Category: Economy

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Economy

The reasons behind China crazy real estate market?

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Some thoughts after reading Wang Jiansuo’s Craziness of Real Estate Market.

1) Fundamental: demand, new household forming, and demand to live better (more space). In the US (according to Buffett) 1.3 million household forms every year, while in the booming years they are building 2 millions houses per year. I don’t have China’s number. Note in China there is this urbanization theme: people in rurual areas migrated to cities to find better paying jobs, and then settled down as they are looking for better opportunities for their kids. Vanke (leading Chinese developer, source: teasmoker, link broken, full article attached below) thinks migration will create housing need for 7.5 millions householding. But most of them can not afford it new apartments in cities.

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Economy

Healthcare reform likely outcome

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Healthcare (excuse me, Health Insurance) reform debate has heated up lately, esp. in those contentious townhall meetings. One hot issue in debate is the Public Option (not the stock option, but rather a public choice for general public to buy). It seems to me this is losing steam recently, because of a mistake made by President Obama. This thing goes sour like this.

Suppose, you are a college student, and you want to ask $5,000 from your father for college. Suppose your father loves you but he is a thrift person (like Buffett). So what would you do? You ask $10,000 or $8,000 and if your father refuses, then you can go the lower number (5,000). What did President Obama do when he wants the public option?

He asked for public option. It’s a mistake. I think he should have asked for single payper system (like Medicare), make conservatives and insurance companies really nervous, then he can back up, and offer the public option.

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Economy

My analogies on healthcare reform protest

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My wife asked me why there are so many outraged people on those congressmen/senators townhalls (she reads that from WSJ). I used an analogy. Imagine the metro (or buses) during rush hours in Shanghai (I used to take a bus almost every Monday morning in early 1990s, from my brother’s place to my working place, a 1.5-2 hrs journey). Suppose you are the guy (or the lady) already on a bus, the bus is packed and the driver requested everyone move inside “a little bit” so that more people can squeeze in.

In this case, many old people protest against the reform because they are already covered in Medicare and they fear their coverage will be less generous, as you and I know, this country is running out of money. There is few such thing as win-win, or free lunch these days. More people got covered, but coverage will be less generous overall. Doctors will see more patients, possibly with less income (profit). Blah blah blah.

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Economy video

Economist article and video on China economy

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imbalance. Article here. This reminds me Wang Jianshuo’s latest article “I am a rich person?”

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Business Economy

Started Financial Times subscription

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I started Financial Times subscription this week. Last week, I took advantage an offer (or a bait) of $49 for 6 months subscription. I have subscribed and read FT in the past (a few years ago when I did not know much about finance). The main reason is my WSJ and Barrons subscription are expiring, Barrons expires on Aug, WSJ on late Sept. While I enjoyed reading those two newspaper, I found the quality of those two paper are declining fast. Some obvious mistakes include printing same sentence twice (WSJ), paper becomes thinner and thinner (WSJ). As to Barron’s, they more or less get into what I would call “stock picking” business (guess the winners in the stock market, which is OK except they only show what they got right afterwards).

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Economy

My thoughts on US healthcare reform: II

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When I first came to the US in fall 1997, I bought the university healthcare insurance plan, which is pretty basic, and pretty cheap. I don’t have a primary physician, and I never went to the university clinic (part of the reason was I don’t know how to say those medical terms in English, part of reason is I did not have major illness). I did take one of my fellow graduate student to the University hospital at Columbia, Missouri, and was very impressed by the facilities. Hey the hospital in the US looks much better than China: less crowded, clean, new facilities etc.

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Economy

My thoughts on US healthcare reform

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This topic is heating up in recent days. I think there are a lot of mis-understandings and mis-conception on this. One is a lot people think medicare is inefficient, I have not used medicare but it seems quite efficient in reality.

Obama healthcare reform pic
(Source: economist)

The bottom line is healthcare boils down to two issue:

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Economy

Should CIT Group be saved?

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By the time of this writing, CIT Group (NYSE: CIT) fate is still unknown. A while ago (Apr 24 2009) I wrote about CIT Group because I traded it on that day. I felt the situation looked more an more like WaMu as that afternoon the rating agency downgraded the rating of CIT bond to “junk” or “default” (I can not remember exactly).

CIT Group NYSE pic

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Economy

May housing starts

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May housing starts beats expectation, quote Bloomberg:

U.S. builders broke ground on more houses than forecast in May, offering a sign that the industry’s slump, now in its fourth year, may be approaching an end.

The 17 percent increase in housing starts to an annual rate of 532,000 followed a 454,000 pace the prior month, the Commerce Department said today in Washington. Building permits, an indicator of future construction, also rose more than estimated.


(source: NAHB web site)

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Economy Life

GM, Jay Leno

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GM is going to file bankrupcy. This was not expected 6 months ago. But it’s a reality now. Many people blame the UAW, the management for the problems at GM, which I think only tells part of the story. GM was doing fine after Sept 11, remember the 0% “Keep America rolling” Ad campaign? (Paula Gardner opinion, Nov 20, 2008 ) The main problem, I think, is GM increasingly dump cars like cabbage, while trying to make money from the finance division (GMAC). This business model is not sustainable because it’s mostly relying on cheap credit (and arguably GM car buyers have worse cosumer credit compared to foreign make buyers). When credit dried up after Lehman bankrupcy last fall, GM’s car sales plummeted.

Keep America Rolling GM Ad Sept 11

Jay Leno

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