Ben Bernanke made a stir today with a speech indicating (if you read between the lines) more quantitative easing via increased economic stimulus. There are two violently different schools of thought about this; some see it as the road to Armageddon, others see it as the only way to save us from a Japan-style deflationary malaise. I won’t argue about that, except to say that I think Bernanke had no choice. He is so damned if you do, damned if you don’t, and there’s literally no way out. And so we will continue flooding the system with money and propping it up with IOUs, and we will eventually see some serious inflation (that could still be some months off). There really are no good choices under the current situation.

Which brings me to a very interesting post from Zero Hedge, in which the pundit reads Ben’s mind.

You can really see into his head from reading this speech. He is an academic who thinks he is smarter than everyone else which is why he is in the position he is in. He thinks the key to monetary policy is to trick people into doing things that will hurt them in the end. He believes the mal-investments he intends to push people and institutions into equals economic growth. What surprises me so much about the investment community and the American public in general is that so many fail to understand that we live in a top down centralized economic system much more similar to China in more ways than people want to admit. We look at how the government steers the economy in China and sneer. How are we so different right now?

Well, I still see plenty of differences; we don’t have the outrageous waste and unaccountability of China’s state-owned enterprises, for example. But on the other hand, we are witnessing an unprecedented top-down intervention, for better or for worse. And I don’t see that we have any choice. The only thing that would be worse would be turning off the spigot and risking a complete collapse. Either way, we’re in trouble. You can’t keep printing money and devaluing the currency without eventually seeing some serious inflation. And that seems to be the path we’re heading down. Inflation has some advantages (it makes it easier to pay our debts), and the Fed will do everything in its power to hold off a deflationary depression, though some say we’re already in one.

Bottom line: Be careful with your money, and buy gold (and silver, at least for now – it’s on a tear). Either way, hyperinflation or deflationary depression, gold does well during times of economic uncertainty and doubts about the efficacy of fiat currencies. I am no gold bug (they can be quite scary), I’m just a pragmatist. Printing money may be necessary, but it will have to have consequences that will hurt the dollar. Dollar goes down, gold goes up. Period, full stop.

For the record, I hate economics and know very little about it. but that said, I recommended to all of you back in 2006 that you load up on gold, which I did. Gold was about $680 an ounce back then. Today it’s around $1,240. It may have it’s shaky, scary days, with huge ups and downs. But the trend is upward. The current economic dilemma, the box that poor Ben Bernanke is in, makes its rise all but inevitable.

Read the entire article and its delicious comments.

Update: While you’re at it, definitely check out this article.

The ballet dancer Li Cunxin, the subject of a new film that is on my list for this weekend, writes about how he was discovered at the peak of the Cultural Revolution, how he was trained and how he felt when he first came to the US. His story is absolutely fascinating.

Prior to her losing power, Madame Mao was the Honorary Artistic Director of the Academy. She often visited us, watched our performances and gave orders. One of her strict orders was that we were required to project political values through our dance steps. As a result, our ballet training syllabus was modified and we were encouraged to carry images of the Red Army soldiers in the battleground holding guns or grenades in our hands while we pirouetted and leaped. We had to finish our adage exercise with a death-like eye stare that could spear a capitalist enemy. Madame Mao also supervised some so-called “Model Ballets” such as The Red Detachment of Women and The White Haired Girl. These were ballets full of red colored communist flags with plenty of swords, guns and grenades. It was political ideology gone mad.

Definitely read the whole thing. It’s not long, and it’s not easily forgotten. I especially enjoyed the story of his arrival in the US, a place he was taught was backward and awful. Not long afterward he would vote by foot and stay here.

They’re saying this contraption can ease Beijing’s infamous traffic by up to 30 percent, though special track will need to be laid everywhere. Where was it when I was living there?

From another source:

A prototype of the super bus is expected to roll out onto the road by December, three months after the 40-day-long design phase is completed, the official Global Times newspaper reported today.

It is expected to commence trials on a six-km stretch of road along the West Sixth Ring Road in Mentougou district.

The concept of the ‘straddle’ bus is unique as cars could drive under its huge uplifted passenger compartment between its 2.2-meter-long legs. The two bus legs leave a ‘tunnel’ wide enough for two lanes of small or medium-sized vehicles — 1.55 to 1.6 meters high, in general — to drive right through under the moving bus.

This is definitely an “only-in-China” type of innovation, where size truly matters. More power to them if the eco-friendly super-bus actually works.

Update: Speaking of traffic in and around Beijing, it’s interesting to see that this story of China’s 60-mile traffic jam has gone mainstream.

Photo of the day, Chinese soldiers helping villagers in a flood zone (via weibo, via a friend on twitter):

I admire these men, even if I don’t envy them their jobs.

For anyone who has the time and fortitude, there’s a very long, detailed and brutal post up on Zero Hedge about China’s insane (in the author’s eye) purchase of US debt and its long term implications, all of which, he says, are terrible.

Not being an economist or a prophet, I can’t say whether he’s onto something or not, but it sure makes for some interesting reading. I’m just going to quote the opening and closing grafs for their sheer evocativeness:

Some people in Asia burn joss paper, also called ghost money, on the Lunar New Year, to give their deceased ancestors something to spend in the afterlife. Because ghost money doesn’t represent a claim on any actual goods or services in this world, there is no reason for its issuers to exercise any particular restraint, and in Singapore it is possible to find notes issued by the First Bank of Hell, with the mythical Jade Emperor’s picture on the front, in denominations ranging into the millions and billions of dollars. Perhaps we’re counting on this charming tradition to make Asian investors comfortable with the prospect of continuing to add to their holdings of European and American sovereign debt, despite the obvious fact that the money they’ve already lent us is money they’ll never get a chance to spend in this life….

In fact, despite its façade of capitalism and modernity, the Party is still making Mao’s mistake of acting first and thinking later. Lending a lot of money to people who will never pay you back is only a symptom of the underlying folly – you have to believe in something that isn’t true to believe that such an insane project is going to work out in the way you want it to, and any fixed untrue belief will eventually injure you somehow….

So modern China is a sort of suicide machine, a train to nowhere with no emergency brake. It is deliberately designed to prevent the passengers from being able to avoid a crash. Not only does the Party espouse false beliefs, it seeks to prevent Chinese people from forming their own, true beliefs in the light of all the available information. Now it turns out it has had them all working long days these last many years just to pile up credit with the Jade Emperor. And who’s down there in Hell, spending it all, no doubt on dancing girls and lavish banquets, and laughing uproariously at your present difficulties? Perhaps the Great Helmsman himself, with Jiang Qing pouring out the wine

In order to see how/why he arrives at this extreme conclusion you need to wade through the whole thing.

Let me say straightaway that I have serious issues with this article, which has a decidedly ethnocentric anti-China slant (though it’s none too kind to the US either). Despite the author’s being a post-doctoral fellow at Princeton, the piece is riddled with ridiculous assertions (anyone who disagrees with the CCP’s policies gets sent off to work camps) and asinine references to Tiananmen Square and Chinese history. But his core point about the danger of China’s strategy-free purchase of US debt and where it might lead is quite interesting, and it’s definitely a fun read (as are the comments).

The day we all knew would arrive is here, and according to Evan Osnos of the New Yorker, China doesn’t know quite how to respond.

How did China respond to the exhilarating news that it has sprinted past Japan to become the world’s second largest economy? Here’s what the Global Times newspaper says today, “The world ranking has brought China jealousy and vigilance…. Despite growth in G.D.P, which is only a number, natural disasters will continue to hit China, and American warships and Congress will continue to be aggressive towards China.”

Um—so you’re saying there won’t be cake? While the story has rated front-page treatment in the U.S., it has sent China into a frenzy of self-flagellation, in the hope of reminding people that it is still home to a lot of very poor people.

Obviously China’s new No. 2 status puts the country in a bind and reinforces the conundrum that China is an unbelievably rich and a desperately poor country. It’s awkward for the propagandists who on the one hand want to gloat about China’s ascending status, but who must also make sure the people understand that China doesn’t have the resources to end poverty.

Of course, real poverty (the kind that leaves people morbidly malnourished or even starving) has been all but eradicated in China, but, to put it in the words of a former Washington Post bureau chief, much of China remains “a third-, fourth- and fifth-world country” with a majority of its population living below the poverty line. On the other side of the spectrum we have examples everywhere of those with money to burn. China is so rich, and so poor.

Of course, this is in some ways the oldest story on earth, and we have an increasing and inexcusable divide between the haves and the have-nots here in America, an open wound that’s only going to deepen and fester as unemployment continues to rise in what seems to be direct correlation with the salaries and bonuses dished out on Wall Street. The contrast in China, however, is a bit more dramatic, and the middle class a far smaller segment of China’s demographic. Osnos illustrates this point:

[E]very full-time China observer has had the experience of greeting a giddy visitor for dinner, after he or she has done the Shanghai-Beijing loop or visited a top university. You inevitably end up playing the role of the local grump, trying to talk your glassy-eyed guest down from the chandelier. Standing outside the bus station in Xining earlier this month, watching the migrants stream in and out, I made a note to bring guests who want a fuller picture of China. It’s only a couple of hours by plane from Beijing, and it’s not a red herring. To reverse the roles for a moment, a visit to the Port Authority bus terminal might not showcase America’s best angle, but if I were a Chinese investor trying to understand how America lives beneath the top-line measures of its strength, I would probably want to make the visit.

China’s spin doctors are going to face an even tougher balancing act now as they send out the message that the country has reached a new economic milestone, yet remains in many ways poor and helpless. I like the way James Kynge expressed this contradiction in China Shakes the World back in 2006,

Although China is poised to overtake the UK to become the world’s fourth largest economy, on a per capita basis it ranks just above the world’s poorest nations, with an average income of just over $1,000 a year. Even if the country’s gross domestic product one day becomes as large as that of the US, simple mathematics ordains that its people at that time will on average be only one-sixth as wealthy as Americans.

Look at how far China has come even since then. And none of this is to take away from China’s huge successes and unparalleled growth trajectory. It’s just an important reminder that there’s more than one China, and that as China’s GDP grows, the higher the tightrope will be strung for China’s propagandists who need to convey two distinctly discordant messages. I don’t envy them their jobs.

The geniuses bringing us the Sinica podcasts over at Popup Chinese continue to outdo themselves, with this week’s discussion touching on one of my favorite topics, The Peking Duck and its commenters. More on that in a moment.

The first half of the podcast is an examination of the bizarre story of the fall of the popular Chinese comedian Guo Degang, yet another case study of the excesses of the Chinese media, the group-think of the news manipulators, the effect of the Chinese internet in increasing the decibel level, etc. Listen to the podcast just for that. (And if Guo Degang is the same comedian as the one I referenced in this post from 2.5 years ago, I can confirm that he is truly hilarious; scroll down for the photo.)

It’s in the second half of the podcast, about 16 minutes in, that the issue of China apologists in general and Shaun Rein in particular comes up, with a few references to my post from last week. It appears to have put the estimable Mr. Rein on the defensive, and he delivers an audio “postcard” toward the end of the podcast, explaining, to his satisfaction, why he is no China apologist.

Much of Rein’s defense revolves around the dust-up over this notorious column from seven months ago, published under the Forbes banner and including the usual obligatory plugs for his marketing business. Go back and read it now if you haven’t already. You can’t really understand why Shaun is an issue without studying this column (or my post about it). In particular, his assertion that real poverty has been nearly eradicated touched a number of nerves, an assertion he clarifies in his postcard, explaining he meant there is no longer severe malnutrition and starvation. And I accept his clarification, and I basically agree with him. The only problem is that he didn’t make this clear in his touchy-feely column, which read like a love ballad to China. Had he thrown in the explanation about malnutrition this might have been a non-issue. But this was just one aspect of how Rein tends to whitewash China’s problems and consistently put forward an image of China that must give the CCP multiple orgasms. From the same column:

Like many teenage boys, China still has a few pimples. It needs a few more years in college to fully emerge as an adult. It has new muscles, but it also has much to learn from the U.S. and the rest of the world.

You can’t blame China for its wrongs. Like a teenage boy with raging hormones, it doesn’t have the capacity for good judgment. Let’s give China space. Let China be China.

As for the rest of the postcard: Rein and I actually are more in agreement about China than you’d think. I completely agree with him that the government has done a great deal of good and made huge strides since reform began. I agree that a lot of people in China are happy. I agree that the Chinese people enjoy a high level of personal freedoms (as long as they remember their boundaries). I have posted countless times here that in terms of social freedoms China is up there almost with the US, and in some ways seems even more liberal. (Of course, there are “on the other hands” for each of those claims.)

The problem is when Rein makes gob-smacking and bewildering assertions, as we see in the very first sentence of his column on North Korea:

Perhaps she was spending too much time planning Chelsea’s wedding, but Hillary Clinton’s recent announcement of a strategy to institute more economic sanctions against North Korea was misguided and half-baked.

FAIL. As multiple commenters have pointed out in the comments there, on the comments here and the comments at Modern Lei Feng, this demonstrates shockingly poor judgment for a columnist writing for Forbes. It’s challenging to think of a more sexist opening to an article. Imagine if we were critical of an Obama decision, and started off our critique by saying it was perhaps due to his being too caught up in planning for his daughter’s wedding. Yet this kind of WTF out-of-left-field whopper permeates Rein’s columns – whenever he writes about topics outside his area of expertise.

I have one issue with an assertion made on the podcast by Jeremy Goldkorn. Jeremy is not a good friend of mine, he is a great friend, and for many reasons he is one of those people I would follow off a cliff. But I must take issues with this:

There was a knee jerk reaction on the part of many commentators, and I’m thinking mainly of Richard, who’s a friend of mine at Peking Duck and his followers, who were like, “Obviously this guy is totally insane” – because, for all of those people Kim-Jong Il is the guy who was in Team America, he is a completely ridiculous dictator. North Korea is completely beyond any hope of redemption, and the ony thing to do is put them back in the Stone Age.

For your reference, here is the entire post Jeremy is referring to:

Modern Lei Feng fisks Shaun Rein’s latest creation. (For those of you who are new to this site, here’s my first post about Rein from half a year ago.) Go read the new post now,

I’ve enjoyed several of Shaun’s columns about marketing in China and I respect his obvious intelligence and experience. But he should never, ever be allowed to write about foreign policy or politics or global economics. He’s great when he’s writing about stuff like the 8-story Barbie Doll shop in Shanghai. When he writes about economic sanctions against North Korea, however, he only embarrasses himself.

(And let me add: I embarrass myself every day, and rarely know what I’m talking about. But I’m not writing columns under the Forbes banner. As I make clear in the legend up at the top, this blog is a bastion of “dilettantish punditry and pseudo-philosophy.” I warn everybody about that before they start reading.)

Okay. My question is, what did I say in this post that corroborates what Jeremy said? I mean, even a little bit? Where is my “knee-jerk reaction” to North Korea or any claims about North Korea at all? I looked for it in the comments as well, and I can’t see anything at all that backs up Jeremy’s description. The most people say is they support or don’t support the sanctions. Nothing about Kim or life in North Korea. Maybe I’m missing something. For the record, the position Jeremy attributes to me on North Korea is simply wrong. Apologies if I wrote something to make him or anyone else think otherwise.

Back to the podcast, I found Gady Epstein’s analysis at the start of the “Apologist” discussion to be the most spot-on:

What am I annoyed by with China apologists? When they talk down to people who make critiques by saying, “It’s much more complex than that, you don’t understand – it’s not black and white.” Well, we know it’s not black and white. It starts there, with this kind of patronizing attitude toward anybody who makes a critique of the system.

He doesn’t name names, and I can’t say for sure to whom he’s referring, but his point is an excellent one, If you’re going to make dramatic claims about China, you don’t knock down your critics by saying they don’t understand China, and blocking them on Twitter and dismissing them. You can read Gady’s blog post on the podcast here.

Let me close by saying I’ve had to deal with being called an apologist for three years now. I always strive to give a balanced picture of what I perceive to be happening in China, explaining in my Tibet posts, for example, that you absolutely must look at it from Chinese eyes and put aside romantic Western stereotypes. To some, any positive words about the Chinese government makes you an apologist. So it’s not a term I toss around lightly. I urge you to read Shaun’s teenage boy column and determine whether it crosses the boundaries of admiration and wades into the waters of unabashed apologism. Your call. I won’t say a word.

Another indispensable Sinica podcast over at Popup Chinese. Gady Epstein, Kaiser Kuo, Shannon Van Sant and Jeremy Goldkorn help clear up some of the myths and memes surrounding this multi-headed subject.

Modern Lei Feng fisks Shaun Rein’s latest creation. (For those of you who are new to this site, here’s my first post about Rein from half a year ago.) Go read the new post now,

I’ve enjoyed several of Shaun’s columns about marketing in China and I respect his obvious intelligence and experience. But he should never, ever be allowed to write about foreign policy or politics or global economics. He’s great when he’s writing about stuff like the 8-story Barbie Doll shop in Shanghai. When he writes about economic sanctions against North Korea, however, he only embarrasses himself.

(And let me add: I embarrass myself every day, and rarely know what I’m talking about. But I’m not writing columns under the Forbes banner. As I make clear in the legend up at the top, this blog is a bastion of “dilettantish punditry and pseudo-philosophy.” I warn everybody about that before they start reading.)

Somehow I missed this priceless column in The Global Times (and I thank this blogger for pointing it out).

This extraordinary travelogue tripe article by the former UN ambassador to Bolivia. After gushing over the joys of China liberating the Tibetans from serfdom and the shiny new infrastructure all Tibetans should be grateful for, the author really ramps up the propaganda:

I had a chance to talk to some educators in Tibet. I asked them about the language used in primary education, weary of the alleged loss of the Tibetan language in the formal education system. I was told the kids learn three languages: Tibetan, Chinese and English! I had thought my own children were something of a special case, as they have been learning French, Spanish and Finnish since they started schooling, but I realize these Tibetan kids will be as internationally literate as my children are, with all the same opportunities that will provide them in life.

…Then there was a family of herdsmen; being summer, they were living in their tent (and beside the tent there was a small solar panel for generating electricity enough for hot water, TV, and the lights in the evening), however they told us they already had a fix house in the village, where they would stay during the winter. And best of all: the government is subsidizing 30% of the new housing, which has been built in collaborative efforts by the villagers, and display the characteristics of the traditional Tibetan culture, both in terms of the materials used and the colorful decorations in the main rooms inside.

These houses are very bright, spacious and beautifully decorated. I saw several generations living there together. What I hadn’t realized before is that the life expectancy of a Tibetan used to be a mere 35 years – couldn’t see so many generations there together in the past – whereas now the life expectancy has doubled to 67 years. This is not only an impressive testament of the improvement of the human rights in Tibet during the past 50 years, but it also provides the old folks the opportunity to tell their grandchildren what life was like in the past. They will pass on the best of the Tibetan culture to their grandchildren, and they will also be able to tell how much life has improved since 1959!

Where’s my motion sickness bag?

Check out the very humorous comments to the blog post that led me to this puffiest of puff pieces. I don’t think I’ve ever seen every talking point about Tibet squeezed so neatly (and breathlessly) into a single vessel. It’s fitting that the blogger brings it up in the context of the Ask Alessandro columns; this one is nearly as funny.

For the record: I am not a Free Tibet groupie and I acknowledge the good China has done for Tibet, and the bad. Where I can never stop ragging on The Party is its dopey propaganda efforts to create a perception of modern-day Tibet that is nearly as ridiculous as the Western perceptions based on the James Hilton novel and the sentimental movie that followed it (and which, admittedly, I loved as a teenager; there’s no doubt these works of fiction helped put some serious stars in Americans’ eyes).

I was pretty random in my quote selection from the GT article. Do be sure to read it all.