glass house talk

Not to hurt anyone’s feelings, but I was happy to see this reported— that China’s  State Council Information Office has done its own assessment of US human rights, and found it lacking.

“The U.S. practice of throwing stones at others while living in a glass house is a testimony to the double standards and hypocrisy of the United States in dealing with its human rights issues,” said the Chinese report.

Not that China has anything to be proud of here, but the US human rights record is far from perfect.

This reminds me of another issue where the US, or many Americans, seem especially hypocritical of China’s pollution problems. I did read that China had recently overtaken the US as the world’s worst polluter, but they also have five times the population. Per capita, the US pollutes three or four times what China does, and when in a similar stage of economic growth, the U.S. had horrible pollution problems.

It does not sit well with me to hear an American–like Hillary did recently–complain about China’s excessive carbon emissions.

bernanke, banks, and housing

He may as well have been responding to my last post. Fed Chairmand Bernanke said yesterday that he does not expect nationalization of banks in the US. That spurred some optimism and demand for stocks, and the Dow Jones rose by 3% even though Bernanke also said the recession is likely to last at least another year.

Another report says that home prices in the US have taken another drop and consumer confidence is lower too. Bernanke was probably taking this into consideration when predicting the extended recession.

Question then–Which would have a more positive effect on the housing market? Banks being held privately? Or under government control?

Held privately, banks are less restricted but also have the option to hoard money. Held publicly, policy makers could push the banks to loan money, but the cost of banking would likely be higher.

Hmmmmmmm….

turning toward socialism

Ted Rall writes many an interesting article, and in this one (like usual) he writes something many will disagree about (but I don’t)–that popularizing communism is a natural reaction to the current financial crisis, and maybe even the US could benefit from socialist policies.

A communist revolution in western Europe would be greeted by curiosity and derision in the U.S. state-controlled media. But if such a social upheaval were to protect French living standards from a global Depression spinning out of control, it might also prove inspiring to increasingly desperate Americans.

He also tells the story of a man in Tajikistan who preferred life in Soviet times, despite having more wealth and choice today. I heard the same things when I was living in Kazakhstan. It is totally believable because, like Rall says, people appreciate individual freedoms, but we are social animals as well.

The cartoon is by Ted Rall too.

pessimism

World stockmarkets

• Dow Jones 17 Feb 09 21:04 7552.6 -297.81 ( -3.79% )
• Nasdaq 17 Feb 09 20:59 1472.7 -60.46 ( -3.94% )
• FTSE 100 17 Feb 09 16:35 4034.13 -100.62 ( -2.43% )
• DAX 17 Feb 09 16:35 4216.6 -150.04 ( -3.44% ) 
• CAC 40 17 Feb 09 16:35 2875.23 -86.99 ( -2.94% )
• Nikkei 18 Feb 09 04:44 7520.81 -124.7 ( -1.63% )

And this is coming out at the same time I see this headline–

Obama Signs Huge Stimulus Package

Investors must be especially pessimistic about the effectiveness of the  expensive bill just signed. And Alan Greenspan is reported to believe that the package needs to be bigger.

export economies hardest hit?

Of countries in the developed world, Japan is apparantly being hit hardest by the global recession.

The 3.3 per cent reduction in GDP reported yesterday by Japan for the final quarter of last year is by far the largest economic contraction for any of the big developed nations announced so far, and dwarfs anything that Japan experienced during its infamous “lost decade” of growth during the 1990s.

Germany runs a close second with their GDP dropping by 2.1%. Comparatively, the US is doing well, with a slight contraction, and Britain’s economy shrank at a 1.5% rate in the last quarter. The author says Japan and Germany are suffering a bit more because their growth is dependent on large volumes of exports.

Now, my question. Are exports more vulnerable during a downturn? Or does a shrikage of export sales have a stronger impact on incomes? I don’t see why strong exports make these economies more vulnerable. 

(Sure, more vulnerable to protectionist policies, but I don’t think that is what is going on here.)

And why is China–another export economy–not hit harder? Yes, their growth rate is less, but still over 6% last quarter.

Please help.

natural selection in economics

First time I have read anything from the Hindustan Times, it turns out to be a very interesting article that compares economic development to evolution and natural selection. Failing companies in times of recession are very much like a particular species struggling for survival.

First, treat corporations and governments as organisms competing in the natural environment of the market. Second, see environmental change in the way, over the past decade, sophisticated financial risk instruments and an unprecedented wave of cheap capital had changed the global economy. Subprime loans and the like were born of this unholy marriage. In Darwinese, the environment has changed radically. And right now natural selection is taking place with the market (and official bail-outs) determining which firm, and even the odd government, survives the shakeout.

Also mentioned, Darwin was an avid reader of Adam Smith, and Alfred Marshall is said to have been inspired by Darwin. Not sure any of this helps us to break out of our recession, but maybe it adds a little perspective to the natural cull of companies that happens with a downturn.

world bank says poverty growing

46 million more people are falling into poverty, defined now as income of less than $1.25 per day. Like I mentioned here a couple of days ago, yes, the people most vulnerable to a recession are those that are marginally employed.

It is obvious that people with such small incomes are much more likely to spend an extra dollar or two if it was made available. Would it not make good sense to give all the bailout money to the poor? Not only because they need it more, they are much more likely to spend their increased income, increasing the multiplier and encouraging new investment

alphainventions

Cool site that shows various blogs as they get posted. It is called Alpha Inventions, whatever that means, and it is a great place to find new blogs and to promote your own.

video games are not so bad

Yes! As a teacher I have been arguing this point with colleagues for years. Schools I have worked at–there have been many–have all had rules against students playing video games. Now a European group has found that–

“Videogames are in most cases not dangerous and can even contribute to the development of important skills,” said Toine Manders, the Dutch liberal lawmaker who drafted the report.

“(They stimulate) learning of facts and skills such as strategic reflection, creativity, cooperation and a sense of innovation,” a news release on the report said.

Not sure that I buy into the idea that all games do this, but certainly the games that require some strategy will help develop that in the players.

china’s exports dropping

Last month’s exports from China dropped by 17.5% from a year earlier.

This is frightening because it will put more pressure on China to keep the value of the Yuan as low as possible, in addition to lowering export tariffs and minimizing manufacturing costs. All that is well enough, but the western world–especially the US– is already hell-bent on protectionist policies, like mentioned here by Pat Buchanan. 

Active export promotion in China will fuel the protectionist fires even more. Then we really will be in this recession for a long time.