Years of Poems and Spirits

Economist (the magazine, of course) is getting ever more loveable … many quotes are properly linked. Awesome!

Anyway, there is an article reminiscing Plaza Accord and fantasizing another.

It refers to another article by Ronald McKinnon from Stanford.

Quotes:
Twin deficit: implies U.S. financed government spending was financed by Japanese money (is it true?)

Why then is China bashing in the U.S. now so much more intense than Japan bashing or Germany bashing when the latter two countries still have larger manufactured exports and larger overall current account surpluses than China’s?

Stressed the difference between bilateral and overall account surplus (not sure why that makes difference to American politicians)

Why the obsession with currency? “industry. Rather than being concentrated in particular heavy industries, (Chinese imports) are spread across the board,”

Key assumption: If a discrete exchange rate appreciation is to be sustained, it must reflect relative monetary policies expected in the future: relatively tight money and deflation in the appreciated country and relatively easy money with inflation in the country whose currency depreciates.

Why: Price level/Real Exchange Rate, “A substantial appreciation makes the country look like a more expensive place to invest,” particularly FDI, and depreciation of dollar assets (which China has plenty).

He advocate fixed exchange rate as monetary anchor.

Problem if RMB revalued:
Because most East Asian countries invoice their trade in dollars, these countries collectively are a natural dollar area–loss of price competitiveness in Asia.

Very interesting idea: poor banking system in China makes exchange rate a better indicator than interest rate. Because in order to maintain the fixed rate, CB has to maintain stable money supply.

China’s recent history “However, the data are consistent with my hypothesis that fixing the nominal exchange rate provided the much needed anchor.”

Liquidity Trap:
In the face of undiminished foreign exchange risk, i.e., the probability that the renminbi could appreciate, a near zero interest rate liquidity trap is possible—even likely. (plus data)

In conclusion, he advocates, “retaining capital controls on inflows of highly liquid “hot” money from dollars into renminbi, and continuing to peg certain interest rates such as basic deposit and loans rates in China’s banks.”

Thoughts/Notes:
1. It compares today’s China to yesterday’s Japan.
2. A good monetary analysis that is simple enough for an undergrad (level) person to understand.
3. Some very interesting data/charts to back up his hypothesis.

Taubman: internet policy and legitamization strategy.
China Cuba case studies (Boas):
Chat room administrators hire censors, or “Big Mamas,” to screen and quickly remove offensive material from bulletin boards.
Recent crackdowns on Internet cafés have encouraged their owners to keep a close eye on web
surfers, and they have also prompted café users to patrol their own activities.
Liu Yuan, “Café Crackdown: China Enlists the Public in Its Ongoing Campaign to Censor the Internet,” Asiaweek, February 2, 2001.
Dissidents like Lin Hai and Huang Qi have been arrested and tried for their Internet use, and their fates have been well-publicized in Chinese media, undoubtedly serving as a message to others.

U.S. schools are banning MySpace.com.., the teens were told to dismantle their Myspace.com accounts or similar sites with personal profiles and blogs
(http://www.dailyrecord.com/apps/pbcs.dll/article?AID=/20051024/NEWS01/510240324)

As Yi Feng has argued, the likelihood of short-term political upheaval is lower in authoritarian regimes that
are perceived to have increased living standards and promoted economic growth.

China’s censorship standard (G.E. Gorman, China-bashing in the internet censorship wars, PDF locker)

Singapore: censorship desired, popular (Dr. Peng Hwa Ang and Ms. Berlinda Nadarajan, PDF locker)

Some history of regulations (STATE CONTROL OF THE INTERNET IN CHINA, reg_hist. PDF locker)

This study has found that censorship of the Internet is commonplace in most regions of the world. In some countries, for example in China and Burma, the level of control is such that the Internet has relatively little value as a medium for organised free speech, and its used could well create additional dangers at a personal level for activists.
Also, page 54-55
(Privacy International, Censorship, PDF locker)

It has been 2 month since I first heard of Mearsheimer and Walt’s work on Israeli influence on U.S. foreign policy. However, other than NPR’s “Morning Edition” gave it a 3 minute report, I have not seen any featured articles on NYT or WP or LAT.

For that matter, I did a little search on “Mearsheimer Jewish” on all three papers.
NYT: one op-ed by Judt, who is supposed to be a Israel critic, with a title “Lobby Yes, Conspiracy No” (or something like that); 9 readers replies; one report from the Metro NYC desk.
WP: search return 3 results (”Yes, It’s Anti-Semitic ” op-ed by Cohen, “Report on Effect of Israel Lobby Distorts History, Critics Say” A03, and one blog like thing)
LAT: only 1 relevent entry.
Salon: 1 entry.
ABCNews.com: no entry.
CBSNews.com: one article by AP (title: “Academics’ Paper on ‘Israel Lobby’ Blasted”–does it sound like a smart ass intern is trying to impress his boss?)
FoxNews.com: no entry
(I do not watch much TV at all, so I may have missed something–or did I? But it is safe to say that the media is more interested in stirring up our emotions around Zacarias Moussaoui than around Elliot Abarams)

What the two authors did was courageous but Don Quixote-ish. Talking about censorship or self-censorship, nobody in the world has been so successful.

However, resentment is like steam: if you can’t cool it fast enough, it will explode in your face.