STAFF NEWS & ANALYSIS
DB Briefs: Economist Mag Makes Up New China Term / Avoiding Ron Paul, Desperate Republicans Turn to Chris Christie / Indian Gov Says Poor Can Live on Half Dollar a Day
By Staff News & Analysis - September 27, 2011

Economist Mag Makes Up New China Term … Catching up is so very hard to do … The emerging economies have had a great decade. That was the easy part THIS month Italy's government sold a slug of five-year paper at one of its regular bond auctions. There was barely enough demand for the bonds to meet supply, even at a steep interest rate. Contrast that with the sale in August of 20 billion yuan ($3.1 billion) of paper by China in Hong Kong's fledgling offshore market. The yield was miserly yet there were more than four times as many bids as there were bonds for sale. – The Economist

Avoiding Ron Paul, Desperate Republicans Turn to Chris Christie … Run, Chris, run? … Will he or won't he? New Jersey Gov. Chris Christie, that is, who suddenly finds himself under pressure from across the Republican Party to enter the presidential race. That's a prospect Christie himself has been exceedingly reluctant to embrace. So far. But some of the party's top leaders and most influential figures — clearly troubled by the failure of anyone in the current field to stir broad, enthusiastic support — are pressing Christie, whom they believe can successfully lead the party against an increasingly vulnerable President Obama. We agree. – NY Post

Indian Gov Says Poor Can Live on Half Dollar a Day … Half a dollar a day 'adequate', says panel … Half a dollar a day is "adequate" for an Indian villager to spend on food, education and health, the country's main planning body has said. Critics say that the amount fixed by the Planning Commission is extremely low and aimed at "artificially" reducing the number of poor who are entitled to state benefits. – BBC

Economist Mag Makes Up New China Term

Catching up is so very hard to do … The emerging economies have had a great decade. That was the easy part. THIS month Italy's government sold a slug of five-year paper at one of its regular bond auctions. There was barely enough demand for the bonds to meet supply, even at a steep interest rate. Contrast that with the sale in August of 20 billion yuan ($3.1 billion) of paper by China in Hong Kong's fledgling offshore market. The yield was miserly yet there were more than four times as many bids as there were bonds for sale. – The Economist

Dominant Social Theme: Growing economies go through a "tricky middle-income" stage. Did you know that? It's true unless the Economist newspaper just made it up.

Free-Market Analysis: The Economist has discovered a new term. It has decided in an article (see above) that China is about to enter " the tricky middle-income stage of development in which the big advances from absorbing rich-world technology start to run out. Trouble has a habit of striking places that avoided the previous crisis and became overconfident. A broad sell-off in emerging-market currencies in recent weeks may be an early sign of softer growth ahead."

This is some amazing mumbo jumbo. The whole idea, we suppose, is to confuse people about how China's economy is growing. We're supposed to believe it's normal growth when it's obviously growth that has come about because of monetary stimulation. This sort of analysis can be found pre-2008 for European countries and America, too. The idea is to attribute the hyper-stimulation of central bank fiat-money to various economic causes.

It sure sounds good. China's ChiComs have taken to building entire empty cities in order to satisfy quotas passed down from the top. But that's not how The Economist sees it. For these ink-stained mavens, China is a success story and the demand for Chinese paper proves it.

The Economist writers are toughies. They are cynical types, and they want you to know it. They won't attribute Chinese growth to an overabundance of fiat money, but they will caution that China's growth may slow down as it goes through a "tricky middle-income" stage. We never heard of this stage, but we are indebted to The Economist for putting it out there. Sometimes The Economist entertains with humor and wit. Other times, the magazine is funny in ways that its writers and editors are not anticipating.

Editor's Note: We should add that perhaps the term in question does exist within what passes for modern economics these days. But it is being used to describe an economic and industrial phenomenon, when what is driving the Chinese "miracle" is monetary in our view. In other words, if the term does exist, it is being misapplied.


Avoiding Ron Paul, Desperate Republicans Turn to Chris Christie

Run, Chris, run? … Will he or won't he? New Jersey Gov. Chris Christie, that is, who suddenly finds himself under pressure from across the Republican Party to enter the presidential race. That's a prospect Christie himself has been exceedingly reluctant to embrace. So far. But some of the party's top leaders and most influential figures — clearly troubled by the failure of anyone in the current field to stir broad, enthusiastic support — are pressing Christie, whom they believe can successfully lead the party against an increasingly vulnerable President Obama. We agree. – NY Post

Dominant Social Theme: The current field of Republican candidates is unelectable. Ron Paul, especially so. We need a real candidate. A heavyweight. Chris Christie is our man.

Free-Market Analysis: As we expected, Republican front-runner and Texas Governor Rick Perry is starting to see his campaign implode. That's what happens when you spend most of your political career as a big-spending globalist and then try to run as a small-government conservative. Once upon a time, you could get away with that sort of thing because the mainstream media would cover you – if you were someone the elites had an interest in backing.

But even with apparent support of American "king-makers," Rick Perry's campaign is fast-diminishing into also-ran status. The Internet remembers or, in many cases, doesn't forget. Between what's on the 'Net and stinging comments from others in the race for the presidential nomination, Perry is looking considerably battered and bruised.

Which is giving the Anglosphere power elite fits. It seems that they are just as opposed to libertarian Congressman Ron Paul as they were last time round. Then, Ron Paul didn't have much of a chance, but today he certainly does. In fact, right now there's almost no one else. Paul runs well against Barack Obama and the party faithful are as unenthused with "front runner" Mitt Romney as they are with Rick Perry.

Ineluctably, Ron Paul is emerging as the candidate to beat, the front-runner if you will. And that has sent the top Republican brass scurrying all the way to New Jersey where they have prostrated themselves in front of tart-tongued conservative Chris Christie. The governor of New Jersey has made a name for himself as a no-nonsense, grown-up conservative. He can't see Russia from his house (like Sarah Palin) and he's not born again (like Michele Bachmann). He doesn't have a liberal record to run against and, unlike Mitt Romney, he never passed a kinda/sorta version of Obamacare.

But the trouble is Chris Christie doesn't seem very happy about running for president, though the nomination might be his for the taking. This only means one thing: He's got something in his background that he's worried about, something that might be revealed on the national stage. He's been saying "no" now for a number of months.

If he does say "yes," there will be an audible sigh of relief from Republican bigwigs. But if he doesn't run, Ron Paul becomes a logical front-runner. This is a terrible possibility for Republicans who like to pretend they are small-government minded and cost conscious but never saw a military item – or even a war – that they couldn't find something in the budget for.

With Perry's self-immolation (his debate appearances are worse and worse), Ron Paul takes another step toward a nomination that has been declared off-limits to him countless times. In fact, even though polls show Ron Paul neck-and-neck with Obama, or even beating him, the top Republican brass would likely forego winning the presidency rather than acquiesce to Ron Paul as the Republican candidate for president. That's how it looks now, anyway.

Let's see what Chris Christie says. The race is heating up, not predictably but in the most peculiar ways …


Indian Gov Says Poor Can Live on Half Dollar a Day

Half a dollar a day 'adequate', says panel … Half a dollar a day is "adequate" for an Indian villager to spend on food, education and health, the country's main planning body has said. Critics say that the amount fixed by the Planning Commission is extremely low and aimed at "artificially" reducing the number of poor who are entitled to state benefits. – BBC

Dominant Social Theme: Half a dollar a day is not very much but it will have to do. Sure it's ridiculous but you have to look at the bigger picture when it comes to India. This is one of the BRICs after all. It's a success story!

Free-Market Analysis: Every now and then the Indian government reminds us of the reality of India – how corrupt the bureaucracy is and how impoverished many of its people are. In this article we get a kind of double-barreled blast. A government commission in its wisdom has decided that something like 77 percent of India (that's the percentage of people that may be living in poverty) can live on 66 cents a day. Could YOU live on 66 cents a day – and your family, too? Didn't think so.

But that's what India's "Planning Commission" has told India's Supreme Court. It's supposed to be "adequate for private expenditure on food, education and health" in India's cities. Country folk get to live on 55 cents a day!

Only about 40 percent of Indians are said to be impoverished, but one reason is because of the way government twists statistics. The poverty rate may be as high as 70 percent. The Planning Commission needs to update its poverty statistics to reflect India's nearly 10 percent core inflation rate. And thus the need to downplay the amount of money that people need to live. The higher the amount, the more the government has to spend on impoverished Indians.

One gets the feeling the Planning Commission would declare that India's impoverished could live on a single cent a day if it could get away with it. "This extremely low estimated expenditure is aimed at artificially reducing the number of persons below the poverty line and thus reduce government expenditure on the poor," well-known social activist Aruna Roy told The Hindu newspaper (according to the BBC).

Anyway, let's review this again. Up to 70 percent of all Indians may live officially at or below the poverty line, which means they're likely spending under a dollar a day for themselves and their families. We can't imagine living on less than a dollar a day. That would truly be a hellish situation. But it's one that the majority of Indians are apparently confronting.

Yes, this is India – one of the red-hot BRIC economies that are supposed to be pulling the world along toward prosperity, or at least a modest recovery. We tend to forget these are DEVELOPING countries because we are seduced by the growing economies and technological sophistication of a certain class of citizens.

All the BRICS – Brazil, Russia, India and China (and South Africa, too) – have significant challenges and large impoverished populations. India is not the exception. BRIC poverty remains both startling and significant.

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