Posts Tagged ‘Taiwan’

Taiwan in Trouble

July 30, 2008

I have been fairly well convinced by Robin Hanson and Bryan Caplan that prediction markets are a good way to get informed information about the likelihood that something will happen.  Basically, prediction markets combine the so called miracle of aggregation or “wisdom of crowds” with the idea that the more someone is sure something will happen the more money he will be willing to wager on it.

The converse of trusting prediction markets is that when I disagree with them, I have to justify why I don’t agree, or maybe what I know that other people don’t.  I find this market on the likelihood of a Chinese attack on Taiwan by December 2010 worrying.  It has enough volume (>4000) to be accurate, and is trading at twenty five dollars a share.  This implies that there is a twenty five percent chance that an attack will happen.

This is far higher than I would put the likelihood of a mainland operation.  I would put it down around three or four percent.  In my opinion, the only likely situation in which an attack might happen is that the Chinese economy goes through a steep downturn, the current Communist administration falls, and the military takes over.  Chinese can be very nationalistic, so the military might view an attack on Taiwan as a way to consolidate power.

But in the absence of such a catastrophic turn of events, I can see many reasons why the Communist leadership of China would not want to attack:

-The new Taiwanese president, Ma Yingjiu, favors closer relations with the mainland.  Why attack when the winds of unification are blowing in the right direction anyway.

-An attack on Taiwan would alienate just about every foreign country.  China would face military action from at least the United States, and heavy sanctions from others.

-Any sort of military operation would cause instability within China’s economy.  Foreign exports and imports would certainly be affected in the short run.   Since the Communist party has no electoral mandate, it is in a much weaker position than many assume.

-The long run economic effects would be disastrous for China.  In the medium term exchange with most developed countries would certainly be curtailed.

-Even if the Taiwanese army had no foreign help, it would be a difficult force to defeat with its advanced American firepower.  In the event of an attack, there would be foreign help.  The Chinese can’t count on an easy victory.

My guess is that the disconnect between the market and me is caused by my knowledge of Chinese and recent experience in China.  I think foreign China experts tend to view the Communist party as being stronger than it is, and also reading too much into saber rattling headlines in mainland Chinese newspapers.

Maybe I should short some shares…

Advertisements

Bad Weather (Prediction)

April 21, 2008

This morning I finished my last mid-term and I wanted to celebrate, but unfortunately rainy weather limited my options. In order to find out the likelihood of my parade being drenched, I took a look at our online weather report. It said there was a 50% chance of rain.

Then I realized that I had no idea what that statistic meant. Did it mean that there was a 50% chance that it would be raining during any particular instant of the day? Did it mean that 50% of Taipei would get a measurable amount of rain? Did it mean that there was a 50% chance that there will be rain at some point during the day?

The answer is, rat-a-tat-tat, that of previously recorded days with similar weather conditions, 50% of them had a measurable amount of rain at some point during the day.

I looks like I am not the only one confused. I pulled the above definition from a study measuring what people in various cities in Europe and the United States think “x% chance of rain tomorrow” means. The researchers gave people three choices: Time (x% of the time it will be raining), Area (there will be a measurable amount of rain in x% of the applicable area) and Days (x% of previous days with similar weather conditions had a measurable amount of rain sometime during the day). As I mentioned above, the “Days” option is the correct one.

Here is a chart reporting the author’s findings:

rain chart

Go New York!  Interesting how people in Amsterdam were mostly wrong in the same way, while in Athens and Milan the distribution was more even.

Full disclosure: I would have guessed “Time” before I saw the answer.

Engrish

April 16, 2008

Today I had my camera with me, so I captured a few Engrish snippets that I happened upon:

The first one is from the men’s room at a coffee shop where I study.  It’s next to the toilet paper dispenser:

Engrish

Next check out this building:

Building

And how should we call such an elegant residence?

Engrish

Far Glory For Tuna.

Finally, I took a different route home than usual, and happened upon this trustworthy motorcycle repair shop:

Engrish

Mysterious Pee (kind of a gross post–consider yourself warned)

April 12, 2008

I often study at coffee shops here in Taipei, and I have noticed a disturbing trend. Often men’s bathrooms will have a puddle of pee on the ground, about two feet in front of the toilet. In the coffee shop I am in right now, there is a urinal next to the toilet, far away from the puddle. The first few times I saw the pee puddle I figured it was just someone incontinent who had an accident, but it appears to frequently for that (I think). I have checked ladies’ rooms a few times and there were no puddles. I am truly puzzled. My current guess is that people are squatting on top of toilet seats, and the way men are set up things don’t go where they are supposed to. Any ideas?

BTW, this week I will be going through the blog desert known as mid-terms, so bear with me as I write a little less than usual.