Fri, Oct 07, 2011 page8

• [ LETTERS ]

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  Look on the bright side

  In his recent letter (“Letters,” page 8, Sept. 25), Dan Bloom conveys the right sense of extreme urgency about climate change, and one correct goal: immediate and massive worldwide public action to drastically cut the use of coal and oil. However, his idea that everyone becoming “grim and despairing about the future because of what we are doing with fossil fuels” will strengthen the movement against global warming is at least misstated and at worst completely wrong.

  When people despair, they have lost hope and see no reason to act for their survival and a better world. And when they despair, their desperation can much more easily result in actions that express only their fear and anger. Violence is too often born of such a mindset.

  Much more productive would be approaches that intensively and rapidly educate the Earth’s citizenry. First, educate them on the full, terrible realities of our current climate situation. Second, make known the range of various possible futures that we are facing, depending on how much we reduce fossil fuel use and other drivers of global warming. Third, educate people about all the specific actions individuals and organizations must take, and are increasingly taking, in order to successfully reverse the heating up of the atmosphere.

  Famed scholar and activist Noam Chomsky, a champion of human liberty for more than half a century, is often asked how, in the face of continuing, horrific war and so many other inhumanities throughout the world, he can keep up his struggle for peace and social justice. Chomsky replies that, while he understands full well how miniscule the chances of turning things around might be, as long as there is any possibility of success, it is worth devoting his life to the cause.

  “Optimism,” Chomsky says, “is a strategy for making a better future. Because unless you believe that the future can be better, you are unlikely to step forward and make it so.”

  Let’s try and imbue all our efforts for a better world with that spirit, and let’s get more educated and more active.

  Matt Nicodemus

  Taipei

  Beware China’s collapse

  As January’s presidential and legislative elections approach, I foresee the conversation turning from this bogus “consensus” issue to what voters really care about the most: jobs and the economy. This will be precipitated by a massive slowdown in China’s economy that will panic the markets. Here’s why:

  ‧ Both small and medium-sized enterprises and real-estate developers are set to hit the wall as they cannot access domestic funding, even from China’s notorious shadow banking sector. Increasingly, they are being locked out of international finance vehicles as well. This is the first of many, many bad omens.

  ‧ In what will certainly become a widespread epidemic, some debt-strapped business owners in China are gathering whatever cash they can and fleeing their factories, never to return. These business owners disappear into the night, leaving angry workers and unpaid suppliers holding the bag.

  ‧ The real-estate sector is also facing major challenges, as the price of new homes has recently fallen below the price of second-hand (speculative) properties, a sure sign that the property market is about to crater. In the words of one analyst: “The China property boom has gone beyond bubble to an outright Ponzi scheme.”

  ‧ While China’s central government insists that it is trying to curb housing prices, local governments are ignoring these calls to restrict housing because fueling the housing bubble is the only way they can pay interest on debt. China’s local debt currently stands at 10.7 trillion yuan (US$1.7 trillion), and much of the local governments’ income is derived from land sales. When builders cannot sell their inventory — for example, the 108,181 unsold apartments in Beijing — they stop buying land for new projects, ending the local governments’ main source of revenue.

  ‧ China’s corrupt crony capitalist system has resulted in some of the worst mal-investment in history, including massive “ghost cities” like Ordos, all built with speculative capital. China’s debt-to-GDP ratio currently stands at 45 percent and debt levels are projected to continue rising quickly through 2013. No one knows how much of this debt would have to be written off if it was marked to market because it was used to fund unprofitable projects.

  ‧ Meanwhile, speculators have been hoarding copper stockpiles, worth an estimated US$7 billion to US$10 billion, and using them as collateral for all sorts of loans from the shadow lending channels. Now that copper has dived 7 percent from its August highs, and with the inevitable contraction in housing, this can only end badly.

  To investors thinking about China, I remind them: There is a reason why it is called a red flag.

  Here in Taiwan, voters face a choice between a legal academic who has led three years of failed economic policies while putting all his eggs in the Economic Cooperation Framework Agreement (ECFA) basket and ballooning sovereign debt, and a highly regarded economist who wants to diversify our export destinations using agreements through APEC or the Trans-Pacific Partnership. I cannot wait for the debate where Democratic Progressive Party presidential candidate Tsai Ing-wen (蔡英文) asks President Ma Ying-jeou (馬英九): “What will you do when — not if — China’s economy crashes?” I hope she herself has a plan for that.

  Torch Pratt

  New Taipei City
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