Chinese Manipulations: a Weird View by mattsteinglass
January 27, 2009, 5:00 pm
Filed under: Uncategorized

Bret Swanson in the WSJ thinks it’s not the Chinese who have kept their currency too low; it’s the US that flooded the world with too many dollars after 2005, after first failing to supply enough dollars in the late ’90s.

It looks at first glance as though when you have a country like China that mandates that every dollar exchanged for a yuan go through a central bank which sets an exchange rate by fiat, and another country that pretty much lets its currency float except for setting base interest rates by manipulating the government bond market, it’s the country that has the nonconvertible currency and the exchange rate set by government fiat that can be more properly said to be “manipulating” its currency. But what do I know? My greater concern is that the proliferation of potential reasonable and unreasonable interpretations of economic phenomena is potentially so great that nobody can ever coalesce around a reasonable view of what actually happened, and the potential for deliberate obfuscation in bad faith is insurmountable.


Chinese manipulations by mattsteinglass
January 24, 2009, 1:16 am
Filed under: Uncategorized

Another few hours, another thing I don’t understand: Tim Geithner says China is “manipulating” its currency exchange rate, and James Fallows says Chinese will not “respond blandly” to being labeled “manipulators” when they hold over a trillion dollars in US debt. Here’s the thing: the Chinese are accused of using their management of currency exchange to keep the yuan artificially low against the dollar, to prop up exports to the US. Some people are muttering that the Chinese might retaliate for Geithner’s affront by dumping large amounts of US bonds. But the reason we’re afraid of that happening is that it would…cause the dollar to fall dramatically. Which would cause the yuan to rise against the dollar. Which would be a clear case of nasal face-spiting, since the whole point of the Chinese “manipulation” was to keep the yuan low against the dollar. And given that, how likely is it, really, that China is going to retaliate in this fashion? Doesn’t Geithner have the Chinese in a box, here?

Or am I, as usual, missing something?

Why only “shovel-ready?” by mattsteinglass
January 23, 2009, 6:08 pm
Filed under: Uncategorized

So here’s something I don’t understand. Supposedly, long-term infrastructure investments are useless as countercyclical recession-fighting stimulus because the money takes too long to get flowing. Only “shovel-ready” projects work.

But let’s look at the market for, say, high-voltage transformers. Right now there’s very little demand for high-voltage transformers, I imagine. So workers at companies that make them are probably getting laid off. But let’s say the government declared that three years from now, after planning and review are complete, there’s going to be a massive reconstruction of the national electric grid. Wouldn’t the guarantee of that future demand be a stimulus to companies to keep production capacity in place? I mean, if you knew the government was going to be ordering 10,000,000 widgets in 2012, wouldn’t you take out a loan and go into the widget business? And if you were a banker and somebody applied for a loan to start a widget company, and you knew the government was planning to order a lot of widgets in a few years, wouldn’t you be inclined to extend credit to that company? And isn’t this how investment gets going and carries a country out of a recession? Or am I missing something here?

Bankers can waste money faster than bureaucrats by mattsteinglass
January 23, 2009, 1:32 pm
Filed under: Economics

Megan McArdle asks:

How come progressives opposed to TARP II are very, very worried about the cost to the taxpayer, but not worried at all by the cost to the taxpayer of a massive fiscal stimulus, a lot of which is nearly guaranteed to be wasted by virtue of the speed with which the money must fly out the Treasury’s door?

It’s a fair question. Two responses come to mind. The first is that the spending contemplated in the fiscal stimulus bill largely consists of programs that progressives have been demanding, on their own merits, for many, many years now. That includes everything from increased spending on transportation infrastructure to expanding SCHIP. Conservatives may think these programs are wasteful, but progressives don’t, so that’s why they’re not so worried about wasting the money.

The second response is that TARP I has made it clear that financial institutions appear to be able to waste money at an astronomical pace that simply dwarfs the excesses of any government bureaucracy (except perhaps the Pentagon). $350 billion is literally (and by that I mean “figuratively”) enough money to fully fund every single proposal made by any wild-eyed progressive since 1992. That may be a bit off, but not by much. And we’ve thrown that money into Wall Street in just 3 months, and Wall Street is now largely unable and certainly unwilling to account for it; it is not clear that the money is being used for anything apart from propping up a few banks that ought to have failed. If we spend $350 billion on infrastructure, the American people will have bought a lot of infrastructure. Some may be useless, but most won’t. Instead we dumped it into financial institutions, and because the equity situation remains unclear, it’s not clear whether the American people bought anything. It appears that when you sign over large amounts of taxpayer money to Wall Street, one of the things that can happen to it is that it can simply cease to exist. As inefficient as some government agencies are, they can’t make money disappear that fast without any results.

The attitude shift here comes on top of what happened during the Iraq War, when it was revealed that while spending an extra couple of billion dollars a year to send every poor American kid to preschool was wasteful and unaffordable, we could easily come up with a trillion dollars for a rather useless war. At that point, a lot of progressives who had internalized valid conservative points about budgetary constraints and bureaucratic inefficiency decided to, well, de-internalize those points.

Subways are people-movers between shopping malls by mattsteinglass
January 23, 2009, 11:04 am
Filed under: Uncategorized

Matthew Yglesias writes that for encouraging greater density and more urban transit, we don’t need to demand a whole lot of implausible new development right away, but we should start by scrapping the rules that prevent people from doing dense development. I’m not sure this is an ambitious enough rhetorical strategy for getting Americans more enthusiastic about funding transit, though maybe I’m just increasingly allergic to anything with even a hint of laissez-faire about it (Yglesias isn’t really saying “take away the bad rules and smart growth will arise naturally” but there’s sort of a suggestion of it).


Kowloon Station in Hong Kong is a rail station, shopping mall, and residential development with an airline check-in counter so you can check your bags before boarding the train to the airport.

Kowloon Station in Hong Kong is a rail station, shopping mall, and residential development with an airline check-in counter (at left) so you can check your bags before boarding the train to the airport. Photo Matt Steinglass 2008.



Anyway, my favorite example of brilliant transit development strategies is the Hong Kong model, where the developers pay for the construction of subway stations in exchange for the rights to build the massive shopping complexes on top of them. I think this points towards a misunderstanding in the US about what modern rail transit is. Modern rail transit is basically a people-mover that connects shopping malls to each other. It’s incredibly convenient — you can zip from one shopping mall to another without ever having to go outside or get back into your car. Then you can connect office complexes to those shopping malls for added convenience, and even residential condos for ultra convenience. In fact in the photo above what you’re seeing is a downtown shopping mall and residential and office complex that has a check-in counter for airline flights so you can actually check your bags at the subway station downtown before taking the train out to the airport. Obviously I don’t ever expect anything that perfect to be achieved in the backward US of A, but the point is clear: these shopping mall people movers called “rail transit” are incredibly convenient.

Plus it has all these incidental benefits, like saving Planet Earth. Anyway, this is why building rail systems that actually prohibit dense development next to the stations makes no sense at all; and I think when you conceptualize rail transit as a way of linking shopping malls to each other, which is really what it is in Singapore, Hong Kong, Shanghai, and even in Paris for that matter, then the whole thing makes a lot more sense to Americans who don’t live in New York or Boston or  SF or Washington, DC.

Courtney Hazlett, please examine the personal entertainment system on the seat back in front of you by mattsteinglass
January 23, 2009, 10:00 am
Filed under: Uncategorized

The MSNBC culture reporter thinks only “elite, effete” people saw and liked “Frozen River”, because people who don’t live in effete, elite big cities would have to drive halfway across their state to find an art-house cinema where it played.

Guess where I saw it? On the plane. I watched it right after I watched another movie loved by elite, effete urbanites: “Batman: The Dark Knight”.

My new blog at by mattsteinglass
January 21, 2009, 11:21 am
Filed under: Uncategorized

This is notice that most of my Vietnam-oriented blogging efforts are now going to be posted here at, the very exciting new internet-based global news organization that’s just been launched by former Boston Globe foreign correspondent Charles Sennott. (This is GlobalPost’s front page. I’m GlobalPost’s Vietnam correspondent. My bloggish thing over there is a “Reporter’s Notebook”, where I’ll be posting frequently; my longer traditional journalism efforts will go up on the site’s main pages.)

With newspapers all over the place shuttering their foreign bureaus, GlobalPost is moving into a very underserved information market, and I think it’s a pretty exciting venture to be a part of. So go check it out.