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The Currency Debate

I am getting quite confused by the currency manipulation discussion surround the Chinese RMB.  Today, Nobel Laureate Krugman came up with this piece in the NY Times. 

I read it once, twice, thrice.  But I think I am missing his point still.  Here’s where I think his logic lies.  Exchange rate is determined by supply and demand of currencies, which in turn, should be determined by import/export balance (either capital or goods).  It is a mechanism which should, in theory, make massive trade imbalances unsustainable.  In theory, since this assumes free trade between all countries. Since the RMB is pegged against the USD, its value appreciates or depreciates with the USD.   At the moment, the RMB is pegged at a lower rate than what it will be at, if traded freely (that’s the assumption, I have no idea). 

I get all that.  What I don’t quite get is how the peg is considered to be currency manipulation when pumping USD into the marketplace is considered not.  When our Fed fixes interest rate at almost zero, requiring our treasury to issue bonds and purchasing them back…   the result is massive pumping and devaluation of the currency.  Yes, the USD is determined by supply and demand, but when we can create the supply and demand ourselves, how is that not manipulation? 

My simple conclusion here is that we are trying to manipulate our currency, but the Chinese are getting in our way since they have their own manipulation mechanism.

TAP: The Sweets

I must confess that I have never liked traditional Chinese desserts.  Where is the chocolate?

While americanized chinese restaurants usually distribute oranges and fortune cookies (a US invention) at the end of your greasy meal, the traditional chinese desserts are in the form of a hot pudding or hot sweet soup.  I tend to think of them in two categories.

1) Hot Puddings.  These are made from one core ingredient, e.g. black sesame, red beans, mung beans, walnut, almonds…  and lots of sugar.  The ingredients are grounded then brewed for hours until they dissolve into a thick paste – the result is a condensed flavored hot sweet pudding.  My favorite of this list is the walnut pudding although it’s really difficult to find in the US.  Next favorite is the mung bean (green bean) one.  

BlacksesameSoup.jpg   Redbeansoupdessert.jpg

2) Hot Soups.  These generally have a clear base, with multiple ingredients (herbs, flowers, fruits, fungus and what not) that will either help generate great skin, or provide strength, or prevent aging.  Or a combination of the above.  The taste is generally quite mild and it is somewhat soothing to consume at the end of a big meal.  My favorite is papaya with clear fungus.  It is quite tasty.  I try to avoid anything with either bird’s saliva or frogs ovaries or anything else I do not normally consume… 

 

 Where to get in NYC:  This is not easy to find.  Sweet and Tart used to carry it, although they closed down their Mott Street location a few years back.  Maybe can try checking out their Flushing location.  Otherwise, the best bet is probably XO Kitchen and Bar (Hester street).

Too complex of a topic to blog about, so…  let’s go to the pictures. 

china

Participants dance with fans during a massive parade to mark the 60th anniversary of the founding of the People's Republic of China

The phalanx of national flag receives inspection in a parade of the celebrations for the 60th anniversary of the founding of the People's Republic of China, on Chang'an Street in central Beijing, capital of China, Oct. 1, 2009. (Xinhua/Yang Lei)

Female members of a Chinese military reserve unit march.  During the two-hour-plus festivities, more than 100 helicopters and jets flew over the city in formation.

TAP: Fishballs

Think of fishballs as the equivalent of meatballs.  Just substitute your beef/pork/chicken with fish.  The same way meatballs are made with mystery meat some times, fishballs are made with mystery fish.  It’s all pulverized so it really doesn’t matter as much.

Fishballs are served in several ways.  The most popular is fishballs in noodle soups.  Then there are curry fishballs on skewers, fishballs in soups, steamed fishballs as dimsums, grilled fishballs, stirfry veggies with fishballs… you name it. 

Better fishballs are fishy, smooth, tender almost to a paste. 

     

Where to get this in NYC: For curry fishballs, best place I’ve had is at Hong Kong Station in Chinatown.  Fishballs in soups you can find in Vietnamese restaurants sometimes, and Chiu Chow restaurants.

Engineers running a country

With all the news about the 60th celebration, everyone, including Scott Adams has China on his mind.  His latest blog post is rather thought-provoking.  An excerpt below:

The bad news for China is that their up-and-coming leaders have backgrounds in law, economics, and history. In time, the lawyers will start passing lots of laws that individually make sense while collectively strangling the business sector in red tape. The economists will all disagree with each other, and the historians will be planning for the past. So China is pretty much doomed. But they had a good run.

Reading beyond the cynicism, I believe there might be some truth to it.  Engineering training focuses on problem solving and rational thinking and empirical experiments.  There is one absolute truth and the mission is to find it.  Liberal arts and social sciences emphasize critical thinking, historical evidence and idealogies.  It is about making arguments to support a model or a theory.  And of course, you got to pick your position first.  You’re either Keynesian or monetarists or austrian.

So yes, it will be interesting to see whether China will continue to be ran on a formula going forward.  I suppose either approach has its benefits and limitations (the engineer in me talking).

From Yahoo’s perspective

The Deal:

Under the terms of the agreement, Yahoo! will contribute its Yahoo! China business to Alibaba.com and the two companies will work together in an exclusive partnership to grow the Yahoo! brand in China. (Yahoo press release in 2005)

CEO Bartz:

…  she disliked how the Yahoo brand was being treated in China, according to a source familiar with the situation. But Bartz said at a July conference that it wouldn’t “make any sense at all” to try to buy the brand back or to “get rid” of Yahoo’s stake in Alibaba.

“We have a bigger play just riding the fortune of Alibaba than we ever could being Yahoo China,” she said.

From Alibaba’s perspective

The Deal:

Alibaba Group acquired China Yahoo! (www.yahoo.com.cn) in October 2005 as part of its strategic partnership with Yahoo! Inc. (Alibaba Group’s website)

Ma’s perspective:

“We will digest Yahoo China in our own way”

Ma said the way Alibaba integrates Yahoo China will be a “case study,” but did not say how the portal may continue to change.

Articles: Alibaba Mulls Yahoo China Future After Bing Deal; Alibaba Removes Classifieds Business From Yahoo China

Here’s the reality.  Yahoo relinguished control over it’s Yahoo China brand back in 2005.  While it is true that Alibaba has since neglected Yahoo China and focused on Taoboa, Alipay and others, in the end, they are doing what makes the most sense for Alibaba Group as an aggregate. 

Since Yahoo owns 40% of Alibaba Group, everyone’s interest should be aligned.  Well, economically at least.  Strategically, the day Yahoo decided to give up control is the day Yahoo threw in the towels for China.  Personally, I think that is one of the few good decisions Yahoo has made in the past few years.

I have an Asian Palette.  I am not sure how one defines it, but for me, it means a rice-based diet, cooked vegetables, soy sauce and anti-butter.  I’m quite sure this is not the definition of asian palette, btw.

I thought I will write about some food/drinks which are generally not western-palette friendly.  Not yet, anyways.  Which means I am not going to write about Peking Duck, or Dumplings, or Boba tea… 

The first item is Hong Kong Style Milk Tea.

Hong_Kong_milk_tea

It even has a Wikipedia page here!

My favorite Chinese food blog, Cha Siu Bao, recently did a write-up on the HK Style Milk Tea competition. 

There is nothing especially new about this.  It is a derivation from the English milk tea, only better (in the opinion of the Asian Palette!). 

 

Instead of English breakfast tea, each restaurant selects their own unique blend of tea leaves.  What’s uniform about it is that the tea is very rich (tea is boiled for a few minutes), very smooth (very fine filter using what’s nicknamed as “pantyhose”), a bit thick (using evaporated milk), and very sweet (lots and lots of sugar). 

You drink this milk tea with almost any food.  It’s for lunch, afternoon tea, dinner…  and breakfast.   One interesting variation is what we call “yin yang”, which means coffee + milk tea.  Yep, coffee and tea all in one!

Where to get this in the US: chinatown.  Most Chinese bakeries and “hong kong style western food” restaurants (will explain in a later post).  Just ask for “hong kong style milk tea” and someone will hopefully point you in the right direction!