RyanErwin.com

45 years ago, Ronald Regan gave a speech in support of Barry Goldwater’s 1964 presidential campaign.

And this idea that government is beholden to the people, that it has no other source of power except the sovereign people, is still the newest and the most unique idea in all the long history of man’s relation to man.

This is the issue of this election: whether we believe in our capacity for self-government or whether we abandon the American revolution and confess that a little intellectual elite in a far-distant capitol can plan our lives for us better than we can plan them ourselves.

… See Complete Transcript and corresponding audio recording.

Regan was a great actor and a great story teller. He understood that we’ve all got a bias. We tend to ignore information we disagree with, and only listen to what we agree with.

ryan USA （美利坚合众国）

In 1873, Mark Twain wrote a book satirizing greed and political corruption in post-Civil War America. Instead of calling the book “Golden Age” the less worthy “Gilded Age” was chosen since it represents only a thin layer of gold coated over a base metal. Shortly after the publication of the book, the word “Gilded Age” because synonymous with graft, materialsim and corruption in public life.

Back in 1994, The Atlantic’s Yin Huangxiao came back to China after 10 years in the USA and wrote “China’s Gilded Age“.

A distant cousin who was a high school teacher until 1986 told me modestly that he had made “a little money” by opening a factory that produces bristle brushes for export to America. He drove me to his new summer house in his new Mercedes-Benz 500SEL, one of his three luxury cars. “This is China’s Gilded Age,” a former colleague of mine commented sarcastically. “These Chinese Carnegies and Rockefellers are more successful than their American counterparts — they made more money within a shorter time.”

More recently, in 2007, David Baskin from CBC news wrote that “China’s Gilded Age of Capitalism“.

It is true that China is still governed by the Communist Party, but I have never been in a more capitalistic environment in my life. Ruthless competition is taken for granted; that economic success should be rewarded with wealth is a given; and that upward mobility is possible for those who are smart and hard working is widely believed – the Chinese equivalent of the American dream.

Baskin does write that:

… and that upward mobility is possible for those who are smart and hard working is widely believed – the Chinese equivalent of the American dream.

This last comment doesn’t seem to accurately represent local folks. The local sentiment seems to be that if you are well-connected, then you’ll be fine. However, there isn’t much hope for the average person to be successful. The key difference between the “gilded age” in China now, and the “gilded age” in America 150 years ago, is that Carnegie, Rockefeller and Vanderbilt were all born poor, and managed to work their way up. In China, the sentiment seems to be the strength of your connection to the government determines how much you can earn.

ryan China (中国）, Economics （经济学）, USA （美利坚合众国）

The Yen carry trade is over for now, but there’s a new carry trade in town. For those (like me) not terribly familiar with a carry trade, it’s:

Strategy in which an investor sells a certain currency with a relatively low interest rate and uses the funds to purchase a different currency yielding a higher interest rate.

Basically, it’s a type of arbitrage where you borrow one asset, and use it to buy another asset assuming that exchange rates WILL NOT CHANGE. When the Bank of Japan set interest rates near 0%, speculators would borrow Yen, trade them for dollars, and then buy dollar denominated assets. The new carry trade is: USD -> RMB -> Commodities.

2009 US federal budget deficit will be $1.75 TRILLION or more.
Not even Bank of China can lend this money, it has to be borrowed.

US dollar bear leads to commodities bull.
People and nations will hoard physical goods to preserve wealth, hence generate demands higher than immediate needs and higher than available supplies.
China is on a big natural resources shopping spree around the world lately, in order to divest its huge foreign currency reserves.

Both events are occurring as people have noticed: Capital is escaping American soil; and China is on a global shopping spree of raw materials.
But people who notice these two things explain it as simply market behavior driven by speculative forces.
They fail to see a more direct, conscious and deliberate reason behind what’s going on, because no one noticed one quiet fact…

That is because for the past one year, trading between USD and CNY is equivalent to exchange one dollar into four quarters, nothing is gained or lost.

[From China, Shipping and the Great Commodity Carry Trade -- Seeking Alpha]

But the interesting part is that: As the flood of US dollars flows in, China merely cranks up its own money printing press to print more RMB Yuan to exchange for the US dollars. It then uses some of the dollars to buy US Treasury bonds and prop up the value of the dollar, maintaining a constant USD/Yuan exchange rate. But China’s real goal is not to support the dollar in long term, but to buy time to allow it to divest the huge dollar assets it is holding, in exchange of physical assets: natural resources, raw commodities, foreign mining companies and other physical assets. It costs China nothing to print more Yuans to buy more US dollars and then use the dollars to buy up the whole world.

There are a few conditions that are important to point out and make changing the current status quo (exchange rate) very difficult in the next 12-36 months.

• Speculators are dumping USD because of financial policy that is not helping to preserve wealth, but those dollars could be used to buy assets anywhere – so why in China?
• Speculators are dumping dollars and buying CYN due to the long term positive fundamentals in the Chinese economy (large inexpensive labor force, good infrastructure, large trade surpluses)
• 4 years ago, exchange rates were 8.3:1, for the last 12 months it’s been 6.84:1 (that’s a 17% rise)
• This 17% rise is partially responsible for the closure of many export oriented businesses here in China — many were already struggling to survive before softening demand in western markets destroyed them.
• The population in China Mainland is not nearly as productive or as well educated as the populations in Taiwan or Hong Kong, where wages are approximately 2x higher but trade barriers (import tariffs) are lower/non existent.
• China Mainland Gov’t has raised Export Rebates (to manufacturers) 7 times in 2009 — making the official policy clear – the current export oriented growth is to be salvaged and preserved for the foreseeable future (rather than moving to fill domestic demand)

There are also very practical considerations though. If you own raw materials all over the planet, you must have a way to maintain peaceful seas to ensure delivery of those materials.

Basically, the US economy and the CYN economy are locked together for the foreseeable future – a pair of codependents, but the relationship has the impact of long term strengthening the CYN at the expense of the USD, migrating intellectual property, skilled labor, entrepreneurs, and assets from the US to China. The breakup will be rough, but when the dysfunctional couple is finally ready for a divorce, China is walking away with much more than 50%.

ryan China (中国）, Economics （经济学）, USA （美利坚合众国）

Jon Meade Huntsman, Jr. (born March 26, 1960 in Palo Alto, California) is the governor of the state of Utah, having first won the office in 2004. His first term as the 16th governor of Utah began on January 3, 2005. He was re-elected, with running-mate Gary R. Herbert, on November 4, 2008, with over 77% of the vote.^[1] It was reported that Huntsman will be nominated by President Barack Obama to serve as United States Ambassador to China on Friday, May 15, 2009.^[2] It is anticipated that a press conference will be held to make the official announcement on Saturday, May 16, 2009. ^[3] Huntsman is a member of The Church of Jesus Christ of the Latter-day Saints.

He served an LDS mission in Taiwan and speaks fluent Standard Mandarin Chinese.

Huntsman’s name has appeared on some lists of potential Republican nominees for the 2012 presidential election,^[9] and John McCain has gone so far as to mention his name as a potential candidate as well.^[10]

[From Jon Huntsman, Jr. - Wikipedia, the free encyclopedia]

ryan China (中国）, USA （美利坚合众国）

China has started to claim waters in the Yellow Sea as part of China’s Economic Zone. Apparently, to assert control over this area, China is either encouraging or permitting civilian vessels – fishing ships to harass US ships in this area.

The USN will have to begin sending armed escorts along with these civilian ships to discourage the harassment.

Question: How does the USA deal with Russia in Int’l waters equal distance from Russia’s coast line and how does Russia respond?

My suspicion is that the USN doesn’t need to be so close to Chinese waters, and that there are some diplomatic issues that the two countries need to discuss candidly and come to a mutually beneficial understanding. Heck, wouldn’t the USA save money by letting China be responsible for patrols in this region? Or, let Japan be responsible…

WASHINGTON (CNN) — Two Chinese fishing vessels came “dangerously close” to a U.S. military ship in the Yellow Sea off the coast of China last week — the fifth such incident in the past few months, two U.S. officials told CNN Tuesday.

The USNS Victorious is an unarmed ocean surveillance ship operated by a civilian crew.

…

After the Impeccable incidents, the U.S. Navy provided armed warships to escort some USNS ships in the region, but as one of the officials said, “it’s international waters, we should not have to do that.”

The Chinese claim much of those waters as an economic zone over which they have sole authority.

[From Chinese boats harassed U.S. ship, officials say - CNN.com]

ryan China (中国）, USA （美利坚合众国）

It’s a little funny to see an article like this. Just outsource everything… just focus on strategy and marketing. But look at what companies in the west are successful right now, in spite of the economic downturn. Apple comes to mind. Does Apple outsource everything? No – Apple controls and manages the entire customer experience. Assembly and production are outsourced to Foxconn, but Apple still keeps a close eye on the process to manage quality.

How to be profitable? Just need to be innovative. You need to create things that people are willing to pay you for.

Is there any evidence that suggests with a 1:1 exchange rate between the USD and CNY that the Chinese way of manufacturing would be competitive with the American one? Or more importantly, man-hour per man-hour does anyone believe that Chinese manufacturing can compete with manufacturing in Japan or Germany?

Schooled by China and India
What US tech companies can learn about innovation from abroad. Hint: it isn’t just about cheap labor.

NEW YORK (Fortune) — It would be a groundbreaking deal if consummated: According to press reports, telephone operator Sprint is in serious discussions with Telefon AB L.M. Ericsson to outsource management of its wireless network to the Swedish equipment maker. If finalized, the arrangement would make Sprint (S, Fortune 500) the first major U.S. wireless operator to cede total maintenance of its network to a third party consultant.

But in parts of Asia, outsourcing whole swaths of a tech business is old hat. India’s leading wireless operator, Bharti Airtel, for example, does little more than set strategy and handle marketing and sales of phones and service. Contractors, including Ericsson (ERIC) and IBM (IBM, Fortune 500), take care of running and upgrading the actual phone network, operating call centers and other day-to-day operations.

Global consultant John Hagel expects to see more U.S. companies plucking ideas from their international counterparts. Hagel, co-chairman of Deloitte Consulting’s Center for Edge Innovation, says Asian companies have started to implement some innovative management ideas that could resonate in the United States. And while many of these ideas on the surface seem like cost-cutting initiatives, Hagel says they also give tech companies flexibility and leverage, two things that benefit companies in good times and bad. “Chinese and Indian entrepreneurs understand that the only way to get scale is to be very modular in terms of how you define activities,” Hagel says.

[From What US tech companies can learn from China and India - May. 5, 2009 ]

ryan Economics （经济学）, USA （美利坚合众国）

10 Years of Dollars

Focus on the last 4 Years (Bush’s 2nd Term)

Same Period Against the Japanese Yen

And against the EURO

ryan China (中国）, Economics （经济学）, USA （美利坚合众国）

The Crisis of Credit Visualized from Jonathan Jarvis on Vimeo.

NPR’s This American Life created two interesting stories covering the Credit Crisis:

• 365: Another Frightening Show About the Economy (10.03.2008)
• 355: The Giant Pool of Money (05.09.2008)

ryan Economics （经济学）, USA （美利坚合众国）

ryan China (中国）, Economics （经济学）, USA （美利坚合众国）

5 years ago (Nov 2003) Buffett wrote a great article in FORTUNE that helps simplify the macroeconomic implications of a trade deficit. This device is the analogy of two islands: Thriftville and Squanderville…

We were taught in Economics 101 that countries could not for long sustain large, ever-growing trade deficits. At a point, so it was claimed, the spree of the consumption-happy nation would be braked by currency-rate adjustments and by the unwillingness of creditor countries to accept an endless flow of IOUs from the big spenders. And that’s the way it has indeed worked for the rest of the world, as we can see by the abrupt shutoffs of credit that many profligate nations have suffered in recent decades.

The U.S., however, enjoys special status. In effect, we can behave today as we wish because our past financial behavior was so exemplary–and because we are so rich. Neither our capacity nor our intention to pay is questioned, and we continue to have a mountain of desirable assets to trade for consumables. In other words, our national credit card allows us to charge truly breathtaking amounts. But that card’s credit line is not limitless.

Read Buffett’s original article.

Buffett even goes so far as to suggest a very creative solution – the creation of Import Credits that are issued to exporters based on the value of goods they sell abroad.

Seeking Alpha had a brief article this evening that pointed to Buffett’s original piece…

ryan China (中国）, Economics （经济学）, USA （美利坚合众国）

This was posted on NPR’s Science Friday…

Considering that the elections on the USA are typically something like 52% to 48% (that is, very rarely more than a 10-point-spread) it made me think more deeply into politics.

Consolation: political parties in america are not based on an underlying principle of conservation of the status-quo vs capitalism vs communism. Rather, political parties are closely akin to coalitions.

Reasoning: parties are fueled by the support of special interest groups. Parties divide up the special interest groups issue by issue, accounting for the base of the party, and then seek out new issues based on the desire to expand their party membership.

Interesting to note that based on demographic shifts in the USA, the republican party may have put itself on the wrong end of the growth trend.

Is it just the philosopher in me that believes the “party” should be based on a single underlying philosophy about what creates the optimal system of american government, and that all positions could be logically derived from this PoV? Perhaps I’m too simple minded in believing that there should be a theoretical underpinning to the management of what is ultimately interest/benefit. More importantly, perhaps we could never even arrive at agreed definitions within a party on what is “optimal”…

Libertarianism does seem to be somewhat in line with this logic: The government that governs best is the government that governs least.

ryan USA （美利坚合众国）

This was a great article. My list would be a little bit different, but I mostly agree… I would add some speeches from Boiler Room, Training Day and most certainly Fight Club to the list, and probably remove some of the older films as I haven’t seen them — maybe afterward I’ll have a change of mind

See the complete list:

- http://news.bbc.co.uk/2/hi/entertainment/3362603.stm

ryan USA （美利坚合众国）, Uncategorized (无大类）

今天，美国的确还是世界上最强大的国家。没有其国家或联合能“单方面”（unilaterally）宣战，等等。可惜真的少数美国公民花什么时间在了解美国以外的事。。。这个问题不是新的，也不单是美国的问题，就是美国权利那么大，所以责任也更大。如果美国要继续保持超级大国身份，必须让人民更国际化。

有一些地图嘲笑普遍美国人民的地理概念。同时，这群体的税费睡支持情报局和军部干扰射界各地。

ryan International （国际）, Laugh (哈哈哈哈), Philosophy （哲学）, USA （美利坚合众国）

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…

ryan Chinese (中文), Economics （经济学）, USA （美利坚合众国）

Call direct from your mobile phone. No calling card. Only 2x the price of Skype In, but better quality and you can call out!

在上海，申请中国移动的国际长途就发“3211”到10086。这样可以申请国际IP长途服务，每次拨国际电话号码，先拨：12593＋00＋国际电话号码，比如：

拨美国的“＋1－206－555－1212”，变成：
12593－00－1－206－555－1212

Give China Mobile a call and Sign-up for IP Int’l Long Distance. Just send an SMS containing only “3211″ to 10086. Each time you want to dial an Int’l number, just add: 1259-00, then the country code and the number.

如果你忘记你的密码，就发密码查询的拼音到10086，那就是：MMCX

If you forget your password, just send MMCX to 10086

如果要查你的账户还有多少钱，发“余额查询”的拼音到10086，那就是：YECX

If you need you current account balance, send YECX to 10086

ryan China (中国）, Shanghai （上海）, USA （美利坚合众国）, iPhone