Showing posts with label usa. Show all posts
Showing posts with label usa. Show all posts

2010-08-08

A-bomb again - the "strange calculus of war"

It was a closed topic. But every year it was brought up again.

I made some estimate on the The net effect of Little Boy and Fat Man 3 years ago. This year Kozak wrote for WSJ, quoted,

  • "Japan remains the only country ever to have been targeted by atomic bombs. More than 120,000 Japanese died instantly from the bombings and perhaps as many succumbed to radiation poisoning afterwards (the exact number will never be known). It should be noted that when President Harry Truman was considering whether to invade Japan instead of dropping the bombs, his advisers estimated that an invasion would result in one million American casualties and at least two million Japanese deaths. In the strange calculus of war, the bombs actually saved Japanese lives."
Not far from my estimates. I estimated around 5M Japanese death had Japan defended to the last preferture. Truman's advisor's number is about half of that, quite realistic if assuming Hirohito would give up when he lost about half of his towns.

===
The full article via google cache is below (WSJ seems to require subscription for this article)

A Hiroshima Apology?

Japan's continued focus on remembering the bomb has been an understandable sore point for its Asian neighbors, who suffered greatly at its hands.

For the first time since the United States dropped the atomic bomb on Japan 65 years ago, today the U.S. ambassador to Japan will attend the official commemoration ceremony at the Hiroshima Peace Memorial. The U.S. ambassador has always declined the annual invitation, but this year is different. President Barack Obama decided to acknowledge the event with the presence of a high-level dignitary. As State Department spokesman Philip Crowley explained, Ambassador John Roos will be there "to express respect for all the victims of World War II."

Gene Tibbets—the son of Brig. Gen. Paul W. Tibbets Jr., the pilot who dropped the bomb on Hiroshima—called the Obama administration's decision "an unsaid apology." Whether or not that's the case, by saying "all the victims" Mr. Crowley raises the specter of moral equivalence, a problem that's grown worse over the years when it comes to judging right and wrong during World War II and throughout history.
The U.S. dropped the atomic bomb on Hiroshima on Aug. 6, 1945. When the Japanese still didn't give up, the U.S. dropped a second bomb on Nagasaki three days later. On Aug. 15, the Japanese surrendered unconditionally, ending the most brutal war in the history of the world.
Japan remains the only country ever to have been targeted by atomic bombs. More than 120,000 Japanese died instantly from the bombings and perhaps as many succumbed to radiation poisoning afterwards (the exact number will never be known). It should be noted that when President Harry Truman was considering whether to invade Japan instead of dropping the bombs, his advisers estimated that an invasion would result in one million American casualties and at least two million Japanese deaths. In the strange calculus of war, the bombs actually saved Japanese lives.
If the Obama administration wants to ease the friction over this event or even to apologize, then perhaps it is also a good time for the Japanese government to begin to discuss World War II truthfully with its own people.
Getty Images
Saved by the bomb? Japanese civilians watch U.S. occupation forces arriving in Kyushu, September 1945. President Truman was told two million Japanese might have died fighting a U.S. invasion.
Since 1945, Japan's narrative has centered almost exclusively on the atomic blasts and its role as victim—with short shrift given to the Japanese invasions of China, Manchuria, Korea, Hong Kong, the Philippines, Indochina, Burma, New Guinea and, of course, the attack on Pearl Harbor. Japanese children have learned little about the Rape of Nanking or the fact that as many as 17 million Asians died at the hands of the Japanese in World War II—many in the most brutal ways imaginable.

There is also the inconvenient truth that Japan started the war in the first place. There would have been no war in the Pacific between 1937 and 1945 had Japan stayed home.

Focusing on the atomic bombs paints the Japanese as victims, like other participants in World War II. They were not. The Japanese, like their German allies, were bent on global conquest and the destruction of other people who did not fit their bizarre racial theories. Japan's continued focus on Hiroshima and Nagasaki has been an understandable sore point for its Asian neighbors, who suffered greatly at its hands.

There are times when ordinary citizens understand history better than their leaders. In approaching Hiroshima and Nagasaki, Mr. Obama should consider a related event that took place 25 years ago. On May 5, 1985, President Ronald Reagan made a rare public relations gaffe when he visited the Kolmeshohe Cemetery near Bitburg to lay a wreath at the graves of German soldiers.


His reasoning came from a decent place—he wanted to help bolster his ally, German Chancellor Helmut Kohl, and he thought that enough time had passed to allow both countries to move on together. But a firestorm erupted when it was learned that the graves were not just those of ordinary Wehrmacht soldiers but of SS troops as well. President Reagan dug in his heels despite strong protests and laid a wreath at the brick tower that loomed over those graves.

The protests came not because people refused to move on or because the postwar bonds between Germany and the U.S. were not strong and real. They were then and they remain so today. Rather, the anger came because the president's act created a tacit understanding that U.S. soldiers were no different than SS Storm Troopers, whose bloody tracks still leave a horror throughout Europe that can barely be equaled in that continent's long, lamentable history. The G.I.s were liberators. The SS were demented murderers. Period.

Young people today may have a hard time understanding that point because of the moral equivalence and political correctness that have taken over our society, our media and especially our universities. It teaches our children that all countries have good and bad elements within them—something so obvious that it's trite. But this lesson has become so powerful that it is not out of the norm for young people today to believe that, while World War II was certainly horrible, all sides share some blame.

Concerning today's event in Hiroshima, the State Department said "at this particular time, we thought it was the right thing to do." It may indeed be the right time for our two countries to share this event. But by tacitly placing all of World War II's participants in the same category, we undermine the ability of future generations to identify real evil, putting them at great risk.


Mr. Kozak is the author of "LeMay: The Life and Wars of General Curtis LeMay" (Regnery, 2009).

2008-10-10

Cheung on sub-prime

From 互不相干二三事

  • 再转谈另一项。美国次贷带来的金融风暴,尽管求教过朋友,不明白的地方仍多。例如输掉了那么多的钱,究竟到了哪里去?想来不是昔日荷兰的郁金香危机的扩大版本。想到另一个可能,不能肯定。希望读者有以教我。
  • 美国的经济学者反对政府救市,我站在哪一边举棋不定!其中一个困难,使我在众议院通过之前出弹弓手。是这样的︰如果政府不救,因为美国工会多,最低工资高,有福利也有失业金,市场暴跌可能引发百分之二十以上的失业率。三十年代的大萧条,出现过近百分之三十的失业率。这数字作研究生时吵过好一阵。有说是真的,有说是夸张了。面对难关,我宁可信其有。我认为佛利民的《美国货币史》对大萧条的解释──货币量应加反减──只对一半。更重要的一半是当时的劳工市场不够自由,工资下调不容易。朱镕基在九十年代推出严厉的宏观调控,经济增长依旧,是历史上非常重要的一课。当时中国劳工市场的合约够自由肯定是重点。我是因为朱老的政策经验而对三十年代的大萧条有了新的体会。
  • 如果目前的美国没有上述的劳工市场的诸多约束,选择「不救」应该是明智之举。市场的运作会调整得快,而十年前亚洲金融风暴的经验,是市场下跌得快时回升也快。短痛是胜于长痛的。问题是美国的劳工市场沙石太多,一下子导致无数企业关门,责任政府负担不起。这样看,出资救市是可以理解的选择,不幸地短痛会换来长痛。
  • 除非我读到的资料有重要的失实之处,我认为目前金融市场的不幸处境,不是短期可以清理的。格林斯潘支持出资抢救,但最近他在一间大学讲话,说会复苏得快。比我乐观。我衷心希望他对,我错。
1) Where the money went - I thought the money was mostly spent, on Iraq, on Walmart, etc. e.g. a 40-something couple in bay area sold their house for 1M and bought another at 250k in Colorado to retire. They pocketed 750k in cash pay the capital gain (which goes to Iraq), save some and "spent" some. Whoever bought that house became the loser.

2) In my view, the government spending 700bn is ok, but it should spend on the source of the problem (and at the right price). i.e. to provide credit directly or to buy real estate, not on the derivatives.

3) Cheung's view on labor market is mainly related to how one deals with deflation. If he is right, then the impact on China is minimal -- because China was on the path of inflation (and general economic growth where salary should be adjusted up otherwise), and China's labor protection is actually a lot weaker than that in US. (yes, i repeat that it is true that China is more capitalistic than US even before the bail-out)

4) The problem in the US (and why Paulson was able to hijack the congress) is due to the short-term behaviors among the US politicians. i.e. they are only concerned about the blames in the short term and would rather follow the majority to vote for the bail-out (which is a less risky decision with regard to their political career) 
-- this has very profound implication on political thoery regarding modern liberal democracy and accountability of politicians. While ensuring democracy with change of terms we have traded off long-term accountability for our politicans, is there any 'patch' to fix for this?

p.s. IMHO the widely talked about failure of free-marketing and liberal democracy is widely exaggerated, and the logics are flawed.

2008-03-31

China vs USA

Here is an interesting comparison from a Lithuanian "Guy" in China, in the comment field of a blog I stumbled upon.
  • Hello Nick,
    I’m Lithuanian. I lived for a fairly long time in the US (Minnesota and Massachusetts) and now I live in China.
    The similarities between the two countries are downright scary. (Especially visible here in the American-inspired, newly-built, fast-living city of Shenzhen.)
    1) Large-scale economic migration (though Americans don’t call that half of their nation that changes house every two years “migrant workers”, that’s basically what they are).
    2) Over-reliance on trucks and cars (though the Chinese seem to be getting a little, just a little smarter with their railways). Governments of both countries arguably care little about the environment.
    3) Cultural insularity - near impossible to make a friend in China without speaking some dialect of Chinese (preferably putonghua). And you just try to live in the US without speaking English… Beyond language, both nations tend to view themselves as, ahem, simply superior. (Because by and large, both have ill-defined inferiority complexes. Americans are often defensive when they compare themselves with Europe, and the Chinese… with America - )
    4) Both the US and China have bafflingly large populations immune to reason. I won’t say anything about the US apart from reminding you to read Nick’s previous editorial. China: just think that most Chinese are not even aware there is censorship in their country. Just… wow.
    5) Lack of social safety nets. Culture of fear quite visible in both countries (though for vastly different reasons). Health care and pensions (I mean mostly lack thereof) give headaches to both Chinese and Americans.
    6) Geographic size. The surface of China is almost precisely that of America (though the landscape is hugely different).
    7) Gated communities for the rich. (And in China, increasingly, the middle class - which is of course vastly richer than the people living on under a dollar a day.) Oh, the joys of life behind armed guards!
    8) Patriotism, support for the army. The Chinese think their army is, ahem, “pure”. I am kidding you not, this is the word they most often use to describe the PLA. Pure.
    As to America, a more flag-waving country there will never be.
    9) Cut-throat capitalism. (Though to be honest the Chinese labor market is similar to the one America had in the 19th century… not now.)
    10) Astounding hypocrisy with regard to sex and mores in both countries. For instance, both the Americans and the Chinese are too virtuous to gamble, that’s why the first only do it in Indian reservations and on rivers, and the second in Macau I won’t even talk about sex ed (Though, again, the US is subject to strong regional variations and China’s cities are light-years away from the hinterlands).
    And lest you think I am a sour European:
    11) People from both nations tend to be hospitable and quite sweet. All you need to do is shout “China is the best”! or “USA no 1″! and you are treated to endless rounds of beer or bai jiu! Then business is going very, very well - it’s amazing!
    I find both nations endlessly and hopelessly and equally weird, but I’m quite fond of both… and their quaint little ways.
    kind regards,a Lithuanian
    — Posted by Guy in China

As for the owner of that blog, this is part of his resume, "...He's also one of the very few Americans to be at least a two-time visitor to every member of the Axis of Evil. ..." Huh? Axis of Evil? :)

Anyway, here is my take

  1. Migration in US is perhaps because it is a 'big' country; for China, a bit articificial/temperal because of the economic special zone (the average distance of migration has significantly shortened in the last few years, when the Sichuan girl is not able to find work in Chengdu, instead of Shenzhen, resulting in (cheap) labour shortage in the sweatshops in Guangdong
  2. May I also add mega-stores (Wal-marts!) on top of car
  3. "insularity" is common to 'big' countries, I guess. But I am sure there is more Chinese who speak English than American who speak Chinese :)
  4. True. Though I would like to argue that it is unfair to use total number as a measure. Perhaps in terms of % population they are on par with the Lithuanians
  5. Hmm... social safety net. Nice observation. I know this but never really make the comparison. Perhaps this is related to #9 below
  6. China = dry + dry + wet; USA = wet + dry + wet. Geographically, USA is like China with an Ocean to its west, hence twice as much of arable land
  7. I saw walled community in Shanghai. But urban China is a much much safer place than the US (Inner city, I mean)
  8. Agree
  9. Couldn't agree more. They are both the most capitalistic countries in this world
  10. This one is even nicer observation. Chinese gamble in Las Vegas and American find sex in Shanghai!

2008-02-12

Roach's Canaries in Beijing

Subprime: Canary in a Coal Mine?
January 31, 2008

Stephen Roach

"Morgan Stanley's Stephen Roach and Mary Meeker both recently presented at the Caijing Magazine Annual Conference in Beijing.

The conference - a leading forum on the Chinese economy - addressed the major challenges and opportunities for China in 2008.

Roach kicked off his remarks by providing a comparision between the dotcom bubble burst of 1999 and the recent subprime mortgage crisis; he then focused on trends in global consumerism and the myth of Asia decoupling. He explored the challenges facing a growing China, as well as the increase in protectionism and currency risks that are playing out with Asia economic expansion."


right click to download - a very insightful set of charts.

2007-08-07

Economists Against Protectionism - WSJ.com

Economists Against Protectionism - WSJ.com

Economists Against Protectionism

By PAT TOOMEY
August 1, 2007; Page A15

On May 4, 1930, 1,028 economists signed a petition urging Congress and President Herbert Hoover to reject the Smoot-Hawley Tariff Act, arguing that "increased restrictive duties would . . . operate, in general, to increase the prices which domestic consumers would have to pay." Neither Congress nor the president listened, but the stock market certainly did.

Though many associate the Great Depression with the stock market crash on Oct. 29, 1929, the market actually rallied during the six months following Black Tuesday, while the defeat of Smoot-Hawley appeared likely. The market turned south again in April 1930 as those hopes of defeat gradually dimmed.

The Dow Jones Industrial Average sank a full 8%, from 250 to 230, over just two trading days in June 1930, in direct response to the Senate's passage of Smoot-Hawley and Hoover's announcement that he would sign it. Exacerbated by other flawed governmental policies, an international trade war continued to drive the market down until the Dow hit a low of 41 on July 8, 1932, having lost 89% of its value from its September, 1929 high. It would be 25 years before the market recovered its 1929 peak.

Unfortunately, Congress is suffering from a bad case of amnesia. Over the past several months, protectionism has reached a fever pitch with lawmakers in both Houses clamoring to attach their names to as many as 50 anti-trade bills.

In the Senate, Max Baucus (D., Mont.) and Chuck Grassley (R., Iowa) have joined longtime protectionists, Chuck Schumer (D., N.Y.) and Lindsey Graham (R., S.C.), in sponsoring legislation to punish China for currency intervention. Tomorrow, hearings in the House Ways and Means Committee commence with a host of protectionist measures on the agenda, including legislation by Reps. Timothy Ryan (D., Ohio) and Duncan Hunter (R., Calif.) that would allow the Commerce Department to increase duties on China. Not to be outdone, the top-tier Democratic presidential candidates are falling over themselves to reject the free trade policies of Bill Clinton's Democratic Party.

In this respect, Congress hasn't changed much over the past 77 years. Thankfully, economics hasn't changed much either: 77 years after 1,028 economists stood athwart protectionism yelling "stop!" a new batch of economists are just as determined to turn back the rising protectionist tide.

The Club for Growth is disseminating a petition advising Congress "against imposing retaliatory trade measures against China." Like its historical counterpart, this petition is signed by 1,028 economists from the left and the right. They come from all 50 states and include four Nobel laureates, three former chairmen of the Council of Economic Advisors, former members of Congress, a former Treasury secretary, and economics professors from our country's most prestigious universities.

While the signatories on this petition will certainly disagree on a host of other issues -- at least 20 signed a 2003 petition against the Bush tax cuts -- they all agree that, in the words of the petition, "there is no foundation in economics that supports punitive tariffs."
Adam Smith long ago observed that "It is the maxim of every prudent master of a family, never to attempt to make at home what it will cost him more to make than to buy." As members of Congress should know -- but unfortunately don't -- the maxim of the family applies equally to a nation. This simple truth explains the irresistible logic of free trade.

Free trade among and between people of various nations is the mechanism that allows producers to maximize their comparative advantage while consumers maximize the value they receive for their dollar. Free trade allows American producers to sell jets and software to the Chinese, while American consumers buy toys and apparel from China -- a win-win proposition for both buyer and seller.

Protectionists attempt to disrupt the market's natural tendency to seek efficiency by imposing tariffs in order to artificially increase the price of foreign goods relative to domestic competition. Thus, tariffs are simply a tax on American consumers, and it would be Americans, more than the Chinese, who pay the price. The very people Sens. Schumer and Graham claim to help will suffer from the higher prices, fewer jobs and potential trade war that will result from their legislation.

As the Club for Growth petition demonstrates, support for free trade is virtually universal among reputable economists. More importantly, history has shown the devastating consequences of protectionist policies. Let's hope Congress steps back from this precipice and rejects the misguided policies of Smoot, Hawley, Schumer and Graham.

Mr. Toomey is the president of the Club for Growth. More information about the petition is at http://www.clubforgrowth.org/

related:
Protectionism - the real threat to growth, stability
Stand Up, Free-Trade Democrats!
THE PETITION TO STOP PROTECTIONIST MADNESS

2007-08-06

The net effect of Little Boy and Fat Man

Little Boy killed about 70,000 people in Hiroshima in 6 August, 1945.

Fat Man killed another 40,000 in Nagasaki on 9 August, 1945.

Tojo and Emperor Hirohito had 3 full days to save the people in Nagasaki. They decided to wait and take chance.

A total of 110,000 were killed as a result of these two bombs. Including the injured who are dead subsequently, the number could increase by another 20-35%.

Of the killed, perhaps only 10% or so are military pesonnels, plus another 15-30% engaged in military industry, as shown in the maps here.

Total death of the atomic bombs in WWII in then about 110,000 to 140,000 (according to the wiki source above).

---

Total death in the Asian Theatre of WWII, according to wiki data, is about 29M (including civilians and military personnels).

Total number of days of WWII (from 8/Dec/1941 to 15/Aug/1945) is 1464 days, For China, the war started on 7/Jul/1937 and the total length is 2961 days.

The death/day, according to calculation here, is 12,889 people per day. i.e. had the war been prolonged for one more day, about 13,000 more people from all countries would have died.

---

Therefore, if Little Boy and Fat Man had together ended the war by 140,000/12889 = 11 days earlier, they had reduced the total number of people died in the war.

If they ended the war half a year earlier, it would have saved (183-11=172) x 12889= 2.2 million people

If the war was ended one year earlier as a result, the number of people saved would have been (365-11=354) x 12889 = 4.6 million lives

The Japanese lives that were killed per day is 1790. So from Japan's perspective the sacrifice of the people of Hiroshima and Nagasaki would be "worthwhile" if the war was ended 140,000/1,790 = 78 days earlier. (i.e. less than 3 months)

Of course it is unfair to the people who lived in these two cities, especially those who were not even engaged in the military industry, who were the ladies, the elderlies, and the children. The tragedy is that it had to take all their lives to convince Tojo and Emperor Hirohito (Showa) that the war was over for them.

But in a war the victims are quite random. If it were not for them, it would be the residents in Tokyo...

---

The Tokyo firebomb killed 80,000 to 100,000 Japanese people.

If Little Boy and Fat Man had avoided 2 such firebombs which might have been launched subsequently, they had reduced the net casualties of Japanese civilians.

---

Total death in the Battle of Okinawa is about 77,500 (12.5k US soldiers, and 66k Japanese militia and soldiers).

If 2 of such battles were avoided as a result of Little Boy and Fat Man, they would have saved 155000-140000=15000 lives.

The population of Okinawa is about 1% of the total population of Japan. If conventional war had to go to Tokyo from the south, at least 60-75% of Japan would be battleground like Okinawa.
i.e. total death would have been 60-75 x 77,500 = 4.6-5.8M people.

---

Fumio Kyuma might have been kissing up his US ally, or what he said was not exactly the right reason. The fact that the two bombs were necessary was something that could really "not be helped", as Fyuma stated. But to characterise the strategic importance of the two bombs as the beginning of the Cold War is gravely wrong, and is a great dis-respect to those who died in the two cities.
  • The Soviet entered the war on August 8, 1945. After Little Boy was dropped, and shortly before Fat Man arrived. Therefore, it its totally against any logic that US dropped the 2 bombs to prevent the Soviets from entering. The more realistic scenario is, that, Tojo and his clan is more afraid of the Soviets than the American, and decided to surrender.

Remember this when you visit Hiroshima or Nagasaki next time. Remember the sacrifice of the innocent Japanese who died in August 1945. Remember how many lives they have saved for their own country, and for the world.

Remember Manhattan Project. Remember Oppenheimer. Remember Einstein.

2007-07-23

How I learned to be not troubled by the re-militarization of Japan

It is not because I know that most people in Japan are peace-loving, or that Japan is a democracy or things like that.

The Weimar Republic was a democracy, so is the USA. (caveat here) The people in USA are definitely mostly peace-loving and benevolent, anyone who studied the history of the last century knows how USA has saved the world, twice. But look at what a mess it has created in Iraq today.

India is said to be the largest democracy in this world, look at how many wars it fought against Pakistan, how Sikkim, Goa, and the Andaman Isles were annexed, and how it detonated a nuke with no provacation or threat.

Now back to Japan. Read this IHT coverage of its remilitarisation.

Japan has accumulated the the economic power and the technology such that it can modernize militarize in just a few years whenever it wants to (or it has already done so), perhaps even faster that how Hitler has militarized Germany in the early 1930s.

The reason I think we should not worry about Japan's re-militarization is as below
  • If it wants to build an aggressive force. It can always do it in a few years
  • If it is doing it too early before it acts, the chances are that these resources are most likely wasted (as I explained in an earlier post regarding China), and be turned into obselete equipment in the future. Less than optimized timing in investment in military often lead to less than optimal deployment of resources, and hence affect its over economic progress (and generalized "power" per Paul Kennedy), a la USSR in 1970-80s

For years Japan has been able to flourish under the umbrella of US protection. Let it waste its resources if it chooses to do so. The gap between Japan and its neighbour is much narrower than it was in 1937 or 1941. Moreover, it is very unlikely that US would let Japan bully around.

Yes, there is concern on Japan's re-militarization, but the country that should most worry about Japan should be the one which has been most active in encouraging it to do so, because that country has humiliated Japan 62 years ago and nuked two of its cities. If you watch the pop arts (manga, animation, movie) you will understand why this is so.

What we really need to take out from Japan is, its enormous stockpile of Uranium and Plutonium, and make sure that US has the ability and the reason to "contain" Japan when it went out of control (i.e. to the right wing such as Isihara).

2007-07-21

Ah, WSJ! ... and why I knew they must reach a deal

Look at the lower right corner: "he may expand this section". via The Big Picture.

I had been puzzled about the Bancroft's family's complaint about Murdoch from the start. Haven't they been in the same camp all the time? Fox and the op-ed pages. This comic tells all. There is no question that there will be a deal.



related: the shameless defense for Wolfowitz on WSJ.

2007-07-19

Pushing Ginnie Mae to China (當中國系水魚)



Related: from Big Picture

US teaches the Chinese Capitalist Party Economics 101:

  • "Mortgage-backed securities yield a higher rate of return than a traditional U.S. Treasury bond with [the] same credit risk," U.S. Department of Housing and Urban Development Secretary Alphonso Jackson said.
Mr. Jackson must have thought that with the GFW China is not aware of the housing bubble and the sub-prime problems in US, and that all the Chinese who understands the relationship between risk and return are already hired by Goldman Sachs or Morgan Stanley. Or is the 'credit risk' Mr Jackson referred to a different concept from what we would normally refer to as 'risk'?

Anyway, this is the most entertaining piece of news of the day.

Related
1) Michael Sesit of Bloomberg wrote about takeover hypocrisy.
2) look at the charts there.

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China Is UrgedTo Invest MoreIn Ginnie Mae (WSJ)

By AARON BACKJuly 16, 2007

BEIJING -- U.S. Department of Housing and Urban Development Secretary Alphonso Jackson Friday encouraged China to increase its investments in mortgage-backed securities in the U.S., especially Ginnie Mae securities, which are fully backed by the U.S. government.

"Mortgage-backed securities yield a higher rate of return than a traditional U.S. Treasury bond with [the] same credit risk," Mr. Jackson said.

The Government National Mortgage Association, or Ginnie Mae, is a U.S. government-owned corporation. It issues mortgage-backed securities that are fully backed by the U.S. Treasury.
China is seeking to earn a higher return on its massive foreign-exchange reserves, which reached $1.33 trillion at the end of June. Beijing is in the process of creating an agency that will invest $200 billion of those reserves in higher-yielding assets overseas.

China has invested its reserves mainly in U.S. Treasury bonds, and that has helped to keep down U.S. interest rates, making housing and other loans more affordable.

According to U.S. housing-department figures, Chinese investors held less than $3 billion in U.S. mortgage-backed securities in June 2003, but by June 2006 that number had risen to $107.5 billion. The June 2006 total includes securities issued by Ginnie Mae and those issued by the Federal National Mortgage Association, or Fannie Mae, and the Federal Home Loan Mortgage Corp., or Freddie Mac, which are overseen by the Department of Housing and Urban Development but not backed by the U.S. Treasury.

Figures weren't available on what portion of the securities held by China are issued by Ginnie Mae, but Mr. Jackson said "we have not been a major player in that area."

Mr. Jackson was speaking to reporters during a visit to China, where he met government officials, including the heads of the People's Bank of China and the Ministry of Construction.

2007-07-15

China's strategic objective: 富國!強兵?

The brightest politican of the modern era is perhaps Lee Kuan Yew. It is a major shame that he was only allowed to run the tiny city state of Singapore. Had he been given the mandate to run Malaysia, or ASEAN, or even China, I wonder how different this world will be today.

My respect for Mr Lee is not only from what he has accomplished, but also from how he has reasoned and what he has deduced. There are critics who discounted Lee's achievement by saying that Singapore is easy to manage because it is small. I do not agree. If you read what he writes and hear what he says, you would know that he makes decision based on reasons. Reasoned decision making goes a long way. It will bring him success whereever he is.

Since Lee has also openly asked for US presence in the area, continuously, it make his analysis on China's strategic objectives even more credible (especially to the "China-skeptics").

Below is an essay Mr Lee has written on Forbes about a month ago. He has explained why China's strategic's objective is in improving the country's general economic and technological (which are related) competitiveness, and why it does not make sense to challenge US militarily. He then backed it up with his conversation with different generations of Chinese leaders who had demonstrated that they understand this.

The example of the USSR was quoted. The reasoning is actually quite simple, especially after the lesson of the USSR, so simple that I do not think anyone would disagree, as follows,

  1. Technology determines modern warfare, investing in military means investing in technology
  2. Technology changes fast, and becomes obsolete quickly
  3. It does not make sense to invest in military technology if you are not going to use it soon (this is like buying the top of the line PC and put it into storage for a few years)
  4. Therefore, one should only invest in technology know-how, and where technology could bring you more wealth/resources so that you could further improve on your technology

In other words, the traditional Chinese proverb of "enrich the country and strengthen the army(富國強兵)" is one that is probably mis-understood by most. What it really mean is "only after one enriches the country and can one strengthen the army(先富國而後能強兵)". It has never meant to be two parallel objectives (except, perhaps when it was "pretended" to convince a king who is eager to defend his country). If you read the original writing in the Spring-Autumn era such as Shang Yang, you would see the logical sequence of the two. In other words "strengthen the military" is only a secondary objective, or a result of "enriching the country". With the current speed in technology advance, it cannot be "pretended" any more.

That is why the increase in China's military spending has mainly gone into paying for salaries of its staff (they are underpaid) and a small portion in keeping abreast of modern technology (in the spirit of marginal return, analogous to buying a low end PC "just in case"), or low (but strategic) investments such as 'shooting down its own satellite from the ground'.

What my readers (or the China-skeptics) may not agree is probably that the leaders in Beijing are rational in their judgment. Lee said they are, through his personal experience with them. IMO It would be ignorant to think that the Chinese leaders do not understand this basic element of ancient Chinese "statecraft". Read the whole essay below.

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Contest for Influence in Asia-Pacific
Lee Kuan Yew

18 June 2007
Forbes Asia
Volume 3 Issue 11

China has been courting its neighbors, and although the Chinese did not coin the phrase "soft power," they have exercised it with consummate skill. Only the U.S. and Japan have expressed concern and asked China what its intentions are regarding its increased military spending and its firing of a missile into space to shoot down one of its own satellites. China's other neighbors appear unconcerned, a measure of its soft-power success. Most of these countries are focused on China's growth, anticipating the economic benefits in trade and investment it will bring them. For example, China's voracious appetite for energy and other natural resources is feeding an economic boom in Australia, and, like other countries in the Asia-Pacific region, Australia wants China's growth to continue without disruption by conflicts over Taiwan.

China has concluded a free trade agreement with the ASEAN countries. But because of domestic pressures, Japan and India have so far been unable to match the ASEAN-China FTA. China's decision making is based on strategic considerations that override such competing domestic interests as importers versus exporters and agriculturists versus industrialists. China wants ASEAN countries to link up, to ride its boom and hitch their economic futures to China's, but Japan's and India's decision-making processes don't allow their governments to override such internal conflicts of interest.

China has been taking steps to avoid conflicts and improve relations with its neighbors. For instance, Premier Wen Jiabao visited Japan and addressed the Diet, knowing that Japan's Prime Minister, Shinzo Abe, wants to remove pacifist clauses in the constitution so Japan can adopt a more assertive foreign policy. Using warm and conciliatory language, Wen invited Japan to join with China in realizing a "peaceful coexistence, friendship for generations, mutually beneficial cooperation and common development." The Japanese media hailed his speech as "historic." Premier Wen told Chinese residents in Japan: "I did a lot of preparation. [I wrote] every sentence myself, and I did all the research work. Why? Because I feel our nation's development has reached a critical moment. We need to have a peaceful and conducive international environment."

Despite these words, Japan and the U.S. worry that China's increased military spending heralds a more aggressive foreign policy. However, I don't believe China will blunder into competing against the U.S. militarily.

In the mid-1990s China's General Liu Huaqing, then deputy chairman to Chairman Jiang Zemin at the Central Military Commission, told me that he had gone to Leningrad in the 1950s to learn how to build a navy. I commented that the Soviets made clumsy weapons. He corrected me, saying that the Russians made weapons that were as powerful as any made in the West. The Soviets' mistake, he said, was in investing too much in military technology at the expense of general technology and the civilian economy. Hence, the U.S.S.R.'s collapse. Vice Premier Qian Qichen underscored this view in his memoirs, Ten Episodes in China's Diplomacy, when he cited a former Soviet Central Committee leader, Yegor Ligachev, as saying that the Soviet Union had "wasted large amounts of capital on strengthening national defense and assigned its best brains with the best equipment and materials to this unproductive sector."

Striving for Competitive Advantage
To become competitive China is focused on educating its young people, selecting the brightest for science and technology, followed by economics, business management and the English language. Its goal: to become a modern technological power by the second half of this century. But China knows it is well behind the U.S. in R&D and lacks the entrepreneurial culture that drives a creative and dynamic economy.

Other leaders in Asia believe that the U.S. economy will remain the world's most powerful and vigorous economy and that its technology will remain the most advanced. They believe the balance of power will not change. However, because they expect China to become the world's biggest economy by 2030--with India not far behind--they want to avoid antagonizing the two giants.

In the competition for economic and political clout the U.S. has enormous strengths. Although its population (300 million) is less than a quarter of China's (1.3 billion), U.S. GDP ($12.4 trillion) is six times China's ($2.2 trillion). Moreover, private consumption constitutes 70% of U.S. GDP but only 38% of China's. More FTAs would further open the U.S.' more attractive market. However, the recent protectionist mood in Congress will likely hobble the Administration once President Bush's fast-track Trade Promotion Authority expires July 1.

2007-06-26

Juxtaposition: We are all _______

Here is the juxtaposition

A) Kill Us, Too: We Are Also Americans
B) Kill Us, Too: We Are Also Al Qaeda (Get a salon site pass and click on this link again)

Except that,
1) it took millions of Americans - the great men who wrote the constitution, Abraham Lincoln, millions who died in the two world wars to liberate the world - more than 200 years to win the good will of Mr. Aslam Abdullah to say (A), voluntarily.
2) it took just a few cone-heads from Washington to -- to force the 27.6M Iraqi, and potentially much more in the neighboring countries to say (B), involuntarily, but they were given no other option

Can't find our enemy? create some so that we have a war to fight. This is the dreamland for arms dealers.

How was Sun Zi taught in West Point? Go figure.

2007-02-03

Application of Sun Zi (i): China's anti-satellite test, and the non-issue of space trash

The Economist disappointed me greatly in its recent analysis of China's anti-satellite missile test recently.

It blindly followed the unsubstantiated claim that the debris of blowing up a low orbit satellite will endanger the space for ages, by claiming,
  • "What irony if China, which takes pride in its own recent manned space flights, were to find its ambitions to put a man on the moon and eventually to build a space station set back someday by the still ricocheting rubble from its own irresponsible action".
I am willing to bet half of my wealth against this Economist editor that it won't happen.

The simple fact is, not only the threat is tiny - consider breaking a television and throw scatter it across the Pacific Ocean, what is the chance of a swimmer finding a piece of the TV - it is also against the Newton's law of physics that any high schooler who has done physics would understand.

Let me explain this with a few facts here
  1. Unpowered object surrounding the earth can only stay on the orbit when the potential (gravitational) energy (determined by altitude) equals the kinetic energy (determined by speed). Therefore, there is only one solution for altitude, the geosynchronous altitude
  2. Therefore, any debris from blowing up a satellite will end up in 3 places: a) spiral down to earth and vaporize when it enters the atmosphere (low energy debris); b) spiral out to outer space and leave the earth's gravitational field for good (high energy debris); c) ends up at the synbronous orbit (just the right energy)
  3. The % of debris that ends up in the geosynchronous orbit is extremely small. An analogy would be to thrown a handful of sand and count the numbers of sand that falls exactly on a very thin line 10 meters away
This is the basic physics that the Economist editor could have tried to understand, or ask a high school teacher, before writing that article. (I still have great respect for the Economist as we are all human, who makes mistakes)

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The Newsweek has provided very good background information of this test. But it made the same wrong claim about debris as the Economist. Furthermore, it made two seriously flawed arguments.
  • 1) It claimed that China's test will provide the space-hawks in US with an excuse for an arms race in space. Well, the simple fact is, for all these years, they have been racing against themselves, and it is not China's responsibility or China's business to change the mind of the US. The people in the US should be responsible for the behaviors of US hawks.
  • So far the US people have been complacent on Bush's belligerent behaviors toward the rest of the world, and Bush got re-elected in 2004. Al Qaeda's claim that American people are collectively responsible for what its government does does have a point. This is like saying that if the Chinese people "behaves" then the Chinese government will give them democracy.
  • Therefore, any argument that whatever China does would affect the minds or impacts of the US hawks are purely bullshits.

  • 2) The second mistake in Newsweek's conclusion is that,
  • "Some pundits have argued that the test was meant merely to pressure the United States into finally agreeing to a treaty to limit space weapons. But this argument doesn't hold water. For one thing, by obliterating one of its old orbiting weather sensors, China also managed to destroy an informal two-decade-old moratorium on such tests. This would be a strange way to promote arms control, as would recent Chinese moves to develop lasers that could disable American satellites."
  • I entirely disagree.
  1. Firstly, this is a very valid way to begin a negotiation to limit space weapon. As so far nothing else suceeded, there could be nothing worse.
  2. Secondly, if we look at this from the purely strategic point of view (i.e. disregarding political ideology and the like). The only victim in an arms race in space is US, as no one else has any real strategic in the space that can become target of such an arms race! So from China's perspective it is a great move, even though it might not have been intended as such (more likely a result of uncontrolled vneture from local/divisional commanders, as speculated by Newsweek and others).
  3. Thirdly, this signifies a new application of games theory to achieve peace as first theorized by Nobel Laureate Schelling's theory. In the old context of the game theory one talks about mutual destruction. Today the balance of power has been disrupted, as the WPMD (weapon of precise mass destruction) the US is applying to Iraq and Yugoslavia runs in parallel with Hiroshima in 1945. By demonstrating that it is very cheap and easy to disable such WPMD, China has shown the world a way to control this kind of crazy warfare. When winning a war is much less easy, everybody will be more careful before waging a war. The world will be a safer place as a result.
All said, a brilliant demonstration of Sun Zi. Achieving the strategic objective, or alleviating the star war threat, by not waging a war -- in fact, by not even technically conducted a weapon test! Technically this is no different from using dynamite to dismantle an old building.

In the next few days, when I find time, I will write about another brilliant demonstration Sun Zi, by one of the smartest politician on the other side of the strait yesrterday. You probably guess it correctly who I am going to talk about.