Events related to the Crash

• [Red] China has a serious resource diversion and disemployment problem: they have initiated a suppression campaign against Falun Gong, a major school of Tai Chi that used to be supported by the government. This has the potential to automatically unemploy almost 10% of Red China's population, temporarily. It also is a diversion of military resources -- at a time when they are needed to intimidate/invade Taiwan in retaliation for suggesting (paraphrase) "We'd like to discuss reunification, but that's impossible without junking the 'one China' policy."
• This also has implications on a spiritual level: Thinking of the spiritual realities behind the Communist government and the Tai Chi variant targeted for suppression -- which is native to China! -- things could backfire very impressively.
• "A house divided against itself cannot stand."!
• Marathir got into a similar bind when he deployed internal(?) security troops against mosques [Islam is the dominant religion in Malaysia]. The resulting spiritual Islamic backlash seriously destabilized his power base, and endangered his (plausible, not definite) frame attempt of Anwar. However, Marathir had the sense (or luck) to stop antagonizing Islam before he lost the court case he was railroading to win.
• I will be surprised if Red China breaks off its suppression of Falun Gong.

• U.S. wage inflation was measured at 0.8% for June 1999, about double the consensus forecast of 0.4%. This increases the chances that Alan Greenspan will raise key U.S. interest rates at the Aug. 24, 1999 U.S. Fed meeting.
• The U.S. macroeconomy statistics are already skewed by an unusually high natural disaster rate (hard goods are skewed upwards: reconstruction counts towards U.S. GDP, but destruction is invisible! This may be a serious flaw in the current economic paradigm). In other words, the so-called U.S. "economic expansion" has a significant portion driven by rebuilding from natural disasters, which have reached record or near-record insured levels in the past few quarters.
• History suggests that in the absence of clear historical guidance, the U.S. Fed has a tendency to overcorrect. In particular (I don't have time to write up a decent exposition), the U.S. Fed's overcorrections were instrumental in causing the Great Depression of the 1930's.

July 27, 1999 [CNN Custom]

• Zimbabwe is seriously considering whether it is in a position to duplicate the Malaysian Firewall.

• The Japan Automobile Manufacturer's Association [JAMA] reported that half-year sales [January 1999 to June 1999] of Japanese automobiles and trucks fell to 4.93 million. This is the lowest level in twenty years; in 1979, this was 4.63 million vehicles. [This implies that from 1979 to 1980, the half-year production rate grew at least 6.4%.]
• In order to preserve current job levels, JAMA expects to need the production of at least 10 million vehicles for 1999. Thus, JAMA expects to need at least 5.07 million vehicles to be produced from July 1999 through December 1999. In percentage terms, JAMA wants production in the last half of 1999 to grow by at least 2.8% compared to the first half of 1999.
• JAMA mentioned that to meet their production target, July-December 1999 would have to be at least 2%-3% higher than July-December 1998. This means that July-December 1998 had between 4.92 million and 4.97 million vehicles produced. The percentage fall from July-December 1998 to January-June 1999 was thus no more than 0.9%.
• Naively, the growth target looks possible, especially with government assistance.
• Mitsubishi Motors Corp. President Katsuhiko Kawasoe was cited as stating that a ¥/U.S.$ exchange rate of ¥110/U.S.$1 would endanger exports of Japanese vehicles. However, he viewed the domestic market as a more serious problem than the overseas market.

• The U.S. states Florida, Georgia, Alabama, and (part of) Louisiana [those supplied by the Fed Reserve bank at Atlanta, Georgia] are in danger of experiencing a penny shortage: when banks do not have enough pennies to meet the requests retailers make for them. Pennsylvania has already had one this spring [S1999].
• Classically, this is a sign of economic boom: many people (in the U.S.) hoard pennies in good times, and spend them in bad times.
• However, there is another complication: hoarding pennies (and small change, generally) is a Year 2000 MetaBug [Y2K] preparation measure. I don't want to cover this, because I believe it is too easy to misdirect attention away from the real problems. However, I should mention that the existence of U.S. martial law plans is not a conspiracy theorist fantasy! Canada's martial law plans for Y2K have been openly documented in mass media clipped by CNN Custom.
• The next obvious critical date is Sept. 9, 1999: COBOL interprets this date as End-Of-File, creating the possibility of automatically-truncated databases. This is of particular concern for financial institutions and academic institutions.
• As financial institutions go: United States, United Kingdom, and Australia should be virtually immune to direct effects, compared with the rest of the nations on Earth. In seriously unprepared nations [INCLUDING JAPAN AND INDIA??], the worst-case scenario is the instant annihilation of all electronic accounts at select financial institutions. These select financial institutions will, by definition, be certain this will not happen to them....
• If you have a college record you want to keep track of, there is one step you can take [and I have taken, for my K-State records] to prepare for the Sept. 9, 1999 variant of Y2K: get a current unofficial transcript. [It is normally impossible for someone to get an official transcript of their records for themselves: these must be mailed directly to the business or academic institution needing them.] Printouts from an online database are acceptable -- but you need the original printouts for credibility. If you have current summer classes, get those grades after they're completed. Get the earlier grades As Soon As Possible.
• It's a good idea, when explaining your academic qualifications for a job, to have an unofficial transcript on hand anyway.
• If the practically inconceivable happens, and your institution's academic records are vaporized by Y2K without a hardcopy backup [i.e., the institution not only was hit by Y2K, they didn't have a serious backup system anyway....] -- an unofficial transcript is more credible than your unaided memory.
• When polled, most people in the U.S. say they are taking explicit actions to prepare for Y2K -- but most people also say they are taking no special actions to prepare for Y2K. This indicates a significant percentage (~30%?) believe that explicit actions to prepare for Y2K are normal, or can be classified as measure to prepare for other things.

• Ecuador's President Jamil Mahuad lifted a state of emergency today. He gave in to strikers' demands on July 16, 1999, by rescinding a gasoline price increase of 13% and agreeing to lock gasoline prices until June 2000. On July 17, 1999, an agreement was reached with Indian groups protesting austerity measures. Two former presidents (one who is currently Mayor of Guayaquil) are planning a protest for July 20, 1999 to try to ensure the continuation of austerity measures -- which the unions are opposing.
• Malaysia has announced a tightening of capitalization rules for insurance companies. Malaysia wishes to reduce the number of insurance companies operating in it from 60 to between 10 and 15 (inclusive?). This is planned in two stages. By Dec. 31, 1999, the capital requirement will be raised from 35 million ringgit to 40 million ringgit; then, by Dec. 31, 2000, the capital requirement will be raised again to 50 million ringgit.

• This is the fourteenth day of Russia's defense of the ruble at ~24.35 U.S. $/ruble. From July 2 to July 9, 1999, the Russian Central Bank's reserves fell from $12.1 billion to $11.8 billion.

• [Red] China has indicated it is now seriously considering a military conquest of Taiwan. Other considerations aside [Taiwan has a fairly high representation of manufacturers of various Intel-system parts], recall that armed conflict outside of a nation's borders is a fairly reliable way to end economic recessions, depressions, etc. China may be looking for more effective methods than public spending to boost GDP growth. This has caused a spike in U.S. Treasury rates.
• Nicaragua's diplomatic response may be intriguing: Nicaragua has explicitly informed China that its 'One China' policy has to be junked before Nicaragua will even consider diplomatic relations with China.
• Six out of seven of the Bank of Japan's most recent interventions with the U.S. dollar have been to weaken the yen against the U.S. dollar. The Bank of Japan has also been engaged in a consistent series of similar interventions against the Euro.
• Apparently, Japan's continued near-zero interest rate policy is creating a significant yen-strengthening effect [as predicted from theoretical grounds in my page Currency Markets]. What I had not expected was for this effect to be cumulative over time, which is a plausible interpretation of the Bank of Japan's interventions.
• Also [another effect which is highly controversial, but seems to be empirically correct], the zero-interest rate policy is effectively a prediction that the Japanese deflation rate "should" be 2-3% to prevent economic implosion. (!?!?!) Japan may have no options available for economic growth, and probably should be focusing on macroeconomic damage control.
• By analogy with the Kosovo crisis and the Euro, an actual military operation by China on Taiwan should seriously weaken the yen.

• The walkout at Oakland by the International Longshoremen's and Waterhousemen's Union [ILWU] ended today. The work slowdown at Los Angles/Long Beach continued. The Pacific Maritime Association thinks that the ILWU has agreed to resume negotiations tomorrow [July 9, 1999].

• Contract talks between the dockworkers [International Longshoremen's and Waterhousemen's Union, i.e. ILWU] and port companies [Pacific Maritime Association, i.e. PMA] broke down over the weekend. The contract expired on July 1, 1999; the ILWU answering machine has a message dated July 2, 1999 stating that no negotiations are occurring and not to take action until they hear from the negotiating committee. This answering machine message directly contradicts a claim that negotiations broke down on July 3, 1999. On July 7, 1999, the dockworkers staged a walkout at the Port of Oakland, and staged a work slowdown at the Los Angeles/Long Beach complex [the largest in the U.S.A.]. This is a direct attack on both imports and exports from Japan, South Korea, etc. to the U.S.A.:
• 84% of Asia's exports to the U.S., and 79% of Asia's imports from the U.S., normally go through the U.S. West Coast [the states of California, Oregon, and Washington].
• Summer is the peak season for shipping on the West Coast, as U.S. retailers and manufacturers try to build up inventories in preparation for the winter holidays [Thanksgiving, Christmas, and Hanukkah].
• PMA is overtly making the following priorities in the negotiations
• "dependable operations" [i.e., no work actions like the above]
• new technology to speed up operations and turnaround. ILWU is politically required to oppose this because it reduces the number of workers required.
• ILWU is overtly making the following priorities in the negotiations
• Labor cost: the ILWU wants serious wage increases.
• The PMA stated the last contract had the following average annual wages for various positions: Longshoreman $99,016, Longshore clerk $117,617, Foreman $156,251
• As such, the PMA believes that the ILWU workers already have the highest wages in the world for their jobs. These wage levels are definitely higher than many doctors' annual incomes -- in the Midwest U.S.A. However, the PMA is conveniently ignoring the cost of living in California.
• The ILWU has demanded a 32% increase in pensions for future retirees, and a 40% increase in pensions for previous retirees. The PMA had no problem meeting the 32% increase for future retirees, but refuses to go above 15% for previous retirees, and furthermore calls this a non-mandatory subject for negotiations.
• ILWU has about 42,000 members, spread out between Washington, Oregon, California, and Hawaii.

• Ecuador's President Jamil Mahuad, in an effort to control a budget deficit threatening to bankrupt Ecuador, had announced a price hike in gasoline from about $1.06/gallon to about $1.20/gallon for July 1999. In response, striking taxi drivers formed blockades in Quito and Guayaquil, snarling traffic. Ecuador is now under a state of emergency in order to allow the use of force to break up these blockades. At least 43 striking drivers have been arrested.
• Ecuador's largest labor federation, the United Workers Front, is actively supporting the taxi driver strike. The United Workers Front has warned that if the Ecuadorian government does not back down on the gas price hike, that wider social protests will be backed by the United Workers Front.

• Brazil's trade surplus (or lack thereof) defied predictions. Imports rose 9.4% to $4.46 billion, while exports fell 1% to $4.31 billion. This resulted in a $144 million trade deficit, in contrast to the trade surplus of $312 million for May 1999. This is 66% less than the trade deficit for the first half of 1998. However, there is a political year-end trade surplus goal of 4 billion.
• Aggravating factors: the price of basic and semi-manufactured goods fell by "nearly 20% on average", while the price of manufactured goods rose by "nearly 8% on average". Brazil exports basic and semi-manufactured goods, and imports manufactured goods.

• The Shukan Post [a tabloid: "includes a full lineup of nudity, scandal, gossip, politics and sports,"] managed to land a story in which a thoroughly anonymous EPA [Economic Planning Agency] official was quoted as saying that the GDP numbers [June 10, 1999] were a "fake gift" for Obuchi to take to the summit. Taichi Sakaiya has openly denied not only the claim, but that anyone in either the EPA or the Ministry of Finance was in a position to say such things.
• However, [June 10, 1999], there was no support in the low-level numbers for the announced results. That is, the low-level numbers themselves testify to the "fake gift" nature of the results.
• Also, [April 21, 1999], Taichi (I'm assuming transliteration problems) was openly cited as informing Ichizo Ohara [LDP party elder] that he had serious doubts that a 0.5% growth rate was possible. Judging from other news on the same day, this was politically intolerable.
• Combining the three above comments, it is obvious that the Obuchi government has both motive and means to coerce the EPA into forging the results. Unfortunately, Taichi's open denial has no information content; it is completely useless in inferring either whether the GDP numbers were forged, or whether he knew about the alterations [it is quite possible for the numbers to be fake, but for Taichi not to know this.].
• CONJECTURE: I think an optimistic scenario would be that the GDP numbers are a "fake gift", but that this was carefully concealed from Taichi.