Saturday, March 27, 2010

The upcoming economic trend in China and United States

My comment on the translation: The prediction in this article is shocking. Or, to some readers, it is too dramatic to be real. Liu Junluo, however, has a long list of proved records of precisely predicting the upcoming critical economic events and their time both in China and in the global scale, which includes the most recent global economic crisis.

The original title of the article was "2012年——2013年中国恶性通货膨胀" (2012-2013, hyperinflation in China). I revise the title to be "the upcoming economic trend in China and United States" by believing it revealing the theme better. The original article in Chinese is here. I also added a few translator's comment and external links (there were no external links in the original article) so that the content may become easier to be understood. Moreover, here are more articles of Liu Junluo translated by Thinking Space.

Thanks for Google translate that saves me a lot of time in translating.


(1)

There is a story. In a deluxe casino many people win money; and the next time they win again. After a while, spontaneously these people reach a consensus: aha -- now it is our time! The "fool" casino owner continues his business and loses money. More and more people thus run for the casino seeking their "brilliant future". When time goes on, they start to bet all they have on the table. Enough. This is an old fashion, and the ending is well-known. The inevitable destiny is waiting for the gamblers.

In 1992, the U.S. President Mr. Clinton promoted the liberal market economy in order to integrate the world with the economic globalization. On January 1, 1995, a total of 74 countries that include all the developed countries in the world and dozens of the developing countries such as Brazil, South Korea, Bangladesh, Kenya, etc. officially became the founding members of the World Trade Organization (WTO). Several years later, in 2001 another U.S. President Mr. Bush Jr. launched the largest tax cut and increased government expenditure operations in the nation's history, which resulted in a rapid expansion of the huge U.S. trade deficit. The huge U.S. trade deficit, on the other hand, became a strong impetus that pushed the progress of economic globalization.

Based on its great amount low-cost labor force, cheap land cost, and the intentionally underestimated environmental cost, China seized a great percentage of the expanded U.S. trade deficit. In 2003, China took 25% of the U.S. apparel market share, while Mexico, the nation right adjacent to the United States, occupied only 10%. By 2005, the Chinese share was increased to 63% of the U.S. apparel market, while the Mexican share was dropped to about 2%.

In the beginning of the World Trade Organization, the former U.S. President Bill Clinton strongly advocated a win-win philosophy -- the tide of globalization is inevitable; global investment, global market, and the technology distribution in the global scale will benefit the whole world eventually. [Translation comment: Though the statement well sounds,] the problem is, however, that it is the Americans who paid the price for globalization where the price is by carrying the huge trade deficit and current account deficits. In order to continuously hold the nations all over the world participate in this American-led economic globalization movement, in 2009 finally U.S. had a record of huge debts in history. In this way, we are now back to the beginning of this article. A "fool" deluxe casino owner [Translation comment: i.e., the United States of America] loses a lot of money to maintain his business, and every one of his customers seems ready to take advantage over this "fool" casino owner until somebody's bankruptcy. [Translation comment: Who is the "somebody" by your opinion?]

In 2009, China had become the nation with the highest debt in the world measured by the combination of the government debt plus the household indebtedness. The ending of the story thus seems become common sense again.

(2)

Many of the current mainstream economists in China are the followers to the "American-led globalization". Moreover, they are the traffickers of the "trash thinking" in Chinese society. Smugly they advocate the U.S. doctrine of free market and currencies in China. If, however, one should ask them about the future based on their doctrine, such as the US dollar in the coming year or the house price in China in the next two years, usually their reply would not directly address the right answer.

It is indeed not very much horrible for a society controlled by the "trash thinking" traffickers. [Translation comment: In fact, we have learned many similar situations in history, especially in Chinese history.] The real thing that scares us is what these traffickers do is in a plan designed by the Wall-Street "Darwinians". Because of these traffickers' "tireless contribution", the US-made "garbage thoughts" have been implanted successfully into the mind of a vast number of Chinese middle class and the class of migrant workers. Seriously these normal Chinese people start to believe that United States is going to be fallen due to its huge debt. [Translation comment: And thus now it is our turn, our time! Take a look at the story in the beginning again.] But is it true?

At present, the health expenditures per capita in U.S. is about 6700 US dollars. The annual U.S. medical care spending equals to 17% of U.S. GDP, which is much higher than the percentage GDP level in Germany, France, or Japan. Comparing to the people living in Germany, France, or Japan, the tax pressure on the American people is, however, about 30% ~ 50% less. Among all the developed countries, Americans have the least burden on individual tax while the nation provides the most expensive health care services. Why are Chinese people desperate in saving? 70% of the saved money is for the reason of the lack of health care protection. By contrast, the current U.S. health insurance system can be kept effective until at least 2030. Hence how can we be so stupid to believe that Americans do not save?

At present, the total U.S. pension assets is close to 17 trillion US dollars, which is greater than the present U.S. GDP (15 trillion). In its distribution, 60% ~ 65% are stocks, 25% are long-term bonds. Thus, the essence of the issue is whether United States can maintain its position on leading the technological innovation of the world.

In history and until now, United States is the heaven for technology innovators. These innovators occupies about 1% of the U.S. population. They, on the other hand, controls 65% ~ 75% of America's wealth. At present the innovative companies such as Microsoft, Google, and Wal-Mart maintain as much as 500 billion ~ 800 billion U.S. dollars in cash. Anytime they are ready to go for taking over the next-generation technology innovation.

At the same time, in the present China the majority of wealth is also controlled in the hand of few elites. These elites are, however, China's "gravediggers", or the realtors. [Translation comment: The realtors dig land, and more importantly, they are now sending China's future into grave.] In their hand they have multi-trillion RMB Yuan in cash. Their vision, however, only allows them being ready to buy bulks of land, bricks, and steel anytime. The distinction between "a society of technology innovation" and "a society of idiots" is the difference between survival and long-lasting and the destiny of Louis XVI.

(3)

In the future the world is becoming very very "beautiful". [Translation comment: In Chinese, "beautiful" and "United States of America" share a same Chinese character "美". Hence what the author really means is that the future of our world will become very very "American".]

Globalization has been the melody of our time and it is beyond the willingness of any single nation. In 1995, the total value of global mergers and acquisitions reached a record 356 billion U.S. dollars. Only after a decade, in 2005 such a total value reached more than 3 trillion U.S. dollars. The worldwide Great Depression in 2008 led to a sharp reduction in the total value of global mergers and acquisitions. At the same period the sovereign debt in the developed countries increased rapidly. Indeed, however, it is not something that we should worry too much. The level of sovereign debt in the developed countries at present just arrived at the debt level at 1950. Due to the great reduction of the global production capacity, global mergers and acquisitions is in a cycle of large-scale reduction as well. Between 2013 and 2015 the overall sovereign debt in the developed countries will reach its peak. After 2015 the overall sovereign debt in the developed countries will enter its cycle of large-scale reduction. After 2015, due to the reduction of the sovereign debt worldwide and the release of the suppression over the global mergers and acquisitions fund, there will be a worldwide synchronized economic rebound since the wave of globalization.

Certainly, the most unfortunate thing for United States at the time is that the large-scale retirement of baby boomers will have already begun nationwide. In 2015, 40% of the workers in the manufacturing sector such as in Boeing and Caterpillar will retire, 30% of the workers in the service sector such as in Microsoft, Google, and Wal-Mart will retire.

From 1870 to 1914 during the first wave of the economic globalization in which United States was the winner, there were 60 million people immigrated from Europe to United States. The number was accounted for 4.1% of the overall world population during the period. Right now United States has a total of 35 million immigrants, accounting for 12.6% of the U.S. population. But it only accounts for less than 0.6% of the world's total population. Hence what is the tactic question that the U.S. administration must think of now? The answer is clear---United States urgently needs a large force of high-tech talent from immigration. Since 1989 the collapse of the former Soviet Union provided United States a large number of high-quality and high-tech immigrants. Actually, one of Google's co-founders was from the former Soviet Union. [Translation comment: Which nation will be the next to provide U.S. such a source of immigrants?]

(4)

There is a question: why in 2009 were there so many people crazily buying houses in China? To answer it, there is a theory called the "Butterfly Effect". In the Atlantic area a butterfly named "Lehman" flapped its wings. In consequence far far away in China the house price was risen 50%.

Now even the normal ones like us know that it required U.S. government about 20 billion U.S. dollars if it wanted to save "Lehman" the butterfly at the meantime. The amount equaled to less than 4% of the U.S. financial rescue fund. Why did the U.S. government not save the company?

Told by Lenin: to ruin a nation, one must first destroy its currency.

My dear friends, in 2009 the total debt accumulated by the Chinese central government + the Chinese local governments + the Chinese banks + all the Chinese residents was more than 20 trillion RMB Yuan. At present the size of Chinese economy is 1/3 of the size of U.S. economy. But China's M2 supply is 20% more than America's M2 supply. Let's think of an analogy. If a German sold an egg by obtaining U.S dollar in 1918, in 1923 the German could buy 30 million German eggs using that money in U.S. dollar.

In Qatar, during the hot season one can often see U.S. soldiers driving a jeep bolting on streets. Today, the U.S. Central Command's forward headquarters is in this small country of the Middle East. Qatar, therefore, dismissed its own national army, and being relax beneath U.S. protection.

Bahrain is where the headquarter of the U.S. Fifth Fleet resides. The oil production in the three key allies of U.S. in the Middle East--Saudi Arabia, Qatar,and Bahrain--accounts for nearly 70% of OPEC's total annual production.

The annual economic growth rate of Saudi Arabia is 1.9%, while its birth rate is 3.3%. The Saudi Arabia economy is in a long-term stagnation. Its annual per capita income is decreased from 18 thousand U.S. dollars in the mid-90s to today's less than 7000 U.S. dollars. 90% of Saudi Arabia's revenue comes from oil. To deal with the pressure of the fast-growing population and to overcome the heavy dependence on the oil industry, Saudi Arabia has begun a large-scale industrial upgrading plan. In 2013 the Middle East petrochemical products will be 18 to 20 million tons. The production cost of the petrochemical products in the Middle East is 30% ~ 40% less than the production cost of the petrochemical products in China. This is the flapping wings of another butterfly in 2013.

And now for China there is another butterfly named "Greece", and another butterfly named "Toyota", and another butterfly named "Google", and another butterfly named "iron ore", and another butterfly named "water resource", and another ... So many "butterflies" are ready to flap wings.

In this year, China is going to experience the collapse of its real estate market. From 2012 to 2013 it will be the collapse of the RMB exchange rate followed by a hyperinflation.

In the end of this year, my most conservative estimate of the U.S. dollar index will be 85. How do I know it? United States is a nation chasing financial profit.

The exchange rate of U.S. dollar is a combat legion of United States. Nowadays only "the stupid" would think of wining battles through hackers and bombers. The new form of battlefields is a consequence of globalization.

In 1997 the ASEAN economy collapsed. In particular, Indonesian rupiah dived from 2,500 yuan to 20 thousand Yuan. The economists in Indonesia and all over the world concluded afterward that the problem of Indonesia was its society-wise corruption. When China's time comes, the mainstream Chinese economists will talk about the same thing in China as well.

By then, CIA will help raise few "Chen Shui-bian" in mainland. And this is called the art of Sun Tzu---win battles with no need of fighting by soldiers. A large number of science and technology elites in China will be forced to immigrate to United States when China loses this battle without soldier fighting.

By then, it will be wise if those corrupted Chinese government officials realize that they must not try to immigrate to United States. It is because by then Americans will learn the same way from Qin Shi Huang to deal with these people. In history, Qin Shi Huang beheaded the last prime minister of Qi, who accepted tremendous amount of bribery from Qin before the ending of the war between the two nations, to comfort the people of Qi. United States will do the same to comfort the Chinese people. In three years some of these Chinese realtors will be in the same destiny of Louis XVI.

At last, allow me ask all of you a question of common sense: if today we Chinese might invent Japan 2.5 trillion U.S. dollars so that the Japanese society becomes few "fool" realtors take advantage of the majority of the Japanese middle class and lower class society, would you support this plan? [Translation comment: To understand the last question, please take into account that a large number of mainland Chinese do not like Japan. Moreover, the "fool" means that some people are willingly blinded because of money. Not really they are less intelligent in thinking.]

Liu Junluo

March 24, 2010

Monday, March 22, 2010

Google.com.cn has been closed

It is now redirected to www.google.com.hk. In its front page, it is said "欢迎您来到谷歌搜索在中国的新家" (or "Welcome to the new home of Google Search in China").

Today must have its unique position in the history of Web evolution.

Friday, February 12, 2010

My brief comment on iPad, Siri, GBuzz, and Aardvark Acquisition

Due to my schedule, I do not have time to make intensive posts that explore the news in depth as I used to do. To celebrate the Chinese New Year and Valentine's Day (this year they happen to be in the same day, Feb. 14) together with the Thinking Space readers, however, I would like to share my brief comment on some of them with my friends. Happy holidays!

iPad

iPad represents a remarkable breakthrough in concept. Its current product design is, however, immature. It is a terrible misleading to think of iPad an enlarged iPhone. To see the real intrinsic distinction, let's take a minute thinking of the following comparison.

The innovation of notebook computer brings the Web to people anywhere in the world; the innovation of iPhone brings people anywhere in the world to the Web; the innovation of iPad, on the other hand, makes an instant bridge between a person anywhere in the world and a specialized subset of the Web---his Web of interest. This is the real gap Steve Jobs claimed to fill in the product launching show.

Certainly, the current iPad design has not reached the goal yet. This is why I call it immature.

Siri

Siri on iPhone is a milestone though there is still a long long way ahead to reach a meaningful success.

Believe it or not, Siri and iPad actually belong to the same philosophy---developing a personal assistant. iPad plans to construct a hardware platform of personal assistants. Siri attempts to build a software platform of personal assistants. Compared to iPad, the road ahead for Siri is even tougher.

On the positive side, Siri provides a fascinating environment to experiment many key concepts of the Semantic Web and linked data in the real world. Idehen Kingsley must be interested in exploring his journey with this service. We as normal users, however, still need more time to watch the future progress of this service.

Google Buzz

Twitter but in Google? Maybe. But GBuzz means more.

Google Buzz reveals the GMail users the social communities they implicitly belong. These social communities existed disregarding GBuzz. GBuzz, however, makes them explicit. This is a critical step Google made towards exploring the treasure of the social web. Google has been hesitated on how to step into the social web for long time. Finally it seems the company finds their unique asymmetric strength to enter this market by cashing the popularity of its dominating GMail service. This is remarkable because in comparison Microsoft still does not get how they might exploit their asymmetric strength in this field.

Google's Aardvark Acquisition

The innovation of Aardvark is ended. This acquisition is probably a good news to the Aardvark investors and the Mechanical Zoo employees. It is, on the other hand, not so good a news to the evolution of the Web.

In short, Google's ultimate interest contradicts to the eventual potential of Aardvark. Google's ultimate interest is to make itself a super-smart brain while everybody using it may follow it stupidly. The social search services such as Aardvark aims to locate smart people and make people rather than machines be smarter through the social communication. This contradiction in the level of philosophy actually is the intrinsic reason that made the Aardvark designers leave Google several years ago. Although at present the power of money brings them back, it does not solve the fundamental conflict.

I had a phone conversation with Max Ventilla two years ago and we shared quite a few thoughts about what the social search was and how to approach it. I am glad of and sincerely congratulate his achievement in business by sealing this acquisition deal. I am afraid, however, that he will start another journey sooner or later when his original passion catches him again.

Sunday, January 31, 2010

A story I must share, save our sisters and children


I feel indebted. Although I am too busy to blog in these few months, I must say something about this talk.

There are people, especially children and women, who live desperately. That they feel out of hope is not because what they were but what they will. No matter how hard our heroes such as Sunitha Krishnan have worked to save these people physically, it depends on us, all of us, to accept them and welcome them back to our normal society so that they can be really saved in the end. Without our support, our cooperation, and our empathy, what our heroes can do is limited. If we do not do what we can and need to do, we are indebted.

The video lasts about 12 minutes. Please take a look, if you have not watched it before, and share the story with two of your friends (as Sunitha asked). Not only just talk to them, but also convince them that this is what we need to do. It will cost you zero dollar and zero minute. What it demands is only our open heart to sincerely welcome our poor brothers, sisters, and children back when they show up in front of you.

God bless them. God bless our heroes. And may God bless you and me too!

Thursday, January 14, 2010

Leaving China, my view on Google's recent statement

A recent breaking news on Internet is Google's new approach to China. I admire this decision and the courage of rejecting the temptation of the growing Chinese market. Google determines to stand "on the right side of history", as Rebecca MacKinnon said.

Through Golden Shield Project (GST) China has built a digital Berlin Wall that intends to separate Chinese people from the rest of the world. While the physical Berlin Wall limited the freedom of physical bodies, the digital Berlin Wall prohibits the freedom of mind. What GST truly blocks is indeed not information, but the ability of free thinking. Because of the digital Berlin Wall, the Chinese young generation has become more and more arrogant and blind in recognizing the truth in the world. They are brainwashed not only by the filtered information but also, and more importantly, by the thinking behind which information to be filtered. Enough is enough. Google finally stood up and declared "no more". No matter of the real intuition beneath, the action itself makes Google stand "on the right side of history" because truth can never be defeated.

I must pay my deep respect to Sergey Brin and Larry Page. They show us why Google can become such a great company in human history. There is something that is greater than money and any "strategy"---the loyalty to the truth.