Owning Toxie the Toxic Asset

A mortgage brokerage in the US advertising subprime mortgages in July 2008.

The infamous toxic asset, widely blamed for the pre-2007 property bubble and resulting economic crash of 2008.  They were all over the news during the crash but although almost everyone knows about them and how bad they are very few people really know what they are and how they work.  Even fewer people know that you, yes you, can buy and own a toxic asset.  In an nutshell a toxic asset is a collection of pieces of bank mortgage portfolios.  Which is another way of saying they are slices of slices of peoples mortgages

In this episode of This American life from November 2010 tells the tail of a toxic asset that the Planet Money team bought and tried to unpack to get some idea of whose mortgages they had bought.  In the end their toxic asset, which they named Toxie, dies a death that only a toxic asset can die when enough mortgages in that portfolio default and the asset gets "frozen."

You can listen to this facanating episode of This American Life here.

The Economist: Comparing Chinese provinces with countries

I want to thank Cui Zhiyuan for letting me know about this interactive map that the Economist recently put out.  The map is a comparison of Chinese provinces with countries in the rest of the world.  The map charts which countries in the rest of the world are the economic and demographic equivalent to Chinese provinces.   The map puts into perspective the shear size of China's economy and population.

You can see the map for your self on the Economist's website here.

Europe's 1848 is North Africa's 2011

The Great Chartist Meeting on Kennington Common, 10 April 1848.

Protesters march on Avenue Habib Bourguiba in downtown Tunis, 14 Jan 2011.

With a the current wave of protests, revolts, and revolutions sweeping across the Arab world these days understanding waves of popular revolts has become more important.  Particularly when those protests, revolts and revolutions are focused on a specific geographical area and are all making, what amounts to, the same demand from their corrupt, autocratic and dictatorial governments.  That demand being for greater liberty.

This is not the first time the world has seen such waves of protests against bad governments by the people calling for greater civil and political rights.  In 1848 a wave of popular protests and revolutions swept through Europe effecting almost every country on the continent.  The only countries that did not experience a revolution during this period were the United Kingdom, Netherlands, Ottoman Empire, and the Russian Empire.  The United Kingdom and the Netherlands already had popular revolutions in the 17th century (the UK had the Glorious Revolution whist the Netherlands fought a bitter war with the Spanish Empire to declare its self a republic followed by the Batavian Revolution) and were on the road to expanding their peoples liberties whist both the Ottoman Empire and the Russian Empire would have to wait another 60 or so years before they would experience revolutions of their own.  The Ottoman Empire's revolution lead by Attaturk would transform what was left of the Ottoman Empire into modern day Turkey.  The Russian Empire experienced many revolts before the successful October Revolution and very brutal Russian civil war transformed the empire into the Soviet Union.

In many ways Europe before 1848, much like the Arab World today, was ripe for popular protests and a change of government.  An popular press expanding and extending political awareness amongst the people of industrializing Europe.  Similar in effect to the emergence of Al Jazeera and other Arab satellite channels in addition to the introduction of the internet in the Arab World today.  Europe at the time had also been experiencing a series of economic downturns and rising food prices.  Also similar to the stagnant economies, high unemployment, and rising food prices in the Arab World today.  All of this leading to increasing levels of poverty amongst the working poor.  The spread of modern ideologies, most notably liberalism, in pre-1848 Europe also contributed greatly to the revolutions as people were presented with new ideas of how they should be governed and what rights they were or should be entitled to.  Again, this is similar to the spread of liberal and other modern ideologies coming from the West through the process of globalisation in the Arab World today.

On this note of shared revolutionary experiences in both the Europe of 1848 and the Middle East & North Africa of today that I recommend the following book by Mike Rapport on the revolutions of 1848.  It will be of great interest to anyone with a strong interest in this sort of popular wave revolutions.

 1848: Year of Revolution, by Mike Rapport, Basic Books, 2009.  Purchase at B&N.com | Purchase at Amazon.com
Since I have not finished reading my copy yet here is a review by Gilbert Taylor from Booklist:

In this account of a turbulent year in which most European thrones were shaken or toppled, Rapport smoothly blends drama of battles on the barricades and perspective on the causes and consequences. As ever in revolution, severe economic distress of workers dovetailed with protest by liberals and radicals to ignite a political explosion, initially in Italy but contagiously in France. Rapport’s telling of the February Revolution in Paris, and of ensuing popular revolts in Prussia, the Hapsburg Empire, and the Italian states, periodically pauses for his keen observations about disagreements within the temporarily triumphant revolutionary camps. After the political revolutions, discord between liberals hoping to establish constitutional order and radicals fomenting social revolution gave conservatives and reactionaries openings to mount counterrevolutions. Such are the political labels of the contending forces, but Rapport’s emphasis on leaders installed in the history books about 1848—including Mazzini, Kossuth, Bismarck, and Marx—reminds readers of the force these key individuals exerted on the course of events. Striking an excellent balance between narrative and explanation, Rapport will engage the history audience. --Gilbert Taylor --This text refers to the Hardcover edition.

Al Jazeera's daily blog on the situation in Libia:  http://blogs.aljazeera.net/node/4621/middle-east/2011/02/17/live-blog-libya#feb17

Radiolab: What Does Technology Want?

A carbon filament lamp.

In this radio program from Radiolab Steven Johnson (author of Where Good Ideas Come From) and Kevin Kelly (author of What Technology Wants) discuss how and why inventions and ideas come about at perticular times.  Pointing out that certain inventions, such as the light bulb, will be invented by many different people in different places within the same short period of time.  Even though this invention might not have even been conceived of only a few years before.  For example, apparently there were up to twenty two different inventors of different versions of the incandescent light bulb before Thomas Edison invented is own version.  The version that would light up the world.

They go on to discuss why this is the case, noting that many inventions and ideas -lets just call them innovations- require other related innovations to come before them.  They note that each successful innovation builds off many different innovations that come before them.  For example, the light bulb could never have been invented with out advances in vacuum technology and glass blowing techniques that would allow a vacuum to be produced inside an incandescent light bulb.  Not to mention the need for electricity to have been developed before hand along with an effective method of reliably and economically generating it.

I think Isaac Newton said this best when he said:  "If I have seen further it is only by standing on the shoulders of giants."

You can listen to the full show on Radiolab here.

Quote of the show: "You are technology."
It makes more sense then it sounds when you hear the show.

BBC Documentary: "The Chinese Are Coming"

This documentory series by the BBC looks at China's commercial expansion into the rest of the world.  Presented by Justin Rowlatt the series first looks at China's increasing involvement in southern Africa and then moves on to South America, North America and the rest of the world. 

The first two episodes, which you can watch below, were first aired on the 8 February 2011.  It is well worth watching to anyone with an interest in Sino-African relations.

Program summery on BBC 2 can be seen here.

BBC Documentary: "The Chinese Are Coming" (Part 1 of 4) 

BBC Documentary: "The Chinese Are Coming" (Part 2 of 4)  

BBC Documentary: "The Chinese Are Coming" (Part 3 of 4)

BBC Documentary: "The Chinese Are Coming" (Part 4 of 4)

A story of political and economic success from Barbados

Parliament building of Barbados where in 1991 the people came up with a remarkable solution to a common big problem.

This episode of This American Life (episode: 410 Social Contract) from June 2010 deals with "the social contract and what happend to it during dire economic times."  The first act looks at a classical case of what usually happens when a government is faced with a shrinking budget, increasing defecates and must make budget cuts, the current (2010) state of New York state's budget and the political gridlock that is preventing the state from making the nessersary compromises, both political and economic, to save the states finances.

The second act, 37miniuts into the show, is more interesting.  It looks at one of those rare cases when people came together to make the necessary compromises to save the government from a almost going bankrupt.  Although in this case it was more a matter of running out of foreign exchange then a classical bankruptcy.  But for a small island nation such as Barbados, the subject of this segment of the show, running out of foreign currency can be just as bad.  

The segment goes on to make a startling comparison between Jamaca and Barbados.  Two very similar Afro-Caribbean countries in terms of economic well being at independence and with a similar parliamentary political system and culture.   Today one is poor, corrupt and politically intolerant of opposition, the other is inclusive, united and has strong social institutions to build compromises that enhance the welfare of everyone on the island.  Needless to say, the troubled nation is Jamaica and the successful one is Barbados.

The account of Barbados's problem, a fiscal problem brought about by an economic recession, and the way in which different segments of society (labour unions, employers, government, and others) can together to solve this problem and the positive social institutions that remain from the crisis that serve as a forum for dialogue and cooperation between these groups today is nothing short of inspiring. 

Prologue of act II:

We hear recordings from all over the country—and the world—of politicians arguing over budgets. (2 minutes) 

Act Two. If You Were Stranded on a Desert Island and Could Only Bring One Economic Plan...  Why is it that Barbados and Jamaica faced almost identical financial crises, but now Jamaica is incredibly poor and Barbados is prospering? Alex Blumberg reports on the surprising strategy Barbados used to survive its crisis. Alex first learned about this story from a paper by Peter Blair Henry, the dean of the Stern School of Business at New York University. (22 minutes)

 Listen to the show here:

Chinese Politics Recomened Reading list

Governing China: From Revolution to Reform (Second Edition), By Kenneth Lieberthal, 2003. Purchase at B&N.com | Purchase at Amazon.com
Because I am feeling lazy right now here is a review by Reed Business Information:
In the past decade, China's dramatic economic growth has captured the world's attention. But there is still lingering uncertainty about its future, emerging from the inconsistencies of China's current political situation. The long history of periodic political turmoil has revealed some fundamental and inherent weaknesses of the Chinese political system. Lieberthal, an experienced China scholar, provides a systematic approach toward an understanding of the complex governing organizations of China from its imperial past, through the 20th-century revolutions, both Nationalist and Communist, until the current regime. Unlike many other China experts, Lieberthal doesn't make any predictions. Through a close look at the largest bureaucratic structures, the actual allocations of power in front and behind the organizational facade, he illuminates the difficult issues and challenges facing contemporary China. Highly recommended.?Mark Meng, St. John's Univ. Lib., New York
Copyright 1995 Reed Business Information, Inc. --This text refers to an out of print or unavailable edition of this title.


What Does China Think?, By Mark Leonard, published by Fourth Estate, 2008.  Purchase at B&N.com | Purchase at Amazon.com
This delightfully short and concise book (only 164 pages long) gives the reader a fascinating insight into how policy makers and interlectuals in China see the world in which they will play an ever increasing role in shaping in the future.  I was particularly delighted to see one of my own professors from Tsinghua Unviersity, Cui Zhiyuan, featured in the book.  The author, Mark Leonard, is one of the most important and influential on British  and European foreign policy.





The Party: The Secret World of China's Communist Rulers, By Richard Mcgregor, Harper, 2010.  Purchase at B&N.com | Purchase at Amazon.com
Mcgregor begins his well researched and revelatory book with a comparison between the Vatican and the Chinese Communist Party.  Noting their shared cultures of impenetrability, secrecy, and pervasive influence. 
 is a journalist for the Financial Times.  Mcgregor looks at the party's influence over China's economy, military and local governments.  Describing a Leninist political system that is at odds with Western standards of management and transparency.  He has highlighted the need for the party to evolve in an the context of the 1989 crackdown, globalization, and technological innovations; providing insight into how the party has and has not been able to adapt.

China's Communist Party: Atrophy and Adaptation, By David Shambaugh, University of California Press, 2009. Purchase at B&N.com | Purchase at Amazon.com 

Few issues affect the future of China--and hence all the nations that interact with China--more than the nature of its ruling party and government. In this timely study, David Shambaugh assesses the strengths and weaknesses, durability, adaptability, and potential longevity of China's Communist Party (CCP). He argues that although the CCP has been in a protracted state of atrophy, it has undertaken a number of adaptive measures aimed at reinventing itself and strengthening its rule. Shambaugh's investigation draws on a unique set of inner-Party documents and interviews, and he finds that China's Communist Party is resilient and will continue to retain its grip on power.
Copub: Woodrow Wilson Center Press 

 Personal note: I have it on good authority that this book is now banned in China.  Having read this rather dry but penetrating and well researched book I can only conclude that it was most likely banned because it discusses too many uncomfortable truths and provides strong insight into the thinking behind much of the Communist party's decision making process.  Conclusion, in this case a Chinese government ban is a vote of confidence in the book's authenticity and the power of its analysis.  And if my source is wrong and it isn't banned, well it is still worth reading for anyone with a strong interest in post Cold-War Chinese Communist Party thinking.
- Douglas Scott

China's Political System: Modernization and Tradition, By June Teufel Dreyer, Longman Publishing Group; 8th Revised edition edition, 2011.  Purchase at Amazon.com 

"Dreyer provides a comprehensive and up-to-date survey of China's political, economic and social landscape. Rather than providing a static overview of existing institutions and processes, the author convincingly shows how the lasting struggle between external influence and China's own tradition underlies changes in China's political system."--Yi Edward Yang, James Madison University

Profile of Justin Yifu Lin by Evan Osnos

 This article written by The New Yorker's correspondent in Beijing, Evan Osnos, traces the life of one of China's most important economic reformers, Justin Yifu Lin.  Lin is with out a doubt one of the most important people in the story of China's economic rise, particularly in the early years during the 1980s.  The article tells the Lin's fascinating life story from his early days as a student leader in Taiwan to his dramatic arrival in mainland China as well as his development as an economist and his role in creating the policies that have helped fuel China's spectacular growth. 

You can read the abstract of his article here however if you want to read the full article you will need to buy it from the New Yorker or read it in the October 11th 2010 edition of the New Yorker Magazine.

This American Life: What is money?

Stone money near the village of Gachpar on the island of Yap. 
This object is about 8 feet or 2.4 meters high.

On the 7 January 2011 This American Life broadcast a show on the invention of money and what it is. 


The section where Jacob, one of the shows producers, talks about the island of Yap and their unique currency is a perfect illustration of how money, whether it is fiat money or gold or stone, only has value because everyone in society believes it has value.  The fact that they chose to use worked stone from a far away island that is 200km from Yap also illustrates that the only true value of anything is in a persons labour.  These stones represent an investment of the islands surplus labour in a form that is tangible and that does not loose intrinsic value over time or though weir and tear thereby making them a perfect medium of exchange (in other words: money).

Prologue from This American Life:

Ira Glass speaks with several members of the Planet Money team, who all found themselves—in the course of their reporting—independently asking the same stoner-ish question: What is money? Ira and Planet Money producer Jacob Goldstein discuss a pre-industrial society on the island of Yap that used giant stones as currency. The book that Jacob read about Yap is called The Island of Stone Money. (10 minutes)

Listen to the show here.