NY Times Blocked in China

Its all over the news in the outside world, even on the Times own website, but you can't read all about it here in Beijing. Altho accessible early on Friday morning, the New York Times' website soon blanked out. Concerned expats who check in on the website regularly were soon checking in with each other to find out whether they were the only ones with access problems but soon found that they were all in the same boat. A quick experiment with any number of proxy servers, which allow access to banned websites by bypassing the government's web filters, showed the Times' website to be functioning perfectly. Mobile access was, curiously, still unblocked as of Saturday evening. In addition, the Times global edition, the International Herald Tribune, was also freely accessible. In the memorable words of Kurt Vonnegut, "And so it goes . . ."

Chinese Dogs in Jeopardy Again

A few years ago, you may remember, dogs around China were in jeopardy for being, well . . . dogs. If you don't remember all of this, here's a link.

We're getting reports that, at least in Beijing, the police (or, in this case, what we might call "the Dog Nazis") are at it again. Beijing's "finest" (that's the guys in the dark blue uniforms with the shiny badges & the walkie-talkies) are entering living compounds in urban Beijing and strictly enforcing the dog rules regarding size (no medium or larger dogs) and number (only one dog per household). According to information we've been given, foreigners' dogs are not immune to this. Apparently, dogs have been unilaterally seized by the cops. As we get more information, we'll pass it along.

The Fab Four

These are four models showing acupunture spots. I saw them in the panjiayuan market in Beijing a few weeks ago. A favorite haunt for savvy tourists, local expats & Chinese alike, the market opened a few years ago at its present location. Prior to its move, it was known as the "Ghost Market" or the "Dirt Market" because it regularly disappeared. Operating only on Saturday & Sunday mornings, it was a sprawling empty lot where vendors came in from the countryside and spread their wares out on blankets laid on the dirt. In its early years, most of the stuff you could find was either worthless junk or genuine artifacts of a bygone era, peeping out from whatever hole they had hidden in during the Great Leap Forward, the Hundred Flowers Campaign, & (of course) the Cultural Revolution. My always overactive imagination assumed that the sellers had carefully hidden all these things away from the Red Guard and whomever else might covet them. Along with that fantasy, I looked at all the vendors themselves as survivors of the vivid history of modern China. Surrounded now by the sterile towers of post-Olympics Beijing, some of the old-timers are still there. Whether their goods are genuine or not, you'll have to decide for yourself. People say they still find the occasional gem. Altho its now much less of a ghost market & is housed in a sprawling semi-permanent complex of old-style buildings & open air shelters, it still retains some of the flavor & atmosphere of the old market.

It All Depends on Where You Sit!

Listening to people talk about today's economic debacle is very interesting. The Pragmatists seem to be saying, "To hell with Theory; let's do what it takes to save ourselves!" (meaning, jobs, investors, Wall Street, Main Street, bondholders, politicians . . . Whatever section they may be sitting in). At least they're not just thinking of themselves.

Then there are the Moralists who want to stay true to the sentiments of Andrew Mellon, former Treasury Sect'y (1921 to 1932, an auspicious moment in economic history) who famously said, "Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate . . . People will work harder, live more moral lives." In today's terms, that translates as "No bailouts! Let the miscreants suffer for their misdeeds!" Many of the Moralists, of course, seem to have enough resources to weather the storm. Some may even benefit from it. And some, regrettably, seem to me to be living in an alternative universe, oblivious to the ruination they welcome.

And never mind who gets crushed in the aftermath!

The Limits of Econometrics

Altho it doesn't explicitly say so, what we're actually talking about in this article is the limits of econometrics. The idea that economic behavior can be predicted with precision and accuracy using mathematic models. In fact, altho a clearly useful tool, uncertainty can and will raise its unpredictable head. The arrogance of delusion is, all too frequently, ready to assume a leadership position.
-Mike
From the New York Times

December 14, 2008

The Way We Live Now

The Remedist

By ROBERT SKIDELSKY

Among the most astonishing statements to be made by any policymaker in recent years was Alan Greenspan’s admission this autumn that the regime of deregulation he oversaw as chairman of the Federal Reserve was based on a “flaw”: he had overestimated the ability of a free market to self-correct and had missed the self-destructive power of deregulated mortgage lending. The “whole intellectual edifice,” he said, “collapsed in the summer of last year.”

What was this “intellectual edifice”? As so often with policymakers, you need to tease out their beliefs from their policies. Greenspan must have believed something like the “efficient-market hypothesis,” which holds that financial markets always price assets correctly. Given that markets are efficient, they would need only the lightest regulation. Government officials who control the money supply have only one task — to keep prices roughly stable.

I don’t suppose that Greenspan actually bought this story literally, since experience of repeated financial crises too obviously contradicted it. It was, after all, only a model. But he must have believed something sufficiently like it to have supported extensive financial deregulation and to have kept interest rates low in the period when the housing bubble was growing. This was the intellectual edifice, of both theory and policy, which has just been blown sky high. As George Soros rightly pointed out, “The salient feature of the current financial crisis is that it was not caused by some external shock like OPEC raising the price of oil. . . . The crisis was generated by the financial system itself.”

This is where the great economist John Maynard Keynes (1883-1946) comes in. Today, Keynes is justly enjoying a comeback. For the same “intellectual edifice” that Greenspan said has now collapsed was what supported the laissez-faire policies Keynes quarreled with in his times. Then, as now, economists believed that all uncertainty could be reduced to measurable risk. So asset prices always reflected fundamentals, and unregulated markets would in general be very stable.

By contrast, Keynes created an economics whose starting point was that not all future events could be reduced to measurable risk. There was a residue of genuine uncertainty, and this made disaster an ever-present possibility, not a once-in-a-lifetime “shock.” Investment was more an act of faith than a scientific calculation of probabilities. And in this fact lay the possibility of huge systemic mistakes.

Read the rest of Skidelsky's article here.