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(This guest post originally appeared at NewDeal2.0)

A year-end opinion piece by NY Times Op-Ed Columnist Paul Krugman with the title: “Chinese New Year” contains errors of fact and flaws of logic. But the most egregious fault of the piece is Krugman’s approach of blaming the victim for the crime.

Krugman wrote in his article that “China has become a major financial and trade power. But it doesn’t act like other big economies. Instead, it follows a mercantilist policy, keeping its trade surplus artificially high. And in today’s depressed world, that policy is, to put it bluntly, predatory.”

What is Mecantilism?

In the current global international finance architecture based on fiat dollar hegemony, mercantilism cannot be pursued by any trading nation beside the US, the issuer of the fiat dollar. ‘Mercantilism’ is a term tied historically to a national policy on international trade conducted with specie money (paper money tied to a mineral) backed by gold. A mercantilist trade policy aims at winning gold with trade surpluses to provide more domestic investment to keep the surplus country more prosperous and more competitive in international trade. Fiat dollars, unlike gold, cannot be spent outside of the dollar economy. China’s dollar trade surplus is denominated not in gold, but merely in paper that the US can print at will. Dollars cannot be spent inside China without first being converted to Chinese currency, a move that would cause inflation in China since the wealth behind this new money has been shipped to the US in exchange not for real wealth but for paper.

Since the end of the Civil War, a strong-dollar policy has been viewed by all administrations to be in the US national interest because it keeps US inflation low through low-cost imports and it makes US assets expensive for foreign acquisition.

This arrangement, which former Federal Reserve Board chairman Alan Greenspan proudly called US financial hegemony in congressional testimony, has kept the US economy booming in the face of recurrent financial crises in the rest of the world, at least until the current crisis. It has distorted globalization into a “race to the bottom” process of exploiting the lowest labor cost and the highest environmental abuse worldwide to produce goods for export to US markets in a quest for the almighty dollar, which has not been backed by gold since 1971, nor has it been backed by economic fundamentals for more than a decade.

Before the emergence of dollar hegemony, through which it became possible to finance the US trade deficit with a US capital account surplus, Federal Reserve Chairman Paul Volcker had to raise Fed funds rate to an all-time high of 19.75% on December 17, 1980 to curb US stagflation caused by a rising trade deficit. Five years later, in 1985, Volcker and Treasury Secretary James Baker III engineered the Plaza Accord to force the Japanese yen up against the dollar to curb US trade deficit with Japan, promptly pushed the Japanese economy into sharp deflationary depression from which Japan has not yet fully recovered.

During the Plaza Accord negotiations, Baker famously told his Japanese counterpart that “the dollar is our currency but your problem.” In 2010, this statement is no longer operative. The weakening dollar has reverted to being fundamentally a US problem. It is a puzzle why Krugman, a Nobel laureate economist, is now trying to jawbone the dollar further down against the Chinese yuan.

Financialization of the Global Economy

Financialization of the deregulated global economy through excessive debt and structured finance speculation supported by fiat dollar hegemony has detached asset values from underlying economic fundamentals to form financial bubbles. The adverse effects of this type of globalization on the developing economies are obvious. It robs the people of the meager fruits of their exports and keeps their domestic economies starved for capital, as all surplus dollars from export must be re-invested in US sovereign debt instruments to prevent the collapse of their own domestic currencies.

The adverse effects of this type of globalization on the US economy are also becoming clear. In order to act as consumer of last resort for the whole world, the US economy has been pushed into serial debt bubbles fueled by unsustainable over-consumption and fraudulent accounting. The unsustainable and irrational rise of US equity prices, unsupported by revenue or profit, had merely been a devaluation of the dollar. Ironically, periodic adjustments in US equity prices, known to the public as market crashes, merely reflect a trend to return to a stronger dollar, as it can buy more deflated shares.

Overcapacity Caused by Wage Stagnation

The world economy, through technological progress and deregulated markets, has entered a stage of overcapacity in which the management of aggregate demand is the obvious solution. Yet we have a situation in which the people producing the goods cannot afford to buy them and the people unfairly receiving the profit from goods production cannot consume more of these goods. The size of the US market, large as it is, is insufficient to absorb the continuous growth of the world’s new productive power in the emerging economies.

For the world economy to grow, the whole population of the world needs to be allowed to participate with its fair share of consumption. Yet neoliberal economists and monetarist policymakers continue to view full employment and rising fair wages as the direct cause of undesirable inflation, which is deemed a threat to sound money.

Demonizing China is not a Policy Option

Professor Krugman should know that demonizing China for its monetary policy, which under dollar hegemony is fundamentally a reactive derivative response to of US monetary policy, serve no useful purpose. Instead of pushing China to revalue the exchange value of its currency upward, he should be pushing both China and the US to raise domestic wages aggressively. Until US workers doing the same work are not paid more than their Chinese counterparts, US-China trade cannot be balanced. The preferred solution is for Chinese wages to increase at a faster rate than US wages and not for US wages to decrease. Cooperation on the front is urgently needed in US-China bilateral trade talks.

Trade Need Not be a Zero Sum Game

Mercantilism is a trade theory that assumes international trade to be a zero-sum game. In such as game, a trading nation’s prosperity is dependent on increasing its procession of capital in the form of gold through trade surplus denominated in specie money. The theory has since been invalidated first by Adam Smith’s trade theory of absolute advantage and later by Richardo’s trade theory of comparative advantage.

Adam Smith (1723-1780) argues that a country should produce and export commodities for which it has an absolute advantage and import commodities from countries that have absolute advantage in producing other commodities. Such terms of trade will benefit both trading partners by expanding both economies. Protectionism works against such mutual benefits.

The theory of comparative advantage as espoused by British economist David Ricardo (1772-1823) asserts that trade can benefit all participating nations, even those who command no absolute advantage, because such nations can still benefit from specializing in producing products with the lowest opportunity cost, which is measured by how much production of another good needs to be reduced to increase production by one additional unit of that good.

Ricardo’s theory reflected British national opinion in the 19th century when free trade benefited Britain more than its trade partners. However, in today’s globalized trade when factors of production such as capital, credit, technology, management, information, branding, distribution and sales are mobile across national borders and can generate profit much greater than manufacturing, the theory of comparative advantage has a hard time holding up against measurable data.

Today, in a global financial market operating under fiat dollar hegemony, the world’s interlinked economies no longer trade to capture Ricardian comparative advantage, only to capture fiat dollars to service their fiat dollar debts.

Mercantilism not possible under Dollar Hegemony

Mercantilism cannot be pursued by any nation in a world trade regime denominated in fiat dollars which has not be backed by gold or other species since President Nixon took the dollar off gold in 1971. Dollar hegemony is a geopolitically-constructed peculiarity through which critical commodities, the most notable being oil, are denominated in fiat dollars. The recycling of petro-dollars into other dollar assets is the price the US has extracted from oil-producing countries for US tolerance for the oil-exporting cartel since 1973. After that, everyone accepts dollars because dollars can buy oil, and every economy needs oil. OPEC had no option except to accept payment for oil in fiat dollars not backed by gold.

Oil and Gas Imports

US consumption has been fairly constant in the past few years. In 2007, about 13.7 million barrels were imports daily and only 5.9 million barrels from OPEC. At $100 a barrel, the aggregate oil bill for the US comes to $2 billion a day, $730 billion a year, about 5.6% of 2007 US gross domestic product (GDP). About 50% of US consumption is imported at a cost of $1 billion a day, or $365 billion a year. Oil and gas import is the single largest component in the US trade deficit, not imports from Japan or China. And unlike low-price import from China, oil import at high oil prices contributed directly to US inflation. This is one of the main reasons why a strong dollar is in the US national interest.

China’s History of Monetary Victimization

Copper, silver and gold had been the component metals in China’s tri-metal monetary regime throughout its long history. Cloth, grain, cattle, pearls and jade, along with precious metals, had also been used as media of exchange in ancient times. The Sung dynasty issued the first paper money in 1023. Silver had been used increasingly widely as currency in China since the 15th and 16th centuries with imports from the increased silver production in the Americas as a result of a Chinese trade surplus with the West.

Around 1564, Mexican silver coins began circulating widely in Chinese coastal trade towns such as Guangzhou and Fuzhou as payment by Portuguese traders for Chinese exports. By the 18th century, China was operating on a de facto silver standard monetary regime.

The 19th-century reversal of China’s foreign trade from surplus to deficit was due to Western opium smuggling starting from 1820. Up to that time, China permitted very little foreign trade and what legitimate trade that did take place amounted to only an insignificant portion of the Chinese economy. This illegal opium trade was denominated in silver until China ran short of silver after two decades, after which the legalized but immoral opium trade was denominated in porcelain that steadily fell in price because China could produce porcelain easier than it could produce silver, albeit Chinese export porcelain was increasingly produced at inferior quality compared to that produced for the more discriminating domestic market. Monetary defacement occurred even in porcelain when it became a unit of account.

Maria Alejandra Irigoin in her paper: “A Trojan Horse in 19th century China? The global consequences of the breakdown of the Spanish Silver Peso Standard”, observes that until the 1640s, silver trade was essentially driven by large differences in the gold-silver ratios between Spanish America, Europe and China, allowing a substantial arbitrage gain to be realized by intermediaries. After 1825, China’s balance of silver trade with the West became negative due to the illicit opium trade.

According to Irigoin, between 1719 and 1833, 259 million silver pesos, or 6,321 tons of silver, entered China to pay for Chinese goods. That is the equivalent of 421.4 tons or 135.5 million ounces of gold at the universal silver/gold ratio of 15/1. For comparison, as of January 2007, gold exchange traded funds held 629 tons of gold in total for private and institutional investors.

Of the 6,321 tons of silver, 62% was introduced after 1785 and a full 30% after Spanish American independence, usually dated as 1810. Importantly, the structure of the silver trade was different before and after 1785. Up to that date, English intermediation accounted for about 50% of silver inflow to China since 1719, French for 20% and Dutch for 15%. After 1785, the US became progressively the main provider of silver to China. Around 1795, North American merchants provided 28% of Chinese silver inflow to pay for Chinese goods. By 1799 the US share had risen to 65% and after 1807 American intermediaries accounted for a full 97% of silver inflow into China.

This one-way trade denominated in silver grew steadily until the late 1820s. It experienced a short-lived high point in 1834-36 after which date it declined strongly and only staged a timid recovery after 1853. The US trade deficit with China did not start in the 1990s. It began in 1800. The only difference between the two dates is that in 1800, the US had a steady supply of silver from Mexico and after 1990 the US has a steady supply of fiat dollars.

Despite Chinese discouragement of foreign trade, China had always enjoyed a trade surplus until 1834. Chinese flow balance of silver had been positive all through history and became negative only after 1826, 10 years later than the inversion of the overall balance of trade of China due to the opium trade. This was because the sliver deficit from the illicit opium trade was at first cancelled by silver inflow from Russia in exchange for Chinese silk, porcelain and tea. Russia earned silver in the trade boom during the Napoleonic wars.

The massive smuggling of opium led to increasing silver imbalance for China after 1819. Similarly, Chinese silver inflow still exceeded outflow until the mid-1820s because the US sent more silver into China than opium-smuggling English merchants extracted from there to Bengal, Calcutta and finally to London.

A spurt of silver demand from China occurred in the first half of the 18th century, when the Chinese exchange rate of silver to gold was still 50% higher than the bimetal exchange rate in Europe. This offered opportunity for European arbitrage with China’s huge population and market growth.

Irigion notes that the historiography of trade globalization has long recognized the role of demand for silver in the Chinese economy as the foundation in the establishment of intercontinental trade between the Americas, Europe and Asia since the 1600s. Silver from Spanish America reached Europe through the trade of both Spanish licensed merchants and northern European interlopers from whence it continued to flow to China within the organized trade of the European chartered companies, primarily the English and Dutch East India Companies.

At the same time, a second route of silver flows was established within the Spanish colonial trading system. This directly linked Spanish American production areas in Peru and Mexico to Manila in the Philippines through the famous Manila galleon, which sailed regularly from Acapulco to the East. The monetary changes in Spanish America in the wake of Spanish American independence impacted upon this trade. The revolutionary wars in Spanish America and the implosion of the Spanish empire led to a fragmentation of the previously unified monetary regime, which resulted in the production of coins of different quality, fineness and weight. Irigion argues that this change, entirely exogenous to the Chinese market, resulted in falling demand for Spanish American pesos in China.

Thus it qualifies the conventional historiography that stresses the role of opium imports in allegedly reversing the flows of silver bullion to and from China in the early 1800s, even though it does not altogether negate the financial impact of opium smuggling.

Evidence supports the conclusion that monetary conditions exacerbated the negative effect of opium smuggling on Chinese national finance. The outflow of silver from China that began in the early 1800s coincided with the collapse of silver prices in the international market as Western countries adopted the gold standard and demonetized silver.

Silver was leaving China in huge quantities while the price of silver was falling in the international market, making the Chinese trade deficit more expensive in local currency terms. Yet while the price of silver fell in the international market, its price rose in the Chinese domestic market in relation to copper, accelerating and exacerbating import trade inflation in the Chinese economy through domestic price deflation.

This monetary collapse inflicted great financial damage on China’s peasantry. While peasant income was denominated in copper coins, their tax obligation to the imperial court was denominated in silver coins, because the imperial government’s trade deficit was denominated in silver. The scarcity of silver created by the massive outflow pushed the domestic silver price sky-high in terms of copper coins.

A similar monetary disadvantage is now hurting American workers, whose wages are denominated in falling dollars with dwindling purchasing power for critical imports such as oil. The only different is that for 19th century China, the damage was forced on the Chinese peasantry by foreign imperialism, while in the US, the damage on US workers was done by their own government’s monetary and trade policy that allowed US transnational corporation to profit from activities that hurt US workers.

International bimetallism greatly disadvantaged the Chinese silver-based export economy and domestic bimetallism greatly disadvantaged the copper-based finances of the Chinese peasantry. Chinese peasant populists would have a similar incentive to promote a copper-based monetary regime against a silver standard in China as the US populists did with fighting for a silver-based monetary system against the gold standard in the US. But until the Chinese Communist Party gained control of the governmental apparatus of the Chinese nation, there was no official defender of the Chinese peasantry.

China suffered a protracted economic recession all through the 19th and 20th centuries as it came into commercial contact with the West. This two-century-long recession reduced China from being the world’s richest economy to one of the poorest. It was the result of the structural double monetary disadvantage of international bi-metallism of gold and silver superimposed on the silver-based monetary system of the Chinese foreign trade sector. This took place in a world monetary regime that was shifting toward the gold standard, which greatly disadvantaged the Chinese domestic bimetal monetary system of copper and silver.

This double disadvantage fatally wounded the Chinese economy, causing the decline of a highly developed culture with a continuous history of four millennia and halted its further development for more than seven generations over two centuries. The bankrupt economy reduced Qing imperial China to a failed state unable to defend itself from aggressive Western imperialist powers, and even after the nationalist bourgeois revolution of 1911, until the founding of the People’s Republic, when China adopted a socialist path for its economy.

Even after the 1911 bourgeois revolution that established the Republic of China under the Guomindang (Nationalist Party), when China followed a petty bourgeois free-market system, she was unable to shake off Western imperialism to free the nation, once the most prosperous in the world, from semi-colonial economic status.

Beside economic exploitation, the British East India Company, to gain political support from the Church of England for colonialism, also adopted aggressive evangelistic policies on behalf of Christianity. The deep hostility between Catholicism and Protestantism was buried within British imperialism. Many British empire-builders were Scots, who brought with them Scottish Catholicism to the non-white British colonies. The Act of Union of 1707 united the kingdoms of England and Scotland and transferred the seat of Scottish government to London. Henceforth England and Scotland were known as the United Kingdom.

The Company methodically destroyed monasteries and suppressed indigenous culture in Buddhist Tibet, which together with the launch of the Opium Wars to protect immoral opium smuggling, caused deep-rooted anti-Western xenophobia in all Asia that lingers on even today and makes a travesty of belated Western grandstanding on religious freedom, human rights and rule of law for centuries to come.

The pound sterling, created in 1560 by Elizabeth I, as advised by Thomas Gresham, brought order to the monetary chaos of Tudor England that had been caused by the “Great Debasement” of coinage that led to a decade-long debilitating inflation beginning in 1543 when the silver content of a penny dropped by two thirds to become mere fiduciary currency. The exchange rate of British coins collapsed in Antwerp, where English cloth was sold in Europe.

The Bank of England was founded 1694 with the pound sterling as the currency of account. All coins in circulation were then recalled by the Royal Mint for re-mint at a higher standard. Sterling unofficially moved to the gold standard from silver as a result of an overvaluation of gold in England that drew gold from abroad in exchange for a steady outflow of silver, notwithstanding a re-evaluation of gold in 1717 by Isaac Newton as Master of the Royal Mint.

The de facto gold standard continued until its official adoption following the end of the Napoleonic Wars in 1816. The gold standard lasted until Britain, along with several other trading countries, abandoned it only after World War I in 1919. During this period, the pound was generally valued at around US$4.90. Britain tried to restore the gold standard in 1925 without success despite support from the US central bank, which contributed to the 1929 crash on Wall Street that immediately spread to world markets to cause a global depression.

A century earlier, the currencies of all other major Western countries in 1821 were either bimetallic or specie-backed paper money. This meant that Britain operated within a floating exchange rate system for most of the 19th century, although for much of this time, when the silver/gold ratio stayed close to the common mint ratio of 15.5/1, the floats were tightly constrained within a narrow band. The 19th century gold standard was supported by government incentives and government ability to adhere to it due to lower borrowing costs (on average 40 basis points) when loans were denominated in currency backed by gold, especially in London, the center of international finance at the time.

Hence large borrowers, such as the newly independent US, had a strong incentive to also adopt the gold standard. By 1870, the main core countries of the gold standard had been deeply engaged in international trade for decades, led by British promotion of free trade. Consequently their respective domestic price levels were similar and their differences changed only slowly, putting less strain on their balance of payments. Trade deficits were difficult to sustain and trade would slow as deficits mounted until balance of payments were restored.

British promotion of free trade under the gold standard took place in an era when new discoveries of gold in the Americas, Australia and South Africa allowed Britain to run a trade deficit while still funding substantial investment in colonies overseas. This was because gold was steadily devalued on expectation of more gold entering the market, and the resultant defacement was expected to be corrected as the economy expanded faster than the rate of gold production. It was a classic example of the positive effects of the quantity theory of money when money supply expansion did not come from official defacement of currency even as gold was devalued.

Pound Sterling Hegemony Replaced by Dollar Hegemony

Earlier in the 19th century, Britain had to run a trade surplus in order to invest overseas. An increased supply of gold translated into an increase in money supply to boost economic growth globally after the middle of the century. Overseas income in turn acted as counterbalance against temporary adverse trade flows and balance of payments and thereby reduced the need for aggressive moves in interest rates.

Globally, wealth was flowing to England from the rest of the world even as England incurred persistent trade deficits. This is the same principle behind dollar hegemony today that allows wealth to flow into the dollar economy controlled by the US even as the US incurs persistent trade and fiscal deficits.

The key difference is that the dollar today is not protected against devaluation by expansion of the US economy, since the Federal Reserve when under chairman Alan Greenspan had resorted to devaluation of the dollar through increasing the money supply as a device to stimulate serial economic bubbles. The global dollar economy is now treating the US economy was a colony. But the global dollar economy is not controlled by China, but still by the US financial elite. China needs to understand that there is no future in participating in a global trade regime with the dollar as reserve currency. Further, China should resist the US call for it to be a “stake holder” in the global dollar economy if China does not wish to fall victim again to colonialism, albeit a new form of neo-imperialism.

The ever-widening spread of a multilateral trading system also reduced the need to settle trade deficits in gold by early 20th century. In 1910, Britain ran a combined trade deficit of 107 million pounds with three large regions: continental Europe, the US and the great plain nations of Canada, Australia and Argentina. But she partially offset that deficit with a 60-million pound trade surplus with the non-white British colonies of India, British Caribbean and Africa. In turn, these non-white British colonies had trade surpluses of 40 million pounds with continental Europe, the US, and the great plain nations. The British trade surplus with semi-colonial China was not even included in these numbers.

The Chinese economy had been victimized by British sterling hegemony in the 18th and 19th centuries. In similar ways, the Chinese economy has again been victimized in the last three decades by foreign trade under fiat dollar hegemony. Thus Krugman’s attack of alleged Chinese “predatory mercantilist” trade policy is in essence blaming the victim for the crime of neo-imperialism. Had China denominated its export in its own currency, the Chinese economy would be in a much better shape today.

Even then, Kruman inaccurately described China’s currency today as “pegged by official policy at about 6.8 yuan to the dollar.” To appease US demand, China abandoned a fixed yuan-dollar peg in 2005 for a managed float against a basket of currencies within a band and at a crawl rate (BBC). Since then, the Renminbi (RMB) has appreciated by about 20% against the dollar. When the yuan was pegged exclusively to the dollar, it lost value relative to other currencies when the dollar fell, as it did between February 2002 and 2005. Thus not withstanding the US accusing China as a currency manipulator, the US was in reality the main manipulator of its own currency and indirectly of the Chinese currency as well through the Chinese currency’s position as a derivative of the manipulated dollar.

In November, 2008, in response to serious and abrupt adverse impacts on the Chinese export sector from the global financial crisis that originated from the US, China let it currency depreciate modestly by market forces. This development was misinterpreted by many Western economists as a shift in Chinese foreign exchange policy. Since then, the Renminbi (RMB) has traded in a narrow band against the dollar, leading some Western economists to argue that a de facto peg has been restored. Between 2005 and 2008, despite the gradual appreciation in the Renminbi, China has continued to record large current account surpluses with the US, leading some economists to conclude that the trade imbalance between the US and China was not caused primarily by exchange rates.

US-China Confrontation not a Solution

Krugman concludes that the US needs not be afraid to confront China on trade issues. He argues that since “short-term interest rates are close to zero; long-term interest rates are higher, but only because investors expect the zero-rate policy to end some day, China’s bond purchases make little or no difference.” He claims “that for the next couple of years Chinese mercantilism may end up reducing US employment by around 1.4 million jobs.” Thus Krugman, quoting Paul Samuelson, rejects “the claim that protectionism is always a bad thing, in any circumstances. If that’s what you believe, however, you learned Econ 101 from the wrong people – because when unemployment is high and the government can’t restore full employment, the usual rules don’t apply.”

Krugman warns China by concluding that “the very mild protectionism it’s currently complaining about will be the start of something much bigger.”

Paul Samuelson and Joseph Schumpeter

On the issue of protectionism, Krugman is correct but for the wrong reasons. Protectionism works to protect weak national industries and only indirectly protects against loss of jobs. Instead of quoting Samuelson, Krugman might have been more persuasive by quoting Joseph Schumpeter. According to Schumpeter’s theory of creative destruction as expressed in his Capitalism, Socialism and Democracy, jobs are regularly destroyed by innovations and replaced by new, more productive jobs. Schumpeter is frequently quoted by Greenspan who selective leaves out the part that, according to Schumpeter, socialism will eventually replace capitalism (chapters 11 -14).

The US is losing jobs to China because US trade policy encourages cross border wage arbitrage. Even if China did not exit, US transnational companies would ship low-paying job off shore to other low wage countries. But these jobs are mostly unskilled jobs at wages that no US workers would accept. In the long run, a strong innovative industrial base with rising wages is the best guarantee for full employment. Until US trade policy focuses on this economic truth, blaming China may make US workers feel good, but it will not solve job loss problems that are fundamentally created by US trade policy.

The Difference between Protectionism and Economic Nationalism

Krugman needs to understand the difference between economic nationalism and protectionism. The cure for cross border wage arbitrage is through allowing the efficiency market hypothesis to function in the global labor market, to bring wages in low wage economies such as China’s up to wage levels in the advanced economies for equal work. Unfortunately, on this issue which cries out for international cooperation, there is still no progress and are glaringly absent in WTO trade negotiation and bilateral strategic and economic dialogues and summits. What the global economy needs now is global full employment with rising wages through coordinated economy nationalism. It does not need the myopic rationalization of obsolete protectionism, even if it is buttressed by quotations from Samuelson.

Roosevelt Institute Braintruster Henry C.K. Liu is an independent commentator on culture, economics and politics.

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See Also:

• We’re About To Make The Same Mistake We Made In 1937
• 2010 Will Be The Year Of China — And Not In A Good Way
• China’s Mercantilist Policies Are Screwing Us Out Of 1.4 Million U.S. Jobs

A report released this morning by Barclays Capital’s Vishal Shah says solar development in China could significantly grow over the next decade, bolstered by a newly launched national feed-in-tariff system.

The feed-in-tariffs could jump start more than eight gigawatts of solar projects over the next three years, according to the Barclays report– see map below for an overview of ongoing projects.

Shah writes:

China, in our view is where wind was in 2002-2003. Although we do not expect solar capacity to exceed wind anytime soon, we believe the pace of solar development in China could continue to exceed the pace of wind development for a number of reasons: First, the introduction of a national feed-in-tariff for solar could trigger development of more than 8GW of announced solar projects in various provinces over the next 2-3 years. Second, unlike the Chinese wind industry, domestic solar manufacturing capacity has grown very rapidly and could support over 10 GW of annual installations in the next 2-3 years.

Wind generation is expected to generate 30 gigawatts of electricity by the end of 2010, from 12 gigawatts in 2008. By 2020, wind installed capacity is expected to exceed 120 gigawatts.  Hydro, a controversial energy source in China since it also includes the massive and disruptive Three Gorges Dam project, will increase to around 300 gigawatts by 2020 from 170 gigawatts currently.

Both the U.S. and China are in a race to take the lead as a cleantech power. China believes it can become a tech-power by developing green energy technologies.  So does the U.S. and as such the Obama administration is working hard to counter China’s budding dominance.

China’s renewable generation portfolio could account for approximately 50 percent of new generation capacity installed over the next decade, according to the Barclays’ report.  Currently the country is the world’s top producer of green power with over 76 gigawatts of renewable energy capacity installed compared to 40 gigawatts in the U.S.

Renewable energy production in China increased by 51% between 2005 and 2008.

As I was thumbing through the weekend edition of the Financial Times (my favorite newspaper) on a lazy Sunday morning, my eye fell on a little boxed off squib titled Dr Mehmet Oz on the January Detox (scroll to bottom to see the piece).  If I ran across something like this in a local daily newspaper, I wouldn’t think much about it, but in the venerable Financial Times?  Since we all know how much good the wonderful Dr. Oz has done Oprah (as evidenced by the photo to the left – were I she, I certainly wouldn’t be toasting him), I decided to read it to see what he had to recommend on detoxing.  I wasn’t disappointed.  He lives up to his billing.

How does Dr. Oz recommend we detoxify our livers?  Let’s read and see.

I like a simple cleansing fast as an easy, inexpensive means of flushing out toxins and rebooting the system (a juice detox, say, which involves a short-term diet of raw vegetables, fruit juices and water). But it is important to remember that detoxifying the liver, the organ responsible for detoxing our bodies, would take a month of healthy living.

Brilliant!

Let me see if I get this straight.  You detoxify your liver by a fruit-juice fast, right?  Which means throwing back at least three or four glasses of fruit juice a day.  Okay, got it.

Sounds great.  But bit of critical thinking.

What happens to the liver to cause it to need detoxifying?  How about fat accumulation?  A fatty liver is one that needs detoxifying.  Fatty livers are way more common than you might expect.  Studies have shown that about a third of Americans are walking around with fatty livers, a disorder called non-alcoholic fatty liver disorder (NAFLD).  No one really knows what the long-term effects of this problem are going to be, but it is known that fatty accumulation in the liver can lead to an inflamed liver, which can then go on to develop cirrhosis and possibly even liver cancer.  Since this epidemic of NAFLD has arisen fairly recently, it’s unknown how it will play out over the long haul, but I doubt that it will be a good result.

So where does all this fat in the liver come from?  Most researchers think it comes from excess fructose consumption.  The pathways of the metabolism of fructose lead to fatty accumulation in the liver, and giving laboratory animals a lot of fructose gives them fatty livers.  If you couple this information with the fact that fructose consumption has skyrocketed over the last three decades, it makes sense that at least part of the NAFLD we’re seeing comes from too much fructose.

With these facts in mind, let’s take a closer look at Dr. Oz’s recommendation to undertake a juice fast to cleanse or detox the liver.

If you go on a juice fast, how much juice do you drink.  Three or four glasses a day, I would imagine.  And I would also guess that these would be decent sized glasses.  Most people don’t drink an eight ounce glass of anything.  Eight ounces is only a cup, which really isn’t all that much.  Even those little weenie juice boxes that parents put in their kid’s lunches are 8.45 ounces, and most glasses of juice that people drink are larger than that.  A regular-sized soft drink can contains 12 ounces, which is probably much closer to the size of a glass of juice most of us would drink, especially if we were on a juice fast.  Four glasses of juice – a not unreasonable amount to drink in a day if that’s all you’re drinking – would end up being 48 ounces of juice.

I went through the USDA database of foods looking for all the juices I could find that had fructose broken out from the total carbohydrate figure and tabulated them.  Take a look at the chart below which is total carbs and fructose in grams.  And remember that 100 grams equals a half a cup.  So when you see something listed at 111.6 grams of fructose, that means more than a half cup.

It should be clear from this chart that a fruit juice fast provides a whole lot of fructose and a whole lot of carbs.  The fructose is particularly problematic in that it encourages fat accumulation in the liver.  The amounts in 48 ounces of any of these fruit juices would be more than enough to stimulate the synthesis and storage of fat in the liver.

How Dr. Oz thinks this would detox the liver is beyond me.

One other note on his cleansing fast.  It’s not just fruit juices; it includes raw vegetables, too.  I assume Dr. Oz recommends the raw vegetables for all of the flavonoids, carotenoids, lycopenes and other phytonutrients.  I guess he never learned that most – if not all – of these nutrients are fat soluble.  Consuming raw vegetables and fruit juices without some fat along with them means you don’t absorb any of the nutrients.  Dr. Oz must have missed that day at medical school.

So, the actual result of his cleansing detox that is supposed to “flush out toxins [while] rebooting the system” is that more fat accumulates in the liver, insulin goes up thanks to all the carbs and you don’t even absorb the phytonutrients.  Sounds like just a hell of a deal to me.

Let’s spend just another moment looking at yet a different piece of idiocy in this small, small piece of writing.

Says Dr. Oz:

Caffeine throws off all the systems, so drink green tea, which has only a quarter of the caffeine of dark tea or coffee but packs a powerful energy punch.

Oh dear.  Where do we start?  Green tea has almost as much caffeine as coffee, not a quarter of the caffeine.  And, please tell me Dr. Oz, where do we get the “powerful energy punch” from green tea if it’s not from the caffeine?
No sooner had I finished reading the Financial Times Oz recommendations, which, by the way, struck me much more as a prescription from a witch doctor than from a trained physician, than MD pointed out that the same Dr. Oz was on the cover of the Sunday magazine that comes with our local paper.  Yep, USA Weekend features our friend expanding on his recommendations.

I’m not going to go through them all (you can read them here), but one did catch my attention:

Ditch extreme diets. People almost always fail to lose weight because they try diets that are too radical to stick with. For a lifestyle change to succeed, it must be sustainable. So instead of eliminating all foods that fit into a certain category or counting every calorie, try making changes that are less noticeable but no less significant. If you can eliminate just 100 calories from your daily intake, for example, you will lose about a pound per month. How hard is that?

This is a blatant attack on the low-carb diet without saying it in so many words.  And the notion that “if you can eliminate just 100 calories from you daily intake’” you will lose weight over time is the ultimate recommendation of someone who is clueless about the operation of the energy balance equation.

Pitiful.

I’m going to leave you with a poem that I believe is prophetic for Dr. Oz and his nutritionally-unsophisticated compadres.  Sooner or later science will out and these folks will be shown for the idiots they are, and they will be left as part of the detritus of the desert of faulty nutritional thinking.  Too bad they will leave a lot of corpses in their wake.

The poem by Shelley is titled, appropriately enough, Ozymandias

OZYMANDIAS

by Percy Bysshe Shelley

I met a traveller from an antique land
Who said: Two vast and trunkless legs of stone
Stand in the desert. Near them, on the sand,
Half sunk, a shattered visage lies, whose frown
And wrinkled lip, and sneer of cold command
Tell that its sculptor well those passions read
Which yet survive, stamped on these lifeless things,
The hand that mocked them and the heart that fed.
And on the pedestal these words appear:
“My name is Ozymandias, king of kings:
Look on my works, ye Mighty, and despair!”
Nothing beside remains. Round the decay
Of that colossal wreck, boundless and bare
The lone and level sands stretch far away.

*Said by Great and Powerful Oz
in The Wizard of Oz

Have you ever wondered what the authorities use to gather data from your computer? One of the big tools they use is call COFFEE, or Computer Online Forensic Evidence Extractor. It is a tool that runs on a USB stick that the Feds can plug into your laptop to automatically gathers a whole boat load of data that could potentially land you in the slammer. I mean, I am sure you are all just downloading free Open Source applications, and Creative Commons music from Bit Torrent right? Ha!

According to Microsoft’s COFFEE page, Coffee allows you the Feds:

… to run more than 150 commands on a live computer system. It also provides reports in a simple format for later interpretation by experts or as supportive evidence for subsequent investigation and prosecution. And the COFEE framework can be tailored to effectively meet the needs of your particular investigation.

To combat this tool, a group of Hackers put together their own counter-tool called DECAF! I first heard it mentioned on HAK5, and when I Googled it I found an article on Wired saying this about DECAF:

[Decaf] deletes temporary files or processes associated with COFEE, erases all COFEE logs, disables USB drives, and contaminates or spoofs a variety of MAC addresses to muddy forensic tracks.

I fairly certain that using this tool to hinder an investigation is probably illegal. You know, obstruction of justice and all that jazz, but if your privacy is a concern to you, and you don’t want Uncle Sam’s minions digging through your laundry, then perhaps DECAF is right for you!

What is your favorite anti-authority program? Know of other programs like COFFEE and DECAF? Hit us up in the comments!

Filed under: Car Buying, GM

Coming out of bankruptcy with four fewer brands, General Motors wants to help its dealers present a fresh face to the public. So it’s offering dealers a deal of its own: remodel your dealerships and GM will help pay for it. Ah, but just like a clever salesman, GM has a few conditions on its offer. For one, any dealer in the business of selling new cars other than GM models must separate them from The General’s products. Also, while the renovations should take about three years, GM won’t be sending dealers a check for something like five to 10 years. And when the money does come, the amount each dealer receives won’t be based on their receipts for the renovations, but rather sales performance. Suddenly that new shiny showroom courtesy of the Mothership ain’t looking so new and shiny.

While we don’t know exactly what a remodeled GM dealership will look like, Automotive News reports that they will feature renovated entryways, new reception desks and – wait for it – free WiFi! Take that Starbucks.

[Source: Automotive News – sub. req. | Image: Scott Olson/Getty]

Report: GM offering to help dealers remodel, with a few conditions originally appeared on Autoblog on Mon, 04 Jan 2010 14:01:00 EST. Please see our terms for use of feeds.

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The University of Chicago’s Frank Richter, SM’71, PhD’72, has received the 2009 Harry H. Hess Medal for outstanding research on the constitution and evolution of Earth and its sister planets.

“Frank’s mode of research is to identify critical problems, develop a fundamental, first-principles-based understanding, and then to delve deeply into the broader consequences and implications for the earth sciences,” said David Rowley, Professor in Geophysical Sciences, in his nominating citation.

In recent studies, Richter, the Sewell Avery Distinguished Service Professor in Geophysical Sciences, has focused his studies on the isotopic characteristics of rocks and minerals from the continents, oceans and meteorites.

Measurements of isotopes, which are varieties of a common element that differ only in their atomic mass, can be used to reconstruct a variety of Earth’s dynamic geological and oceanographic processes.

“His approach is to identify an earth science-related problem where he can make a significant contribution, work rather single-mindedly until he succeeds to some satisfying degree and then move on once he feels that further efforts would not yield as significant results as what he has already achieved,” Rowley said.

Consequently, Richter’s specialization defies classification. At various times in his career, he has conducted in-depth, influential research in fluid dynamics, geodynamics, geochemistry, experimental petrology and cosmochemistry.

In each of these areas, Richter has combined theoretical and analytical insight with experimental data “to better understand how physics and chemistry affect the evolution of natural systems,” according to Rowley.

On a personal level, Rowley said, “Frank is also a careful listener and reader, whose questions and input can often be transformative of his friends and colleagues.”

Richter became a research associate at the Massachusetts Institute of Technology after completing his UChicago doctoral degree. He returned to the University on a faculty appointment in 1975.

An elected member of the National Academy of Sciences, Richter has received many honors for his work. These include the Arthur L. Day Medal and the George Wollard Award, both from the Geological Society of America, and the Norman L. Bowen Award of the American Geophysical Union.

He also is a fellow of the GSA, the AGU and the American Academy of Arts and Sciences.

Previous recipients of the Hess Medal include Alexandra Navrotsky, PhD’67, the Edward Roessler Chair in Mathematical and Physical Sciences, University of California at Davis, in 2006; Edward Anders, the Horace B. Horton Professor Emeritus in Chemistry, in 1995; the late George W. Wetherill, PhB’48, SB’49, SM’51, PhD’53, of the Carnegie Institution of Washington, in 1991; the late Julian R. Goldsmith, SB’40, PhD’47, the Charles E. Merriam Distinguished Service Professor Emeritus in Geophysical Sciences, in 1987; and Gerald J. Wasserburg, SB’51, SM’52, PhD’54, the John D. MacArthur Professor of Geology and Geophysics Emeritus at the California Institute of Technology, in 1985.

Cool-er’s lineup of readers is getting new models such as the super-small Compact, the Wi-Fi-enabled Connect, and the appropriately named 3G. Based on previous models, it’s quite possible that these will find a place in the hearts of bargain shoppers.

We’ve seen 3G, Wi-Fi capabilities, touchscreens, and the like in plenty of readers on the market. What Cool-er focuses on is putting those features into lighter, thinner, and cheaper gadgets. I suppose that explains why they saw the need to make the Compact and announce that it’s got the smallest footprint of any reader out, even if Sony might disagree with that claim. Either way, the Compact is still among the smaller devices and still sounds rather good given Cool-er’s budget-friendly price tags.

Thes new readers will be shown off at CES, but they’ll be hitting the shelves Spring to mid-2010.

Interead Announces New COOL-ER Ereader Models

LAS VEGAS, Jan. 4 /PRNewswire/ — Interead, makers of the COOL-ER line of ereaders, today announced new models that will be introduced at the 2010 International CES® in Las Vegas.

* At only 6.7″ x 4.6″ x 0.41″ (170 mm x 117 mm x 10 mm), the amazingly affordable and portable COOL-ER Compact has the smallest footprint of any ereader while still maximising the reader experience with a 6″ E Ink® screen. With 2GB onboard memory (expandable via SD card to 6GB total), it easily holds thousands of ebooks.

* COOL-ER Classic, the lightest and most elegant ereader currently available, has quickly become a favourite of readers around the world, and will be offered in exciting new colours.

* Weighing in at only 5.8 ounces (164 grams), COOL-ER Connect adds the convenience of WiFi and ease of a touch screen, ideal for readers on the move.

* Available in mid-2010, COOL-ER 3G adds robust 3G connectivity to the ereader experience to download 1,400+ periodicals and 2 million + books wherever they are.

All COOL-ER ereaders come in numerous vibrant colours, which now include Midnight Blue and Orange Crush, bright new additions to the colour line-up. Working in every country on the planet, COOL-ER ereaders support ebooks in every language and have menus in English, Spanish, Portuguese, German, French, Russian, Japanese and Chinese, and also support multiple zoom levels to create a customized and comfortable reading experience.

COOL-ER Classic is currently available from premier global retailers and www.COOLREADERS.com. COOL-ER Compact and COOL-ER Connect will be available in Spring 2010, and COOL-ER 3G will be available in mid-2010.

Any of the more than 2 million books from COOL-ER’s companion online bookstore, COOLER-EBOOKS.com, can be shared with up to five other readers to let friends and families share the works they love. COOL-ER works with ebooks in all commonly used ebook formats, including EPUB and PDF.

Neil Jones, Interead’s CEO, commented: “As we have seen the ereader market evolve over the last year, it has become clear that the ereader is now a lifestyle device—not just a niche gadget. As such, it’s important that we offer a range of ereaders to accommodate a variety of preferences and reading habits, and this product range does just this.”

[COOL-ER]

In Japan, it’s customary for companies to come out with statements regarding their plans for the new year. It’s like us going crazy with fireworks and getting outrageously drunk after. Drop that last part, that might just

Beyonce is featured on the cover of the January 11, 2010 issue of US Weekly. Click on the preview below to see the scans.

1. A tower in Dubai that opens today has earned the title of world’s tallest building with a height of 2,717 feet (828 meters). That’s more than half a mile high. Actually, it grabbed that title during construction back in July 2007 when it passed Taipei 101, which stands 500 meters tall.

2. Until its official opening today, the building’s exact height was a closely held secret known by only a few people. The building’s architects, Chicago-based Skidmore, Owings, and Merril, speculated last week that someone might try to steal the thunder from the big announcement by measuring the building’s shadow to figure out its height.

3. The opening ceremony included another surprise. The tower, which had been known as the Burj Dubai, was renamed the Burj Khalifa, in honor of Sheik Khalifa bin Zayed Al Nahyan, the president of the neighboring emirate Abu Dhabi. The last-minute switch carries a symbolic weight in light of the billions of dollars oil-rich Abu Dhabi has poured into Dubai in order to cover its debts [The New York Times].

4. The Burj is not only the tallest building in the world, it’s also home to the highest observation deck, swimming pool, elevator, restaurant, and fountain in the world.

5. Speaking of the acrophobia inducing elevator, it travels at speeds roughly 40 miles per hour (65 kilometers per hour) and reaches the observation deck in about 2 minutes.

6. Once at the top, visitors can enjoy temperatures that are nearly 15 degrees cooler than at the building’s base.

7. Dubai is built in the middle of the desert, so to withstand the UAE’s 120-degree blistering summer heat the tower is covered with 24,348 cladding panels.

8. Many skyscrapers are built to bend with the wind—the Burj, which will be exposed to strong desert winds, more than others. According to lead architect George Efstathiou, “the building is tuned to sway slowly so your middle ear doesn’t pick it up,” Efstathiou explained. “They tune it just like a musical instrument so that the harmonics of the building don’t coincide with the harmonics caused by the wind…. We tune it so that on the floors where people are going to be, you don’t feel it that much” [CNN].

9. Before all those floors fill up with people, Burj Khalifa has an empty weight of 500,000 tons.

10. The building won’t be empty much longer, however. So if you want in, you better hurry; 90 percent of the 900 residences (not including the soon-to-open Giorgio Armani-designed hotel) have been sold.

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Image: flickr / joi

There’s a lot of talk this morning about a speech yesterday by Federal Reserve Chairman Ben Bernanke. At the annual meeting of the American Economic Association in Atlanta, he provided some concrete views on what caused the housing bubble. Several articles I’ve read about the speech imply that Bernanke is shoving off blame, since he says the Fed keeping interest rates extremely low shouldn’t be faulted. But what he says did cause the mess should still keep the Fed in the hot seat. Yet, he’s using it to ask for even more responsibility.

First, I’m not trying to agree that the Fed keeping rates so low had nothing to do with the housing bubble. I actually believe that played a role, but certainly shouldn’t take on close to all of the blame. The more major cause according to Bernanke: not enough regulation. After a lengthy argument that rates weren’t the problem, he says:

What policy implications should we draw? I noted earlier that the most important source of lower initial monthly payments, which allowed more people to enter the housing market and bid for properties, was not the general level of short-term interest rates, but the increasing use of more exotic types of mortgages and the associated decline of underwriting standards. That conclusion suggests that the best response to the housing bubble would have been regulatory, not monetary. Stronger regulation and supervision aimed at problems with underwriting practices and lenders’ risk management would have been a more effective and surgical approach to constraining the housing bubble than a general increase in interest rates. Moreover, regulators, supervisors, and the private sector could have more effectively addressed building risk concentrations and inadequate risk-management practices without necessarily having had to make a judgment about the sustainability of house price increases.

My first observation is that this hardly deflects criticism. The Fed doesn’t only wear a rate-setting hat; it’s also a regulator. It could have stepped in and created rules for subprime mortgages, adjustable-rate mortgages, underwriting standards, etc. It didn’t do so in time. So even if its rates setting policies didn’t fail, its regulatory oversight certainly did.

Second, Felix Salmon makes an observation that I agree with regarding a paragraph following the one I quoted where Bernanke goes on:

The lesson I take from this experience is not that financial regulation and supervision are ineffective for controlling emerging risks, but that their execution must be better and smarter. The Federal Reserve is working not only to improve our ability to identify and correct problems in financial institutions, but also to move from an institution-by-institution supervisory approach to one that is attentive to the stability of the financial system as a whole. Toward that end, we are supplementing reviews of individual firms with comparative evaluations across firms and with analyses of the interactions among firms and markets. We have further strengthened our commitment to consumer protection. And we have strongly advocated financial regulatory reforms, such as the creation of a systemic risk council, that will reorient the country’s overall regulatory structure toward a more systemic approach. The crisis has shown us that indicators such as leverage and liquidity must be evaluated from a systemwide perspective as well as at the level of individual firms.

Salmon says that he sees a power grab. Presumably, he thinks Bernanke really means something like, “Gee, look: if we could regulate more, then we could have avoided this whole mess.” Salmon is probably right. Bernanke doesn’t appear to so much be looking for absolution for messing up as he does to try to argue that the Fed should be able to do even more regulation.

I think that’s nuts. The Fed already had sufficient power to regulate mortgage banking, yet it failed to do so. If it’s given even more regulatory authority, such as systemic risk regulation, why do I have any reason to believe that it will do better next time? To me, this amounts to someone dropping a dozen eggs and saying that he will do better if he has to carry two dozen next time instead.

I’ve argued before, as the central bank the Fed has too many a conflicts-of-interest to be trusted to spearhead financial regulation. One of its major priorities is to protect banks. The moment that mission conflicts with sensible regulatory restraint, I worry that the Fed will defer to the banking industry’s stance. You could even imagine back in 2004 that the Fed might have liked the housing boom and worried that full employment could suffer if the mortgage industry had more regulation. Which priority should it put first — regulation or full employment?

While the Fed is talking loudly now about new regulation while we’re in the recessionary trough with 20/20 hindsight, let’s see if it will be as quick to create and enforce new regulations when happy times are here again. I remain highly skeptical.

People who live with irritable bowel syndrome (IBS) are often faced with trial-and-error to find treatments that work for them. One type of treatment that can be successful for some people with IBS is using antidepressant medications. This isn’t to say that IBS is related to depression, but some antidepressant medications have other properties, such as providing pain relief from chronic pain. In the case of IBS, the antidepressants may work because there are chemical transmitters in the brain that are also present in the colon.

When it comes to antidepressants, some people swear by the supplement St. John’s Wort (Hypericum perforatum). Because of the antidepressant properties found by some people, researchers wanted to see if St. John’s Wort would be a reasonable treatment for IBS, as well.

The researchers studied 70 people (86% women) with IBS. They were divided into two groups and randomized to receive St. John’s Wort or a placebo. The medications were taken for three months.

Symptoms of IBS, such as stomach pain, diarrhea, constipation and bloating were observed. When the researchers assessed the incidence of the symptoms in both groups, they found that the people who took the placebos were actually doing better than those who took the St. John’s Wort.

According to the study’s authors:

“The challenge with IBS is that there is no cure, no one treatment tends to be wholly effective and some treatments come with significant side effects,” explains Dr. Saito [M.D., M.P.H., gastroenterologist and lead physician scientist]. “However, well-designed studies of herbal supplements are important so that physicians and patients can make informed decisions about which supplements to recommend or try. Studies of alternative treatments are generally lacking and patients are forced to use a “trial and error” approach to over-the-counter treatments for their IBS.”

~~~

Image: MorgueFile.com

Post from: Blisstree

St. John’s Wort Doesn’t help IBS

Lithium-ion battery maker EnerDel once expected to generate 800 jobs and invest $184 million in an Indiana manufacturing plant – but no more. Although it has not disclosed revised numbers, the company has scaled back its plans for the new facility, according a county official quoted in local media reports this morning.

Reining in the size of the project […]

Brian T Klug has balls, I’ll give him that. Why else would he have bought a Discovery Channel CD-ROM (Windows 98) incorrectly priced on Amazon to the tune of $2,904,980,000 just to see what would happen?

As you can see from the image above, the result was that…well, he spent $3 billon on an ancient CD. However, It wasn’t long before Amazon noticed the record payday and cancelled the order. Despite the fact that the payment was impossible to process, I wouldn’t have been surprised if Klug’s little fiscal adventure backfired in a big way—either with destroyed credit or crippling debt.

The seller behind the CD has a good rating, and it is obvious that this was a typo. What I don’t understand is why a new seller jumped in to sell the CD at a comparably inexpensive $250,000. Looks like Orbit Inc is trying to pull a major scam. [reddit via Consumerist]