, fixed fabulous images that lasted down to Columbus setting sail for the marvels of Cathay. But when real information about the country arrived in the 17th and 18th centuries, European attitudes towards China tended to remain an awed admiration, rather than fear or condescension. From Bayle and Leibniz to Voltaire and Quesnay, philosophers hailed it as an empire more civilised than Europe itself: not only richer and more populous, but more tolerant and peaceful, a land where there were no priests to practise persecution and offices of the state were filled according to merit, not birth. Even those sceptical of the more extravagant claims for the Middle Kingdom – Montesquieu or Adam Smith – remained puzzled and impressed by its wealth and order.
A drastic change of opinion came in the 19th century, when Western predators became increasingly aware of the relative military weakness and economic backwardness of the Qing empire. China was certainly teeming, but it was also primitive, cruel and superstitious. Respect gave way to contempt, mingled with racist alarm – Sinomania capsizing into Sinophobia. By the early 20th century, after eight foreign forces had stormed their way to Pekin to crush the Boxer Uprising, the ‘yellow peril’ was being widely bandied about among press and politicians, as writers like Jack London or J.H. Hobson conjured up a future Chinese takeover of the world. Within another few decades, the pendulum swung back, as Pearl Buck and Madame Chiang won popular sympathy for China’s gallant struggle against Japan. After 1948, in a further rapid reversal, Red China became the focus of still greater fear and anxiety, a totalitarian nightmare more sinister even than Russia. Today, the high-speed growth of the People’s Republic is transforming Western attitudes once again, attracting excitement and enthusiasm in business and media alike, with a wave of fashion and fascination recalling the chinoiserie of rococo Europe. Sinophobia has by no means disappeared. But another round of Sinomania is in the making.
The review is nuanced, scholarly, and even-handed. Definitely worth a read.
The Washington Post gives a great article on what we already knew:
If you have been following the recent media saliva-thon regarding The Obama’s recent trip to China, you may be under the impression that the trip was an utter failure, an abject round of grovelling and slavering, and an unmistakable sign of both Obama’s incompetence and America’s irrevocable decline. That is the predominant message the US mainstream apparently wishes to get across, with its endless narrative of Obama as a “profligate spender coming to pay respects to his banker”.
Once we in the US agree upon a story, we tend to believe it in the face of contravening evidence (WMDs anyone?). How else to explain our ignoring of this article in China’s (state-run) China Daily? If one takes its message at face value, this article indicates a major victory for the Obama Administration.
From the article:
The vice-foreign minister said the RMB rate’s flexibility may widen, echoing the nation’s central bank a month ago.
The announcement by Vice-Foreign Minister Zhang Zhijun comes after the People’s Bank of China, which has the power to oversee the yuan and financial institutions, said it was in the process of reforming the exchange rate system.
China is also starting to receive more international pressure to let its currency appreciate. The nation adopted the policy of loosely pegging the RMB to the US dollar since the financial recession began.
“China will increase the flexibility of the RMB exchange rate at a controllable level in the future,” Zhang said, “based on the market demand and with reference to a basket of currencies.”
China Daily is essentially the equivalent of Pravda in the Soviet Union – a state-run publication whose role is to inform the public and businessmen on official government policy (aside from the ‘state-run’ part, not at all dissimilar to our US media). Of course, their articles are written in byzantine journal-ese and one won’t find the slightest breath of dissent within its pages, but over the years it has grown useful in deciphering what the Chinese leadership wishes to say publicly.
Thus the surprise. For more than two years now, China has steadfastly refused to allow its currency to appreciate, an act which nearly every other country considers cheating (or “aggressive monetary policy”). By keeping its currency pegged to the dollar at favorable rates, China puts its export market on steroids. The US has made its position on this practice abundantly clear; our Treasury Secretary castigated China for it literally on his first day, and our leading Nobel Laureates write accusatory op-eds in our state-run newspapers demanding that “something be done”.
Now, a few lines in a China Daily hardly pass for a substantive policy announcement, but one is led to think that Obama and his Chinese doppelganger had a nice little chat while he was over there, and they made some kind of agreement regarding China’s “currency manipulation”.
If China allows its currency to appreciate, they will have acceded to Obama’s central (though unstated) goal in visiting Asia. They will also have begun to do their part in reducing our monstrous and unsustainable trade deficit. However it is also clear that any currency re-valuation on the part of China will spell hardship for America’s “middle class” (that is, the bottom 95%). We depend on cheap products from China to a wholly unhealthy extent, in much the same manner as a heroin user. When inexpensive Chinese currency is no longer an option, import prices are bound to inflate. Of course, this matters little to our policymakers at the top; their interest is in preventing the further hemorrhaging of value from the dollar, thus securing their overseas investments.
So! Good news, I guess?
I missed the last three failed bank Fridays, so here are all seventeen that failed in the past three weeks in a row. As always, from the FDIC:
|Pacific Coast National Bank||San Clemente||CA||57914||November 13, 2009||November 18, 2009|
|Orion Bank||Naples||FL||22427||November 13, 2009||November 17, 2009|
|Century Bank, F.S.B.||Sarasota||FL||32267||November 13, 2009||November 18, 2009|
|United Commercial Bank||San Francisco||CA||32469||November 6, 2009||November 9, 2009|
|Gateway Bank of St. Louis||St. Louis||MO||19450||November 6, 2009||November 9, 2009|
|Prosperan Bank||Oakdale||MN||35074||November 6, 2009||November 9, 2009|
|Home Federal Savings Bank||Detroit||MI||30329||November 6, 2009||November 9, 2009|
|United Security Bank||Sparta||GA||22286||November 6, 2009||November 9, 2009|
|North Houston Bank||Houston||TX||18776||October 30, 2009||November 3, 2009|
|Madisonville State Bank||Madisonville||TX||33782||October 30, 2009||November 3, 2009|
|Citizens National Bank||Teague||TX||25222||October 30, 2009||November 3, 2009|
|Park National Bank||Chicago||IL||11677||October 30, 2009||November 3, 2009|
|Pacific National Bank||San Francisco||CA||30006||October 30, 2009||November 3, 2009|
|California National Bank||Los Angeles||CA||34659||October 30, 2009||November 3, 2009|
|San Diego National Bank||San Diego||CA||23594||October 30, 2009||November 3, 2009|
|Community Bank of Lemont||Lemont||IL||35291||October 30, 2009||November 3, 2009|
|Bank USA, N.A.||Phoenix||AZ||32218||October 30, 2009|
The policy blogs are abuzz with the recent news that the Federal Reserve System might finally undergo an audit. The bill, sponsored by Ron Paul and endorsed by nearly everyone else, passed with a lopsided 43-26 victory in the House and would be the first comprehensive inquiry into what the Fed does with the trillions of dollars it commands. Glenn Greenwald has the best dissection of what went down.
Our leading media outlets are capable of understanding political debates only by stuffing them into melodramatic, trite and often distracting “right v. left” storylines. While some debates fit comfortably into that framework, many do not. Anger over the Wall Street bailouts, the control by the banking industry of Congress, and the impenetrable secrecy with which the Fed conducts itself resonates across the political spectrum, as the truly bipartisan and trans-ideological vote yesterday reflects. Populist anger over elite-favoring economic policies has long been brewing on both the Right and Left (and in between), but neither political party can capitalize on it because they’re both dependent upon and subservient to the same elite interests which benefit from those policies.
Beyond the specifics, a genuine audit of the Fed would be a major blow to the way Washington typically works. The Fed is one of those permanent power centers in this country that exert great power with very little accountability and almost no transparency (like much of the intelligence and defense community). The power they exert has exploded within the last year as a result of the financial crisis, yet they continue to operate in a completely opaque manner and with virtually no limits. Its officials have been trained to view their unfettered power as an innate entitlement, and they express contempt for any efforts to limit or even monitor what they do.
Time Magazine reports that Obama is planning another stimulus package in what they refer to as a “stealth stimulus” – it bears all the characteristics of a new round of spending without the now-discredited moniker.
In fact, Obama officials have been adamant that what they are proposing is not a new stimulus. They prefer such woolly phrases as “tax credit” and “other measures to improve the economy”. But by whatever name you choose to call it, the measures being proposed could eventually add up to more than $100 billion, according to Time.
Meanwhile, if the old stimulus has had any effect, it remains somewhat difficult to tell. The administration touts various figures of “saved jobs” (according to recovery.gov, my home state of Michigan saw 397 jobs created), but they present small relief when compared to the still-horrifying monthly job losses. It is also clear that the original stimulus is not being spent quickly enough. According to the government’s own statistics, the states have received only 11% of the original stimulus, even though 73% of the amount specified by the bill has officially been awarded.
This indicates a bureaucratic bottleneck that no amount of extra “tax credits” can relieve. Authorizing a new stimulus when the old one is still 89% unspent will only add to the deficit while having no other discernible effect. Most indicators would suggest that the stimulus money is now being spent at its fastest possible rate – our bureaucracy literally cannot allow for the funds to be distributed any faster. In light of this, a second stimulus would seem positively irresponsible. No wonder the Obama Administration doesn’t want to call it that.
An addendum: Christopher Flavelle over at ProPublica did some math and calculated that jobs created by the current stimulus bill cost $533,000 apiece. Even more evidence that a stimulus bill might not be the most efficient way to mitigate job losses.