Yellow Peril Playing Right Now on CNN
October 25, 2010 5:35 PM   Subscribe

This new ad, [appearing on a "America's #1 taxpayer watchdog website"] which features a chilling look at one potential future scenario if America continues on its current destructive fiscal trajectory, is a 2010 homage to...

...The Deficit Trials, a 1986 ad that was produced by W.R. Grace & Co. For those who were able to view it, the ad caused a sensation; it was considered so controversial at the time that the networks refused to run it.
posted by KokuRyu (76 comments total) 13 users marked this as a favorite

 
I can see why they'd want to pay homage to the ad, given what a chillingly prescient vision of the future it turned out to be.
posted by EarBucket at 5:39 PM on October 25, 2010 [8 favorites]


Forbidden remix. The blogger reposting it notes that:
Naturally, the CAGW folks, who masquerade as friends of liberty, didn’t hesitate to use the power of the state, in the form of a DMCA takedown notice, to prevent free discourse. YouTube reports “This video is no longer available due to a copyright claim by Citizens Against Government Waste.”

The last time I checked, though, even the Roberts Court hadn’t quite repealed the First Amendment. So I’m going ahead and posting the forbidden re-make.
posted by maudlin at 5:42 PM on October 25, 2010 [11 favorites]


I've said it before and I'll say it again: where were these deficit hawks when Cheney & Co. were borrowing hand over fist to take over Iraq and Afghanistan - and failing? They were just fine. But spend money on the health of our own citizens so they can go to work and make stuff? What are you, some kind of tax-and-spend liberal?

Face it. China already owns our economy and wishes they didn't - they need the American market and know it's not looking good.

Good ad, though.
posted by Michael Roberts at 5:43 PM on October 25, 2010 [33 favorites]


Yeah, where were WR Grace in 1988 when Bush 1 said "Read My Lips...I lied"
posted by spicynuts at 5:45 PM on October 25, 2010


Oh my God, the remake is fantastic!
posted by Michael Roberts at 5:45 PM on October 25, 2010 [4 favorites]


You'll notice that they don't include, as one of the downfalls common to all the fallen empires, the cost of maintaining an imperial army.
posted by Joe Beese at 5:46 PM on October 25, 2010 [30 favorites]


(The embedded link to the remix doesn't always work, so here's the direct link.)
posted by maudlin at 5:46 PM on October 25, 2010


It makes no sense. The instructor criticizes the US for stimulus spending when China implemented a package of its own. And he blames "government takeover of private industry" for the downfall of the country, even though this is supposed to be Red China and that would presumably be seen as a good thing.

Of course, the Obama "Joker" poster didn't make any sense, either. I guess it's all about visceral fear and gut reactions these days. Also racism.
posted by Rhaomi at 5:49 PM on October 25, 2010 [11 favorites]


Oh, and lest anyone think that the right has a monopoly on racial tastelessness, the very end of the remix video samples Long Duk Dong from Sixteen Candles saying "What's happening, hot stuff?"
posted by Joe Beese at 5:51 PM on October 25, 2010


I think the only solution is for America to start another war... the last few have been so successful and well-thought out. What could possibly go wrong?
posted by russmaxdesign at 5:52 PM on October 25, 2010


Not only did the Chinese also implement a stimulus package, the value of it was close to 20% of their GDP.

The American one? 5%.

China's also the one that seems to be showing GDP growth. Just pointing that out too.
posted by qcubed at 5:52 PM on October 25, 2010 [9 favorites]


thank god we will have warm mittens for the children.
posted by clavdivs at 5:52 PM on October 25, 2010 [1 favorite]


The Deficit Trials is the answer to my AskMeFi question, no longer unanswered.

As far as the latest ad, China's got a lot of it's own problems, including a huge rural peasantry that's getting rich like their coastal urban fellows, ethnic/religious tension and separatism in the west, and the downside of relying on the US to be there to buy stuff from you and operate factories to employ your citizens.

Thomas Barnett (and many others) thinks that the whole "China threat" is pushed by the "Big War" folk @ the Pentagon who are looking for the next Soviet Union to defend us from to justify their big weapons programs.
posted by Pirate-Bartender-Zombie-Monkey at 5:58 PM on October 25, 2010 [7 favorites]


Michael Roberts: I've said it before and I'll say it again: where were these deficit hawks when Cheney & Co. were borrowing hand over fist to take over Iraq and Afghanistan - and failing? They were just fine. But spend money on the health of our own citizens so they can go to work and make stuff? What are you, some kind of tax-and-spend liberal?

This is something that just drives me freaking insane... there were a bunch of us jumping up and down and yelling about the fiscal situation years ago. But when Bush singlehandedly doubled the Federal deficit, as computed to GAAP standards (what we hold our corporations to), by passing the Medicare drugs bill, where the fuck were they?

I mean, with that one program, Bush incurred more future liability than all other presidents combined.

And Bush was the first one to bail the banks out, such a hideous mistake. I don't remember whether the takeovers of AIG, FNM, and FRE were on his watch or Obama's, but that's probably another ten trillion in liability.

And, of course, he started two wars. Not just one, but two.

Where the fuck were these people then? Now, I don't like Obama's fiscal policies at all. I think they're very destructive. But the stuff he's done is chump change in comparison to his predecessor. Where were these 'reasonable' voices five and six years ago, back when it actually mattered?
posted by Malor at 6:07 PM on October 25, 2010 [18 favorites]


Meh. I'd rather be ruled by the Chinese than by Christine O'Donnel.
posted by mccarty.tim at 6:12 PM on October 25, 2010 [11 favorites]


I don't remember whether the takeovers of AIG, FNM, and FRE were on his watch or Obama's, but that's probably another ten trillion in liability.

All under Bush.
posted by jedicus at 6:12 PM on October 25, 2010 [1 favorite]


The production values are fantastic, and it resonates..... and I'm not sure that I like that.

Also, this post needs more context. It took me a minute to notice the 'racism' tag, and before that, thought that the OP was a big ol' racist himself for posting this with the body text ripped directly from a right-wing PAC's website.
posted by schmod at 6:15 PM on October 25, 2010


Frankly if the Chinese own the whole damn country, maybe they'll have motivation to invest in its infrastructure and its populace. Unlike our current owners.
posted by T.D. Strange at 6:18 PM on October 25, 2010 [14 favorites]


Don't worry, our Corporate Masters will be ok. Just go back to watching your TV.
posted by Max Power at 6:22 PM on October 25, 2010


I'm not Chinese... I'm you.
posted by orthogonality at 6:40 PM on October 25, 2010 [5 favorites]


Both of these ads seriously misunderestimate the number of robots that exist by the timeframe. In 2017, courts will have scribebots, at least four varieties of Roomba in the jury, and the judge will be an iPad that has been Jailbroken for impartiality. All of the humans will either be busy roaming the dumps searching for minerals to sell to the machines, or extremely wealthy but slowly dying of diseases of hyperaffluence (like gold toxicity). So, maybe the jury will also have one emaciated husk of a person and a pampered girthy gentleman in electronic pants that do his walking for him because he's above using his own legs "like a pauper."

And by 2030, China will have amended the policy to No Child, Just Robots. And they'll all be cute robots like from Wall-E, rather than androids that look like college students.

Ironically, though, China will buy most of their robots from Japan. And within the ad, there will be another ad, showing the Japanese gloating about how they grew larger than China because nobody bought their robots locally. The robots in the class in that ad coldly calculate that the professor is correct, which is the closest thing to laughter the sinister Japanese robots are capable of.
posted by MuppetNavy at 6:42 PM on October 25, 2010 [30 favorites]


Hi, I'm the OP. I saw this ad on CNN today (the office park where I work has CNN blasting on every flatscreen in every common area for some reason), and I found it pretty disturbing, mostly for its portrayal of an Asian "other" somehow taking over in the future. The message is simplistic, to say the least.
posted by KokuRyu at 6:44 PM on October 25, 2010 [1 favorite]


Also, this ad needed mad comic relief. Where's the part where the professor has trouble with his jumbotron and has to call tech support, where he has to deal with a Texan who can't speak Chinese at all?

And weren't right wingers saying Mexicans would have taken over the continent by then or something? So wouldn't it be Mexicans working for the Chinese?
posted by MuppetNavy at 6:45 PM on October 25, 2010 [1 favorite]


my god they're ASIANS
posted by the noob at 6:52 PM on October 25, 2010 [7 favorites]


Chinese meanies!
posted by naplesyellow at 6:53 PM on October 25, 2010


Forbidden remix. The blogger reposting it notes that:

I saw another "translation" somewhere, which was funnier.

Didn't they realize that by using subtitles, they were inviting everyone to do their own versions? This thing could end up the successor to Downfall. But it probably won't.
posted by delmoi at 7:19 PM on October 25, 2010 [1 favorite]


here's a blog post that mentioned the remix I saw. The actual remix got DCMA'd though.
posted by delmoi at 7:21 PM on October 25, 2010


This is fucking disgusting, even for propaganda. Are they really running it on national television? That might be even more disgusting.
posted by EatTheWeak at 7:24 PM on October 25, 2010 [1 favorite]


Watching the Chinese ad reminds me my senior year in high school (a year before that W.R. Grace ad came out). I went to a prep school that had mandatory chapel attendance, with occasional outside speakers. The longtime head of HISD was one of the speakers that year and he essentially congratulated my mostly, but by no means exclusively, white peers for staying ahead of the Japanese, who were the big threat of the day, academically. He stopped short of using the term 'yellow peril' but the context was clear. I was appalled that he was using a blatantly racist appeal to get us to do our damned homework. I can only imagine how my Asian-American friends and fellow-students felt. In retrospect I'm amazed nobody walked out and I sure wish I had.

tl;dr Same racist shit, different decade.
posted by immlass at 7:24 PM on October 25, 2010 [3 favorites]


I think they cut out the part where Steve Jobs' granddaughter sprints into the room, and kills the guy with a shotput....
posted by schmod at 7:25 PM on October 25, 2010 [12 favorites]


Funny how excessive tax cuts are not mentioned as a cause of the catastrophic debt.

And yes, the remix is hilarious.
posted by XMLicious at 7:41 PM on October 25, 2010


Democrats shrank the deficit by a near record 122 billion last year or 10%. Don't like the deficit vote democrat. Two times in my life we balanced the budget were under Carter and Clinton.
posted by humanfont at 7:50 PM on October 25, 2010 [25 favorites]


the best way to fix this situation is to cut taxes and...do nothing about spending. right.
posted by TrialByMedia at 8:07 PM on October 25, 2010



Two times in my life we balanced the budget were under Carter and Clinton.

thank god the 3 martini lunch survived the later.
posted by clavdivs at 8:09 PM on October 25, 2010


"Of course, we owned most of their debt, so now we're even broker than they are."
posted by pyramid termite at 8:21 PM on October 25, 2010 [2 favorites]


For posterity's sake the text of the original is
Beijing, China, 2030 AD

Why do great nations fail? The ancient Greeks... the Roman Empire... the British Empire... and the United States of America. They all make the same mistakes, turning their back on the principles that made them great.

America tried to spend and tax itself out of a great recession. Enormous so-called "stimulus" spending, massive changes to health care government takeovers of private industries, and crushing debt. Of course, we owned most of their debt, so now they work for us.
and the text of the remix is
Beijing, China, 2030 AD

Why do great nations fail? The ancient Greeks... the Roman Empire... the British Empire... and the United States of America. They all make the same mistakes. The rich bought control of the government and media and distracted the people with spectacle while they stole the nation's wealth.

Eventually there were only the poor and the rich. The new poor grew angry, so the rich betrayed the government they controlled, hiding in and fueling the angry crowd.

Friends inside kept the government powerless but just to be safe they manufactured fear of a foreign devil. But who's stupid enough to fall for that one again?
posted by XMLicious at 8:23 PM on October 25, 2010 [3 favorites]


Bejing China 2030. Why was China eclipsed by India and Brasil. How does it cope with an aged popuation, most of which have skills more suited to physical labor, but lack the productive capacity of the young. How do only children care for aging relatives. What about the cultural impacts of bringing in all these outsiders from se Asia and the African "colonies". What to do about the great rust belt in Guadong where all the good factory jobs left for lower cost and local manufacturing centers abroad. Also global warming and environmental cleanup challenges remain. As the party continues to cling to power after aa decade of stagnation how will we return to the glory of the early 21st century.
posted by humanfont at 8:35 PM on October 25, 2010


Two times in my life we balanced the budget were under Carter and Clinton.

It continues to baffle me how the Dems let the right get away with being the fiscal conservatives. The moderate right's gap between rhetoric and reality is insanely large, but always seems to slip beneath view in the larger populace. I'll give the tea party one thing: they understand that benefits will have to be savagely slashed to balance the budget in their low-tax world even if I think they are out of touch with just how much the government gives them (and how much life is better now then the times they pine for). The moderate right seems to think they really can have their cake and eat it too and manage to drag a whole lot of people with them. Why do the Dem's fail to find a message that sums that up nicely and succinctly? Is it a complete failure of vision and leadership?
posted by Bovine Love at 8:37 PM on October 25, 2010 [6 favorites]


URK! Make that
China's got a lot of its own problems, including a huge rural peasantry that's not getting rich like their coastal urban fellows...

posted by Pirate-Bartender-Zombie-Monkey at 8:38 PM on October 25, 2010 [1 favorite]


Now, I don't like Obama's fiscal policies at all. I think they're very destructive. But the stuff he's done is chump change in comparison to his predecessor.

Now you know why some of us voted for Obama. It wasn't because we were all thinking he was going to give us a magic unicorn or something -- it was because the alternative, which was to have more of what his predecessor did, scared us shitless.
posted by EmpressCallipygos at 8:46 PM on October 25, 2010


This far in to the thread and no one has pointed out that (as of right now) the new ad is blatantly false?

Top US Debt Holders
1. US Intra-governmental holdings (e.g. the US Government itself) 5.2T
2. Savings bonds/Other investors 1.1T
3. China 0.9T
4. Japan 0.8T

So this ad can blow its bullshit fear-mongering of China out its ass. They might be the largest foreign country in terms of debt ownership, but they certainly don't control us.
posted by SirOmega at 8:53 PM on October 25, 2010 [11 favorites]


Remember, SirOmega, China also holds a very great deal of US currency (as does Japan), and modern currency is just another form of debt. That's part of why lending money to try to fix a debt problem is so destructive -- it's compounding the real issue (inadequate economic output to service the debt), not fixing it.

They don't control us, but they can make our lives absolutely fucking miserable if we start seriously arguing. That'll hurt them too, but it'll hurt us one hell of a lot more than them.
posted by Malor at 9:03 PM on October 25, 2010


They don't control us, but they can make our lives absolutely fucking miserable if we start seriously arguing.

Bullshit. How could they make our lives miserable without fucking up their own economy, even if we didn't retaliate?

Furthermore, economic retaliation by us would be much worse. Their economy is export dependent, and high import tariffs could be pretty damaging.
posted by delmoi at 9:27 PM on October 25, 2010


THEY
posted by KokuRyu at 9:31 PM on October 25, 2010


The entire debt/deficit debate is spurious, stupid and ill founded. There will always be a government budget deficit in the USA if we want the private sector to have any growth at all. That's just basic accounting. I used to be ignorant about this, but after quite a bit of research, I found that the dominant view of "budget deficit = EVIL" is nonsense in a fiat currency. Which is what we have- -- a fiat currency.

Frankly we don't even need to issue debt, the only federal government spending limit is inflation and real resource constraints. We can easily pay back China or any other Treasury bill holders , by changing the numbers in their checking accounts, which is all that it means to pay "interest" on Treasuries.

It's sad how many progressives fall for the "ZOMG deficit" nonsense.
posted by wuwei at 9:33 PM on October 25, 2010


Where the fuck were these people then? Now, I don't like Obama's fiscal policies at all. I think they're very destructive. But the stuff he's done is chump change in comparison to his predecessor. Where were these 'reasonable' voices five and six years ago, back when it actually mattered?

They were having their patriotism misappropriated, and being bullied into submission by manipulated terror alerts, and totally bought into the narrative that criticism during wartime equals treason. A lot of people tend to double down on a bad bet to maintain the illusion of control. It's why nigerian email scams get so many people.

I fully believe a large part of the current "outrage" is due to the only other alternative for a lot of these people is admitting just how stupid their support of the Bush administration made them look.
posted by billyfleetwood at 9:40 PM on October 25, 2010 [1 favorite]


What will the world look like in 2030?
posted by kliuless at 9:41 PM on October 25, 2010


Wait, I don't get it. Are we supposed to go Communist, like the Chinese, so we can be successful in 2030?
posted by RalphSlate at 9:46 PM on October 25, 2010 [3 favorites]


This is all just in time for the remake of Red Dawn.

Then I thought, if Michael Ruppert & the Collapsitarians are right, there won't be anything left for China to rule over.

Take that, ChiComs! You wanna come rule over a nation drowning in debt, it's agricultural heartland petrochemically poisoned to the point of sterility, it's infrastructure crumbling, and it's manufacturing base degraded, come get you some of the smoking crater that used to be America, baby! ;-)
posted by Pirate-Bartender-Zombie-Monkey at 10:02 PM on October 25, 2010


Is this going to be the next video that people switch the subtitles for comic effect? Like the Hitler yelling video? "What makes nations fall? Windows 7."

or something like that.
posted by fuq at 10:02 PM on October 25, 2010


wuwei: It's sad how many progressives fall for the "ZOMG deficit" nonsense.

Robert Mugabe, is that you? I didn't know you were a MeFite!
posted by Malor at 10:26 PM on October 25, 2010 [1 favorite]


As a child of the 80's, I remember all the anti-Japanese xenophobia that was prevalent in movies and TV, and I hate this sort of thing, if for no other reason it runs the risk of somehow creating another Robocop 3.
posted by Uther Bentrazor at 10:35 PM on October 25, 2010 [3 favorites]


This is the best ad of the year. I'm going to rant a bit now about how good it is, why, and what it means for the election.

"Why do great nations fall?... They all make the same mistakes, turning their back on the principles that made them great."

"Our country desperately needs a mighty leader who will do what has to be done to destroy
the radical new ways and sinfulness that are ruining us."


"Our country will be destroyed someday if we do not smash the perversions eating away at
our moral fiber and traditional beliefs."


"What our country really needs is a strong, determined leader who will crush evil, and take
us back to our true path."


The first quote is from the ad; the others are items in Robert Altemeyer's Right-Wing Authoritarian personality test. The message is a perfect match to the values of the group of people it targets. Setting it in the future, and putting it in the mouth of an 'enemy', primes the audience to assess it in what Robin Hanson calls "far-mode", using ideals and professed beliefs as the measure rather than immediate desires or experiences. It's a nailed-on certainty that your average middle-America conservative will have a strong reaction to the first half of this ad.

The second half is what the ad is ostensibly about - the economic programme of the Obama administration. Here the emphasis is on 'big'. As in, 'great', 'enormous', 'massive', 'crushing'. The wonderful thing is, you can't say it's wrong. The changes have been massive. And massive change from tradition is anathema to authoritarians.

The ending is pure authoritarian button-pushing. "High RWAs tend to feel more endangered in a potentially threatening situation than most people do, and often respond aggressively." This terrible disaster isn't just a threat to America - it also directly benefits our Communist enemy China, and even enslaves us to them! You'd better believe "the base" is going to respond aggressively.

Every values voter who in 2008 thought a Democratic victory was inevitable, who thought the world was turned upside down and would never be righted, is worked up into a frenzy of righteous anger right now. They're talking about the election with their friends and colleagues every day, and in a week they're going to herd them into the voting booths. That's what liberals are up against, and you got nothing. Well, you got "racism", but people don't turn out to vote against racism except in very unusual circumstances, like Barking in England a few months ago. The Democratic narrative is incoherent and it's common knowledge that the Republicans will make huge gains whatever happens. The strategy is one of image - using personally popular figures like Michelle Obama to provide cover. Making your candidates more popular is no use without presenting reasons to vote for them, however. That bumfuzzled approach to this cycle is why the results will be much worse for Democrats than the polling. Enjoy your election night.
posted by topynate at 11:23 PM on October 25, 2010 [3 favorites]


Wow Malor, maybe someday you can grow up and figure out that we're not on the gold standard anymore. And we aren't going to become Zimbabwe either, provided we don't destroy our productive capacity.

But why let facts get in your way when you can do a drive-by posting. Keep on keeping on, and keep on shilling for the financial interests who are driving Americans into "austerity" while enriching themselves.
posted by wuwei at 1:15 AM on October 26, 2010


My question - are the Asian actors in this ad actually Chinese? How did this ad get made? Are those Asian-American college student actors, or did they go to China to film this? And how did they pitch it?

Also, it'd be really interesting to get a verbatim translation of what the speaker is actually saying and see if it matches the original subtitles.

I'm also getting a fair amount of cognitive dissonance out of 'warning imagery' of future domination and control which has traditionally been a feature of liberal rhetoric being completely repurposed as authoritarian propoganda. But I guess that's a swing back to the good ol' days of Pacific War dehumanisation and everything that went along with it.

Must say I preferred the lighter tone (and bouncy techno) of Ha Ha America.
posted by Happy Dave at 1:44 AM on October 26, 2010


I'm also getting a fair amount of cognitive dissonance out of 'warning imagery' of future domination and control which has traditionally been a feature of liberal rhetoric being completely repurposed as authoritarian propoganda.

Consider that the Chinese are portrayed as having attained superiority. They haven't turned their collective back on the principles which made them great, and now they're a great nation.
posted by topynate at 1:51 AM on October 26, 2010 [1 favorite]


Wow interesting ad - thanks for posting.

China has been figuring large in the research papers I sell to banks and hedge funds ("Deep Opportunity Discussion Series"); there is a lot lots of misinformation about China and their financial position wrt The United States, influence, etc. Here's our view: China has their own problems threatening their economic well being far more than their holdings of US Treasuries threaten ours.

Specifically, they seriously aren't in a position to control us and THEY KNOW IT. John Connally former Treasury Secretary said it best: "The dollar may be our currency, but it's your problem." . The Chinese are holding the debt. They bought the debt. The debt is their problem, and, once again, they know it. But they are pretty damn shrewd traders, and anyone watching the debt markets know The Chinese are positioning themselves accordingly. How?

First we know who is holding US debt; as October 18, 2010 we can see that The Chinese hold $868.4B, compared to Japan's $836.6B, The UK's $448.4B and so on. Interestingly (and this is the kind of thing we watch), they are reducing their holdings of US Treasuries, with their aggregate position declining by some 7.27% YOY. And we know they are getting ready to move out of Treasuries (wholesale or not, doesn't matter); we know the majority of their holdings used to be out at the 10Y tenor and the now seem to have moved lots of money down into the short end of the yield curve; 3M / 6M maybe one year. Clear signs they are preparing to exit as its easier to liquidate short term debt than longer term.

Second, they are offering to purchase Greek debt, effectively backstopping The Euro.

So The Chinese aren't fools, they watched how the United States effectively fleeced the last biggest holders of US debt (The Japanese) in the 80's when we last had a wave of high inflation, and not only are they quietly repositioning their holdings accordingly they are backingstopping the Euro so they'll have a market to diversify into. And guess what? They are executing that plan.

But China has problems that are much, much larger than their holdings of US Treasuries; specifically an enormous property bubble, one they've been trying to deflate but with little luck to date. How big?

Well we believe property in some cities is massively overvalued. Looking at data for selected regions (Shenzhen, Hong Kong, these are blended metrics, with our information coming from proprietary on ground sources) we see that in some cities property values in 2009 increased 20% A MONTH.

This bubble has been driven by the usual factors: greed, speculation & hot money, but compounded by the speed of construction in China (very fast by western standards, perhaps less than 20% of the build time we experience).

We know (as does the PBC) that demand is slowing and here is the curious metric: there are almost 70M flats using absolutely NO electricity. In other words, finished, flats hooked up to the mains but using no electricity because they are unoccupied. Built for speculative purposes.

The value of these flats is approaching 20% of GDP; a truly enormous bubble, in other words.

We know the PBC is worried, as they have widened the bands for domestic bank stress tests TWICE this year. They are now requiring domestic banks to assume a 60% price fall in real estate prices, with a 50% default rate.

As prudent as that sounds, PBC know (as do we) that there are another 50M flats coming to completion during Q4 of this year. Supply is sharply increasing, and I wouldn't want to be holding one of those unoccupied flats, looking for buyer, as supply sharply increases as price isn't going to move in a direction that would benefit me.

And even though their economy seems to be booming, we're seeing signs things are starting to wobble with Chinese imports (yes they do import stuff but most folks seem to watch Chinese exports), notably some foodstuffs and basic metals starting to decline. Property stocks are getting hammered due to a recent surprise increase in Chinese interest rates.

But here is something I find very fascinating (and the subject of the paper I'm presenting this week): the low key G7 Finance Ministers meeting that took place last weekend. Wasn't really publicised much, but we do know what they were trying to do - resort confidence in the global financial system, and stem the currency wars we've seen the past six or so weeks.

It took place in a town Gyeongju, South Korea, a city of some 300K located 230 miles south of Seoul. Of course you've probably heard of Gyeongju since it is the sister city of Versailles, France, Inglewood California, United States and Nara Nara, Japan. How significant was this meeting?

Well, lets look at past meetings:

March, 2009, in the depths of the financial crisis when Investment Banks were dropping like flies and retail banks were being nationalised. Things looked very grim when the G-20 Finance Ministers held what was ostensibly a pre-meeting for the upcoming G-20 summit. How did the markets react?

US Equity markets popped some 28% in one month, and the sharp increases followed through, trading up from 6,547 on March 9, 2009 to 10,548 on December 31st, or some 61% for the entire year. It seemed a little confidence was all that was needed.

June, 2010, the European Sovereign debt crisis was in full swing. Folks talked openly about the upcoming disintegration of the Euro. Amid this backdrop the G-20 Finance Ministers once again met first the weekend of June, another one of these quiet pre-meetings. How did the markets react?

We saw the bottom of the EURO / USD trade on Monday June 7th. In the weeks that followed we saw the Euro strengthen against the US Dollar, from 0.8361 on June 7th to 0.7180 on October 23rd. Once again, a little confidence was all that was needed.

But what are they up to now? Well, it seems they're trying to stem the global currency way. As the US Dollar weakens other governments are intervening and competitive currency devaluations are the end result. Messy. This is eerily reminiscent of my 2008 FPP noting the race to zero interest rates, when most countries seemed to be in a race to see who could cut nominal the quickest.

So the outcome of this meeting will be interesting; lots of chatter in the markets about a new Plaza Accord, this time to stablise the US Dollar. While the Americans may not want a strong dollar, they (and the rest of the global financial system) would like an abrupt DROP even less. So stabilisation does indeed seem to be a plausible reason to meet, as we know they can't really fix market driven exchange rates (for long that is).

Well, if they do succeed in this goal it would be only a temporary fix so we're advising folks to position assets accordingly. There are much better investment opportunities available in the G-20 than America; Germany, for example, is looking at 2010 GDP of roughly 3.5%, perhaps 2.0% in 2011 but there are signs of labour shortages in Bayern, for example.

Still pedestrian growth compared to the CIVETS (Colombia, Indonesia, Vietnam, Egypt, Turkey and South Africa ) or even the broader next eleven.

Thanks for posting that video; I wouldn't have seen it otherwise. Still, don't think their prediction is going to come true - we're going to see The Chinese continue to move out of US debt, even as other, faster growing economies continue their rapid expansion.
posted by Mutant at 2:24 AM on October 26, 2010 [44 favorites]


here's a blog post that mentioned the remix I saw. The actual remix got DCMA'd though.

is this the one you were talking about?
posted by ennui.bz at 4:15 AM on October 26, 2010 [1 favorite]


My question - are the Asian actors in this ad actually Chinese? How did this ad get made? Are those Asian-American college student actors, or did they go to China to film this? And how did they pitch it?

An extra in the Chinese Professor Ad speaks

So yes, I was an extra for this commercial. The way I got involved in this commercial is by signing up to be an extra for Transformers 3, which was being filmed in DC. So I got an email from my Kollaboration staff (I am on the board for Kollaboration DC) saying that they were filming Transformers 3 (Our show just ended btw too, like a week ago). Some of us signed up to be extras and a couple of us got called for this commercial because the Transformers 3 shoot was full, and they informed me that it was for a conservative - political ad, so I was aware of the political stance (thinking it wouldn't be a serious issue). So thats basically how I got involved.

BTW, to sign up to be extras we had to fill out information like, our name, gender, age, height, ethnicity, and a picture.

It was filmed at a community college (NOVA in Alexandria VA) and when we got there, the production team did tell us about the ad, but in a misconstrued kind of way. I know that the ad was about the US deficit and they did tell us the premise of the ad (taking place in the future, and we all supposed to be "chinese" students in a lecture). I saw the commercial and it's pretty intense and one thing I did not know that the commercial would do, is put this almost red-scare type of fear in the eyes of Americans (effectiveness wise, the political ad works, not saying I agree with the tactics).

What's interesting is that the production team told us that we would all be laughing in the commercial because the "Chinese Professor" said something funny, so there were multiple shots where we all "laughed" after the "Chinese Professor" said his so called, "joke."

At the end of the production, the person who was in charge of managing the extras came to us at the end of the shoot to inform us that the production crew is non-partisan about the issue, and that they were just doing it for the money. Of course as extras we all did get paid for the all day shoot. Another thing, the production team didn't convey to us that this ad would be used in this way either.

Personally, I had no idea that this commercial would be aired nation-wide and as soon as it aired, it was put onto the politico blog. I got a few emails from friends who work in politics telling me that they saw me in this crazy ad, and it kind of took me off guard.

posted by Comrade_robot at 5:02 AM on October 26, 2010 [9 favorites]


We're going to have to change that axiom. Instead of 'For great evil to occur, good men need only do nothing', it'll be 'For great evil to occur, good men need only be non-partisan about the issue and just do it for the money'.
posted by Happy Dave at 5:15 AM on October 26, 2010 [5 favorites]


How ridiculous, everyone knows laughter is forbidden in Chinese classrooms!
posted by The 10th Regiment of Foot at 5:23 AM on October 26, 2010


Shame on us if we let the GOP's fear of the Other go mainstream. I mean, it's bad enough that in their circles they stereotype, vilify, and/or demonize gays, the Chinese, Indians (they get so worked up over anyone in tech support with an accent, despite loving the free market) and Muslims.

Between this and the mosque thing, they seem quite good at getting people worked up over the possibility of a minority getting privileges (or "taking over" as they put it). And now that we're in an economic downturn, people are eager to blame their problems on someone else.

And I really don't get this whole "AMERICA COULD FALL BEHIND!" thing. America being #1 (by a few metrics) is great for bragging rights, but I really would much rather trade some of those distinctions for a better quality of life, a larger middle class/more upward mobility, and being a shining example of ecological stewardship to the rest of the world*. They want, nay, need American Exceptionalism, when I would gladly trade it for American Lagom, meaning America's people would be satisfied and content to have what they need, without the implicit dick-size comparisons with other nations.

*Speaking of which, how about the right wing argument that China and India will pollute no matter what, so we might as well not even try because we'll still be pretty good for a first world country?
posted by mccarty.tim at 5:33 AM on October 26, 2010


It's about time that someone Chinese is criticizing our healthcare system.

Obviously, the students in class are chuckling, because they know that the US would've saved far more if it actually had socialized the entire medical establishment.
posted by markkraft at 6:04 AM on October 26, 2010 [1 favorite]


Mutant: First we know who is holding US debt; as October 18, 2010 we can see that The Chinese hold $868.4B, compared to Japan's $836.6B, The UK's $448.4B and so on. Interestingly (and this is the kind of thing we watch), they are reducing their holdings of US Treasuries, with their aggregate position declining by some 7.27% YOY. And we know they are getting ready to move out of Treasuries (wholesale or not, doesn't matter); we know the majority of their holdings used to be out at the 10Y tenor and the now seem to have moved lots of money down into the short end of the yield curve; 3M / 6M maybe one year. Clear signs they are preparing to exit as its easier to liquidate short term debt than longer term.

Chinese holdings are probably higher than that and still growing, I would guess. I haven't kept up since Brad Setser's blog went away last year, but as I recall he did a fine job back then of demonstrating why you can't really trust those numbers. Granted US Treasurys most likely make up a smaller share of China's total foreign holdings (which still grow rapidly) than they used to, and no doubt they're looking for some kind of eventual exit. Anyway, I just get annoyed when people use that ~$900b number as if it were a certain truth. Searching the web I see people are still making the same kind of arguments that it isn't:
China and the Missing Treasuries: "We won’t know how the June 2010 numbers will be revised until early next year. And we have to wait until 2012 to have a better idea of the extent to which last month’s huge $75bn increase in the UK’s holding is attributable to China.

But if you’re keeping track of which country is likely to be the biggest holder of US Treasuries in the near future, don’t discount China just yet — it might have a bigger lead than you think."
But anyway. Who will take up the buying if China do cut back further? The US Federal Reserve? Do US officials feel a bit of cognitive dissonance when they pledge to avoid competitive devaluation while simultaneously making plans for massive new QE2? If anything I think this latest G20 thing is negative for the dollar, not stabilising. The US is even less likely than most to actually do anything differently than they would've otherwise. It sort of reminds me of the Fed voices warning against monetary easing leading to inflation... I sometimes feel this slight suspicion that it might just be part of a communication strategy designed to convince people of that, so that when they do something it increases inflation expectations that much more.

If asset bubbles in China burst, what does that do to the hope of that much-talked-about trade balance improving by way of some influence from Chinese inflation? I guess that depends on what their response is when it happens. Can they indulge in some kind of quick and massive economic stimulus without creating too much immediate price inflation, like in the US, or is that not going to be possible in China with the foreign capital presumably still pouring in?

Ah well, I don't know a thing about China really, and watching that ad sure didn't help. I liked the 1986 one better.
posted by sfenders at 6:13 AM on October 26, 2010


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posted by markkraft at 6:36 AM on October 26, 2010 [1 favorite]


Shame on us if we let the GOP's fear of the Other go mainstream

Shame on us because it's too late.
posted by fuq at 6:51 AM on October 26, 2010 [3 favorites]


Mutant what do you make of TIPS going negative interest rates. I mean given that inflation adjusted US treasury bonds are bring sold at a negative interest rate, that would seem to be a signal that inflation is not our big threat.
posted by humanfont at 7:19 AM on October 26, 2010


wuwei: Wow Malor, maybe someday you can grow up and figure out that we're not on the gold standard anymore. And we aren't going to become Zimbabwe either, provided we don't destroy our productive capacity.

You're right, we're not. It never ceases to amaze me how people miss that the primary reason that financial markets have turned into a runaway cancer is because of this. There simply is too much money in the world, far more than the underlying economy can supply value for. It's turned into a gigantic Ponzi scheme.

And saying "we won't turn into Zimbabwe from excessive money printing as long as we don't destroy our productive capacity" is like saying "This bowling ball won't damage this lovely parquet floor when I drop it, as long as gravity turns off." Injecting currency into the system allows the injector to take real value out of the economy while providing nothing in exchange. The amount of currency grows, while the amount of real goods and energy remain the same, causing inflation. The economy gradually reorients itself to serve the people printing money, instead of the people generating wealth. Destruction of wealth generating capacity is absolutely inevitable in that scenario, exactly like gravity.

Inflation always hurts people at the bottom of the food chain the most, and benefits those closest to the money. In essence, you are arguing that we should steal everything we want from poor people, while enriching the elite that gather around the supply of cash... and somehow I'm the one "shilling for financial interests"? What the heck do you think is going to happen in an environment where loads of free money just shows up for doing no work?
posted by Malor at 7:28 AM on October 26, 2010 [1 favorite]


sfenders -- "Chinese holdings are probably higher than that and still growing, I would guess."

Well, I'd like to see some data on that; I don't disagree that the numbers might be somewhat off (the purchases in London are a good example of how errors could be introduced) but I suspect we're not talking significant amounts here, probably single digit or low double digit if at all.

Still we seem to agree that The Chinese are gearing up to reduce their holdings (if they haven't already); after all that's the only credible reason they'd shore up Greek debt (and there were rumours whizzing about the trading floor here last week they were purchasing Portuguese and Irish govvies as well, but since that was just shouted out and I don't have any evidence to support take it what its worth).

"But anyway. Who will take up the buying if China do cut back further? "

Ha then we'd hopefully see some rationality return to this exercise. Doubt Treasury could get their balance sheet extended enough to compensate for The Chinese not purchasing, so if nothing else, as we discussed March, 2009 in Why the US won't see hyperinflation , market forces would start to reign in the deficit spending.

Like the 80's episode, US interest rates would start to creep up as demand for Treasuries fell, the economy would slow as the cost of capital surges, folks would squeal especially so if we saw mortgage rates approaching 20% again, the voters would vote and the problem would be solved.


humanfont -- "Mutant what do you make of TIPS going negative interest rates. I mean given that inflation adjusted US treasury bonds are bring sold at a negative interest rate, that would seem to be a signal that inflation is not our big threat."

Its pretty interesting as far as market events go, but the headline is a little misleading as we've seen TIPS with negative yields before, back in March 2008 actually (traded down to about -0.17%). 'Course the whole world was nuts back then, negative yields on TBill as well so maybe we can overlook that episode.

Still I love these unusual market scenarios, if for no other reason than they are historic. Like every day in the markets, reallly.

But it seems that some investors are betting on inflation making a comeback - otherwise why purchase the debt at a negative yield? If you though deflation was the threat, you'd want to hold securities with low probability of default; treasuries, selected high grade corporates, since as their payouts continue in a deflationary environment the purchasing power of the cash flow increases.

TIPS protect against inflation, so some folks are worried about the purchasing power of the US Dollar in the future.

Curious, although indices such as Journal of Commerce Commodity Index show strong deflationary pressure, if you click that chart to a 1M or 3M view you'll see evidence that there is some inflationary pressure in the system. I'm not the only person looking at JOC (although it is damn obscure, which is why I love it so). But we don't have to look at JOC alone, lets look at some soft commodities : And that US Dollar Index is getting (measures the dollar's value against a basket of currencies, rather than a single pair) is getting pounded on, which doesn't help the US inflation story, at all.

So we're seeing clear evidence of inflation just entering the system, only question is how much can be absorbed into producer price margins and how much we'll get whacked by?
posted by Mutant at 8:19 AM on October 26, 2010 [3 favorites]


Mike Ashton has this to say about the negative yield TIPS auction:
The 5y TIPS reopening came at -0.55% real yield, which provoked many dramatic headlines about how this was the first ever negative yield for a Treasury auction. Those of us who live and breathe in the inflation-linked markets are accustomed to this sort of real-nominal confusion. In truth, there is nothing particularly extraordinary about an auction clearing at a negative real yield, and in fact there have been many, many Treasury auctions that cleared at a negative real yield. Apples to apples, folks – the most-recent nominal 3y Treasury note auction cleared at 0.569% on October 12th. The 3y inflation swap was 1.50% on that day, so that auction cleared at a -0.931% real yield. Treasury Bill auctions routinely occur at sharply negative real yields; the only thing unique about a TIPS auction is that the real yield, and not the nominal yield is reported. There is nothing remarkable about the level of today’s TIPS auction.
posted by malocchio at 10:13 AM on October 26, 2010 [1 favorite]


Blargh. This discussion went over my head so fast. Glad our resident economists showed up though.
posted by thsmchnekllsfascists at 4:54 PM on October 26, 2010


topynate has it. exactly. This ad will be terrifyingly effective.
posted by odinsdream at 5:45 PM on October 26, 2010


I should add that nothing about the lack of facts or internal coherence is what makes this an effective ad. Not at all. The single goal of this ad is to get likely non-democrat voters to vote. That's all it's designed to do.
posted by odinsdream at 5:46 PM on October 26, 2010


We must come up with a suitable viral video that will get equal air time. I suggest a bunch of white folks being flung into the air to be used in place ot skeet by heartless CEOs who are talking about how big their tax cut will be after all these stupid rednecks are done voting republican. As they shoot a pregnant woman they one says to the other, Shit Fred you hit a fetus, careful you'll get us off our pro life message.
posted by humanfont at 6:16 PM on October 26, 2010 [4 favorites]


Ha then we'd hopefully see some rationality return to this exercise. Doubt Treasury could get their balance sheet extended enough to compensate for The Chinese not purchasing, so if nothing else, as we discussed March, 2009 in Why the US won't see hyperinflation , market forces would start to reign in the deficit spending.

But high interest rates in the 80's didn't reign in deficit spending in America. Pretty much the opposite actually. The deficit started to be a problem around the same time interest rates started falling. It was sort of a transition from inflation to deficit spending I suppose, accompanied by falling interest rates, which lasted 30 years. The opposite of what might happen now.

It does look more plausible than it did way back in March 2009 that the US could be getting uncomfortably near some kind of limit. Most importantly, it seems everyone now knows that those "bond vigilantes" aren't extinct after all. Treasury yields are a fair bit lower than they were then, but maybe *this* time it's the bottom in yields, for realz.

That Journal of Commerce Commodity Index chart is very pretty. The 5-year view is so nicely symmetrical. It seems to think we're back to whatever passed for normal before 2008.
posted by sfenders at 3:33 AM on October 27, 2010


Critics say Political ads hint of xenophobia

YANG: In a way, this is more or less just another manifestation of kind of the paranoid style of American politics, where - especially in times of economic duress - there is a marginal attitude that kind of comes from the mainstream, which is a fear of immigrants, a fear of foreigners, a fear of the outside. It's a way of redirecting attention in some ways. And political candidates often seize on this as kind of a get-out-of-jail free card.

It's a way of not talking about real issues, a way of demonizing an opponent by associating them with a demonic other. And in this case, you know, it's China, but it could just as easily have been - and is, often - Latinos or Middle Easterners or Muslims, and so forth.



Playing the China Card

The Space ad was made even more distressing by its unfortunate imagery. While many of the cycle’s anti-China ads share similar iconography (lots of Communist red, triumphalism, PRC flags, Beijing opera sound effects) Space’s hired guns decided to climax the commercial on a stock photo of a Lunar New Year dragon dance performance — which careful observers will recognize as taking place in San Francisco. The English-language signs in the background are a dead giveaway.

That’s what makes the widespread demonization of China and “the Chinese” so frightening to Asian Americans: The line between Asians on that side of the ocean and those on this side has always been blurry to those with a surplus of rage and a deficit of judgment.

posted by Comrade_robot at 8:19 AM on October 28, 2010


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