Would you buy this?
Saturday, January 22, 2011
Friday, January 21, 2011
Yuan Appreciation!
On Wednesday, Chinese President Hu Jintao will meet with President Obama to discuss the relationship between China and the United States, focusing particularly on issues of trade. This has been a hotly contested issue for sometimes now as the US has pressured China to appreciate their currency, claiming that China has held the exchange rate artificially low so that Chinese businesses can enjoy a trade advantage over their US counterparts. In an interview with the Wall Street Journal, Jintao has fired back at the US saying that “the monetary policy of the Untied States has a major impact on global liquidity and capital flows and therefore, the liquidity of the US dollar should be kept at a reasonable level.” He also suggested that China will consider making the yuan a global currency, while conceding that it “will be a fairly long process.” This is the setting for what should be an intense bilateral discussion between the leaders of the two biggest economies in the world.
The yuan has tremendous potential as a global currency because of China’s continuing emergence as a global economy. Currently, less than 1% of China’s $2.3 trillion imports are done in yuan. According the the Wall Street Journal article “New Move to Make Yuan a Global Currency,” “some analysts have predicted that it will be only a few years before 20% to 30%” of the imports “will be conducted in yuan rather than dollars.” This suggests that there is already a demand for direct yuan exchange in foreign exchange markets.
Trade between the United States and China constitutes a large portion of the United States’ goods deficit and China’s surplus. Of the United States’ $51 billion monthly goods deficit, $26 billion is attributable to China. The trade between the two countries means that both countries have a stake in each other, present and future. The US has helped China build its economy by buying their goods, and as a result of this capital outflow and wealth, China has accumulated US financial assets.
From an economics perspective, it should be understood that both countries can benefit from a yuan as a global currency, one that is subject to appreciation and convertible for direct trade with other countries. The appreciation of the yuan relative to the dollar can help the US industry and trade in a number of ways. However, it can also help China by reducing its exposure to the US, reducing its transaction costs in trade and making foreign resources less expensive. The decision to make the yuan a global currency should have mutually beneficial consequences.
The US has been clamoring for the Chinese government to appreciate their currency for sometime. Because the yuan has been pegged at a fixed rate, China has enjoyed advantageous trade with several countries, but in particular the United States. We know from our stock and flow model that countries neither want to face a trade deficit (because of the marginal cost of debt) nor accumulate foreign financial assets forever (because of the risk of default). Eventually, the demand for a flow of foreign goods and services must shift, leading to an appreciating yuan. An stronger yuan should help the US trade deficit by making its goods cheaper and China’s goods more expensive.
Devaluing currency often is depicted in a negative light because it is usually caused by inflation. Traditionally, inflation has been the primary cause of a depreciating dollar. Additionally, a strong dollar is important for buying foreign foods and for travel. However, it has been detrimental to domestic industry and labor. First, depreciating the dollar relative to the yuan is not a result of inflation but rather a consequence of the market forces; there is a demand to conduct trade directly in yuan rather than in dollars. Second, a strong dollar has hurt the US by making domestic goods less attractive to foreign countries, influencing the balance of trade. It has also made it more attractive to invest in cheaper foreign labor by outsourcing, since domestic labor has been relatively more expensive. As other currencies appreciate relative to the dollar, companies from those other countries will be more attracted to hiring US labor. Having the dollar depreciate relative to other currencies can have a positive impact on the balance of trade and labor without the worry of inflation.
China has been accumulating US financial assets through the influx of dollars from the imbalance in trade. The combination of accumulating US assets as well as the growth in the US budget deficit has made China increasingly exposed to the US default risk. While US bonds have always had the reputation of being a safe asset to hold, the recent financial crisis has reinforced the important of diversification. China has been concerned that the US will “inflate away its debt” “by printing money.” By making the yuan a global currency and relying less on the dollar as a medium of exchange, China will accumulate less dollars which will not necessitate the purchase of US financial assets. Instead, China will be trading in their own currency and accumulating other foreign currencies and financial assets. This will increase their portfolio’s diversification and help stronger relationships with foreign countries. It will make the countries interdependent on China just as the US has been. Diversification will make China less susceptible to fluctuations in the United States, enabling for a more stable economic environment.
Another advantage of opening the yuan to global trade is reducing transaction costs. By using the dollar as a medium of exchange, China is paying a spread, the difference between the price to buy or sell, of the dollar exchange rate. Essentially, for every transaction that China is conducting in dollars, China is paying a tax. They are paying more and getting less than what they would if they had direct exchange through the yuan. While it may only be a small fraction of the transaction, with the magnitude of trade that China is involved in, its sum adds up. If it makes the yuan a global currency, it can trade directly with other countries rather than using the dollar as an intermediary medium of exchange.
As a developing country, China has become a huge player in the commodities industry. Commodities are very much the life blood of industry and commodity production is integral to industrialization. The mark of an industrialized nation is consuming 300 kilogram per capita of steel. Currently, China is producing 426 kilograms per capita. To produce steel, you need coke, which is a product of coal. Additionally, 68.7% of China’s electricity comes from coal. While China is the leading producer of coal, it imports nearly 3 million tons of coal from the United States. This is only one example of China growing demand for resources, but a stronger yuan would make these resources, these factors of production, cheaper.
The bilateral meetings Wednesday should serve as an opportunity to discuss the possibility of opening up the yuan to the world. As Juntao said, it will be a “long process.” As the world’s two largest economies, China and the United States are the leaders of the global economy. For both sides, it is important for them to come to a resolution that is mutually beneficial. A war of words between two countries so interdependent on each other is not a viable solution. Appreciating the yuan can go a long way to better the relationship by helping trade and industry in the US and making trade less costly and risky for the Chinese.
The yuan has tremendous potential as a global currency because of China’s continuing emergence as a global economy. Currently, less than 1% of China’s $2.3 trillion imports are done in yuan. According the the Wall Street Journal article “New Move to Make Yuan a Global Currency,” “some analysts have predicted that it will be only a few years before 20% to 30%” of the imports “will be conducted in yuan rather than dollars.” This suggests that there is already a demand for direct yuan exchange in foreign exchange markets.
Trade between the United States and China constitutes a large portion of the United States’ goods deficit and China’s surplus. Of the United States’ $51 billion monthly goods deficit, $26 billion is attributable to China. The trade between the two countries means that both countries have a stake in each other, present and future. The US has helped China build its economy by buying their goods, and as a result of this capital outflow and wealth, China has accumulated US financial assets.
From an economics perspective, it should be understood that both countries can benefit from a yuan as a global currency, one that is subject to appreciation and convertible for direct trade with other countries. The appreciation of the yuan relative to the dollar can help the US industry and trade in a number of ways. However, it can also help China by reducing its exposure to the US, reducing its transaction costs in trade and making foreign resources less expensive. The decision to make the yuan a global currency should have mutually beneficial consequences.
The US has been clamoring for the Chinese government to appreciate their currency for sometime. Because the yuan has been pegged at a fixed rate, China has enjoyed advantageous trade with several countries, but in particular the United States. We know from our stock and flow model that countries neither want to face a trade deficit (because of the marginal cost of debt) nor accumulate foreign financial assets forever (because of the risk of default). Eventually, the demand for a flow of foreign goods and services must shift, leading to an appreciating yuan. An stronger yuan should help the US trade deficit by making its goods cheaper and China’s goods more expensive.
Devaluing currency often is depicted in a negative light because it is usually caused by inflation. Traditionally, inflation has been the primary cause of a depreciating dollar. Additionally, a strong dollar is important for buying foreign foods and for travel. However, it has been detrimental to domestic industry and labor. First, depreciating the dollar relative to the yuan is not a result of inflation but rather a consequence of the market forces; there is a demand to conduct trade directly in yuan rather than in dollars. Second, a strong dollar has hurt the US by making domestic goods less attractive to foreign countries, influencing the balance of trade. It has also made it more attractive to invest in cheaper foreign labor by outsourcing, since domestic labor has been relatively more expensive. As other currencies appreciate relative to the dollar, companies from those other countries will be more attracted to hiring US labor. Having the dollar depreciate relative to other currencies can have a positive impact on the balance of trade and labor without the worry of inflation.
China has been accumulating US financial assets through the influx of dollars from the imbalance in trade. The combination of accumulating US assets as well as the growth in the US budget deficit has made China increasingly exposed to the US default risk. While US bonds have always had the reputation of being a safe asset to hold, the recent financial crisis has reinforced the important of diversification. China has been concerned that the US will “inflate away its debt” “by printing money.” By making the yuan a global currency and relying less on the dollar as a medium of exchange, China will accumulate less dollars which will not necessitate the purchase of US financial assets. Instead, China will be trading in their own currency and accumulating other foreign currencies and financial assets. This will increase their portfolio’s diversification and help stronger relationships with foreign countries. It will make the countries interdependent on China just as the US has been. Diversification will make China less susceptible to fluctuations in the United States, enabling for a more stable economic environment.
Another advantage of opening the yuan to global trade is reducing transaction costs. By using the dollar as a medium of exchange, China is paying a spread, the difference between the price to buy or sell, of the dollar exchange rate. Essentially, for every transaction that China is conducting in dollars, China is paying a tax. They are paying more and getting less than what they would if they had direct exchange through the yuan. While it may only be a small fraction of the transaction, with the magnitude of trade that China is involved in, its sum adds up. If it makes the yuan a global currency, it can trade directly with other countries rather than using the dollar as an intermediary medium of exchange.
As a developing country, China has become a huge player in the commodities industry. Commodities are very much the life blood of industry and commodity production is integral to industrialization. The mark of an industrialized nation is consuming 300 kilogram per capita of steel. Currently, China is producing 426 kilograms per capita. To produce steel, you need coke, which is a product of coal. Additionally, 68.7% of China’s electricity comes from coal. While China is the leading producer of coal, it imports nearly 3 million tons of coal from the United States. This is only one example of China growing demand for resources, but a stronger yuan would make these resources, these factors of production, cheaper.
The bilateral meetings Wednesday should serve as an opportunity to discuss the possibility of opening up the yuan to the world. As Juntao said, it will be a “long process.” As the world’s two largest economies, China and the United States are the leaders of the global economy. For both sides, it is important for them to come to a resolution that is mutually beneficial. A war of words between two countries so interdependent on each other is not a viable solution. Appreciating the yuan can go a long way to better the relationship by helping trade and industry in the US and making trade less costly and risky for the Chinese.
Thursday, November 25, 2010
Happy Thanksgiving Everyone!
Happy Thanksgiving everyone! Thanksgiving is the most American of holidays. I mean, what other holiday has the food, the booze, and the sports like this one? The excessive eating is funny because in a lot of places, they don't have food. In other places, their food sources are limited. Name a country that has a sports day like this? What's impressive is that it's one sport that carries us through the day. The culmination of food, booze, and sports are just unmatched by any other holiday.
We go all out to honor the coming together of the Native Americans (notice I didn't use Indians, that's offensive to us Indians) and the Pilgrims. Or do we? Do we even think of these things? Perhaps not. Perhaps we think of what we're thankful for. Perhaps that's enough, but perhaps we should be thankful for the Native Americans and Pilgrims; we wouldn't have Thanksgiving without them.
Thursday, November 11, 2010
Happy Veteran's Day
I knew we just passed the anniversary of the founding of the Marines, but I was unsure we were close to Veteran's Day. I really don't study the calendar as much as I used to, considering we don't get holidays like this off in college. Lately, I've been seeing more of these poppies, for lack of a better word, popping up. I knew they had some symbolic meaning for the Brits, as I'd seen football managers and commentators wear them. I did not know they were worn in the US too, particularly because I've never seen anyone wear them. It got me curious as to how this tradition or meaning was initiated.
I did a little searching (Google Search) and I found this blog entry:
The red poppy is a familiar emblem of Remembrance Day which began with a poem “In Flanders Field” written by Canadian Physician John McCrae. The poppy emblem was chosen because they were the flower that loomed in their red colour across some of the bloodiest battlefields of Flanders in World War One, making the poppy’s colour symbolic for the bloodshed and despair of trench warfare.That's really powerful. Well, the poppy seems like a very powerful flower. It's bright and distinctly shaped. It probably has the right colors to symbolized the blood and darkness of war as well. It's just so fitting.
Regardless, this day isn't about poppies or me, it's about our troops, our veterans, and our fallen fathers. It's about the people who fought for our freedom, to help make this country the most powerful nation in the World, politically, socially, and economically.
To all the Armed Forces, thank you.
Thursday, October 28, 2010
State is Out Of Control
These are the kind of things that lead me to dislike State:
What kind of example is that? You should be trying to develop quality human beings. This is why you have ex-Spartans getting drug problems (Charles Rogers) and shooting themselves in nightclubs (Plaxico Burress). See Sparty, I'm not denigrating your school for its poor academic reputation and your status as little brother, I'm ripping you for the poor standards you set for your students. How many chances can you give a player without giving him a slap on the wrist? These kids will never learn anything.
I guess when you have your first chance at a national championship in God knows how long, you're willing to turn East Lansing into a State Penitentiary. Dantonio can take that zero tolerance and shove it up his ass. May be he'll understand zero tolerance then. That's where his head is.
"Zero tolerance does not mean automatic dismissal," the coach said. "To some critics, it might be seen as a low-percentage call or the wrong decision," Dantonio said. "It is neither. To me, our coaches, and our entire team -- the men in the arena -- it was the right call for the right reasons."I'm not from Michigan, so I don't have the same strong hatred for Sparty that most of my friends seem to have. However, things like this really piss me off. How do you let your students get away with this? You're an institution of higher learning and this is the kind of example you set? If you're a talented athlete and you make horrible mistakes like getting a DUI, assault, or even rape, you will be absolved of your sins.
What kind of example is that? You should be trying to develop quality human beings. This is why you have ex-Spartans getting drug problems (Charles Rogers) and shooting themselves in nightclubs (Plaxico Burress). See Sparty, I'm not denigrating your school for its poor academic reputation and your status as little brother, I'm ripping you for the poor standards you set for your students. How many chances can you give a player without giving him a slap on the wrist? These kids will never learn anything.
I guess when you have your first chance at a national championship in God knows how long, you're willing to turn East Lansing into a State Penitentiary. Dantonio can take that zero tolerance and shove it up his ass. May be he'll understand zero tolerance then. That's where his head is.
Only In Florida
This is sickening:
A 22-year-old mother from Jacksonville, Florida, has pleaded guilty to second-degree murder for shaking her 3-month-old son to death after his crying interrupted her FarmVille game.For a fucking farmville game? Are you fucking kidding me? These are hte type of people I was talking about when I said we need to get rid of this welfare society. We can't afford to keep idiots like this in our gene pool. C'mon America! Get the fuck with it. This is just fucking disgraceful. A fucking kid died because of this dumb bitch.
Thursday, October 21, 2010
O'Reilly Owns The View
My favorite part is when Elizabeth tries to get in a word and Sky Jones is like "no no."
Wednesday, October 20, 2010
Does Modern Warfare...
...make you feel like a Vietnam veteran? Now stay with me for a second here. You know how Vietnam veterans have all these nasty flashbacks. I feel like over the last couple days, I've been having these types of flashbacks too. As some of you know, I've been completely immersed in playing Modern Warfare, something I've decided to quit. In this time, it's been difficult to sleep because whenever I close my eyes, I feel like I'm in the game. I feel like I'm hiding behind a wall waiting for my opponent to come out so I can snipe him. BOOM HEADSHOT! I've gotten knived so many times, it's a broken record. It's pretty scary. I don't know how to get over this.
Tuesday, October 19, 2010
Not Cool Yo
This was part of a stunt for San Francisco's Fleet Week, but to me, it's a really scary reminder of events that happened on September 11th. I don't care that it was part of a show. For something like this to happen in real life is extremely frightening and conjures up bad memories to many. This brings up the what if it really was another attack idea. It differs from the recent episode of South Park in this way.
Wednesday, October 13, 2010
Monday, October 11, 2010
The New Dream Team
Mourinho wants Zidane to coach at Real Madrid with him:
Putting the best manager at the moment along with one of the greatest players to walk on the pitch, THAT would be something.
'I would like to have him more with me and less with the president,' Mourinho, who joined Real during the close season, told French TV.
'I don't think he wants to become a coach but I would still like to have him with me,' said Mourinho.
Friday, October 8, 2010
Wednesday, October 6, 2010
Bye Bye Red Sox
I just wanted to say that I am taking a hiatus from supporting the Red Sox. Their owners are buying Liverpool. I can no longer be affiliated with a team owned by those people. When they sell Liverpool or they sell the Red Sox, I will support the Red Sox again.
Monday, September 27, 2010
What To Watch This Season
New TV Shows are debuting and I see a lot of people making mistakes with their television watching. I'm just gonna tell it how it is.
What to watch:
Dexter-If you are going to watch one show this fall, it should be Dexter. In its fifth season, the series has become the cornerstone of television drama. Along with Breaking Bad, this is probably my favorite show.
Eastbound and Down-A hilarious show about a former pitcher who is now washed up, Eastbound and Down is entering its second season. This series oozes glory. Watch it.
Boardwalk Empire-This show airs opposite Dexter, but its a worth competitor. After two episodes, I can only say that I'm enthralled by where this show could go. Starring Steve Buscemi, the show is about prohibition era Atlantic City. There hasn't been a show as good as this on organized crime since The Sopranos and The Wire.
Community-Probably the best comedy on tv right now, this show centers around a eccentric group of students at a Colorado Community College. This show is sharp and witty and worth every second of viewing. It's only entering its second season, so you have a whole season of glory to catch up on.
Modern Family-Also entering its second season, Modern Family has been a hit. The first season helped the show gain many accolades and that should continue in the second season. While I think Community is a better network TV show, Modern Family is right up there with it.
What not to watch:
Mad Men-I only list this show because nothing happens in the show. It's good for a season and the 50s style is quite cool, but other than that, I don't think it's a very interesting show. Nothing happens. It's not worth the time.
30 Rock-Tina Fey just isn't funny. At some point, you have to get sick of Alec Baldwin carrying the show.
The Office-Is anyone still watching this show? Seriously?
The one show I'm iffy on watching is It's Always Sunny in Philadelphia. For seasons, this show has been brilliant. However the start of the season has been kind of weak. Certainly, it's had its moments, but it hasn't reached the peak of hilarity or the expectations its set for itself in the past.
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