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| 7/9 |
| 2009/2/3-8 [Politics/Foreign/Asia/China, Politics/Foreign/MiddleEast/Iraq] UID:52503 Activity:nil |
2/3 Bad economy is good for military (puts on conspiracy hat)
http://www.nytimes.com/2009/01/19/us/19recruits.html?_r=2&hp
It wasn't just the market. (Governments steered the market into
the wall.)
http://blogs.cfr.org/setser/2009/02/02/it-wasnt-just-the-market/#more-4618
Wen Says Crisis Shows Dangers of Unregulated Markets
http://www.bloomberg.com/apps/news?pid=20601089&sid=ahk0bbmaDQm4
\_ I agree with Comrade Wen. -comrade
\_ The fetishtic more efficent markets are always better crowd
forgets that an efficent system that is highly unstable
is worse than worthless. |
| 7/9 |
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| www.nytimes.com/2009/01/19/us/19recruits.html?_r=2&hp com More Americans Joining Military as Jobs Dwindle Jeff Swensen for The New York Times Ryen Trexler, 21, is learning about heavy equipment at the Jobs Corps Center in Pittsburgh, skills he will take to the Army in July. LIZETTE ALVAREZ Published: January 18, 2009 As the number of jobs across the nation dwindles, more Americans are joining the military, lured by a steady paycheck, benefits and training. Draft and Recruitment (Military) The last fiscal year was a banner one for the military, with all active-duty and reserve forces meeting or exceeding their recruitment goals for the first time since 2004, the year that violence in Iraq intensified drastically, Pentagon officials said. Army exceeded its targets each month for October, November and December -- the first quarter of the new fiscal year -- bringing in 21,443 new soldiers on active duty and in the reserves. Recruiters also report that more people are inquiring about joining the military, a trend that could further bolster the ranks. Of the four armed services, the Army has faced the toughest recruiting challenge in recent years because of high casualty rates in Iraq and long deployments overseas. Recruitment is also strong for the Army National Guard, according to Pentagon figures. "When the economy slackens and unemployment rises and jobs become more scarce in civilian society, recruiting is less challenging," said Curtis Gilroy, the director of accession policy for the Department of Defense. Still, the economy alone does not account for the military's success in attracting more recruits. The recent decline in violence in Iraq has "also had a positive effect," Dr. Another lure is the new G I Bill, which will significantly expand education benefits. Beginning this August, service members who spend at least three years on active duty can attend any public college at government expense or apply the payment toward tuition at a private university. No data exist yet, but there has traditionally been a strong link between increased education benefits and new enlistments. The Army and Marine Corps have also added more recruiters to offices around the country in the past few years, increased bonuses and capitalized on an expensive marketing campaign. The Army has managed to meet its goals each year since 2006, but not without difficulty. As casualties in Iraq mounted, the Army began luring new soldiers by increasing signing bonuses for recruits and accepting a greater number of people who had medical and criminal histories, who scored low on entrance exams and who failed to graduate from high school. The recession has provided a jolt for the Army, which hopes to decrease its roster of less qualified applicants in the coming year. It also has helped ease the job of recruiters who face one of the most stressful assignments in the military. Recruiters must typically talk to 150 people before finding one person who meets military qualifications and is interested in enlisting. Gilroy said the term "all-volunteer force" should really be "an all-recruited force." Recruiting offices are reporting a jump in the number of young men and women inquiring about joining the service in the past three months. As a rule, when unemployment rates climb so do military enlistments. In November, the Army recruited 5,605 active-duty soldiers, 6 percent more than its target, and the Army Reserve signed up 3,270 soldiers, 16 percent more than its goal. December, when the jobless rate reached 72 percent, saw similar increases in recruitments. "They are saying, There are no jobs, no one is hiring,' or if someone is hiring they are not getting enough hours to support their families or themselves," said Sgt. First Class Phillip Lee, 41, the senior recruiter in the Army office in Bridgeport, Conn. The Bridgeport recruitment center is not exactly a hotbed for enlistments. But Sergeant Lee said it had signed up more than a dozen people since October, which is above average. He said he had been struck by the number of unemployed construction workers and older potential recruits -- people in their 30s and beyond -- who had contacted him to explore the possibility. The Army age limit is 42, which was raised from 35 in 2006 to draw more applicants. |
| blogs.cfr.org/setser/2009/02/02/it-wasnt-just-the-market/#more-4618 Atom 03 The Council on Foreign Relations has launched its very first weblog, The Candidates and the World, which aims to track the campaign through the prism of foreign policy, trade, international economics, and national and homeland security issues out on the stump on a daily basis. It appears that you are using either an older, classic Web browser or a hand-held device that allows you to view our content but may not work with every feature of our site. James Saft of Reuters worries that the crisis will lead to a shift away from the "Davos consensus," especially as the market's power had pulled so many out of poverty. "the stuff underlying the Davos consensus really was pretty good at doing lots of things, not least raising living standards in huge swathes of the developing world. States aren't traditionally all that great at allocating resources either" Reasonable point. But the narrative of the past six years isn't really one defined solely by the retreat of the state and a greater role for markets in allocating resources in the developing world. In both China and many fast-growing (until recently) oil-exporters, the state played an active role in guiding investment decisions. It thus was helping to determine how resources were allocated across sectors. Nick Lardy and Morris Goldstein pointed out a while ago, is financed domestically. And a lot of that investment is financed by the retained earnings of state firms or by loans from state banks. Perhaps all of these investments were done on a purely commercial basis, but there was certainly scope for the state to guide the allocation of resources. And a lot of "private" investment in Gulf came from banks and firms that were either owned by the state or by the "palace." A host of firms borrowed not on the basis of the strength of their own balance sheet but on the perception that they were too close to the state to fail. Dubai is often presented as a model of free-wheeling capitalism. Simeon Kerr and Roula Kalaf of the FT: "Dubai's sprawling business empire spans government institutions and private companies owned directly by Sheikh Mohammed but acting as quasi-government bodies. The ruler has instituted a culture of competition among state-backed companies and insisted they run themselves as private sector entities. In their quest to satisfy his ambitions, the business groups have come to rely heavily on debt - leveraging myriad commercial ventures, from domestic property developments to international acquisitions. Along the way, Dubai's finances have become complicated and the line between ruler and government assets blurred. It turns out that state backed companies weren't borrowing as private sector entities -- or at least no one who was lending them money thought so. They were able to borrow so much largely because of their state backing. And now, given Dubai, Inc's cash flow troubles, Dubai, Inc may soon morph into Abu Dhabi, Inc. Pegging to the dollar as the dollar fell from 2002 to early 2005 produced a large real depreciation in the RMB The RMB then rose v the dollar, but never by enough to fully offset the dollar's fall. The BIS estimates that China's real exchange rate was weaker at the end of 2007 than at the end of 2000 -- even though China's exports grew by a factor of five during this period. The nominal and real depreciation of the RMB encouraged foreign firms to set up shop in China and encouraged domestic investment in the export sector; it is hard for me to believe that as much would have been invested in China's export sector if China had had a different exchange rate regime. China's policies also influenced -- in all probability -- the global allocation of resources. Before the recent crisis, remember, private capital wanted to finance current account deficits in the emerging world, not the current account deficit associated with the US household sector's borrowing need. By holding US interest rates down and the dollar up, China's policies discouraged investment in tradables production in the US while encouraging investment in the interest-rate sensitive sectors that weren't competing with Chinese production. This isn't too say that the US didn't already have a slew of policies in place to encourage investment in housing. It did -- from the Agencies to ability to deduct mortgage interest from tax payments. But the surge in demand for US bonds from the world's central banks reinforced those policies. Larry Lindsey argued -- I think correctly -- that China's policy of spending huge sums - to keep its exchange rate from rising, China often had to spend 15% or so of its GDP buying foreign assets -- to avoid currency appreciation didn't affect overall levels of output or employment in the US, but it certainly affected the composition of output and employment. More money was allocated to home construction (for a time) and less to investment in the production of goods for export than otherwise would have been the case. My point is simple: A lot of global growth during the boom came in countries where the government owned or influenced the domestic banking sector and thus influenced the domestic allocation of credit. And policies that kept exchange rates lower than they otherwise would also indirectly encouraged private investment in those countries export sectors as well as discouraging investment in the export sectors of other countries. Governments were playing a significant role in the allocation of capital even before there was any talk of nationalizing the financial sector of key G-7 countries. Those who attribute the growth of the past several years solely to the market miss the large role the state played in many of the world's fast growing economies. Conversely, those who attribute all the excesses of the past few years to the market miss the role that governments played in financing many of those excesses ... " February 2nd, 2009 at 6:00 pm 1 Ying responds: "the stuff underlying the Davos consensus really was pretty good at doing lots of things, not least raising living standards in huge swathes of the developing world. States aren't traditionally all that great at allocating resources either" Isn't the boom the result of global credit expansion? For me, as the technology gap narrowed significantly between US and Asia countries,there seems to be a diminishing rate of return from global trade for countries all over the world. US was using credit expansion to keep its annual growth rate. China also resorted to credit expansion and increase loans around 10% or so to keep 8 or 9 percent growth rate in recent years. The past successful strategy doesn't guarantee that the same strategy will be successful in the future as the circumstances are evolving and changing. February 2nd, 2009 at 6:01 pm 2 Jian Feng responds: Brad, The influence of exchange rate (RMB/USD in particular) on export must have been exhaustively studied by economists. You seem to believe that the exchange rate plays a big role, but even if RMB/USD appreciated 100%, labor cost in China is still too low. Investors would still prefer opening up a factory in China to produce, for example, lithium batteries, than in the US. Many other factors are involved in shaping the export economy in China. I just changed the battery in my watch yesterday in Target. The sales lady first cited a potential liability to lawsuit as a reason not to do anything to the watch. Then she found that Target actually is still carrying the watch and agreed to change the battery, for $4. I felt lucky, because to change the battery for the more expensive watch that I bought at Macy's, I had to go to another store and spent $20. I am sure that you have been to China and you know how convenient and cheap it is to ask people to do things, more complicated things than changing batteries in watches. All greedy investors did that little investigation before they decide to open up a factory or research institute in China. February 2nd, 2009 at 6:13 pm 3 bsetser responds: Goldman did a study a couple of years back that found a 1% real depreciation increases china's export growth by 1%; most econometric work has found that a real dollar dep... |
| www.bloomberg.com/apps/news?pid=20601089&sid=ahk0bbmaDQm4 Wen Jiabao said the worldwide economic crisis shows "how dangerous a totally unregulated market can be" as he pledged to maintain growth in his country's economy. Gordon Brown in London today, put on a united front with his host and joined him in warning against protectionism, his comments highlight his government's continued antipathy to a totally free market. "It brings disastrous consequences," Wen said through a translator at a joint press conference in London with Brown. "Some economies, they have imbalances in their economic structure. For a long period of time they've had dual deficits, trade deficits and fiscal deficits." Brown and Wen both said that moves towards protectionism in the face of worldwide recession would make matters worse. China needs to export goods to Europe and the US to sustain its growth. In Britain, Brown is facing protests from workers angry at jobs going abroad. "The best attack on protectionism is to demonstrate the benefits of trade," Brown said. Growth at Home Wen said he wanted to maintain growth at home. "If China's economy can maintain steady development, it will be the biggest contribution to the whole world," he said. The Chinese premier earlier promised his country will send purchasing missions to Europe soon in order to combat protectionism and help global trade. "Confidence is the most important thing, more important than gold or currency," Wen, speaking through a translator, told business leaders in London. Wen said his country would send "procurement missions" to Europe "as soon as possible" to "purchase commodities and technologies that we need." He said he hoped these would "help us restore and shore up confidence in the market." |