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Archive for January 2005

Chilling history

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The following is taken from a comment on my previous post. I guess the election doesn’t mean we are out of the woods yet. Will the US end up with military bases in Iraq, and a friendly government in power? Only time will tell.

U.S. Encouraged by Vietnam Vote :

Officials Cite 83% Turnout Despite Vietcong Terror

by Peter Grose, Special to the New York Times (9/4/1967: p. 2)

WASHINGTON, Sept. 3– United States officials were surprised and heartened today at the size of turnout in South Vietnam’s presidential election despite a Vietcong terrorist campaign to disrupt the voting.

According to reports from Saigon, 83 per cent of the 5.85 million registered voters cast their ballots yesterday. Many of them risked reprisals threatened by the Vietcong.

The size of the popular vote and the inability of the Vietcong to destroy the election machinery were the two salient facts in a preliminary assessment of the nation election based on the incomplete returns reaching here.

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January 31, 2005 at 4:54 pm

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Successful elections in Iraq

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Is it too much to hope that this could be a turning point? Let’s hope that, with an estimated 60% turnout, these elections will be as important to Iraq as the Orange revolution to Ukraine.

More questions: Is it just the filtering of Western reporters, or do most people now understand (and demand?) democracy? How does the PRC government present this to their people, who still lack the right to vote?

NYTimes: Far from taking away their instinct for asserting themselves, they seemed to be saying, the humiliations of tyranny had made them hungry for a chance to take a stand.

The point was made by another elderly Shiite, Hachim Shahir, 83, who said he had been a bricklayer for much of his life. Dressed for the occasion in a faded blue blazer, with only frayed ends of cotton where its buttons used to be, and a Bedouin’s black-and-white checkered headdress, he said he could not say exactly what it was about Abdulaziz al-Hakim, the scion of a Shiite religious dynasty, that had made him vote for the United Iraqi Alliance. “How would I know?” he asked. “I cannot read or write.”

But after a pause, he remembered, after all, what had drawn him to the polls, and kept him there for a long time after his two sons, men in their 50’s, had urged him to quit the lengthy lines and go home. “Under Saddam we were a people who were lost”, he said. “Before, we were not able to talk to officials; they were just punching you, and kicking you. But now, with elections, we’ll have good officials. We will know them, and they will know us.”

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January 31, 2005 at 4:41 am

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Monkey business

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I can’t think of any clever comments – the research speaks for itself 🙂

“A new study found that male monkeys will give up their juice rewards in order to ogle pictures of female monkey’s bottoms. The way the experiment was set up, the act is akin to paying for the images, the researchers say.

The rhesus macaque monkeys also splurged on photos of top-dog counterparts, the high-ranking primates. Maybe that’s like you or me buying People magazine.

The research, which will be detailed in the March issue of Current Biology, gets more interesting.

The scientists actually had to pay these guys, in the form of extra juice, to get them to look at images of lower-ranking monkeys.

Curiously, the monkeys in the test hadn’t had any direct physical contact with the monkeys in the photos, so they didn’t have personal experience with who was hot and who was not.

“So, somehow, they are getting this information by observation — by seeing other individuals interact,” said Michael Platt of the Duke University Medical Center.” Article

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January 29, 2005 at 5:26 pm

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Iraqi voting begins abroad

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I think the war was a mistake – perhaps the greatest strategic blunder of any US president since Vietnam. Nevertheless, I am touched by the sentiments of these Iraqi exiles and Iraqi-Americans as they cast their votes. Cost-benefit analyses aside, I still hope for a better future for Iraq. (From AP.)

Adim Altalibi struggled to hold back tears Friday after voting in an Iraqi election for the first time. All he could think about were his five nephews, all killed under Saddam Hussein’s regime.

“We lost a lot of our young men and women struggling against Saddam Hussein. It’s paid off now,” said Altalibi, 55, an engineer who left Iraq in 1987 and cast his ballot Friday at a suburban Detroit voting site that was once an abandoned home-improvement store.

Isho Mishail, 40, a driving instructor who was voting at the Chicago polling place, said it is important for him to vote because he does not know if his relatives in Iraq will have the same luxury. Insurgents “went to the houses and threatened them, `If you go to the polls, we’ll kill everyone in the house,”’ Mishail said.

…”Ten to 20 years from now, all the generations will remember that this is the first time we practiced our freedom of choice,” said Alshimmari, 49, who worked as a history teacher and was jailed by Saddam before leaving Iraq in 1991.

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January 28, 2005 at 9:31 pm

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Orange revolution

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More commentary from a Ukrainian friend here.

“I was at a New Year party in Kyiv hosted by a woman-entrepreneur, who co-owns an Italian furniture store in central Kyiv. She told us about her partners from Donetsk (Eastern Ukraine, camp of Yanukovich) who were very surprised that she operates without any “cover” from racketeering gangs. They literally asked her: “So you are living like in Europe?” One should understand — this is a great shift in views on the world, in perception of the reality and social order. Democracy vs Autocracy. Rule of Law vs Rule of Will.”

“Traditional special thanks to CERN physicists Tim Berners-Lee and Robert Cailliau who invented World Wide Web in 1990. Besides commercial and academic benefits for the mankind, WWW elevated freedom of speech to the highest level, unreachable for any government to muzzle the flow of information.

It happened so that Internet editions became the source of information about Yushcneko and Orange revolution for readers in Ukraine and the world as Kuchma’s government controlled all but one TV channels. For example, one of them, maidan.org.ua, served like a newswire from various volunteers all over Kyiv to warm about government moves.

Moreoever, at the peak of tensions, Yanukovich put pressure on Ukrainian Internet providers to block the traffic to opposition websites. One could only regret that the US Congress never found time to consider special proposition of developing the Triangle Boy Web developed at SafeWeb. This would allow democracy idea to beat censorship even further…”

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January 28, 2005 at 5:43 pm

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FX roundup

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Comments of Fan Gang, director of the National Economic Research Institute at the China Reform Foundation, at Davos:

“The U.S. dollar is no longer — in our opinion — is no longer a stable currency, and is devaluating all the time, and that’s putting [sic] troubles all the time.”

“So the real issue is how to change the regime from a U.S. dollar pegging … to a more manageable … reference … say Euros, yen, dollars — those kind of more diversified systems.”

“If you do this, in the beginning you have some kind of initial shock,” Fan went on. “You have to deal with some devaluation pressures.”

Keep in mind Fan is not an official spokesperson of the PBOC or the Ministry of Finance. Nevertheless, he represents at least one thread of the internal debate that must be ongoing among Chinese policymakers. The “shock” he refers to will be felt here as a dollar and interest rate crash.

Further analysis and commentary:

Setser blog

Sage Capital Zurich

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January 27, 2005 at 7:42 pm

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Dark energy

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Below is a figure I stole from Sean Carroll at the University of Chicago. For those who haven’t yet heard, dark energy is a strange substance with negative pressure, whose existence has been recently inferred from cosmological observations. It seems to constitute about 70% of all the energy in the universe, and is causing accelerating expansion. (Don’t worry though – nothing very noticeable will happen for the next few billion years.)

Theorists have no idea what this stuff is. Let me repeat that – theorists have no idea what this stuff is! The discovery, via supernova distance-redshift observations, was totally unexpected. That makes studying it tremendously exciting. However, we may not find out what it is for a long time. For example, dark energy might be a quantum field with very weak interactions, coupled to us only via gravity. In that case we might not learn much beyond how it affects the large scale evolution of the universe.

If the discovery of dark energy holds up, it will be one of the most surprising and important discoveries of the last century. The public hasn’t really caught on to this yet, but who can blame them with all the background noise about speculative (meaning, very likely not real) things like superstrings, extra dimensions, supersymmetric partners, etc.

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January 27, 2005 at 9:16 am

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Comparison shopping via barcode

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This is kind of old news, but the utility of it became apparent to me over the weekend while I was shopping for a new printer. In Japan, you can use the camera on your cellphone to capture the barcode of an item you are looking at in a store, and get an immediate price quote from Amazon Japan. If you prefer the Amazon price, you can order it with a click. An even more useful model would be an aggregation service that lets online merchants bid to sell you the item. I don’t know when we’ll see this in the US, but when it comes I predict dire consequences for stores like Best Buy or Circuit City.

BTW, I ended up buying an HP printer-scanner-copier (all in one). It is amazing what a couple hundred bucks gets you these days – the thing plugs right into my wireless router and is accessible from anywhere in the house. On the downside, the HP driver CD installed 7000(!) files on my laptop. Because it’s a network printer the driver software communicates with the server on the printer (as well as HP servers on the Internet to share photos or other documents with friends and family), sending and receiving large chunks of data. Good luck distinguishing spyware from legitimate stuff in this environment…

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January 26, 2005 at 9:29 am

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Dangerous flows

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Here’s a very nice figure from today’s Times:

Readers of this blog are by now quite familiar with these issues. The US is running unsustainable current account deficits. Asian central bankers are supporting the dollar with massive purchases of Treasury debt (see Brad Setser’s blog for detailed analysis), in the interest of protecting their own export-driven economies. (Also see Nouriel Roubini’s blog for game theoretic discussion of the world currency regime and “mutual assured destruction” if China and Japan stop buying Treasuries.)

Analysts have often discussed the tremendous paper losses faced by countries like China and Japan if their dollar-denominated FX reserves (approaching the trillion dollar range) were to fall in value. I’m not quite sure how to think about these losses. Take China as an example: dollars repatriated to China by companies are converted back into renminbi, and the PBOC has to issue renminbi-denominated debt to remove the excess currency from the money supply (“sterilization”). This leaves the PBOC with renminbi debt and dollar assets, so dollar devaluation relative to the renminbi makes it hard for the central bank to meet its obligations. Clearly bad for them. As a last resort, though, I suppose dollar reserves can still be used to buy US assets – including technology or natural resources.

In the aftermath of the Plaza Accord of 1985 (see figure) the Yen appreciated by over 100 percent. I would be very interested to know what the consequences were for the BOJ.

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January 25, 2005 at 9:59 am

Posted in globalization

Goldman optimistic on China growth

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The graph below seems a bit speculative to me, forecasting US GDP growth rates at about 3% and China at 7-8% for the next 50 years or so! Actually, it underestimates where China is today, using official exchange rates rather than PPP. If the size of the economy right now is actually $6 trillion, the PPP value, rather than $1.5 trillion, the nominal FX value, then Goldman is forecasting a more reasonable average annual growth rate of about 4.5%.

There is some recent precedent for this line of thinking. You can see here that the value of the Yen went up by more than a factor of 2 after the Plaza Accord, meaning the implied size of the Japanese economy (in nominal FX terms) more than doubled in less than 5 years. Presumably the PPP figure is more meaningful. (For related discussion, and definition of Purchasing Power Parity, see here.)

WSJ: “Sustaining long periods of strong growth is hardly unprecedented. If China edges out the U.S. in, say 2041, as a Goldman Sachs research paper predicted in 2003, it will have done so in about 65 years. The U.S. took about 100 years to surpass Britain as the world’s No. 1. Japan rose to second place from the ruins of World War II in 30 years.

China has many of the advantages that the U.S. and Japan enjoyed in their ascents. Like the U.S., it has land in abundance and a sizable domestic market, which drives internal demand. Like Japan, China has a highly educated population, an undervalued currency and access to capital and technology.

China also has a history of economic supremacy, having been the world’s largest economy for much of the 700 years starting around 1000. In an echo of today’s capital and technology transfers, the introduction of early-ripening rice and later of New World crops like maize and sweet potatoes created food surpluses, allowing the buildup of porcelain and silk industries that dominated global trade, says Kent Deng, an economic historian at London School of Economics. As late as 1730, historians say, the country produced a third of the world’s manufactured goods. China currently dominates about 12% of world manufacturing.”

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January 24, 2005 at 7:19 am

Posted in globalization