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Daily Archives: May 15, 2012

A debate on whether now is best time to own your first house

A nice debate.

Eric Lascelles of RBC Global Asset Management argues now is the best time to buy your first house, because interest rate is at historical low, house price has declined 34% from the 2006 peak, and owning a house has become relatively more attractive to renting in recent years.

Gary Shilling is on the other side.  He predicts further fall of house price by as much as 20%, due to excessive inventory. If taking into account of the hidden inventory (people chose to hold up because the current offer is too low), and future foreclosure, he argues, the situation is even worse.  He also cited Bob Shiller's research that showed in the past, when housing bubble burst, it tended to overshoot on the downside.  We haven't seen that yet.

My personal view is that it's a good time to buy your first house if you really love the location, and you have no plan to move to another place, say, in the next 5 years.  I would still stay away from using house as an investment.

Link to the WSJ article.

gender wage gap or hour gap?

Kay Hymowitz, fellow at Manhattan Institute, argues on Wall Street Journal that much of gender wage gap can be explained by the difference of hours worked by men and women.  In other words, men earn more than women because they work longer hours.  This is especially true when a child is born – most women, even the most educated, choose to stay home or work as part-time.

Most people have heard that full-time working American women earn only 77 cents for every dollar earned by men. Yet these numbers don’t take into account the actual number of hours worked. And it turns out that women work fewer hours than men.

The Labor Department defines full-time as 35 hours a week or more, and the “or more” is far more likely to refer to male workers than to female ones. According to the department, almost 55% of workers logging more than 35 hours a week are men. In 2007, 25% of men working full-time jobs had workweeks of 41 or more hours, compared with 14% of female full-time workers. In other words, the famous gender-wage gap is to a considerable degree a gender-hours gap.

The main reason that women spend less time at work than men—and that women are unlikely to be the richer sex—is obvious: children. Today, childless 20-something women do earn more than their male peers. But most are likely to cut back their hours after they have kids, giving men the hours, and income, advantage.

One study by the American Association for University Women looked at women who graduated from college in 1992-93 and found that 23% of those who had become mothers were out of the workforce in 2003; another 17% were working part-time. Fewer than 2% of fathers fell into those categories. Another study, of M.B.A. graduates from Chicago’s Booth School, discovered that only half of women with children were working full-time 10 years after graduation, compared with 95% of men.

Women, in fact, make up two-thirds of America’s part-time workforce. A just-released report from the New York Federal Reserve has even found that “opting-out” by midcareer college-educated wives, especially those with wealthy husbands, has been increasing over the past 20 years.


Jamie Dimon interview on “Meet The Press”

China got a “deficit”

These days, the word "surplus" is often associated with China.  China runs a huge surplus on its international trade.  As a result, it also holds the world's largest foreign exchange reserves, at staggering  $3.3 trillion (as of April 2012).  With its fast growing economy, everything seems to run in China's favor.  Not completely.   As Joseph Nye Jr. explains below, China runs a soft power deficit.

China is spending billions of dollars to increase its soft power. Its aid programs to Africa and Latin America are not limited by the institutional or human rights concerns that constrain Western aid. The Chinese style emphasizes high-profile gestures, such as building stadiums. Meanwhile, the elaborately staged 2008 Beijing Olympics enhanced China's reputation abroad, and the 2010 Shanghai Expo attracted more than 70 million visitors.

China has also created several hundred Confucius Institutes around the world to teach its language and culture. The enrollment of foreign students in China increased to 240,000 last year from just 36,000 a decade ago, and China Radio International now broadcasts in English around the clock. In 2009-10, Beijing invested $8.9 billion in external publicity work, including 24-hour cable news channels.

But for all its efforts, China has had a limited return on its investment. A recent BBC poll shows that opinions of China's influence are positive in much of Africa and Latin America, but predominantly negative in the United States, everywhere in Europe, as well as in India, Japan and South Korea.

Great powers try to use culture and narrative to create soft power that promotes their national interests, but it's not an easy sell when the message is inconsistent with their domestic realities. As I told the university students, in an Information Age in which credibility is the scarcest resource, the best propaganda is not propaganda.

The 2008 Olympics was a success abroad, but shortly afterward China's domestic crackdown on human rights activists undercut its soft-power gains. The Shanghai Expo was also a great success, but it was followed by the jailing of Nobel Peace Laureate Liu Xiaobo. His empty chair at the Oslo ceremony was a powerful symbol. And for all the efforts to turn Xinhua and China Central Television into competitors for CNN and the BBC, there is little international audience for brittle propaganda.

Pang Zhongying, a former Chinese diplomat who teaches at Renmin University, says this reflects "a poverty of thought" in China today. When Zhang Yimou, the acclaimed director, was asked why his films were always set in the past, he replied that films about contemporary China would be "neutered by the censors."

I read the students a recent statement by Ai Weiwei, the acclaimed Chinese artist who's suffered from state harassment. He warned that censorship is undermining creativity. "It's putting this nation behind in the world's competition in the coming decades. You can't create generations just to labor at [electronics manufacturer] Foxconn. Everyone wants an iPhone but it would be impossible to design an iPhone in China because it's not a product; it's an understanding of human nature."