AFP is reporting that a popular Korean blogger was arrested because he criticized the monetary policy of the current Lee administration. The best part was, he was arrested for not having professional credentials — he was a self-taught finance commentator. He had become extremely popular in part because he had called the housing bust that occurred there (there was a speculative bubble in Korea) as well as the huge depreciation in the currency, and he criticized the “loose” response by the administration (e.g., subsidies).
Wouldn’t you be demanding your money back from the institutions that taught you finance when a guy that was self-taught accurately predicted some big moves?
While the arrest is somewhat surprising, Korea’s underlying problems have not gone away since September. The currency (Won) was the worst performer in Asia last year and only recovered at the end because the central bank and government institutions bought the Korean Won and sold stockpiles of dollars. In fact, at the beginning of the year, the Won continued its descent in part because “monetary authorities” stopped trying to spend as much USD to defend the currency.
In addition, Korean Development Bank (a large state-owned bank) and the state-run Pension Fund (the largest institutional investor) bought huge shares of faltering firms, propping them up and preventing them from liquidating, thus sending their stock market shares artificially higher. Plus, the central bank continues to lower rates, to a record low, to “bolster” the GDP — yet it effectively destroys the value of the currency. And any attempt to raise rates, to encourage savings, would undermine the governments work at propping up zombie firms (sounds like the US?).
The only saving grace is that the US Fed created a swap agreement with them, yet Korea has blown through that and wants to revise it upwards.
Koreans tried to live above their means, racking up huge amounts of personal debt and saving very little. On example is Ssangyong, a large Korean carmaker, that went into receivership today because no one has any money to buy cars (just like Americans). In addition, as I predicted would happen, the administration is having one hell of a time trying to privatize state enterprises and ratify the US free-trade agreement. As a consequence, the benefits of liberalizations that could help the macro economy won’t come into fruition when the Hermit Kingdom needs it the most.
So, I stand by my earlier long-term bearish outlook on the bonds of corporate equity players and sovereign institutions.
Over at Mises.org I created an open thread regarding economic predictions for this year.
For me, while it is pretty easy to see a new speculative bubble forming around US Treasuries especially since they’ve gone negative (perhaps the Fed is buying them as well), it is hard to guess if/when it will pop.
I think it is safe to say that for at least another 6-9 months everyone is going to still be on a honeymoon with Obama. Thus, I suspect that despite looming retail bankruptcies there will be a nominal increase in value for many major indices, with the Dow moving above 10000 again. In particular, all of the areas benefiting directly from his new stimulus packages will probably see temporary stock gains.
However, Frank Shostak has a thoughtful piece coming out soon (I took a peak) that causes some concern. I’ll link to it when it comes out. Suffice to say he discusses another worrisome scenario on top of what Murphy and Higgs have recently outlined.
And regardless of monetary policy the short-term price of oil will probably remain low for several months because demand is non-existent. If I had spare tanks, I’d be doing the same thing the Dutch, the US and the Chinese are: stocking up on cheap oil. Once the OPEC production cuts kick in and economic activity resumes, $45 will look awesome in the rear-view mirror. And you can’t print petroleum. (Maybe this will be another ‘73-’74?)
One other financing point is clear. While most analysts agree that the administration will be operating a large deficit that will grow throughout the year, I suspect the decline in tax revenue this April will probably be on the lower end of the estimates. And this trend will continue for several years as the private, tax-producing economy undergoes dramatic correction/deleveraging.
Regarding precious metals like gold and silver, so as long as the ECB and other major central banks continue to lower interest rates, an ounce of G probably won’t rise above $1000 for several months. Oppositely, if the UK or Europe dramatically raised rates, that would strengthen their currencies relative to the dollar, yet from all of the press releases I doubt this will occur anytime soon (quantitative easing is the new kool-aid). So a relatively stronger dollar in the near-term (sans the Yen).
Turn that frown upside down
One additional note regarding some of the emails I’ve been getting. In January 2007 I sent a questionnaire to about 40 different big wigs in the libertarian movement similar to what the Edge Foundation does each year. The main question was “What are you optimistic about the future? Why?” (their question from 2007).
Despite receiving a ton of thoughtful comments I never published them and probably won’t have a chance to anytime soon. However, one that stuck out was from economist Robert Higgs who was much more pessimistic than the rest (including Arnold Kling and Lew Rockwell), who thought that the state would continue centralizing its control through various industries — and would continue doing so for years to come. I’ll leave it to the reader to reflect on who is currently winning that battle right now, but it’d hard to say he’s been wrong.
For a more upbeat pep-talk, see Lew’s recent piece, “Don’t Cave” or the halftime speech from Murphy.
…if you recognize the existence of Tierra del Fuego.
It’s that time of the year where my evil atheistic puppet masters command me to spew hate and misery.
This edition involves Noah’s Ark and the type of flash flooding which almost ruined Evan Almighty’s political career two years ago.
In the beginning
Here is one problem with Biblical literalism, based on our calendar system when exactly was day uno? And how long does it take to walk from Mt. Ararat to Drake’s Passage?
Bishop Ussher’s chronology is traditionally used by many Christian denominations, he says terra firma began in 4004 BC. Other scholars date this particular deistic creation as far back as 5500 BC.
Let’s assume that these guys are correct, there was a day uno created by the Bearded God from The Far Side.
Now if they are correct about this, what about a supposed world-wide flood that wiped out all but 8 people? When did that occur in that timeline?
Like usual, someone put together a handy chart starting with day uno around 3924 BC and the flood subsiding at 2267 BC. So to be fair — and the most liberal — let’s use that 1700 year gap and also apply it to an even earlier start day of 5500 BC. Thus making the flood take place around 3800 BC.
Heck, for the purpose of this post, we’ll flat out assume the flood took place on 5500 BC and see how Biblical literalism is still wrong.
Walking 500 Miles
So as standard Young Earth Creationism suggests, Noah’s family repopulated the planet, giving rise to every civilization in existence — including those horseless guys in the Americas.
Assuming that a flood took place as detailed by YEC advocates like Kent Hovind or AiG, dating this event anytime prior to 10,000 BC means they lose this blog battle.
You see, based on archaeological evidence of the Americas, there were numerous clans, tribes and fully-fledged civilizations at around 3500 BC… near Tierra del Fuego at the tip of South America. Sure they didn’t have flushing toilets or high-speed internet access, but they did leave behind stone tools, trash and of course, bones. But let’s ignore that.
So let’s say that Noah’s posse sees the first rainbow at 5500 BC, built some tents and procreated a bunch. After about a couple hundred years of peace and quiet, they’ve put together a motley crew of several hundred, maybe even a few thousand offspring.
A group of them gets bored of playing Scrabble all day (they preferred Go or Mahjong) and decides to head off to become Asians, because they have a thing for fireworks and rice cakes.
Where do they start off from?
Modern-day archaeologists have posited an Out-of-Africa theory based upon all the skeletal remains and tools found throughout East Africa. Let’s ignore that and assume that these new Asians, Nuevo Asians, started out either in Mesopotamia (birth place of the wheel) or Mt. Ararat in Turkey (birthplace of rugs).
How long would it take, say 100 Nuevo Asians to wander aimlessly from Baghdad to Beijing? The distance is 6267 kilometers, but how fast can they go?
The thing is, they can’t just hop into their Honda’s and drive up the local highway. First, they have to live. They have to collect food and carefully wander across the plains of Asia Minor until they bump into the armpit of empires: Afghanistan. Let’s say they manage to cross 30 kilometers a week without rain, snow, monsoons or other inclement weather. We should also take into account party members dying from dysentery, dying while trying to ford the river, and dying from attacks by white, two-dimensional bears (aka the Oregon Trail).
Sleeping without a roof
In real life, the group would inevitably have had to rest on occasion because their Asian parents forced them to bring a piano which is hard to pull up hill.
One such pit stop probably looked like this: while the women folk watch Desperate Cavewives and haul around babies, the men skin small guinea pigs and stitch together new Nike cross-trainers to sell to on the streets of a not-yet-founded Hong Kong. Always be prepared.
Okay, so remember, no one has a GPS and they have no idea that all of the ‘Stans are barren unforgiving steppes in every direction. But they keep a stiff upper lip and trudge away.
And then they have to found India quickly and bury a bunch of civilizations worth of bones and trash for archaeologists to stumble on later. But let’s skip that part. (See history of India).
Instead, these guys are going straight to the Bering Strait and are only stopping to practice their violins and cram for the SAT.
Alright, so if they b-lined it from Baghdad at the start of spring, some 200 days later they could saunter into Tienanmen Square, just missing the Mid-Autumn festival.
Realistically however, assuming that any of them survived, it’s hard to imagine how even a modern-day, seasoned group of Special Forces led by Chuck Norris himself could hike that distance in one season. Remember, no maps, no compasses, no flash lights, no Gortex, no tarps or sleeping bags. Oh and lots of hairy unplucked unibrows. Gross.
So let’s say the Nuevo Asians detour along the Khyber Pass, save some valuable time swimming up the Mekong river and then set up a H&R Block franchise for a few years in Yunnan (whose hand-sculpted terraces and rice paddies have been continually cultivated for some 8000 years). They are thrifty Asians after all, gotta bring in the bling.
Okay, so like Moses, 40 years later they make it to Beijing, just in time to see Wang build the first kite. The promised land, right?
Nope. Now they have to found both Korea and Japan (with cultures dating back thousands of years BC), then saunter up to Cape Dezhnev next to the Bering Strait.
Who never prospers?
But let’s cheat again. None of the party members want to cross the land bridge because there are no extended warranties for the Lexus SUVs they are now driving.
Instead let’s go back to central China, to Kaifeng. A direct flight from there to Santiago Chile apparently is about 19,000 kilometers. In reality, the journey on land would take the form of a big parabola and involve marching across every terrain imaginable. Facing gigantic Kodiak bears, harsh blizzards, General Winter and Canadians. Then they would have to cross the Great Plains without the aid of Doppler radar and frantically sidestep some of those nasty turnadows you see in fancy movies. (See the alley)
Then cross North Texas. Then Central Texas. Then Southwestern Texas. And finally, to Nuevo Laredo where they create the first Taco Bell. The Chihuahua would be added later by Cortez who didn’t like hair on anything.
Making their way south, the Nuevo Asians leave a gooey trail of various other cultures that would later build temples and become the centerpiece of Apocalypto. Then they would use their banana domestication skills (having already done so back in Southeast Asia) and create Del Monte thus laying the seeds to the Banana Wars.
Upon reaching Columbia, they get high on cocaine for a few generations and leave behind the great-grandparents of Juan Valdez.
Then they scale the Andes mountains, blast the stone apart (because Asians invented gunpowder) and build a karaoke bar which is later renovated into Machu Picchu.
Then they split into factions. One group books it over to Buenos Aires and erects a gigantic phallus that is later chiseled into Christ the Redeemer. The other sets sail to Easter Island to carve big headed statues, implying that Asians are super smart.
Finally, a smaller third group of Asians domesticate horses and become the first vaqueros and then head to the tip of America del Sur. These people become known as Yaghan. And just as they are pitching their tents, unitard-wearing Francis Drake comes sailing through what was then called the Asian Passage. He renames it. What an asshole.
Then hands them a bunch of blankets with smallpox and erasing all traces of Nuevo Asians below the Mason-Dixon line.
What really happened
Getting back to the original exercise, the problem with this particular Biblical interpretation is that it wholly ignores the archaeological evidence of Pre-Columbian Americas, of which numerous sites date back thousands of years. It also ignores the time needed to effectively build a population base large enough to fill out South and East Asia before making the fateful trip across Alaska.
Based on current models, it is believed that humans managed to accomplish these feats and reach the tip of South America some 11,000 years ago. Thus, even the most liberal Biblical chronology cannot account for this time span.
In addition, based on DNA evidence from samples taken around the world, we can use haplotypes, mitochondria and Y-chromosomes to give us a pretty good idea of who is related to who and where your ancestors came from. That’s right, by testing indigenous peoples, scientists can actually put together a footprint map that goes in reverse order. Be sure to read the related articles: Y-chromosomal Adam, Mitochondrial Eve, haplogroup
One last point. If you don’t buy the fact that humans settled the Americas before a hypothetical Noah was even born, how is this for mental gymnastics: Army Ants. With or without bazookas, just how the hell would these fragile little insects have made that journey across Asia and down into South America? What about the tens of thousands of plants and animals endemic to the New World that couldn’t survive the transportation through hostile Asian environments and climates.
Plate tectonics anyone? Or does Hovind’s god still work in mysterious ways?
I’ve been operating on radio silence for a few days because of the utterly ridiculous emails I received over a sarcastic piece on abortion.
Holy cow people. If you don’t like abortions, don’t have one. And above all, don’t send out death threats, because, ya know that’s not really pro-life, mmmkay?
This whole ordeal reminded me one of my favorite cartoons from the always good, xkcd.
So I’ve been ragging on the Korean Won for awhile now and thought I should be a little more even handed.
Fortunately for SNL and The Onion, it looks like Mexico is having a repeat of 1994.
The peso has taken a nose dive in the past two weeks, losing 20% in value.
And believe it or not, another currency has them beat. And I don’t mean the Zimbabwean dollar which for all intents and purposes doesn’t exist.
Ol’ Iceland couldn’t defend a peg to the euro for an entire day. The quote on the krona is mercurial, changing all of the time — in a downward fashion. Yea, you know you’re in bad shape when Russia is the only country willing to bail you out.
So I was in a service organization back in college and am still on the alumni listserve. One of the alumni apparently works as a financial broker at a boutique firm.
He recently sent out a message saying among other things that he and his family are in the stock market for the long run and that he isn’t going to sell.
Ouch. Even if he invests solely in entities like defense contractors (which just received tens of billions in financing two weeks ago), he is going to be cleaned out. Even five years from now.
I hate to say this, but the pollsters at CNN have a better grasp of reality than the financial planner:
As I’m winding down my contract here in Korea I’d like to quickly discuss what many foreigners do here: teach.
There are roughly 25,000 native English teachers scattered throughout South Korea, most residing in the larger metros.
And where do they teach?
Usually not public schools. The vast majority teach in private academies called hagwons (I’ve mentioned them here). Unless you grew up in East Asia, you probably haven’t seen anything like them.
These aren’t like private schools that simply mimic whatever the public schools create, rather, these are intensive extracurricular programs that focus solely on one or two subjects.
For example, a typical Korean kid that enters middle school has the following schedule:
- Goes to public school from 8am-4pm
- Has a 30 minute break to eat/drive to their hagwon
- Goes to the hagwon from 5-11pm (sometimes even 1am)
- Goes home and study
- Gets 6 hours of sleep
- Repeats six days a week (yes, they go to school on Saturdays)
Note:
- Sometimes they may only go to an English hagwon every other day, alternating with a math or science academy
- Even kids as young as kindergarten participate in these daily cram academies
It’s absolutely insane from a perspective of fostering creativity/innovation/individualism and one of the leading causes for suicide (tons of stress, zero fun). In fact, if there is one statistic that no one probably wants to be number one in, it’s suicide… which Korea currently is.
While this topic deserves more space, some people have asked me how much Korean parents spend on this extra education. According to some recent numbers, about $15 billion.
According to the CIA Factbook there are 8.4 million kids between the ages of 0-14. So let’s cheat and say the same amount for 5-18. That means that parents spend roughly $2000 a year per child on language schools alone.
And people wonder why Korea has the lowest birth rate in the world (seriously, at 1.08 it ranks dead last). After all, relative to middle class families in the West, Koreans earn about 30% less. So in order to afford this education, they have fewer kids.
Anyways, it’s a pretty insane situation especially considering many of these kids are sent to hagwons that have utter crap for curriculum (rote memorization), so it’s a complete waste of their time (apparently its systemic as it pervades their Higher Education system too).
For instance, some of the new kids I get at the beginning of each semester have been going to hagwons for years, but are simply incapable of saying or answering simple sentences like “What is your name?”
Joshua Snyder has more on this and provides the best quote summarizing the situation: too much of a good thing can be bad. Agreed.
And on a slightly different topic you may be interested in my most recent LRC piece on North Korea. If you like it, you may also enjoy a couple of complimentary pieces that I’ve run into lately:
I just finished watching The Fall, an unusual indie film that portrays the life of the original stuntmen in Hollywood.
There is a montage at the end — comprised of the old black and white silent films – which depict daring and stupid stunts done at the expense of life and limb.
The symphonic booms, plucks and clangs were synced perfectly to each crushing fall and breaking blow.
So, be sure you’ve eaten before you click on this link, it’s a big chart of all the world markets today. Asia is all down by a couple percent and Europe completely tanked by 4-5%.
How come?
The individuals directly responsible for injecting artificial credit and increased inflation are not getting fired out of a cannon or being dropped from a plane. You see, it’s the G-Men that choreographed financial stunt after stunt, yet at the end of the day, guess who isn’t being blamed for lighting the fuse?
Their stunts completely backfired by epic proportions. Sync some music to that.
Over at Mises.org I created an 
…if you recognize the existence of Tierra del Fuego.
I’ve been operating on radio silence for a few days because of the utterly ridiculous emails I received over a 
As I’m winding down my contract here in Korea I’d like to quickly discuss what many foreigners do here: teach.
According to the CIA Factbook there are 8.4 million kids between the ages of 0-14. So let’s cheat and say the same amount for 5-18. That means that parents spend roughly $2000 a year per child on language schools alone.
I just finished watching