20,939 etc

June 19th, 2018

Every day the nuttiness gets worse, as this AT piece about illegal immigration with the number 20,939 illustrates. Apparently Laura Bush does not like the President. Speaking of Bush associates, how about this CIA director? Charming. For a trip back to sanity for a brief moment, this piece featuring the number 918,098 is sober and sensible. BTW, the bottom line of all this stuff and nonsense is that Russia is now RIP.

Unfun bonus: we’ve never heard of this Shriver, but it sounds like the usual idiocy, this time in the publishing industry. And the universities go on more perversely on and so forth. These creepy people really do live in a bubble, don’t they?

If you build empty cities in China, what happens?

June 18th, 2018

We’ve addressed this many times before. If you build empty cities in China (here and here), nominal debt-fueled GDP growth happens, at least for a while. But capex’s accounting for half of GDP growth is a disaster waiting to happen, if the government can’t bail out the borrowers (which China can do to some extent, given very high household savings rates). The clock is ticking, much faster now. We’ll see…

From 1,000,000 to 300,000 to 150,000 — oops!

June 17th, 2018


In China’s Inner Mongolia province, in the middle of the Gobi desert, row upon row of largely vacant apartment towers line the streets of Kangbashi, a new district of the city of Ordos. Earlier this month, Xu Yongfen and his family moved into one 28-story building. In the hallways there are a few signs of life — tricycles, slippers and pink children’s shoes in front of some doors. But most apartments remain unoccupied, their doors still covered in plastic wrap, and at street level, barren storefronts are visible in all directions. “This area is nearly totally empty,” Mr. Xu says, tapping a cigarette into a bowl of ashes at his dining room table.

The city has spent 14 years planning, erecting and maintaining Kangbashi, which has the distinction of being one of China’s best-known “ghost towns” — gleaming but sparsely populated new urban centers adjacent to older metropolises. Built by the dozen across the country, the new areas reflect—and were meant to accelerate — China’s economic boom. As the country’s growth has slowed, many of them have become serious liabilities, deep in debt, with little prospect of full occupancy anytime soon.

A decade ago, Ordos was one of China’s wealthiest cities, thanks to its big coal deposits. Full of optimism for the future, it spent billions on roads, water and gas pipelines to transform a patch of barren desert into a vision of the urban future. But the city has been hit hard by the drop in demand for coal, and its annual growth rate has fallen by more than two-thirds since 2008. Real-estate values have cratered too, and the city’s debt has ballooned to almost 250% of its budget.

Local officials had hoped to attract 1,000,000 people to the new area, nearly matching the size of the old city 20 miles away. Architectural showpieces—a museum in the form of a giant metallic bean bag, a library resembling a shelf of books, a sports stadium reminiscent of a modern Coliseum — were built as attractions. Officials have since reduced their population goal to 300,000, and they are just halfway there. An early resident, Hu Richa, has been waiting seven years for more neighbors. Still, he says, “There’s barely anyone living here.”

In another northern desert city, Lanzhou, the drive from the new district’s airport to downtown takes at least an hour, past rows of hollow apartments and a half-finished theme park with a full-size replica of Egypt’s Sphinx.

Pictures from 2010 of other ghost towns here. Hey maybe the US government can help fill those empty apartments.

Bonus: boy, Bruce Willis was really lucky that Die Hard (with the greatest villain) came along.

13, and another large number or two

June 16th, 2018

13 — that’s quite a large number, given the context of very senior government officials trading Top Secret stuff publicly

Hmmm. $2 trillion in M&A so far this year is also a large number. Re this $2 trillion, we think the author is overexcited since M&A goes up and down, but the observation is noteworthy and we will follow subsequent developments.

Regarding China in the WSJ link below, we note once again that China’s ghost towns may someday come to be a problem.

No comment, maybe

June 15th, 2018


you probably sense that I believe the report is half-baked. But if I say it “may be” half-baked . . . well, technically that means it may not be, too. I mean, who really knows, right? If that annoys you, try wading through 568 pages of this stuff, particularly on the central issue of the investigators’ anti-Trump bias. The report acknowledges that contempt for Trump was pervasive among several of the top FBI and DOJ officials making decisions about the investigation. So this deep-seated bias must have affected the decision-making, right? Well, the report concludes, who really knows?

Not in so many words, of course. The trick here is the premise the IG establishes from the start: It’s not my job to draw firm conclusions about why things happened the way they did. In fact, it’s not even my job to determine whether investigative decisions were right or wrong. The cop-out is that we are dealing here with “discretionary” calls; therefore, the IG rationalizes, the investigators must be given very broad latitude. Consequently, the IG says his job is not to determine whether any particular decision was correct; just whether, on some otherworldly scale of reasonableness, the decision was defensible. And he makes that determination by looking at every decision in isolation. But is that the way we evaluate decisions in the real world?

In every criminal trial, the defense lawyer tries to sow reasonable doubt by depicting every allegation, every factual transaction, as if it stood alone. In a drug case, if the defendant was photographed delivering a brown paper bag on Wednesday, the lawyer argues, “Well, we don’t have X-ray vision, how do we really know there was heroin in the bag?” The jurors are urged that when they consider what happened Wednesday, there is only Wednesday; they must put out of their minds that text from Tuesday, when the defendant told his girlfriend, “I always deliver the ‘product’ in paper bags.”

Fortunately, the judge ends up explaining to the jury that, down here on Planet Earth, common sense applies. In our everyday lives, we don’t look at related events in isolation; we view them in conjunction because they read on each other. Let’s say on Monday I confide to my friend that I can’t stand Bob, and on Tuesday I tell Bob I can’t join him for dinner because I have other plans. It may or may not be true that I have other plans, but common sense tells you my disdain for Bob has factored into the decision — even if I don’t announce that fact to Bob.

For all his assiduous attention to detail, IG Horowitz has weaved a no-common-sense report. On August 8, 2016, FBI lawyer Lisa Page, borderline hysterical, texts her lover, agent Peter Strzok, about GOP candidate Donald Trump: “He’s not ever going to become president, right? Right?!” Strzok replies, “No. No he won’t. We’ll stop it.”

Now mind you, Page isn’t just any old lawyer; she is counsel to the FBI’s deputy director (Andrew McCabe) and involved in virtually every significant decision the bureau makes. And Strzok is not any old agent; he is deputy assistant director and one of the FBI’s top counterespionage agents — and he steered both relevant investigations, Clinton-emails and Trump-Russia.

This August 8 text exchange does not occur in a vacuum. It is part of ceaseless stream of anti-Trump bile. It is, moreover, just a week before the infamous text in which we learn that top-level bureau officials met in the deputy director’s office to discuss what they saw as the harrowing possibility of a Trump presidency; Strzok urged that, though highly unlikely, this prospect was so intolerable that the bureau needed an “insurance policy” against it — i.e., the Russia investigation.

Conclusion here. Well, we do have a comment from watching CNN and MSNBC for a few minutes: disgusting! Klavan has more.

What does POS mean?

June 15th, 2018

It might be an entertainer of some sort. It might be a cash register. Of course if the cash register is located at a smelly southern Virginia Walmart, the uneducated, lazy POS is something else indeed.

China growth and debt numbers, and a clarification

June 14th, 2018


According to China Chengxin’s figures, private firms raised 275.4 billion yuan from bond sales in the January-May period. Of the total, about 260 billion yuan was used to repay debts, leaving a relatively small net financing figure.

In comparison, according to data from China’s central bank, across both the private and public sectors, the total net financing from corporate bond sales in the January-April period was 915.9 billion yuan, while the full-year total for 2017 was 442 billion yuan.

Also, outside the rust belt province of Liaoning in China’s northeast, very few state-owned enterprises reported defaults in the period.

Even Tianijn Real Estate Group, a developer backed by the Tianjin government, last month escaped defaulting on a 200 million yuan bond despite having debts of 180 billion yuan and a debt-to-equity ratio of 85 per cent.

So a lot of the debt raised now is repaying other debt. Thus no surprise that growth and investment have slowed: “Infrastructure investment slowed to 9.4 per cent in the January-May period, from 12.4 per cent for the first four months, according to the statistics agency. Investment in railways, which comes almost exclusively from state and local governments, fell 11.4 per cent year on year in the period.”

As for clarification, try this: we were curious about Trey Gowdy’s frankly bizarre comments recently. Now we know he was trying to look impartial as he was drafting this for release today.

More nuttiness

June 13th, 2018

The other day we noted the consistent way the MSM viewed the Singapore meeting. Our update is that the NYT has started making videos, and has one on Singapore, complete with vulgarity of course. Roger Simon has some good thoughts on related matters.

Bonus: we used to think that there was some sort of secret and clever thing going on with Jeff Sessions. Now we’re wondering how he keeps his job.

How do you say garbage in Mandarin?

June 13th, 2018

An email also received over at PL:

Dear Alumni and Friends,

In the weeks and months ahead, a lawsuit aimed to compromise Harvard’s ability to compose a diverse student body will move forward in the courts and in the media. As the case proceeds, an organization called Students for Fair Admissions — formed in part to oppose Harvard’s commitment to diversity — will seek to paint an unfamiliar and inaccurate image of our community and our admissions processes, including by raising allegations of discrimination against Asian-American applicants to Harvard College. These claims will rely on misleading, selectively presented data taken out of context. Their intent is to question the integrity of the undergraduate admissions process and to advance a divisive agenda.

One of our B school classmates started a company that moved Chinese teenagers to countries in South America and elsewhere so that they could get admitted to college as Brazilians or Colombians etc instead of getting the customary discrimination against Asians. Disgraceful places, these universities (and high schools!).

Hey, maybe Drew Faust can get a job at the FAA.

Bonus: this Harvard / Asian grossness is likely to get much worse — for the university (if there is an honest judge of course.)

Opinions may differ

June 12th, 2018

In the WP: The spectacle of the murderous dictator Kim Jong Un on equal footing with the president of the United States — each country’s flag represented, a supposedly “normal” diplomatic exchange between two nuclear powers — was enough to turn democracy lovers’ stomachs. President Trump naturally made things worse.

In the NYT: Kim seems to have completely out-negotiated Trump, and it’s scary that Trump doesn’t seem to realize this. For now Trump has much less to show than past negotiators who hammered out deals with North Korea like the 1994 Agreed Framework, which completely froze the country’s plutonium program with a rigorous monitoring system.

More from the WP: Reporters crowded into a Singapore auditorium Tuesday, expecting President Trump to walk out and announce the results of his historic meeting with North Korean leader Kim Jong Un. Suddenly, two huge screens on either side of the empty podium came to life. Soaring music boomed over the speakers, and the reporters were bombarded with a montage portraying North Korea as some sort of paradise. Golden sunrises. Gleaming skylines and high-speed trains. Children skipping through Kim Il Sung square in Pyongyang, North Korean flags waving between images of Egyptian pyramids, the Taj Mahal and the Lincoln Memorial. In a split-screen shot, Kim Jong Un waved to an adoring crowd while President Trump stood beside him with his thumb in the air. The pair appeared over and over again, like running mates in a campaign video. The film went on like this for several minutes, with brief interludes of missiles, soldiers and warships interrupting the fanfare. Some journalists, unable to understand the Korean-language narration, assumed they were watching one of Pyongyang’s infamous propaganda films. “What country are we in?” asked a reporter from the filing center. But then the video looped, playing this time in English. And then Trump walked onto the stage and explained that the film was not North Korean propaganda. It had been made in America, by or on the orders of his White House, for the benefit of Kim.“I hope you liked it,” Trump told the reporters. “I thought it was good.”

In the DB: The Trump-Kim summit held Tuesday in Singapore represented the triumph of hype over experience. The event was the first reality-television summit in American history, a sham staged for the cameras featuring D-list characters from supporting players like Dennis Rodman and Sebastian Gorka to the two leaders themselves. But unlike the more engaging reality-TV shows that contain a little drama and even a smidge of humanity, this was pure rose ceremony from beginning to end, a pre-cooked bromance based not on true love or respect but on the need of both principals to be known and admired by audiences watching at home. It was also much worse than that. Because as shallow as the exercise was and as inconclusive as its discussions proved to be, it did have real consequences. The president of the United States essentially provided the kind of elevation and endorsement the North Korean leader and his family have sought for decades. Not only did he treat him as an equal; he did not in any meaningful way make an issue of the fact that Kim, his father, and his grandfather had enslaved their people, wantonly tortured and murdered them, and violated every norm of civilized behavior.

We’re optimistic, since North Korea’s nuclear facilities are largely destroyed anyhow, as China reported. With that being the case, Kim now has a new direction to go in, as that odd video showed. Kim got the best deal he could under the circumstances, and the interests of all parties are served by cooling things down, particularly China’s as it seeks greater regional domination. Oh yeah, and North Korea could be great for hotel and casino development.

Final point: the writers above all sound like that MIT prof who got the vapors listening to Larry Summers.

Final Final point: constitutional crisis, Yikes!

Two sorts of numbers

June 11th, 2018


China has moved up the global value chain dramatically, with a world-class export sector bigger than that of any other G-20 economy. It boasts a large domestic high-tech market and technology firms that are fast becoming global leaders. The country has been granted the largest number of patents globally since 2015. Over half its population — some 700 million people — use smartphones. As of September 2017, China had the second-largest number of unicorns after the U.S. — some 98 companies.

True, while China’s per capita income reached $8,830 in 2017, up eight-fold from 2001, it’s still well below the World Bank’s $12,236 threshold for high-income countries. This measure is misleading, however. Already an upper-middle-income nation, China has a high-income country living inside of it. Over 200 million Chinese live in high-income areas, including the cities of Beijing, Tianjin and Shanghai, and the powerhouse coastal provinces of Jiangsu and Zhejiang. Jiangsu alone has a population of 80 million people and per capita GDP of almost $17,000 — higher than Argentina, Chile and Hungary. Shenzhen’s 12 million residents boast a per capita GDP of more than $27,000 in nominal terms.

China has also become systemically important financially in a way few other countries are. It houses the world’s largest banking system, second-largest equity markets and third-largest bond market, and is promoting a larger international role for the renminbi. In recent years, China has become the world’s largest net exporter of capital; its policy banks have extended more lending to developing economies than all of the multilateral development banks combined.

A couple of years ago we were told that a quarter of the country was deplorable. With the latest outburst on live TV, we’re up to fully half the country being that way. Mark Steyn has some sort-of funny things to say about that, but we confess to being appalled at such bad behavior.

Bonus: Caution, bank robbery ahead,, as Lifson and Attkisson well point out.


June 10th, 2018

Hey, you know who made a similar phrase famous, but times have changed:

“Civilisation requires energy but energy use must not destroy civilisation,” the pope told top oil company executives at the end of a two-day conference in the Vatican. Climate change was a challenge of “epochal proportions”, he said, adding that the world needed an energy mix that combated pollution, eliminated poverty and promoted social justice.

Hey maybe this fine fellow should team up with the distinguished professor Mann (MWP disappeared!) and they both can hide the decline.

Interesting piece on economies of India and China

June 9th, 2018


India has been one of the fastest-growing large economies in the world for over two decades. However, the country’s performance in terms of GDP growth and macroeconomic stability has been dwarfed by that of China.

This disparity can be best illustrated by the two countries’ respective economic trajectories: Although they had similar economic status in the 1990s, China’s economy has grown much faster since then and is now almost five times bigger than India’s.

Given this situation, closer Sino-Indian cooperation may be the right solution for some of India’s economic problems. To this end, instead of viewing India and China as being on an equal footing as the representatives of emerging markets, we should recognize both China’s head-start and India’s unrealized potential for growth. This would be more conducive for assessing the promising future of Sino-Indian economic cooperation.

As countries that both have populations of over 1 billion people, China and India share three important advantages: a large and low-cost labor force; a large domestic market; and a great supply of high-quality human capital known for professional services and science and engineering talent.

Utilizing these three assets, China followed a three-step model. First, it focused on labor-intensive and export-oriented industries like clothes, toys and furniture at the low end by tapping into its huge workforce.

Then, with initial capital and expertise accumulated, it exploited growing domestic demand on the one hand by initiating policies that encouraged more transfer of technologies from developed countries, and on the other hand by taking advantage of its own economies of scale to develop national champions.

China then turned its attention to research and development, utilizing its large reservoir of talent. In this way, China expects to reap high value from cutting-edge industries like integrated circuits, pharmaceuticals and aviation.

Interestingly, though it has the same three advantages, India’s approach followed a reverse sequence: For decades, India has been famous for its highly competitive technology and capital-intensive industries like pharmaceuticals and IT services. While India’s intermediate-tier industries, such as cellphones and automobile parts, have made major progress in recent years, they still lag behind in terms of international competitiveness and the industrial ecosystem.

Ironically, and deviating from the conventional growth pattern, India’s labor-intensive manufacturing sector is disproportionately underdeveloped, leaving its huge workforce largely in less productive informal sectors.

Such a distorted industrial development pattern has taken a heavy toll on the Indian economy, which has been unable to meet the massive domestic demand for manufactured products, forcing Indian consumers to rely on imported goods.

India 2018 GDP $2.8 trillion. China 2018 GDP $13.2 trillion. Looks like somebody took a wrong turn.

Miscellany – 1970s, 1950s etc

June 8th, 2018

Back to the seventies in a way – here, here, here, and here. The first one, Seymour Hersh, is very interesting. Speaking of the seventies decade, we just passed the 40th anniversary of our first marathon. (Now we jog at about 10% the speed.)

Bonus old coot question: what age were you the first time you fired a gun? A: maybe 8 at YMCA camp. We wonder what today’s youth would answer.

Minor tiny thing: we know who the 3 stooges of today are. We hope when one is indicted, they will play this in the courtroom.

Heap Big Numbers

June 7th, 2018


Of the top 100 companies in the world, China and Hong Kong have 21 of them. The U.S. has 30. The difference between the two countries in terms of its corporate titans is quite stark, however. As expected, China is big because its banks are big — at least within the top 100. By comparison, the U.S. top companies are much more diverse. Banks lead the top 10, down the list includes the tech companies and energy companies and media and telecom firms. China is bank-heavy.

China is big – at everything. Its tech companies like HNA Technology are getting bigger. Asian e-commerce powerhouse Alibaba, founded by billionaire Jack Ma, is already a beast. China has some of the biggest airlines in the world. C-Trip International is bigger than Expedia by market cap. Car companies? Of the 32 auto and truck manufacturers on this year’s Forbes Global 2000 list, eight are Chinese. That puts them on par with Japan and clobbers the U.S. at just three.

Of the top 10 global companies ranked by Forbes, China and the U.S. are split down the middle at five each. All of the top companies are banks, led by the Industrial and Commercial Bank of China (the biggest public company in the world) and China Construction Bank (the second biggest public company in the world). The U.S. is also bank heavy, except for Apple, which comes in at No. 9 on the Global 2000 list. Back in 2003, China and Hong Kong had a combined 43 companies on the list. China alone has 232 companies this year.

The country’s banking sector hit around $35 trillion in loans this year, accounting for more than three times the size of China’s GDP in dollars. China overtook Europe’s banking assets of $31 trillion two years ago.

If you’d like to read a really annoying piece that spends a fair amount of time on China, read this.

And if you really want to get annoyed, here are a couple of pieces (here and here) on the scam known as SPLC, much loved by the tech lefties. Ugh.

More about our two, non-overlapping countries

June 6th, 2018

It’s D-Day once again, and we usually note it. Several million US soldiers, sailors and airmen were killed or wounded over the years. Deep gratitude is the normal response. However, here’s one perspective (bad) on America today, and here’s another one of today (excellent). Take your pick. (Some days we actually think things might work out for the best.)

For unrelated material on how fast the world continues to change, read this.

More then versus now

June 6th, 2018

Today: “In place of the swimsuit portion of the competition, Miss America contestants will now take part in a live interactive session with the judges.” As Spock might say: fascinating. They’re “aiming to evolve in this cultural revolution.” Meanwhile, TCM is showing 42nd Street, with Shuffle off to Buffalo of course, the meaning of which is very unclear (ahem). For further fun, the next TCM film was Gold Diggers of 1933, with its memorable theme song, applicable to very few in that year. Much more longevity and wealth today of course. But as for the messaging of now versus then, take your pick.


June 5th, 2018

Guess who’s going to the Singapore summit. And no, it’s not the Philadelphia Eagles.

Q: When did mellifluous become a bad word?

June 5th, 2018

A: when VDH used it in a great piece. Hmmm. The AGW crowd doesn’t sound all that mellifluous however. Bonus: more VDH here. Guy sure works hard with that brain.

Ah, wisdom

June 4th, 2018

We’re not going to bother to quote from this hysterical Guardian piece on trade and you-know-who, except getting to the last paragraph is rewarding, since the greatest economic thinker of the last several generations is called on as an authority.