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Reply #8 greendragon's post
Thank you Greenddragon. Not only for what you wrote, but also for your boldness.|
I feel that you feel the subject.:) I agree with you.
I just put an image , that an exchange rate in countries ,where full free money flow and market value of their money is seriously limited, deforms the PPP from 1 up. To artificially boost the export.
You see , I wrote about RMB and China in my first post for few reasons. If I wrote about polish zloty or, or ukrainian hrywna it would definitelly reduce chances for any replies to zero. Who gives a flight about such countries. Plus - this is Chinese Economy section, not other's economy.
Not longer ago than yesterday I read again in this forum ,the PPP factor being used to adjust the image of some statistical data, where raw figures could be misguiding. I always agree with this. An example: Person A writes that the total amount of money directed to medical care in China is XYZ. THen he divides it by 1.3 bilion and comes out with the medical care per head. In usd. Such figure looks terribly low , when read by Americans for example. Then a person B adjusts this and says " you cannot look at the figure in dollars , you need to realize , that for this money they can buy 4 times more medicines and and other stuff. This XYZ you need to quadruplate to get a real image".
I agree with such ammendments, for the PPP will sharpen the image closer to reality. It doesn't mean that PPP is a magic factor explaining everything 100%. Because , if part of the money is used to buy FOREIGN medicines and FOREIGN apparatuses/medical equipment , then PPP should not apply to this part of costs. Usually person B will not devagate on such details.:)
Another example. Discussion is going on about Chinese spending on military. Total figure spent is FGH( in USD, or RMB with 8:1 calculation gear). Person B will say "look how much nothing it is comparing with the USA! ".
It somehow happens that in this moment Person B miraculously "forgets" about PPP. On the other side, person A "recalls" this PPP=4 factor and says " In the real meaning it will be 4 times more than in usd, we need to use PPP to get a good image on the speed of reinforcing the army".
You cannot desagree with this , once we accepted the PPP in other branches, can you. Of course Person A will also not penetrate the details of purchasing costs of arcrafts , ships, radars from foreign countries ( that is , when PPP will not work) for about same reason (only 180 degree U turned) ,as person B did not make it in the medicine zone.
I know that there are quite a few people here, who have a good grip on the skills of joggling economical data and connecting feet with bonds, (no I am not talking about bonding feet), real estates with inflation with deflation with balances with hedges with commodities and with what not.
And there is silence about PPP and what it does.
I have a feeling , that Fish might have been somehow right in one point - freedom of speech problem. Not necessary meaning any administrative nets/traps leading to jails. I am thinking about something else.
Nowadays we see the import/export tensions between China and Europe and China and USA. Two biggest markets are happy with Chinese products for their better value/price ratio , but the producers there and the laid of fpeople are not necessary that happy. Nobody with any mental fitness will dictate China how to set the RoE, but such thingies like import tax and quotas are in the hands of those countries , not China. It is a hypocrisy to agree with full and sole right to make decision here and attack the right to make a sole decision there. Isn't it? It is understood that any decision, be it in China or in other countries will have it's impact both good and bad, whatever the decision would be. There is no doubt , that Chinese gvmnt is primarly responsible for the good of China and Chinese economy. At least I do not have such doubt.
Does anybody think that other governments are not responsible for the good of their countries?
This is why part of the people ,who know the subject do not want to post their thoughts since they would only have two options:
1.lie or twist
2.be seen as "hanjian".
However, however, I can not exclude the third opition, that as a no-no in economics I mixed everything and somebody will show me that it is not like I think.
[ Last edited by doberman at 2006-4-3 05:22 PM ]