This is an intriguing article from China Daily, written by a government researcher. It sheds some light on the question the whole world has been wondering about lately, i.e., how will China react to the collapse of America’s leading financial institutions at a time when it’s so heavily invested in US dollars? I am wondering if it’s representative of the government’s concerns, and whether it’s hinting at things to come.

The US government has its own criteria in determining what it ought to rescue, and Lehman Brothers was left to its own devices because of its high proportion of foreign investment.

As a result, foreign investors suffered more than their US counterparts from the collapse of the century-old financial body.

As the crisis unfolds, more American financial bodies are expected to follow in Lehman Brothers’ footsteps, with Asian nations and oil exporters holding a large sum of dollars expected to be the greatest victims….

The US financial crisis leads us to ask some questions.

First of all, is it the end of US financial hegemony? In addition to the latest financial crisis, the US has so far experienced another financial crisis since the turn of the century – the bursting of its technological bubble. Many foreign investors have suffered heavy losses in these two crises. Some economists even warned that such cyclical formation of bubbles will seriously compromise foreign investors’ confidence in the US financial market.

Second, what losses have Chinese financial bodies suffered as a result of this crisis? Available data shows that Chinese financial bodies had not purchased that many mortgaged US financial derivatives, and will therefore not suffer too many losses from this crisis. So, it is impossible for the country to be plunged into an economic recession like Japan in the 1980s.

More questions, more reflection, and a few hints of the usual propaganda (sense of victimhood, China is invulnerable to recession, conspiracy to protect US investors at foreign investors’ expense) so you may want to read it all. As my source [blocked in the good old PR of C] for this article writes,

What could be more unnerving than having your largest creditor begin pondering your financial demise?

“Indeed.” If this writer is speaking for the Chinese government, there are some grim implications here.

I’ve been avoiding China’s milk scandal because so many other blogs have done such a great job covering it. But today’s story in the NY Times simply must be read to be believed. It’s one of those detailed investigative pieces that remind us great newspapers are absolutely indispensable.

We all remember how the government knowingly suppressed the fact that SARS was a danger in Beijing in 2003 so as not to cast a negative light on their annual National People’s Congress, right? (If not, search through this blog archives from January – April 2003.) Well, as that crisis ended many of us said it heralded a new age of transparency, when the government would never again deliberately hide information from its citizens about health risks that could kill them.

Fast-forward to 2008, and we learn that the same script is replayed. This time its an event even more important than the NPC, it’s the Olympic Games, China’s launchpad, the dawn of a new day for the rising superpower. And so once more the government lied and covered up, and once again innocents were the victims. Just a sample of the intensity of this article:

Fu Jianfeng, an editor at one of China’s leading independent publications, Southern Weekend, recently used a personal blog to describe how his newsweekly discovered cases of sickened children in July — two months before the scandal became public — but could not publish articles so close to the Games.

“As a news editor, I was deeply concerned,” Mr. Fu wrote on Sept. 14. “I had realized that this was a large public health disaster, but I was not able to send reporters to do reporting.”

Even earlier, on June 30, a mother in Hunan Province had written a detailed letter pleading for help from the food quality agency, the General Administration of Quality Supervision, Inspection and Quarantine. The letter, posted on the agency’s Web site, described rising numbers of infants at a local children’s hospital who were suffering from kidney stones after drinking powdered formula made by Sanlu.

The mother said she had already complained in vain to Sanlu and local officials.

“Urgent! Urgent! Urgent!” she wrote. She called on Beijing authorities to order a product recall, release the news to the Chinese media and provide medical exams for babies who had consumed Sanlu formula. “Please investigate whether the formula does have problems,” she wrote, “or more babies will get sick.”

Reading the article will sicken you. It is apparently “an open secret that milk was adulterated….Some dairies routinely watered down milk to increase profits, then added other cheap ingredients so the milk could pass a protein test.” Sanlu knew, the government knew, the media knew – and still there was silence. Only when New Zealand started to voice concerns and it became a global issue did the government finally respond.

We all know of companies elsewhere selling products they know are harmful. Merck and its painkiller Viox is a classic example. It is rare, however, to have so many people in the know, including government and the media – the supposed watchdogs – while the public is kept in the dark, continuing to poison their own children. I wrote back then, in 2003, words that I regretted later. I don’t think I was right – it is far too simplistic and black/white; however, reading this Times article, I understand again exactly how I felt as I wrote those words:

As I prepare to leave this country, I worry less and less about telling the truth. To say that another way, I have always tried to tell the truth here, but often I felt I had to tone down my rancor, soften the blows. Right now, I just don’t care, and I want whoever happens to stop by this little site to know the truth about China, or at least what I perceive that truth to be: China is the Evil Empire, a tottering, power-drunk, paranoid nation of thugs dressing themselves up as saviors — a bad country. It was for the bastards we saw smiling and waving at the “People’s Congress” that my God made hell.

Knowing full well that this was dramatic in the extreme, with the potential to be misread, I immediately added an addendum. I couldn’t condemn all of China because there was so much here that I loved. (And I don’t apologize for being dramatic – the situation was dramatic, as is the present situation.)

Footnote: I refer only to the Chinese government here. The people I know here are gracious, kind and good. They know, to a large extent, what their “leaders” are all about. Luckily for these good people, the SARS fuck-up has been of such great magnitude that it could end up resulting in long-term change and improvement here. Maybe. It has certainly opened the eyes of the world as to what “the new China” is all about.

This article, like Philip Pan’s book, reaffirms my belief in the goodness of the Chinese people, and the badness of many who govern them. Read it and see. It’s just so terrible that those over-wrought words I wrote about the government then, in 2003, half a decade ago, apply with just as much power and accuracy today. And those men who allow this to happen and tell the media to lie to the people, knowing those lies can result in death – well, let’s just say it was for them that my God, if I believed in one, would have made hell.

China is changing? China is getting better? I see it all the time, I hear it all the time, I say it to myself. I say it so often I get narcotized by it, like a chant. And then I see the closing line of today’s great story:

This week, China Central Television, the government network, has been offering reassurances that the dairy products still on the shelves are safe

And I wonder. And I ask myself how far this country really can go, even if America’s economy disintegrates. Like America, China needs a stable-sweeping on a scale hitherto unimaginable. Can it happen? It has to, at least at some point, if China is to be a true superpower. As in America, the future of the nation depends on it. I see it (the stable-sweeping) coming to America, and it will be painful. I don’t know when it will come to China, but it can’t be a moment too soon. Catastrophes like this can make the whole house of cards fall down.

Nearly 1am. Hope all the different points I wanted to pull together formed a cohesive whole. I’m too tired to tell.

No, not really. That’s the headline I was hoping to write. But now that you’re looking….

I only saw a small portion of the debate live, and that was via my PC, followed by lots of pre-recorded bits and piece later in the day. Based on that, I would have to join the consensus and call it basically a draw, with Obama “winning” because he seems to have won over more undecideds than McCain.

Both did well (or well enough) and both achieved their most necessary goals:

McCain showed he is basically in control of his faculties and bodily functions (the Palin selection made a lot of us wonder), and that he has a decent grasp of the issues.

Obama showed he can speak articulately without a teleprompter, and succeeded in coming off as an erudite, likable and trustworthy centrist. Personally, I don’t think this is the right time for a centrist, but here we are.

No matter what we thought about the debates, one inescapable conclusion all of us can agree on is that McCain’s behavior prior to the debates was unsettling, to say the least. Maybe “deranged” would be more like it. Canceling the debate on the grounds he’s needed for the economic emergency (he wasn’t) – such a dire emergency for an economy he just said was fundamentally sound?? Flip-flopping and doing the debate?? Canceling his appearance with Letterman at the last minute?? (I presume all of you have seen the hilarious Letterman responses. Talk about backfiring.)

There’s a reason why McCain seems to be losing his mind: The day of the debate and the day prior brought to the foreground the most galling and unforgivable of McCain’s excesses, namely the selection of Sarah Palin as his running mate. Thanks to the interviews she held on TV, I no longer need to tell anyone why I feel she is unacceptable and even dangerous. She can tell you that in her very own words:

COURIC: Why isn’t it better, Governor Palin, to spend $700 billion helping middle-class families who are struggling with health care, housing, gas and groceries? Allow them to spend more, and put more money into the economy, instead of helping these big financial institutions that played a role in creating this mess?

PALIN: That’s why I say I, like every American I’m speaking with, we’re ill about this position that we have been put in. Where it is the taxpayers looking to bail out. But ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up our economy. Um, helping, oh, it’s got to be about job creation, too. Shoring up our economy, and putting it back on the right track. So health care reform and reducing taxes and reining in spending has got to accompany tax reductions, and tax relief for Americans, and trade — we have got to see trade as opportunity, not as, uh, competitive, um, scary thing, but one in five jobs created in the trade sector today. We’ve got to look at that as more opportunity. All of those things under the umbrella of job creation.

I want everyone to go over this sentence and savor each syllable:

But ultimately, what the bailout does is help those who are concerned about the health care reform that is needed to help shore up our economy. Um, helping, oh, it’s got to be about job creation, too.

She has a list of talking points, and she is frantically trying to pluck the right one, but she jut can’t do it. She simply doesn’t have the breadth of knowledge or depth of understanding to play global politics. This is not a one-time fluke. If you check around, some of the most outspoken (and irritating) female conservative bloggers are saying Palin was and is an out-and-out disaster, and unfit for command.

But as always, I want to put the blame where it squarely lies – on McCain, not Palin. Like his temperamental on-again/off-again decision on the debates, his selection of this profoundly unqualified amateur underscores a dangerous predilection for shooting from the hip and thinking through the consequences later, if at all.

No complaints. Poison pill Palin is now McCain’s kiss of death, a very heavy albatross tied tight around his neck. As conservative Kathleen Parker says:

It was fun while it lasted.

Palin’s recent interviews with Charles Gibson, Sean Hannity, and now Katie Couric have all revealed an attractive, earnest, confident candidate. Who Is Clearly Out Of Her League.

No one hates saying that more than I do. Like so many women, I’ve been pulling for Palin, wishing her the best, hoping she will perform brilliantly. I’ve also noticed that I watch her interviews with the held breath of an anxious parent, my finger poised over the mute button in case it gets too painful. Unfortunately, it often does. My cringe reflex is exhausted.

Palin filibusters. She repeats words, filling space with deadwood. Cut the verbiage and there’s not much content there. Here’s but one example of many from her interview with Hannity: “Well, there is a danger in allowing some obsessive partisanship to get into the issue that we’re talking about today. And that’s something that John McCain, too, his track record, proving that he can work both sides of the aisle, he can surpass the partisanship that must be surpassed to deal with an issue like this.”

When Couric pointed to polls showing that the financial crisis had boosted Obama’s numbers, Palin blustered wordily: “I’m not looking at poll numbers. What I think Americans at the end of the day are going to be able to go back and look at track records and see who’s more apt to be talking about solutions and wishing for and hoping for solutions for some opportunity to change, and who’s actually done it?”

If BS were currency, Palin could bail out Wall Street herself.

If Palin were a man, we’d all be guffawing, just as we do every time Joe Biden tickles the back of his throat with his toes. But because she’s a woman — and the first ever on a Republican presidential ticket — we are reluctant to say what is painfully true.

…Only Palin can save McCain, her party, and the country she loves. She can bow out for personal reasons, perhaps because she wants to spend more time with her newborn. No one would criticize a mother who puts her family first.

I said within a day of her being named that she would self-destruct and take McCain down with her. One needn’t be a seer to predict the obvious, but I remain baffled as to why so many people actually saw her as an asset, as a great choice to possibly be president of the United States. Aside from the announcement’s surprise effect, it was clear from the first that this was going to be a catastrophe. Still, I’m sure it was purely coincidence that McCain’s first suggestion was to cancel the vice-presidential segment and replace it with one of the postponed presidential debates.

Read the Catie Kouric interview again. Better yet, watch the whole thing. Imagine what’s going on in McCain’s head as he visualizes her standing up in front of a hundred million people and matching wits with Biden. As he looks at the Couric interview, does he think he made the best possible decision? Do any of you?

Update: As The Duck presciently noted back almost a month ago in this comment, this was sooo predictable:

Meanwhile, the big story here, as stated earlier, is about McCain, not Palin. Watching them scramble now to vet her is kind of amusing and definitely pathetic. They fucked up with their first major decision, and now much of the election going forward will be about defending Palin. Will this make her a sympathetic figure? To some. But in the light of America’s economic catastrophe, two wars, lack of health insurance, rising unemployment and in general a country deep in the shitter, it’s just a distracting sideshow that will further keep McCain from articulating why he would make the better president.

Truer words were never spoken.

Here it is. So light there’s almost nothing there. Shocking.

You are what you eat, and whether you know it or not, you are eating a lot of food (and other stuff) that’s made in China, or so says John Pomfret.

If the [milk] scandal illustrates anything, it’s that China’s product safety system is woefully ill-equipped. And that’s pretty sobering news from a country which is the second biggest supplier of goods to the United States.

A big chunk of that is food. From 1996-2006, U.S. imports of Chinese food, agricultural, and seafood products increased 346 percent to 1.833 milion tons. China is the third leading supplier of food (after Mexico and Canada) to the U.S., and the second biggest supplier of fish. Drugs and vitamins, too.

That vitamin C you’re popping each morning? Chances are the ascorbic acid was Made in China. In the past several years, the number of FDA-registered drug manufacturers in China has nearly tripled. They went from 440 in 2004 to almost 1,300 in 2007….

The Bush administration made the obligatory noise about cracking down on Chinese goods. But the reality was that, according to a series of agreements signed between the Bush administration and the Chinese government in Beijing in December of last year, no significant new American resources are going to be devoted to dealing with the problem. The onus is on the Chinese to clean up their act.

Just as we we’re told we should trust Paulson to take care of a trillion-dollar loan, so too should we leave it to China, on blind faith, to make sure all that food they’re sending us is safe. And for a long time, that’s what we did. Now, I am sure my friends in California and Arizona are going to think twice before they buy those frozen tilapia filets at Trader Joe’s. Which is tragic for China. But that’s what happens when greedy businessmen decide to cut some corners and make some extra yuan, even if cutting those corners leads to the death of infants. Other businesses, even the law-abiding ones, will suffer. Once again, the carelessness and selfishness of a few will lead to hardship for many. (Hard to tell whether I’m talking about the sub-prime debacle or Chinese food exports.)

And now, I’m going to check where those vitamins in my cabinet are made. (Just out of curiosity. After all, I live here and just about everything I eat is made in China.)

Please watch this clip. Make your friends watch it, too.

Kaiser Kuo posted this video link on another medium, and you simply have to go there. Absolutely electrifying.

Sorry for the missing link! It was midnight when I put that up. Corrected.

I hereby make a resolution never to post anything without previewing it and testing the links.

Remember that Bush slogan? This was going be the time when people and businesses would be responsible for themselves, without the government clinging like a monkey on their backs. The free market would set things right and, unfettered by bureaucracy and unspoiled by handouts, America would prosper like never before.

Well, it didn’t exactly turn out that way, did it?

I’m not sure how many of you have heard of Danny Schechter, a Nieman Fellow at Harvard, former 20/20 producer and reporter, winner of several Emmys and one of the smartest critics of the American media on the planet. I used to link to him until about 2006, when he fell off my radar screen.

Now he’s back on my radar screen. I just read one of his articles that is so terrifying, I have to conclude Schechter is either clinically insane or a prophet. If you want to google around, you’ll see that he is highly respected and has a rather incredible track record when it comes to dissecting what’s actually going on in the world (as opposed to what we see in the media).

Anyway, all of that was just a way to lead up to to this link. This is about as over the top as one can possibly get – or so it seems. But it would also have been over the top six months ago to even think, let alone to say out loud, that Bear Stearns, Merrill Lynch, Lehman Brothers, AIG and others (many more to come) would crumble one right after the other. Totally over the top.

Schechter says we may be on the verge of a civil war. Normally this type of alarmist talk would make me laugh my head off, but not in a week when I read that the domino effect of the subprime crisis could soon lead to similar meltdowns around the globe.

But back to Schecter’s post. Just a short snip:

Some are saying that because of this dire emergency, the election could be “postponed.” That may be too unlikely and unnecesary, especially if it is fixed or if both candidates sign on to the PLAN, what ever it is. We don’t even know the details yet but both McCain and Obama are aboard as you may have seen on 60 Minutes Sunday night.

This seems to follow the pattern layed out by Naomi Klein–create a shock and disorient the normal processes of government to impose emergency rules by fiat. It is shocking, but few in the media are even presenting the voices of critics who feel this way.

This measure is being sold as a way to help everyday Americans but the first time that members of Congress wanted the bailout to apply to distressed homeowners, Tresasury Secretary Paulson’s predictable response was a big fat NO WAY.

Thanks a lot.

This power grab has a name—“the troubled assets relief program” or TARP. Gretchen Morgenson of the NY Times compares this tarp to others, “the kind of thing they spread over muddy fields so you don’t spoil your Guccis.” This is also a tarp they seem to be pulled over the eyes of the American people and its Congress as the fear weapon is used again as it was after the last 9/11.

He goes on to say an actual armed insurrection in America is not out of the question in the weeks ahead. Yes, I know how nuts that is sounds. But this guy is not a fool and he’s not crazy. Of course, he may be totally wrong (I sure hope so), but he’s got credentials and he’s equal opportunity – he goes after Obama’s campaign manager without mercy. (Scroll down in that post to find the Schechter quote.)

So I am not saying I agree, only that I am listening and wondering, just how serious is the crisis we are in? Are we on the verge of a precipice as steep and equilibrium-eradicating as 911? It doesn’t feel quite that severe, but can anyone read the headlines and say there isn’t a surreal mood settling in around the nation, a state of angst and confusion, as if we were heading into an uncharted and possibly dangerous territory? I can only relate it to 911 because that was perhaps the only time in America, ever, that I had to ask myself, What the fuck is going on? Is this a dream or reality? What is happening to the world? Today, especially after reading Schechter’s piece but even by simply reading the headlines.

And do keep an eye on gold.

If you think so, what would you say about this?

Senator John McCain’s campaign manager was paid more than $30,000 a month for five years as president of an advocacy group set up by the mortgage giants Fannie Mae and Freddie Mac to defend them against stricter regulations, current and former officials say.

The story isn’t that McCain has a campaign manager who was dedicated to deregulating one of the lynchpins in this crisis. The story is McCain’s sanctimonious and unbelievably hypocritical finger-pointing at Obama for his ties to Fannie Mae, the “tie” being that the leader of Obama’s VP search was head of the quasi-governmental organization. If that’s reason to link Obama to the Fannie Mae disaster, which was years in the making, then what does today’s revelation do to McCain? McCain chose to play guilt by association, and based on his own rules he’s looking very guilty.

Just one more example of McCain’s descent from being (or appearing to be) the tell-it-like-it-is “maverick” to a nasty, hypocritical, quick-to-smear liar. He’s my senator; I’m ashamed of him. You should be, too.

MoDo has written a splendid column. As it starts, you groan because she seems to be using her usual cheeky tricks. And then it picks up speed and gravitas. I know, Maureen set the bar kind of low, but this is her magnum opus. First time in years I’ve read one her columns and ended up angry – and not at her.

Have to add the money quote – a long one.

OBAMA: What would you do?

BARTLET: GET ANGRIER! Call them liars, because that’s what they are. Sarah Palin didn’t say “thanks but no thanks” to the Bridge to Nowhere. She just said “Thanks.” You were raised by a single mother on food stamps — where does a guy with eight houses who was legacied into Annapolis get off calling you an elitist? And by the way, if you do nothing else, take that word back. Elite is a good word, it means well above average. I’d ask them what their problem is with excellence. While you’re at it, I want the word “patriot” back. McCain can say that the transcendent issue of our time is the spread of Islamic fanaticism or he can choose a running mate who doesn’t know the Bush doctrine from the Monroe Doctrine, but he can’t do both at the same time and call it patriotic. They have to lie — the truth isn’t their friend right now. Get angry. Mock them mercilessly; they’ve earned it. McCain decried agents of intolerance, then chose a running mate who had to ask if she was allowed to ban books from a public library. It’s not bad enough she thinks the planet Earth was created in six days 6,000 years ago complete with a man, a woman and a talking snake, she wants schools to teach the rest of our kids to deny geology, anthropology, archaeology and common sense too? It’s not bad enough she’s forcing her own daughter into a loveless marriage to a teenage hood, she wants the rest of us to guide our daughters in that direction too? It’s not enough that a woman shouldn’t have the right to choose, it should be the law of the land that she has to carry and deliver her rapist’s baby too? I don’t know whether or not Governor Palin has the tenacity of a pit bull, but I know for sure she’s got the qualifications of one. And you’re worried about seeming angry? You could eat their lunch, make them cry and tell their mamas about it and God himself would call it restrained. There are times when you are simply required to be impolite. There are times when condescension is called for!

“Heh. Read the whole thing.”