Many, if not nearly all of the foreign correspondents in Beijing have been focusing on more or less the same topic for the past six months, namely how the global financial meltdown is affecting one of the most important spokes in the wheel of globalization,China. They’re sending photographers and reporters to the railroad station to get photos of migrant workers leaving Beijing for their hometowns who know they will probably not be coming back anytime soon. They’re sending them to Shenzhen and Dongguan to cover the closings of factories and how each closing ripples through the food chain in concentric circles. As I said in an earlier post (with the best comments thread in years), it’s all economic crisis all the time. Every day. 24/7.

Everything is now discussed in relation to the crisis. Every discussion about future projects I have with people in all kinds of industries includes the obligatory clause about how “it all depends on how bad the crisis is at the time.” Just last night I attended a panel discussion (and an excellent one, at that) on how we in Beijing can apply creativity and entrepreneurial skills to make money at a time when the economy is contracting. I think nearly everyone I know spends a good part of the day thinking about the crisis in some form or another, whether it’s choosing where to go for dinner or what to do for CNY, buying a Christmas gift or renewing your gym membership.

Which brings me to the link of the day. Paul Denlinger recently wrote one of the grimmest arguments I’ve seen about where we’re all heading, and why China and the US have got to crash. Unfortunately, I agree with him pretty much across the board. This is a lengthy clip, but it’s all essential stuff.

Now, China and America are entering a dangerous period of deglobalization, where they have come to the realization that after the bubble pops and the deleveraging begins, their interests are really quite different. Instead of China and America being two sides of the same economic coin, they need to play or pander to their own constituencies. The blame game will begin.

And their native constituencies are confused, hurt and angry. But they are not nearly as angry now as they will be in the near future when they have figured out what has happened to their wealth. When that happens, there will be hell to pay, and there will be blood in the streets.

The reason for this is because the leveraging which occurred is simply too big and too complicated. Taking all the bad leveraging out of the system and replacing it with cash and credit liquidity is like trying to rebuild the engines of an aircraft in flight. It cannot be done. This means that there can only be a crash.

The bright side is that crashes can be managed. You can go into a death spiral which is impossible to pull out of, but a smart pilot will look for a stretch of land and try to glide in for a crash landing. So far, the political leadership worldwide is pursuing policies which more closely follow the former path of the death spiral. This is because everyone is acting in what they perceive in their own interests, instead of keeping their heads and thinking through what needs to be done. It is a deadly panic move.

The problem is that we are now entering a phase where the crisis has spread from subprime mortgages, to derivatives, and then on to currencies. In the beginning the patient suffered from a lack of credit liquidity (constipation), so the central banks are going to provide liquidity (the enema). This did not work, and the patient has become bloated. There is the very real chance that this will eventually cause runaway inflation (dysentery) and the patient will then die of dehydration. When this happens, the currency becomes worthless and society falls apart until a new dictator imposes his will on the society, as Hitler did at the end of the Weimar Republic in Germany. In China’s case, runaway inflation led to the Kuomintang and Chiang Kai-shek’s loss of support in the cities, and directly contributed to the establishment of the People’s Republic.

Sounds really really really bad, doesn’t it? That’s because it is.

I believe Paul’s metaphor is spot-on. The deflation we are seeing now is the first phase in the treatment, and as the patient is bloated – i.e., as dollars are printed and thrown everywhere – inflation is inevitable, if not hyper-inflation. (I think that may be a year or two down the road, with what we perceive to be a deflation in the short term.)

Meanwhile, I am sticking, for now, with my original argument that even though China will be slammed hard, it will hold up relatively better than the US (“for whatever that’s worth,” as I said before). This is mainly because despite its monumental problems and 300 million+ peasants earning less than $1 a day, China has money on hand, and can launch its own stimulus package with far less strain on its coffers. Also, its domestic financial system has been relatively unaffected, while that in the US has been gutted.

Some are far more pessimistic about China’s future. Deported human rights activist and former Sakharov Prize winner Wei Jingshen sees a veritable “tidal wave” of demonstrators threatening the very existence of the Party. John Pomfret says he’s “agnostic” on the question of which country is better poised, but I think if you read his post on the subject it’s pretty clear where he stands, referring to the “irrational exuberance” of those betting on China. The argument will go on for years, and of course for all our passionate exchanges, there’s still no one on earth who knows.

Like last year’s presidential election, we’ve got another horse race to watch, one with far greater consequences. The way the world’s leaders handle or mishandle this albatross will affect each of us for years to come, maybe for the rest of our lives. I increasingly feel this is not a recession, it’s a depression, and we’re pretty much there. When companies that were seen only months ago as robust report profit losses well above 50 percent, and when you think of the effect their factory closings and layoffs will have right down the food chain, from plastics manufacturers in Dongguan to a family in the Dominican Republic waiting for the monthly check from their daughter working as a nanny in NYC, you can’t help but shudder. Nor can you help but be glad that at this moment you’re in China, as everyone who attended last night’s forum agrees. There are still opportunities and untapped markets here, and most importantly, customers with some cash to spend. Right here in Beijing.

Let’s take a break from China for a minute and savor this list, which spans across ideologies and targets figures on all sides of the aisle, including our newly elected president. Of course, the Michelle Malkin blurb was especially enjoyable:

It’s a remarkable achievement in unconscious projection that the author of a book called Unhinged could lose her fucking marbles over a patterned scarf in a donut ad, but that’s what Michelle Malkin did when she sounded the nutbar clarion call and sicced her half-cocked league of masturbators on Rachel Ray and Dunkin Donuts for the flatly absurd notion that they were sending a message of solidarity with Palestinians. Right, Michelle—you just can’t sell donuts without joining the intifada these days. What did the nauseously spunky Ray do to incur the wrath of the Malkinoids? She wore a black and white scarf. A paisley scarf. A scarf that was clearly not a kaffiyeh, which, by the way, is just a hat that Arabs wear, not some universal symbol of jihad. In terms of completely false outrage, the only thing that rivaled this travesty of reason this year was the “lipstick on a pig” metaphor panic. But what puts this embarrassing sham over the top is that Dunkin Donuts actually apologized and pulled the ad, rather than try to explain to the fact-phobic horde that they were just blind, raging idiots with the collective brain-power of a lobotomized howler monkey.

49 other selections, each one devastating, even if I don’t think some of the choices deserve to be on the list. The Sarah Palin and Bernie Madoff selections are also wickedly funny. Their server has been off and on, but keep trying.

Please take a moment to visit Global Post, a new site that offers not only significantly above-average reporting on a wide range of topical issues, but that also was kind enough to include me in its aggregator of global bloggers.

When they first asked if they could run my posts on their site I was a bit hesitant. I knew nothing about them, and I’ve always been cautious about associating TPD with other sites. After looking into have a look.

Update: The more I see of this site the more I love it. Forget about some posts of mine showing up on its aggregator. This site rocks, and should be a daily visit for people who want serious news beautifully told, with lots of photos and video and imagination.

Sounds like the name of a deranged redneck death metal band…but no. 

h/t ESWN.

No, she’s not; but the former bureau chief of CNN in Beijing is clearly exasperated [use a proxy in China] with some sloppy stenography and misunderstandings that resulted in a story claiming MacKinnon does not see Hong Kong as a part of China, among other mistakes.

Well, everybody makes mistakes, and MacKinnon wisely points out that this is a perfect example of why anti-CNN’s campaign to convince the Chinese that Western media discriminate against them and always put China in a bad light is simply false.

[Th]is incident is instructive for the anti-CNN people out there who believe CNN is at the forefront of a vast Western media conspiracy against China. It’s not.

A lot of errors happen because editors and reporters are under pressure to churn out volumes material on short deadline with inadequate staff and funding. There is often an over-reliance on interns and lack of staff to supervise them properly. As a result, on American cable and satellite TV news outlets (I don’t want to speak for other countries’ TV broadcasters or for print or radio organizations without first-hand experience of them), major mistakes get made by people whose work should have been checked before going out. Photos get cropped for websites without adequate thought. Agency material gets mis-labeled as being from one country when it was actually from another. Names of leaders get mixed up. Things get mis-translated. Errors go on air or get published online before somebody notices. It happens all the time. Believe me. Ask anybody who has worked in the business. I even know of one instance in which video of Michael Jackson the pop star was erroneously put in a report involving a NATO general by the same name – a video editor was under time pressure and followed written instructions without thinking about the report’s substance at all.

Please, my Anti-CNN friends, study those words and use them to broaden your perspectives. Try to realize the innocence in much of what you perceive to be bias. Try to realize that every politician in America has horror stories equal to or greater than yours about how their words were misconstrued by the American media and their photos butchered by layout editors. Try to realize this is a friend to CNN and she had to deal with the same stuff that you feel marks you as unique victims. MacKinnon, however, knows she has not been victimized, only that some sloppy work was done and that it’s an everyday occurrence.

Needless to say, I don’t have high hopes for this lesson to stick, as victimhood is one of the most difficult things to give up. It comes with all kinds of benefits and privileges, such as always being right, and having a license to whine ad infinitum about imaginary prejudice. Of all the propaganda programs in China, Anti-CNN is the most successful and sophisticated, pushing all the right buttons in a slick and compelling format. I can actually understand why so many intelligent Chinese people, including my own good friends, fall under its sway. Let’s hope they all read MacKinnon’s words [too bad her site is harmonized] and start to get that accidents happen, people are fallible, and most of what they see as bias and loathing is actually an innocuous oversight, a bit of human error, or simply nothing at all.

Those who follow sports will know that the starters for the NBA All-Star game are chosen by fan ballot, originally this was done at the arenas but with the Internet and the internationalization of basketball most voting is now done online.  As a result of fan voting presumably from China and, possibly, Newark, Yi Jianlian, the 21 or 24-year old forward for the New Jersey Nets, has surpassed several established stars and is threatening the starting position of Boston Celtics superstar Kevin Garnett.  Yi is a solid NBA player, but he’s hardly in Yao Ming territory, never mind KG.* This week the Beijing Youth Daily questioned whether or not A-Lian, as he is known, deserves to be an all-star.

According to a summary published in the China Daily:

China’s 350 million basketball fans have become an important group for the NBA, so it is not surprising that Yi, a Chinese national, rank thirds in the voting. They believe the votes cast by Chinese fans should carry equal weight with those cast by American or German fans, and they have called on others to be self-confident in participating in the vote.

But others argue that Yi’s skills are not good enough for him to become a starter in the All-Star game. They say some fans have voted for him repeatedly or even resorted to manipulating computer software in an attempt to give him enough votes to be included on the All-Star game’s roster. Those that believe Yi’s skills as a basketball player are below par say the level of All-Star game is lowered by such tactics, which constitute cheating. They also note that forcing the NBA’s global fans to accept the voting results of Chinese fans is not good for the future development of Yi, whom they believe is not qualified to take part in the All-Star game at present.

Interesting dilemma…support the democratic rights of the large number of Chinese fans who want to see Yi hoop it up against the NBA’s best** or else insinuate that such large-scale movements can be a detriment to overall interests and goals.***

——–

*Yi’s also out for the next four weeks with a broken pinkie.

**Just for the record: My all-star picks were Devin Harris, D-Wade, KG, Lebron, and Dwight Howard from the East with Chris Paul, Kobe, Tim Duncan, Dirk Nowitzki, and Yao in the West.  That Yi Jianlian is getting more votes than Chris Bosh, Danny Granger, or Paul Pierce just kills me.

***Yes, I’m being tongue-in-cheek here. Sorta.

[Update: For a superb look at this issue from multiple perspectives, go here now.]

If you want to understand why groups you would expect to be banging the drum for Charter 08 – Falun Gong, the DPP, the Dalai Lama, and even the mainstream foreign media – you can find some interesting answers here. Apparently, everyone with a beef against the CCP can find something about the document that dissatisfies them enough to steer clear, mainly because Charter 08, while calling for dramatic reforms, is, to them, not critical enough of the current system.

I found this so interesting:

More curious, and changing, reactions, came from Falun Gong, or FLG, a religious and political group that has been banned in mainland China. A search on FLG’s Chinese language website Sunday came up with 100 links cheering “Charter 08,” with titles such as “Reform Is Dead, Long Live Revolution!” However a click on any of those links gave only a blank page. Remnants of posts here and there indicate that FLG originally found “Charter 08” an exciting sign of the coming revolution and supported it whole-heartedly. Later, though, they made a 180 degree turn after the FLG leader deemed the manifesto not revolutionary enough, but rather a “ghost shadow” of the communist party.

Understandably however, revolution is favored by few Chinese, whether supporters or contenders of Charter 08. In contrast, many pointed out the legitimacy of Charter 08 in accordance with China’s constitution.

For a little while I thought we were going to see a media avalanche. Looking at the tiny number of publications on Google news that have run with the story, I’m now a lot less certain.

Yes, Xinhua really did insist on these things – however, there’s one small catch.

This is becoming an increasignly thorny issue for the CCP.

On Dec. 8, the police took Zhang Zuhua into a room in Beijing and sat him in a chair.

For 12 hours, they questioned him. They brought him water, but no food. And they debated the document that had led him here: Charter 08, a call for sweeping political change in China.

It’s gotten to be an old story here: A clutch of activists challenges the government; the government jails one or two to scare others into silence.

But the movement around Charter 08 is different, say human rights groups and Mr. Zhang, who helped draft the document.

A month after its release, Charter 08 is still making waves in China. A wide cross-section of citizens has expressed support online. And the government, nervous about social unrest and the approaching anniversary of Tiananmen Square, has contacted – and in some cases, interrogated and threatened – at least dozens of the manifesto’s original signers.

“This text is having a lot of impact – people are debating and signing it online,” says Nicholas Bequelin, China researcher for Human Rights Watch. “This is a landmark in terms of its appeal, and [the] attention that it has provoked.”

Charter 08 calls for an end to one-party authoritarian rule and lays out a vision for a rights-based society – an electoral democracy, under the rule of law, with equality for peasants and city-dwellers and protected freedoms of speech and expression.

Today, Asia Sentinel dubbed Charter 08 the most serious threat to the party since 1989 and, in a misguided but interesting article, Daniel Drezner goes so far as to prophesy either the complete collapse of the CCP or the iron-fisted crushing of massive demonstrations. (The commenters straighten him out on this.) Also, note the three or four (at this moment) comments to the Asia Sentinel piece. Right out of the party’s talking points, from the obligatory swipe at the Dalai Lama to the argument that democracy is rash and dangerous.

I hope you can read through the CSM article, which leaves the impression that many people in China are taking Charter 08 to heart (some 300,000 website now link to it), and some are even willing to risk jail to support it. When people are that passionate about something, it can spell big trouble for a government that depends of lock-step thinking and sloganeering to keep their citizens’ minds pure.

It will be fascinating to watch this unfold, right at the time when China’s leaders most fear a disruption of the harmony they worked so hard to achieve. I don’t think it will bring them down, but it’s already created a colossal headache. 1989 inevitably comes to mind. Cheers to the people who had the courage to launch Charter 08 and the fortitude to propel it into the global consciousness.

Go listen. A great reporter, Fallows explains why China invests and saves the way it does, how the global financial crisis is rocking China more than many had predicted, and why China cannot “save the world” from the crisis. He also discusses our good friend, China’s Net Nanny, and why the CCP bothers blocking and monitoring Web sites, which he calls “subtle repression” that’s worked better than many of us realize. On CCP propaganda, he quips, “It’s like a whole country run by Fox News.” Not that far off. Strongly suggest you listen to it all.