People who go long China's economic growth by buying their equity index will miss out on a lot China's growth. Via the Economist I came by this interesting fact:
Recently, PC magazine had an article highlighting how important old people are to AOL's returns. In the article, "Is AOL Scamming Old People?", they highlighted a quote from the New Yorker article about AOL's CEO Tim Armstrong.
'[M]any of [AOL's subscribers] are older people who have cable or DSL service but don't realize that they need not pay an additional twenty-five dollars a month to get online and check their e-mail. "The dirty little secret," a former AOL executive says, "is that seventy-five per cent of the people who subscribe to AOL's dial-up service don't need it"'
"The indigenous innovation drive is forcing foreign technology companies to anguish over balancing today’s profits with tomorrow’s survival. With its extraordinary infrastructure plans and a continental-sized consumer market that has just begun to really develop, China is a market no multinational can ignore. But the price of admission is getting more expensive by the day as China opens its policy toolbox to ensure that foreign technology allowed into China is accessible for “co-innovation” and “re-innovation” by Chinese companies."- China's Drive for 'Indigenous Innovation, Page 31
While pointing out what a great country America is and implicitly comparing us to our competitors such as China, Obama made the following remark in his most recent State of the Union Address:
China is building faster trains and newer airports. Meanwhile, when our own engineers graded our nation's infrastructure, they gave us a "D."
We have to do better. America is the nation that built the transcontinental railroad, brought electricity to rural communities, constructed the Interstate Highway System.
These workers quickly earned a reputation as tireless and extraordinarily reliable workers--"quiet, peaceable, patient, industrious, and economical." Within two years, 12,000 of the Central Pacific railroad's 13,500 employees were Chinese immigrants.
Almost 150 years ago Chinese workers were brought in to do a job that Americans weren't willing or able to do*. Obama's speech writers were trying to make a more general point about the value of infrastructure in general while touching on the feel good notion that Americans can accomplish anything. It is amusing to contrast this message with the idea that 145 years ago the Chinese work ethic, technological expertise and cheap labor were what drove this particular American success.
Krugman is a little upset with some of his commenter's insults.
Get your insults right. There is, I believe, a fair bit of evidence against the hypothesis that I’m stupid. What you mean to say is that I’m evil.
The basic point is that the recession of 2001 wasn't a typical postwar slump, brought on when an inflation-fighting Fed raises interest rates and easily ended by a snapback in housing and consumer spending when the Fed brings rates back down again. This was a prewar-style recession, a morning after brought on by irrational exuberance. To fight this recession the Fed needs more than a snapback; it needs soaring household spending to offset moribund business investment. And to do that, as Paul McCulley of Pimco put it, Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble.