Thursday, May 31, 2012

A rebuttal to China crashing soon

Minxei Pei writes an interesting article in The Diplomat titled "China's Economy: Seizure or Cancer".

In it he outlines a number of the obvious features that have been discussed on this blog about China's overall economy.  He dissects the current situation and asks whether there will be an immediate heart attack that hobbles the beast or a systemic cancer that eventually kills it.


He refers to a "heart attack" scenario where a cascade of events, precipitated by a slowdown and excess debt, cripples China.  In his perspective China's communists will force the banks to defer losses and provide a backstop to prevent further contagion.  He states:
But China is different. Because the banking system is effectively owned and controlled by the state, a banking crisis won’t materialize unless the state itself is insolvent and Chinese depositors have completely lost confidence in the state’s sovereign guarantee of its banks. This unique character of the China’s state-owned financial system is the cause of the country’s inability to allocate capital efficiently. However, in the short term, this structural flaw may turn out to be an asset in averting a seizure of the financial system.
As in the global meltdown of 2008 and earlier banking system upsets in China, this approach has worked.

On a second level, if the economy doesn't crash immediately over the course of the next several months, the author perceives a potential "cancer" in the nature of the communist-capitalist hybrid.
Despite the threat of a seizure in the near term, the greater danger to the Chinese economy is its structural inefficiency, which is deeply imbedded in a state-led development model...

The investments made by the Chinese state may have given the Communist Party a lot of prestige (think of the country’s modern infrastructure and ambitious high-tech plans), but delivers preciously few real benefits to its people. Chinese state-owned enterprises have thrived because of their access to practically free capital, but their efficiency remains abysmal compared with domestic private firms or their Western rivals.
No country can keep pouring unlimited amounts of capital into unproductive infrastructure projects. China doesn't have the ability to keep blowing this current bubble and then dismissing colossal financial losses when the bills come due.  With Europe sinking into recession, America limping along, and much of the emerging market turning negative, there is little reason to believe they can pull the same rabbit out of the hat again.

Wednesday, May 30, 2012

America's strange obsession with criminalizing abortion

A rather strange event has occurred in Indiana.  A severely unstable and pregnant woman attempted to commit suicide.  She survived, but her child died because of her actions.  Neither suicide nor abortion is illegal in the state of Indiana or in the USA; however, shortly after the incident, a state prosecutor charged the woman with murdering her fetus and attempted feticide.

The Guardian UK newspaper elaborates:
On 23 December 2010 Shuai became so depressed after she had been abandoned by her boyfriend – a married Chinese man who broke his promise to set up a family with her – that she decided to end her life. She consumed rat poison, and after confessing to friends was rushed to the Methodist hospital.

Doctors took steps to save her, but on 31 December there were signs that the baby, then at 33 weeks gestation, was in distress and a Caesarian was performed. On the second day of Angel's life the baby was found to have a massive brain hemorrhage and on 2 January was taken off life support.
Many countries in the world criminalize abortion.  Most Latin American countries routinely prosecute and incarcerate women who undergo treatment and doctors who perform abortions.  The moral argument is that a fetus is a person and subject to the same rights as an actual person.  However, by that same logic there is always two people involved in the gestation process: the mother and the child.  In the above case, we have a mentally unstable women who attempts to commit suicide and a child who was born prematurely but dies soon afterwards, because of the mother's actions.  The fetus was 32-weeks old when Shuai attempted suicide.

The Houston Chronicle reports that the woman's lawyers unsuccessfully attempted to have the charges overturned on the following basis.
Defense attorneys argued in court documents filed March 9 that prosecuting a woman based on the outcome of her pregnancy violates constitutional rights to due process and equal treatment and is cruel and unusual punishment.
Women's rights and legal groups have intervened in the case:
Several medical and women's rights groups, including the National Organization for Women and the National Alliance for Mental Illness, have filed friend-of-the-court briefs in support of Shuai, claiming that prosecuting Shuai could set a precedent under which pregnant women could be prosecuted for smoking or other behavior that might deemed a danger to their fetus. They said that could discourage women from seeking prenatal care.
The prosecution claims that they are only following the law and the three-judge appeals court stated that "Shuai had not proven that common-law immunity exists for pregnant women who harm their own fetuses".  So what does this really mean?

In America's southern and conservative states there has been an outbreak of prosecutions against mothers.  Rennie Gibbs of Mississippi was accused of murdering her unborn child.
Gibbs became pregnant aged 15, but lost the baby in December 2006 in a stillbirth when she was 36 weeks into the pregnancy. When prosecutors discovered that she had a cocaine habit – though there is no evidence that drug abuse had anything to do with the baby's death – they charged her with the "depraved-heart murder" of her child, which carries a mandatory life sentence.
In Alabama, Amanda Kimbrough a mother of three was was arrested at her home and charged with "chemical endangerment" of her unborn child.  Just prior she gave birth to a child that lived for nineteen minutes.  The basis of the prosecution was that she had taken drugs during the pregnancy; a claim she has denied.
"That shocked me, it really did," Kimbrough said. "I had lost a child, that was enough."
She now awaits an appeal ruling from the higher courts in Alabama, which if she loses will see her begin a 10-year sentence behind bars.
This bizarre infatuation of the religious and conservative right with women's reproductive organs and their individual liberties is appalling.  In Latin America, despite abortion's illegality, the abortion rate is higher than in either Western Europe or the United States.
In a region where there is little sex education and social taboos keep unmarried women from seeking contraception, criminalizing abortion has not made it rare, only dangerous. Rich women can go to private doctors. The rest rely on quacks or amateurs or do it themselves. Up to 5,000 women die each year from abortions in Latin America, and hundreds of thousands more are hospitalized.
If the objective of these prosecutoral zealots is to increase the welfare of newborns or reduce abortions, their mission will fail.  In the first case, anyone who thinks they may be subject to prosecution  just will simply get a legal abortion.  In the second case, as the evidence above shows, by creating legal barriers to abortion all you end up doing is forcing women into back alley clinics where their lives are jeopardized and where ultimately more deaths will occur due to a lack of proper medical supervision.

Harper's contempt for Science and Canadian values

One of the fundamental differences between the previous Progressive Conservative government of Brian Mulroney and the current Harper Conservatives (Reform-Alliance Party; i.e. CRAP) has been the complete abandonment of progressive environmental policies and investment in the basic sciences.

First, let us consider what Mulroney did in his two-terms that has lead some environmentalists to call him the "greenest Prime Minister" in Canadian history.
  • In 1987, the Tories helped establish "The Montreal Protocol on Substances That Deplete the Ozone Layer".  The global treaty placed a ban on the destructive CFCs that were destroying the ozone layer and jeopardizing life on this planet.  
  • Acid rain pollution was dramatically curtailed through cooperative legislation with the Americans.  
  • A moratorium on fishing Cod, which twenty years later has yet to recover
  • At the 1992 Rio Earth Summit, the United Nations Environment Programme was championed by Canada, and Canadians served as their leaders.

Whereas, Mulroney could be considered the high-water mark in environmental protection, the Harper government without any doubt is about as low and dirty as a clogged drainage pipe.


Plenty of people have talked of the Conservative's fealty to market based approaches, which is vaguely strange given that the current Prime Minster has never held a real job or career outside politics; his Finance Minister Jim Flahery was a motor vehicle accident and personal injury litigation lawyer (aka Ambulance chaser); and key Minsters Peter MacKay, Tony Clement, John Baird, and Jason Kenney have spent much of their adult lives as professional politicians.  So having established that none of these men has any experience in actually running anything but their mouths off, on the tax payers dime, it is less than obvious why anyone would believe that they understand what they are doing when it comes to making decisions about science funding in the public's interest.

Stephen Harper's desire to constantly control the message and limit the information that reaches the public has become legendary.  Like the Republican Party under George W. Bush, Harper has fought to manipulate the press and machinations within the government to serve his exclusive political goals.  The influence and taint of lobbyists peddling preferred laws, as it is done in Washington DC, is now the norm in his majority government.  Legislation is proudly rammed through parliament without adequate review or discussion from opposition parties or committee members input.  Through this unsightly metamorphosis into a corporate state, impediments such as empirical data, scientific facts, and international treaties to protect the environment have been removed.

Harper has pursued a global embargo on the speech of research scientists affiliated with the Government of Canada for the past few years.  For example, prominent scientists have been barred from granting interviews, providing opinions to the public on their subject of expertise, or discussing  their publications at conferences.  Environment Canada prevented  Dr. David Tarasick from "published findings about one of the largest ozone holes ever discovered above the Arctic."  Similarly, Kristi Miller was prevented from discussing her research into  a virus that might be killing British Columbia's wild sockeye salmon, despite her research being published in the journal Science.  An article in the scientific journal Nature further illustrates the problem:
Carefully researched reports intended for the public — Climate Change and Health, from Health Canada, and Climate Change Impacts, from Natural Resources Canada — were released without publicity, late on Friday afternoons, and appeared on government websites only after long delays.
The government demands that any information provided to the public must be vetted and cleared with a local propaganda officer from the Conservative party.

Science that offends the sensibilities of religious fundamentalists, the same group that makes up Harper's western base, is also edited from public disclosure.
When Scott Dallimore, a geoscientist for Natural Resources Canada in Sidney, British Columbia, reported evidence of the colossal flood that occurred in northern Canada at the end of the last ice age (Nature 464, 740–743; 2010), he was put through the message-moulding machine. As a result, Canada's taxpayers, who funded the research, were left in the dark. While the news broke elsewhere, journalists in Canada who had previously had open access to Dallimore, a gifted communicator, were left spinning their wheels while deadlines passed. The flood happened 13,000 years ago, so how can this work be construed as politically sensitive?
Recently, the Harper government changed the laws so that not-for-profit groups that engage in political criticism are penalized to prevent them for so-called abusing their registered charitable status.

The nearly paranoid and conspiratorial nature of these acts, stems from the Conservative's desire to prevent any information that may run counter to their pro-corporate or religious minded policies from reaching the public and interfering with their program.


---
It is not just the message that Conservatives loath; it is the scientists that accumulate all these facts that make Conservative-backers so angry with the fact-based world.  Over the past year, the Harper government has engaged in a systematic withdrawal of funding for Environment Canada projects and the scientists involved in those research projects.  A student researcher at the University of  Toronto discusses his perspective:
Over the past several months we have seen major cuts to Environment Canada that are leaving it without any real scientific or research power. We have seen many prominent scientific jobs cut, research funding slashed, and our ability to effectively do environmental assessment and management largely neutralized.
Given that public funding is the main source of revenue for environmental sciences at Canadian universities, which has now evaporated, researchers are packing up and leaving Canada en mass.

In 2011-12 Environment Canada had its budget cut by 20% to 854 million dollars.   Eleven percent of the department personnel was cut last year, with a total of 776 employees told that their jobs may be terminated.  Those affected include engineers, meteorologists, scientists, chemists, and biologists. Given the extent of previous cuts imposed by previous budgets, the department is said to be barely functioning.  Treasury Board Minister, Tony Clement (aka Mr. hundred thousand dollar Gazebo),  facetiously told reporters that “Environment Canada is open for business, they’re doing their job, and they want to do it more efficiently.”

Canada was a pioneer in ozone monitoring technologies, which "led to the discovery that the world's ozone layer was dangerously thinning in the 1970s, which in turn led to the successful Montreal Protocol on Ozone Depleting Substances."  The internationally renowned ozone monitoring network, has about one-third of the ozone monitoring stations in the Arctic region. The data produced by this network is heavily relied on by scientists around the world.  A single person was running the entire archives, until the conservatives closed down the The Polar Environment Atmospheric Research Laboratory (PEARL) in Eureka, Nunavut.

Not convinced at stopping the flow of information, eliminating the funding of  researchers, and closing down research stations, the conservatives have decided to destroy Arctic ice core bores that provide evidence of the atmospheric gaseous concentrations for thousands of years.  Mark Twickler, director of the U.S. National Ice Core Laboratory in Denver, Colo said, “These ice cores are so valuable that the international community, including the U.S., will do whatever we have to to preserve these remarkable archives of past climate.”

The Department of Fisheries and Oceans is undergoing a similar budget slashing process. Budget cuts have lead to the closing of the Experimental Lakes Area. The program used a region of 58 freshwater lakes near Kenora, in western Ontario, where scientists conducted experiments on the effects of pollution.
The Environmental Lakes Area program was launched in 1968 and led to important discoveries about the effects of pollutants such as phosphates in household detergents and mercury on bodies of fresh water, prompting tighter regulation in Canada and the U.S.
Researchers from across the world are claiming disbelief at the action.  Harvard University aquatic sciences professor Elsie Sunderland said:
[she] was pretty shocked... This is one of the foremost research projects and places to do research in the world. To have it shut down is just appalling. It's just embarrassing. 
Cynthia Gilmour, a senior scientist at the Smithsonian Environmental Research Center in Maryland, said  she "was stunned".  Jim Elser an aquatic ecologist at Arizona State University said in an article in the journal Nature,  titled "Canada's renowned freshwater research site to close," that it was "completely shocking".  Elser said it was equivallent to the "U.S. government shutting down Los Alamos — its most important nuclear-physics site — or taking the world's best telescope and turning it off."

In a separate incident, 625 prominent scientists have written to Prime Minister Stephen Harper and warned him not to "gut fish-habitat protections they say would put species at risk and damage Canada’s international standing."  The legislation being implemented as part of the Fisheries Act in Bill C-38, the omnibus budget bill, would eliminate components of federal law that bans activity that results in "harmful" alteration, disruption or destruction of fish habitat.  The new law consists of a  prohibition against activity that results in "serious" harm to fish that are part of a commercial, recreational or aboriginal fishery, or any fish that supports one of those three fisheries.

David Schindler, ecology professor at the University of Alberta said the “pro-development” Conservative government was determined to abrogate long standing environmental protections.  Others are equally pessimistic of Harper's infringement on established environmental protections and resource management:
Nick Dulvy, a Simon Fraser University professor who worked formerly as a fisheries scientist in the British government, said the two moves add to his growing alarm about the Harper government's "misuse" of science.
---
Hannah McKinnon of the Climate Action Network Canada (CAN Canada), an environmental NGO, made the comparison between funding essential scientific research that monitors the health of the nation versus providing 2-billion dollars to build ships for the Canadian Navy and Coast Guard and another 29 billion dollars allocated in a non-competitive and rigged bid for 65 F-35 fighter jets that don't even meet the Department of Defense's own minimal specifications.  The government can find billions of dollars to spend on pet projects, fighting Middle Eastern wars, and providing billions in subsidies to petrochemical companies -some of which are the most profitable in the world- yet it can't find the funds to monitor the environment or maintain reasonable scientific competency.

John Bennett, the executive director of Sierra Club Canada, puts it more bluntly, “It will give the polluters what they want, a toothless Environment Canada with no scientific or enforcement capability."

Tuesday, May 29, 2012

Quote of the Day: Wall St. Bankers & Fraud

A huge portion of Wall Street’s earnings were built around the model of ‘I’m going to bet against my clients. I’m going to regard my clients not as clients — and you can hear it in their language, but as counterparties.
- Edmund Clark, Chief Executive Officer Toronto-Dominion Bank, "No Trading for Dimon Principle With CEO Clark: Corporate Canada"

The pains of wealth

Richard Branson is a billionaire UK entrepreneur and businessman, who is known for his numerous business ventures and his high energy style.

Last week he was in Vancouver, British Columbia touting Virgin Airlines service from the city, along with BC Premier Christy Clark.   Based on news reports, Branson apparently invited the "delightful" Premier (his words) to come Kite-surfing on his back with him.  However, it appears that he had initially failed to mention the dress code and placed the picture below as an example of the requirements on his blog!

What every businessman yearns to be!

Clark's liberal government has nearly zero chance of being re-elected next year and she personally has extraordinary low polling numbers amongst the electorate.  In response to Branson's bravado she gave the following response:
I think when you meet with the CEO of a billion dollar company who wants to do business with your province, you can get a little bit more respectful treatment than that.
Frankly she missed the boat (or kite-surf) on this one.  She should of ran with it and told the public that as a divorced woman she'd enjoy frolicking in the waves like that, but her duty is to country first and helping local businesses be more cocky like Branson in the global marketplace, unlike the wealth destroying socialists of the NDP or the anti-tax crackpots of the BC Conservative party.


---
If there was a better advertisement for capitalism and the benefits of the free market system over the sclerotic and dismal prospects of socialism, I'd like to see it.   Mothers, make sure your sons grow up to be businessmen!

G-20 Police excoriated in report



About two years ago, the city of Toronto was host of a G-20 summit meeting of international leaders.  Police were tasked with protecting the glitterati of the global elite from protesters, malcontents, and violent anarchists bent on confrontation.  As far as most Canadians were concerned the entire event was a fiasco.  More than a billion dollars was spent on law enforcement, the entire city was shutdown at the beginning of the tourist season, hundreds of ordinary citizens, protesters, and journalists were harassed, brutally attacked by law enforcement, and subsequently jailed.

Numerous stories of police malfeasance and unconstitutional actions by the state against lawful citizens were reported in the media.

Over the past month a series of reports on police conduct during the G-20 meeting have been released.  The first report issued by the Commission for Public Complaints Against the RCMP (CPC) found that it saw no indication that the RCMP acted "inappropriately" or as "agents provocateurs."  This report however, was only concerned with actions associated directly with the RCMP, Canada's national police force, and not with the nebulous complaints and behavior of the entire security apparatus on display that week.  The report did fault the RCMP in participating in the inappropriate "kettling" of protesters and ordinary citizens.  The process of "kettling" is a means in which police eliminate all egress routes for persons, as is portrayed in the picture above, and then extract detainees on a singular basis.  The sophistication of the mass arrests was also subject to ridicule in a specific instance where the RCMP arrested five persons, "two of whom turned out to be undercover Toronto police officers".

The second report that came out shortly after, by the Office of the Independent Police Review Director (OIPRD), was scathing in its denunciation of police misconduct. The report found that the planning for the event was poorly conceptualized and concluded that:
many of the arrests of peaceful demonstrators were illegal — without proper warrants or reasonable grounds — and that the conditions and treatment of prisoners inside a makeshift detention centre were "improper and unnecessary"
The report expounds the fact the some officers deliberately ignored the Charter rights of citizens, used excessive force, and took “unreasonable, unnecessary and unlawful” actions against the same people they took an oath to protect and serve.

During the period of June 25 and June 27, police stop-and-search exercises in downtown Toronto increased exponentially.  The report determined that the police had overstepped their authority.  In an example of the latter, a metro Toronto transit worker was assaulted as he was on his way to work, arrested, and detained for 29 hours.  Mr. Elroy Yau is currently seeking "over $3 million, claiming his charter rights were violated during the G20 summit."

In another incident, which I discussed in my original blog on this topic, two Toronto police sergeants face disciplinary hearings after they were found to have illegally arrested journalists during the G-20 summit and engaged in a homophobic tirade.
In the case of [Ryan] Mitchell, the review found that the officers used excessive force in his arrest. But it couldn't substantiate Mitchell's allegation that during his arrest, an officer said: "I'm going to love shoving this baton up your ass."
The Toronto Star newspaper elaborates on the incident.
It also found [Sgt. Douglas] Rose and another officer, Sgt. Michael Ferry, unlawfully arrested [Lisa] Walter and her colleague, Ryan Mitchell, on the afternoon of the final day of the G20 summit. And that both officers used “unnecessary force” when arresting Mitchell, who said he was tackled to the ground and put into a headlock, his right arm twisted behind his back.
Video footage shot by bystanders contradicts the police officer's statements, where they claim that they arrested Mitchell for breach of the peace and that Mitchell was "struggling quite violently".

In the case of the second journalist, Lisa Walter, the review said there was insufficient evidence to substantiate that excessive force was used against her.  However, it did conclude that arresting officer Sgt. Rose was involved in "discreditable conduct" for using "profane, abusive or insulting language" regarding her sexuality.

---
Toronto Police Chief Bill Blair was initially chastised in the editorial pages of Canadian newspapers for failing to accept the results of the OIPRD report.  The Globe and Mail stated that:
Police Chief Bill Blair has not apologized for his own failings and those of the officers under his command... Mr. Blair’s response, a grudging concession that things could have been handled better, is a surprising miscalculation. He needed to show he is in command. His attempt to soft-pedal the findings will not succeed in dampening criticism of police actions, or the calls for heads to roll. On the contrary, it will raise pressure on Mr. Blair and the Toronto Police Service, because it suggests they have learned little over the past two years.
In response to public outrage to the report's findings, Chief Blair took the "unusual step of appointing retired judges and former Crown attorneys to run the hearings, which are usually adjudicated by a fellow officer, to avoid any appearance of a conflict of interest."

In the end, none of this had to happen if Prime Minster Harper hadn't prematurely decided to force upon Toronto this unnecessary, ill planned, and useless publicity stunt.  We the public are equally left bewildered towards Minster Tony Clement, who was found in an auditor general's report to be in clear breach of federal policies on accountability in the G-8/G-20 boondoggle.  Why is it that millions -and in this case over a billion dollars- can be found to be used for Ministerial photo-ops, but actual infrastructure spending on subways, new transit lines, highway repairs, and sewer upgrades, all of which the city needs, is disregarded and mocked by the Conservative "law and order" politicians we have today?

Monday, May 28, 2012

That hard landing in China is looking a lot more likely!


Data that has been coming out in the past several weeks has shown a distinct contraction in the economy of China.  Unlike previous monthly claims that showed that the country was achieving its predetermined growth numbers, both April and May's numbers look at best underwhelming.  Questions are now being asked if China is in a recession?

Publicly,  April's growth in imports rose a moribund 0.3%, compared to an 11% from the previous period in 2011.  The NY Times is reporting that businesses across the country have reduced consumption of  many products, including commodities such as iron ore and high-end electronics, such as computer chips.  Exports grew only 4.9% in April; half as much as economists had expected.

Preliminary data published by HSBC and the financial information provider Markit for the month of May indicates that the Purchasers Managers Index (PMI) fell to 48.7 in May from 49.3 in April.  Indexes below 50 are considered representative of a contraction.  Whereas the HSBC manufacturing index has been below 50 for seven months.  May exports similarly fell to 47.8 in May, from 50.2 in April. 

China's National Bureau of Statistics has stated that
inflation in consumer prices slowed to 3.4 percent in April from 3.6 percent in March, while producer prices, measured at the factory gate, actually fell 0.7 percent in April from a year earlier.
Chinese government indexes show real estate prices have fallen in a majority the country’s urban markets.  Housing developers have dropped prices and some have reduced activity at constructions sites to a single daytime shift, down from a continuous 24-hour work cycle.  Demand for construction workers has sharply declined.

In a different NY Times article, the plight of local business people in Xi'an, a city of eight million in northwestern China, is highlighted.  Sun Yufang, a wholesale dealer of ovens, ranges, and water heaters,  states that local  residents have nearly stopped redecorating or outfitting apartments.  She elaborates that, “We didn’t really feel the global financial crisis, but this year, we’ve really felt it — I don’t see a solution unless people start buying,”  Likewise, Yian Leilei, a wholesaler of tablecloths and car seat covers, said that "sales nose-dived after Chinese New Year on Jan. 23 and had not recovered."

Jim Walker, founder and managing director of the Hong Kong-based economic research company Asianomics, has said that the, “Property-led growth and infrastructure-led growth is just about finished".  He concludes that more stimulus funding will have limited value, since there is already an excess of infrastructure projects, including transportation projects such as airports. 

---
Historically, China's economic data has been of questionable value. Senior politicians and economists within the Chinese government have said that the data, especially that arising from local offices, are frequently massaged to confirm with politburo demands.  For example, Le Keqiang, a senior communist party official, was quoted in 2007 cable released by Wikileaks that China's GDP figures were "man-made."  He explained that he reviewed only three statistics to assess the strength of the Chinese economy:
  1. Bank lending
  2. Electricity consumption
  3. Rail cargo volume 
If one is to evaluate the economy based on these metrics only, the Chinese economy is in very poor shape.  For instance, bank lending has contracted as demand for new loans and projects has declined.  Electricity production is down m/o/m  for April, while freight cargo by rail has flat-lined.  An article on The Atlantic magazine's online site discusses these issues.

The collective declines in imports and exports, a worsening housing market, depressed labor conditions, reduced consumer confidence, and sinking inflation are representative of a serious situation that points towards a fundamental hard landing occurring in the months ahead.

Further stories on Chinese Students Cheating


Over the past several years there has been a recognition that academic fraud amongst Chinese students has reached critical levels.  In the past five years, Chinese students have increased their undergraduate representation in American colleges from a mere 10,000 students to over 57,000.  While there is no reason to believe that the most successful Oriental students currently enrolled in North American schools engage in any of the documented modalities of fraud, sufficient data continues to accumulate that the average applicant is less than accomplished than what he or she is portraying.  For example, an article in the IHT titled "Sneeking into Class from China" points out the following:
Zinch China, a consulting company that advises American colleges and universities about China, published a report last year that found cheating on college applications to be “pervasive in China, driven by hyper-competitive parents and aggressive agents.
The consulting company told American colleges,
Our research indicates that 90 percent of recommendation letters are fake, 70 percent of essays are not written by the applicant, and 50 percent of high school transcripts are falsified.
Colleges in response are finding the following:
American college recruiters in China feel overwhelmed by the proliferation of cheating, lying, and fraud: Study abroad big business in China, and young Ivy League graduates write essays for Chinese applicants while many a Chinese public school fakes transcripts and recommendation letters.
In 2010 a Centenrary College, located in NJ, decided to shutter each of its satellite campuses in China and Taiwan, subsequent to discovering "rampant cheating among local student".  The extent of the fraud was so ubiquitous that the college was forced to
[withhold] degrees from all 400 Chinese-speaking students in its master’s of business administration programs in Beijing, Shanghai and Taiwan, said Debra Albanese, Centenary’s vice president for strategic advancement.
---
In 2009 the GMAT testing agency discovered a wide-spread scandal in which Chinese companies were collecting and selling GMAT questions online.  In response to that and a growing demand from Chinese students for the test, the testing agency has introduced a fourth part containing integrated reasoning questions, in addition to the current verbal and mathematical skills and analytic writing ability sections.  A NY Times article stated that the, "rise in applications to U.S. schools from overseas students has been accompanied by a reported rise in fraudulent credentials"  The new analytic section is meant to handicap memorization and assess the ability of the student to
synthesize information from multiple sources in order to solve complex problems... They also wanted candidates to be able to indicate what information was relevant, and not relevant, and to be able to evaluate which among a set of possible outcomes were the most likely.
---
Despite all these harsh criticisms and unfavorable reviews, China's institutions appears to be still very much centered around polices and practices that maintain acceptable levels of fraud and corruption.  The Economist magazine stated,
Scholars, both Chinese and Western, say that fraud remains rampant and misconduct ranges from falsified data to fibs about degrees, cheating on tests and extensive plagiarism.
This pervasive and continuous levels of fraud not only diminish the value of honest Chinese students who participate in Western universities -many of whom I personally knew to be excellent students- but leads one to question the entire system of data collection, research, and scientific publication that is present within China.
The implications of widespread academic misconduct could be great. Denis Fred Simon of Penn State University argues that growing evidence of fraud “calls into question the overall credibility of the entire scientific enterprise in China-and unfortunately feeds negatively into the related concerns about the safety of Chinese products and the integrity of information coming out of China.”
Whereas this slavish affection for deception will allow a few to prosper, eventually the system will collapse from the weight of fraud, incompetence, and indifference to empirical fact.

Sunday, May 27, 2012

Spanish society in freefall...

Spain currently has a mass unemployment rate of 24.1% and youth unemployment rate (15-24 y/o) that exceeds 50%, up from 18.2% in 2007.  In comparison Italy's youth unemployment is 29%; Portugal is 30%; and 24% of young people in France are without employment.  The Spanish economy has been contracting each of the past two quarters and is officially back in recession.  As the financial sector attempts to wade through the morass of over-development, massive consolidation of the banks and the crippling of credit has occurred.

The root cause of much of this disaster lies in the corrupt nexus between local bankers and regional politicians, which happen in many instances to be one and the same.  Lax lending standards, cheap foreign labor, and easy inflows of European capital all lead to a massive over-development.  The days of cheap credit ended with the financial crash of 2008.  Private debt was absorbed by the balance sheets of the state and ultimately the collective nations of the Eurozone.

Whereas the chicanery that lead to this bloody mess is a story that needs to be told, I'm interested today in discussing the impact on real people and the current generation of people who will have to pay for this economic catastrophe for the rest of their lives.  The decline and hopelessness felt across Spain has been chronicled in a number of newspapers and journals.  Here are some of the highlights.

In the Spanish daily La Pais, a 9-March article titled Generation Nimileuristra described the lives of young people who see opportunities denied and their lives stagnating with either low or no paying jobs.  
In 2005 youth unemployment was about 20%. Now [reaching] 50% while doubling the European average (22.4%) . The best educated generation has the worst outlook since the transition and feels a victim of the excesses of others...

In Spain there are 10,423,798 people between 18 and 34... Their average net income (including the unemployed), is 824 euros per month. And those who are working earn on average 1,318 euros a month (data from the Youth Council of Spain)...  Professions that seemed safe... are not. The Polytechnic University of Valencia followed the first steps in the process of engineers and architects who graduated in 2008: one in four did not reach [jobs with salaries over 1000 euros/month]. And what is worse: the [educated with jobs with salaries under 1000 euros/month] had advanced by 8% compared to graduates a year earlier.
In many cases youth are forced to abandon independence and relocate into their family's homes.

It has been established that even small levels of protracted unemployment in developed countries can have serious implications for the unemployed.  Those include reduced lifetime wages, reduced employment opportunities, and higher mental health issues.  With respect to society at large, depressed wages will promote educated youth emigrate to other jurisdictions, resulting in a brain-drain to the nation.  Undereducated and unemployed male youth on the other hand are statistically more likely to participate in criminal activity.

In many OECD countries the unemployment rate is substantially higher than the general population. An Economist article from Sept-11, 2011 discusses the various disadvantages and impacts under-employment and unemployment will have on these people.
Unemployment of all sorts is linked with a level of unhappiness that cannot simply be explained by low income. It is also linked to lower life expectancy, higher chances of a heart attack in later life, and suicide. A study of Pennsylvania workers who lost jobs in the 1970s and 1980s found that the effect of unemployment on life expectancy is greater for young workers than for old. Workers who joined the American labour force during the Great Depression suffered from a persistent lack of confidence and ambition for decades.
The implications of this situation are severe.  Not only will youth not be entering the work force, they will not be participating in the economy and doing normal things, such as buying cars, homes, furniture. So there is a negative cascade felt across the nation on all levels. Secondly, since they will not be paying taxes, who will bear the burden of maintaining the welfare state that Europeans are so proud of?   As fewer people are contributing to these pay-as-you-go programs, older generations will see a reduction in benefits.

---
The financial crisis has lead to governments across Spain to drastically cut programs, services, and cash transfers to lower levels.  A New York Times article elaborates:
Just as Spain’s national and regional governments are struggling with the collapse of the construction industry, overspending on huge capital projects and a pileup of unpaid bills, the same problems afflict many of its small towns.
One town's mayor discusses his small community's problems:
“We lived beyond our means,” Mr. García said. “We invested in public works that weren’t sensible. We are in technical bankruptcy.” Even some money from the European Union that was supposed to be used for routine operating expenses and last until 2013 has already been spent, he said.
The banking upheavals have brought similar troubles to small and medium scale businesses, which represent "60 percent of the economy, and 80 percent of the jobs".  The vicious cycle has resulted in the shuttering of more than 500,000 small business according to the NY Times.  
“The cuts in credit have been so abrupt that some businesses not only lost specific projects they were working on,” said Carlos Ruiz Fonseca, the director of economy and innovation at Cepyme, Spain’s association of small and medium-size companies. “Some companies have just gone out of business.” 
How is any of this supposed to engender confidence in the international markets?  The same banks which are cutting credit lines, reducing exposure to risk, and contracting their businesses are simultaneously being downgraded by the various credit agencies.  Billions of Euros are being requested by the financial sector to keep these debt ridden entities from further collapsing and imploding the entire Spanish economy.

The net result of all these events is a society that is in freefall.  If these trends continue, not only will Europe have generated legions of angry, unemployed persons, they will have created the same foundations that gave rise to the extremists of the last century.

---
Update: video link about squatters taking over an vacant apartment complex, built during the construction boom, in Seville

The Great Gatsby

When I was younger I never read any of F. Scott Fitzgerald's works .  Occasionally I'd come across references to his works and not think much of it.  Like most non-liberal arts students, I've yet to read most of the great classics and haven't motivated myself  or found the time to engage in understanding them.  I remember an episode, that is probably all too familiar, in the CBS comedy King of Queens, where Carrie takes time off to "find herself" and stakes out reading The Great Gatsby.  The episode ends with her never reading the book and her husband Doug, the clownish and portly parcel deliveryman, musing to Carrie, "don't you think the Great Gatsby was lost before he came a magician!"

The irony isn't in whether Gatsby was once lost or a magician, because on some abstract level both are true.  Instead, the irony resides in Gatsby's own devotion to a single cause and his need to re-create himself from a simpler and less glamorous past.  When prodded in the novel about being unable to "repeat the past", Gatsby retorts incredulously, “Why of course you can!”

Most people live their lives blinded to the opportunities and realities around them.  While they know there is an entire world of possibilities, they also know that pursuing those dreams is difficult and in the end, there is no more guarantee that pursuing those objectives will make them any more happy or successful.  So they compromise and accept certain realities and condemn themselves to much smaller lives; just like Carrie in the above example.  Gatsby on the other hand, has been on the other side of paradise, where the grass isn't greener, where the lights are dimmer, and hopes go unfulfilled.

With the upcoming release in December 2012 of Baz Lurhmann's film adaptation, there has been some discussion of this seminal work.  The Great Gatsby has been described as a story of "lasting power and beauty" that is rooted in "illusions and self-delusion."  Like America in both the roaring twenties -in which the story is set- and its current situation, the book is filled with the surfeit of wealth, tumultuous descents, and everyday violence.
America is now full of millions of bankrupt Gatsbys who bought their dream homes with no money down. Meanwhile, the derivatives market was the very embodiment of American fantasy and self-deception, built on as flimsy a foundation as Gatsby’s wealth. The promised gold of the Reagan years, burnished to a shine in the new millennium, has turned a grimy yellow.
It is precisely these attributes that made the story then and now so engaging.  The rise and fall of ambitious men who have seduced an even less sophisticated public on their perceived virtues.  An opportunistic elite too absorbed in extracting from society marginal gains, to understand the larger problems unfolding around them.  And, of course, a public incapable of fully engaging the world around them, but all too willing to blame others for any sleight that has befallen them. In each of the classes of people a central conceit is revealed: the moment an individual thinks that they are firmly ahead, they also become cognizant, for however a brief a moment, that the game has been rigged and that they've always been determined to be the loser. It may not be fair; it is not even remotely intelligent, but that is how the game of life is played.

Others have questioned whether Fitzgerald's story could ever be adequately brought to film.  Ta-Nehisi Coates of The Atlantic magazine discusses his thoughts on this issue:
As in so many of the books I love, I found the plot in Gatsby to almost be beside the point. Whenever I see it translated to cinema, the film-maker inevitably crafts a story of doomed romance between Daisy and Gatsby. It's obviously true that Gatsby holds some sort of flame for Daisy, but what makes the book run (for me) is the ambiguity of that flame. Does he really love her? Or is she just another possession signaling the climb up? I always felt that last point—the climb up—was much more important than the romance. 
As in all things, where the truth begins and the illusion of reality ends is not always a clear line.  Gatsby's successes and failures are driven by both factors.  What is certain, is that the recurrent theme that is portrayed in Gatsby remains a great lesson to us all in our own sometimes feeble attempts of improving ourselves.
Gatsby believed in the green light, the orgastic future that year by year recedes before us. It eluded us then, but that’s no matter — tomorrow we will run faster, stretch out our arms farther.... And one fine morning —
So we beat on, boats against the current, borne back ceaselessly into the past.

----
The first trailer from Warner Bros. Pictures.

Saturday, March 10, 2012

Quote of the Day: On Plutocracy

The interests that would undermine government are strong and growing stronger, with rich individuals leading the charge.
- Simon Johnson (MIT professor and former chief economist of the IMF)  "Koch Brothers, The Cato Institute, And Why Nations Fail", The Baseline Scenario.

Saturday, February 4, 2012

Why are Americans such Assholes? Part-III

Some Americans have a rather an unusual definition of liberty and freedom: you are free to do what you are told.

Say you decide to visit the sunshine state of Florida, like so many Canadians every year.  In fact, it is approximated that as many as 3.1-million Canadians visit the state every year.  According to news sources:
Canada is Florida’s single largest international tourism market, accounting for three per cent of visitors. Americans make up 88 per cent, while other international visitors contribute nine per cent. Tourists spend more than $60 billion in the state each year.
So you would think that the locals would be very keen on making as receptive a welcome to persons from outside the state as possible.  Of course, if you think this, you've never been anywhere in the American south.  Consider the following news bulletin posted about a rather unstable but not unusual character assaulting a set of Canadian tourists.
Floridian sicks police on "terrorist"

"What's that, some kind of foreign licence plate? Yeah, that guy's definitely a terrorist."

That's what Joseph Tarochione thought when he spotted a set of white-and-blue Ontario plates on a car in Florida, apparently.

On January 31, the 73-year-old Homosassa, Florida man dialed police, said he was with the Department of Defense and asked them to inspect a vehicle belonging to a Canadian tourist for bombs, reports News 13.

Tarochione had used his own vehicle to force the Ontario car off the road and into the parking lot of a strip club, where he held the, um, suspects until officers arrived.

Problem is, Tarochione is not actually with the Department of Defense. And the tourists were not terrorists. Just Canadians. No bombs.

That doesn't mean firepower wasn't involved. When police searched Tarochione's car, they found a .22 Magnum handgun, a .22 long rifle revolver, a 16-gauge shotgun and ammunition.

Good thing he didn't try to use any of them during his "arrest." No one was harmed during the incident.

Tarochione was later arrested and jailed for impersonating a law enforcement officer.
This is what a decade of bogus furore and incendiary political machinations aimed at those who happen not to pray to ole' glory and pontificate on a daily basis the virtues of the American hedgemon produces. Given that only one third of Americans even own a passport, it isn't surprising that the nation is filled with xenophobes.  What I find appalling about these assholes, is their use of violence against anyone they consider remotely different than themselves.

Again, it's just another example of how Americans view themselves and rest of the world.