One weird thing about being an armchair economist is that everything happens so slowly. I’m professionally kind of used to it, but it’s especially apparent these days as the U.S. economy rolls off a cliff in slow mo like a bad 70s car crash movie. Every time you check in it’s a little worse - oh look, there a door came off. And there goes a wheel.

This article from the Times puts it all very clearly: Real estate? Still falling. Jobs? Evaporating. Credit? Still getting tighter. Prices? Going up! But the scary thing is that everyone agrees that things have to get worse, maybe much worse, before housing prices and household credit are at something like normal levels and we can turn around and start building again. My favorite scare line was the estimate that we have enough new houses for the next two and a half years, without building a single new one. (I suspect that this is a deceptive average, and that there is still some demand in New York and Minnesota, to take two places at random, but enough housing stock in Florida and Las Vegas to last approximately forever. Just a guess.)

The Times has been pointing out for a while that not only are we likely to be in a recession, but that the preceding period of expansion wasn’t actually that great: most people’s real incomes have actually been declining since 1991. An earlier article that I lost the URL to said: “For a variety of reasons that economists only partly understand — including technological change and global trade — many workers have received only modest raises in recent years, despite healthy economic growth.” I ain’t no E-conomist, but I think this isn’t actually that tricky. The reason why American workers aren’t getting raises is that technological change and global trade have made it a lot easier to use foreign workers, so jobs are going or are threatening to go overseas, and the real wages of workers worldwide is going up while wages here are stagnating. Or so I thought, and lo and behold How the World Works has just brought out a Goldman Sachs report that agrees. Because I live in one of the places where real wages used to be very low but have been going way up, I tend to see this as a good thing, though of course if you’re an American worker who has been enjoying earning a lot more than pretty much everyone else for the last century or so, it sucks.
Classical economists are on my side, because the winners (Chinese and Indian workers, and of course the global capitalists who are getting them work) could compensate the losers (American workers) and still come out ahead, leaving everyone with more, er, utils. In reality of course this never happens, the winners go to the bank and losers get poor. And if you try and make the winners share a little they whine about global competitiveness. In this case there is a little turnabout at work too, because when American labor was on top how hard did it it work to make capitalists and the US government compensate the rest of the world? That record unfortunately is clear.
And I must be getting old and conservative, because I sense a lot of entitlement loss in America from ordinary people. I read this from Ohio Senator Sherrod Brown from an older How the World Works (quoted in turn from the Nation):

“…There’s a company called American Standard, they make toilets, plumbing fixtures, you’ll see them in near any public restroom anywhere. They’re in Tiffin, Ohio, town of 20,000. They’ve just announced back around 3 months ago, the closing of the plant. It was bought by some investors, they’re moving offshore, they’re honoring the union contract as far as they have to, which is those who already have their 30 years. If you have less than 30 you’re pretty screwed — they give you something, but you can’t get to the 30 years because they close the plant.”

This is hard for the workers and for the town, but “screwed” is a pretty powerful word to use when people are honoring the contract and the worst you can say about them is that they won’t guarantee you the chance to work there for 30 years. 30 years! To me this has the same ring to it as clauses stating how many hogsheads of ale the lord will get from the village, it’s just not credible in the world I see around me.

Here’s something new: Since June 1, you no longer get plastic bags when shopping in China. (The complete policy is given here, but the short version is that shops may not give out free bags, and plastic under .025 mm thick is banned altogether.) My personal take on the rule after a week or so: AWESOME! Twice recently I was out shopping, bought a couple of things, and didn’t get a bag. In one case I was with the baby and actually asked for one and was turned down. In both cases adjustment was easy and painless; it turned out I didn’t need a bag after all.

To me, this is one case where government fiat makes a lot of sense. You can take the fate of the world on your shoulders and be the only weirdo in town carrying around a canvas bag (and trying to get every salesperson not to give you three plastic ones.) But it’s a pain and there’s always the nagging suspicion that you’re not affecting a damn thing, and eventually you stop. At least, that was my story. Or, the government says, we use 3 billion plastic bags a day which requires 37 million barrels of oil a year, and that seems excessive, so just stop. And that’s it.
Nobody familiar with the giant accumulation of plastic in the Pacific Ocean can doubt that we have to get rid of disposable plastic as soon as possible. My personal hope is that the plastic bag ban will be like the smoking bans I have seen take effect - it seems like the end of the world and there’s all kinds of histrionics, but when it actually takes effect everyone realizes that things are just like they were before, except much better. And the rest of the world will soon follow.

P.S. It’s nice to see China taking the lead in an environmental matter. Lord knows it needs the press - not that I’ve seen any.

It’s been a tough year in China. First there were the freaky winter storms that hit right before spring festival. There was a horrific train crash, and almost a head-on airplane collision. There were deadly riots in… a place that can cause blogs to get censored, and the resulting international furor including attacks on Olympic torch bearers, demonstrations and counter-demonstrations, and lots of ignorant ranting on the internet. Of course, the earthquake has dwarfed everything. It’s been bruising us for two weeks and won’t stop: more than 60,000 dead, dozens of schools crushed with all inside, a quarter million people injured, five million homeless, 16 million buildings destroyed. And the pictures are worse than the numbers, and the stories are worse than the pictures. People are really shaken.
It has actually changed the country, in the same way that 9/11 changed America, although I don’t think anyone knows exactly how yet. But everything is clearly different. This place which was all about getting ahead, making money and doing new things at the greatest speed possible has been badly rocked, not only by the horrible event and the aftermath, but by the exposure of the poverty of the countryside, and the growing realization that buildings for rich people held up and protected them, and buildings for poor people and their children collapsed and killed them. The whole country has been in a bad accident, and I think that mentally at least the gold rush is over.

Until the earthquake, everything printed or shown came through several layers of filters, but for two weeks the earthquake was everything and it was all live. Now people are asking how much money the Red Cross has received and where it’s being spent, and why schools fell down in places where other buildings didn’t, and I think it’s hard to go back.

I’m thinking of a mediocre movie I saw recently, in which a policeman asks a victim who was badly beaten and her fiance killed,  “How do you survive something like that?” Her answer: “You become a different person.” I don’t think China will become a different country, or that those of us living here will become different people. We’re all moving on with our lives, going to work, buying stuff, having parties. But I do think something has changed.

All right, I’ve actually been back in Shanghai for more than a week, but these were my thoughts over being in Dalian, HIHO Shanghai’s home town, for a week over Chinese New Year:

• Blue skies. I would rather have 20 F and sunny skies than 35 F and raining - or just gray and hazy - any time.
• Fireworks! Every year I am astonished at the number and caliber (in both senses) of fireworks set off over new year’s. Think of the typical American fourth of July fireworks show: This is possibly equal to the fireworks set off by the average apartment building in a city of several million people - and yes, I mean the kind that shoot hundreds of feet into the sky and explode; they are perfectly legal to buy and not that expensive. Add to that assorted spinners, flares, roman candles (here called “magic eggs”) and the red strings of hundreds of crackers whose main job is to be as loud as possible, and you just cannot imagine the shock and awe. It’s a perfect Armaggeddon, and we have a good view of it from my in-laws’ hillside apartment. I am planning a video upload; wish me luck.
• We both sometimes feel that Shanghai is a foreign country, and on this trip one big reason for this became apparent - in Dalian, I can understand people on the street! It is amazing what a difference this makes in your perception of a place - when the cabbie answers his cell phone, I understand what he says, and when the two old ladies talk in the elevator, I hear their whole conversation. It’s not that I’m so interested in all this peripheral chitchat, but it makes you feel like you’re a member. In Shanghai, I can talk to pretty much anybody - but I have to start the conversation. Otherwise I might as well be in Seoul (Shanghainese sounds sort of like Korean to me, unlike Cantonese, which is even more unintelligible but couldn’t be anything but Chinese.)

Also, HIHO Shanghai has been making a list of good things about Shanghai, and being in Dalian brought out some of those too:

• People on the street in Shanghai basically don’t think me being a foreigner is that big a deal; in Dalian I am noticed and still get the occasional “helloooor.” This is not a greeting but the equivalent of throwing food at the monkey to see what it will do. In the old days in Changchun I used to stop traffic.
• We tried to buy a couple of things for the baby, and realized quickly that we had not properly appreciated living in a place where you can get anything you want:  local, domestic or imported.

Anyway, it was great to be there, but coming back was okay too.

A post from home, for a change. The thrashing in the stock markets this week was either the beginning of the collapse of the entire worldwide financial system we’ve been waiting for, plus a serious recession (highlights: lending halted by banks over their ratios because of massive subprime mortgage losses, bond insurers defaulting because of poor subprime mortgage risk pricing, stocks in freefall because of the inability of Americans to keep buying stuff, the dollar in freefall because of the Fed’s futile attempts to keep the party going by printing money and lowering interest rates - stop me if this gets boring) or, it was just a cold week in Shanghai. I dare say nobody knows which. I find it hard to be too upset, myself: the jeremiah in me thinks that Americans have been living beyond their means for a long time (literally: we have had a negative savings rate on and off since the 1980s) and finds some satisfaction in seeing the chickens checking in. The selfish part of me notes that except for some retirement and college funds, basically all our money by necessity is in Shanghai real estate, which still seems like a decent bet - plus I get paid in RMB. The rubbernecker in me kind of wants to see a real train wreck. It’s not pretty, because I know a lot of people in the States who were careful and played by the rules are still going to lose their houses and jobs, and I bet a lot of people in China and other developing countries are going to stay poor, because of all this, and the worst part is that it probably didn’t have to be this way.

By the way, you’ve probably been wondering how much China and the rest of Asia are still linked by exports to the American economy.  A lot of people have been speculating “a lot less than before” but the Asian markets gyrating in synch with all the others make that argument a lot less persuasive than it was. But here’s the kicker: the Times and others are wondering if this is actually a good thing for China - the argument is that China’s economy is going flat out right now and faces its biggest threat from inflation and overheating. If demand from the US goes away, the Chinese have a lot better chance to control inflation and more chance to spend their tremendous hoard of wealth in their own country. I have to admit that that would benefit me too, since I live and work here.

More importantly, it snowed almost all day today, big wet fun snowflakes that you could almost hear hitting the ground. Because this is Shanghai, the result of 8 hours worth of decent snowfall was a lot of cold puddles.

There surely is not a good airport to be delayed in, but Sanya has one huge advantage in this regard; after going through security and confirming that your plane will not even arrive for another half hour, you can go outside to a large and pleasant area with wooden patio furniture to wait in the cool evening breeze and listen to the continuous delay announcements.
I refuse to feel sorry for myself tonight. Here’s how I look at it: Despite massive delays all around the country, I managed to get on a flight for home scheduled to leave only an hour after my original departure time. And although that flight has also been delayed, its new time appears credible (unlike so many of the other flights for which no new time has been posted at all), and it’s to Hongqiao airport, which is much closer to my house than the original flight. The cold I am nursing is only a little irritating to my throat and does not make me feel awful. I have my trusty computer and a good book and the abovementioned outdoor seating area, and if there are no actual seats because of the large number of fellow stranded travelers, at least I am not fettered by silly cultural mores prohibiting sitting in your dress slacks on the grass. There is no wireless internet, but that means that I’m not obligated to check my work email – which I know is full of issues because I have been in rural Hainan for three days. Not that I am complaining, because I got to spend a day climbing a mountain and looking at beautiful scenery on work time (site research!)
So actually life is pretty good. With only a little luck – actually a lack of bad luck is all that’s required – in a few hours I will be at home in my own bed, and that’s something to really be happy about.

I’m reading “The Time-traveler’s Wife” while in rural Hainan on my baby boy’s 10^th monthaversary, probably about as far from Shanghai (in a lot of ways) as you can be and still be in China. Well, it’s still very Chinese, which I suppose some places are not, but it still takes a full day of travel to get here. It’s past eleven on Thursday night, and the hotel I’m staying in is across the street from a large karaoke place. Like last night, my room is full of the sound of drunk people comically howling their way through Chinese folk songs at extreme volume. I mean, you could not sing so badly if you were trying to. If this were America the police would have arrived hours ago, but I must be acclimated because I’m only distantly aware of it and I find it more funny than infuriating. That may change when I try to go to sleep.
Today I sort of identify with the time traveler in the book, who involuntarily leaves his beloved wife at random times to go to faraway backward places. Okay, it’s a stretch, but basically the book is about love and separation (so far; I’m barely a third of the way through it), and those resonate with me right now.

I was putting the baby to sleep a week ago or so, and although he’d had his beloved evening bottle he wasn’t acting very sleepy. As I walked him past our curtained bedroom window, sashaying in the rhythm I think makes him go to sleep, he reached out and ran his hands over the curtains and smiled. I stopped and let him grab one fold in each hand, then alternately pull them together and apart, as if playing peekaboo. He started grabbing more folds until he found the break in the middle between the two halves, then pulled them apart and peered out into the darkness outside. He looked for a long time. Then he pulled the curtains together again, then apart for another long look at the dark gingko tree and the lights of the city, twisting in my arms to get a better angle. Then together again, then another look. Finally he dropped the curtains and sighed deeply with immense satisfaction. Within five minutes he was asleep. I had read before about the joys of being a father, but nothing prepares you for such a scene. When I’m gone, I miss HIHO Shanghai a lot, but we talk every day and as two adults, we have a complex relationship that varies with how each of us is feeling, what happened during the day, and other things going on. With the baby, I simply miss him.

Back in Shenzhen. I am in a luxury hotel room facing the ocean, and the best thing about it is that across from the hotel there is a small but steep beach that creates quite sizeable waves, and I can hear the comforting boom of the surf now as I type.

 The hotel (or “club”) that I am staying in thoughtfully provided a bilingual letter of welcome, left in the room for me when I arrived. The English part reads in its entirety:

The respect distinguished HIHO NY: (SIR)

Nin hao!

Welcome you to stay at the XX Club! Arrives us regarding you to be honored incomparably! We will continue for you to provide fine and the honored service, anticipated our service will be able to surmount your expectation unceasingly! You will find our Restaurant and Service direction on your writing desk. I hope that will serve as a useful reference for your stay. If you have any assistance to be possible the attending each staff to relate, we will give assistance in the first time! All staff is willing you to be able to pass a section joyful and the happy time; Gives to you most sincere blessing sincerely.

This must be a machine translation; no human however unskilled could come up with that last sentance.

I have been traveling a lot recently. Among the places I have been in the last month and a half are: Beijing (twice,) Hong Kong, Ningbo, Sanya, Shenzhen, Tianjin, Yangshuo and Zhuhai (three times.) To my continuing surprise, I have become the traveling businessman: business casual or suit slacks and a formal shirt, laptop bag and rolling carry-on, cell phone. A big part of me is still thinking, well, it’s not really me, this is just something I’m doing right now - although of course it really is me.

I don’t like to be away from home so much, but it is good for me to get out and see the rest of the country - I haven’t really been anywhere except Shanghai and Dalian for several years. Here are some of my reactions, in no particular order:

Zhuhai was one of the earliest “special economic zones,” and borders Macao just as Shenzhen borders Hong Kong. Under a recent mayor, the city saw greatness coming and started building for it at an admirable pace. Coming in on a night flight, you see the long, straight landscaped boulevards stretching on for miles, brilliantly lit in the middle of empty blackness. The airport itself is famous, because it’s new and beautiful, but it has more gates than daily flights and half of it is permanently blocked off and completely unused. It’s a full hour away from the city. Nevertheless, Zhuhai is growing fast, the skyline is dotted with high rise condos under construction, but with a population of barely one million they’re not selling them to locals: think Miami, or Las Vegas…

Tianjin is like Zhuhai’s negative particle: old, drab, and industrial. With a population of over ten million it’s certainly the largest city nobody outside China has heard of, but its airport is shockingly underscaled, built on grade without separated arrival and departure halls, and with a very strange system of shared gate corridors, it doesn’t look like it would be enough for the city’s new high tech logistics zone, let alone the city itself.

Sanya is a place I never had any desire to go, since all it offers is a tropical climate and beaches and I’ve never been that kind of guy. But it turns out that warm and sunny beaches are actually quite nice, and the big seafood lunch on the terrace overlooking the ocean that the client put out had the desired effect, all right.

One added note on client lunches: Nice as the al fresco seafood was, it was not as effective a carrot as another client’s stick - we arrived late without time for lunch, and they thoughtfully ordered us some KFC, except they didn’t count right and I didn’t get a drink. For future reference if you’re in charge of interrogations at Guantanamo, cold fast food and no beverage is not a technique that pesky Senate subcommittees are asking about, and by the time the meeting was over I would gladly have lowered the fee by 100,000 RMB in exchange for a medium Coke.

Hong Kong: Although it’s a Cantonese city, it just feels like home after living in China for a while. Just about everyone speaks English, the press is active and interesting, and the quality of the public realm is actually far superior to America’s: witness the airport express train, which runs every 8 minutes from Central, stops all of twice, and thrusts you deep into the airport terminal itself for US$7. I had tears in my eyes.

I read somewhere that Apple hardware techs are sometimes sent for two week stints in the enormous Foxconn factory in Shenzhen that makes ipods, and that they call this being sent to Mordor. I was surprised today to find myself in the same place - Mordor, I mean, not Shenzhen. We were on our way to a client’s office in the Tanggu new city district of Tianjin, and by way of being deeply lost found ourselves in the Tianjin port, stuck in traffic on a half-built road. Dust obscured anything more than a hundred meters away, the sky was the color of lead, and the only landscape visible was stunted trees and brown bushes in an evil-looking marsh, into which was spewing boiling (!) effluent from a hole in a dilapidated group of brick buildings. Huge trucks carrying bales of silicon carbide rumbled past. And as traffic started moving, I saw in a break in the dust a guy standing by the side of the road under a multicolored umbrella, selling drinks - possibly the world’s worst job. I would not have been surprised to see a troop of orcs march by, which caused me to start thinking, who is our client again? I mentioned by instant message to HIHO Shanghai the fact that I was in Mordor and she messaged back, “don’t look in the eye,” causing me to guffaw out loud in the car full of anxious late consultants. What a woman.