Month: January 2016
…it appears that there was roughly $750 billion of capital outflow in 2015
The Aaron Back WSJ story is here, or try through here. And here is a Victor Shih paper (pdf) on the fragility of China’s reserves, from 2011 but still of relevance. One key point is that high wealth inequality in China makes capital flight easier to accomplish.
By the way, here is a profound Andrew Batson post on why China is not specializing much in its exports. That is the good news, the bad news is that Chinese leveraging does not seem to be slowing down at all.
3. History of The Monkey Cage; note I said many very positive things about political science blogs, and The Monkey Cage in particular, which did not make the final cut of the article.
I don’t think climate change is the right framing for this effect, nonetheless this is an interesting result, with the subtitle “Evidence from a billion tweets.” Here is the abstract:
What is the welfare cost of environmental stress? The change in amenity values resulting from temperature increases may be a substantial unaccounted-for cost of climate change. Because there is no explicit market for climate, prior work has relied on cross-sectional variation or survey data to identify this cost. This paper presents an alternative method of estimating preferences over nonmarket goods which accounts for unobserved cross-sectional and temporal variation and allows for precise estimates of nonlinear effects. Specifically, I create a rich dataset on hedonic state: a geographically and temporally dense collection of updates from the social media platform Twitter, scored using a set of both human- and machine-trained sentiment analysis algorithms. Using this dataset, I find limited evidence of temperature effects on hedonic state in low temperatures and strong evidence of a sharp decline in hedonic state above 70◦F. This finding is robust across all measures of hedonic state and to a variety of specifications.
And here is a new result that Canadians are more polite on Twitter, I wonder what happens if you control for temperature…
For the pointer I thank Samir Varma.
On the Gaspé Peninsula in eastern Quebec, a group of locals and small-business owners have begun to accept an alternative currency—one where $5, $10, $20, $50, even $100 bills, get cut in two, ostensibly reducing their value by half—as a means to promote the local economy.
Here’s how it works, or, at least, how locals argue it’s supposed to: When someone buys clothes at a Wal-Mart, Zibeau explains, there’s no telling how much of that money will be reinvested in the community. But with stores and locals accepting the cut-up bills, a currency they’ve dubbed the “demi”—French for half—that money can only be spent locally. And because banks don’t accept half a $20 bill, the money would be reinvested right away and not pile up at home (perhaps out of fear that storeowners might just stop accepting the half-bills). This would help keep the economy rolling.
As I write the overnight rate is over sixty-six percent (yikes, although the frequency of reporting that figure is unclear). Hibor, by the way, is the Hong Kong Interbank Offer Rate.
Why so high? The most natural interpretation is that many traders are shorting the renminbi, and in response the Chinese central bank is trying to crush them. There is a short squeeze, and the high overnight rate reflects the need to make good on contracts now.
More generally, it seems both the central bank (PBOC) and the big Chinese banks are buying up yuan like crazy, especially offshore yuan. There is a free (but PBOC-influenced) Hong Kong rate, and the controlled rate internal to China. The freely traded offshore yuan have been cheaper, although about a day ago the two rates converged. The PBOC wants to keep the currency value relatively high, to limit capital flight and to maintain credibility.
In other words, an epic battle is going on. Round one (or is this round three)? goes to PBOC.
Aramco is worth, officials say, “trillions of dollars”, making it easily the world’s biggest company. It says it has hydrocarbon reserves of 261 billion barrels, more than ten times those of ExxonMobil, the largest private oil firm, which is worth $323 billion. It pumps more oil than the whole of America, about 10.2m barrels a day (b/d), giving it unparalleled sway over prices. If just a sliver of its shares were placed on the Saudi stock exchange, which currently has a total market value of about $400 billion, they could greatly increase its size.
That is from The Economist. The talk is of starting with the sale of a 5% share, but that is still an enormous offering.
Why are Amazon ebook reviews from US readers more important than reviews from international readers?
Have you noticed that reviews from Amazon.com are aggregated across all other international Amazon sites, but that the reverse is not true? If someone kindly posts a review of a book on Amazon.co.uk, it is stuck there, and not aggregated to Amazon.com. Why? Is a UK review less valuable than a US review? Are reviews from Canadians, Australians or India inferior to US reviews?
2. “What I really wanted was every kind of life, and the writer’s life seemed the most inclusive.” That is from Susan Sontag. And a kind of theological interview with David Brooks.
5. Scott Sumner’s cinematic 2015, recommended.
New York City’s top traffic agent is a relentless, ruthless street-sweeper who slings summonses at a rate of one every 9 minutes, 45 seconds.
South Brooklyn’s orange tsunami, Arnous Morin, 53, wrote nearly 19,000 parking tickets in fiscal year 2015, an average of 76 per day he worked, city records analyzed by The Post and AAA Northeast show.
The one-man ticket blitz dished out 4,000 more summonses than the city’s No. 2 traffic cop.
And Morin’s base pay of $36,000 was eclipsed 33 times over by the amount of fines he generated for city coffers — $1.2 million.
Morin, who was a Catholic-school principal in his native Haiti, is unapologetic about his lack of mercy for motorists.
“Never, never. It’s never OK to break the law,” he told The Post at his Canarsie home. “The law is hard, but it’s the law. You can’t break the law for any reason.”
He is in fact paid about 63k a year with overtime. And he has been ticketed three times himself, though I believe not by himself. He claims to hold a knowledge of the entirety of South Brooklyn in his head.
The story is here, with other interesting points, via Jordan Schneider.
The author is Lars Mytting, and the subtitle is Chopping, Stacking, and Drying Wood the Scandinavian Way. If only every book could be this good and to the point! Here is your Norway fact of the day:
Even in oil-rich Norway, as astonishing 25 percent of the energy used to heat private homes comes from wood, and half of that is wood chopped by private individuals.
In per capita terms, however, Bhutan is number one for wood chopping. Yet in the 1960s, the government of Norway had its own advisory body for the burning of wood chips.
I enjoyed this segue:
Although it may seem strange today, chain saws were regarded with suspicion at that time and there was much resistance to their use…
There were quite a few colorful players in the early days of the chain-saw industry in the 1950s. The competition was hard and the business attracted people with a fiery temperament. One legendary character was John Svensson (alias Chain Saw Svensson), who imported saws made by the Canadian firm Beaver. He had been arrested and tortured during the war and for the rest of his life suffered pains in his arms and joints; when demonstrating the Beaver saws he always made a point of stressing how the vibrations that passed up through the handle brought a welcome relief to his aching joints.
Svensson was not a man to take professional disappointments lying down. On one occasion he was so annoyed when a visiting government delegation refused to let him demonstrate his chain saw to them that he felled five trees across the road to stop them from leaving.
The interest of a Norwegian man in his firewood often rises sharply in his sixties. Perhaps this sentence from the book says it all:
It took a while, but that didn’t bother them, as long as it turned out the way they wanted.
You can order the book here, recommended.
Joel S. Wit, who has negotiated with North Koreans for over twenty years, has a very interesting NYT piece on that topic, here is one excerpt:
The North Koreans may know a lot about the outside world, but they don’t know everything, even about the United States, their main adversary. In one meeting, an official asked, “Why do the president and secretary of state keep saying that the United States will not allow North Korea to have nuclear weapons when in fact you are not doing much to stop us?” He deduced that there must be a hidden agenda. “It’s because you want us to have nuclear weapons as an excuse to tighten your grip on South Korea and Japan, your two allies.” We responded that there was no hidden agenda and that the United States really did not want the North to have those weapons. I’m not sure we convinced him.
The piece is interesting throughout, most of all Wit stresses their realism and sophistication as negotiators, and urges us not to think of them as lunatics.
2. Who needs the FCC? (pdf). Brent Skorup doesn’t.
3. What goods can you not buy with median income?, by Chris Dillow: “…most “libertarians” are hypocrites and it is we Marxists who are the true lovers of freedom.” And a Martin Sandbu FT piece on the same.
6. Louis Armstrong and Maxine Sullivan (and others) video, it becomes an ensemble piece after the horse goes away, my favorite parts are in the second half but all of it is fantastic.
Given all of the recent publicity, I thought I would re-up on my China video, The Rise and Fall of the Chinese Economy. This is a recent addition to our Everyday Economics series from MRUniversity, and it also will be part of our in-progress macroeconomics course.
The Learn More page features additional resources about this topic. As I say in the video, the key variable to track for whether things get really bad is capital flight. In other words, recent developments have indeed been unsettling.
What we’ve seen is the central government spending down reserves at a much higher pace than virtually anyone had expected…except perhaps the central government. The response to falling stock prices has been to make it legally harder and harder to sell — what do the prices even mean at this point? A barometer of which kind of PR hit the government feels like taking on a given day? And perhaps most importantly of all, more and more people, both in and outside of China, are questioning whether the government really has matters under control. It seems not.
By the way, here is your China fact of the day, Larry Summers informs us:
Over the past year, about 20 per cent of China’s growth as reported in its official statistics has come from its financial services sector, which is now about as large relative to gross domestic product as in Britain, and Chinese debt levels are extraordinarily high. This is hardly a case of healthy or sustainable growth.
On the (somewhat) cheerier side: “Film market analysts have pointed out that the biggest films have performed similarly in China and the US in recent years.” Star Wars: The Force Awakens had the biggest single-day opener in Chinese history (FT link), let’s see how well the future installments do.
Max Mendez Beck emails me:
Given the advent of statistics in sports that occurred in the last five years, I am struck by how well soccer works as a metaphor for current epistemological debates regarding the use (and primacy) of quantitative versus qualitative data in social science research. While the three major American sports (football, basketball, and baseball) have been overtaken by a quantitative obsession (count how many tables and numbers you see on an average ESPN show), soccer is emblematic of a sport that is quite difficult to measure quantitatively.
Consider how easy it is to determine who did well in an average NBA game without needing to even watch it. You can just look at points, assists, rebounds, steals, turnovers, etc. In soccer, individual statistics are almost nonexistent. Even as major sports channels have attempted to incorporate quantitative measures into their soccer broadcasts–for example, by showing the number of kilometers a player has covered when he gets subbed out (a pretty uninformative statistic on its own)–these numbers have not caught on with the regular fan.
While in basketball everyone debates about who “the best ever” is by referring to their career averages in points, field goal percentage, PER, etc. In soccer the only statistic that is ever used is goals scores, and goals scored is only one small dimension of a player, even smaller if he is not a striker. It would be silly to judge Andrés Iniesta or Zinedine Zidane on how many goals they scored in a season.
So what is it about soccer that makes it so hard to quantify? Or what makes American sports so easy to measure? One obvious answer is the length of the units that can be easily separated and analyzed. In basketball its a maximum of 24 seconds, in baseball its essentially a pitch (or an at bat), and in football its each snap. For soccer, the only apparent unit to separate out is the 45 minute halftime mark. Changes in possession could be another measure, but even then a team’s single possession could be several minutes long.
However, the real challenge comes in measuring individual accomplishments. Just recently I was watching a Barcelona game and Iniesta clearly was having an amazing game (as was mentioned several times by the announcer), and yet the things that made him have a great game were only describable in words and not numbers. There was a beautiful and sudden “regate” or dribble around a defender before he passed it on to a teammate for a quick counter attack. There was the beautiful pass between defenders that led to an assist for the first goal. There was the sudden change in direction and over the top pass to the other side of the field that put the defenders on their heels. Many of these moves are incredibly situational; they have to do with the rhythm of the game and the need to speed it up or slow it down. Nothing in the boxscore could truly capture these attributes.
So the question is: Is soccer something that can’t be measured in numbers?
Here are various readings on the topic.