Raising the Red Flag on Red Capitalism

Posted by , 10th January 2011

China Stock MarketRick Carew
1/10/2011

The conventional wisdom, propagated by senior businessmen, pundits, and policy makers, holds that the 21st century is China’s for the taking, says Carew. He reflects on a book by Carl E. Walter and Fraser J.T. Howie who argue that China isn’t immune from normal economic laws as its cheerleaders argue. Scratch the surface and China’s economic model is less impressive than it looks. The authors discuss unacknowledged bad loans piling up within China’s system (implying that leaders have misallocated capital), and put its public debt at 76% of GDP. With an aging population and a weak social safety net, China cannot afford a banking crisis in the next decade. If and when one comes, Beijing could regret not creating a more resilient, genuinely capitalist market.

Carew is a former Asia M&A reporter for The Wall Street Journal.

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Friends with Benefits

Posted by , 5th January 2011

William D. Cohan
1/5/2011

Facebook is now considered to be worth more than Time Warner, DuPont, and Goldman’s rival Morgan Stanley. Cohan says it is worth the $450 investment Goldman Sachs pumped into the company. This is because Goldman’s cost of capital is close to zero since, as a bank holding company, it can borrow from the Federal Reserve at negligible interest rates. Any capital gain Goldman Sachs makes would be sheer profit. In addition it will have locked up the role of lead manager of Facebook’s initial public offering when it happens. Cohan also looks at other business deals Goldman has negotiated on its behalf and says it will come out ahead. The loser will be the average investor who will be left holding the bag when Wall Street realizes its performance doesn’t live up to the hype.

Cohan blogs about Wall Street and Main Street for The New York Times.

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The States Versus ObamaCare

Posted by , 5th January 2011

Pam Bondi
1/5/2011

As new state attorneys general take office in the coming weeks, Bondi expects an increase in the number of states challenging ObamaCare in court. No legislation in our history alters the balance of power between Washington and the states so much as ObamaCare does. The lawsuit brought by 19 states to challenge it is based on the notion that an individual’s decision not to purchase health insurance is not an act of “commerce” that can be regulated under Congress’s constitutionally enumerated powers. If the courts deem the federal health-care law to be constitutional, then there are no meaningful constitutional restraints on Congress’s power to regulate virtually every facet of our lives.

Bondi is the attorney general of Florida.

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China’s National Insecurity

Posted by , 22nd December 2010

ChinaJohn Lee
12/22/2010

As social unrest rises exponentially each year throughout China, the Communist Party remains as insecure as it has ever been. A regime that is awkward in its own skin and uncomfortable among its own people is always in danger. Beijing sees Liu Xiaobo’s Nobel Peace Prize as part of an international strategy to contain China’s rise. Chinese leaders observe that awarding the prize to past winners like Poland’s Lech Walesa, Burma’s Aung San Suu Kyi, and Iran’s Shirin Ebadi weakened the legitimacy of authoritarian regimes in those countries. Lee notes that Beijing’s official line has always been that reforms will only occur “when the time is right.” It had better democratize soon or domestic discontent will destabilize it.

Lee is a foreign policy fellow at the Centre for Independent Studies in Sydney and at the Hudson Institute in Washington, DC.

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In Belarus, a slide toward Eastern aggression

Posted by , 21st December 2010

LukashenkoAnne Applebaum
12/21/2010

In Belarus, Alexander Lukashenko was “elected” to a fourth term as president after a violent crackdown by his regime. The violence, says Applebaum, was evidence of Lukashenko’s weakness. Truly popular leaders do not need to resort to bloodshed and beatings to intimidate their opponents and shut down communication. Lukashenko rejected a deal with the European Union that involved Belarus receiving, among other things, more open borders in exchange for free elections. He did, however, sign an oil deal with Moscow. This represents the decline of the West. The United States and Europe are “out of money and out of ideas” and can not offer any “carrots” as attractive as Russian oil.

Applebaum is a weekly columnist for The Post, writing on foreign affairs.

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When Zombies Win

Posted by , 20th December 2010

MoneyPaul Krugman
12/20/2010

Even though free-market fundamentalists have been wrong about nearly everything, Krugman says they dominate political thought now more than ever. He points out that everything the right said about Obama’s economic policies was wrong, including warnings that interest rates would rise along with a hyper-inflation. They were also wrong about politics abroad, including idealizing Ireland as a shining example of sound economic policies. Krugman says it is one thing to stay true to your ideals and goals, but it is entirely another to open the door to what he calls zombie ideas because they could kill the economy.

Krugman is a New York Times columnist.

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A progressive’s answer to Obama

Posted by , 16th December 2010

Obama-Clinton.jpgKatrina vanden Heuvel
12/15/2010

The recent tax cut deal is yet another example of how President Obama’s centrist focus has resulted in failure to define his principles and values (and, by extension, America’s). While the author concedes that compromising on policy is part of the political game, she disagrees with compromising one’s principles. Strong leadership, says vanden Heuvel, should not be defined by compromise but by a clear, defensible vision and the mobilization of popular support. If Obama’s pattern of compromise continues, he may leave behind few achievements and a disillusioned Democrat party.

Katrina vanden Heuvel is editor and publisher of The Nation magazine.

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We’ve Only Got America A

Posted by , 16th December 2010

usaThomas L. Friedman
12/15/2010

We have only one America so we have to make this work. If it fails, our children will grow up in a different world and we will not like who picks up the pieces. Friedman looks at the role of China in the future–a country that tried to intimidate its trading partners from sending representatives to attend the Nobel award ceremony at Oslo’s City Hall after it rejected the Nobel Peace Prize given to one of its citizens, a democracy advocate who has been imprisoned. On the other end of the spectrum, Friedman wonders what the world would be like if individuals feel empowered to change the world by dumping state secrets at any time. He says a stable world requires that we get the best from both extremes while limiting the worst; it will require smart legal and technological responses. That job requires a strong America.

Friedman is a New York Times columnist.

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In Britain, outrage without a thoughtful outlet

Posted by , 14th December 2010

Great BritainAnne Applebaum
12/14/2010

Unlike their stoic acceptance of government spending cuts this fall, disgruntled British citizens took to the streets several times over the past month and engaged in riotous vandalism, presumably in response to raised university tuition rates. A younger generation feels no nostalgia for the austere postwar years. Applebaum suggests there is resentment on the part of young people whose baby boomer parents enjoyed free university tuition and other benefits from taxpayers. The British protests are similar to those that occurred in Greece two years ago, perhaps due in part to both countries lacking an “organized political outlet” through which to vent their grievances.

Applebaum is a weekly columnist for The Post, writing on foreign affairs.

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