Chinese RMB sends Global Markets Crashing

It doesn't take a finance guru to tell me about the volatility of the Chinese RMB and its possible affect on the global economy. In a previous post last September, I mentioned that the bad loans in China are estimated to be between 500-650 billion dollars. That's over half a trillion dollar. That's a huge chunk a' change we're talkin' hea'.

Let's pretend for a sec. Say you came to me asking for advice about investing. I told you to invest in the stocks of a certain bank. However, you already know that over 7.5% of this bank's loans are bad- bad meaning they are in default and probably won't be repaid. Would you still listen to me? So why are people still knocking down doors in China?

From experience, every emerging market needs to crash and burn a bit before it prospers into its Golden Age. 1987 US Crash, 1989 Asian Crisis, the Dotcom Bust. They all resulted from some fat elephant in the corner, who probably sold bad loans to fellow fat elephant friends. Today, we experienced a taste of what it would be like if the Chinese market really decides to take a dump. Is China on an inevitable path towards mayhem? Was today's financial tremor enough to shock people back to their senses? Should we all start running to our mattresses, with the anticipation of a nauseating global crash? Perhaps. As the world stage gets smaller and smaller, our interconnectivity renders us more and more dependent on the others' well-being. Look what happened when a tiny earthquake hit Taiwan last December. But so far investors have been optimistically undeterred. JVs and foreign entities are setting up shop faster than you and I can say "ni hao." In cities such as Shanghai, the expatriate community has more than doubled since 2003. China's GDP went up 10.7% in 2006 to 20.7 trillion dollars, and with the prospect of the 2008 Olympics in Beijing along with a strengthening position in global politics, potential capitalists have been flocking to China's door. But is all this a surefire formula for success? Will China be able to smooth out this bubble with the grace and ease that will affirm its role as an emerging world power? Maybe. Then again, the positive economic drive China has had such good luck with so far could just be the inauspicious calm before the storm.

My Newest Business Venture...

My German friend Felix found this on Shamian Island near Guangzhou.
The sign reads "Free stroller for adopted babies."

Happy Happy Pig Pig!

Holy smokes. Literally. It's 00:44 am Chinese New Year Eve, and just in my neighborhood alone we've burnt through enough fireworks that'll put all of Texas on July 4th to shame. A Google Earth Hack of China should reveal an expansive blanket of smoke covering the whole of this big ol' country. For the past sixty minutes, colorful, sometimes circular patterns have been pounding the sky non-stop, one after another. In my neighborhood there are about 15 high-rise buildings, and each alone has stocked up enough ammo to last through the year (I swear my complex has a van parked out front full of explosives.) Strings of red firecracker explode from the 10th, 20th, 30th floor of the Shanghai skyline.

Funny, these Chinese people. I live in a country in which the idea of celebrating is to place ten pounds of fully loaded fireworks directly under a set of power cables, and then proceed light them all up. After igniting the explosive fireworks directly under the power cables they then watch from no less than 15 feet away (because, apparently, any further you wouldn't be able to see a single darn thing) But however we celebrate it, today signifies a new beginning, carving out a fresh start, a resetting of all parameters. Goals are decided, reflections made, and most importantly, little red envelopes are passed out by the lovely folks of marriagedom. Happy New Year!

Fuzhou: Inopportune Opportunities

Recently a group of friends and I took a trip through eastern China before flying into Thailand for three weeks. Though not exactly remote cities, Fuzhou and Xiamen were definitely a different cup of tea from the fast, glamorous but slightly seedy flavor of Shanghai. In the past, my experience with the Fukinese is limited to the New York Chinatown street vendors, who have established an intricate underground system of selling knock-off merchandise without getting caught by the NYPD. Walkie talkies, an unintelligible dialect, and mad guts all formulate an impressive game of Dodge the Man In Blue. But bootleg gear isn't this community's bread and butter. Fuzhou, a quiet but prosperous city of roughly 6.6 million, is the major source of undocumented Chinese American aliens residing in the United States. This particular industry emerged in the 70's to atone for China’s political repression and policies of sterilization and forced abortion. Patrick Radden Keefe of the New Yorker wrote an entertaining piece about the exciting but infamous oddyssey of New York Chinatown's most notorious human trafficker- a short petite woman named Sister Ping who grew up in Fuzhou. Aside from illegal racketeering, however, Fuzhou also has some of the dirtiest and most ill-maintained zoos in the world. A recent article in the Speigel piqued our interest in Chinese zoos. It's a typical Chinese fallacy: Jump on an idea without fully realizing the actual overhead and maintenance it takes to run it. Many zoos are opened almost overnight, most privately owned, with a large inventory of animals with the assumption that it will undoubtedly attract tons of animal-loving visitors. Unfortunately the budget is often undermined, visitors never show, and ultimately the zoo falls into human-induced Darwinian chaos- birds are fed to alligators, alligators to the lions, and the lions sold to the Chinese black-market for food. The situation wasn't quite so dire at the Fuzhou Zoo, but I've never seen a more sad, depressed and luckless bunch. Monkeys in dirty square boxes. An orangutan, unflinching, unmoving, and spiritless. A whole pack of wolves, stuffed into a series of cages no larger than 10 ft by 40 ft total. The list goes on.

But I guess its all a bit comical, even absurd, my complaining of improper animal treatment in Fuzhou. I mean, just down the street, someone probably just paid $10,000 US dollars to be shipped on a month-long journey to be illegally smuggled to the states through some of the shadiest places on earth, with a likelihood of dying on the way, so that s/he can spend the next five years of his/her life paying off the debt of the cost of freedom. "But that's voluntary", one may argue in defense of the disadvantaged caged ones. A good rebuke would be to ask, "And who are the caged ones?" Hmmm...

Hosanna Wong: My very own Wong Kar Wai

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