February 3rd, 2008 -- Posted in American Politics |
Two entries in one day, I know that is pretty amazing but I told myself today that with Super Tuesday looming, I would like to write this article or rather this endorsement. The few people that read this blog may wonder what is the point of writing a long endorsement that will not influence many people but it is to these people I say that the smallest difference is a difference none the less the few people that do read my blog go out and vote for Obama, I know than that I have contributed in part to electing the man who will change America and the world that we live in.
I live in Ireland for the moment where the two largest minorities are Polish and Chinese, and if I asked the average Irishmen if they would ever vote for a non-Irish Taoiseach (Like the President), the answer would be no. I think America has come along way from the racial tensions of the 20th century into an age where race is not a major issue. I have listened to the commentary about Senator Obama since people were speculating that he might make a run for President and a lot have people do not notice he is black. I for one do not, the very first thing I noticed about Senator Obama is at the last DNC where I thought to myself, he is an excellent speaker. Does this mean he will be a good President? Far from it but it is one of the essential qualities.
If we look back at the last century or so, society and civilization as we know it are defined by good speakers. From Winston Churchill to Nelson Mandela, people who can get on stage and rivet an audience so that no matter how long and boring the speech is, they stay interested. Senator Obama is one of these people, he will bring a passion and consistency to the presidency that we have not seen in many years. He will be the kind of President that we need in the 21st century to save the economy as well as bring America back into the limelight as the super power it is supposed to be.
That being said, he will also said he will also realize that China and Russia are going to remain Super Powers for the foreseeable future and there is nothing that can be done about that. The USA is entering a new era where the President must work hand in hand with the likes of Dmitry Medvedev and Wen Jiabao to create the world that I want my children to live in. A world where the peace is prevalent and terrorism becomes a word of the past, immigration is no longer an issue because people can move freely around the world but most importantly the future president of the United States of America must create a world that is sustainable for future generations to come.
No one country can be number 1 anymore, Senator Obama can assume the presidency without the baggage of the past. Larry King commented on CNN that people like John McCain and Hillary Clinton are using the same old playbook for a world that has changed. This is true, John McCain often talks about his time under the Reagan administration, that was a different time and a different world and Senator McCain cannot save the USA from the economic crisis that has arisen or increase the competitive level of the country compared to the likes of China and Russia.
For those of you that have read this blog, young and old I urge you to think about the long term future when voting for Senator Obama. Vote and Support a candidate who can remake America into the country it should be for the 21st century. I may be 25 and some people may discount my support as the folly of youth but look back at history, and it will tell you that knowledge gets you so far but you need charisma, talent, passion and strength to truly make a difference in this world. Senator Obama has this and I wish him good luck as the future president of the United States of America.
February 3rd, 2008 -- Posted in World Politics |
With February the 1st’s job numbers in many people’s minds, I think, as much as I hate to admit it…the American economy is going to head into a recession. The monthly jobs report that came out for January indicated that for the first time in 4 years, American employers cut 17,000 jobs from the economy instead of adding to it. That being said, such a number is not unexpected considering the losses endured by the financial sector but I think more than anything, that number reinforced the notion in many people’s minds that maybe it is time to move our money elsewhere? Elsewhere in this case being the People’s Republic of China.
I know many American’s will outwardly cringe at the idea but I am sure every one of you knows at least one person who has a diversified portfolio that includes some Chinese stocks? You would be a fool not too considering the Shanghai 180 A Share Index grew by 215% in the last two years (Courtesy of marketoracle.co.uk):
For this article I will be referencing my friend Amilie’s article entitled: “The Prospects of the Chinese Economy in 2008.” The link to her blog can be found in my blog roll and she has kindly given me permission to reference excerpts of her article in my effort to provide a Western view on the Chinese Economy. The first memory that comes to mind when I think of the Chinese Economy is the famous billionaire Warren Buffet saying that he would not invest money in China because he did not believe that the growth was sustainable. I am not sure when he said this but it is one of those memories that I have when I end up watching CNBC. Here is a quote from Amilie that accurately sums up the issue “The Chinese economy is like a train running at high speed and it is time for it to slow down.”
I think in this case, the central government has realized this as referenced by the recent ending of the freeze on new stock funds by the CSRC (China Securities Regulatory Commission). The entire economic situation can be termed a “balancing act” which is a phrase that I am not the first to use nor will I be the last. With the expansion of the economy, the central government has loosened the reigns on many things including financial and economic regulations. This has certainly helped keep the economy under control but I think I would like to draw a different analogy. Imagine the Chinese economy as an Irish Wolf Terrier, tall and proud but eager at the same time. The Irish Wolf Hound is one of the biggest dogs in the world so imagine a smaller man holding the leash of that dog, he would have a hard time controlling it if a cat ran in front of the dog.
I know that sounds a little complicated but the dog is the Chinese economy, the central government is the smaller man and the cat is the agent of growth that can make the dog run wild. What I am trying to say is that any potential investors need to watch how the central government manages the issues in China like the rising cost of housing, prices and the weather. Let’s look at the news over the last couple of days, CNN estimates that China has lost upwards of 7 billion dollars due to the snowstorm. Some people might say how can we invest in a country where the government cannot cope with the weather? I think as time progresses, global warming will come into effect increasingly by diversifying the weather patterns around the world.
The Chinese government did the best under the circumstances and the last I heard that things were slightly improving. Now comes the question of the day, would I invest in China? I will be honest with you, at the moment at my young age of 25, all my investments are with American Stocks using E-Trade.com however with regards to my financial goals in my life, I plan to move some of that money into Chinese stocks like China mobile, Gushan Energy, Baidu.com and Aluminum Corp of China. These are just some of the few companies that will make headways into the coming years despite the impact of the American recession on the Chinese economy.
I believe the Central government has the ability to create the quintessential equilibrium for a country as large as China with such a diverse and widespread population. The government at the same time must keep an eye on the financial markets while spending some of trade surplus on improving the infrastructure not only in the populated cities but in the countryside as well. An improvement of infrastructure will benefit the lives of every citizen and reduce the drag on the economy from the people living at below the poverty level. Lastly the government must focus some of its resources in helping migrate the Chinese economy from a Industrial based economy to one where services are equally important.
The majority of the FDI that comes into China is from companies around the world taking advantage of the incentives and low cost of labor. That being said, other countries like Vietnam are now taking that lead and the government should not fight against that. China should allow Industry to move to less developed countries so that companies can take advantage of the huge pool of intellectual capital. Let me put the Emphasis on HUGE. Addressing some of the issues above while maintaining the current government strategy, I believe that the average American can move their money to China without major risk while still taking advantage of the financial sector in the U.S once it hits the bottom. I see the Chinese economy weathering the global economic storm that has enveloped the first quarter of 2008 but for the rest of us to survive said storm, we need to jump on the boat.
Lastly I would like to include Amilie’s article below mines so that an easier comparison can be made between the Western and Eastern Viewpoint:
The IMF adjusts its forecasts for the global economic growth for 2008 to 4.1% lower than that of 2007 because of the current financial crisis and the slowing economic growth of America in the fourth quarter of 2007. But the IMF doesn’t anticipate a recession of American economy and it estimates that Chinese economic rate in 2008 will be 10% lower than 11.4% in 2007.
I have no idea about how the IMF calculates the economic growth but I agree with its anticipation of the overall economic trend.
The American economy is slowing down although the Fed cuts the interest rate several times which will definitely affect the economic growth of China as America is the biggest trade partner of China. The exports to the US contribute a large portion to its GDP.
China has experienced a rapid development for over twenty years and its economic growth in the past years is especially so high that many problems occurs such as the abnormal high housing price, the bubble in stock market, the surging CPI ,the unbalance of international trade and the bad debt of banks. The Chinese economy is like a train running at a high speed and it is time for it to slow down. The period before the recession is always flourishing which could be convinced by the past recessions in history. The Chinese government has realized the problem and has taken some measures, for instance, raise the interest rate, expecting to slow the growth down and achieve a soft-landing.
I think the possible decreasing exports could provide an opportunity for China to change its current economic structure to a more appropriate one. China’s GDP depends more on the exports .So the most important task for China is to stimulate the domestic demands, especially the spending demands of the consumers. And I think it is not only a measure for China but also could make some sense for America. America should encourage the consumers to buy more products made by its own thus stimulate its economy while China could change its economic structure and keep a healthier growth. But it is hard to carry out detailed measures. China’s domestic demand is still at a low level for the salary is low and the healthcare system is not that good for many people in China so people prefer to save money than spend them. If some valid policy have effect on the demand, the economic growth will keep a normal rate otherwise it will slow down.
How about the Chinese stock market in 2008? It is the question cared by many investors in and abroad. The capital market is more complicated than we think. No one could give a definite estimate of the changing market which can rise sharply and slump in a short time. I think the Chinese investors will be more sensible and they will invest rather than gamble in the stock market. The foreign investors will still be interested in Chinese market for its rising demands and opportunity. In fact, foreign investors hope China could keep its growth rate for it is one of the best countries for investment. And if China’s economy stops growing, most multi-national companies will suffer and the global economy will be affected.
The housing price will be reduced since the government has made some valid policy to prevent the price from rising. But the room to lower is still limited for the demand isn’t reduced at the same time.
Nowadays, the macroeconomic fundamentals are much healthier in China and some other Asian countries and the large foreign exchange reserve makes it less vulnerable to shock than before. Besides, the budgets are surplus, providing more scope for fiscal stimulus to main the growth rate.
