Jesse Veverka's  Instablog

 ‘Propaganda’ is a dirty word. It is associated with authoritarian regimes with no respect for human rights and is relied on by such governments to influence popular opinion in their favor. In the West, the so-called ‘free-press’ has long relied on more innocuous—but equally dangerous—forms of self-censorship to distort or ‘spin’ the truth. As China continues to develop economically, a new paradigm is starting to emerge: not that of bumbling old-guard communists with kitschy hand-painted posters with smiling children declaring ethnic unity, but rather a sophisticated understanding of capitalism, in which popular opinion is influenced using China’s increasingly long economic levers.  We are beginning to see that the ‘spin’ of Western media itself is gently being pulled into the orbit of Beijing’s economic machine. We have been exploring this topic in our feature-length film “China: The Rebirth of an Empire.”

When the Chinese hosted the 2008 Olympics in Beijing, officials promised an improvement in human rights and freedom of information. Instead, when protests erupted in Tibet in March of 2008, they crushed them with military force and sealed the entire region off from foreign journalists and travelers. This was a textbook authoritarian move; it was also a violation of the agreement Beijing had made with the International Olympic Committee (IOC) in order to host the games, and the Olympic Charter itself. But, with billions of dollars tied up in the games, the IOC and partners like Coca-Cola, GE and McDonald’s decided to turn a blind eye while genocide ensued. However, once the opening ceremony began and the awesome display of fireworks and Olympic magic took hold, people associated China with prosperity and success.  The Chinese leadership had achieved its objective: it influenced Western hearts and minds not through direct propaganda, but rather by aligning the economic interests of western organizations with the Chinese national agenda.

Chinese authorities have been successful at influencing policy makers in the West in other ways as well. Take for example Xinjiang, a vast province in Western China that is the homeland of the Uyghur people, an ethnic and religious minority, who, like the Tibetans, contest Chinese rule of their land. After the events of Sept. 11, 2001, the Chinese government aggressively lobbied the United States to list an obscure group called the East Turkestan Islamic Movement (ETIM) as a terrorist organization. The ETIM was supposedly comprised of ethnic Uyghurs, and just like that, the Uyghurs became associated with terrorism throughout the West.

It’s happening again, this time with the coverage of the recent violence in Xinjiang. The Western press has widely described this violence as “racial” and has shown many pictures of ethnic Han Chinese injured by crowds of enraged Uyghurs. The Chinese state-run news agency, Xinhua, reported on July 8, 2009, “The separatist World Uyghur Congress, led by Rebiya Kadeer, was behind the deadly July 5 Urumqi riot.”

The image of “terrorist” has been difficult for the Uyghurs to shed. We conducted a phone interview with Alim Seytoff, the Vice-President of the Uyghur American Association (founded by Ms. Kadeer) in Washington, D.C. “Unlike Tibetans, Uyghurs are Muslims. After 9/11, if you are Muslim and you have a problem, usually everybody is suspicious of your struggle,” Mr. Seytoff said.

According to Seytoff, the West has recently become less vocal in its criticism of Chinese human rights abuses due to the pressures of the global economic downturn. “Everybody needs to do business with China, and many countries are borrowing money from China, so of course they don't want to offend China by taking a strong stand on human rights issues,” Seytoff said. 

Our own country, the United States, has borrowed upwards of $1 trillion (that’s 1000 billion dollars) from China in recent years and we import about 2% of our GDP from China.  How independent is our news media when we need to rely on the Chinese to support our government and prop-up our living standard?

Positions: Gold and Japanese Yen

Yesterday various governments including China, Japan and Britain asked the WHO to re-examine the criteria by which it deems an infectious disease outbreak a “pandemic.” Specifically, the WHO was urged to include the lethality or severity of the disease, not just its prevalence, in making judgments about how dangerous it was. Interestingly the United States was ambivalent on the issue although it has the greatest number of cases of Swine Flu.  Perhaps this is because unlike other countries, there are national interests in the US that would serve to benefit from a full-blown pandemic.

Here in Japan, you might be forgiven for thinking there was an outbreak of that mutagen that turned the world into zombies in “Day of the Dead.” Companies are giving employees detailed contingency plans in case of the worst and employees are being banned from foreign travel and in some cases asked to stay home from work if they have been recently abroad. Academic conferences are being cancelled or held only on the condition that attendees submit to daily temperature readings and health questionnaires or wear surgical masks even when speaking.  Surgical masks are in short supply. Field trips, sports and group activities are being cancelled. Hyogo prefecture has closed all public schools.

The problem is that the numbers just aren’t there to justify this kind of activity.  In the two months since Swine Flu cases because apparent in Mexico there have been less than 10,000 cases confirmed worldwide. That is about 1 in 800,000 people.  Of course these are confirmed cases and there are undoubtedly many more unconfirmed or undetected cases out there and the CDC admits the disease is “virtually everywhere” in the US.  However, taking the US as an example there have only been six deaths in that country. A little less than 15,000 people die from AIDS each year in the US. Seasonal influenza kills about 36,000.

More »

I find it difficult to believe that despite the utter corruption that has become increasingly apparent as a result of this economic crisis inherent in the banking and Federal Reserve systems and the contempt of these institutions for the long-term value of the US dollar, that there still seem to be many supporters of fiat-based monetary regimes. Perhaps even more difficult to believe is the vitriol with which some proponents of this system criticize those who choose to invest in gold, let alone advocate a return to the gold standard.   And yet, the gold bugs have it right.  They have always had it right. Why, because throughout history gold has always maintained fundamental value.  

The anti-gold crowd will say: “wait a minute, gold is just a bunch of shiny metal, with no intrinsic value. If you were stuck on a deserted island with a pile of gold it would be worthless.”  This example, in the extreme sense is true. In such a case gold would be worthless, but so would paper fiat money, promissory notes, stocks, bonds, credit default swaps (these seem pretty much worthless anywhere these days) or more or less any other store of value except commodities that are fundamentally necessary to human existence such as food, water, clothing and shelter.  (Actually Federal Reserve notes might be useful for cooking fires.)   The point is “value” as a concept derives from supply and demand, which itself derives from human want and need and therefore human existence and competition within human society itself. (To some extent this phenomenon also exists for other forms of life.)  Without life, value does not exist.  And likewise without human society currency or mediums of exchange have no value.  Therefore in some existential sense we could argue that nothing has fundamental value.  But similar to the way mathematicians will tell you there are different types of infinity, there are different types of worthlessness. And paper money is far more worthless than gold could ever be.

Gold, throughout history, across cultures, and during the rise and fall of various nations and empires has always maintained a fundamental value.  To be sure, that value has fluctuated, in terms of how many real goods (or fake dollars) it could buy, but humans have always recognized that this shiny, yellow metal was something rare and therefore something special. I could take an ounce of gold today, and go 500 or 1000 years in the past or 1000 years in the future and assuming I could find humans, I am confident I could get something for my gold.  Collector’s value aside, how many of you are willing to bet you could do so with the dollar? (Zimbabwe or American.) The point is this: fiat money derives its power from governments and governments fail.  Gold on the other hand derives its value from some fundamental aspect of human psychology (it turns out parrots seem to like shiny things too).    So as long as there are humans (or parrots) gold will have value.  In a sense gold is the monetary equivalent of  “I think therefore I am.”  “We think therefore gold is valuable.”  The same cannot be said for the kindling the treasury prints up.

More »

I have been following with great interest Tyler Durden’s articles on the various cheap tricks and accounting mumbo jumbo that AIG (NYSE: AIG and Goldman Sachs (NYSE: GS) have pulled off in recent weeks in order to report profits while simultaneously being recipients of the government dole. Tyler asks the question “has the whole world gone crazy” to which I am tempted to reply “no, just American economic theory.”

More »