Andy Xie: Economists Who Cannot Remember The Past Are Doomed To Repeat It

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Andy Xie. Andy Xie, Andy Xie, Andy Xie. Hast thou learned nothing from Lucy Gao?

I participated in the panels on commodity and China-India and in some obligatory dinner parties. On Friday night, the Singapore PM invited the speakers at the meetings that Singapore government organized. Trichet, Larry Summers, Paul Volker, Chuck Price, the finance ministers of ASEAN countries were there. No government official from China was there. I guess I was there to make it look like China was represented. The dinner was turned into an Oprah with PM Lee Hsein Long at the center. The topic was on the future of globalization. People fawned him like a prince. Of course, he is. There are two reigning royalties in the world that the Davos crowd kiss up to, Jordan and Singapore. The Davos crowd are Republican on economic issues and Democratic on social issues. Somehow, they mange to put aside their moral misgivings and kiss up to Lee Hsein and Abdullah.

Birthday party invite email continues after the jump.
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I tried to find out why Singapore was chosen to host the conference. Nobody knew. Some said that probably no one else wanted it. Some guessed that Singapore did a good selling job. I thought that it was a strange choice because Singapore was so far from any action or the hot topic of China and India. Mumbai or Shanghai would be a lot more appropriate. ASEAN has been a failure. Its GDP in nominal dollar terms has not changed for ten years. Singapore's per capita income has not changed either at $25,000. China's GDP in dollar has tripled during the same period
I thought that the questioners were competing with each other to praise Singapore as the success story of globalization. Actually, Singapore's success came mostly from being the money laundering center for corrupt Indonesian businessmen and government officials.
Indonesia has no money. So Singapore isn't doing well. To sustain its economy, Singapore is building casinos to attract corruption money from China. These western people didn't know what they were talking about. Aside from the nauseating pleasantries, some useful information came out of it.
Trichet sounded very bullish on euro-zone economy. He noted that euro-zone was catching up with the US in growth rate and talked about further gain in 2007. His tone was much more bullish than our house view. As Japan is surprising on the downside, I don't see how the rise of euro-yen could be stopped.
Larry Summers and Paul Volker were very worried about the US economy. As you probably know, Alan Greenspan is talking the same way. At the CLSA conference last week, he talked like on of his critics. There is a fear of a US collapse. Many Americans think that an Rmb reval would save the US [sic]. This is just a dream, in my view.
Most were worried about the future of globalization due to income inequality. As average workers in the west are not seeing wasge incrase, many may vote against globalization. I thought that they were understanding the benefit from cheap consumer goods. However, as inflation comes back, it does admonish the benefits for western consumers.
No one was worried about the growth outlook for China or India. The Indian Planning Minister was very bullish, talking about 9% forever.
My sense is that policymakers are related about the short-term economic outlook but anticipate the US collapse at some point. Americans think that Rmb reval could save the US. So they would keep pressuring China.
Andy Xie

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