More of the same fun and unfun

October 17th, 2018

For fun, read the part about urban dog parks in Portland, Oregon. This thing about Sinema is fun too, but in a very weird way (how does this person have any kind of job?). We remember watching a TV show about the Saudi dead guy’s uncle 33 years ago, but when you read this unfun NYT piece, nothing about the story makes any sense at all. Nothing. Something really ultra creepy is going on unless the prince is a complete idiot, which, for all we know, he may be.

Bonus unfun: 9-11 was a billion years ago. The young have been ruined for almost two generations now.

Fun and not fun

October 16th, 2018

Fuaxcahontas fun. This one who we know nothing about, unfun. Outstanding analyst Cashill analyzes the disturbed and unfun Ford. A decade ago Professor Roubini was pretty correct about some problems ahead. Now he seems to be predicting that Darth Tweeter will start a 2020 war with Iran. Darth really has driven a lot of people crazy.

Bonus: faux faux fauxnier: “To make up for the dearth of Native American DNA, Bustamante used samples from Mexico, Peru, and Colombia to stand in for Native American. That’s because scientists believe that the groups Americans refer to as Native American came to this land via the Bering Strait about 12,000 years ago and settled in what’s now America but also migrated further south.” A charming and appropriate way for a phony to exit the stage.

Second bonus: fun VDH piece.

Only 60% GDP from the private sector

October 15th, 2018

SCMP:

“Why were there very significant reforms in its initial stage, then it turned stagnant or was even pushed back?” asked Zhang, a professor of economics at Peking University’s national school of development – which he co-founded in 1994 with five other prominent economists, including structural economics pioneer Justin Yifu Lin and free market advocate Zhang Weiying.

The 67-year-old Zhang attributed the country’s four-decade economic miracle to its institutional changes.

“The biggest one was the introduction of a market into a previously government-controlled economy,” he told the South China Morning Post. “It was truly uneasy.”A vast majority of economic activities are now generated by the market. According to official data, private firms contribute to over 60% of the nation’s GDP and more than 80 per cent of urban employment.

But in his latest academic book The Institutional Evolution of China: Government vs Market, Zhang warns of economic challenges ahead, such as restricting administrative power, breaking the state monopoly in upstream resource-intensified sectors, allowing farmers to transfer their land contracts and curbing corruption.

His research indicated that the pace of reform had actually slowed after Zhu Rongji, who once laid off millions of workers from ailing state factories, opened up the housing market and shook up the state banking system, stepped down as premier in 2003.

Very interesting: more saving than investing, consumer spending growth down. Very interesting. Not quite sure what it means though it seems clear enough that Xi’s policies have a lot of questioners and dissenters.

Provocative piece on China’s economy

October 14th, 2018

Gordon Chang in a piece that deserves a lot of thought and analysis:

This geopolitical recession is something really simple — it’s the end of the U.S.-led global order,” Ian Bremmer, head of risk advisors Eurasia Group, told the ANZ Finance & Treasury Forum in Singapore this week.

Bremmer’s message plays well, and not just to those attending financial conferences. Most American policymakers, for instance, have bought into his “declinist” predictions about China’s rise and America’s fall. At least two—and maybe all three—of President Donald Trump’s immediate predecessors accepted the premise of eventual Chinese dominance.

For a long time, those predictions were generally accepted. Most recently, however, there are even more reasons to challenge the assumptions underpinning the narrative of declinism.

Declinists make one fundamentally incorrect assessment. “So that is one big reason why we have entered a geopolitical recession,” Bremmer told the crowd in Singapore. “All of the major international underpinnings of the U.S.-led order have become unmoored over the last 25 years.”

The most important reason for the establishment of the U.S.-led order after the Second World War was the dominance of the American economy, and the most important justification for declinist views has been China’s stunning four-decade economic revitalization. There is no shortage of predictions when in dollar-denominated terms China’s gross domestic product will overtake that of the U.S.

The gap between the two economies is still wide, however. Last year, the U.S. produced $19.39 trillion of GDP. China’s 2017 GDP, at a reported $12.84 trillion, was only 66.2 percent of America’s.

And that gap is, in reality, widening. Beijing’s official National Bureau of Statistics reported 6.8 percent growth for the first half of the year, far in excess of the American rate.

Yet China’s number is surely exaggerated. Beijing claimed nearly identical 6.7 percent growth for 2016. The World Bank, however, has cast doubt on that figure by releasing a chart in the middle of last year.

So what was China’s gross domestic product increase in 2016 according to the World Bank? Answer: 1.1%

Shocked? The 1.1 percent figure is surprisingly close to the single best overall indicator of Chinese economic activity, total primary energy consumption. In 2016, total primary energy consumption, according to Beijing’s official numbers, was up 1.4 percent.

America’s economy, thanks to Trump’s deep cuts in taxes and regulations, is powering ahead. In the first two calendar quarters of this year, the economy grew 2.2 percent and 4.2 percent. The Atlanta Fed’s GDPNow forecast for the just-completed third quarter is 4.2 percent.

China’s economy is beset by excessive debt accumulation and other maladies, but the main factor inhibiting economic potential is not a systemic debt crisis—a concern to be sure—but the abandonment of reformist policies. Xi Jinping, the Chinese ruler, has turned his back on Deng Xiaoping’s “reform and opening up” program that is credited with sparking Chinese growth for almost four decades. Instead, Xi for a half decade has been reinstituting the Stalinist state model that Mao Zedong embraced in the early 1950s.

Xi’s reversal of liberal economic policies has been matched by his reversal of political and social policies. He has de-institutionalized the Communist Party, thereby heightening the risk of political instability. At the same time, he has demanded conformity—“absolute loyalty”—and tightened social controls. The institution of a nationwide social credit system , which will assign a score to every resident for all his or her actions, is but one example of the state’s attempt at total control of society.

China, as a result, is moving from authoritarianism back to totalitarianism, readopting a model that brought the People’s Republic to the brink of economic failure twice, once during the Great Leap Forward of the late 1950s and early 1960s and again during the Great Proletarian Cultural Revolution of the mid-1960s to mid-1970s. China’s economy cannot be expected to do well in an increasingly intolerant political atmosphere, as the country’s own history suggests.

And there is one more reason to doubt Chinese economic dominance: demography. China will soon join the ranks of shrinking nations. The population will peak somewhere around 1.44 billion people at the end of next decade according to the U.N.’s World Population Prospects: The 2017 Revision. By the end of the century, China will have a population of 1.02 billion.

China’s decline has implications for its competition with the U.S. In 2015, China’s population was 4.4 times larger than America’s. By 2100, China is projected to have a population only 2.3 times larger.

China’s projected decline—and we should remember the U.N.’s estimates seem to overstate that country’s demographic potential—does not mean the Chinese economy cannot succeed, but it does mean it will have to succeed in spite of demography. China’s four-decade burst of growth occurred during the reaping of the “demographic dividend,” an extraordinary increase in the size of its workforce.

China’s workforce, by the way, is already shrinking, first peaking in 2011 according to the official National Bureau of Statistics.

China has yet to show it can break through the dreaded “middle-income trap,” and if it does not, the country’s economy will not overtake America’s. If China’s economy does not overtake America’s, Beijing is unlikely to dominate the global system that is supposedly crumbling. Without a vibrant economy, China will not be able to modernize and build up its military, it will not be able to ensnare developing nations with its debt-trap diplomacy, and it’s One Belt, One Road initiative will go unfunded.

Bremmer in Singapore made the argument, as the CNBC headline told us, that “A ‘Geopolitical Recession’ Has Arrived and the U.S.-Led World Order Is Ending.” During a week when U.S. equity indexes are plunging, his conclusion looks prescient.

Yet by even that measure, the U.S. still looks strong. Despite this week’s carnage, the Dow Jones Industrial Average is up 1.4 percent this year, and the broader S&P 500 has gained 2.1 percent. Nasdaq has increased 6.2 percent.

Chinese indexes are going the other way, among the world’s worst performers this year. The Shanghai Composite is down 21.9 percent, and the Shenzhen Composite is off 31.9 percent. The tech-heavy ChiNext has dropped 28.0 percent. Chinese stocks would be far lower had Beijing’s so-called “National Team” not been buying shares like crazy in a centrally directed effort to avert meltdowns.

More tellingly, the onshore renminbi is down 5.91 percent this year against the greenback. It would be far lower than the current 6.89 yuan to the dollar if it were not for persistent state intervention.

So is Bremmer correct that the U.S. is in decline and the international system it leads is passing away? The Chinese people don’t seem to think so. Survey after survey show almost half the country’s wealthy have plans to leave China permanently.

And they are taking money with them. Money gushed out China in 2015 and 2016—about $2.1 trillion of net capital outflow those two years. The hemorrhaging would have continued but for the draconian clampdown in late 2016, with many of Beijing’s controls, banana republic-style, unannounced.

Many of the people and much of the money have ended up in the United States, as walks through most American cities—and my suburban neighborhood—suggest.

So the main underpinning of the American-led order, the American economy, is doing just fine. And the economy of the main challenger to that order is not doing well at all.

The comments on the piece are very interesting too. Of course Gordon Chang has been a China pessimist for a long time.

As for us, we’re not convinced by this analysis. For example, Shanghai’s stock market has been all over the place in the last decades. We’ve said that China’s big problems will happen when the credit markets vote a big NO on the often squirrelly debt arrangements with the SOE’s and others. When that happens it will be a world historical event, but it hasn’t happened yet. When it does, it will probably make 2008 look like a minor thing. Stay tuned.

Dum Dum Dum Dum

October 14th, 2018

No it’s not Dragnet’s music. It’s this and this and this and this. We forgot how to spell dumb. It’s unbelievable how much the media and others hate Darth Tweeter.

Creepy in so many ways

October 14th, 2018

We never heard of this Saudi guy but every aspect of the story is really creepy. All sides are horrible and indeed far worse than that.

Just for fun

October 13th, 2018

Roger Simon on the wisdom of the Kanye freakout. Kanye is a “white supremacist” who is 1) dumb; 2) mentally ill; 3) a house negro; 4) a token 5) a minstrel, etc. The insanity is really quite a funny thing. Re hysteria, we’re going to read this and report.

Lower and Lower we go

October 13th, 2018

We’ll add links when available, but they are a little hard to find outside TV. There are a number of ads in CA where candidates and propositions want to stop the evil capitalists and their price rises, but they never mention that government price controls never control prices; instead, they eliminate competition and supply here and here and here – a marvelous piece, and so on. Duh. Yet the opponents of the Leftists never address the issue directly and strongly, pointing out the idiocy of their opponent Leftists’ positions. Rather, they wimp and whine and make stupid tiny arguments. Stupid party indeed.

OH NO, who is coming to lunch?

BTW, we’ve been diligent students of the Fed and monetary policy since our first job as a corporate lender in 1974 at Citibank. We saw Fed Funds rates of 20% or so back in oil and hostage crisis days of 79-81. Darth Tweeter has it right, and we understand that maybe Jim Cramer agrees as well. Our current time is a lot more like Eisenhower and his 2.5% rates than anything else. Stop with the nonsense please, dear Fed.

Sigh

October 12th, 2018

NK in the NYT:

Prof. Michael E. Mann of Penn State told me that Hurricane Michael should be a wake-up call. “As should have Katrina, Irene, Sandy, Harvey, Irma, Florence,” he added wryly. “In each of these storms we can see the impact of climate change: Warmer seas means more energy to intensify these storms, more wind damage, bigger storm surge and more coastal flooding.”

OTOH: First ever audit of global temperature data finds freezing tropical islands, boiling towns, boats on land.

Mann should have been in paragraph one so we’d have an early warning system.

More insanity

October 11th, 2018

In evacuating the plane, it’s womxn and squirrels first. This is a “conservative.” Hey, what’s the newest law in NYC? Bonus fun: brief outbreak of sanity.

“People are either of Dar Al-Harb or not”

October 10th, 2018

We’ve covered this before. Lifson has updates.

FWIW

October 10th, 2018

We very much like the buzz that Nikki Haley would become a SC senator after The Newly Roaring Graham becomes head of the DOJ post 11/6. Even if it’s unlikely and just gossip, it’s gossip that at least makes sense for once.

Who you gonna believe?

October 10th, 2018

This guy Brennan is a Commie voting nut (as he has demonstrated so many many times) and here’s his latest. How did he get his job, seriously, and why would anyone believe a word he says? Speaking of believing, do you believe the self-interested nuts who say the planet has 10 years and “a climate-sensitive realignment of savings and expenditure towards low-emission, climate-resilient infrastructure and services requires an evolution of global and national financial systems.” Or these guys: “freakishly improbable data, and systematic adjustment errors, large gaps where there is no data, location errors, Fahrenheit temperatures reported as Celsius” etc. If you choose the former, please remember to hide the decline.

Outer space

October 9th, 2018

An astronaut said something nice about Winston Churchill. Thank goodness he apologized. Didn’t something big happen back then? We forget or, if we were younger than 40 or so, we never knew. Hmmm, most affluent, lifespans 2x their great grandparents, all the riches of the last hundred years. Oh never mind, everybody was evil back then, according to the young who are smart like Fredo.

More China economy stimulus

October 8th, 2018

WSJ:

the People’s Bank of China said it would reduce the amount of reserves most commercial banks are required to hold by 1 percentage point, effective Oct. 15. The move comes as the U.S. has imposed tariffs on $250 billion of Chinese goods and has vowed additional import taxes on $257 billion of products.

Chinese leaders are eager to get ahead of any potential economic impact of the trade spat and boost confidence in a flagging stock market, economists say. Stocks in Shanghai have sunk about 15% since the beginning of the year, while the yuan has weakened by more than 9% against the U.S. dollar since mid-April.

The central bank said the cut will free up 1.2 trillion yuan ($174.72 billion) in total. Of that, 450 billion yuan ($65.52 billion) will be for banks to repay short-term debt coming due this month and 750 billion yuan will be released into the financial market. Big Chinese banks will face a reserve-requirement ratio of 14.5%, down from 15.5% currently.

The cut in the reserve-requirement ratio, coming after a weeklong holiday on the Chinese mainland, was widely expected. Chinese leaders have already lowered banks’ reserve-requirement ratios three times this year, and rolled out fiscal measures such as reducing individual income taxes and urging local governments to boost infrastructure spending.

“In the current trade-war situation, they don’t want to be seen with a weak economy,” Ding Shuang, an economist at Standard Chartered, said of policy makers’ intentions. “They are very serious about the growth target this year.”

Meanwhile, brains are exploding at WaPo, Google, Georgetown and NYT, and in many other places too. Bonus: just for fun, a couple of aviation stories (here and here).

Shout Shout

October 7th, 2018

Bonus fun or unfun from a German or Austrian, and from a listener in the gallery. Charming.

Brief news from the Klingon Empire or some other planets

October 6th, 2018

(1) “Tuesday evening in Southhaven, Miss., Trump laid into Ford with the ruthlessness of an attack dog.” It seemed like no big deal to us, but apparently it got played and mocked a lot on CNN etc, which makes us wonder why they didn’t just ignore it. Not brite. (2) 1,000 Harvard Law alumni signed a petition saying his presence on campus now would send a message to female students that powerful men are above the law. 1,700 law professors have signed an open letter complaining that Judge Brett Kavanaugh “displayed a lack of judicial temperament.” (3) The KPFK people sounded as though they were having a heart attack. (4) Back in our universe, Conrad Black has a funny piece. (5) A little more fun.

Fighting the good Fight, Fight, Fight, and even more Fight

October 5th, 2018

38% strongly approve of Darth Tweeter, very impressive since 90% or so MSM coverage is negative or worse. But he’s a Fighter. And the Brett (we need a nickname for this guy) is a Fighter too. And 3 senators who used to be sheep (Larry, Moe and Curly?) also became Fighters this week. BTW, the Collins speech was remarkable. Much more interesting than the braying leftists. Darth has really changed things for the better.

Where do we go from here? It’s a good question. Today was a day of hope that the sensible people can best the lunatics from the Snowflake, Media, and Tenure cohort. However, someone has got to begin fixing ASAP the education system that has enabled the Tenured, for at least 1.5 generations, to inflict on the Snowflakes their reflexive anti-American nonsense, e.g. white privilege and similar stuff. One course would be to send all the superior Tenured folk to take Omaha Beach in another conflict, but WWIII would then be a loss.

Hey, what’s that grain of rice doing?

October 4th, 2018

Bloomberg:

Nested on the servers’ motherboards, the testers found a tiny microchip, not much bigger than a grain of rice, that wasn’t part of the boards’ original design. Amazon reported the discovery to U.S. authorities, sending a shudder through the intelligence community. Elemental’s servers could be found in Department of Defense data centers, the CIA’s drone operations, and the onboard networks of Navy warships. And Elemental was just one of hundreds of Supermicro customers.

During the ensuing top-secret probe, which remains open more than three years later, investigators determined that the chips allowed the attackers to create a stealth doorway into any network that included the altered machines. Multiple people familiar with the matter say investigators found that the chips had been inserted at factories run by manufacturing subcontractors in China.

The chips had been inserted during the manufacturing process, two officials say, by operatives from a unit of the People’s Liberation Army. In Supermicro, China’s spies appear to have found a perfect conduit for what U.S. officials now describe as the most significant supply chain attack known to have been carried out against American companies.

One official says investigators found that it eventually affected almost 30 companies, including a major bank, government contractors, and the world’s most valuable company, Apple Inc. Apple was an important Supermicro customer and had planned to order more than 30,000 of its servers in two years for a new global network of data centers. Three senior insiders at Apple say that in the summer of 2015, it, too, found malicious chips on Supermicro motherboards.

Maybe the FBI and a CA senator should investigate. That’ll do the trick.

Transformative Hermeneutics of Quantum Gravity – Volumes 2, 3, etc

October 3rd, 2018

Volume 1 was the Sokal hoax more than a decade ago. Now there are multiple volumes, including a feminist rewrite of Mein Kampf. Oh, in case you were smiling, here’s a real downer.