The Currency Issue - G20 aftermath

Summit, summit, and after summit. G20 is over.

I promise this time not to make any typo which irritated so much one of my friend faculties ( sorry about that).

The hottest issue discussed during the summit was the apparent currency war between China and USA. One might actually think that it is some new issue suddenly on the global media agenda.

It is not. Indeed it roots from the very times of  Deng Xiao- Ping as China's head of state. It was him who told to the nation "Socialism does not mean being poor. Get rich by all means you can. It is not important if a cat is black or white, the important part is that he hunts for mice". With more or less these words Deng "encouraged" the nation with centralized carefully planned vision of economic growth. He started from getting hands on Hong Kong area and it's finnacial businesses and opening it's shores to foreign investment in simple-assembly electronic sector.

USA with raising wages in it's blue collar sector was very happy with this solution. Together with another stage of multilateral talks in WTO rounds, that was a strategy which supposed to be both successful for american businesses relocating their factories and for long-term democratization agenda which USA had actually never given up.

As I often say, West plans for 4 years term in office, East, including Korea, Japan, and especially China, plans on tens of years ahead. This is one of the factors totally ignored during any sort of economic actions and negotiations done by the Western powers.

China gradually accumulated and invested capital inflow since the very 80's. Hong Kong street educated financial tycoons advised and still do advise central government on what to do when and how to get richer and to checkmate USA on the global political and economic map.

Weak renminbi means long term exports of goods which conquer 25%-30% of the Western customers pockets with their affordable price. This as such has been a long term basis of Chinese growth. Only recently China invests in own R&D and focuses on own high-tech era in development.

So China secured lots of $ simply buying them off the forex market, investing in US treasury bonds or securing them out of trade. The first crisis encountered in 1998 when USA woke up and started insisting on Beijing to make the Yuan more real in value so the Chinese goods would no longer be that cheap.

The second crisis encountered in 2007 when during subprime mess $ got dramatically weaker and some China critics in Congress started advocating that stronger Yuan will bring blue-collar jobs back to USA and so on.

Third one is happening just now and is related to current $ situation in general.

By common sense economically it's nonsense to say that stronger yuan will change anything. China is no longer cheap labor market. And although manufactured good are decreasing as % of USGDP the high-skill and talent added value ones are still it's comparative advantage.

Current situation is a strong effect of superficially liberal full of mess lacking working transparent regulations American economy. And the American attitude to prosperity - if I can no longer afford Cherokkee 4x4 each year it means there is a crisis.

Finally in terms of politics Washington realized that it cannot insist on Beijing about anything, whether this be freedom press, transparency, human rights, etc., simply because it's time to be afraid of what actually China can do with $ and it can do a lot.

As in 2007 one of the Chinese scholars had put it very clear:" If Yuan gets appreciated dramatically we will be forced to sell our $ assets into the market. As long as the exchange rate is stable it's ok."

In both countries politics plays a major role and now it's the middle of struggle for dominance in the world between an emerging Asian dragon and mature, slow, but neverthelessly still strong American grizzly.

Maybe after all Deutsche Welle journalist was right on Friday when he said: "regarding currency issue, is it an advance in process if they talk?"

From my point of view, maybe it is. But the conversation can be pictured as above on the illustration.

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Have a nice day or night, wherever you are.
Even if you are worried about the economy or politics or future of the world as such, don't forget to show love, appreciate your friends and folks. After all that is what makes it all fuzz worth living.

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Illustration comes from safeheaven.com

Offtopicz: economy and culture

I am tired. Really tired so much that I can't sleep at night sometimes. It is my multitasking personality which makes this burden and I know I do it to myself and noone else does. Studies, radio, NG, museum, exhibition, photos, social life, thesis, etc. etc.

Today I have started analyzing the faces of economy in various corners of the world, especially I mean time spent at work, financial satisfaction, and many others.

Like a lot of people in Europe I have been previously convinced that agressive face of capitalism comes from USA and that if you do not wanna work 24/7 for shitty money as a first generation immigrant better don't go there.

But it seems that according to OECD comparison this is my homeland, Poland which takes the second place in the classification. Netherlands ( I have also lived there) takes the last place. So I have seen on my own eyes, talking to people and watching stuff. Polish were in Netherlands just as hardworking as Berbers, Marrocans and others. The prize for that comes only to fresh graduates after prestigious subsidiezed studies in the West, others need to proove themselves first. http://en.wikipedia.org/wiki/File:Yearly_working_time_2004.jpg

In Netherlands most of people leave home at 7:30 and go back home at 4 or 5 unless they have specific responsibility for network maintainance or managerial jobs. On Sunday only gas stations are places where you can buy anything as most of shops are closed. In East Europe most of shops operate on Sundays at least until 4 if not longer, not to mention Tesco or other networks.

The place South Korea takes requires deeper analysis. Does that 1st place mean that these people are the richest, the most happy or the country most effective? Not so sure. The responsibility structure is so mild that you never know if the goal gets accomplished on time. Many western managers I met mentioned that 3 Europeans do more within 3 hours until lunch than most of Koreans do until 4 pm. I cannot verify myself any of that as so far I am just a grant student or a university lab worker ( apart from freelance journalism), and this world is so much different from any corporate environment. Yet I have seen both hardworking and both lazy people, so it depends. Anyway Korea always accomplishes goal on time, so maybe that is what matters?

But I wish the most that the economic growth is not at the expense of the nation which has no real state law to secure it's interest at work and regulate labour issues. But for that there are needed leaders of changes, whose message can be heard.

In most of countries in the West such things were historically shaped by a long term social clash or dialogue ( mostly dialogue) and it took a 100 years to stabilize the situation. Maybe it's too much to expect a randomized process in any other corner of the world.

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It is also very nice to know that USA is still, after all, an eldorado. Of ideas.
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That reminds me of a coverage done for Trójka przekracza granice somewhen in 2008, when during the election year several radio reporters travelled through the States and interviewed average people on their feelings on crisis, elections, etc. Somewhere in Arizona in a very small city a lady said: " Yes, there is a crisis, but my neighbors will help me, I will help my neighbors and we will survive. If you want to feel welcome and accepted, come to us" I remembered these words for a long time.

From the cauch on the second floor in Warsaw,
Me.

National Branding and historical politics

....variety of ideas.
Today Korea Times has informed about the newest national advert in the US.
Korean ownership of the Dokdo Island will be promoted by 100 000 hand rubber bands in the USA, just after the full page article in New York Times and Times Square billboard.

This is just one of the actions of Korean authorities to promote the country and it's interests. Korean PR and soft power has been deeply involved in promoting Korean dramas ( soap operas) in the Far East, Korean music and contemporary youth bands, even Korean fashion brands.

This has caused increased numbers of Japanese and Chinease who travel to Korea just to learn the language or watch the house or caffeteria of their favorite amants from the soap operas ( here especially girls).

That would be enough on national branding in this post.

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There is however another interesting issue about Korean politics and foreign relations with it's neighbors.
Dokdo is an island otherwise called Takeshima by Japanese and is located in the sea south of Korean coast. There are some traces of natural resources on the island, but the whole conflict in Japan has deeper roots.

This is more about memory and historical politics. Japanese occupation has exceeded Hitler's regime in accuracy and implementation of methods and left huge traces of bad memories in both Koreas. So therefore the ownership of Dokdo is more a matter of national identity and common sense of harm which has never been excused for up till now. Historical politics in Korean education system builds many myths about nation's history as it helps to improve the identity and mobilizes human powers into any action for the common goal (whether real or imaginary).

There might be critics of such policy of the state which tells a lot of tales to Korean children, but on the other hand the same happens in Japan.

Contemporary Japan had not experience any denazification process as it was done in Germany post World War II. In the West it would not be accepted that Nazi officers are invited to tv stations where they are treated like national heroes in the 21st century in front of millions of young Japanese. This attitude is simmilar to the attitude of current Russian leaders who still try to deny the massacres of Katin ( see Katyń of Wajda if you are interested, but warning, the movie contains drastic scenes). However current Russian leaders stopped denying communist crimes, these crimes are nameless, they were done by anonymous people who "had their orders". This quote: "I had my orders" is also very often mentioned by Japanese veterans when they sometimes face more detailed quations about their actions during the war.

Tensions between Tokyo and Seoul are big and not easy to resolve. But time heals the wounds as I have mentioned before and young generation of Japanese raised on Korean Wave will show different attitude, also young generation of Koreans who have no historical burdens will be able to say: "It is past now. We will remember but we do not have to hate".

What will be with Dokdo then? I don't know, but knowing the energy of Koreans in fighting for their interests, it will be Dokdo and it will be Korean.

I am sorry if this post is not answering all as I write in haste this time.

Korea Times on Dokdo Bands:http://www.koreatimes.co.kr/www/news/biz/2010/04/123_63870.html

http://www.youtube.com/watch?v=mM1zyQ_zffM.... and this one a movie on Katin

Lenin, Friedman and starvation

After denomination of the currency in North Korea prices went high and people started facing hunger again. It took the North Korean government 2 months to react on the issue and in the late January Kim Jong Il held a special summit related to starvation crisis.

Since that time the central government sends 5 kg of rice daily to each People's Unit and from 5 to 15kg to enterprises and businesses (if one can call them such).
That caused the relief to citizens and no new cases of starvation have been reported so far.

Officials in local authorities are said to be punished if they do not supervise the aid properly and react to the circumstances.

All of that is a surprising reaction of the government which rules ruthlessly the communist state and where citizens have no rights whatsoever.

It is possible that this time if they do not react, people of North Korea will finally revolt against the regime.

The optimal social system for people to live in has been always a subject of dispute. Obviously democracy is the God's favorite, but economic conditions are the topic on the table.

More or less 130 years ago in Great Britain two social activists have invented basics of socialism which were later applied into bloody action by Lenin himself.

If we think about contemporary China or North Korea, that all was invented in Europe as a response to abusive capitalism with no welfare and social care.

On the surface communism is not bad at all. It assumes fair share of all goods between everyone involved in the system. But what is more in human nature is competition and comparison to others. Most of times we are happy to have more than others and it is just this way in our genes. To impose ideas which are against human nature one needs strong power and system of control, that is what happens in communism.

On the other hand some time ago in USA a guy named Milton Friedman invented the idea that the market regulates itself and that all players behavior is rational and aims for the best. That is not quite true and everyone knows as much.

But such a conflict remains. Conflict between a system of chances and responsibility and system of shortages and regulated life. People prefer to have, to possess and to be happy. This is in their basic needs.

Communism itself led always to the economy of shortages. And it was exactly that which made regimes collapsed provided that they were not aided externally.

Last thought which comes to my mind is that socialism in democratic states made enourmous career and settled down in the social and economic system, placed itself forever in Germany, France or Scandinavia. State protection system which is imposed by force will sooner or later collapse. Better sooner than later.