Back in February, President Trump nominated a fellow named Landon Heid to an obscure-seeming post, assistant secretary for export administration at the Department of Commerce. The post requires Senate confirmation. POTUS has withdrawn Heid's nomination for that post in recent days. Why? Ah, that is the question. Heid -- the fellow in the foreground of the photo here -- is a 'China hawk' (there is that avian metaphor again that we discussed in another context in yesterday's post). Heidi has long supported restrictions on the export of computer chips to the People's Republic of China in a targeted way aimed at limiting China's ability to make use of certain cutting-edge computing capabilities. The withdrawal of his name may, then, be a victory for China doves over China hawks within a administration deeply divided on just those lines. There is some speculation that the nomination has been withdrawn because Trump doesn't want to go down that road any longe...
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I will assume a reader's familiarity with the first two panels of this ongoing discussion of a book by Barry Buzan and Ole Waever. With our authors, we turn now to the east of Asia, the Pacific rim. Looking with the eyes of these scholars affiliated respectively with the London School of Economics and the University of Copenhagen, let us start with this quote. [p. 145.] "After the east Asian economic crisis in 1997, the succession crisis facing Indonesia became critical, and at the time of writing it was far from clear whether the muddled shift to electoral politics would be able to handle the turbulent mix of economic disaster, secession, (East Timor, Aceh, Irian Jaya) and recurrent bouts of communal violence in various places. Indonesia had all the appearance of a crumbling empire, and its internal disarray and weak leadership contributed to the paralysis of ASEAN, which was already burdened by both over-ambitious expansion and the impact of the regional economic crisis....
Meanwhile, in a distant land, Country Garden struggles to get out of its hole. One year and two days ago I posted here about the huge Chinese realty developer and its default on its bonds. The broader issue, worth noting from the other side of the world, is: the PRC allows huge companies to continue in operation after they have ceased to be economically viable yet without restructuring or liquidation. It is known as the "zombie companies" issue and the zombies are a drain on the productivity of the economy as a whole (though, no, we cannot even metaphorically say that they eat its brains). https://jamesian58.blogspot.com/2023/10/news-from-china-country-garden-story.html The question after the default was: would Country Garden become such a zombie? https://www.bloomberg.com/news/articles/2024-10-09/country-garden-misses-target-date-for-restructuring-backing Nothing new to report, one might say: but that fact IS the news worth reporting. Bloomberg is now repo...
I admit to having very mixed feelings about the whole TikTok issue. Let's review. The US House of Representatives has passed, in what is nowadays an impressively bipartisan vote, (and with 352 yeas) a bill that would force Chinese parent company ByteDance to divest itself of TikTok or face a US ban. A study last year out of Rutgers University indicated a "strong possibility that content on TikTok is either amplified or suppressed based on its alignment with the interests of the Chinese government." Perhaps more worrying, the broad use of TikTok is a means by which interests in China may build up a database on Americans and America, and whoever at ByteDance can get that information would be susceptible to demands from his/her government to pass it along. What information exactly (aside from dance trends) would China get in this way that it could turn to nefarious purposes? It could help identify targets for recruitment for espionage, or data could be crossed-chec...
In last year's round-up of the top financial stories, I mentioned that I was somewhat embarrassed that THAT list turned out to be as America-centered as it was. Seven of the stories (every one that was NOT about Ukraine) had a US locus. This year, I don't have that problem. This is a VERY international list. Ukraine is still here, but only once, and the OTHER war that has dominated headlines this year, the Israel/Hamas war, makes its debut in these lists via its ramifications for shipping. Actually, both wars are here with reference to shipping. Likewise, the US is still a locus, but only of three of the twelve big stories: April, June, and November. Less than half of last year's. Two of our US based stories this year concern artificial intelligence as a new industry: the other, one of America's periodic games of chicken with a debt ceiling. China gets and warrants more attention here than any other single country. It is the locus in four of our stories. Af...
Peter Navarro, a former economics advisor to former President Donald Trump, has figured in my humble blog before. Or at least I thought he had, but I cannot find him now. I cannot find him in the precursor to this blog either. A little further searching finds that I did say something about Navarro on the social media site then known as Twitter. You can find it here: Click. I was sure I had said something about Navarro's theories about US-China relations, which are presumably what led Trump to hire him for an economist's post. But I can't find it now. That's too bad, because IIRC, early in the Trump administration Navarro got caught in some blatant scholarly finangling in his (allegedly non-fiction) books on trade. He would quote a supposed expert to nail down a point. The expert was a fellow named Ron Vara. It turns out there was no Ron Vara. I'm sure I wrote something about that, but I can't find it and it wasn't worth the effort that I've alr...
The staff of the Federal Reserve recently concluded that President Trump's war on trade has not produced or created US jobs. Quite the contrary. Gee, you could've knocked me over with a feather when I saw this. Who predicted such a thing? Anyway, for the curious, here's a URL for the report: https://www.federalreserve.gov/econres/feds/files/2019086pap.pdf?fbclid=IwAR2C4oBHUEDstQXGV7kTkwvTftRoJ19ObYsmsU9vH6gS4sinFcxTIijs80g One quote, and I am done for this post: "We find that tariff increases enacted in 2018 are associated with relative reductions in manufacturing employment and relative increases in producer prices. In terms of manufacturing employment, rising input costs and retaliatory tariffs each contribute to the negative relationship, and the contribution from these channels more than offsets a small positive effect from import protection. For producer prices, the relative increases associated with tariffs are due solely to the rising input cost channe...
At this time of year I ask myself what were the biggest stories of the past twelve months in business/financial news. Here are the twelve stores that especially caught my attention and that in retrospect I recommend to yours. I'll make no effort to rank their importance against one another, so I will order them simply by month. January: Brick and mortar retail. A bankruptcy court judge offered Lambert, the man behind the chief institutional owner of Sears, another chance at avoiding the liquidation of that august institution. (Update -- Lambert would get that chance, but wouldn't make it stick. By end of year liquidation was well advanced.) February : Space exploration for profit. The Dutch organization, Mars One, entered bankruptcy. Why do I elevate that fact to the unutterable prestige suggested by putting it on this list? Because it suggests the narrowness of the line that now separates reasonable business plans from fantasy/fraud. Mars One had planned to cr...
Here’s a key point about trade. A bilateral trade deficit is NEVER by itself a policy issue. Consider a microeconomic parallel. I have a severe bilateral trade deficit with my barber. I’m a content provider for websites and my barber doesn’t even HAVE a website. He has no need for my services at all. But I regularly need my hair cut. So the trade between us is one way. I pay him cash, he provides a service to me. Is this alarming? No. Why not? First, because I do need the hair cuts and my barber does a good job of providing them. Second, because the price he charges is fair. If it weren’t fair, there would be other barbers in the world to whom I could turn. Third, because trying to cut my own hair would be an unproductive waste of my time — time better spent preparing content for websites. Likewise, there is nothing alarming if the US sells little to the People's Republic of China, and China sells a lot of stuff to us. In that case, China is the barber. Now, if I ...
The Trump administration is forfeiting a great US asset. The US has long been at the center of world trade, and the US dollar has become the currency-of-currencies, the numeraire. That fact has worked in our national favor in countless ways. Now, some of my readers might say that it is "about time the US lose this privileged position." But of course the Trumpets won't say that. They're the "America First" administration after all. Yet their actions will remove American firstness in one very important respect. How? Well, one object of Chinese policy for a long time has been to rebuild the famed "Silk Road," the trade route leading from China through the Middle East, to Ottoman lands and northeastern Africa. Marco Polo tapped into it when he wasn't too busy inventing swimming pool games. China wants to revive that route, and wants it emphatically to include all of Europe this time, not just for an occasional traveler, and ideally it woul...
I've recently encountered a working paper on the subject of "oil price shocks" prepared by economists affiliated with China's Shanghai Tech University. There is something in it that surprised me a bit. Specifically: the authors do not believe that a sudden increase in the mean price of petroleum (that is, averaging across different local markets within a nation etc.) hampers economic growth. Nor do they believe that a sudden decrease in the mean assists growth. They claim to have solid empirical evidence for this negative conclusion, though their data is confusing to me and I offer no assessment here. But if it is valid, the conclusion means that "oil price shocks" as generally understood do not exist. That strikes me as very odd. It would seem intuitively plausible that a sudden increase in the value of any commodity integral to the system of production would ... well ... hamper production. More expensive input, less total output. Why is that i...
At this time of year I ask myself what were the biggest stories of the past twelve months in business/financial news. Of course, I choose the ones I do largely because they illustrate an important theme, and in the list below I'll spell out and boldface the theme. Yet the theme itself isn't the story. Here are the twelve stories, by month, that especially caught my attention and that in retrospect I recommend to yours. 1. January. Immigration. Well, of course. But I want to highlight a different aspect of the immigration question than the one that has caught the most attention. In the early days of the new year, Reuters appears to have heard from sources that the President elect (as he then was) was in talks with hi-tech employers about the possible overhaul of the H1B visa system. At the end of the month, word leaks out that the now President, Donald Trump, is moving in the opposite direction from what those employers presumably had hoped . This will...
The Legal History Blog has alerted its readers to the existence of a journal on Buddhism, Law & Society . In its inaugural issue, a professor at the University of Bern delves into the law in 18th century Mongolia. Mongolia was part of the vast Qing Empire at this time, the Manchu based empire that would last until the early 20th century and the rise of the Republic of China. But Mongolia was given relative autonomy, so it makes sense to speak and wrote of its legal system as a separate entity. The abstract of the article in question reads thus: "For 18th-century Mongols living under Qing rule, the imperial state was not the only source of law. Among the rules acknowledged to have binding character were Buddhist legal traditions, customary legal practices as well as rights and duties emanating from dependencies and prerogatives. Yet, the existence of these different legal practices and codes raises many questions about the specific way these di...
I've been reading a book about banditry in China from the late 18th into the mid 19th century (the mid-Qing or late Imperial period, in terms of traditional Chinese periodization). These are simply among my notes from the reading. Notes that did NOT get into the actual review that I have prepared for publication months hence in The Federal Lawyer . "Bandit" is not a legal term in English, it is a vernacular term that derives from the word for "banishment." It is associated with activities that might get their perpetrator banished, and with activities sometimes associated with those who HAVE BEEN banished, and who accordingly can only continue their criminal ways on the margins of a settled society, where there are hiding places or a nearby sanctuary. The word most often translated into "bandit" from Chinese is "fei," which has a similar etymology. Also, both "bandit" and "fei" suggest violent theft, as well as ...
Every once in awhile we hear econo pundits telling us how evil deflation would be. Why? Well ... deflation is often a symptom of bad times. If a lot of people are out of work and have no purchasing power, demand for a wide range of products will drop and so will the general level of prices, i.e. there will be deflation. This is one way of getting to deflation, and the causes of that symptom are, to those directly affected, bad things indeed. BUT ... deflation there is only a symptom, not a cause of the trouble, and this doesn't rule out the possibility that deflation in other contexts may be harmless, or better-than-harmless. One often encounters a suspicion of deflation that goes beyond any real justification, and this is the background of an expectation that a central bank should program into an economy a mild level of price inflation, say 2 to 3%. Just to keep those deflationary demons away? These thoughts are motivated by Apple's product launching event on March 2...