Much madness is divinest sense

The NYT reports today:

A new study suggests that 55% of Americans will suffer from a mental disorder during their lifetime.

Well, if the majority of the population suffers from it, can it really be called a “disorder?”

Dr. Paul McHugh of Johns Hopkins University breaks it down like this:

Pretty soon we’ll have a syndrome for short, fat Irish guys with a Boston accent, and I’ll be mentally ill.

Won’t we all rue that day.

The study also reveals that 13.2% of Americans will suffer from alcohol abuse at some point in their lives. Only 13.2 %? Come on. On any given Thursday night this summer in the District the only thing measured by the number 13.2 is the percentage of interns and 20 somethings sober after 8pm.

Then finally, there’s this gem:

Mood disorders like depression typically first struck people in early adulthood, in their 20’s or early 30’s.

No kidding? Unhappiness in your 20’s? Why on earth would anyone be unhappy in their 20’s?

I mean, after busting your ass to get through college, which only after the fact do you realize to be the period of your life with the least amount of responsibilty required to survive (I don’t care what your high school teacher said to you about how tough college was. They were all lying.), you have to take a shit job making far less than your age multiplied by one thousand, and in all likelyhood having absolutely nothing to do with your undergraduate course of study. And that’s if you’re lucky. Otherwise, you wind up waiting tables or temping for even less money and no insurance to boot.

After a few miserable years of that, you realize that you’re going to need another degree to get anywhere, and so then you cram your ass off for the GRE or LSAT, go further into debt, and then work your ass off studying all over again. And for what?

Unless you went to law school, you’re still probably only making your age multiplied by one thousand. And if you did go to law school, you’re still working your ass off. (But at least you’re being fairly compensated for it for the first time in your life!)

Don’t get me wrong, I love what I do. But sometimes that’s the only consolation I’ve got. And some people don’t even have that. I’m only speaking from my experience in DC and things could be quite different elsewhere. But should we really be all that surprised that people in their 20’s and early 30’s struggle with occasional unhappiness or depression?

Where’s the Niurou?

The Asahi reported today that as of June 1st, Yoshinoya resumed sales of gyudon at all 45 of its stores in Taiwan. This is the first time Taiwanese gyudon lovers have been able to buy the bowls in one year and four months since Yoshinoya halted sales last February following the Taiwanese ban on U.S. beef imports. Taiwan reopened imports in April, but only for cattle under 30 months of age.

According to the article, the price is some 20 percent higher than before sales were halted, but this apparently hasn’t stopped large numbers of visiting Japanese businessmen from frequenting Yoshinoya outlets.

Since MFT founding contributor Roy is in Taiwan this summer, and in keeping with the challenge issued by Adamu last week, and Curzon and Joe‘s intrepid trek to consume coffee flavored ramen, perhaps Roy might be willing to visit and give an eyewitness account. Five points for every photo you get of a Japanese salaryman chowing down on gyudon! And ten for any still beating hearts you find in the bowl!

What does this say about us and our readers?

I just noticed that in the “recent comment” section our two most popular posts, with 12 comments each, deal with Sino-Japanese pedophilia and mechanical pencils. I also noticed that neither was authored by me.

Hmm…

Perhpas my next post should be on the economics of mechanical pencil weilding East Asian sexual deviants.

More beef with the Japanese government

Well, it wasn’t hard to see this one coming. Although I must admit, I thought it wouldn’t happen until shortly after the ban on U.S. beef imports was lifted.

The Australian Broadcasting Corporation today ran this story on fears that Japan would raise the tariff on frozen beef imports 11.5 % to 50%, up from the current 38.5 %.

If any of this sounds vaguely familiar, that’s because it’s all been done before.

Following Japan’s first mad cow hysteria a few years back, Japanese beef consumption fell, for domestic beef at least. To compensate for the fall in supply, more beef had to be imported. (Those of you in Japan at the time might remember Yoshinoya’s now sadly ironic 100% American Beef campaign.) The resulting increase in imports triggered the tariff, which took effect on August 1, 2003 and lasted until the following April.

Now there is talk of that same tariff taking effect this August as well.

How can Japan get away with this you ask?

Well, it’s easy. Under the Uruguay Round, Japan agreed to lower tariffs on imported beef from 50% to the current 38.5%. However, it retained the legal right to reinstitute the 50% tariff in the event that imports increased 17% or more on a quarterly basis.

The reasoning behind allowing such recourse was to safeguard domestic producers against sudden surges in imports, which is very much the idea behind other types of safeguards also allowed under WTO regulations.

According to the WTO:

safeguard measures are defined as “emergency” actions with respect to increased imports of particular products, where such imports have caused or threaten to cause serious injury to the importing Member’s domestic industry.

The catch is that these temporary measures were meant to protect against unfair trade practices. They were never intended to be used as an unfair trade practice.

Theoretically, safeguards give domestic producers of cattle or any other traded good time to restructure the industry or take some other sort of defensive measures to increase competitiveness. But the fact is that the competitiveness of Japanese cattle farmers is not the issue here.

The issue here is that domestic beef consumption is rising to once normal levels, and that has automatically triggered the tariff. Ironically, as pointed out by an article in yesterday’sAsahi print edition (sorry, I couldn’t find this online), imports of frozen beef are actually 28% below 2004 levels!

Clearly the danger here is not for Japanese cattle farmers, but for Japanese consumers who will inevitably have to bear the cost of the tariff and its misuse by their government. The cost of beef has already risen by 20% wholesale and 10% retail since the ban on U.S. imports. Now consumers face another potential price hike because of the tariff.

As for the winners, we have the domestic beef industry, in spite of turning up 15 cases of BSE in recent years, and agriculture interests within the government, which doesn’t make out too badly itself, given the destination of those potential tariff revenues.

Attack of the Clowns

This just in from the AP:

WASHINGTON – President Bush on Friday said he would veto legislation that would loosen restrictions on embryonic stem cell research and expressed deep concern about human cloning research in South Korea.”

I’m very concerned about cloning,” the president said. “I worry about a world in which cloning becomes accepted.”

Now I’m not saying that I am in favor of cloning. To be quite honest, I am not going to pretend I have sufficient grasp of the scientific or moral issues involved to make an educated decision to clone or not to clone.

But the last thing I’m worried about is a world in which cloning becomes accepted and we have a bunch of Jango Fetts running around on a rampage. (Wait, on second thought, that might solve the Army’s recruitment problem! )

And quite frankly, this kind of crap should not rank too high on the President’s agenda either. If he wants to be concerned about human life, how about starting with our soldiers dying in Iraq.

And since that was an admittedly cheap shot (and about as damned intellectually lazy as one can get), here’s a more legitimate criticism: what about the hundreds of murdered women and children in our ally in the Global War on Terror, Uzbekistan.

Or perhpas those Afghans a couple of our sick fuck soldierstortured to death at Bagram?

And while we’re on the subject of South Korea, if the President wants to express his concern, he might want to begin with the Bank of Korea and its irresponsible behavior in the Forex markets during the past two days.

Why Paul Krugman Should Stick to Economics

Full disclosure — I am not a huge Paul Krugman fan. I do not mean that in the sense that I do not like the man or his work. For the most part, I do. I only mean that I own just one of his many books, and that happens to be the International Economics text book he co-authored with Maurice Obstfeld. (I have, however, read everything he has written on the Japanese economy.)

Nevertheless, I do recognize that not only does Professor Krugman understand economics, but he also has a brilliant gift for making it understandable (and even enjoyable) to others.

Consider this example from today’s NYT:

Here’s how the U.S.-China economic relationship currently works:

Money is pouring into China, both because of its rapidly rising trade surplus and because of investments by Western and Japanese companies. Normally, this inflow of funds would be self-correcting: both China’s trade surplus and the foreign investment pouring in would push up the value of the yuan, China’s currency, making China’s exports less competitive and shrinking its trade surplus.

But the Chinese government, unwilling to let that happen, has kept the yuan down by shipping the incoming funds right back out again, buying huge quantities of dollar assets – about $200 billion worth in 2004, and possibly as much as $300 billion worth this year. This is economically perverse: China, a poor country where capital is still scarce by Western standards, is lending vast sums at low interest rates to the United States.

Yet the U.S. has become dependent on this perverse behavior. Dollar purchases by China and other foreign governments have temporarily insulated the U.S. economy from the effects of huge budget deficits. This money flowing in from abroad has kept U.S. interest rates low despite the enormous government borrowing required to cover the budget deficit.

Low interest rates, in turn, have been crucial to America’s housing boom. And soaring house prices don’t just create construction jobs; they also support consumer spending because many homeowners have converted rising house values into cash by refinancing their mortgages.

(To see the point o read the rest of the story here. Trust me, it’s worth it.)

Now, compare that to his May 16th op-ed, “Staying What Course?,” which is nothing more than another liberal gripe about the War in Iraq. And the New York Times has enough of those already.

It doesn’t require a PhD in Economics from MIT to see that the United States, “isn’t just bogged down in Iraq; it’s deteriorating under the strain. We may already be in real danger…” Any reader of the NYT who happens to be in a semi-conscious state would have picked up on this in reading through the 24 pages that preceed the op-ed section.

So please, Mr. Krugman, I have absolutely no objection to your criticizing the policies of the Bush Administration, and most often I even agree with you. But please, please, stick to economics.

Sometimes in April

Last Thursday evening I attended a small, private screening of the HBO original film, “Sometimes in April.” The film is a fictionalized account of the 1994 Rwandan genocide as experienced by two Hutu brothers. One, Augustine, is a Hutu military officer married to a Tusti woman, who is also the mother of his three children. The other, Honore, is a disc jockey/journalist for Radio Télévision Libre de Mille Collines (RTLM), or “hate radio,” as it would come to be known because of its incessant spew of anti-Tutsi propaganda.

As the film opens in April 2004, Augustine has just received a letter from his estranged brother, presently being tried as a war criminal at the International Criminal Tribunal for Rwanda (ICTR) in Tanzania. The letter implores Augustine to visit his brother, who wishes to come clean. The remainder of the film consists of two interwoven story lines taking place a decade apart, one in which Augustine attempts to face the past, and one in which he lives it.

The Rwandan genocide took place 11 years ago last month. If you don’t know what happened by now, I see no need to belabor the point by describing the hellish atrocities here. Nor do I intend to make any moral condemnations and sanctimoniously declare, “never again.” If you are looking for any of these things, then I suggest you watch the film or read one of the number of excellent books that have since been written about the subject.

But I would like to share a few of my thoughts after having had a few days to digest what I saw.

Several adjectives spring to mind whenever genocide is mentioned. Terrible. Most certainly. Hellish. Without a doubt. Tragic. Yes. Evil. You bet. Preventable. Perhaps. Anarchic. No.

To describe the state of affairs that unfolded following the downing of Rwandan President Habyarimana’s plane by Hutu militants on April 6, 1994 as anarchic would be a mistake. These killings were carefully planned well in advance. And, at least in the early days, they were carried out with frightening efficiency.

Hutu militias had been trained. Guns, grenades, machetes (by one account, enough to arm every third adult Hutu male with a machete), and other weapons had been imported, distributed, and stockpiled in caches across the country. Lists, containing the names of Tutsi and moderate Hutu who were to be executed, had been prepared and circulated by the military prior to the slaughter. Later, names of those missed in the initial sweep of the capital city of Kigali were broadcast over the radio by the station RTLM.

This was far from anarchic. And more than anything else, this was what most terrified me after seeing the film.

As a resident of the United States, like residents of most other developed nations, I can think of a number of material comforts that I more or less take for granted. Central heating and air. Public transportation or private ownership of automobiles. Indoor plumbing. And indeed all of these things do contribute to a high standard of living with few inconveniences. Yet it isn’t difficult to imagine life without most of these things.

But try to imagine waking up one morning to discover that everything you thought you knew about your world, every rule and societal norm you had come to accept as permanent, all of this, gone in an instant.

I’m talking about the certainty that you can walk down the street in broad daylight without having your head caved in by a gang of drunken goons – gone. The certainty that your house won’t be set on fire with you and your family inside – gone. The certainty that you won’t be stopped at a roadside checkpoint, be violently pulled from your vehicle and then summarily shot, chopped, or beaten dead on the spot – gone.

One moment it’s there, the next – gone.

It’s not as though these things happened in Rwanda overnight. Again, much of this had been planned in advance. But for some 800,000 Tutsis and their Hutu defenders, the moment that that plane went down, all of that certainty just simply vanished.

One of the noteworthy books I referred to earlier is former journalist Samantha Power’s A Problem From Hell: America and the Age of Genocide. Although the book does contain a chapter on Rwanda, it is meant to be a survey of major genocides of the twentieth century and a detailed examination of American responses. As I said before, I don’t intend to pass moral judgment here. And I don’t think that was Power’s intent in writing the book either. So don’t please don’t cringe at the mention of “American responses,” because I’m almost to the point.

One of her conclusions is this:

Despite graphic media coverage, American policy makers, journalists, and citizens are extremely slow to muster the imagination needed to reckon with evil. Ahead of the killings, they assume rational actors will not inflict seemingly gratuitous violence. They trust in good-faith negotiations and traditional diplomacy. Once the killings start, they assume that civilians who keep their heads down will be left alone. They urge ceasefires and donate humanitarian aid.

But this isn’t just a problem for Americans. Time and again, Power writes of the difficulty of not only outside observers to wrap their minds around the horror, but also that of would-be victims to do the same. On Cambodia she writes:

…[T]hose with the most at stake are in fact often the least prone to recognize their peril. The Cambodian people were frightened by the reports of atrocities in the [Khmer Rouge]-occupied countryside, but they retained resilient hope… [I]n the mental duel that was fought in each and every Cambodian’s mind, it was the concrete features of a horrifying, immediate war that won out over the more abstract fear of the unknown.

It is precisely this difficulty to “wrap one’s head around” the horrors of genocide that I speak of when I describe that total absence of certainty and security that has been characteristic of all past genocides. Say what one may about democritization, economic development, free trade, etc… They are all important means in themselves, no doubt. And I by no means intend to suggest otherwise. But before suffrage, before the ability to produce semiconductors, and before hvaing a selection of imported French wine on my supermarket shelf, I’ll take those basic certainties and securities as an end any day of the week.

Paradox of public opinion – SDF and Article 9

Judging from the total lack of response to my last two postings, I trust no one will be terribly troubled if I go back on my word to make my next post about the implications of RMB revaluation, and write instead on Japanese constitutional reform.

This morning’s Asahi print edition carried the results of the newspaper’s latest nationwide poll, which, in addition to the normal questions about support of political parties, contained a large number of questions about possible constitutional revision. (I had originally intended to translate the entire results and post them, but there are too many questions and too little time.)

One thing the poll data reveals is an interesting paradox in public opinion with regard to the relationship between the SDF and Article 9. Although close three quarters of respondents indicated that the Constitution should be revised to either recognize the SDF’s existence (58%) or make it into a regular army (12%), when asked directly, a majority opposed revision to Article 9 (51%), with only slightly over a third favoring revision (36%).

At the risk of oversimplifying things, it appears that although the Japanese like the SDF, and are increasingly in favor of revising their constitution, they remain wary of touching Article 9, which arguably prohibits the SDF’s existence. The Asahi argues that this paradox is rooted in the Japanese public’s acceptance of both Article 9 and the SDF.

With regard to the SDF, only 7% of respondents said its existence was unconstitutional and should therefore be abolished in the future. Additionally, over half of the respondents said Japan should recognize the SDF’s ability to participate in UN peacekeeping operations, while one-third said they would do the same for SDF support for reconstruction in a country with an ongoing war.

Concerning Article 9 on the other hand, 32% of all respondents said that out of the entire contents of the constitution, they were most concerned with Article 9, and just over three-quarters said they believed that Article 9 had played a role in [creating and maintaining?] peace and stability in Japan.

This belief was even stronger (84%) among the 51% who opposed revision of Article 9. And even among those 58% of total respondents who believed that the constitution should recognize the SDF and that Article 9 had played a role in Japan’s peace and stability, nearly half of this group opposed revision of Article 9.

That’s a lot of numbers to think about, and of course there are the usual caveats about the reliability of poll data, but there are a few other things worth considering here.

First, one wonders if public support would remain high for UNPKOs and especially for reconstruction assistance in a war-torn country if a few Japanese peacekeepers met with the same fate as Belgian UN peacekeepers in Kigali in 1994.

One might also wonder if Japanese politicians would be willing to risk political capital to put SDF forces in harm’s way. My guess is that given the lack of a past failure (i.e. no dead Japanese soldiers), and given that the ruling coalition was able to get away with the mission to Iraq, whatever public or opposition party resistance might exist would easily be overcome the first time around.

RMB Notes, part II

Pressure for revaluation of the RMB continues to mount on both the financial markets as well as on the Chinese government. Meanwhile, debate continues among economists, financial analysts, and currency traders as they remain vigilant for signs of an impending change in China’s currency policy.

The Financial Times’ Richard McGregor reports that yesterday for around 20 minutes the RMB traded 8.27 to the dollar, slightly higher than its set band of between 8.2760 and 8.8600. Although there was no confirmation as to whether the Chinese government was involved in any trades at this higher price, some observers took it as a sign that the government was testing the waters for a revaluation in the near future.

“…[T]he point is that they are ready to do it and could move at any time,” [Frank Gong, a strategist with JP Morgan in Hong Kong] said. He said the higher rate remained on trading screens for up to 20 minutes, a sign that the authorities may have been testing the market “to see how much ammunition they may need to keep everything under control”.

Beijing has been sending strong signals in recent weeks that it has completed all the technical preparations necessary to remove the US dollar peg and allow greater flexibility for the currency.

Congress is clearly worried about the harm an undervalued Yuan may do to politically sensitive sectors of the U.S. manufacturing industry. They have been especially concerned following the expiration of the multi-fiber agreement on January 1st of this year, motivated by fears that a surge of cheap Chinese textile imports would put more Americans out of work.

One response to this is Democratic Senator Charles Schumer’s proposed bill decrying China’s RMB peg as providing:

the People’s Republic of China with a significant trade
advantage by making exports less expensive for foreign consumers and by making foreign products more expensive for Chinese consumers. The effective result is a significant subsidization of China’s exports and a virtual tariff on foreign imports.

Schumer proposes a 27.5%* tariff on all Chinese exports to the U.S. unless Beijing agrees to revalue the RMB. Frighteningly, the bill survived a preliminary vote earlier this month and is scheduled for one final vote in July.

Passage of the legislation would unquestionably violate WTO regulations, though Fred Bergsten, Director of the Washington, DC basedInstitute for International Economics has suggested that one possible way around this restriction might be for the United States, along with other IMF member countries to seek:

…World Trade Organization authorization on the grounds that persistent currency manipulation represents both an illegal export subsidy and “nullification and impairment” of previously negotiated liberalization.

Whatever China’s decision, it will not be an easy one. (Anymore than Senator Schumer’s proposed quick fix be quick or a fix for U.S. industry and our widening trade deficit. But I digress.) Pegging the RMB to the dollar is a dangerous and double-edged sword. Although revaluation may ease international pressure on Beijing for now, it will likely create a set of new and equally difficult economic challenges both internationally and domestically.

The next post will examine some of implications of a currency revaluation and look at these problems in more detail.

*27.5% is the average undervaluation of the RMB cited in the text of the legislation.

RMB Notes

Hardly a week passes without at least one article on Chinese currency policy by at least one major newspaper. In the ongoing debate over maintaining, adjusting, or abandoning the RMB’s peg to the dollar, one commonly cited reason in favor or adjustment is the increasingly large flow of speculative capital into China.

Consider this report, posted yesterday and updated today by the Financial Times:

The World Bank on Wednesday said China should revalue the renminbi and abandon the dollar peg in favour of a link to a basket of currencies.

It warned that without revaluation, speculative capital flows could destabilise economies in the region.

Homi Kharas, the bank’s chief economist for the region, said there was no imminent risk of a financial crisis caused by currency speculators, like that in the late 1990s, but “very large volumes of money” flowing into the region threatened economic distortions.

And just how large are the “very large volumes of money” currently flowing into China? Because such flows are illegal, gathering accurate data is impossible. But it is possible to make reasonable estimations. According to China’s central bank and Reuters:

China’s foreign exchange reserves jumped $49.2 billion in the first quarter to a record $659.1 billion, the central bank said on Thursday, signalling persistent inflows of capital betting on a yuan revaluation.

China posted a trade surplus of $16.6 billion in the first quarter, compared with a trade deficit of $8.4 billion a year earlier. Foreign direct investment in China was $13.4 billion in the first quarter, up 4.5 percent on the year.

That left some $19 billion* in other transactions on the balance of payments, much of which analysts believe was speculative money inflows betting on a revaluation of the yuan.

One popular desitination for these speculative inflows is the property market. By converting U.S. dollars into RMB, and then investing in China’s booming real estate sector, a speculator doubles his chances of profit – once from the rise in property prices, and once again from the rise in the price of the RMB in dollar terms should the Chinese government revalue.

And just how booming is real estate in China, you ask? According to Brian Bremner and Frederik Balfour’s excellent article Businessweek Online:

New hundred-square-meter apartments in posh sections of Shanghai have doubled in value, to $550,000, since 2003. High-end properties in the Chinese megalopolis have shot up 20% during the past three months alone. It’s not just Shanghai. UBS Securities (UBS ) says overall urban land and property prices in China last year were up 70% over 2001.

Sounds pretty tempting, no?

Although figures on speculative capital flows and the latest global real estate boondoggle are a common sight in print and online, one thing I have yet to see addressed is exactly how speculators are moving into RMB positions given the supposedly tight controls on foreign exchange in China.

Exchanging small amounts of dollars for RMB and vice-versa is easy. Anyone who has travelled to China knows that this can be done at the airport (provided one holds on to those receipts!) or even through black market money changers.

But one can’t expect to purchace a prime piece of Shanghai property with the one thousand dollars worth of RMB purchased at the airport exchange desk. And even if one could purchase the property, and even if one were able to sell it for a profit, and even if the Chinese government did revalue the RMB, without a recepit for that new amount all that profit would be for naught, stuck inside China.

But if it were that easy for the Chinese government to stop speculative capital flows, there would not have been $19 billion worth of them in the first quarter of this year.

So how do they do it?

I was pleasantly surprised to see that the Mure Dickie and Richard McGregor of the Financial Times answered the question today in this article. Unfortunatly, it’s only accessable to FT.com subscribers, or in the print edition, but consider this fascinating introductory anecdote:

Using his permanent residency in France, Mr Hu set up an offshore company to buy property from a real estate business he established in China… The property did not actually exist. But the paper trail allowed Mr Hu to apply to [legally] bring 284,000 euros into China.

The Wenshou entreprenuer – who was unmasked last month by regulators – offers an example of the efforts that individuals and companies have been making to move funds into the renminbi amid widespread speculation that Beijing is moving towards a significant revaluation.

I still have no idea how Mr. Hu planned on getting his profits back out of China, but the story is interesting nevertheless. For anyone interested, the FT article goes on to list five other commonly used methds to, “bet on the renminbi despite China’s capital controls.” Here are three for your consideration (comments mine):

1) False trade accounting – Intentionally mark up the prices of your exports to bring in more dollars.

2) Money smuggling – Black market banks and corrupt officials serve your forex needs.

4) Increasing overseas leverage – Unless you’re one of the lucky few companies allowed to borrow abroad, forget about it.

Still not sure how they plan on changing back to dollars, but I suppose if the money is there, ways can be found.

*Forex numbers are online here, but for the life of me I can’t find balance of payments data, so don’t ask how Reuters came up with the $19 figure. If anyone cares to work out the math, it would be much appreciated.