Comments on: SAC-CIC?

By: Guest

Guest — Fri, 27 Jul 2007 12:37:58 +0000

“…Indian Americans are the second largest Asian American ethnic group following the Chinese American community. Indians own 50% of all economy lodges and 35% of all hotels in the US, which have a combined market value of almost $40 billion… One in every nine Indians in the US is a millionaire, comprising 10% of US millionaires… A University of California, Berkeley, study reported that one-third of the engineers in Silicon Valley are of Indian descent, while 7% of valley hi-tech firms are led by Indian CEOs… Indians along with other Asians, have the highest educational qualifications of all ethnic groups in the US. Almost 67% of all Indians have a bachelor’s or high degree (compared to 28% nationally). Almost 40% of all Indians have a master’s, doctorate or other professional degree, which is five times the national average…” http://en.wikipedia.org/wiki/Non-resident_Indian_and_Person_of_Indian_Origin

“…Regions with significantly large Chinese American populations include San Francisco, San Gabriel Valley and Silicon Valley in California and the Tri-State Region… of the East Coast… Areas with growing Chinese American populations include southern Orange County, California, Edison, New Jersey, Plano and Richardson, Texas….” http://en.wikipedia.org/wiki/List_of_U.S._cities_with_large_Chinese_American_populations

By: bsetser

bsetser — Fri, 27 Jul 2007 09:53:22 +0000

HZ — i think we both would be more comfortable with more balanced current account positions. agree that the 90s suggest that relying on portfolio flows to cover EM current account deficits (big ones at least) is risky, tho perhaps those risks have fallen as demand for local currency assets has increased.

lending may have been a bad term, tho it is accurate for the majority of current flows. equity investments to date have been small.

rich is accurate. apart from a small number of oil exporters (UAE. Kuwait) the average per capita GDP of those countries whose governments are financing the US is well below the US/ european level.

and i think would once again encourage those posting (regularly) as guest to pick a handle …

By: HZ

HZ — Fri, 27 Jul 2007 09:33:24 +0000

Brad,
I agree that it is strange that EMs are financing developed economies. It is not desirable and it is reflecting policy inflexibility designed for another era. However I also don’t think developed economies financing EMs model works either. The failure of this conventional model created the old inflexible policies of EM.
Both China and India have high domestic savings and a large well-to-do diaspora (bringing in investments different from typical investment flows).

By: Guest

Guest — Fri, 27 Jul 2007 08:50:06 +0000

which may also lead to the current reality that many of the so-called poor nations have established sizable populations in the ‘rich’ countries, and that, in addition to the interest payments and tech transfer, dividends also include 10’s of billions of dollars worth of annual remittances.

By: Anonymous

Anonymous — Fri, 27 Jul 2007 06:25:54 +0000

they don’t need to foreclose upon technology & know-how….they’ve historically acquired it much more simply and cheaply by stealing it. Even the Japanese have extremely heightened awareness about the amount and access of IP in their industrial transplants

By: Guest

Guest — Fri, 27 Jul 2007 05:39:16 +0000

i don’t know that a ‘vendor-financing’ development policy has ever been tried before, but there has been cases — e.g. ‘company towns’ — whereby easy financing is extended as a hook to eventual foreclosure on assets. if this can be extended to the US’ situation, the US is definitely on the easy-financing hook, whether its assets (technology, institutional know-how) can be ‘foreclosed’ upon now remains to be seen…

By: Guest

Guest — Fri, 27 Jul 2007 05:35:21 +0000

perhaps along with the definition of ‘lending’…

By: Guest

Guest — Fri, 27 Jul 2007 05:21:07 +0000

if it may be more accurate to rephrase it as ‘rich governments’ of poor countries lending to relatively rich countries - although your definition of ‘rich’ country also seems to be somewhat conflicted - at least to me.

By: bsetser

bsetser — Fri, 27 Jul 2007 04:18:01 +0000

My definition of system includes emerging economies.

the private flow of capital is now as strongly toward emerging economies as before the asian crisis (see the ADB report, or the IMF report).

I don’t have a reference on hand but as Treasury Secretary Dr. Summers made the argument that capital should flow from rich (in capital) to poor (in capital) and from the aging to the young. China is a bit of a strange case b/c its demographics differ from that of other emerging economies, but if you think of urban migration as increasing the urban labor force, it still clearly has a rapidly expanding labor force — unlike say japan.

until the current pattern of capital flows emerged, i know of no theory that argues that the governments (remember, this a government flow) of poor countries should lend to consumers/ households/ governments/ firms in rich countries.

the current flow of capital is something very new (china only started to run 10% of GDP surpluses recently) and to my knowledge unprecedented.

By: Guest

Guest — Fri, 27 Jul 2007 02:53:48 +0000

even informed (if unverifiable) assertions may not be true… esp on the internet. what is the quality of your information? can the US have china’s assurances? and in writing… without a very functional legal system (nor a strict adherence to rule of law), how will it be enforced?

what if the US were to bring political pressure to bear, say on documented human rights and environmental abuses, much less political (taiwan, tiananmen, tibet) and religious (falun gong, the pope, panchen lama) freedom, or technology transfer/sales/aid to iran and pakistan?

recently china has shown that it is not immune from political pressure (food/product safety, darfur) but their responses appear belated, haphazard and almost grudging, if only because they were preventable and yet they weren’t…

china still lacks internal controls and the ability to self-regulate (not that the US or any other country is without room for improvement) hence if not imposed from within it will, eventually, be imposed from without, as it has always been…

relatively uncontroversial, but while the world is justifiably thrilled at china’s rise, ‘peaceful development’ and commitment to progress, it is also wary that china’s brand of growth masks significant compromises and risks that could yet prove malignant and ultimately unsustainable. do they not deserve a proper hearing? this forum provides one, but i think it will get a lot larger…