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Cullion
23rd September 07, 07:43 AM
I'm sure you've all seen queues of brits lining up to withdraw their money from Northern Rock.

Here is the thread where we can all pretend with varying degrees of plausibility that we know all about economics and finance and try and predict what will happen next.

Arhetton
23rd September 07, 08:49 AM
what is there a good old fashioned bank run going on or something?

Cullion
23rd September 07, 09:11 AM
what is there a good old fashioned bank run going on or something?

Yep, first one in the UK since 1866. The depositors have calmed down now as the government has guaranteed all of their deposits (added a few billion to the liabilities column of the govt's balance sheet with a single TV interview). The bank's stock is still collapsing by double digit percentages every day.

This was a queue of people waiting to withdraw their money from a branch of the bank last week.

http://www.telegraph.co.uk/news/graphics/2007/09/18/nrock118.jpg

Arhetton
23rd September 07, 09:29 AM
oh so the government has honoured the banks debt and bailed them out?

That could possibly drive inflation up a bit, depends how big the debt is.

Cullion
23rd September 07, 10:04 AM
For Northern Rock it's order of 10 billion IIRC. The issue is whether other banks are going to run into the same kind of trouble.

Lu Tze
23rd September 07, 10:12 AM
As I understand it, Northern Rock's business model was high risk from the start, the government shouldn't have bailed them out. Basically they borrowed a shitload of money then just crossed their fucking fingers. Someone actually had to go to business school to come up with basically the same plan any fucking alky gambler in Ladbrokes would come up with...

Cullion
23rd September 07, 10:15 AM
As I understand it, Northern Rock's business model was high risk from the start the government shouldn't have bailed them out. Basically they borrowed a shitload of money then just crossed their fucking fingers. Someone actually had to go to business school to come up with basically the same plan any fucking alky gambler in Ladbrokes would come up with...

That's pretty much my understanding too.

SFGOON
23rd September 07, 10:15 AM
That depends on WHY people are wanting to withdraw the money. In this case, it seems to be an isolated bank which indicated that it's customers have zero faith in it's management.

That picture amused me, mostly old folks in the line. Conspicuous and copious amounts of grey hair.

The federal Government adding a safeguard by underwriting the deposits will dampen the effects on other banks.

Cullion
23rd September 07, 10:28 AM
That depends on WHY people are wanting to withdraw the money. In this case, it seems to be an isolated bank which indicated that it's customers have zero faith in it's management.

AIUI The problem was caused because that particular bank relied much more on borrowed money (rather than from customers deposits) to fund the mortgage lending they generated most of their profit from.

At present, banks are being much, much warier about lending each other money because they are all concerned about each other's exposure to the sub-prime mortgages in the US. Banks around the world have bought billions and billions of dollars worth of those risky loans which were starting to default, and there is a lot of uncertainty about how much exposure each bank has.

This meant that Northern Rock was unable to borrow the money it daily borrows on the inter-bank money markets to fund its normal operations and had to go to the Bank of England for an emergency line of credit. There had been stories for the last few weeks in our press of banks borrowing from Bank of England emergency reserves which were soon explained as 'perfectly normal, simply a result of a technical glitch in the inter-bank money lending system' or words to that effect, before Northern Rock was forced to admit that it really was in the shit and not just suffering from 'technical problems' or 'an operational delay'.

There are signs of other banks being in simillar trouble and apparently hedge funds are starting to place big short bets on other UK banks.



The federal Government adding a safeguard by underwriting the deposits will dampen the effects on other banks.

It will prevent bank runs if the guarantee is extended to all deposits, I don't know what this would cost and whether our central bank and/or government can actually afford it. It doesn't solve the seize-up of inter-bank lending. The recent fed rate cut is more likely to help there.

Is there any sign of stuff like this happening outside the UK at the moment?

Yiktin Voxbane
23rd September 07, 10:31 AM
The banking / monetary system as we know it, is basically dead. It has become unworkable , EG : USA owes billions... to whom and what for ? seems nearly every country is in debt, to Whom ??

/Picard : Economics of the future are Much different .

Cullion
23rd September 07, 10:34 AM
The banking / monetary system as we know it, is basically dead. It has become unworkable , EG : USA owes billions... to whom and what for ? seems nearly every country is in debt, to Whom ??

Investors who buy bonds. Some of them are other countries' central banks (China has been lending the west a lot of money for years). Some of these investors are investment organisations like pension funds, and some are just individual investors.

Cullion
23rd September 07, 10:36 AM
Is anybody here an economist or have a job in finance?

Yiktin Voxbane
23rd September 07, 10:44 AM
Not I, I am several hundred a week below our Avg wage and far below the Poverty line , took economics in school, my Teacher (FUCK YOU Mr Weiss) spent the 3 school terms hurling chalk stubs at my head and telling me I was stealing oxygen from a REAL human being.

Seems he didnt like me calling him and his Missus hook-nosed-bastards (Seriously coulda put 3 rigid fingers into either of his nostrils w/o stretching the skin, missus was abt 1/2 " behind hymn) .

Arhetton
23rd September 07, 10:50 AM
there is some more sinister economic shit afoot elsewhere in the globe. The subprime mortage stuff hasn't seen its last consequence IMHO.

I think the U.S is poised at the end of its economic dominance.

http://www.thetrumpet.com/index.php?q=4241.2444.0.0

http://www.investmentadvisor.com/article.php?article=6007

Important part - china holds about 250 billion of U.S debt, has sold off 48 billion in the past half year.

THAT, would be a bank rush that would cause some bad stuff to happen.

Cullion
23rd September 07, 10:57 AM
The US dollar has been headed down for years due in part to prolonged super-low interest rates. Bernanke tried bringing interest rates back up, but it lit the fuse on the sub-prime problem so he's been forced to bring them down again.

Soros and Warren Buffet started moving out of the Dollar several years ago citing the crazily-low interest rates and irresponsible US govt. borrowing.

Those articles were very interesting. China does have an incentive not to let the US economy fall apart though, because the US is such a big customer.

As the article said though, I'm pretty sure that when chinese and US officials meet to talk about trade regulations etc.. the chinese delegates are grinning the contended grin of a man with an ace up his sleeve.

Lu Tze
23rd September 07, 01:09 PM
Yeah, but the thing about China is, they're fucking crazy. Maybe one day they'll decide they want Taiwan more than they want a stronger economy. Never assume rational self interest, especially in international diplomacy...

Shawarma
23rd September 07, 01:19 PM
Actually, always assume rational self-interest at the expense of others when it comes to great world powers and not tinpot dictatorships in 3rd world countries.

China isn't crazy. They will eventually be your Oriental Overlords and you will have to kowtow to them, but they will become so in a rational way using economics and the threat of military force after the US degenerates to the point of losing superpower status.

Lu Tze
23rd September 07, 01:39 PM
I never said don't assume self interest, I said rational self interest... history is replete with countries cutting their noses off to spite their fucking faces.

Cullion
23rd September 07, 01:55 PM
I never said don't assume self interest, I said rational self interest... history is replete with countries cutting their noses off to spite their fucking faces.

I think the chinese govt. is rational enough to use it as a big poker chip. We'll see.

Lu Tze
23rd September 07, 02:06 PM
Oh, so do I. I just don't think they're rational enough to be bluffing when they do...

jvjim
23rd September 07, 08:26 PM
The Chinese would have a great advantage if it weren't for one small eventuality: the fact that the producing members in their production economy will inevitably shift from the working class into the middle class, creating a giant hole in the labor supply because these new, educated workers will demand more compensation for their human capitol (reference: Japan.)

Now, the immediate counter-example to this is India, where you see a gigantic workforce of hyper educated individuals who seem to defy the law of one price. However, give this situation some time, let these people start building families and having increased responsibilities, and with that of course comes mortgages (and the problems we here in the US are feeling), increased wages, etc. This same thing will happen in China for several reasons. First, the increased buying power of the average Chinese citizen (which derives from the now anecdotal movement from the agrarian centers to production centers) means they will eventually require higher end goods, such as expensive electronics, homes (again mortgages) and higher education. Second, this means that, like the United States, they will be forced to send more of their currency over-seas (since they wonít be able to buy cheaper Chinese goods because, Chinese goods will be the same price as those produced in other developed countries) which will mean theyíll experience a similar devaluation of their currency.

As to the Euro argument thatís undoubtedly going to be raised, itís a bubble. Itíll pop unless the UK decides to switch over. The UK wonít switch because they know itís a bubble, and because they only want the good the EU has to offer (no borders, little restrictions on trade, etc.) and not the bad (HUGE possibility countries with less stable economies, Spain, Hungary, all of Eastern Europe, will sink the Euro and the new ďsuperĒ economy.) Canít blame them, I wouldnít want to share my micro-economy with Eastern Europe, and particularly not with those lazy fucking Frenchmen.

So, America in general has little to fear in being subjugated economically because if Americaís economy is subjugated that meansÖ I donít fucking know, that the extremists have taken over the world, a successful resurgence of communism; I donít know itíll be the end of all we know monetary wise. EVERYTHING is based off American consumption, the market is just too big, like itís been said, no entity would want, or really be able, to circumvent the size of the American economy, except maybe China and India, but that will dump them into the problems outlined above, except the question of ďWhose creations are we going to innovate into better products?Ē will be forever unanswered because their cultures lack the tertiary education system we have to produce new ideas. What we DO have to worry about is shifting our production model from being based on cheap labor (because where the fuck is left thatís not engaged in their own hyper accelerated industrial revolution, Chad?) to being based on system efficiency (ie home sourcing work and hyper efficient production models).

So itís not so much a race to the bottom, but a race to how will fabricate the next phantom resource (in my view that resource would be exponentially increased systems efficiency.) My two cents, convert them to pesos or pounds as is your estimation of their future value.

Sun Wukong
24th September 07, 01:19 AM
The bank's stock is still collapsing by double digit percentages every day.


Holy crap!

Sun Wukong
24th September 07, 01:21 AM
The Chinese would have a great advantage if it weren't for one small eventuality: the fact that the producing members in their production economy will inevitably shift from the working class into the middle class, creating a giant hole in the labor supply because these new, educated workers will demand more compensation for their human capitol (reference: Japan.)

I stopped reading here. You do realize that china's under-class laborer's number in at about 1.2 billion people right? Because it looks like you don't know what the hell you're talking about here.

Sun Wukong
24th September 07, 01:25 AM
Yeah, but the thing about China is, they're fucking crazy. Maybe one day they'll decide they want Taiwan more than they want a stronger economy. Never assume rational self interest, especially in international diplomacy...

Oy vey, China's crazy? have you taken a good long look at the United States lately? I know you're a limey pommie bastard and all that but the UK is the US's biggest ally. We've been pulling you poor bastards into shit since Korea and you'd think you guys would figure out which way the wind is blowing by now.

Please explain why it you think China is nuts again?

Arhetton
24th September 07, 02:53 AM
jvjim

I think anyone arguing about the price of goods and manufacturing jobs and labour and all that shit needs to have a long hard look at some of the robotics that are coming out and think about the next 15-20 years. You are looking at remote mining, remote vehicles, automated farming, logistics, so much stuff its fucking incredible. I'm sure everyones seen those GPS devices that track your own car for route plotting, consider when it goes fully automatic (route pre-programming, automated parking, sensing other vehicles etc). Thats one example of a small developement in robotics that will totally change day to day life.
The world is going to change alot this century.

China and India will both surpass the U.S economically this century. The U.S doesn't have the population to draw on like either of those countries.

There are more honours kids in china than there are kids in america. There are more people in china with an IQ over 100 than there are americans (total). In ten years China will almost be the country with the largest english speaking language population in the world.

This isn't relly the place for this topic though, sorry I brought it up.

My economic predictions are simple:

long term, china and india > U.S

the U.S economy will get steadily weaker from this point on relative to those economies.

Cullion
24th September 07, 04:05 AM
I'm going to read up more on the credit-crunch which triggered the ealry 90s recession in Japan (IIRC property prices dropped 50% from the peak of their bubble to the trough). This sounds like a pretty simillar situation (although AIUI the cause then was default on large bad corporaste loans made under the influence of organised crime rather than housing market debt going bad after an interest rate rise).

DAYoung
24th September 07, 04:09 AM
Thats one example of a small developement in robotics that will totally change day to day life. The world is going to change alot this century.

Hmmm. I wonder how it will change.

There's no doubt that new technologies can lead to unexpected changes. But they're often guided by, and expressed in, all sorts of shifting and diverse social, political and economic trends.

Whatever happens, there'll still be a need for cheap human labour somewhere.

jvjim
24th September 07, 04:26 AM
You do realize that china's under-class laborer's number in at about 1.2 billion people right?

Yes sir I do, and I love that, because that means by the time my children are entering the work force theyíll have that many more people to sell services to. Why:

http://i35.photobucket.com/albums/d193/tranes/jimschool.jpg

See, those Chinese people wonít work for peanuts for ever, sooner or later theyíre going to want a pay increase thus this:

http://i35.photobucket.com/albums/d193/tranes/jimschool3.jpg

Turns into this:

http://i35.photobucket.com/albums/d193/tranes/jimschool4.jpg

Because of this:

http://i35.photobucket.com/albums/d193/tranes/jimschool2.jpg

And continued diffusion of technology (education and machines).

How many Chinese geniuses are there? Or more importantly how many are there compared to American child prodigies?

Neither of those questions are important: How many Chinese prodigies are allowed to meet there full potential as opposed to those in the US?

Even thatís not a relevant question, the question that you should be asking is how many people in the US are allowed to meet there full potential. Spoiler: Much more than China due to Americaís system of regional universities.

Thus, the number of Chinese eggheads is irrelevant, because for every Sino Stephen Hawking there will be an exponentially greater number of American researchers with more resources at their disposal. Now, many Chinese students come to the US, and thatís great because we get to tap into their cultural affinity for solving difficult problems (as to why you see so many Chinese nationals in your Chemistry department). Thereís a problem here, and Iíll concede it. Thereís a disconcerting new trend among these bright people; theyíre going back to China for the reasons I outlined above: increasing wages and availability of new technology. So we see a shift back then toward an equalization among the two nations, but we also see that Chinaís been disarmed of the weapon the nation has used to increase its power: its cheap work force. Now it has to compete on quality. Now it has to compete for its own domestic market or severely limit imports thus putting it back in the position it was in to begin with!

Arhetton
24th September 07, 04:27 AM
http://en.wikipedia.org/wiki/Panic_of_1907

Dayoung- it will be cheap robot labour - ROBOT SLAVES! yeah!!


How many Chinese geniuses are there? Or more importantly how many are there compared to American child prodigies?

Neither of those questions are important: How many Chinese prodigies are allowed to meet there full potential as opposed to those in the US?

Even thatís not a relevant question, the question that you should be asking is how many people in the US are allowed to meet there full potential. Spoiler: Much more than China due to Americaís system of regional universities.


Just stop. Americans are smarter/more special children yes okay! Those stupid yellow asians are all rice farmers that grow up in the dirt. They don't have any decent primary or high school educational systems.

I think that arguing that the U.S education system is SO AWESOME is a fallacy. I'm at university at the moment, I know what universities are like - want to listen to a bunch of lectures from some of the best U.S universities for free?

http://lecturefox.com

University is a crock of shit. Education yourself costs as much as a textbook and a desktop pc - all that modern universities have used so far to 'master' the process of education. Bring me interactive education and use the full power of modern multimedia please.

Cullion
24th September 07, 04:56 AM
Hmmm. I wonder how it will change.

There's no doubt that new technologies can lead to unexpected changes. But they're often guided by, and expressed in, all sorts of shifting and diverse social, political and economic trends.

Whatever happens, there'll still be a need for cheap human labour somewhere.

Well, not necessarily. Certainly not necessarily on the same order of magnitude people are used to now. Look how much it's changed over the last hundred years., and then remember that rate of technological advance is (broadly speaking) increasing.

The earlier discussion of cheap labour in Asia didn't discuss Japan in enough depth IMHO. The Japanese economy is a fundamentally advanced and strong economy. It had a shock in the early 90s when corruptly-loaned debt went bad, but they recovered.

Japan doesn't have particularly cheap labour and has good living standards for its population. They have an aging population much as we do in most western countries. What works for them is that their industrial base is very high tech and massively automated. They can produce things in a very cost efficient way that doesn't rely on just paying the serfs less.

People assume that high efficiency of production relies on slave-like working conditions. But they forget that the slaves can be machines. It's easy to forget that an awful lot of things we take for granted now would have been considered science fiction to our grandparents when they were children.

DAYoung
24th September 07, 05:01 AM
Well, not necessarily. Certainly not necessarily on the same order of magnitude people are used to now. Look how much it's changed over the last hundred years., and then remember that rate of technological advance is (broadly speaking) increasing.

The earlier discussion of cheap labour in Asia didn't discuss Japan in enough depth IMHO. The Japanese economy is a fundamentally advanced and strong economy. It had a shock in the early 90s when corruptly-loaned debt went bad, but they recovered.

Japan doesn't have particularly cheap labour and has good living standards for its population. They have an aging population much as we do in most western countries. What works for them is that their industrial base is very high tech and massively automated. They can produce things in a very cost efficient way that doesn't rely on just paying the serfs less.

People assume that high efficiency of production relies on slave-like working conditions. But they forget that the slaves can be machines. It's easy to forget that an awful lot of things we take for granted now would have been considered science fiction to our grandparents when they were children.

I'm sure that some geographic regions will be automated like Japan. But this itself often relies on large areas of the planet offering cheap labour, lax environmental laws, low taxes, and so on. They offer the labour and the resources that core economic zones (e.g. Japan, US) can transform to their advantage.

In simple terms, progress requires inequality - development in one area often necessitates degeneration or stagnation in another.

jvjim
24th September 07, 05:17 AM
Japan itself might be a bad example, because it started to industrialize well before the west started to move away from production economies. In fact, you could argue that Japanese industrialization pre-dates that of some Western countries, like Russia, by a significant amount of time (depending on how you view Tzarist attempts to revitalize the nation.) So, we may not have a model of how inpoverished nations industrialize when more advanced nations have moved on to service econcomies, but we definitly have an example of increased systems design replacing raw resources as a means to fuel the economy (be they simple methods to smooth demand or inovations akin to Arhetton's cyberknetic assembly plants, nano-swarms, cheap robot wives, etc.)

Arhetton, please don't put words in my mouth. There probably are many more people with impressive IQ's in China than in the United States. Why? Maybe genetic predisposition, or, more likely, they just have a higher population. Yes, their secondary education system is likely not up to par with that or the US, Australia, Japan, France, Canada, so on and so forth, but its likely to increase with their wage level (same thing in any other nation that is allowed to progress economically.)

EDIT: Sorry for hijacking the thread.

Cullion
24th September 07, 05:19 AM
I'm sure that some geographic regions will be automated like Japan. But this itself often relies on large areas of the planet offering cheap labour, lax environmental laws, low taxes, and so on. They offer the labour and the resources that core economic zones (e.g. Japan, US) can transform to their advantage.

Why do you believe that automation relies on these things ? I see no inherent reason why economies whose primary source of wealth comes from natural resource extraction or mass industrial production cannot be highly automated.

I think you've conflated 'automation' with 'financialisation', which is the real signature characteristic of the wealthiest economies. Especially the UK. Our economy is massively dependent on profiting from international trade through our financial exchanges rather than production of physical goods. We act almost as a 'layer of abstraction' above the economies which focus on actually making and growing stuff. I can't see a reason why that would have to stop just because the makers and growers became more efficient.



In simple terms, progress requires inequality - development in one area often necessitates degeneration or stagnation in another.

I do not agree that market economies are zero-sum games.

DAYoung
24th September 07, 05:25 AM
Why do you believe that automation relies on these things ? I see no inherent reason why economies whose primary source of wealth comes from natural resource extraction or mass industrial production cannot be highly automated.
Because the weath is usually appropriated by more developed regions, along with the resources and labour. The underdeveloped regions don't become automated - they remain relatively primitive (except for the comprador classes), as their wealth and resources go offshore, and aid in the transformation of core economic regions.

In simple terms, automation in one region is the product of exploitation in another, and which often speeds up, intensifies and broadens this very exploitation.

In this, I'm following Bunker's Underdeveloping the Amazon, as well as other works by dependency theorists (e.g. Frank, Amin).

jvjim
24th September 07, 05:30 AM
I do not agree that market economies are zero-sum games.
If anything they're gain multipliers, because workers are compensated on the value of the labor they invest into producing a good, not on the profit generated from the sale of these goods. That's why London's been a financial powerhouse for how many centuries? 4, 5? A lot? And why you can buy Levi's jeans in Bangladesh (given if you can save up for a while, but even this disparity is ever shrinking). I'm a little spooked about this new development (an English bank having people rushing to withdraw funds? cue Scooby Doo style fleeing), but I just don't have enough time to look into it right now (finance test in 2 days X_X.)

Cullion
24th September 07, 05:46 AM
Because the weath is usually appropriated by more developed regions, along with the resources and labour. The underdeveloped regions don't become automated - they remain relatively primitive (except for the comprador classes), as their wealth and resources go offshore, and aid in the transformation of core economic regions.

In simple terms, automation in one region is the product of exploitation in another, and which often speeds up, intensifies and broadens this very exploitation.

In this, I'm following Bunker's Underdeveloping the Amazon, as well as other works by dependency theorists (e.g. Frank, Amin).

I haven't read those works and I have no doubt that they are packed full of good observation of real events. My point really is that automation doesn't necessitate these things, it just happened to turn out that way because of a range of other factors.

There's an awful lot of Mercantilism, military conquest, racism, natural disasters, cold war manipulation and some bad political choices on the part of the poor involved in the history of how some countries came to be richer and other's came to be poorer. I think it's possible to separate increasing automation and trade from these things.

To put it in practical terms, I don't think Japanese car-plant automation relies on the Chinese not owning tractors.

DAYoung
24th September 07, 05:55 AM
I haven't read those works and I have no doubt that they are packed full of good observation of real events. My point really is that automation doesn't necessitate these things, it just happened to turn out that way because of a range of other factors.

There's an awful lot of Mercantilism, military conquest, racism, natural disasters, cold war manipulation and some bad political choices on the part of the poor involved in the history of how some countries came to be richer and other's came to be poorer. I think it's possible to separate increasing automation and trade from these things.

To put it in practical terms, I don't think Japanese car-plant automation relies on the Chinese not owning tractors.

I think this is a genuine position, I'm just worried that it's wrong.

I suspect the inequality is a necessary part of the system.

I hope not, but I have a suspicion...

jvjim
24th September 07, 05:59 AM
Well, is the solution for those on the periphery to do what Chavez did or to have present day center powers self-regulate for fair international trade?

Cullion
24th September 07, 06:03 AM
I suspect the inequality is a necessary part of the system.

I hope not, but I have a suspicion...

Well, let's explore that more. Does your suspicion revolve around labour costs ?

bob
24th September 07, 06:29 AM
http://www.telegraph.co.uk/news/graphics/2007/09/18/nrock118.jpg

There is only one sure fix for that kind of problem...







http://msnbcmedia1.msn.com/j/msnbc/Components/Photos/040203/040202_wonderful_hmed_630a.hmedium.jpg

Jimmy Stewart.

Arhetton
24th September 07, 06:43 AM
I don't think inequality is a neccessary part of the system. There will be some competition for resources but essentially it won't be a problem since new technology uses old materials in better ways - for instance electronics on plastic is another revolution waiting to happen.

Think about it this way, if you have ten kilos of steel, different countries will be able to use it in different ways. Primitive cultures might beat it into a shield or sword whereas in modern cultures it would be parts of an engine assembly or a blender or a toaster or something.

Its the level of knowledge that is changing, not the resources themselves. There will probably be a change in demand for different resources as part of the changes.

Then theres nano and genetics too. Biological computing, quantum computing. This stuff will all happen in our lifetimes its going to be amazing. I find it quite exciting.

Cullion
24th September 07, 08:52 AM
Holy crap!

This is what the shareprice of that bank looks like over the last couple of weeks.

http://chart.bigcharts.com/custom/ft2-com/chart.asp?type=256&style=2027&size=1&symb=NRK&sid=119527&time=10dy&freq=15mi

Riddeck
24th September 07, 08:54 AM
On a note...the American Dollar is now the same value as Canadian dollar. Funny for me cause I live in Detroit, and it has always been a "Monopoly Money" kind of mentality towards Canadian Currency (Though I did try to spend some in St. Louis once, and the guy at the hotel desk looked at me like I was mad).

http://www.infowars.com/articles/us/ron_paul_slams_bernanke_for_dollar_meltdown.htm

Ron Paul owning up on the Federal Reserve.

Cullion
24th September 07, 09:07 AM
Yes sir I do, and I love that, because that means by the time my children are entering the work force theyíll have that many more people to sell services to.

Agreed. Other countries getting wealthier, even if it's relative to us, does not necessarily imply that it is out our expense. I'd be delighted if more people in other countries could afford things that I make money for producing.



How many Chinese geniuses are there? Or more importantly how many are there compared to American child prodigies?

Neither of those questions are important: How many Chinese prodigies are allowed to meet there full potential as opposed to those in the US?

Even thatís not a relevant question, the question that you should be asking is how many people in the US are allowed to meet there full potential. Spoiler: Much more than China due to Americaís system of regional universities.

Thus, the number of Chinese eggheads is irrelevant, because for every Sino Stephen Hawking there will be an exponentially greater number of American researchers with more resources at their disposal. Now, many Chinese students come to the US, and thatís great because we get to tap into their cultural affinity for solving difficult problems (as to why you see so many Chinese nationals in your Chemistry department). Thereís a problem here, and Iíll concede it. Thereís a disconcerting new trend among these bright people; theyíre going back to China for the reasons I outlined above: increasing wages and availability of new technology. So we see a shift back then toward an equalization among the two nations, but we also see that Chinaís been disarmed of the weapon the nation has used to increase its power: its cheap work force. Now it has to compete on quality. Now it has to compete for its own domestic market or severely limit imports thus putting it back in the position it was in to begin with!

I don't think that necessarily follows from increasing worker real wages.
It's possible for two workforces to have the same standard of living whilst one workforce is still cheaper than the other, if the other workforce is more efficient and productive. An example

This depends on investment* in infrastructure, education and scientific/technological research.

China may also benefit from not having made as many political enemies amongst the customer base of other countries.

*Careful now, any fool with access to a large treasury can massively increase spending on education and the laying of new roads and cables without getting much back for it and then declare 'look, this is awesome, see how much we spend on infrastructure and education.'

jvjim
24th September 07, 05:58 PM
Yes, China is in a very sound position, I'm just unnerved by the thought of the an ex-Empire having that sort of power. I frankly don't know if the average Chinese citizen would think highly of their modern nation being the next English Empire, but I can tell you for sure that the average American citizen DOES NOT want to be policing the world. Of course, neither does he or she want to forgo the advantages of having Peak Oil or allow powder keg situations like in North African and the Middle East to simply aggrandize.

As to the Northern Rock situation, I agree with early posters about it having more to do with the companyís high risk business plan. As to whether the government should subsidize NRís losses, well, I donít have enough training in the subject to really comment on that.

Cullion
25th September 07, 07:53 AM
Yes, China is in a very sound position, I'm just unnerved by the thought of the an ex-Empire having that sort of power. I frankly don't know if the average Chinese citizen would think highly of their modern nation being the next English Empire, but I can tell you for sure that the average American citizen DOES NOT want to be policing the world. Of course, neither does he or she want to forgo the advantages of having Peak Oil or allow powder keg situations like in North African and the Middle East to simply aggrandize.

Whilst it has been a common pattern in the last couple of centuries in Europe, I don't think we should always assume that every culture will evolve into a liberal democracy as it becomes wealthier. Even if it becomes a full democracy, I don't think we should assume that the Chinese will think the same way as Americans.

Don't mistake this for some 'yellow peril' paranoia on my part. I think China is likely to remain a more hierarchial society than the US no matter how wealthy it becomes, but one that is less likely to see itself in the role of 'world police'.

I think America, and us Brits before that, were more prone to this because we came to believe in an almost messianic 'bringing liberty and civilisation to the world' sense of mission (yes, obviously combined with a much more cynical and pragmatic mercantilist desire to get rich by conquest).

China has been a super-power before, for a very long time, and I don't get the impression that they seemed prone to this kind of 'we have been specially chosen to educate you barbarians' kind of thinking.

Cullion
25th September 07, 08:05 AM
As to the Northern Rock situation, I agree with early posters about it having more to do with the companyís high risk business plan. As to whether the government should subsidize NRís losses, well, I donít have enough training in the subject to really comment on that.

What they have done is tell Northern Rocks customers that they will guarantee their deposits so that their savings accounts won't disappear if Northern Rock goes bust.

This is a sort of indirect subsidy, but one that I think was necessary to contain any spreading panic.

I still think that the original cause of this problem can be squared with the current government, because they were the ones who nudged the Bank of England into such ridiculously low interest rates for such a long period, which is what I see as the root of this absurd consumer debt culture and house-price bubble which led to all this now.

I hope that they learn from this so it doesn't happen again. I also hope that the board members of Northern Rock are debarred from operating as directors because as far as I can tell, the company was continuing to operate despite being insolvent. Under UK law that is not only illegal, but members of the board become personally liable for the company's debt under UK law. They seem to have escaped this for now because the govt. was forced to give them a form of free insurance which stopped the bank run.

On a related note, the director who was supposed to be in charge of the Bank's risk and actuarial committee is Sir Derek Wanless, a good friend and advisor to our prime minister.

So yah, they almost certainly will escape without being personally liable for the business' debts, and probably won't be legally disbarred from acting as company directors.

Scrapper
25th September 07, 08:07 AM
Scrapper's First Law of Economics:

McDonald's, Wal-Mart, and internet porn: Everybody wants them. Chinese laborers want them, Middle-eastern oil sheiks want them, african tribesman want them.

China's workforce WILL want more money for their work (to buy the above stuff). IT is inevitable. If you have a labor force of 1.2 billion people, you need to make sure that they don't decide that you are ripping them off...cuz that is A LOT of disgruntled employees. As China's share of the global market grows, that workforce will become very disenfranchised with their lot and either export themselves, or...wait for it... UNIONIZE. Of course, China's government will do all sorts of heinous thing to prevent that, but if wages and benefits don't increase drastically, it wil happen.

If wages and benefits DO increase, China will begin to lose it's advantage. That's sort of how these things work.

Can you immagine a proletariat revolution of 1.2 BILLION?

Cullion
25th September 07, 08:10 AM
Can you imagine a proletariat revolution of 1.2 BILLION?

No need to imagine. They already had one in living memory. There's movie footage.

Cullion
25th September 07, 08:17 AM
Let's think about what economic measurements we could make to compare cultures for this stuff.

An example: Apparently, the Japanese culturally have what's called by economists a lower 'time preference'. This means they are more willing to delay gratification in an economic sense. The evidence and means of measurement for this ? Their net savings rate. Japanese people consistently, on average, save a higher proportion of what they earn than brits and americans, and are much less prone to using consumer debt to get stuff 'right away'. This was true even when their central bank lowered their interest rate to 0%. The chinese also have a much higher savings rate. IIRC it's amongst the highest in the world.

Brits and Americans, on average, for much of the last decade have had a negative savings rate (representing the fact that their populations spent more than they earned, financed with consumer debt).

Here's what I would be interested in seeing figures for: 'Inequality tolerance' for different cultures.

Some measure for different countries, based on figures from economic history correlated with times of civil insurrection, to see if there were any common patterns in some measurable divide between 'richest x%' and 'poorest y%' and when revolutions occurred, and then see if that differed between cultures in any consistent way. Anybody got an idea where to start ?

Lu Tze
25th September 07, 08:18 AM
They already have unions, they're communists (haha) for christ's sake, what kind of socialists don't have unions?

Cullion
25th September 07, 08:23 AM
They already have unions, they're communists (haha) for christ's sake, what kind of socialists don't have unions?

Haha. Labour unions are one of the first things usually banned when a society turns communist because the central committee deems them unnecessary. This is also true in mainland china. You see, in a communist society, everybody is supposed to be part of one enormous labour union, and the government are the 'shop stewards' who stand up to the rest of the world, ensure that the work is divided up fairly, production is orderly and the rewards egalitarian.

Cullion
25th September 07, 08:28 AM
Yes, in practice it means the working conditions are shitty, everybody except a tiny elite gets poorer and complaint is often met with suppression of the right to freely assemble or speak out, or even armed repression.

Socialism is funny like that.

Lu Tze
25th September 07, 10:02 AM
Yes, hilarious. Another reason communism is a bad joke.

"Workers of the world unite, and do as you're fucking told".

jvjim
25th September 07, 10:29 AM
As to time preference, something scary to consider is that one can draw a parallel between today's "gold card today, cry tomorrow" mentality to the rampant financing pre-Depression. Sorry, I can't resist a little paranoia mid-morning. Concerning an economic toolkit for determining a nation sensitivity to inequality, I did a few prefunctory web searches and couldn't find anything on the layman level (which is what I'd require to come to any understanding on the matter; I'm not even an armchair economists.) However, I have studied this on a more cultural, non-quantitative manner (ie. from a >shivers in disgust< sociological standpoint.)

A good comparison is to take the Americo and Franco viewpoints on high end consumer goods. For example, a group of young American university students see an investment banker zip buy in his Porsche and say, "Holy shit! Did you see that old geezer in that Porsche! I want a car like that!" While a group of French "students" (laugh) see the same thing, their reaction is quite different, "Pute! Did you zee that old foo-el in hiz ridiculous voiture! I 'ope zometing takes hymn down-a-notch!" This is a bit of a generalization, but, trust me, itís not that far off.


Regardless, we see a distinct difference in the mind set of the two cultures. One accepts inequality because the cultural stance is that said inequality is caused by a certain set of actions that it is believed can be accomplished by anyone given the correct amount of time, effort, and luck. The other sees ostentatious displays of wealth as a symbol of an inequality that is insurmountable. However, given the similarity of the two nationsí economies and possible opportunities, we see that the condition falls somewhere in between. For some people getting that car IS going to take a lot more work, luck, and natural ability, but it is still possible (for these two nations.) So, someone like Horatio Alger (who died a pauper mind you) actually paints an unrealistic picture of the American dream, but neither is every successful personís triumphs a result of practices that are, to coin an irritatingly over-used phrase, pas juste.

Cullion
25th September 07, 10:34 AM
I'm with you on the difference between French and American attitudes to wealth

That's something you can reasonably broaden to European and American in most cases. Ostentatious displays of wealth unless done by people who have truly excellent taste from an old-world European standpoint are considered extremely crass.

Brits, as in many of these things, generally lie somewhere between the two poles.

Another more pragmatic reason why the French are like that is that wealthier French people are conscious of avoiding the attention of their tax inspectors looking for evidence that they are with-holding on the French 'wealth tax'.

Without having ever visited China, I expect there to be all sorts of differences like that. Probably bigger than the ones you find between Americans and Western Europeans.