A Letter to the United States of America: Stop Deceiving the World and I Know What You Want

   The whole world is keeping a closer eye on than ever on what’s going on in the United States of America. Democrats and Republicans have a serious disagreement on the debt ceiling. And failing to raise the debt ceiling will a catastrophe for the world economy

From the start, I support the causes the Democrats have been fighting for. But I now can’t tolerate on both sides. Let me be clear on a point, the policy of my blog is to say not what I should but want. To say what you should sometime implied the pressures from the outside world.  Not taking side. I just say what I think it right.

What they are doing is a conspiracy to deceive the world again. They have done it many times already. The most obvious one is 9/11 attack. [1]They are finding a way to inject more and more money into the economy (QE3). Republicans are taking the world economy as hostage to demand concessions from the Democrats.

Barack Obama : Politics is a mission not a business. 

I can’t help but to say that US politicians are young in term of their course of action, at least for now. They just keep craving for nonsense things happening at the expense of the whole world. They are Young Politicians. The world is at risk now. The Great Depression might return in the very short order. Who knows?

By the way, I want to brief you on the stances of Democrats and of Republicans. Democrats support spending and tax increase for the rich and tax slash for the poor. And the Republicans are just the opposite. I support Democrats because America’s middle class have been oppressed over the last three decades. It’s high time they were treated with great care.

I don’t support Democrats because I think they are collaborating with Republicans to do it again. I’m surprised that only few people believe that the crisis of 2007 is a man-made one. I have been researching on the debt ceiling debate for a while. My conclusion is that the default is “both likely and unlikely.”

First scenario:  The Fed used to hint about the possibility of implementing QE3. I think it’s unlikely because of two main reasons:

1.         It will endanger Obama’s bid for reelection. QE3 will push down the value of dollars and that’s why it’s especially unpopular with the average Americans. As I said again and again, QEs is attracting more and more investors, esp. the native ones, to America. My professors told me QEs are not working.

I can’t agree more.  It’s only a matter of time that QEs will become effective and get the economy moving again. It won’t be that long.[2] Do think the Fed has a good pretext to inject the money into the economy when QE1 and QE2 are effective. Absolutely not!!!

2. QE3 will produce a strong backlash from the rest of the world. In China, India and Brazil, inflation is already high enough. QE3 will be damaging.

Second scenario: America won’t default on its debt unless she wants to be that way.[3] I’m skeptical that Obama is cooperating with Republicans to make US default on its debts. And the QE3 will be easily passed without strong outcries from the rest. If so, the United States is playing with fire. What would China and Europe do?  US politicians are winning the battle as Americans are losing the war.

Hopefully, my second scenario is totally wrong. However, only one scenario can stand the test of time. There are a few days to go. Let’s count down the countdown.

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[1] Read 9/11: The Big Lie for detail.

[2] Previous articles in the blog might answer your doubt.

[3] I’m talking about near and medium term outlook only

In Defense of China’s Currency Manipulation: We Are Two Sides of The Same Coin

 

I just met with both a French journalist and a US-born freelancer. We have many things in common except when it came to currency manipulation of China.  They said China is manipulating its currency. And I agreed with them. What China is doing is stifling global economic growth, they went on.

I only agree with the notion that China’s moves are stifling the growth only in the case that China is the only country doing so. Western media often blames China’s currency manipulation for their problems. The media mostly reports currency manipulation gives China an unfair competitive edge and hits the global fragile recovery very hard.

They are talking as if they had done a good job in response to global economic downturn. They actually did a good for themselves but not for the world. United States floods its economy and of course the world economy with money. Its fiscal policy has pushed up the price of everything, especially the food prices hurting the poor the most.

Following the collapse of Leman Brothers, there has been a gigantic outflow of so-called “Bad Money” to developing countries. That money is responsible for the rise of Inflation and the risks of bubble bursting. What is America is doing? What we are doing is to rescue ourselves first so that we can safeguard the world economy, one might said. If so, what China is doing is no vice too.

The Great Recession stemmed in a large part from “Excessive Risk-Taking” in America’s banking system. Who created the problems first? Western media paints a very bad Picture of China. I’m largely dominated by Western thoughts. For some issues, I can’t agree more. Ones talk about China’s currency manipulation. But why they don’t talk about Thought Manipulation?

Let’s turn to Europe, most of European countries are implementing contractionary fiscal policy running counter to Principles of Keynes economics. They are cutting the spending as the world economy is badly in need of a strong, flexible circulation of Capital. According to Alan Greenspan, Greece default is inevitable.

Borrowing the money (debts) to compensate the debts is a good but a wise choice. Second bailout was done. Greece will face the same problem when the deadline is reached. Greece won’t default on its debts unless she receives a kind concession from France and Germany. They are using Greece to counter the effects of economic policies of United States and of China’s.

Checks and balances are to be met in a democratic country. There’s a serious problem of ad hominem. They are not attacking the problems; they just attack China. I’m not taking China side.  I’m disappointed to see some people are telling neighbors to clean up the house while their one in a mess. Is that the backbone of Democracy? However, I’m not saying that China is doing the right thing.

China, Europe and United States are two sides of the same coin. They are fighting for their own gain. Asked if what my solution to that problem is, I’m speechless because the World is up and down with their successes too. It’s a No Brainer!!! What are your thoughts? Please share it with me.

  

Not A Matter Where You Are But Who You Are

  Thomas Friedman, a long-time columnist for The New York Times, once said World is hot, flat and crowded.  The World is hot and crowded because of global warming and population growth; the world is flat because of Globalization. Globalization has flattened the world into a level playing field in which all players have nearly the same opportunities. He has discussed the ten forces being flattened our world.[1]

 Let me take a few examples to explain to you. When The Olympic Game Opening Ceremony was started in China in 2008, the whole world was watching. The death of Osama Bin Laden was quickly spread to the world. People living in everywhere in the world have many ways to watch both important events. They can view ones via Television, The Internet, satellites and so on.

So, the world has no lows and highs. The World is actually flat. I suggest you read “The World Is Flat” by Friedman for further explanations. Today, I want to talk about the globalization of education. People in developing world are becoming more and more educated. The World now has a global class.

One of my seniors in Canada recently praised I did a good job given the fact I just studied in a local University. Nope, I replied. I study with international students in a global class. I’m studying with a Harvard Professor. It’s the first time in history that Harvard University offers an online course free of charge.

Do you know about the “Justice Course” with Professor Michael Sandel? The course is by far the most popular course in Harvard. The course is on critical thinking and reasoning with a special focus on what’s the right thing to do. One can stream and download 12 episodes free via www.justiceharvard.org.  The course is even popular beyond the United States. He is comparable to a star in China, Japan and so on, Japanese media reported.   

IT revolution has made me accessible to a Harvard professor. Never before have students get such a good chance. Globalization makes the living location of a person less important. I get the same lessons as other students in United States, China, India, Japan and the rest of the world do. 

I recently was told an interesting story. There is so-called The Central Provident Fund, a compulsory saving plan for all Singaporeans and permanent residents. The Singaporean Government takes about %20 of salaries from its people.  The fund can’t be withdrawn until they attained the age of 55. However, they can take the fund for two reasons: Firstly, for buying house and education. Lastly, for hospitalization fees.

I have learnt a lot from Facebook. Living in Cambodia doesn’t necessarily put me at an disadvantage. All one need is a Computer, Internet connection and a good command of English. We enjoy more rooms than our predecessors did. So, we are supposed to do a better job.

There are E-books available on the Internet. And we could talk to well-known professors via Skype, Facebook, and Yahoo massager and so on. Education is widely available now. However, a good education is no guarantee but a precondition for success. We have to fight for it.  All you need to do is to keep yourself ahead of the tide and know how to take advantage of Globalization.  Final examinations are coming. Please pray for me. ^_^

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[1] Visit here for detail :  http://en.wikipedia.org/wiki/The_World_Is_Flat

Waiting for an Economic Crisis from China- And Secret Economic War 2.0

  Capitalism has always had crises, and will go on having them, Robert Skidelsky wrote in an article in Syndicate Project titled Life after Capitalism. [1] America has experienced a number of economic crises already. China, currently the most promising developing country, has yet to meet ones.

Professor Kenneth S. Rogoff of Economics of Harvard University predicts:  within a decade China’s lofty property bubble and its mounting debts could cause a regional recession in Asia and stifle growth in the rest of the world.[2] He used to serve as chief economist for IMF and co-author of “This Time Is Different: Eight Centuries of Financial Folly.” The book studies financial crises over the last eight centuries. I am not sure if what he means by This Time Is Different? I haven’t read the book.

As I mentioned before, Capitalism is new to China. And Capitalism has crises. So, it won’t be long before China meets an economic crisis. I expect a recession for China’s economy in the near future and a big one in 2030s. I think the coming recession from China is a short but greatly painful one.

I totally agreed with Professor Kenneth S. Rogoff. All bubbles, sooner or later, will burst. The property bubble of China is no exception. It is high likely that the bubble will burst at some point within this decade. Ironically, I believe that recession will hit the rest of the world harder than it hits China.

China is the largest holder of foreign reserves, totaling more than three trillion dollars. At the same time, China is now diversifying its holding of foreign reverse by mainly buying European debts in exchange for export markets and investment. The collapse of China’s economy will have severe ramification for the whole world.

The economies of US, EU, Japan, Russia, India and China are heavily linked together by many fields.  The failure of an economy makes a dangerous snowball effect. There are two points convincing me that China won’t hit hard by a property bubble.1. The saving rate of Chinese people is very high.  2. Chinese Government is holding a large amount of foreign reserves 3. China has a great deal of hard working people.4. China is a “State Capitalism”, meaning that the State is both powerful and flexible. However, one should be noticed Dragonomics estimated that total Chinese government debt at 82% of GDP at the end of 2010.[3]

Americans and Europeans are not the same. Most Americans are indebted and their largely future is dependent on the rise and fall of the values of housing markets. And that’s the point that Americans find it hard to get back on their feet. Europe is busy dealing with the problems of defaults of member countries.

Again, the secret economy is not over. The Fed is considering another Quantitative Easing measures (QE3). The Fed floods the economy with money. 1. Low interest rate is in favor of both business and job creation.  2. It also attracts investment from abroad, especially from China and Europe. Last but not least, it reduces the inflow of bad money. As I said before, there was a huge capital flight in the aftermath of economic crisis, mostly to emerging markets.

I read an article by Reuter. It reported that the money flowed to emerging is turning into long term investment. I argued in previous article that it’s actually an investment flight. You can imagine the benefits of investing in foreign countries.

Now, let’s turn to European countries. EU can’t use easy-money policy as US did. Their debt-to GDP ratios are already high enough. Printing more money will be counter-productive and endanger investors’ confidence. I would like to use the term “Politics of Economic Decline” to describe the situation in Europe. Greece will eventually default on its debts.

 But I don’t think that other European won’t have the same lot. European leaders create fears in Europe to weaken the Euro by using Greece as the Obama admin is using Ben Bernanke.  The have got the same advantages, cheap currency for the sake of export and inflow of investment from abroad.[4] China and many countries are manipulating their currencies.[5]

China’s property bubble will burst because of two main reasons. 1. it’s because of the nature of Capitalism.[6] 2. The willingness of Chinese government. Since China has opened its economy to the world, the poor Chinese have been extensively exploited. The rich has become rich enough. Social injustices need to be changed. The problem is unacceptable when it comes to house ownership.

If a Chinese blue-collar worker had been working nonstop since the Opium War, then he or she might have enough money to buy an apartment in Beijing today. A prostitute would have had to work every night from the age of 18 to 46, an anonymous said. [7] 80% of people living in coastal areas either couldn’t afford or don’t have houses. If they don’t buck the trend, social unrest will happen.

As the price falls, average Chinese people could afford to buy the house.   And it will reduce social inequality. So, prepare yourself for that crisis.

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[1]He is a member of the British House of Lords.

[2] http://www.nytimes.com/2011/07/07/business/global/building-binge-by-chinas-cities-threatens-countrys-economic-boom.html?_r=3&pagewanted=2&hp

[3] Dragonomics is a Beijing-based research firm.

[4] I meant it is beneficial to EU in the long run.

[5] The term “Currency War” was coined by Guido Mantega, Brazil's finance minister.

[6] For an excellence investigation of the causes of financial crises, I suggest you read “Manias, Panics, and Crashes: A History of Financial Crises” by Charles P. Kindleberger.

[7] http://www.nytimes.com/roomfordebate/2011/04/14/chinas-scary-housing-bubble/the-upside-if-the-bubble-bursts

Compete with Giants: The Struggle for the Survival of My Future

 It has been over a year since I posted my very first article in the blog. It’s high time I shared blogging experience and most importantly say a few words on the events making who I am now. Before delving into the conversation, I would love to touch on the blog.

To start with, why did I choose “My Brain Bank” as my blog title?  The answer is a simple one.  I sometimes forget what I have written. So, I take a visit to my blog to kick-start a quick review. It’s a place where I could find virtually the information containing in my brain.  That’s it.

The creation of my blog has something to so with the double standards of my school. I call the “Home Truth” in my school double standards system, but the school managers call it an equal education system. However, what does equal education mean when the reality tells a different story? I will keep asking this question until I get at least a proper explanation.  

I have been outspoken about this issue in Facebook accounts of mine. In a word, the school puts French-speaking students at advantages. It’s hurtful to talk about the unfair education in my beloved school. They say we have an education for all while we don’t get equal education for equal pay. I have some hard facts to support my claim:

1. v  We are being taught by Khmer lecturers with broken English as they are being taught by both Khmer and French with excellent command of French.
2. v  We have only a session for a day as they have at least two sessions for a day with nearly the same pay.   
3. v  They get two bachelors: one from the school itself and another one from Ministry of Education in France.
4. v  Seminars, workshops, press conferences are mostly sponsored and organized by French embassy in Phnom Pench: we are often not invited to partake in. I have asked for admission to participate in the seminars two times already. And every time I was politely dismissed citing the bullshits that I was asking for the right time. [1]

My note has the big picture of the double standards system in my school. I’m sure you are feeling that I pretty hate my school. To some extent, I do. It’s hurtful to see the Reality being displayed every day I go to school.   I think I’m being marginalized given the services the school offers to me comparing to those of French students. I keep questioning myself if the school is really mine. Ironically, it is more of an imagination rather than a reality.

I vividly remembered an event that has shaped my life. I met one of my very best friends ever some day. He tested me on what I have learnt since we entered different classes, between France and English. And I pretended to know nothing. Could you take a guess what did he say to me? He says: It serves my right that I didn’t take the French class. You have to accept your fatal decision to take the English class.

I nearly burst into tears once he finished the words. It’s unbearable since it came from my best friend ever.

It sucks!!! A number of events following that day forced me my whole perspective toward French students here and indeed the French language. French students think they are smartest.  And I don’t share that view. I acknowledged that they are the best but I will try to be the only Best. I have tried my best to outsmart them since then. French students are strong because they are well-connected. They are indeed giants. Yeah, I’m going to compete with Giants. In another word, Giant means a person who is very good at something.

You might think I won’t beat Giants down. If you do think do, I’m sure that you haven’t read a book titled “The Power of Positive Thinking.” From a perspective, the strengths of a Giant are actually its weaknesses. A giant is big and very visible. So, it’s not hard for us to attack one. Confidence is very important for defeat your competitors and I knew how to use it.

I first started to attack the weaknesses of my counterparts. I knew that they aren’t really good at Computer skills and English. You run a very real risk of becoming an illiterate in 21^st century had you have yet got both of them under your belt. Anyway, Good luck my French friends. I learnt how to create email, blog, do research, and so on by myself. I’m not kidding. I didn’t even know how to properly start desktop computer when I first stepped in Phnom Pench. I like a slogan: I love my haters, they are my motivators.

I have learnt a lot since then. And I am very grateful to them for making who I am now. Let me take this article to express to greatest gratitude to all people who have supported me. Without your guys, I won’t have this day. Well, I don’t think it’s a success but “I have gone this far and I will keep going.”

I will do everything within my capacities to change the system of my school. I’m not trying to be a hero, though. Some of my friends quitted the school because they can’t stand the heat. It makes me hurt to see this even though are not brothers. Hilary Clinton said during Democrat’s presidential debate. : Harry Truman famously said: “if you can’t stand the heat, get out of the kitchen. And I feel very comfortable in kitchen.” I feel very comfortable in kitchen too and I’m going the stand the heat in my school and I will find the way how to put the flame out. Just believe in me, I can do it.

I have received loads of praises until now. I have got very encouraging messages from AFP, Reuter’s reporters, university lecturers, NGO officials and so on.  The biggest problem I’m facing now is that my blog is inaccessible. I mostly write about international economy and global politics. The readers require basic understating of economics to understand the message I want to deliver. The blog is not accessible to general readers and I’m figuring out the solution.

I will prove to them French students that I have made a right decision by choosing English class. It’s not a matter of how good I am but how good I want to be. All supporters, thanks again for supporting me. Future belongs to students who speak English not the ones who speak French. Fighting!!! Seng Kongs.

P.S: Pardon me for grammatical I have made in all articles. I don’t have enough time to edit. It’s 5:00 am in Phnom Pench. I have to take a nap. Good Night, readers. Thanks for reading. Please post your comment!!!  

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[1]My note has more. Access one via https://www.facebook.com/note.php?note_id=217029228316737

Free Market Is Not Free: Why Our Future Belongs To a Disaster

 Free market is not free is a point I want to make. A price must be paid to free market for every country taking Capitalism. Free market, as Adam Smith described, is guided by invisible hand. Individual freely pursuits his/her own dream and the competition is always fierce. There’s no question that fair competition leads to a more innovative, prosperous, creative society.

The only big problem is that free market carries risks and challenges. Most countries in the world are of capitalism system. China and Vietnam are communist in name only. Some countries are developing at a neck-breaking speed. There are Brazil, China, India, Russia, Turkey, Vietnam, and Indonesia and so on, all of them are capitalists. Do you ever think what would happen when Capitalisms collide?

I’m talking on the decline of world consumers. US have been gigantic consumers for the world until the housing bubble burst. They are not spending more because they don’t have money. They got themself into debts by buying inflated house(s) during the boom of housing bubble in the hope of getting profits. Unfortunately, the bubble burst before they could make enough profits. The crisis started in 2007 was caused in part by both excessive spending and excessive borrowing.  

Learning from this lesson, I think they won’t spend the money irrationally, especially on foreign goods, at least for somewhat period.   As I mentioned in previous articles, investors are moving back to America. US consumers will mostly buy home- made products. US goods are now cheaper than before with virtually the same quality before the economic crisis came. The point is that we can’t depend on US consumers. We can’t also depend on emerging markets’ export markets. Emerging markets are export-oriented countries. Advanced countries can sell only medium and heavy industries products to fast developing countries.

My previous pieces suggest that neither developed countries nor developing ones are the losers of global economic contest. US will remerge again and developing economies will keep developing faster and faster. However, not all countries will succeed and the successive ones will fail after they succeed. We will have problems in both medium and long term. European countries are implementing austerity measures. They are not going to spend more too. At the end of the day, global export market is usually small. US now contain loads of “Zombie Consumers” and that’s the problem the whole is having.

Stephen S. Roach, authored The Next Asia, expressed an impressive view on the death of America consumers.[1] Advanced nations can’t depend on China for export markets because Chinese people’s saving rate is amongst the highest ones in the world. Chinese Communist Party’s11^th Five Year Plan stresses the importance of domestic consumption given the diminishing export markets; the West won’t very much benefit from the Plan thanks to high productivities of Chinese people. 

Increasingly smaller market with bigger exporters. Who will survive? Maybe only the weak. Those are the challenges we are facing now. What about the future? The more they develop the more risks they carry with. Capitalism is new to emerging markets. If we look at the history of Capitalism in America, we see that US have a lot of severe economic crises. The effects were limited for most crises. For present day, we are living a globalized world. It turned the world to a global village in which the Systematic Risk is both potential and far-reaching than ever. The crisis of 2008 is an undeniable example. If we strictly regulate the economy it will stifle the economic growth. If we don’t, the economy will be risky. Well, we can’t have the cake and eat it.   

If China succeeds, she will fail after that, India also. There will be a severe economic crisis from emerging markets some day and it will keep coming.[2]  We are having problems with dead consumers . In the medium and long future, we will have problems with economic crises coming from emerging markets. Each crisis is not a small one, I guess. Each country’s economy is getting more and more connected. When an economy fails, the rest will suffer especially, the one that comes from major economies.

Emerging markets will fail one by one but they can reemerge as countries in the West did. We don’t need to avoid unavoidable. We can manage manageable by reducing risks in global economic system by regulating without compromising growth.

 

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[1] Access the article via http://www.project-syndicate.org/commentary/roach4/English

[2] Read this article for detail, http://sengkongses.blogspot.com/2011/06/future-news-in-2030s-global-economic.html