Sapiens and sperm count

This news-story in FT caused a flutter as it documented that male sperm count has fallen drastically in western countries. It might be truer of other societies too. Stress and chemicals are supposed to have played a role – “prenatal chemical exposure, adult pesticide exposure, smoking, stress and obesity,”

The BBC version of this story said that the sperm count drop could make humans extinct. Well, other living organisms might get a new lease of life. Yuval Harari had written in ‘Sapiens’ that wherever Sapiens set foot, they had destroyed the living organisms that had been existing there for thousands of years. So, may be, this is what Planet Earth needed.

Of course, these stories would prompt granular analysis – geographical, ethnic and religious breakdown of the population that is witnessing sperm count reduction or not, etc.

(2) My friend Nitin Pai wonders (or makes a plaintive appeal to China) why China is willing to alienate 500 million Indians. I doubt if they see the Doklam standoff that way. On his part, the President of PRC has answered him. The question he is asking is why 500 million Indians are alienating 1.3 billion Chinese by not paying homage to them and acknowledging that they have reached a historical turning point?! The article in the ‘South China Morning Post’ reminded me of this.

(3) Little over two weeks ago, I wrote in MINT that the U.S. dollar was still the king. In June, I had questioned the euphoria over Europe.  I am not resiling from both the positions. But, I have to add caveats. Perhaps, I was engaged in cognitive dissonance reduction since I was short Euro vs. U.S. dollar.

After some analysis and reflection today, I have come to the conclusion that, although the U.S. dollar should be supported by the rising real interest rate differential to the Euro, political leadership and policy competence perceptions seem to be tilted in favour of Europe, even if only relatively. Further, in both the regions – America and Europe – there is no interest in their political leaderships to halt the trend in the US dollar – Euro exchange rate. Germany, with its 8.5% current account surplus/GDP ratio is happy to see the currency rise rather than having to undertake fiscal stimulus in an economy that is already operating at full capacity.

American thinking in the present administration favours a weak U.S. dollar. So, for now, the path of least resistance for EURUSD, therefore, is up. But, after reading the Article IV report of the International Monetary Fund on the Euroarea, I was pleased to note that this column of mine still remains valid. The Eurozone is still far from being an Optimal Currency Area.

Farewell to Lucy

Lucy Kellaway will no longer be working full time for Financial Times. She penned her ‘farewell’ column three days ago and these lines prompted me to write the following comment under the column:
As I sit down to write this last column, I feel so wobbly I can hardly put one word in front of another. This has taken me quite by surprise. so long ago, I have had ages to get used to the idea. And it is not as if I am regretting it. [Link]
dear Lucy, whether you realise or not, in these sentences above, you had debunked the idea of ‘rational expectations’ theory that ‘Homo Economicus’ types peddle, even now, after multiple crises and tonnes of evidence to the contrary.  You had just added one more to that pile of evidence. No matter how well and early information is available,  it does not get ‘discounted’ (or, ‘digested’) continuously, seamlessly and uneventfully. The emotions are there.
They matter and they will elicit certain responses from us which may not be strictly ‘rational’ but entirely valid. Certainly, we will miss your columns and, I am sure, many here have said this before me: you were one of the reasons why we hung on to FT. There are still a few journalists who have the ‘pull’ factor but equally, FT has many more now who wield the ‘push’. Your departure has tilted the balance in their favour, perhaps. We will see.
I remember one of your columns a while ago about life being too long these days for us to spend it on one thing that we started doing in our youth.  You are actually putting your words into action. I am happy to take a bet on you enjoying the experience as would your students. Best wishes.

Parsing ‘The Economist’

The Economist has a special report on India-Pakistan relationship. There is an ‘opener’ or ‘warm up’ article for it.

(1) Key sentences are these:

India’s loss of patience is understandable. It has a population six times Pakistan’s and an economy eight times as big, yet it finds itself being provoked far more often than it does the provoking.

That is the truth.

(2) Just such a cycle started in late 2015, prompted, perhaps, by a surprise visit to the home of the Pakistani prime minister, Nawaz Sharif, by his Indian counterpart, Narendra Modi.

The article fails to mention Modi’s invitation to all SAARC Heads of Governments for his inauguration.

(3) After a routine operation, the adversary may or may not escalate; after a publicised operation he will have only one option: to escalate,” writes Pratap Bhanu Mehta, one of India’s more thoughtful intellectuals.

Unconvincing because it fails to show diplomatic, political and military gains, if any, from ‘routine operations’ that were not ‘publicised’ in the past.

This asymmetry is hard to ​justify and blaming India is quite illogical. N
o reciprocity for good gestures but retaliation for aggressive gestures suggest that the problem lies elsewhere and not with India.

(4) Worryingly, Pakistan also rejects the nuclear doctrine of no first use. Instead, it has moved to deploy less powerful nuclear warheads as battlefield weapons, despite the risk that fallout from their use might harm its own civilians.

India does espouse a no-first-use nuclear doctrine, but its military planning is said to include a scenario of a massive conventional blitzkrieg aimed at seizing chunks of enemy territory and crushing Pakistan’s offensive capacity before it can respond.

Well, the contrasting positions between both countries in their espousal of the ‘No first use’ doctrines has not been brought out strikingly enough.

Planning will always be needed, for all scenarios. So, what? India’s military planning does not dilute its ‘No first use’ doctrine and second, more importantly, it cannot be open-ended and unconditional, indefinitely.​ See (1) above.​

(5) For India, enmity with Pakistan has fostered a tilt away from secular values towards a more strident identity politics.

Just a random observation without basis. I am leaving it at that because the refutation must trace the pre-Partition and post-Partition Indian politics. The only thing I can recommend is that ‘Economist’ editors read portions of Christopher Caldwell’s book, ‘Reflections on the revolution in Europe’

(6) In turn, India, because of the constant aggravation from Pakistan, has become bad-tempered with its smaller neighbours.

Well, not quite true. India has mended its relations with Sri Lanka and Bangladesh considerably. Indeed, Pakistan has made SAARC a useless association.

(7) And it is no surprise that Pakistan has opened its arms to China, which is offering finance, trade and superpower patronage.

Having written in the previous sentence that India suffers constant aggravation from Pakistan, this sentence appears to blame India for Pakistan’s tilt towards China. It has got the cause-effect completely wrong. It is mendacious, in fact.

Pakistan is turning to and is being encouraged by China to aggravate India. One of the earlier sentences in this article clearly acknowledged that India was more a victim of Pakistan’s provocations than a provocateur itself. See (1) above. In that sense, this final sentence is contradictory.

Asia in the fast lane?

In a piece, he wrote for ‘Project Syndicate’, Prof. Kaushik Basu, former Chief Economic Advisor to the Government of India made the following prediction:

in 50 years, I predict that the world economy is likely (though not guaranteed) to be thriving, with global GDP growing by as much as 20% per year, and income and consumption doubling every four years or so. [Link]

I am happy to take the other side of the bet, if there is one.

But more than that, what caught my eye was this:

From 1500 to 1820, according to data collected by the late Angus Maddison, the world’s annual growth rate was just 0.32%, with large sections of the world experiencing no growth at all….Industrial Revolution, which lifted average annual global growth to 2.25% from 1820 to 2003?

The Angus Maddison database at the website of Groningen Growth and Development Centre did not give me information for the year 1500. Second, it only gave me per capita GDP for individual countries and regions measured in 1990 PPP GK (Geary-Khamis) dollars. The Excel sheet I could download had information starting only from the year 1820 (see link above).

On that basis, world per capita GDP (1990 GK $) experienced a CAGR of 1.27% from 1820 to 2010. Asia’s number 1.26%. For the world, the pre-WW I (1820-1913) growth rate was 0.84% and post-WW I (1913-2010), including the war periods, the growth rate was 1.69%. Double.

For Asia, the difference is more striking. The comparable figures were 0.15% and 2.34%.

It gets even more interesting if one split the data into two periods, 1820-1950 and 1950-2010. For the world, the growth rate in per capita GDP (in 1990 GK $) for the first 130 years since 1820 was 0.84% per annum. For the next 60 years, it was 2.21%.

It is more striking for Asia. The comparable figures are 0.10% and 3.84% respectively. Amazing speed of growth and catch-up. Put it down to Japan and China, post-1950. Roughly, the first thirty years from 1950 was the story of Japan and the next thirty years, it has been the story of China. What comes next? Who comes next?

Indian monsoon

I had spent two days in Munnar where monsoon was at its best. The descent from the highlands to Coimbatore for the first two to three hours was heavenly. That was on July 8. It became progressively drier and warmer as we reached ground level. Then, all talk in Coimbatore was about how dry and disappointing the monsoon had been.

One of our drivers lamented that, when he was young, he would not be able to ride a scooter without a heavy sweater or jacket beyond 2:30 PM in the afternoon because it used to be so cool due to rains and cooler breezes. Not any more. They used to have a tough time removing the moss or dampness from walls. Not any more. Drawing water from wells used to be about dipping a bucket or a plastic mug without bending too much. Not a fat chance.

A long-standing Pollachi resident told me that this ‘shock’ is probably needed. He said that sowing of rice, without a care in the world, used to happen. Even those who used to think or warn about so much of paddy cultivation with its water intensity were dismissed as fear mongers because, well, Coimbatore and Pollachi were not Ramnad Districts, you see. Now, Ramnad climate has come to Coimbatore! He feels that this is what would make the people of Coimbatore-Pollachi take water conservation seriously and think about what they are cultivating, when and how much.

I am writing so much about Coimbatore because my mother lives there now and I have begun to visit that place. Done so twice this year already. Chennai and Madurai were sweltering. Madurai used to witness cooler months of June and July because of the monsoon in Kerala. Now, this year, Kerala has a shortfall of 23%. That is ‘deficient’ as per IMD in India. The shortfall had reached 24% by July 13. So, the ‘good news’ is that, as of 22nd July 2017, had not worsened! Kerala had a bad SW monsoon in 2015. Data for that are available.  See table 12 in page 26 in the link given. Check out Table 26 of the report for State-wise, district-wise, month-wise rainfall data. Data for 2016 are not yet available.

Tamil Nadu is a different story. It had a decent NE monsoon in 2015. Perhaps, quite good for most districts. But, we must remember that it poured on a particular day in December 2015. So, how well temporally distributed the rainfall was is hard to say.

In 2017, Tamil Nadu had a shortfall of 6% by 12th July. It had widened to 19% by 19th July and to 21% by 22nd July. All these figures are for the period 1st June to the respective dates mentioned. You can get these data from the IMD website with a little bit of exploration. They have a weekly weather report and, thanks to my friend Harikiran, I learnt that they have a daily rainfall score card too.

According to the Tamil Nadu State Agricultural Department, the foodgrain production in 2016-17 was estimated at 60.34 lakh tonnes, down from 113.69 lakh tonnes in the previous year. The figure is the ‘fourth advance estimate’ for 2016-17. The news-story is here. So, clearly, 2016 was not a good monsoon year for Tamil Nadu – SW or NE.

Tamil Nadu appears to have had it bad in 2016 and, so far, in 2017, it has not had it good with SW monsoon after what it appeared to be a promising start in June.

Singapore weather and climate

Just caught up with the Singapore annual climate assessment reports of 2015 and 2016.



There has been a warming trend over Singapore over a number of decades. The
average rise is 0.25ºC per decade from 1948 to 2015. This is higher than the global
warming rate of 0.12ºC over a similar period (1951 to 2012).

(If one looked at figure 9 on page 7, we would notice that Singapore’s warming trend accelerated from the 1980s. Price to pay for ‘development’)

2015 was the joint warmest and 2nd driest year on record for Singapore. 2015 set new monthly records for the warmest July and December; and tied the records for warmest October and November.

For Singapore, 2015 tied with 1997 and 1998 as the warmest years on record. Eight of the ten warmest years in Singapore have occurred in the 21st century and all have occurred since 1997.

Increasing frequency of warm nights and decreasing frequency of cooler nights. In this regard, 2015 and 2016 were literally off the charts! (See figures 10A and 10B in 2015 and figures 13 and 14 in 2016).

Singapore has a tropical climate which is warm and humid, with abundant annual rainfall of about 2400mm. Generally, the eastern parts of Singapore receive less rainfall
compared to other parts of the island. (Damn!)


2016, with a mean annual temperature of 28.4°C, is Singapore’s warmest year on record since 1929. This is 0.1°C higher than the previous joint record set in the years 2015, 1998 and 1997. All months in 2016 recorded mean temperatures above the 1981-2010 climate normal. With on-going global warming, new record temperatures for Singapore are increasingly more likely. (Oh, well!)

Singapore’s temperature displays a stronger long-term warming beyond average global land temperature. Being a city state, Singapore has been impacted by other human activities influencing the local climate. For example, urbanization cannot be easily identified as it is not possible to measure what the temperature increase would be without the urbanisation effect which is contained within the station network observations. Thus, although greenhouse warming has contributed to the rise in temperature over Singapore, it does not account for all of the increase; urbanization has played a role in the warming over Singapore as well, as measured by MSS’ network of instruments. Most of the additional warming however (when compared to the global warming over land) appears to have occurred in the 1980s and early 1990s.

(One can have a day-long seminar or longer on the meaning and overall costs and benefits of economic growth, urbanisation, etc.).

Dedicated to Sushil Aaron


(2) “Chinese property developer Sunac agreed to invest 15 billion yuan ($2.21 billion), including 9 billion yuan into LeEco’s non-listed entities. …. Leshi had income receivables of 9.5 billion yuan as of the first quarter, representing 28.4 percent of its total assets of 33.6 billion yuan, according to its financial report. Chief Financial Officer Zhang Wei said the company aims to lower that ratio to below 20 percent and reduce the receivable account by around 3 billion yuan.”


(3) “S&P puts Sunac China on credit watch with negative implications”


(4) “… consider Dalian Wanda Group Co., which has also come under official scrutiny of late. It recently sold a $9 billion piece of its empire to Sunac China Holdings Ltd. to pay down debt after an ambitious acquisition spree. But the deal had an unusual twist: It was funded with a loan from Wanda-the-seller to Wanda-the-buyer. Wanda is actually securing a loan to Sunac to buy the assets from Wanda.”


(5) “Let’s begin with some grade A gibberish on Xi the free market zealot economic reformer …” – a tweet by Chris Balding and he was referring to this article Arthur Kroeber, published in 2013:



(6) Even this observation by Arthur Kroeber in the link above has been belied in reality:

“In short, the vision seems to be to move China much further toward an economy where the government plays a regulatory, rather than a directly interventionist role.”

For example, see this header and sub-header in an article from FT:

“China’s overseas acquisitions recover from doldrums – State-owned companies stage comeback while private peers remain in the cold.”


(7) “The new Chinese owner of Darwin Port is heavily indebted and has struggled to make interest payments on money borrowed to buy the lease, raising doubts over promises to upgrade the port and fund a new $200 million hotel on a nearby site.”


(8) “OTTAWA — The Trudeau government should spend less time bowing down to Canadian journalists preoccupied with human rights and get on with negotiating an important free trade agreement with China, says the country’s ambassador.

Chinese ambassador Lu Shaye blamed the Canadian media for disseminating a negative portrait of his country that depicts it as an abuser of human rights and lacking democracy.”


(9) “China claims territories of 23 countries, even though it only has borders with 14. The total area of China’s claims on other countries exceeds the size of modern China itself, but Beijing refuses to budge on its claims.”


(10) “Chinese conglomerate HNA Group Co. is copying the financing strategies of hedge funds and private-equity firms as it pursues its quest to become one of the world’s largest companies. HNA, a sprawling group that operates in everything from airlines to hotels, has been on an overseas acquisition spree. Increasingly, it is financing those deals with loans backed by company stakes it has purchased. The conglomerate has also entered into complex derivatives with U.S. and European banks that are helping fund its investments outside China.”


(11) A story in NYT on the web of family ties behind HNA:

(12) Bank of America Corp. has told investment bankers to stop working on transactions with HNA Group Co. for now amid growing concerns about the acquisitive Chinese conglomerate’s debt levels and ownership structure, according to people familiar with the matter.

The U.S. investment bank joins other Wall Street firms, including Citigroup Inc. and Morgan Stanley, that are largely steering clear of advising and financing the group on deals because they are unable to get internal approvals from “know your customer” committees, the people said, asking not to be identified because the information is private.

(13) “a Financial Times investigation has found that China’s high-speed rail ambitions are running off the tracks. Far from blazing a trail for One Belt, One Road, several of the projects have been abandoned or postponed. Such failed schemes, and some that are under way, have stoked suspicion, public animosity and mountains of debt in countries that Beijing had hoped to woo.”


(14) “Chinese banks have been warned by regulators against lending to Dalian Wanda as the serial acquirer comes under official scrutiny following a half-decade overseas dealmaking binge. Regulators instructed banks to restrict exposure to the property-to-movies conglomerate in a meeting on June 20, according to notes of the meeting that were seen by the Financial Times. A Wanda spokesperson declined to comment. ….Wanda also has come under investor scrutiny following the unexpected sale last week of $9.3bn of hotel and tourism assets to rival developer Sunac.”


(15) “The Senate Armed Services Committee approved a major change in U.S. policy toward Taiwan as part of an annual defense-policy measure, voting to allow regular stops by U.S. naval vessels in a move that is likely to anger China. In a bipartisan 21-6 vote, the panel approved re-establishing “regular ports of call by the U.S. Navy at Kaohsiung or any other suitable ports in Taiwan and permits U.S. Pacific Command to receive ports of call by Taiwan.” If ratified by Congress, the new policy would roll back nearly 40 years of U.S. deference to China under the “One China” policy, in which Washington grants diplomatic recognition to China, but not to Taiwan.”


(16) “China said on Monday it had lodged a stern complaint with the United States after the U.S. House of Representatives passed its version of a big annual defense bill that would expand exchanges with self-ruled Taiwan.”


(17) “US-China economic dialogue ends in a tiff.  Press conferences cancelled; no joint statement issued”


(18)  “A flood of credit to the household sector in June shows the limits of the government’s campaign to rein in credit, as well as the grip that rising house prices have on Chinese consumers. We expect mortgage lending to cool in the second half as the authorities try to control financial risk. However, this policy stance will be tempered by the importance of the housing market to China’s economic growth.”

…………… Official rhetoric indicates the authorities are not willing to loosen up on the housing market. The recently concluded National Financial Work Conference identified real estate bubbles as one of seven financial system risks to be prevented.

On the other hand, the PBoC has noted low levels of debt on household balance sheets and identified the importance of mortgage loans in supporting industrial activity. The authorities will be wary of going too far with tightening given the political imperative to maintain stability and deliver on growth. For this, they need a robust housing market.”


(19) “China is creating roadblocks for U.S. auto makers and tech companies to bringing self-driving cars to the world’s largest auto market. Citing national security concerns, China is limiting the amount of mapping that can be done by foreign companies, as General Motors Co. , Ford Motor Co., Alphabet Inc. and Apple Inc. rush to develop self-driving cars or the software behind them. High-definition maps are crucial for autonomous cars to help them discern their exact location, navigate tricky intersections and avoid fixed objects such as buildings.”


(20) “According to Deutsche Bank , VIP gambling revenue in Macau and third-tier city property prices have a correlation of 0.74, where a correlation of one indicates they move in lockstep. … Banks have to report cross-border transfers above 200,000 yuan ($30,000) and ATMs with facial recognition are popping up in the city. The city’s biggest junket operator, Suncity, which brings big-stakes gamblers to Macau and lends them money, sent messages to its customers last week warning about the risks of moving money across the border. The more the high rollers keep coming, the more likely Macau is to become the next part of the economy to be squeezed.”


(21) This blog post by Chris Balding is worth a careful read: ‘Is the PBOC Fudging FX Reserve Numbers?’


(22) “A hastily arranged meeting of party officials on Saturday in the inland city of Chongqing announced that Sun Zhengcai, the city’s top official, was being replaced and was being investigated, a person familiar with the matter said. A second person corroborated the investigation. No further details of the investigation were given, the people said. State media announced Mr. Sun’s removal Saturday but didn’t provide a reason or mention an investigation. Replacing Mr. Sun as Chongqing’s party secretary is Chen Min’er, who was party chief for the southern province of Guizhou, state media reported….

According to a state-media report, Mr. Chen told attendees that “firmly protecting General Secretary Xi Jinping’s core status” should be their top political priority…..

Mr. Sun, named Chongqing party chief in late 2012, was tasked with cleaning up Mr. Bo’s legacy. His efforts were recently deemed inadequate by the party’s disciplinary agency, which in February criticized Chongqing authorities for failing to eradicate Mr. Bo’s “lingering pernicious influence” and curb corruption in local bureaucracy and business……

….. Some party insiders have said Mr. Xi may also be trying to block promotion of anyone who could be seen as a potential successor—a move that would enhance his authority and boost his chances of remaining in office after his second term expires in 2022.”


My comment: I suppose any resemblance to the recent Wall Street Journal story on how Prince Nayef was deposed in Saudi Arabia is purely coincidental)

(23)  “The humour has been lost on China’s government, which is wary of any discussion of its leadership in the run-up to this autumn’s 19th National Congress of the Communist party. The once-in-five-years event will bring a potentially tricky handover of power at the top of the party.”


Liu Xiabo

(24)  “To understand the ruthless authoritarian logic behind Beijing’s treatment of Liu is not to excuse or condone it. But it is important for people outside China to understand it, especially as China becomes more prominent and active on the world stage.

This is how Liu himself put it in 2006: “Although the regime of the post-Mao era is still a dictatorship, it is no longer fanatical but rather a rational dictatorship that has become increasingly adept at calculating its interests.”

In calculating those interests, the regime has decided that it was safer to turn Liu into a martyr than to allow his ideas to spread unchallenged. This conclusion is probably correct in the short term.”

(Source: – Jamil Anderlini on the death of Liu Xiabo)

(25) Bilingual tribute from the Taiwanese President:


(26) Carrie Grace in BBC: ‘Liu Xiaobo: The man China couldn’t erase’

“To make it hard for family and friends to visit, he was jailed nearly 400 miles from home. His wife Liu Xia was shrouded in surveillance so suffocating that she gradually fell victim to mental and physical ill health.”


(27) An excellent tweet from a Hong Kong resident Ilaria Maria Sala. She was born in Italy, grew up in Bologna and Florence, and now lives in Hong Kong, where she writes about China. She studied at the School of Oriental and African Studies, Beijing Normal University, and Beijing University. She is a winner of the Bruce Chatwin Award for travel literature for Il Dio dell’Asia: Religione e Politica in Oriente: Un Reportage, a book of travel features about religion.)

“I’m no fan of Trump. But we’ve been so busy looking at ways to shame him that we even wrote China was now the “grown up” “responsible” one.”


(28) Her tribute to Liu Xiabo:

“Far from being the personal sorrow of a friend taken so gravely ill after years of hardship, this is China’s sorrow, too. It has an obsession with control so strong that it is rendered incapable of celebrating its most inspiring people, and of cherishing the wealth that sparks from free minds, free thinking, and diversity.”


(29) A searing tweet by Chris Balding:

One Nobel Peace winner who died for his win hasn’t even received words from a man who didn’t deserve his @BarackObama


Who is Sushil Aaron and why is this post dedicated to him? See here for clues.

[postscript: The Indian Censor Board is embarrassing itself and the Indian government. See here.]

Shame offensive

Neville Maxwell makes no attempt to hide his distaste for India. But, what is amusing is that he does not take into account contextual evidence of China’s behaviour towards other countries in the region, in the last several years.

See this brief from Singapore-based Institute of Southeast Asian Studies on the exclusion of the Thailand Prime Minister from the Belt and Road summit.

This story suggests that the standoff between India and China near the tri-border with Bhutan is more a pressure on India to accept changing realities. That is realistic, compared to the Maxwell story above. But, are the realities really changing?

Frankly, China’s economy is far from healthy. It is brittle and vulnerable. Big time. It is overestimating its strength and underestimating American resilience, in my view.

STCMA – 19 July 2017

(1) Shock rise in China’s shadow banking enrages Xi Jinping. Quite why it should be shocking is unclear to this blogger. The interesting tidbit in the story is this:

… the shadow banking nexus is bigger than all other regular activities of the lenders put together. Regulators had thought it was equivalent to 42% of on-balance sheet business at the end of 2015. They have revised this drastically, admitting that it reached 110% by the end of last year.

(2)  Have the Economic Constraints on China’s Geostrategic Ambitions diminished? That is an interesting question to ask. But, as Brad Setser note,s there is room to disagree with the author’s recommendations.

(3) Headlines that tell the story together. No need for lengthy analysis

China’s Xi orders debt crackdown for state-owned groups [Link]

Chinese purchases of overseas ports top USD20bn in past year [Link]

(4) Barry Eichengreen on the 20th anniversary of the Asian crisis:

… if the emergence of China signifies how much has changed, it is also a reminder of how much remains the same. China is still wedded to a model that prioritizes a target rate of growth, and it still relies on high investment to hit that target. The government maintains liquidity provision at whatever levels are needed to keep the economic engine humming, in a manner dangerously reminiscent of what Thailand was doing before its crisis.

Because China’s government relaxed restrictions on offshore borrowing faster than was prudent, Chinese enterprises with links to the government have high levels of foreign debt. And there is still a reluctance to let the currency float, something that would discourage Chinese firms from accumulating such large foreign-currency-denominated obligations.

China is now at the same point as its Southeast Asian neighbors 20 years ago: like them, it has outgrown its inherited growth model. We have to hope that Chinese leaders have studied the Asian crisis. Otherwise they are doomed to repeat it.

(5) The real Takeaways from the weekend meeting in China:

(i) Support the real economy
(ii) reduce lending costs for the real economy
(iii) relegating financial opening up and currency reforms to the backburner – no more liberalisation. Concern over capital flows dominates.

The rest is all smoke and mirrors.

(6) Singapore blinks. [Link]

(7) Bill Gates cautions Europe on its open door immigration policy. Good stuff from the man. Speaking the truth.

(8) China’s Growth masks Unresolved Debt and Real-Estate Problems. Who knew?

(9) California confronts solar power glut with novel marketplace

(10) Conviction of former President of Brazil. I think Brazil is doing a far better job of cleaning up its politics than many other countries, including the so-called developed countries.