From a interview with Gao Xiqing, president of the China Investment Corporation,…

Americans are not sensitive in that regard. I mean, as a whole. The simple truth today is that your economy is built on the global economy. And it’s built on the support, the gratuitous support, of a lot of countries. So why don’t you come over and … I won’t say kowtow [with a laugh], but at least, be nice to the countries that lend you money.

Talk to the Chinese! Talk to the Middle Easterners! And pull your troops back! Take the troops back, demobilize many of the troops, so that you can save some money rather than spending $2 billion every day on them. And then tell your people that you need to save, and come out with a long-term, sustainable financial policy.

Everything this guy says in this interview has a lot of truth in it. Even the part quoted above has a lot of truth in it.

But “gratuitous support?” Give me a break. We all know why the Chinese lent the Americans so much money. It was a calculated policy to help their exporters. An insanely stupid policy perhaps. But calculated none the less.

They got what they paid for. History was put on hold for 8 years. Like the Great Wall of China, that was an impressive achievement. But I think it will look rather futile in the end.

Having said all that, the man’s complaint is basically valid. China has taken a lot of crap from ignorant people in the US who don’t realize how good they had it or how much of that was due to China’s intervention. The exercises of US power in Iraq and Afghanistan along with the attendant economic boom would have been impossible without China’s economic support.

However, doing the world a favor and getting hated for it is what being a superpower is all about. People are always going to see the downsides of a exercise of power by a another nation and they will never acknowledge the benefits. Just ask any American.

Edit: It should be noted that China is still shoveling money down the rat hole.

However, I think Brad Setser is overstating his case a bit. I think that when we finally get good data on the November and December we our going to find that China’s exports fell through the floor. That is going to put downward pressure on the Renminbi all by itself.

One notes that Russia has been running a current account surplus for a long time. During that period they followed China in trying to hold down the value of their currency. Now they are struggling to keep the Rubble from collapsing in value.

Having said that, it clear that China is still growing its reserves to some degree. The only question is by how much.

From Macro Man…

As always, however, large government actions carry unintended consequences. While lower long-term rates may be seen as a boon to spending, they also substantially increase the net present value of pension fund liabilities. Coming at a time when declining asset performance has left a hole in pension funds’ balance sheets, lower long term rates make the asset-liability mismatch even worse. Among those funds most adversely affected include, quelle surprise, the defined-benefit plans of the Big 3, who themselves are lobbying for fresh government bailouts.

This is even more true if the effect of all this money printing is inflationary.

From the Wall Street Journal….

As part of a renewed bid to win backing for a government bail out, GM requested a total of $18 billion in federal loans — $6 billion more than it said it would a few weeks ago — and added it needs an immediate injection of $4 billion to stay afloat until the end of the year.

The urgency of GM’s request stirred up new worries that GM may have to file for bankruptcy protection. In Detroit on Tuesday, top officials from the United Auto Workers union said at a meeting that GM could be forced into a Chapter 11 filing before Christmas if the auto maker fails to get government funding in the coming days, people familiar with the matter said Tuesday.

From the Associated Press…..

Gov. Arnold Schwarzenegger declared a fiscal emergency Monday and called lawmakers into a special session to address California’s $11.2 billion deficit.

The state’s revenue gap is expected to hit $28 billion over the next 19 months without bold action. The emergency declaration authorizes the governor and lawmakers to change the existing budget within the next 45 days.

Without quick action, the state is likely to run out of cash in February.

In a democracy, endless problems call for endless money.

Can you guess where this comes from?

Equally also, our thrust has been founded on our unwavering belief that extraordinary circumstances must be confronted through extraordinary interventions and not through halfbaked or even wholesale 16th century economic dogmas that have been long discarded in their founding countries.

As Monetary Authorities, we have been humbled and have taken heart in the realization that some leading Central Banks, including those in the USA and the UK, are now not just talking of, but also actually implementing flexible and pragmatic central bank support programmes where these are deemed necessary in their National interests.

That is precisely the path that we began over 4 years ago in pursuit of our own national interest and we have not wavered on that critical path despite the untold misunderstanding, vilification and demonization we have endured from across the political divide.

(h/t Naked Capitalism)

From the New York Times…

The surprising news made headlines in December 2002. Generic pills for high blood pressure, which had been in use since the 1950s and cost only pennies a day, worked better than newer drugs that were up to 20 times as expensive.

The findings, from one of the biggest clinical trials ever organized by the federal government, promised to save the nation billions of dollars in treating the tens of millions of Americans with hypertension — even if the conclusions did seem to threaten pharmaceutical giants like Pfizer that were making big money on blockbuster hypertension drugs.

Six years later, though, the use of the inexpensive pills, called diuretics, is far smaller than some of the trial’s organizers had hoped.

The biggest problem in the way health care is done in America is that consumers generally have no incentive to watch costs. To be sure, some people still argue that diuretics are not as effective as the new drugs as the article above points out. But the bottom line is that they are both pretty close in effectiveness and yet one cost 20 times as much as the other. Even granting that the new drugs are better, one has to wonder if it is worth paying 20 times more for a marginal improvement in effectiveness.

For some reason, this Chickenman entry did not feed through like it should.

From Mish….

The state of New Jersey is insolvent. Bankrupt might be a better word. New Jersey is $60 billion in the hole on pension funding and the Governor is planning on skipping payments in a “pension payment holiday” until 2012 so as to not increase property taxes. To top it off, the ongoing plan assumptions are 8.25%. Sorry NJ, that simply is not going to happen.

Read the whole thing.

Acme gives all of its employees a turkey at this time of year. Acme employs a lot of temporary workers–which is to say, Acme does not employ them, they are employed by the agencies, so they do not get turkeys. Acme does employ a number of high school co-ops; since they are Acme employees, they Click Here to continue reading.