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China’s latest GDP figure is pretty weak, but that doesn’t make it any more believable

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China’s National Bureau of Statistics released the country’s third quarter GDP growth rate today, and at 6.9% it was the lowest quarterly growth the country has clocked in more than six years, or since the first quarter of 2009.

Slowing GDP growth is part of China’s transition to a “new normal” of domestic consumption-led growth, and a quarterly number under the annual growth target of 7% was expected by analysts, investors, and governments. What’s interesting about today’s announcement is the open skepticism with which the rest of the world is greeting even this weak figure, which, after all, still beat analysts’ estimates of 6.8%.While China’s government-supported Shanghai Composite Index traded up all morning on the news, after an initial bump most stock indices fellin Japan, South Korea, Hong Kong, Singapore, and Taiwan. After lunch even the Shanghai Composite Index headed south.
Market analysts, journalists, and fund managers took to social media, news outlets, and issued reports questioning the figures.
As one analyst from London’s IG Group, a spread betting firm, writes:
The 6.9% Q3 GDP print really just makes one question the veracity of both the Q2 and Q3 numbers. It’s hard to be overly optimistic about the headline number, especially given the range of other data released today.

A policy researcher for NSBO, the Beijing research house, told Reuters:

The GDP beat is surprising, given that the monthly FAI and industrial production figures slowed considerably, and much faster than expected.

The data would suggest that retail sales is holding up the data and there are other areas that the government is factoring in consumption and services data that are not picked up in the monthly figures.

An economist from Capital Economics said figures were overstating growth by a “wide margin” and explained (via the Wall Street Journal):

The continued stability of the official GDP figures will further cement concerns over their credibility. Flaws with how the GDP deflator is calculated, along with political pressure to meet growth targets that have become increasingly at risk, have meant that official growth rates have not slowed nearly as quickly as most third party measures of growth in recent years.

Others were less circumspect, like this economics professor:

China has long been accused of massaging its official economic numbers, and particularly its GDP figures, in order to hit pre-announced growth targets. But the number of outside observers in the finance industry who are questioning the figures has been growing in recent quarters, as the country’s slowdown increases.

Along with GDP, China released data on “nominal GDP”—which adjusts GDP to strip out the effects of inflation— and industrial production. Here figures were downright bad, with nominal GDP growing 6.2%, and industrial production growing 5.7% in September, missing analysts estimates of 6%.

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Russia Without BS (A Tale of Two Incidents)

I’m quite certain all my readers have already heard plenty about the Dutch Safety Board’s investigation into the downing of MH17. If you haven’t read it yet, here’s asummary, and if you want to slog through the whole thing, look here. As if on cue, as tends to be the case every time some new evidence from the investigation leaked out in the past, Russia turned the bullshit up to 11 and pre-empted the release of the DBS report with another press conference held by Buk Surface-to-Air missile manufacturer Almaz-Antey. Once again, previous Russian stories were contradicted, but the fun didn’t stop yesterday. Shortly before I began writing this, the head of Russia’s aviation service was throwing out all kinds of accusations and claims, including some that contradicted yesterday’s Almaz-Antey claims. This wasn’t the first time. In other words, this satirical story is pretty close to the truth.

Some Western journalists act perplexed at this incredibly guilty behavior, particularly in light of the fact that the DSB report didn’t even attribute blame for firing the Buk and it also said that Ukraine should have closed the air space in the region (Gee, guess what part of the report Team Russia will deem reliable!). Some of us aren’t surprised at all. Personally speaking, I liken this to the recent behavior of the conservative propaganda machine back in the US when they float rumors or mock scandals about illegal immigrants committing voter fraud or Obama not being a natural born citizen. Nobody who puts these theories out there actually plans to act on them. Sure, some politicians will promote voter ID laws, but this is just about disenfranchising poor people. The real reason for these conspiracy theories is that it reassures Republicans that when they lose elections, it’s only because the other side cheated, and therefore the winning party is illegitimate.

Same thing is going on here. Russia’s foreign ministry claims that the Dutch board didn’t consider facts from “Russian experts,” without naming the experts or talking about which facts they are referring to, no doubt because the folks at the MFA can’t be bothered to keep up on the latest alternative scenario. These public statements and the media coverage they get in Russia’s domestic press is enough to reassure Putin’s base that the whole thing was unfair, and the whole world is part of a massive conspiracy against Russia.

It’s a shame though, because what Russia is doing is spitting on the graves of the victims. Then again, this is a government that spits on the graves of 25 million Soviet citizens, many of them Russian, so I guess I shouldn’t expect more sympathy for foreigners flying out of “Gayropa.” But I digress, I wanted to compare the MH17 to another recent incident, one which will suddenly have all of Team Russia nodding their heads along with my text. I’m talking of course about the airstrike on a Doctors Without Borders hospital in Kunduz, Afghanistan.

Now as an aside, while I post links about this, I’d just like to remind you how “the mainstream media” like CNN would never report something like this.  Okay maybe they would, but they wouldn’t air allegations that it was a war crime. Okay, maybe CNN would do that, but I bet Fox news wouldn’t! Oh…wait…no. But I keep hearing from the pro-Kremlin side that state-run outlets like RT are no different from CNN and Fox. I guess this means that we should soon expect CNN and Fox to start personally attacking journalists and airing “experts” who will insist that the Taliban, Doctors Without Borders, or literally anybody but the US forces were responsible for the deadly airstrike. I mean it’s all the same, right?

Okay enough of that. The fact is that I am as disgusted by this Kunduz attack as I was about MH17. I could start pointing out how in the case of the former, the gunner on the AC-130 could at least see what he was shooting at, whereas a Buk operator is looking at blips on a screen. I’m not going to get into detail there, however, because I don’t want some Team Russia fanatic to get overexcited, whip his dick out, and start beating it right there in his office. Part of my anger is due to the fact that it’s 2015 and we’re still involved in Afghanistan, as though we’re going to somehow get some kind of victory out of this. Another part of me is angry at the lying that took place afterward. When this story broke, I have no doubt that there were people all across America who wanted to see justice be done, because this incident is a stain on the country’s flag (some Team Russia folks might need to change their pants now). In Russia, by contrast, 3% of people believe the version of MH17 that the Western world does.

With the myriad of alternative, contradictory stories that have circulated, sometimes within 24 hours of each other, it’s no wonder that these people can’t really tell you what they think actually happened. They only know it wasn’t the rebels, and it wasn’t Russia’s fault. In other words they know exactly what the Kremlin wants them to know. When the White House and Pentagon change their story or squirm in front of cameras, Americans sense bullshit and get angrier. Russians just throw up their hands and say: “Who knows what’s true? Everyone lies! We lie, they lie!” That’s the Russia Putin’s regime has built.

Before anyone balks about the comparison of MH17 to Kunduz let me point something out. Even in spite of the Pentagon’s failed attempts to spin the events, and in spite of the White House’s reluctance to support an international, independent tribunal, the administration has accepted the blame for these deaths on behalf of the United States. And of course, they admit the presence of US forces rather than pretend that only the Afghan national army is doing the fighting. They are not crying information war and claiming that the Taliban did it, or that the hospital patients and staff did it as a “provocation.” If there is an independent investigation, don’t expect its progress to be met with periodic White House press conferences featuring new experts that will “prove” alternative theories absolving the US military of blame.

Just another example of how when it comes to political regimes, the slightest difference can have a big impact on behavior. Whatever happens, however, I think it’s clear that the victims of Kunduz will get justice long before the families of the victims of MH17 ever will.

Scientists and mathematicians aren’t all white men—but you wouldn’t know that from the movies

What do you see when you picture a scientist?

For most people—myself included—the default answer is probably a white man in a lab coat, hunched over a microscope. The same image arises for the archetypical computer programmer (a white man in a hoodie, hunched over a computer) and mathematician (a white man in a threadbare cardigan, hunched over a pile of composition books).

In other words, not only do we tend to assume that all scientists, technologists, and mathematicians have poor posture—our go-to image of STEM professionals is typically white and male. Ada Lovelace Day is the perfect opportunity to change this picture.

Ada Lovelace is widely considered to be the world’s first computer programmer. A close friend of 19th-century mathematician Charles Babbage, in 1842 she published the first programs for his proposed analytical engine—a machine that was never built but bore the essential traits of a computer. Nearly a century later, her notes helped inspire Alan Turing’s work on the first modern computers.

Lovelace was clearly a trailblazer. But where is her biopic?

Rather than yet another film about Steve Jobs, we need popular representations of women like Patricia Bath, who became the first African-American female doctor to patent a medical invention by developing a laser device to remove cataracts. The story of astronaut Mae Jemison, the first African-American woman in space, is also blockbuster-ready.

When we fail to tell stories about women in science and math, we reinforce the impression that few women have patented inventions, derived important equations or otherwise contributed to scientific discoveries. This dearth of visible role models can discourage young women from pursuing careers in STEM. It also bolsters ignorant claims that women simply lack interest in these subjects—or that they’re incapable of the intellectual rigor required by such fields.

But as Gloria Steinem once said, “women have always been an equal part of the past. We just haven’t been a part of history.” In order to change public perceptions about gender and STEM, we have to put a spotlight on the contributions of women past and present.

To that end, the TED Fellows program recently published a portrait of 12 women scientists conducting groundbreaking research in subjects ranging from astrophysics to archaeology and genetics. The photograph of a dozen leading women in science gathered together obliterates the white-man-in-a-lab-coat stereotype better than any image I can recall.

What stuck with me even more than the striking image was this accompanying quote from one of the scientists:

“This week, a cab driver asked me, ‘What do men say when you tell them you’re a scientist? Because you don’t look like a scientist,’” marine biologist Kristen Marhaver says. “In this picture, I see a twinkle in each of our eyes, saying, ‘No, that’s the thing, sir. I do look like a scientist.’”

Equally powerful was the #ILookLikeAnEngineer hashtag that spread through Twitter earlier this year after an engineer participated in her startup’s recruiting campaign and received a torrent of skeptical comments regarding her appearance.

These efforts expose the problem with assuming that an entire category of professionals should look one particular way—whether defined by gender, ethnicity, age, body shape, style of dress or any other category. A jockey looks nothing like a linebacker, yet both are athletes. Lupita Nyong’o bears little resemblance to Robert De Niro, but both are Oscar-caliber actors. The same logic applies to people in STEM.

Chances are the next big breakthroughs in science, technology, engineering and math will come from people who look less like Albert Einstein and more like “first lady of physics” Chien-Shiung Wu or computer scientist Grace Hopper. By destroying stereotypes about what kind of person “belongs” in STEM, we can encourage new generations of women to work toward life-changing innovations.

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Sweden’s liberal image is a mirage that hides a very ugly problem

Sweden is supposedly a liberal utopia: a land of generous welfare, substantial foreign aid donations, and green-fingered sustainability. But Sweden’s noble image is hiding an ugly truth.

Racism is blighting Swedish society, and people of African descent face daily harassment and hate crimes, according to a United Nations report presented to the UN human rights council earlier this week. Yet the country is so convinced by its tolerant reputation that it refuses to acknowledge the problem. The report found:

The Swedish philosophy of equality and its public and self-image as a country with respect for human rights, non-discrimination, and liberal democracy blinds it to the structural racism faced by Afro-Swedes and Africans in its midst.

There has been a 31% rise in reported “Afrophobic” hate crimes from 2010 to 2014, according to the Swedish National Council for Crime Prevention (pdf). The UN Working Group of Experts of People of African Descent reported “a real fear within the communities, especially for young black men, that they could be violently attacked at any time.” Structural racism means that black people in Sweden have reduced access to health care and education, according to the UN report, while “the police view people of African descent as criminals rather than a vulnerable community that needs protection.”

But Sweden is so convinced by its own reputation that the government has removed the word “race” from the Discrimination Act—because the law assumes that all people belong to the human race. The United Nations was unimpressed:

The Working Group is aware that to delete “race” from the lexical corpus does not eliminate racism based on racial discrimination. Rather it may be a way to ignore, minimize, or obscure the reality of the specifically “racial” racism faced by a part of the Swedish population.

There are roughly 200,000 Africans and people of African descent living in Sweden, who make up 2% of the country’s 9.6 million population. But the UN found that Sweden did not properly address or acknowledge its involvement in the transatlantic slave trade.

A xenophobic political party, the Swedish Democrats, won almost 13% of the national vote in 2014 and became the third-largest party. Yet Sweden continues to cling onto its “self-perception of being a tolerant and humane society,” according to the UN report.

Sweden has the world’s best reputation for its social and economic policies, and is understandably proud of its status. But if Sweden’s benevolent reputation is unfounded, it risks becoming a mask for the very intolerance Sweden claims to avoid.

This post was updated with details of the Swedish Democrats’ results in the 2014 general election.

How to cope in volatile markets

Turbulence in asset prices can be unsettling for investors. A diversified portfolio and a focus on the long term are better defences than trying to time the market.

Periods of high volatility can be unnerving. We’re told that long-term returns are the only thing that matters, but it’s difficult to remain calm when our investments’ short-term performance looks bad.

Stock markets worldwide have been more volatile this year, but investors have suffered from particularly painful falls in share prices in recent weeks.

The recent turmoil in global financial markets was triggered by data suggesting weaker economic growth in China, the world’s second largest economy, following a surprise devaluation of its currency earlier this month.

Chinese stock markets suffered some of the biggest declines in share prices, adding to the significant sell-off that began in June. However, fears about the wider implications for the global economy, including companies that sell goods and services in China, led share prices to tumble around the world.

As a result, the FTSE 100 index of British shares dropped to below 6,000 at one point, having surpassed 7,000 earlier in the year, while commodities markets, which are heavily dependent on demand from China, also fell heavily.

Some investors fear a weaker Chinese Yuan could lead to the spread of deflation, or falling prices, across the developed world. Falling asset prices are worrying because it can depress consumer spending and proves painful for debtors. They see the cost of their borrowing rise in real terms.

Following weeks of volatility, the Chinese authorities stepped up support for share prices with a series of measures, including cutting its benchmark one-year lending rate by 25 basis points to 4.6% and the one-year deposit rate by 25 basis points to 1.75%. The moves have led stock markets around the world to rally, recovering some of their losses.

But a broader reason for the turmoil could be worries about an impending increase in interest rates by the US Federal Reserve. Central banks in both the US and the UK are moving to normalise monetary policy, ending a period of record-low interest rates and quantitative easing (QE) that has resulted in unusually calm bond markets and rising share prices. This has pushed up the cost of equities around the world.

Janet Yellen, chair of the Fed, has hinted that US interest rates could rise next month, although this isn’t likely to happen until March next year now following the setbacks on stock markets.

Even so, volatility is likely to continue. So how should investors respond?

Whenever the prospect of a sell-off seems to be particularly severe, there is a temptation to reduce exposure to the market. Once the threat has diminished, we can buy back in, hopefully at lower valuations.

However, it is almost impossible to distinguish between a genuine, imminent crisis and a mere market wobble over an event that proves far less serious than anticipated. As a result, investors who spend too much time waiting for the right moment to invest may miss out on many of the gains.

For example, over the last five years, some investors have kept part or all of their cash on the sidelines. In waiting for the global economy to become a safer place, they have missed out on very significant gains in most asset classes.

The implication is that unless markets are clearly extremely overvalued, your best approach may be to stay invested and try to manage the psychological effects of high volatility. That’s assuming, of course, you are investing for the long term.

If your goal is to retire comfortably in several decades then you have more time in which to regain any losses resulting from short-term volatility. But if you need to access your money sooner, you may wish to rebalance your portfolio. For example, you could move towards asset classes that have historically been less volatile or move into cash.

Focusing on the long term is more easily said than done, but adopting a sensible strategy of diversification should temper the volatility of your portfolio. This means both diversifying within asset classes and among asset classes.

For example, a fully diversified portfolio of stocks will be less volatile than holding just a handful of stocks. No matter how effectively you diversify though, your investments can still fall in value so you may get back less than you invest.

Investors should also consider whether they want to diversify their stock holdings globally, rather than confining themselves to the UK market. In doing so they could benefit from the different performance of international markets.

Note, however, that international diversification can expose investors to another form of volatility: foreign currency risk. This is where the value of investments can fall owing to a decline in the sterling value of foreign currencies.

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