Is China graduated from "Original Sin"

Some more quick thoughts about the sizable Chinese stimulus package:

Is China graduated from the class of emerging markets, which are often characterized by inability to borrow in the local currency - the original sin, and countercyclical fiscal policy? Many people in the west are in shock of the size of stimulus that was announced. Although the true figure is hard to verify - I have no idea how they arrive at that figure - China is acting more like a matured economy on that front.

Upon further investigation of the detail though, China is unique in many aspects. Perhaps it should not be in the EM class at the first place.

• Most of the announced stimulus is directive to state-owned companies to invest and expand. The U.S. has been urging its banks to lend more also, but I bet China would have more success in cajoling its companies.
  
• China enjoys high saving rate. Although many argue the approach has been mercantilism, the high reserve comes in handy in a time of crisis like the current one.
• The mere size of a diversified economy. Countries like Chile and Brazil, and possibly Russia who relies a lot on oil revenue, are more likely to be subject to a turn-of-trade shock from their commodity exports. Although China's external component of GDP is about 70%, which is alarmingly high, China also enjoys the advantage of sheer size and a more diversified economy.
  

This reminds me of a New Yorker critics piece:

If the invention of derivatives was the financial world’s modernist dawn, the current crisis is unsettlingly like the birth of postmodernism. For anyone who studied literature in college in the past few decades, there is a weird familiarity about the current crisis: value, in the realm of finance capital, evokes the elusive nature of meaning in deconstructionism. According to Jacques Derrida, the doyen of the school, meaning can never be precisely located; instead, it is always “deferred,” moved elsewhere, located in other meanings, which refer and defer to other meanings—a snake permanently and necessarily eating its own tail. This process is fluid and constant, but at moments the perpetual process of deferral stalls and collapses in on itself. Derrida called this moment an “aporia,” from a Greek term meaning “impasse.” There is something both amusing and appalling about seeing his theories acted out in the world markets to such cataclysmic effect. Anyone invited to attend a meeting of the G-8 financial ministers would be well advised not to draw their attention to this.

He could be talking about market characterization terminology. Developing, underdeveloped, emerging, BRIC, what else?

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Here and There

• A trip to grocery store, $68.
  A cup of Spanish Latte, $3.80.
  Keeping the marriage between men and women? $75 million.
• If politicians like an average voter can not be trusted to lead, can you trust voters to pick the right person?
• Taiwan, violence broke out upon Chinese official's visit to negotiate direct trade deals. A CCTV female reporter was also attacked during the "siege". Taiwan may think of itself as a vibrant democracy, it has much to learn from the relative tranquility on American streets where close to half of the people don't agree with the person elected.
  
  If the government should be "by the people, for the people", what if "people" are unruly and violent, happy to take cheap shots, being exploited by politicians in the process?
  
  I'm not sure what exactly people on the Taipei streets wanted to achieve, it seemed like a whole a lot for nothing, but here are some perspectives from the top, take your pick:
  Ma Ying-jeou:"Tsai(DDP Chairwoman) was responsible for (instigating) the clashes."
  Tsai:"The government that forces people to go into the streets should be held responsible." Hmmm, I'm disappointed in Cornell (where Tsai got JS.)
  
• One way to weather the storm in an economic downterm is to take money from haves to have-nots. Then the economic wheel can keep turning. Fiscal stimulus may be one politically acceptable way to do that. By fiscal expansion, government debt would be later financed by increased taxes, which would be shouldered of larger proportion by high-earners, or if not sufficiently financed, would cause inflation, which would bring savers' real wealth down. Large inflation is as ugly as a recession, so is to be avoided. Therefore, the tax burden is to be shared one way or the other.
  
  While the U.S. congress is contemplating a second stimulus, Chinese government unveils a large stimulus package, featuring mostly State-driven investment project. The success of it depends on who it really benefits - it should be the poor - and how it will be financed later.

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Trick or Treat

“Only Thing We Have to Fear Is Fear Itself,” that's a famous line from Roosevelt's first presidential speech. People wanted him, in comparison to hapless Hoover, to succeed so much that FDR had to hire many additional workers to handle mails from well-wishers.

The election will be over tonight. In the process, Palin went from the most popular governor in the country to be edified on SNL and a Tina Fey double. Republicans complained so much about media bias, it would probably put Chinese grievance in shame. That will be over also for her, win, or in the most likely case, lose.

We don't yet know what Obama is going to do, although we know his promises add up to 85 pages. Energy policy will probably be the first to gather enough political will to pass, although coal industry is already trembling in fear. Many Chinese are enamored with him, the way they saw a young, handsome, and energetic politician in Clinton, bill, that is. But his China policy is harder to differentiate. We only know he leans against more free trade, that he opposes NAFTA. Somehow, these issues were not even debated, not on the level of "lipstick on a pig" at least.[Speaking of trade policy, it used to be that American workers are more productive than others, so free-trade naturally favors the U.S., but that edge is rapidly waning, so does the appetite for free-trade. This election, more than anything, is a referendum on American people's acceptance in The U.S. new reality in the world. They don't worry about "the world leader" anymore than "give me the bread today". I wonder what Krugman thinks, since he was a strong proponant for free-trade in his more academic years.]

Oh, we also know that when slightly annoyed, while McCain has that it's-so-ridiculous-it's-laughable look, Obama has a more solemn what-the-heck-he's-talking-about look. As FDR could testify, personality plays a large part in a president's initial success.

The season of well-wish should not wait for January. Some will ask the "trick-or-treat" question, but the Hallowing is already over.

P.s. Here's another paragraph in the same FDR speech that is as interesting to read this time around:

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

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