Flexing Muscle or Crazy Talk?

It is the second time this week that off hand remarks made by Chinese officials have affected stock markets. The first was made by Premier Wen Jiabao on November 5 reflecting that the "through train" of capital from investors in mainland China is not coming to Hong Kong any time soon despite the fact it was supposed to be a done deal back a couple of months ago. Of course he did not directly say that. The guy was in Uzbekistan and just mentioned that more scientific factors need to be determined before opening the dam.

The second remark drove the Dow to plummet 360 points. Excerpt from The Wall Street Journal:

"A weakening dollar has played a significant role in driving commodity prices higher, and the greenback sagged across the board after a Chinese government official indicated Beijing may seek to diversify its foreign-currency reserves. Cheng Siwei, the vice chairman of the Standing Committee of the National People's Congress, was quoted by wire services as saying China should shift more of its $1.43 trillion in reserves into "stronger currencies" to offset "weak" currencies like the dollar."

Well there you have it. A vice chairman of the Standing Committee of the National People's Congress talking about a huge financial move China that can affect the world economy. Who is this guy anyway? Sure the Standing Committee is of some importance in China, but then it is a part of the NPC, the world's biggest rubberstamp of a congress.

According to Who's Who in China's Leadership Cheng Siwei graduated from UCLA with an MBA in 1984. But it looks like from his bio he is an engineer without any background in capital markets and managing a large economy. Is he just a peon in the bureaucracy who got picked to make a little blurb to let the Federal Reserve know that the weakening dollar is not sitting well with party bosses? Or is he just making crazy talk without anyone telling him to make comments?

One Who Flew Over the Cuckoo's Nest

Remember watching that movie with Jack Nicholson and the big Indian guy that picked up the water fountain and threw it through the window? It was about inmates in a mental hospital and if you behave badly the head nurse lobotomizes you by taking out pieces of your brain out. Pretty barbaric and completely useless and that is why the procedure has been blacklisted.

But not in China. The Asia Wall Street Journal has this article today on the use of brain surgeries to cure schizophrenia. What is worse is that the doctors also lump in depression as a good reason to lobotomize you. Article

Mr. Mi Zhantao suffered from depression and had trouble socializing. The doctors at No. 454 Hospital of the People's Liberation Army decided that he suffered from schizophrenia and proceeded to drill "tiny holes in the young man's skull, inserting a 7½-inch-long needle and burning small areas of brain tissue thought to be causing his problems". What's even more alarming is that a doctor now gets 90% of his income from bonuses that depend on the business he personally generates.

By the way, I think it is a good idea to never, ever, ever walk into a hospital with a number for its name.