China Meets Joseph Conrad, Going Up, and Here, Worry about This

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Last Week’s Survey Results: Nearly two-thirds of you think Aretha will be remembered with only 10 percent believing McCain will and 20 percent think neither will be remembered 200 years from now. Tough times for McCain fans.

Without further ado, here’s what you need to know.

China Meets Joseph Conrad

China has moved upriver in the world of international investments and aid. It famously is a big player in Africa, building infrastructure and providing other sorts of aid. In fact, China’s level of aid and loans is as large as the United States. But the composition is very different as you see in the chart below from AIDDATA (a project of William and Mary—William gets all the credit but Mary does all the work). While most of U.S. expenditures in Africa take the form of aid, much of China’s is in the form of loans. The bulk of China’s efforts are in the energy sector, followed by transportation. Some  criticize China for a mercenary approach. On the other hand, just how effective has U.S. aid been over the years?* But, there are reasons to be concerned about China’s commercial activities in Africa. Case in point, a big investor in a South African newspaper is China International Television Corporation (CITVC). After the investment, a columnist wrote an article for the newspaper about the Chinese government holding more than one million Muslim Uighur’s in internment camps. He no longer has a column,  or as Joseph Conrad wrote, “It was written I should be loyal to the nightmare of my choice.”

*This is an honest question. Some of the aid was certainly effective, some not. Perhaps self-interested loans may have a better overall outcome?

Going Up

We first read about the concept of a space elevator over a decade ago. It excited our imagination but since then very little progress has been made. However, Japan is now trying to change that. Wait, what the hell is a space elevator you may ask? Well, it is a means of transporting goods back and forth via a cable tethered to the earth and reaching all the way into space. The catch is for this to work the cable needs to be very strong. Unfortunately,  progress on developing new materials for such a cable have been very slow. But according to Electronics Weekly (the world’s 352^nd most exciting periodical), “Shizuoka University and contractor Obayashi aim to launch two small (10 sq cm) satellites connected by a 10m steel cable from the International Space Station.” They plan to use carbon nanotube for the cable’s material. Therein may be the catch—can they create such a material that is strong enough for these purposes? If so, the cable would transport vehicles capable of holding 30 people (though more likely they would be transporting materials). The cable would start from a platform on the sea and reach up 36,000 kilometers above earth. One assumes like more pedestrian elevators here on earth, the “open door” button won’t actually work.

Here, Worry About This

Because people don’t have enough anxiety as it is, Nomura Holdings has created a Damocles Index that assesses the risk of currency exchange crisis for 30 emerging markets. Their index finds that of the 30 emerging markets, seven are at risk of exchange rate crises, meaning there is doubt they have enough foreign reserves to maintain their exchange rates (those with sharp memories may remember the Asian financial crisis of 1997 when the Thai baht could no longer be pegged to the U.S. dollar). The Index gauges factors such as foreign exchange reserves, debt levels, interest rates and import cover. Any market with a score over 100 is at risk. Sri Lanka tops the riskiest markets with a score of 175 followed by South Africa, Argentina, Pakistan, Egypt, Turkey and Ukraine. Perhaps surprisingly of the 30 emerging markets, Brazil has the least risk. Of course, that means that’s where the crisis will start.