06.13.08
Posted in Economics at 1:23 pm by ryan
Under the market economy you are rewarded to moving resources from where they are undervalued to where they are valued more — and punished severely for misallocating resources.
There’s a great old book by george soros, alchemy of finance, that you should read to better understand the market.
If the year was 1900 and you operated the #1 wagon wheel factory in the country, what would you do? Answer - CHANGE. The market changes. Everything changes. We either capitalize on the change, or ignore the change and get hurt by it — but no matter how hard we close our eyes, the change will happen just the same.
(Excerpt from an email I sent to a close friend)
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05.08.08
Posted in Chinese (中文), Economics, USA at 12:14 pm by ryan
Interesting piece in the Economist: American housing - Map of misery. Can’t say I care too much, but it does define the relationships between rents and mortgages in more eloquent economic terms that I have 
A better measure of housing fundamentals is the relationship between house prices and rents. This is a sort of price/earnings ratio for the housing market: the price of a house reflects the discounted value of future ownership, either as rental income or as rent saved by an owner who lives in the house.
—Chinese Version—
衡量关于房地产的基础经济情况：房价和租金的关系。你可以理解这个比例有点像股票的市盈率：一套房子所有权的价格表示贴现值的未来所有权。这个所有权代表房子可以赚的租金或者这个房东可以节约的房租。
当然，你还要考虑：
－利息的比例
－通货膨胀的比例
－其他的因素
但是可以用这个比例来判断这段时间是否适合买房。
And in case you were curious about that map…
UPDATED: 2008/05/15 - Added Chinese Translation and Considerations…
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03.30.08
Posted in China, Economics, USA at 2:06 pm by ryan
Quote Seeking Alpha / Barron’s
Commodity bull Jim Rogers notes that there are about 70,000 mutual funds in the world, and only about 50 that invest in commodities. He thinks the speculative bubble has a few years to go. But looking at the ’smart money’ — farmers and others who actually trade in and use the physical commodities — tells a different story. Net commercial shorts are 30% higher than a previous record.
Factors that could burst the bubble:
- Even the slightest hint of a China slowdown (much of the bullish outlook is due to the perception of an ‘insatiable’ China).
- A U.S. recession.
- A stronger dollar (commodities are dollar-denominated).
- A stronger stock market, leading people to put money back into stocks. (Or, conversely, a weaker market that sees traders liquidating commodity longs to meet margin calls. Barron’s doesn’t mention this, but it got some mileage when gold and oil dived suddenly a couple weeks ago.)
- The CFTC changing its exemption of position limits on index funds.
Personally, my money’s on Jim Rogers, but we’ll see
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03.24.08
Posted in China, Economics, USA at 9:20 am by ryan
Had coffee last week with a reporter from The Atlantic, James Fallows. Just saw an excellent story he put together called “Countdown to a Meltdown”:
America’s coming economic crisis. A look back from the election of 2016
Countdown to a Meltdown
January 20, 2016, Master Strategy Memo
Subject: The Coming Year—and Beyond
It’s an excellent read. Check it out.
There’s also a great article called “Win the peace” with a speech from Thomas PM Barnett at the TedTalks. Watch it.
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02.28.08
Posted in Books, China, Economics, History, Indonedia at 11:03 am by ryan
Well, we’ve managed to burn through the list posted at the start of the month:
21:Bringing Down the House and Rigged: The True Story of an Ivy League Kid Who Changed the World of Oil, from Wall Street to Dubai
These two should be commented on together because the style and stories are so similar. If you in the mood for a fast paced novel about a life that sounds exciting, then either of these might be fun. Author Ben Mezerk spins out a story that you should be able to find on MTV. In the case of “Rigged”, saying that building a oil futures exchanged in Dubai “changed the world of oil”, it seems a bit exaggerated, but I’m not in the oil business so I suppose it’s not really my place to comment otherwise… In both cases the stories are a lot of fun, but again, I think of these more as a novel written in the character of historical fiction (ie, parts may have been based on actual events). Don’t get your expectations out of control and you should have a good time 
In the Ruins of Empire: The Japanese Surrender and the Battle for Postwar Asia
This was an excellent history of Asia from 1945-1950. If you’re interested in how military occupation works, in how systems operate, in how civil wars get started, in how arms get moved from one group to another, this is a great read! Thoroughly enjoyed this one! How did the Vietnam War get started anyway? And what about the Korean war? And why did we let Suharto get away with so much in Indonesia? Much of the current state of Asia is the result of “The Allies” unwinding the Japanese Empire in Asia. The Korean War, Vietnam War, Chinese Civil War, and Indonesian Independence from the Netherlands will all be quickly understood. Prior to reading this, I confess I wasn’t even aware that France tried to restore it’s colony in Vietnam after Japan’s surrender at the end of WWII. At least I’m slightly less ignorant then before I read this one… Highly recommended!
Liar’s Poker: Rising Through the Wreckage on Wall Street
This was a very wittily written story about greed on Wall Street during the ’80’s, and a bit about the training (hazing) process for new recruits. At least a few blank spots in your knowledge of modern finance will likely be filled in by a read through this one. Recommended! Enjoy
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02.20.08
Posted in Chinese (中文), Economics at 6:04 am by ryan
创新者（Innovator）
最先尝试者 (Early Adopter)
早期从众者 (Early Majority)
晚期从众者 (Late Majority)
落后者 (Laggard)
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01.28.08
Posted in China, Economics at 8:33 am by ryan
Suharto (June 8 1921 - Jan 27, 2008). Indonesia’s Suharto was infamous for blocking currency exchange during the Asian Financial Crisis (亚洲金融危机). Indo lost 13.5% of it’s GDP during the crisis and the inflation in food prices led to riots that ultimately caused Suharto to resign. You many not be as aware that his campaign for power during the late 60’s was responsible for the deaths of many chinese residents of Indonesia, approximately equivalent to the numbers of Pol Pot’s “Killing Fields” in Cambodia. To this day, significant Muslim vs/ Chinese tension exists in Indo. During Suharto’s “New Order” Government (1967-1998):
The New Order targeted ethnic Chinese and enacted several anti-Chinese legislations, banning them from public life. Chinese literature and characters were outlawed, and they were forced to renounce their Chinese ties and adopt Indonesian sounding names. Many Chinese were forced into exile, while others were killed during the anti-Communist purges.
Due to Suharto being vehemently Communist, his reign was supported by the United States, in spite of it’s brutal consequences. I’m curious how Indo’s Suharto compares to Egypt’s Mubarak? Edward S Herman provided this interesting background on Suharto…
Coverage of the fall of Suharto reveals with startling clarity the ideological biases and propaganda role of the mainstream media. Suharto was a ruthless dictator, a grand larcenist and a mass killer with as many victims as Cambodia’s Pol Pot. But he served U.S. economic and geopolitical interests, was helped into power by Washington, and his dictatorial rule was warmly supported for 32 years by the U.S. economic and political establishment. The U.S. was still training the most repressive elements of Indonesia’s security forces as Suharto’s rule was collapsing in 1998, and the Clinton administration had established especially close relations with the dictator (”our kind of guy,” according to a senior administration official quoted in the New York Times, 10/31/95).
Suharto’s overthrow of the Sukarno government in 1965-66 turned Indonesia from Cold War “neutralism” to fervent anti-Communism, and wiped out the Indonesian Communist Party–exterminating a sizable part of its mass base in the process, in widespread massacres that claimed at least 500,000 and perhaps more than a million victims. The U.S. establishment’s enthusiasm for the coup-cum-mass murder was ecstatic (see Chomsky and Herman, Washington Connection and Third World Fascism); “almost everyone is pleased by the changes being wrought,” New York Times columnist C.L. Sulzberger commented (4/8/66).
Suharto quickly transformed Indonesia into an “investors’ paradise,” only slightly qualified by the steep bribery charge for entry. Investors flocked in to exploit the timber, mineral and oil resources, as well as the cheap, repressed labor, often in joint ventures with Suharto family members and cronies. Investor enthusiasm for this favorable climate of investment was expressed in political support and even in public advertisements; e.g., the full page ad in the New York Times (9/24/92) by Chevron and Texaco entitled “Indonesia: A Model for Economic Development.”
The U.S. support and investment did not slacken when Suharto’s army invaded and occupied East Timor in 1975, which resulted in an estimated 200,000 deaths in a population of only 700,000. Combined with the 500,000-1,000,000+ slaughtered within Indonesia in 1965-66, the double genocide would seem to put Suharto in at least the same class of mass murderer as Pol Pot.
It’s is a bit interesting that Pol Pot’s victims were primarily Christian, and so the tragedy in the eyes of American’s was obvious. Meanwhile, most of Suharto’s victims were Chinese — associated with the Communism of Mainland China. Nothing makes friends like a common enemy, so the US vs/ USSR (Capitalism vs/ Communism) dynamic makes the situation comprehendible. The ultimate irony though, is that Chinese are famous as the merchant class throughout South East Asia - the merchant class turning communist seems far fetched… Heck, even mainland China could only pull that trick off for a few years…
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01.23.08
Posted in Chinese (中文), Economics at 6:30 am by ryan
Sometimes it’s rather difficult to find certain words in the Chinese <=> English dictionary, or when you do look them up, you’ll often find 10 word choices and not sure which most accurately represents your meaning. For the last 5 or so years, I’ve spent a considerable amount of free time trying to better understand the global economy, current imbalances in supply and demand (opportunities!), politics, the US debt, and global politics.
As you further your own understand of these areas, you might find the following useful. “T-Bills” were the most difficult translation for me to find
- Interest: 利息
- Futures: 期货
- Loan: 贷款
- Bond: 债券
- Debt: 债务
- Credit Rating: 信用度
- T-Bill: 国库券
- Mutual Fund: 基金
- IMF: 国际货币基金组织
- World Bank: 世界银行 （当然啊）
Also, a parting chinese proverb for your consideration:
教学相长
Teaching benefits student and teacher alike…
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01.20.08
Posted in China, Chinese (中文), Economics, Photos, Shanghai at 11:35 am by ryan
I was extremely pleased to get another chance to meet Jim Rogers, though this time only at a brief speech ~ not really any time to chat. This was the first time I’ve seen Jim speak in public and I thought he did an excellent job! There are a few speaking notes that I think anyone can take away:
Humanize it - Turn it into a story. If we were looking for only the cold, dry facts, we could scan through the 10Ks ourselves, but few financial reports are truly memorable - we remember stories!
Repeat It - Jim would say the same thing over and over and over. He would say it 10 different ways. He might have 1000 other peals of wisdom that quickly get thrown out, and a few will appeal to different sections of the audience, but the core of what you are trying to persuade MUST BE REPEATED - use the same words, and then use different words, but repeat it.
Slowly. Speaking, like art is not a race. The whitespace in an Ad, the open space in a courtyard, and the silent pauses while you are speaking are all equally important. Do not talk to fast!
Additionally, there were 3 questions that I was particularly interested in, and Jim was able to answer them for me quite quickly.
1. Doesn’t the fact that the US Federal Debit is denominated in US Dollars make the actual $9 Trillion dollar figure much less important that it appears to be?
Not to quote Jim response, but basically, there will come a time when other countries are no longer willing to continue financing the US debit. As that happens, interest rates in the USA will rise - potentially quite high.
Jim did not mention this, but I would expect that one day we’ll see other nations demanding that US treasuries are denominated in a basket of currencies, rather than dollar debt backed by yet more dollars…
2. The British Pound once served as the global reserve currency. How did this change and what was the process like?
There was a long period of recession in the UK, making it a miserable place to live. This period was not short, and caused extensive changes throughout the UK economy. Again, I’m just paraphrasing an answer, but this topic is now the single economic topic that I’m most interested in… What happened to the Pound Sterling?
3. Do you worry about China’s centrally (mis)-managed investment in Gas Stations where there are no cars stopping for Gas (every 1km in Xinjiang, every station empty), empty airports in Zhuhai (16 terminals, but 2 FLIGHTS DAILY - TOTAL) and empty high rises all over the country?
Jim partially answered by saying that he would NOT be in China’s real-estate market, particularly in any of the “Tier-1 Cities” - Prices are all hyper-inflated and due for a large correction. Shanghai is probably number one in that group… As for the empty capacity - well, at least it’s better than just the excess consumption in the USA - at least they do have a gas station to show for it, rather than just another empty Starbucks cup in a landfill…
My good friend Wu Yi (who I met the day I first met Jim Rogers in Shanghai) also came with me Saturday morning for Jim’s speech 
(BTW: Pic came out badly…. But was in a hurry and I’m not a suit guy to begin with…)
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01.09.08
Posted in China, Economics at 6:41 am by ryan
I stumbled across 国父’s speech on 大亚细亚主义 (Pan-Asianism) this evening. Really an interesting read! I was not previously aware that 中山公园’s name came from Dr Sun Yat Sen (his given name is “中山”…) most mainland chinese cities have a large street or park by this name. Shanghai certainly does! (Zhongshan Park if you prefer pinyin…)
Anyway, if you haven’t read 国父’s speech, I highly recommend you take a look. And while you are looking replace references to The Imperial Western Powers with The United States, and see if it changes your outlook on the future of the US economy… Very interesting.
If you’re behind the Great Firewall, you read the english version here. Otherwise, just go directly to the wikipedia page. en.wikisource.org/wiki/Sun_Yat_Sen%27s_speech_on_Pan-Asianism
Gentlemen: I highly appreciate this cordial reception with which you are honoring me today. The topic of the day is “Pan-Asianism,” but before we touch upon the subject, we must first have a clear conception of Asia’s place in the world. Asia, in my opinion, is the cradle of the world’s oldest civilization. Several thousand years ago, its peoples had already attained an advanced civilization; even the ancient civilizations of the West, of Greece and Rome, had their origins on Asiatic soil. In Ancient Asia we had a philosophic, religious, logical and industrial civilization. The origins of the various civilizations of the modern world can be traced back to Asia’s ancient civilization. It is only during the last few centuries that the countries and races of Asia have gradually degenerated and become weak, while the European countries have gradually developed their resources and become powerful. After the latter had fully developed their strength, they turned their attention to, and penetrated into, East Asia, where they either destroyed or pressed hard upon each and every one of the Asiatic nations, so that thirty years ago there existed, so to speak, no independent country in the whole of Asia. With this, we may say, the low water mark had been reached.
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01.04.08
Posted in China, Economics at 7:58 am by ryan
I was very excited to find that a hero of mine Jim Rogers will be coming back to Shanghai for a presentation on the 19th. Jim was kind enough to meet me lunch in Shanghai a few years back, and I very much look forward to seeing him again. Rogers is an absolutely fascinating guy. In fact, if I had never read his Adventure Capitalist book, I very well may not be here in Shanghai right now!
If you have a chance, you should check out his new book: A BULL IN CHINA
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Posted in China, Economics at 7:55 am by ryan
Just a reminder for anyone not keeping track - Chinese New Year (Spring Festival) will begin on Wednesday, February 6th. This means that we will work non-stop from January 28th until January 5th (no Sat/Sun off for Feb 2 & 3), but then will not return to work until Wednesday the 13th. So that’s actually a total of a 3 day holiday, because the weekend rest of the 2nd and 3rd gets moved to the Spring Festival vacation.
Not sure what I’ll do for the Spring Festival… Any ideas?
Here’s a handy reference chart for anyone that needs it
In case you prefer english, the dates in order are:
新年：new years
春节：spring festival
清明节：visit the graves of our elders (扫墓)
劳动节：labor day
端午节：dragon boat festival (eat zongzi)
中秋节：mid autum festival (eat moon pies)
国庆节：national day AKA independence day
妇女节: Women’s Day
青年节: Youth Day
儿童节: Children’s Day
建军纪念日: Military Memorial Day
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09.10.06
Posted in China, Economics at 12:06 pm by ryan
Asia Sentinel - Taxis – China’s Deep Throats:
“The mistress of the Beijing party chief works there as sales manager,” the cabbie says. “On weekends they go to a villa in western Beijing where he keeps his collection of expensive imported cameras which foreign visitors have given him.”
He goes on to describe in detail the private life of Chen Xitong, mayor of Beijing during June 4 and later elevated to the post of party secretary. In the bedroom of the villa, the cabbie adds, Chen had a mirror on the ceiling for an instant replay of his performance.
I feel bad about posting this… but from my experience in Shanghai and Beijing I would say it’s generally an accurate portrayal of the feelings associated with each city. Not super meaningful - no statistics here - but never the less a generally accurate portrayal of the atmosphere in these two very different of chinese cities.
I also think too much foreign information comes by way of TAXI DRIVERS. Would you trust Taxi drivers in San Francisco to give you the inside scoop on the technology business?
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04.18.06
Posted in Economics at 8:19 am by ryan
My father forwarded me an email a while back from a crazy friend of his. Being the arrogant son I’ve always been, I sent back a marked up version that I thought represented a more level headed view.
----- Original Message -----
From: Scott Erwin
To: Ryan Erwin
Sent: 2006年4月18日 21:14
Subject: FW: (no subject)
“A democracy is always EVERYTHING is temporary in nature; it simply cannot NO STRUCTURE can exist as a permanent form of government. THE DECLINE OF A DEMOCRACY WILL OFTEN BE SIGNALED BY THE POINT IN TIME WHERE THE A democracy will continue to exist up until the time that voters discover that they can vote themselves generous gifts from the public treasury. From that moment on, the majority always votes for the candidates who promise the most benefits from the public treasury, POTENTIALLY LEADING TO A PERIOD OF HIGHER INTEREST RATES AND A LOWER RATE OF ECONOMIC GROWTH. with the result that every democracy will finally collapse due to loose fiscal policy, (which is) always followed by a dictatorship.”
Ever heard the phrase “the only constant is change”? It’s the only constant that I’ve ever found. Our live’s begin. Our live’s end. Life for mankind will go on. During the Roman empire, the Christians were slaves. Some 2000 years later, most of the world uses a calendar based on the birth of Christ. Examples of change are easy, examples of forever are not
“In aggregate, the map of the territory Bush won was mostly the land owned by the tax-paying citizens of this great country. Gore’s territory mostly encompassed those citizens living in government-owned tenements and living off government welfare…”
Additionally, I believe one of the more fundamental aspects of a Democracy is that each citizen has the right to vote. If only the people that you agree with get to vote, how is that a democracy and not tyranny?
Does the fact that you have more material wealth make you better than others? Or does it mean that God gifted you with birth in the right place, the right time, or with the right abilities? If God’s gift’s to you are more than the rest of us, did he give you those gifts to keep for yourself or did he give you those gifts to share with the rest of us?
Does the fact that the USA was the most powerful country in the world when you were born mean that it will (or should?) be the most powerful country in the world when you pass away? If power never changed hands, how would you explain the romans? The spanish? The french? The english?
We just do the best we can… Oh, and the devil, he’s usually hiding in the details
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