Using Web Applications is getting easier every day, but there’s generally not quite as convenient as desktop applications. The only two exceptions I’ve found so far are Remember The Milk for task management and Google Reader for my RSS feeds.

This evening I found a way to bring RTM one step closer to “Native Application” like performance – now I can simply press “CTRL+ALT+R” or click the cute “Cow” icon in my Menubar and immediately add tasks to my RTM account.

Screencast of the Process

(Note that the video has narration – be sure you’re sound is enabled)

1. Download Fluid from fluidapp.com
2. Download the RTM Menubar Icon from Flickr
3. Copy this URL http://m.rememberthemilk.com/add

Once you’ve downloaded Fluid and the RTM icon from Flickr, open RTM and choose: * URL: http://m.rememberthemilk.com/add * Name: RTM Add Task * Location: Applications * Icon: The Icon you downloaded from Flickr

After choosing create, go to the Application menu and choose Preferences, then select the “General” and select the Global Shortcut.

Next, go back to the Application menu and choose “Convert to MenuExtra SSB”, choose OK on the prompt, and you’re done.

For years browsers have included options for “User Defined Styles”, allowing users to define a custom style sheet. But recently there has been massive innovation in allowing website users to customize the underlying sites.

The core of this innovation is XML and CSS, which has succeeded in finally separating the content from the presentation of websites. This is for practical purposes fully realized. Now for the next revolution.

The Revolution: User Scripting Websites

When we visit YouTube, Google, NY Times, or any other website, we’re never quite satisfied. The site always could have been better. It could have been easier to navigate. It could have been less cluttered. It could have included some key feature that would have made the site so much more useful. Like every engineering problem, the solution has always been possible – but the cost has outweighed the value, so modification of websites has not been wide spread.

Greasemonkey/Userscripts are leading the way into a new future. It can be commercialized. This will be bigger than Peer-to-Peer. Bigger than BitTorrent. Once this is integrated into every frequently used browser (IE, Firefox, Safari, Opera) UserScripts will become as important as XML RPC is to the modern internet.

User Scripts allow users to customize the look of any given website to match their preferences. Moreover, User Scripts allow the customization of the way that the given website actually works! For example, want Google Reader to look more like iTunes?

Default Google Reader in Safari

Google Reader Customized with “Mac OS X Snow Leopard” User Skin

Want to download .MPEG4 videos directly from YouTube?

Default YouTube in Safari

YouTube Customized with YouTube Perfect

Not only does this provide the ability to download FLV or MPG4 videos directly from Safari, it provides the ability to automatically select “HD”, to turn off the “Auto-Start” and even to change the color of the buttons!

Want to get rid of all the adds on the page you’re reading and focus only the content in a big, pleasant to read font? Usually the only rescue is to hit the “Print” button and try getting a reasonable page.

However, thanks to the “Readability” experiment, you can save yourself from any website and just focus on what you want to read – in a style that is most comfortable on your eyes.

Consider how many people enjoy “tuning” cars? Adjusting the suspension, the exhaust system, the interior, the lighting. Look at how much people customize their icons, their desktops. Once you can customize the software that you use, online, in an easy way, it’s going to unleash a revolution unlike any that have been seen in traditional software development to date.

1. Some customizations can be very efficient, saving users time or bandwidth
2. Customizations can change the feel to match the needs of certain groups of users (teens, employees of a specific company, seniors, students at a specific university)
3. The “cost” of customization will be much lower than what’s ever been seen in software because the changes are done automatically on the client side at runtime
4. The scale of such customizations will be vast. Imagine if Windows, Office, and Internet Explorer were released as Free Open Source software in 2000 – we would have hundreds of different versions of each. This will be even bigger!

A “bubble” is a sustained but temporary major misalignment between perceptions of value (momentarily reflected in market prices) and actual underlying value (eventually reflected in actual cash flows over time). In this sense, it is primarily a psychological phenomenon, caused by unrealistically high expectations of profit and/or underestimation of risk. I stress the words “sustained” and “major” because minor misalignments are taking place — and being corrected — constantly, which is what markets are all about. If all of us knew what returns would actually be over time, we wouldn’t even need markets — or entrepreneurs — in the first place. But there are times — we call them bubbles — when these misalignments persist and feed on themselves until, somewhere down the road, the market loses faith and valuations suddenly come crashing back to reality in one fell blow.

Some economic bubbles that we’ve experienced:

• Tulip Mania, Netherlands, 1637
• South Sea Company Bubble, UK, 1720
• Compagnie d’Occident / Mississippi Company, France, 1720. (Leveraged)
• Railway Mania, UK, 1840s
• Canal Mania, UK, 1790s
• Stock Market Bubble, US, 1920s (Leveraged)
• Japan Real-Estate and Stock Bubble, Japan, 1986-1990 (Leveraged)
• Internet – Dot Com Bubble, US, 1998-2000
• Housing Bubble, Worldwide, 2000-2006 (Leveraged)

Non-leveraged bubbles are still bubbles, but fortunately their ends are not as dramatic and there effects are not as long lasting as leveraged (credit boom) bubbles. Frederic Mishkin pointed out this distinction in the Financial Times (Not all bubbles present a risk to the economy [FT subscription required]).

Like the start of the Internet Industry, there were also bubbles at the start of the Automotive, Radio and Television revolutions. Each one changed our life. Each time, too much speculative capital chases too few good assets. Additionally, the excess supply of capital creates an excess supply of assets that can be purchased.

The common thread in these three bubbles is over-excited investors putting money into a relatively new product, financial scheme, or industry that seems, given its limited track record, to offer a sure-fire path to riches but whose real risks and rewards they do not yet fully comprehend. Funding those investments via debt is not a necessary ingredient.

I have not yet been able to find a lot of 3rd party sources covering real-estate leverage in China, for now I’ll quote Prof. Chovanec on the subject (Leverage and China’s Property Market).

According to current rules, Chinese developers must use their own capital to secure land. Once they do so, banks will lend them 65% of the money they need for construction and related development costs, with the land pledged as collateral. But saying developers must use “their own capital” to buy the land is a bit misleading.

Residential Sector: Developers build and offload projects rapidly to buyers, half of whom are paying cash.

• Many developers do raise such funds by listing on the domestic or Hong Kong stock exchanges
• Many bring in private equity investors.
• I’ve also seem them raise it in the form of debt
  • Parent company take out loans and then inject the funds as capital into a real estate subsidiary. (most common)
  • Issuing high-yield bonds (if they’re listed)
  • By taking on loans at multiple layers of holding companies, a developer can leverage up considerably to cover his “capital” commitment to the banks.
  • It’s very hard to quantify the extent of this exposure, due to the indirect way many of these loans were raised and channeled into real estate.
• Approximately 50% of all residential purchases in China today are financed with mortgages
• China’s mortgage market is relatively small — about 10% of GDP, compared to 48% for Hong Kong.

Commercial sector, developers are building properties mainly to hold and lease. That means they are raising debt — both from banks and subordinated creditors — and they are not deleveraging.

• Many commercial buildings sit nearly or completely empty
• Where does the cashflow to pay the loans on the property come from?
  • Does the bank care, or is it happy rolling over the loan because the (supposed) value of the collateral has risen?
• This is the Dubai story all over again — multiple layers of leverage, no tenants, no cash flow.

Credit vs Collateral

• In the West, banks usually make commercial loans to businesses based on an evaluation of their expected profits and cash flows — will they earn enough to repay?
• In China, as in many developing markets where banks’ technical skills are not so sophisticated, most business loans are made on the basis of collateral — are there assets the bank can seize if the loan goes bad?
  • Asset Chinese banks like most as collateral is real estate
  • Therefore SOEs enjoy both preferential access to land AND lion’s share of bank loans in China
• Nobody is really arguing that Chinese banks are over-leveraged.
• It’s their clients, the developers and SOEs, that are leveraged up on real estate.
• It’s loans to those clients, should property take a tumble, that would hit the banks as losses.

Cash Rich SOEs Pushing Real Estate Bubble Ever Higher

The National Audit Office data shows that 25 central ministries are involved in real estate violations, worth billions of yuan. Among them, unlisted assets of 51.6917 million yuan from the Ministry of Foreign Affairs have gone into purchasing real estate. The Ministry of Agriculture has developed commercial housing, acting beyond its authority, and has submitted false reports on housing subsidies. In 2008, a real estate rental service center under the Ministry of Finance took in rental income of 5.3193 million yuan. The Ministry of Public Security has approved construction projects worth 422 million yuan, utterly exceeding its authority. Other data show that among 136 central enterprises under the State-owned Assets Supervision Administration Commission, about 70% of the companies are involved in real estate, among which 16 firms are primarily based in the property industry, including Poly, Sino-Ocean, and China Resources, while more than 80 outside firms have business in real estate. Among the top ten highest priced land purchases in major cities in the first half of this year, 60% were gobbled up by SOEs.

Yes, that is 25 central ministries that have been caught speculating in the real-estate market.

• What is the Ministry of Agriculture doing building houses?
• And the Police Department (called “Public Security” here) is in the construction business too?

The government here is just as “asleep at the wheel” as the OFHEO was when regulating Fannie-May and Freedie-Mac.

The Office of Federal Housing Enterprise Oversight (OFHEO) was an agency within the Department of Housing and Urban Development. It was charged with ensuring the capital adequacy and financial safety and soundness of two government sponsored enterprises — the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac).

Ignoring the Dubai Crisis and Bubble Concerns, Chinese SOEs Continue Playing “Land King”

Another 19 real estate companies also showed interest in the land bought by Sino Ocean, among them Gemdale Group, a private real estate company. It didn’t bother to bid, though, as prices were too high and a huge challenge for a private company. In the current environment, SOEs are able to take significantly greater risks than private enterprises.

My closest friend in Shanghai is also a land developer (房地产开发商) and I’ve heard the exact same story from him. Every time they try to bid on a project, some SOE backed business comes in at a higher price. No matter how much you are willing to offer, the SOE backed group raise the bid until they get the property.

Do SOE’s have a secret for generating better ROI than experienced, well managed, privately held developers? If they do, they should start a training academy teaching their “post-market economics efficiency”. Most likely this will be a lesson in buying high and selling low.

Zhang Shuguang, chairman of Unirule Institute of Economics, says, “Real estate policy next year is a choice among contradictions and big changes may not take place. Tightening policies will cause the real estate bubble to burst, resulting in economic problems, while excessive stimulus will bring a bigger bubble and greater risks.”

You’ve got a bubble on your hands. Choices I’m aware of are a) soft landing or b) hard landing. Sounds like the Chinese plan is to “manage the bubble”. Good luck with that.

The dilemma is more obvious for local governments. Zhang Shuguang says that half of local government income is real estate-related, and local real estate policies will not see big changes. Preferential policies may be fine-tuned instead of cancelled.

In case you want to know “why” the bureaucrats what to “manage the bubble” instead of fixing the economy? Because the bubble is putting money in their budgets. The bigger the budget, the bigger the kickback.

Can we bring Zhu Rongji back the way Deng Xiaoping was brought back? He’s ceased to exist as a public figure since 2003 – just about the time the economy started going way off track.

Zhu tackled the problems of an excessive money supply, rising prices, and a chaotic financial market stemming, in large measure, from runaway investments in fixed assets. After four years of successful macro-economic controls with curbing inflation as the primary task, an overheated Chinese economy cooled down to a “soft landing”.

Unfortunately, he’s not likely to be restored because:

Zhu has a reputation for being a strong, strict administrator, intolerant of flunkeyism, nepotism, and a dilatory style of work. For his hard work ethic and general truthful and transparent attitude, he is generally considered one of the most popular Communist officials in mainland China.

The New York Times put together an excellent story about the struggle against chinese real-estate speculation here in Beijing. The article is called “Chinese Businesses Resist Eviction by Developers“.

The company that bought the land that included her restaurant for $700 million — a huge parcel a few minutes from the Olympic stadium — was already busily clearing the block for another glittering mega-development. The sooner it broke ground, the sooner it could capitalize on property values that spiked more than 30 percent this year in Beijing and a handful of other cities.

The only thing in the company’s way was a squat row of buildings that included the Fish Castle Restaurant, a decidedly modest Sichuan-style seafood joint that Ms. Qin and her boyfriend opened just before the 2008 Summer Olympics. The couple, the very picture of modern Chinese entrepreneurial bravado, had signed a three-year lease, poured their extended families’ life savings into fixing up the space, and then learned in August that they had only two months to get out.

Chinese newspapers are filled with stories of battles involving so-called nail houses, the properties whose owners and occupants are like deeply embedded spikes that refuse to give way to redevelopment juggernauts. As an unceasing real-estate boom has swept the nation, much of it orchestrated by the local governments that benefit from soaring land values, property owners and occupants often protest unfair compensation.

SOEs are becoming an ever larger portion of the Chinese economy, bidding up prices and pushing out private entrepreneurs. Long term, I have zero faith that the “central planners” in any country can create long term growth better than innovative entrepreneurs.

Bloomberg published: “China Property Bubble May Lead to U.S.-Style Real Estate Slump“

Although parallels with other bubble markets, the China bubble is not quite so easy to understand. In some places, demand for upper middle class housing is so hot it can’t be satisfied. In others, speculators keep driving up prices for land, luxury apartments, and villas even though local rents are actually dropping because tenants are scarce. What’s clear is that the bubble is inflating at the rich end, while little low- cost housing gets built for middle and low-income Chinese.

Koyo Ozeki, an analyst at U.S. investment manager Pimco, estimates that only 10 percent of residential sales in China are for the mass market. Developers find the margins in high-end housing much fatter than returns from building ordinary homes.

The central government now faces two dangers. One is the anger of ordinary Chinese. In a recent survey by the People’s Bank of China, two-thirds of respondents said real estate prices were too high.

The second danger is that Beijing will try, and fail, to let the air out of the bubble. Pulling off a soft landing means slowly calming the markets, stabilizing prices, and building more affordable housing.

One difficulty in handicapping the likelihood of a nasty pullback is the opacity of the data. As long as property prices stay high, the balance sheets of the developers look strong.

The 234-room Pangu Plaza, which opened in December, charges as much as $17,750 a night for a suite. The sushi bar, where the cheapest lunch special is $265, cooks its rice in mineral water flown in from Japan.

Confidence, however, is belied by the cavernous, empty lobby where the only sound is the tapping of the high heels of the crisply attired staff. No paying customers were evident during a weekday afternoon visit, although Seng said that occupancy has reached “up to 30%.”

This is an extreme example, but this sort of scene is EVERYWHERE in China. Weather you’re in the showcase cities of Shanghai and Beijing, in the 2nd tier provincial capitals, or any of the smaller cities. EVERYWHERE you go there is construction and everywhere you go the buildings are UNUSED.

Glad to see the western media is finally opening their eyes to this one. Nice job to the LA Times for this article “Global financial crisis hits Beijing luxury hotels hard“.

Interesting 30 minute session on CCTV 9, moderated by Tian Wei, covering China’s Economy in 2009 and 2010. 1. Xiao Geng, Senior Fellow, Brookings Institute 2. Prof. Patrick Chovanec, Tsinghua Univ

Not sure if Fox News in the US is this bad, but Prof Chovanec does an excellent job being respectful of the bureaucrats, in spite of their naiveté. Enjoy the propaganda.

The Economist put together the following chart of the GDP of Japan and China as compared to the USA. Obviously China is nowhere near as advanced technologically as Japan was in 1990.

Also, note that ever since WWII, economic growth of the USA has been very consistent, averaging 1-2% in inflation adjusted GDP.

If the GDP of China was 12% of the USA in 2000, and 18% in 2005, does it seem reasonable that the economy would grow to be 38% the size of the USA by 2010?

Spending time in China starting in 2003 and living here full time from 2005 onward, I have not seen increases in consumer spending, increases in employee salaries or any other dramatic changes that would account for the massive shift.

What I have seen, is that the “Rise of China” is the most read news story of the decade. When good things happen, everybody wants to be involved and nobody wants to be left out. What happens when everybody is chasing the same asset, without paying attention to underlying value? Bubbles. I’ve also seen huge increases in gov’t spending without attention to ROI.

According to what happened in Japan, perhaps the bubble can hold on for another 5 years before bottoming out. But I doubt it will last that long. Why? Hopefully people will recall the Japan story sooner rather than later.

Also, facts about the true internal debt numbers could burst the bubble of the current Chinese miracle very fast.

The sad thing about this is that China is a great country. When bubbles anywhere burst, there are a lot of average people that get hurt in the process.

The Economist ran a story called “No forgiveness; no quarter. Happy Christmas from China” that had over 450 comments last time I checked. There are two components to the story:

On Christmas Day a Beijing court sentenced Liu Xiaobo, a veteran human-rights activist, to 11 years in prison for “inciting subversion of state power”

On December 21st Akmal Shaikh, a 53-year-old Briton charged with smuggling drugs, had his death sentence upheld by China’s Supreme People’s Court.

Far more interesting than the article itself was a commenter (British citizen living in Australia) “who has spent a large proportion of his career living and working in China”:

I believe this case highlights several problems facing China as it rises in the 21st century. Firstly, there is no rule of law. This is probably the greatest problem currently facing the country. The law remains arbitrary and corrupt. Your ability to defend yourself from the state depends upon your connections and your wealth. If you have neither, it’s a lottery.

Secondly, it illustrates the ability of the Chinese state to whip up nationalism and xenophobia, thanks in no small part to the ignorance of the general population it has done so much to bring about.

I think it is very sad that the CCP has inculcated many Chinese people with the belief that criticism of the Chinese government is criticism of China.

The comment in response from a typical “party line” Chinese author was perhaps even more interesting:

As for chapter 8, I was discussing with one of my friends (who is studying Law) on this matter, it is actually a Chinese copy of American Constitution. It is a good proposal, but not very suitable for current China, really.

Democracy is created to ensure fairness, while autocracy to gaurantee efficiency and unification. China needs to tackle with poverty and separatists, which necessitates a central-controlled government. You may believe that Tibet, or Xinjiang is not a part of China, but for all the chinese, we will fight ultil the last person to protect the integrity of our nation.