I Have a Bad Feeling About This

We now have money to give to banks and other organizations, in a bid to bail them out. But money does not grow on trees. We are able to get that money because foreign lenders supply it. If it does not appear that government will be getting repaid, foreign lenders will be worried that they are throwing good money after bad. The supply of easy money may dry up. That is economically problematic, to say the least. What gives me a bad feeling at this moment is the thought that the $100, or $100 million, that we are giving to a certain banker now, will be money that we will desperately need for food and other essentials later. It has long been the case that just a few dollars (sometimes, even pennies) would be sufficient to save the life of some Third World wretch. Our bailout talk does not yet contemplate the possibility that, in the worst hard times, a similar financial logic may apply at home as well.

The American Renaissance

The timing is pretty good. John McCain can't possibly be as bad as George Bush has been, and for purposes of presenting an image of a new American, Barack Obama will likely be much better. Especially in the President Obama scenario, we may now be entering into an age where the United States comes to look increasingly attractive. One reason for saying so is the general investing principle that, when things look too ugly to believe, they probably are not really that ugly. The Bush/Cheney administration has done so very much to depress the stock of America. It is realistic to expect that any next president would cast the nation in a better light. Obama certainly seems capable of doing so; and there is some chance that McCain, if elected, will prove to be much less regrettable than some of his campaign tactics and statements might suggest. Both are, in any event, talented and experienced individuals. Another reason to expect a change in America's global reputation is that the rise of China seems likely to provoke considerable anxiety around the world. It is true that much of the American effort and attention abroad has been steered by people of money and power, as distinct from people of principle. Even at their worst, however, American abusers of power and wealth have had to consider the possibility of lawsuits and investigations -- civil, criminal, and journalistic -- that, sooner or later, might expose their misdeeds and undermine or taint their legacies. This is not yet the case in China. To compare recent examples, the Bush administration faced many hurdles in its efforts to commit human rights abuses in places like the prison at Guantanamo Bay, and the pendulum is now swinging back. There will be innumerable investigations, articles, interviews, and tell-all books in response to such abuses. In China, meanwhile, the collapse of poorly constructed schools during a recent major earthquake appears to be attributable to massive corruption on the part of local officials and construction enterprises; yet China's response to this is not to learn from it, much less to air its dirty laundry in public. The school collapses join the Tienanmen Square massacre as major catastrophes that will simply fade away into the past, if the Chinese government has its way. Ideally, Americans would not commit horrible atrocities or exploit other peoples. As a dim second-best, one can at least hope and expect that there will remain a belief in justice, and a number of ways to pursue it, within the American culture and government. Whatever tales may have been told about American soldiers to Japanese soldiers and civilians during World War II, when it came to the end, the decision was clear: surrender to the Americans, not to the Russians. The brief American occupation of Japan compared quite favorably to the postwar Soviet occupation of Eastern Europe. America was, and remains, the kind of occupier from which an occupied land could expect some openness and respect. Again, notwithstanding the atrocities, American ambitions in Iraq do compare favorably against Chinese ambitions in Tibet or Sudan. The United States also appears likely to retain a relative attractiveness, compared to China, in terms of its natural environment. There has been a long-term American commitment to the outdoors, one that has cost a great deal of money that could have been pocketed by people who would have liked to cash in on real estate values and mineral rights in national parks and other preserved lands. Even a bankrupt municipality rarely thinks seriously about selling off the city park. China has a nearly permanent disability in this regard. It has too many people. Those people want food, shelter, and ultimately a middle-class (or better) lifestyle. Unless environmental conditions deteriorate to such a gross extreme as to enforce other values upon those individuals, the present course suggests that the average Chinese person is going to focus on lifestyle and childbearing, rather than the environment, for the foreseeable future. Tourists will still want to see China. But it is not likely to be considered one of the world's most attractive travel destinations. The Bush/Cheney administration has given the world's people many incentives to want China to replace or counterbalance the U.S. China, as the new kid on the block, has been positioned to gain much attention and prestige from the present state of affairs. When the dust settles on the 2008 Olympics and the Bush/Cheney administration, however, some of China's novelty is going to begin to wear off, and there is apt to be a positive reappraisal of the U.S. contribution to the world's welfare. The United States is the sort of nation whose culture gives rise to a Peace Corps and to robber barons, from the 19th century to Bill Gates, who ultimately devote their fortunes to charity. It is not that every robber baron followed such a path, nor that every college student longs to join the Peace Corps. It is that such orientations do endure and are respected. We actually believe in soldiers giving candy to kids in occupied lands. Despite our leaders' macho denials of interest in "armed social work" or "nationbuilding," circa 2003, that is exactly the kind of commitment to which we have proved capable of allowing ourselves to be yoked. For all our arrogance and exploitation over the past half-century, we do not have a 2,000-year history of considering ourselves the center of the world. As China becomes stronger, people everywhere are going to become more concerned about that difference. In financial and, eventually, military terms, China will increasingly become a rival of the United States. In doing so, China will be following the path of the Ugly American who threw his money and weight around, starting especially in the 1950s. Thus, at the very time when China is making itself more of a challenger to the U.S. in those regards, it will ironically be making itself less competitive against the U.S. in terms of values and ideals. The land that could learn from (and become famous for) its Buddhist and Taoist heritage will instead become the latest incarnation of an exploitative and corrupt capitalist model -- just when the likes of Obama may be swinging America back toward its best values. At such a time, it may appear that the true deficit of a nondemocratic regime lies not in its capacity to manage, but rather in its difficulty in inspiring its subjects with a vision. A generation from now, China will have developed into a somewhat more mature capitalist society. Its people will have more of a say in things. There will be greater awareness of environmental and spiritual matters. China, too, may be approaching its own low point in the next few years. What remains unclear is whether China will recover from that sort of low point with imagination and creativity, or will instead continue to follow examples borrowed from other countries -- previously, the U.S.S.R., and more recently the U.S. At present, it seems that China will not be a leader in the competition for the best ideals of humanity. If the U.S. is in that race, its competitors will most likely be in Europe or, perhaps, India.

Catching Up: Best of 2004: November & December

Here's another installment in the continuing effort to distill the best postings from my personal mailing list. These are from November and December 2004. * * * * * The Cowboy

An old cowboy sat down at the bar and ordered a drink. As he sat sipping his drink, a young woman sat down next to him. She turned to the cowboy and asked, "Are you a real cowboy?" He replied, "Well, I've spent my whole life, breaking colts, working cows, going to rodeos, fixing fences, pulling calves, baling hay, doctoring calves, cleaning my barn, fixing flats, working on tractors, and feeding my dogs, so I guess I am a cowboy."

She said, "I'm a lesbian. I spend my whole day thinking about women. As soon as I get up in the morning, I think about women. When I shower, I think about women. When I watch TV, I think about women. I even think about women when I eat. It seems that everything makes me think of women." The two sat sipping in silence.

A little while later, a man sat down on the other side of the old cowboy and asked, "Are you a real cowboy?" He replied, "I always thought I was, but I just found out I'm a lesbian." * * * * *

Late-Night Political News from About.com "John Kerry said yesterday, 'In an American election, there is no loser.' Uh, earth to John." --Jay Leno "There's a rumor that Attorney General John Ashcroft will resign before the inauguration. The White House feels that since Bush is going to swear to defend the Constitution, they want to make sure it's still around." --Jay Leno "As you know, Osama bin Laden has released another video. He bragged that he will 'bankrupt the United States.' And today President Bush said, 'two can play that game, pal.'" --Jay Leno "Down in Washington, D.C. today a man tried to climb the fence to the White House. Luckily the man was knocked over by fleeing Bush cabinet members." --David Letterman "Here's a late breaking bulletin from the Bush White House -- the White House Christmas tree has submitted its resignation." --David Letterman "This just in -- Yasser Arafat's funeral went well. Only 30 people died. ... Mrs. Arafat is so distraught she could barely shop today." --David Letterman "The temporary successor to Arafat, Mahmoud Abbas, escaped a shooting by militants as he was visiting Arafat's grave. See, that's why he's called a 'temporary successor.'" --Jay Leno "Dan Rather announced he was leaving. President Bush said, 'I didn't even know he was in my cabinet.'" --Jay Leno "There is good news back home. Congress finally signed a bill completely reorganizing America's intelligence community. And all is took was three years of nagging from grieving 9/11 widows. Cause you know, it was a back burner thing for Congress. It ain't Freedom Fries, people." --Jon Stewart "Donald Rumsfeld held a question and answer session with soldiers on their way to Iraq and one soldier asked why a lot of their vehicles still don't have the proper armor and Rumsfeld said, 'You go to war with the army you have. Not the armor your wish for.' And then he got into his armored car and drove away." --Jay Leno "Senator John McCain thinks that congress may have to step in to control the use of steroids in sports. The Baseball Commissioner Bud Selig agrees. Is this congress' number one priority now? Baseball players. Did we win the war? How about global warming. Have we fixed that already?" --Jay Leno "After an attack at the American consulate, Saudi Arabia has renewed their fight against terrorism, and they're serious, this time they may actually stop funding them." --Jay Leno "President Bush announced that the new head of Homeland security is Bernard Kerik, the former New York City police commissioner. You can actually tell he's a New Yorker because now the color coded warning system will go from green, to yellow to orange to forget about it" -- Conan O'Brien * * * * * Great Quotes "As democracy is perfected, the office of president represents, more and more closely, the inner soul of the people. On some great and glorious day the plain folks of the land will reach their heart's desire at last and the White House will be adorned by a downright moron." - H.L. Mencken (1880 - 1956) * * * * * Borowitz Report Excerpts Breaking News CANADA REPORTS HUGE JUMP IN IMMIGRATION Over 55,000,000 Requests for Citizenship Since Tuesday Night Canadian immigration officials have reported a huge increase in the number of requests for Canadian citizenship in the past twenty-four hours, with over fifty-five million such inquiries pouring in since late Tuesday night. . . . Canadian Foreign Affairs Minister Pierre Pettigrew said that he was "flabbergasted" by the fifty-five-million-plus requests for Canadian citizenship, adding that it was difficult to pinpoint the precise reasons for the staggering increase. "My only theory is that after many years of exposure in the U.S., hockey is finally starting to catch on," Mr. Pettigrew said. He cautioned, however, that it is impossible to know exactly what is sparking the sudden interest in America's frozen neighbor to the north: "People answering our immigration hotline say that it is hard to understand many of the American callers because they are sobbing uncontrollably." Breaking News GEORGIA SCHOOLS TO STOP TEACHING LAW OF GRAVITY Murphy's Law Could Be Next, District Warns A suburban school district in Georgia has thrown itself into the vortex of a legal controversy after deciding to stop teaching the law of gravity as part of its science curriculum. The Dunnsville Unified School District fired the first salvo in the ongoing debate over the law of gravity last year when it mandated that stickers be affixed to all science texts in the district's schools indicating that "the law of gravity is a theory, not a fact." District superintendent Charles Leverall said that initially it was not Dunnsville's plan to eliminate teaching the law of gravity altogether, but merely to inform students that there were other equally plausible explanations for why things fall down. Breaking News IRAQI ELECTIONS DELAYED TO ALLOW TIME FOR NEGATIVE ADS Swift Boat Veterans Parachute into Baghdad The Iraqi elections, originally set for January 2005, have been delayed six months to give the Iraqi people enough time to produce and air negative political ads, the White House announced today. * * * * * The Concession Speech John Kerry Should Have Given (abridged) [A note that I posted at the time: "This one is bitter, and I wouldn't have phrased it entirely this way, but it does make a point. My own view? Bush in 2004 means Hillary in 2008."] My fellow Americans, the people of this nation have spoken, and spoken with a clear voice. So I am here to offer my concession. I concede that I overestimated the intelligence of the American people. Though the people disagree with the President on almost every issue, you saw fit to vote for him. I never saw that coming. ... I concede that I misjudged the power of hate. That's pretty powerful stuff, and I didn't see it. So let me take a moment to congratulate the President's strategists: Putting the gay marriage amendments on the ballot in various swing states like Ohio... well, that was just genius. Genius. It got people, a certain kind of people, to the polls. The unprecedented number of folks who showed up and cited "moral values" as their biggest issue, those people changed history. The folks who consider same sex marriage a more important issue than war, or terrorism, or the economy... Who'd have thought the election would belong to them? Well, Karl Rove did. Gotta give it up to him for that. I concede that I put too much faith in America's youth. With 8 out of 10 of you opposing the President, with your friends and classmates dying daily in a war you disapprove of, with your future being mortgaged to pay for rich old peoples' tax breaks, you somehow managed to sit on your asses and watch the Cartoon Network while aging homophobic hillbillies carried the day. You voted with the exact same anemic percentage that you did in 2000. ... More than 40% of you Bush voters still believe that Saddam Hussein had something to do with 9/11. I'm impressed by that, truly I am. Your sons and daughters who might die in this war know it's not true, the people in the urban centers where al Qaeda wants to attack know it's not true, but those of you who are at practically no risk believe this easy lie because you can. As part of my concession speech, let me say that I really envy that luxury. I concede that. Healing? We, the [blue state] people at risk from terrorists, the people who subsidize you, the people who speak in glowing and respectful terms about the heartland of America while that heartland insults and excoriates us... we wanted some healing. We spoke loud and clear. And you refused to give it to us, largely because of your high moral values. You knew better: America doesn't need its allies, doesn't need to share the burden, doesn't need to unite the world, doesn't need to provide for its future. ... And I make this pledge to you today: In the next election, there will be no pandering. Next time we will not pretend that the simple folk of America know just as much as the people who devote their lives to serving and studying the nation and the world. They don't. ... * * * * * Clippings In a recent issue of the American Journal of Preventive Medicine, the Atlanta-based federal agency said that bigger luggage is not the only thing weighing down airliners and causing them to burn more costly fuel. In fact, the CDC said, the average weight of Americans increased by 10 pounds during the 1990s - requiring an extra 350 million gallons of jet fuel to fly them around each year. SALT LAKE CITY, Nov. 16 - In a case that has spurred intense soul- searching in legal circles, a 25-year-old convicted drug dealer, who was arrested two years ago for selling small bags of marijuana to a police informant, was sentenced on Tuesday to 55 years in prison. The judge who sentenced him, Paul G. Cassell of the United States District Court here, said that he pronounced the sentence "reluctantly" but that his hands were tied by a mandatory- minimum law that required the imposition of 55 years .... Judge Cassell said that sentencing Mr. Angelos to prison until he is 70 years old was "unjust, cruel and even irrational" .... The question of Mr. Angelos's sentence was at the center of a debate as to whether it was fair to send a minor drug dealer to prison for 55 years when a murderer, rapist or terrorist, according to the same sentencing directives, would ordinarily receive no more than about 25 years. [China] today has more church-going Protestants than Europe, according to several foreign estimates. Buddhism has become popular among the social elite. Beijing college students wait hours for a pew during Christmas services in the capital's 100 packed churches. American universities, which for half a century have attracted the world's best and brightest students with little effort, are suddenly facing intense competition as higher education undergoes rapid globalization. The European Union, moving methodically to compete with American universities, is streamlining the continent's higher education system and offering American-style degree programs taught in English. Britain, Australia and New Zealand are aggressively recruiting foreign students, as are Asian centers like Taiwan and Hong Kong. And China, which has declared that transforming 100 universities into world-class research institutions is a national priority, is persuading top Chinese scholars to return home from American universities. ... Mr. Payne briefed the National Academy of Sciences on a sharp plunge in the number of students from India and China who had taken the most recent administration of the Graduate Record Exam, a requirement for applying to most graduate schools; it had dropped by half. Foreign applications to American graduate schools declined 28 percent this year. ... Some of the American decline, experts agree, is due to post-Sept. 11 delays in processing student visas, which have discouraged thousands of students, not only from the Middle East but also from dozens of other nations .... International students say it's not worth queuing up for two days outside the U.S. consulate in whatever country they are in to get a visa when they can go to the U.K. so much more easily. ... According to one survey, 56 million Americans say that nighttime pain interferes with falling and staying asleep. * * * * * Worst Political Quotes of 2004 "You bet we might have." —Sen. John Kerry, asked if he would have gone to war against Saddam Hussein if he refused to disarm "All of a sudden, we see riots, we see protests, we see people clashing. The next thing we know, there is injured or there is dead people. We don't want to get to that extent." —California Gov. Arnold Schwarzenegger, on the dangers posed by gay marriage "Too many good docs are getting out of the business. Too many OB-GYNs aren't able to practice their love with women all across this country." —President George W. Bush "I actually did vote for the $87 billion, before I voted against it." —Sen. John Kerry, on voting against a military funding bill for U.S. troops in Iraq "Our enemies are innovative and resourceful, and so are we. They never stop thinking about new ways to harm our country and our people, and neither do we." —President George W. Bush

Why the Tibet Protests Are Important

The Chinese leaders will not back down on Tibet. The Chinese people will not let them. The people of China are convinced that Tibet belongs to them. So it seems unlikely that protests on Tibet will make things better in Tibet. They may help, but they may also hurt. The protests are important because they provide a focal point for the world to treat China as a superpower. The sooner the people of the world become sensitized to the dangers that a superpower poses, the more likely they are to unite against it. It's not that people should just band together against a superpower for the hell of it. That's not the nature of the situation. People do, or should, band together against superpowers when they abuse their power. Power tends to corrupt. It seems almost inevitable that, when a country becomes strong, it begins to throw its weight around. "Appeasement" was the word used when, in 1938, the leaders of France, Britain, and Italy caved in to Hitler's demands to annex part of Czechoslovakia, claiming that it rightfully belonged to Germany. It took another year or so for those leaders to realize that, when you feed the tiger, the tiger becomes bigger. The world does not need any more Munichs. China has entered onto the world stage. It is taking superpower-level actions; it is stirring superpower-level irritation; and it is generating superpower-level unity, not only among its opponents, but also among those who were previously undecided about it. This process is healthy. The sooner the world can unite against China, the less likely China will be to commit the kind of costly mistake that, for instance, the U.S. made in Iraq. The world is going to continue to deal with China, and China is going to continue to grow. But, with luck, it will grow not only quickly, but well. The best that could happen, for these purposes, would be that the world would become truly outraged, and the Olympics would become a tremendous embarrassment for China. That way, ten or twenty years from now, the Tibetan incident will be remembered more clearly, and will be likely to have more influence, than the Tiananmen Square massacre has had. The bigger the problem, the harder it is to sweep under the rug. Ten or twenty years from now, China will be a superpower indeed. With luck, it will have the lessons from its "Wild West" period held up for reflection within living memory -- not just weakly resurrected from history books, like in the U.S. Let China take a very large, very visible fall on its face -- not because there is any joy in embarrassing anyone, but because the world does not need any more Tiananmens either.

The Ultimate Intellectual Piracy

The United States may soon cease to be the world’s greatest threat to global peace.

That statement may come as news to those who were not aware that the U.S. ever was a great threat to global peace. And surely, by many measures, it is not. How many countries have a Peace Corps? How many provide real estate for a United Nations?

Let us not quibble about the U.S.’s standing as the world’s leading seller of weaponry. Let us not debate the invasion of Iraq, or the devastation and brutality of the Vietnam War (or, indeed, the murder rates in our own cities).

In fact, let us withdraw that statement about the United States altogether. Because soon, it may not matter anyway.

The U.S. has had its Ugly Americans abroad, as well as its piggish Yuppies cluelessly asking themselves, “Why do they hate us?” in the wake of 9/11. But at least some such Yuppies did ask, and some actually seemed to want to hear an answer. That, however, may not be the way of the future.

Surely there will always be a liberal, educated fringe of Chinese individuals who have not only visited the West but who have also come to appreciate the good things that the West’s liberal, educated fringe try to achieve. Such individuals will undoubtedly be grossly outnumbered, though, by those Chinese people who, in good middle-class American style, neither know nor care, very much, what the rest of the world may think or believe.

Most Chinese may be like most Americans – concerned, that is, with what’s on the barbecue or in the fridge, and not so concerned with what someone with a cause, somewhere else in the world, seems to be complaining about.

China has a reputation, these days, of copying what other people invent. There is no law of nature that limits such copying to the good things. Those who plunder goods from others’ homes may inadvertently haul away some dust and cockroaches as well.

In particular, China may be copying some flaws from America of the 1960s. Chinese responses to Tibet certainly make it seem that way.

On Tibet, as in Vietnam, the world speaks out, in the name of fairness and humanity. The Dalai Lama, like a latter-day Ho Chi Minh, actually talks as if he believed that the leaders of the superpower were reasonable people. But those leaders have their eyes on domestic opinion, and domestic opinion is clear enough.

It took a long, long time for Americans to make up their minds, take action, and ultimately end the Vietnam War. Even in a fairly open democracy, with many fictions exposed by a relatively free press, it took years on end for society to get sick of its own anti-communist rhetoric.

Americans of that era knew what they believed. They knew it because it was what someone had told them, and it was also what their friends seemed to believe. We cannot expect anything different from the Chinese, and we are not getting anything different. The effort to talk sense to Chinese people – even educated, westernized ones – about Tibet, these days, seems much like the effort to talk sense to Americans in 1968 (or, actually, in 2003).

Tibet is not the point. Tibet is merely the illustration. If the Chinese people are presently able to support internal or localized nationalist hype á la the Alamo or Cuba, in the future they may also be able to support nationalist hype focused abroad, á la Saigon or Baghdad.

Things are changing very quickly, these days, in the U.S.-China balance. It is easy to notice the shifts in the balances of finance, military power, and influence. But other things are shifting as well.

Sooner than we expect, people of the whole world may begin to encounter the Ugly Chinese. If such a thing happens, it will not be because Chinese individuals are interpersonally ugly. Much to the contrary, they hail from a culture that seems to foster deference and agreeableness. It will happen, not because of who the Chinese people are, but despite that.

Power tends to corrupt, and the Chinese people are gaining power. There are things they want and, as shown in Tibet, there are things they will take – not because they are right, educated, or caring, but simply because they will be increasingly able to follow their beliefs and feed their desires.

It will be too bad if China copies us so diligently in that mistake. But the writing does appear to be on the wall. Chinese public opinion is harshly set against a fair deal for the people of Tibet. Leaders in China, like leaders in the United States, do not generally tell their constituents to set their nationalism aside in favor of respect or decency to others.

Ultimately, the problem is with the accumulation of power itself. When a nation becomes as big as China or the U.S., it tends to expect its leaders to achieve outsized things at the expense of other peoples. There had never before been a superpower like the United States. And in its own, different but conceivably far worse way – as we may soon begin to see – there may also never be a superpower like China.

2008 Beijing Olympics: The Chinese Government Is Screwed

It appears increasingly likely that China will not be able to deliver air suitable for athletes, in time for the 2008 Olympics (or, indeed, for years to come). There could not be a better way to advertise China's pollution problem -- to tell the world what a terrible price China is paying for its rapid economic advance -- than to convene the planet's best athletes there, force them to breathe that air, and give them and the sports commentators something to talk about, for years to come. It also appears increasingly likely that China will present, to the world, the picture of a political mess. The Chinese government needed to be responsive to its people's dreams and concerns before 1989. If it had done so, there might not have been a protest or consequent massacre in Tiananmen Square that year. Failing that, there was an opportunity to become more responsive thereafter. That, too, has substantially failed to happen. At present, the government is ramping up its suppression of dissent. But the dissenters are not quitting. With the eyes of the world on that nation, the ugly truth will be highly visible. In short, within the Olympic context, the Chinese government is doing its level best to persuade the world that the government is illegitimate and that the Chinese route to prosperity is not the right one. This is not Abu Dhabi, with its shimmering wealth. This is a land of a billion people who cannot get clean air or drinking water. And the whole world is going to see that. Having the Olympics in Beijing was a proud idea, but it does not seem likely to serve the Chinese government well.

China: Reduce Inflation by Dumping Dollars?

The Chinese government is worried about inflation in its overheated economy. I noticed someone's remark, the other day, that China would welcome a slowdown in the U.S., because that would reduce American demand for Chinese goods, giving the Chinese authorities a better chance to stabilize their economy. China is a heavy subsidizer of the U.S. government's budget deficits. If China invested less in American government bonds, the U.S. government would have to offer higher rates of interest in order to attract lenders who would continue to subsidize its deficits. It seems like those higher interest rates would compete with other would-be borrowers (e.g., American corporations). Also, higher borrowing costs would increase pressure on the U.S. government to lower its spending. In both of those ways, a Chinese departure from the dollar would seemingly facilitate the sort of U.S. economic slowdown that China is said to prefer at this point. I don't know if I have all those things right, and I also don't know if those steps will actually occur. A separate point is simply that it is now conceivable that, as one would expect, a big lender (e.g., China) eventually becomes able to manipulate the options and circumstances of its borrower (e.g., the U.S.). Such things have happened in the past -- with e.g., the Arab oil embargo of 1973-74. But the ability to influence the rate of interest that the U.S. government must pay nonetheless does seem to be a different kind of event.

China and Australia: Two Scenarios

You have a large, largely empty, resource-rich, predominantly Anglo land down under. And you have two interested parties who would like to get their hands on it. In one corner, we have the defending champion, the U.S., whose primary claim may be cultural or racial. In the other corner, we have the challenger, China, whose primary claims may be that it wants and needs the resources and the space, it is willing to pay for them, it is a next-door neighbor (relatively speaking), and (in the future) that it is militarily better positioned to take it. In one scenario, China flexes its muscles in ways that worry people. Last year's bit about knocking down a satellite -- a direct threat to the U.S. -- is an example. Enough examples like that, and it won't just be an Anglo-Aussie coalition; it'll be Russo-Anglo-Aussie. (And let's not forget the anglophone Indians.) Then China really will have to fight for Australia, and it may be hard-pressed to succeed. In another scenario, China proceeds gently. Continue putting highly educated Chinese people in various places throughout the anglophone world; continue making appreciated purchases of resources (and also of companies) in the U.S. and Australia; continue letting Chinese people be welcomed as friends in Australia. And meanwhile, continue bringing China into the modern world, with enhanced rights for its people, growing awareness of rights violations, and other quietly woven threads of restraint around its oligarchs. Then Australia is not alarmed, the U.S. is not shocked into confrontation, and the ties between the lands of the koala and the panda grow naturally. In a generation, it will seem odd that the Australians would ever have contemplated an essentially anti-China economic (never mind military) coalition with the U.S. Can the second scenario be the primary one? I'd put the odds at somewhat less than 50%.

Speculation on Home Prices

The real estate news is bad. Some are now saying it will be 2009, at the earliest, before property values recover. Apparently the tax base for cities is eroding because of the decline in home values and the rise in foreclosures. An ordinary house is an expensive thing. Not just in terms of what it costs, but also in terms of what we take for granted about it. In that regard, four basics are lately coming into question: financing, transportation, public services, and water. On the financial front, house prices have risen because we have had money, and have been willing to spend that money on our homes. We have had money, in the earlier years, because America was a rich country and getting richer and, in the later years, because foreign investors could make money by lending their money here. That second tenet is now failing because the value of the dollar has been falling. They say that a foreign investor -- an Asian investor, say -- who invested in the stock market in 2000 has lost money, despite the Dow's rise, because the dollars in which stocks are priced have lost so much value. The dollar fall has not stopped; indeed, it may have a ways to go. Thus, foreigners are increasingly looking to invest elsewhere. Transportation becomes an issue when people cannot afford to get to the place in question. As long as the money is there, the government can keep building highways, people can keep buying cars, and cars can keep burning gas. This piece of the puzzle is still in place. But gas is becoming more expensive as it becomes rarer for us (you don't find much oil in the Quaker State anymore). Hopefully the experts will develop vehicles that run on alternate fuels -- hopefully other than biofuels, which entail the questionable water- and (for some countries) starvation-intensive prospect of, basically, burning food. But it still costs money to build highways, and rising numbers of people still have to jostle for space on increasingly congested roads. In the long term, we would have been further ahead if we invested in mass transit. But the point here is that there are limits to urban sprawl. One, long known, is that people won't drive five hours each way to work. But another, less familiar, is that suburbs may not keep expanding outwards forever. At some point, there may be a frontier where you are essentially gentrifying -- where you are buying a piece of land that, in the past, was not used for purposes of housing your kind of people, and you are betting that it will be continue to be used for that purpose in the future. And some of those people on the fringe, in some places, may have bet wrong. The ability to build highways goes along with the ability to provide public services generally. Again, as long as the money is there, there is no problem. But cities are running into difficulty now. Their tax bases are taking a hit because of the drop in house prices and the rising number of foreclosures. Empty houses don't generate tax revenues, in which case cities can't provide everything we have gotten used to. With fewer people paying property taxes, and those taxes not rising at the expected rates, cities will have to increase fees and taxes if they are to keep providing the services we expect. For each additional $50 per month of property taxes and other service fees, there will be some people who are priced out of the housing market. So the drop in the tax base may have its own self-perpetuating dynamic to some extent: as fewer pay, costs rise, so even fewer can afford to pay. Among those public services, water is particularly worrisome. There is not enough of it, and there will be less. Even if the cities could continue to afford to supply the same levels of services, there have to be the resources for them to supply -- the water, in particular, but to an increasing extent the electricity as well, particularly during peak periods. There is no long-term plan in place, at present, for resolving the nation's (never mind the world's) shortages of water, electricity, or, for that matter, food. We have largely squandered the opportunities we have had to take leadership in such matters during the past two generations. It will be harder for us to do so in the future. China will run into extreme problems along these lines before we do, but we will have those problems too; and to the extent that China owns us, there may be some very interesting deals made in the future. Most likely wars will be fought for such things, and they will not always be wars involving uniformed armies. If you are a homeowner, you are valuable to the wealthy people only as long as you continue to be a vehicle for production of wealth. The system on which you have been that sort of vehicle is now undergoing extensive modification. Your house is becoming a less reliable way of creating transactions in which realtors, lawyers, bankers, et al. become wealthy, and that means that your own value is declining: you are no longer capable of serving as a conduit for the generation of wealth through the automatic operation of a system of rising house prices. If you are to continue to have value in this system, you must achieve it by having stable, good-paying employment and an ongoing ability to make your house payments. Of course, you may still be vulnerable to a decline in your home's value, to the point that some people will be working to make payments on a combination of mortgage and home equity loan that puts them under water. In other words, some will ask themselves why they are struggling to keep a house that's worth less than they owe on it. Regardless of your own stability, your operative assumptions will continue to mutate as your neighbors ask themselves questions of this sort. The time to buy is when nobody wants the thing you are buying -- assuming, of course, that they will want it later. The time to sell is when everyone wants the thing you are selling -- assuming that you won't then have to turn around and buy it back at a higher price later. When *everyone* was buying a house, when it was *obvious* that everyone should buy a house -- that was the time to sell. People will be buying shelter again in the future. It is not yet clear what form of shelter will be most attractive. Resource questions will likely influence this issue.