The enemy is US, not China

[Cees Binkhorst]

REPLY TO: D66 at nic.surfnet.nl

In plaats dat de USA schoonmaak houdt in eigen huis, geeft ze de
voorkeur aan verdachtmakingen van andere landen (uiteraard niet de
'vrienden' maar wel de zogenaamde niet-democratische landen).

De gouverneur van Texas “We would be foolish and irresponsible to place
our children’s future in the hands of unelected bureaucrats and
special-interest groups thousands of miles away in Washington.”

Groet / Cees

January 13, 2010
Op-Ed Columnist
Is China the Next Enron?
http://www.nytimes.com/2010/01/13/opinion/13friedman.html
By THOMAS L. FRIEDMAN

Taipei, Taiwan

Reading The Herald Tribune over breakfast in Hong Kong harbor last week,
my eye went to the front-page story about how James Chanos — reportedly
one of America’s most successful short-sellers, the man who bet that
Enron was a fraud and made a fortune when that proved true and its stock
collapsed — is now warning that China is “Dubai times 1,000 — or worse”
and looking for ways to short that country’s economy before its bubbles
burst.

China’s markets may be full of bubbles ripe for a short-seller, and if
Mr. Chanos can find a way to make money shorting them, God bless him.
But after visiting Hong Kong and Taiwan this past week and talking to
many people who work and invest their own money in China, I’d offer Mr.
Chanos two notes of caution.

First, a simple rule of investing that has always served me well: Never
short a country with $2 trillion in foreign currency reserves.

Second, it is easy to look at China today and see its enormous problems
and things that it is not getting right. For instance, low interest
rates, easy credit, an undervalued currency and hot money flowing in
from abroad have led to what the Chinese government Sunday called
“excessively rising house prices” in major cities, or what some might
call a speculative bubble ripe for the shorting. In the last few days,
though, China’s central bank has started edging up interest rates and
raising the proportion of deposits that banks must set aside as reserves
— precisely to head off inflation and take some air out of any asset
bubbles.

And that’s the point. I am reluctant to sell China short, not because I
think it has no problems or corruption or bubbles, but because I think
it has all those problems in spades — and some will blow up along the
way (the most dangerous being pollution). But it also has a political
class focused on addressing its real problems, as well as a mountain of
savings with which to do so (unlike us).

And here is the other thing to keep in mind. Think about all the hype,
all the words, that have been written about China’s economic development
since 1979. It’s a lot, right? What if I told you this: “It may be that
we haven’t seen anything yet.”

Why do I say that? All the long-term investments that China has made
over the last two decades are just blossoming and could really propel
the Chinese economy into the 21st-century knowledge age, starting with
its massive investment in infrastructure. Ten years ago, China had a lot
bridges and roads to nowhere. Well, many of them are now connected. It
is also on a crash program of building subways in major cities and
high-speed trains to interconnect them. China also now has 400 million
Internet users, and 200 million of them have broadband. Check into a
motel in any major city and you’ll have broadband access. America has
about 80 million broadband users.

Now take all this infrastructure and mix it together with 27 million
students in technical colleges and universities — the most in the world.
With just the normal distribution of brains, that’s going to bring a lot
of brainpower to the market, or, as Bill Gates once said to me: “In
China, when you’re one-in-a-million, there are 1,300 other people just
like you.”

Equally important, more and more Chinese students educated abroad are
returning home to work and start new businesses. I had lunch with a
group of professors at the Hong Kong University of Science and
Technology, or HKUST, who told me that this year they will be offering
some 50 full scholarships for graduate students in science and
technology. Major U.S. universities are sharply cutting back.

Tony Chan, a Hong Kong-born mathematician, recently returned from
America after 20 years to become the new president of HKUST. What was
his last job in America? Assistant director of the U.S. National Science
Foundation in charge of the mathematical and physical sciences. He’s one
of many coming home.

One of the biggest problems for China’s manufacturing and financial
sectors has been finding capable middle managers. The reverse-brain
drain is eliminating that problem as well.

Finally, as Liu Chao-shiuan, Taiwan’s former prime minister, pointed out
to me: when Taiwan moved up the value chain from low-end,
labor-intensive manufacturing to higher, value-added work, its factories
moved to China or Vietnam. It lost them. In China, low-end manufacturing
moves from coastal China to the less developed Western part of the
country and becomes an engine for development there. In Taiwan,
factories go up and out. In China, they go East to West.

“China knows it has problems,” said Liu. “But this is the first time it
has a chance to actually solve them.” Taiwanese entrepreneurs now have
more than 70,000 factories in China. They know the place. So I asked
several Taiwanese businessmen whether they would “short” China. They
vigorously shook their heads no as if I’d asked if they’d go one on one
with LeBron James.

But, hey, some people said the same about Enron. Still, I’d rather bet
against the euro. Shorting China today? Well, good luck with that, Mr.
Chanos. Let us know how it works out for you.
============================================
January 14, 2010
Texas Shuts Door on Millions in Education Grants
http://www.nytimes.com/2010/01/14/education/14texas.html
By SAM DILLON

Texas will not compete for up to $700 million in federal education
money, Gov. Rick Perry said on Wednesday, calling the Obama
administration’s main school improvement grant program an unacceptable
intrusion on states’ control over education.

Mr. Perry’s decision, days before a Jan. 19 deadline, interrupted months
of work by Texas officials and a consulting company financed by the Bill
and Melinda Gates Foundation to prepare the application for the federal
grant competition, known as Race to the Top. Texas had been eligible to
win up to $700 million of a total of $4 billion the department will
award for encouraging charter schools, improving teacher instruction,
overhauling schools and joining an effort to adopt common academic
standards.

“We would be foolish and irresponsible,” Mr. Perry said, “to place our
children’s future in the hands of unelected bureaucrats and
special-interest groups thousands of miles away in Washington.”

Mr. Perry, who is seeking re-election in November, is locked in a tough
Republican primary battle with Senator Kay Bailey Hutchison, and both
candidates have been trying to appeal to conservative voters.

Texas is one of two states, (Alaska is the other) that last year refused
to participate in a nationwide effort, supervised by the National
Governors Association and encouraged by the Obama administration, to
write common curriculum standards. That posture had put Texas at a
disadvantage in the federal competition. But the state education
commissioner, Robert Scott, argued in an interview in the fall that
Texas was well-positioned to win because of what he characterized as his
state’s pioneering work in school reform. In an interview Wednesday, Mr.
Scott said that his views had evolved and that the potential payoff for
Texas had been too small to justify giving up state control.

“Even if we won the full amount, it would only run our schools for two
days, so for that we weren’t going to cede control over our curriculum
standards,” Mr. Scott said.

Mr. Perry’s decision ended weeks of speculation about the state’s
intentions. Officials at the Texas Education Agency had already spent
700 to 800 hours preparing the state’s proposal, and the Gates
Foundation had spent some $250,000 to provide consultants to assist the
state.

Gayle Fallon, president of the Houston Federation of Teachers, the
state’s largest teachers union, said she supported the governor’s
decision because the federal competition appeared to be leading toward
adoption of a national test, which she opposes.

“I’m relieved because we’ve got enough problems with high-stakes tests
already,” Ms. Fallon said.

But Terry Grier, superintendent of the Houston Independent School
District, disagreed.

“I’m disappointed,” Mr. Grier said. “It was potentially a lot of money
for our state. I’m not one to sell my soul for money, but I have 100,000
kids in Houston who don’t read at grade level, and I don’t agree with
people who say resources don’t make a difference.”

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