Flashback, and maybe forward

July 24th, 2017

NYT 8/16:

Over the last five years, Chinese investors have plowed at least $2.8 trillion into buying such funds from banks alone. After quintupling since 2011, these investments, known as wealth management products, now total an amount roughly equal to more than one-third of the country’s annual economic output.

Among the biggest issuers of wealth management products are hundreds of banks and other financial institutions in poor, inland provinces. These banks are under intense pressure from provincial political bosses to keep lending and help sustain big employers like state-owned enterprises, at a time when the entire country’s economy is slowing.

To raise money for large-scale lending, banks have ramped up issuance. They sold 187,000 separate wealth management products by the end of last year, up 56 percent from a year earlier, according to official statistics. Technology has made it easier for firms other than banks, like State Gold Treasure, to sell the products online and through smartphone apps. “In the past, you’d need to go to the bank to open an account or open an account at a certain fund company,” said He Zhirui, a finance company worker in Beijing who also invests in wealth management products. “Now, with the apps, you can simply upload your personal ID and purchase wealth management products right away online.”

State Gold Treasure, known as Guojinbao in Chinese, has its wood-paneled offices on the 71st floor of the gleaming Shanghai World Financial Center, which has a large statue of a Chinese god of wealth in the lobby. On its website, the company says investors are protected by a “seven-layer guarantee mechanism” and promises that all investments will be repaid in full. But the fund does not say who is guaranteeing the funds.


Wanda, Anbang, HNA Group and Fosun have made at least $41 billion of overseas acquisitions, according to Dealogic, a research firm. The country’s debt levels soared. In 2011, total credit extended to private, nonfinancial companies was about 120 percent of economic output in China. It is now 166 percent. Last year, the chairman of Anbang, a fast-growing insurer that paid $2 billion for the Waldorf Astoria in New York, held court at the luxurious hotel, wining and dining American business leaders. Last month, the chairman, Wu Xiaohui, was detained by the Chinese police, for undisclosed reasons.

As we observed last year, China has 8x the steel making capacity of the US, and apparently used more cement in 3 recent years than the US did in the 20th century. Someday the chickens will come home to roost. However, we’ve been saying that for over a decade now, and it hasn’t happened yet.

History repeats itself — with a little difference

July 23rd, 2017


In 2001 the quantity of first-class mail in the U.S. began to decline thanks to the internet. Today it is down 40% from its peak levels, according to Postal Service data. But though there are fewer letters to put into each mailbox, the Postal Service still visits 150 million residences and businesses daily. With less traditional mail to deliver, the service has filled its spare capacity by delivering more boxes.

In 2007 the Postal Service and its regulator determined that, at a minimum, 5.5% of the agency’s fixed costs must be allocated to packages and similar products. A decade later, around 25% of its revenue comes from packages, but their share of fixed costs has not kept pace. First-class mail effectively subsidizes the national network, and the packages get a free ride. An April analysis from Citigroup estimates that if costs were fairly allocated, on average parcels would cost $1.46 more to deliver. It is as if every Amazon box comes with a dollar or two stapled to the packing slip — a gift card from Uncle Sam.

Amazon is big enough to take full advantage of “postal injection,” and that has tipped the scales in the internet giant’s favor. Select high-volume shippers are able to drop off presorted packages at the local Postal Service depot for “last mile” delivery at cut-rate prices. With high volumes and warehouses near the local depots, Amazon enjoys low rates unavailable to its competitors. My analysis of available data suggests that around two-thirds of Amazon’s domestic deliveries are made by the Postal Service. It’s as if Amazon gets a subsidized space on every mail truck.

History: By 1890, Standard Oil controlled 88 percent of the refined oil flows in the United States. “beyond question the dominant position of the Standard Oil Co. in the refining industry was due to unfair practices — to abuse of the control of pipelines.”

Standard Oil controlled the pipelines back then, and Amazon controls them now. But Mr. Rockefeller wasn’t smart enough to buy the WaPo and subsidize its self-congratulatory flatulence. HT: Michael Walsh

Zero, Zero, Zero, Zero

July 22nd, 2017

(a) To the nearest percent, what percent of air is CO2? (b) To the nearest percent, what percent of people are T, i.e., have gender dysphoria? (c) To the nearest percent, what is the probability that a detailed 2200 word WaPo story on a shooting, which names over a dozen people, contains the name of the shooter? (d) To the nearest percent, what is the probability that a WaPo story that also contains the word “backlash” does not name the shooter over a dozen times?

Hey, 5% is pretty good

July 21st, 2017


North Korea’s economy grew at its fastest pace in 17 years in 2016, South Korea’s central bank said on Friday, despite the isolated country facing international sanctions aimed at curbing its defiant pursuit of nuclear weapons. Gross domestic product (GDP) in North Korea last year rose 3.9 percent from the previous year when the economy contracted due to a drought and low commodity prices, the Bank of Korea said. The expansion, driven by mining and energy, marked the biggest rise since a 6.1 percent gain in 1999. North Korea, which counts China as its biggest trading partner, also boosted exports by 4.6 percent, the most since an 11.8 percent jump in 2013. Still, the isolated state’s per capita gross national income in 2016 was just 1.5 million won ($1,342), less than 5% of the comparable number in South Korea. North Korea does not publish economic data.

These guys need to be put out of business, and soon. Writing about NK triggered a memory. Years ago we met OJ and his wife who were hosting at their Rockingham home a fundraiser for a school our kids attended. They seemed nice enough. A while later the Dinomom was visiting and asked to see 875 South Bundy. It was a mess and the blood from days before was still everywhere. Kim and OJ; hmmmm, wonder what prompted them to be in our thoughts at the same time.

Cash and no carryback

July 20th, 2017


Cash held by U.S. non-financial companies notched its largest increase, 9.2%, to set a fresh record of $1.84 trillion at the end of 2016, according to a report from Moody’s Investors Service. Moody’s estimates that roughly 70% of total corporate cash, or a record $1.3 trillion, is held overseas. “The cash held offshore continues to grow because of U.S. tax policy,” said Richard Lane, senior vice president at Moody’s and an author of the report. Apple, Microsoft, Alphabet, Cisco Systems Inc. and Oracle Corp. — all part of the technology sector — were the top five cash hoarders, unchanged from a year earlier. As a group they held $594 billion, or 32% of the total cash balance. Apple Inc. continued its reign as the cash king into the eighth straight year. The technology company’s $246 billion cash balance accounted for 13% of the total cash held by non-financial companies. The majority of Apple’s cash, about 94%, is held overseas.

Somebody please explain how this makes any sense.

FDR, then and now

July 19th, 2017

So you didn’t know that FDR was a right wing nut? Apparently he was. (HT:PL) Here’s a little more of the same, and we also note with interest the observations on his administrative style — that’d also send the media skyward today. Super fun bonus: another right wing conspiracy. Enjoy!

Map of the day

July 18th, 2017

How about this. Michael Barone has commentary. Bonus fun here.


July 17th, 2017

It’s fun to catch a wave and surf for a bit. Of course it will probably end inelegantly but not so badly. Worse of course if that’s a concrete block up ahead and there doesn’t seems to be any way around it. So maybe the psychological way out (delay and denial) is to pretend that the nasty block is something not so bad, or at least distant. And conquerable. So in Hollywood, they yell at an author about “intersectionality, identity politics, PC virtue signaling,” etc, whatever those things are. Some people worry about DOOM in 100 years caused by a gas that is 0% of the atmosphere. Hey, they want to keep fiddling. The problem comes when some damn guy comes along and keeps saying what none of these people want to hear, as we’ve discussed wrt to Thomas Kuhn here and elsewhere. Spengler sees a guy yelling Islam that’s causing the trouble. Wretchard sees oil as one of the paradigm-threatening issues driving the uncomfortable surfers nuts. Sometimes it’s just fun to watch the hysteria and not think too much about what’s going on in the hysteric’s head. One thing is clear: the hysterics aren’t going to stop until they can use the Martha Stewart ploy for some leverage and / or blackmail. But that won’t be the end either.

Short takes

July 16th, 2017

Clarice and Wretchard make sense. One pretty interesting story that we probably won’t see reported is how many in the media / lobbying / non-profit circles in NY and DC get spiffs for their family trusts or modest retainers from oil producing countries so they can preen about their objectively anti-US policy positions. Wonder what Mann gets BTW.

The Martha Stewart ploy vs. reality like the stock market

July 15th, 2017

Every day is stupidity and more stupidity. In our view it will go on until the FBI guys (who should themselves be in jail for turning non-crime into crime) get some statement so they can pull a Martha Stewart / Frank Quattrone / Scooter Libby stunt on some relative of Agent Orange to force him out. Meanwhile: “The Dow Jones Industrial Average and the S&P 500 closed at records, as investors anticipated low interest rates for the foreseeable future. The S&P 500 rose 11.44 points, or 0.5%, to 2459.27, notching a weekly gain of 1.4%. The Dow industrials added 84.65 points, or 0.4%, to 21637.74 and rose 1% for the week. It was the biggest weekly gain for both indexes since late May.” Which is the real news and which is worth commenting upon?

Time is fleeting, madness takes its toll

July 13th, 2017

The other day Ralph Peters was off his rocker, more recently Max Boot got to Godwin’s Law pretty quick. We yearn for the normal days of insanity, when it’s just nuts assaulting fisherman for their evil deeds. BTW, wouldn’t it be murder to kill a flower or a bug to eat? Certainly not a choir boy. Very hard to figure this stuff out.

Dumberer and Dumberer

July 11th, 2017

Byron York:

President Trump’s performance at the G-20 summit in Germany produced a wave of commentary claiming the United States has abdicated its role as world leader. ABC News contemplated “A World Without U.S. Leadership.” CNN reported that Trump exchanged “an aggressive, traditional American leadership role for isolation in a club of one.” The liberal activist Neera Tanden tweeted, “Can we just admit that the era of American global leadership is over under Trump?” The talking point quickly became conventional wisdom in Europe. In the United Kingdom, the Independent wrote, “The G-20 proves it. Because of Trump, the world no longer looks to America for leadership.” While there were disagreements in Hamburg between Trump and the other 19 nations on lots of things, including trade, the main factor in all the end-of-American-leadership talk was the president’s decision to pull out of the Paris Climate Accord. The idea is that, by not going along with the other 19 nations — Argentina, Australia, Brazil, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, the United Kingdom, and the European Union — the United States is no longer leading.

Can some politician or reporter please, somewhere, at some time, ask the nincompoops a simple question: to the nearest percent, what percent is CO2 as a part of the atmosphere? 20%, 30%, 40%, 70%? Hilarity should ensue. What a great and profitable scam that makes Bernie Madoff look like a three card monte guy ripping off the rube tourists in Times Square.

A little fun, or not

July 10th, 2017


today’s internet distribution systems distort the flow of economic value derived from good reporting. Google and Facebook dominate web traffic and online ad income. Together, they account for more than 70% of the $73 billion spent each year on digital advertising, and they eat up most of the growth. Nearly 80% of all online referral traffic comes from Google and Facebook. This is an immensely profitable business. The net income of Google’s parent company, Alphabet, was $19 billion last year. Facebook’s was $10 billion. But the two digital giants don’t employ reporters.

The News Media Alliance, which represents digital and print publishers (including Dow Jones, publisher of The Wall Street Journal), is proposing a solution: a new law granting a limited safe harbor under antitrust for publishers to negotiate collectively with dominant online platforms. This would grant media organizations the flexibility to expand innovative digital models of news distribution, while also giving them more ways to sustain high-quality journalism.

High quality journalism? We thought the solution at the end of the first paragraph was going to be to fire all the reporters. Funny bit:

individuals wanting special treatment are the newspaper owners themselves. Washington Post owner Jeff Bezos (worth $83.9 billion, according to the Bloomberg Billionaire’s Index), New York Times owner Carlos Slim (worth $61.1 billion), and Buffalo News owner Warren Buffett ($76.9 billion), publicly pleading poverty, are asking Congress for a helping hand in their negotiations with Google, controlled by Sergey Brin ($45.6 billion) and Larry Page ($46.8 billion).

We can’t help wondering if the $300 billion net worth media owners share their employees’ opinion of Western Civilization.

Going, Going, Gone

July 9th, 2017

(a) My daughter, a freshman at U of Arizona in 2009, took a class titled, “American History since 1877.” I was helping her prepare for the final exam and found this in her study guide. “The Silent Majority consisted of white people who did not accept the 1964 Civil Rights Act.” No mention of Nixon or the Vietnam War. I complained to the Dean of the “General Studies” program and he suggested that perhaps I should send her to another university. (b) while we do not know what is in his heart or mind, nor that of many public figures, we know what actions and words are and that is what we have to base our impressions upon. By his actions, non-actions, words (after all he does have the best words) he is an anti-semite. He traffics in their online postings, does not deny anti-semitic behavior. He wallows in ignorance and non-intellectual curiosity. Anti-semitism along with racism, homophobia, sexism and whatever else we want to toss at him are products of ignorance and hate. (c) We begin with the meteoric fall of the U.S. from the world power that dominated the G-20 to something of a joke on the world stage where the daughter of a president known for her clothing line sits in between the British and Chinese leaders on an important meeting for her father who has managed to isolate the U.S. from the rest of the G-19 in less than 6 months. Charles Kupchan, who was director of European Affairs on the National Security Council during the Clinton Administration and spent the last 3 years as Special Assistant to President Obama for National Security, joins us to discuss the much anticipated meeting between Putin and Trump that was conducted in secret without the National Security Advisor or the National Security Council’s Russian-speaking expert present. (d) he argued that Western (read: white) nations are “the fastest and the greatest community” and the “world has never known anything like our community of nations.” He crowed about how Westerners (read: white people) “write symphonies,” “pursue innovation” and “always seek to explore and discover brand-new frontiers,” as if these were unique qualities to white-dominated nations, instead of universal truths of the human race across all cultures. (e) Honing in on his repeated emphasis on “the will” and his declaration that “our civilization will triumph,” many made connections between the speech and an infamous 1935 Nazi propaganda film titled “Triumph of the Will,” which was directed by Leni Riefenstahl and based on the 1934 Nuremberg Rally. (f) Godwin’s Law, QED.

BTW, it’s already too late, but eliminate tenure and fire the people running the colleges.

Strange Days Indeed

July 8th, 2017

Ralph Peters: “Listening to Secretary of State Rex Tillerson’s summary of the two-hour-plus meeting was painful. The naivety on display played into Putin’s hands. We got nothing, Putin got a big win.” So let’s see. This guy ran a $200 billion company with a market cap of $340 billion, 84,000 employees in 65 or so countries, and a pretty good board of directors, etc. Yup, pretty much the dictionary definition of naive. It’s not just the left that’s lost its mind, though they certainly have as well, and are dumb, dumb, dumb to boot. (Our college major, Western European intellectual history from the 12th to 19th centuries, probably comes with a complimentary prison sentence today.)

BTW, we’re no fan of Pooty-Poot, but we just saw Peters and Max Boot make asses of themselves on the Carlson program. Carlson was no charmer either. What’s going on? Seriously.


July 7th, 2017


The most shocking sentence in Trump’s speech — perhaps the most shocking sentence in any presidential speech delivered on foreign soil in my lifetime — was his claim that “The fundamental question of our time is whether the West has the will to survive.” The West is a racial and religious term. To be considered Western, a country must be largely Christian (preferably Protestant or Catholic) and largely white. Where there is ambiguity about a country’s “Westernness,” it’s because there is ambiguity about, or tension between, these two characteristics. In his 2003 speech, Bush referred to democracy 13 times. Trump mentioned it once. And for good reason. Ideologically, what links the current American and Polish governments is not their commitment to democracy — both are increasingly authoritarian. Given that Trump had linked “our values” to America and Poland’s “tradition,” “faith,” “culture,” and “identity,” it wasn’t hard to imagine whom that leaves out. In his speech in Poland on Thursday, Donald Trump referred 10 times to “the West” and five times to “our civilization.” His white nationalist supporters will understand exactly what he means.

Here’s more nuttiness. And more. These people have all lost their minds.


July 6th, 2017

(1) The next time you’re with some dope who goes on about climate, ask that person to say, to the nearest percent, what percent of the atmosphere is CO2. (Answer: zero) (2) Yes, it was en excellent speech, but this is over the top. (3) We do, however, take the position that Fake News is a stroke of genius. Since, for example, any change to health care law will be characterized by the opposition as killing babies, the elderly, the poor, and most people on the planet, the only way to disrupt the narrative is to point to CNN etc and say “you still gonna believe these clowns and their Fake News?” Well done. (4) Genesis 22 is puzzling in some ways, but perhaps this is part of an explanation. (5) We’ve liked L&O but we’re done. When a certain species of mental illness is normailized, as opposed to being called out for its horrible infliction on a tiny fraction of the population, and we’re supposed to accept this as a new norm, somebody is sick, but it ain’t us.

GDP and GDP per capita

July 5th, 2017


What would the Declaration of Independence look like on twitter?

July 4th, 2017

The Declaration of Independence has around 1458 words if you count the signatures. Though some of the phrasing is fancy, at bottom it is a declaration of war against England and King George III — a war that had been going on for more than a year. Fast forward to today.

You’d have to lop off about 99% of the Declaration to fit its message on twitter. What would that message to King George look like today? Lest you think it would necessarily be flowery, we remind you that Thomas Jefferson was a strong supporter of the French Revolution, even after it turned horribly nasty and bloody. So what would the DoI look like as a tweet?

(BTW, King George’s response tweet might have resembled that of a NY Daily News columnist.)

0 to 250K in seven years, 0 to 3 billion in ten years

July 3rd, 2017


Zhengzhou, China — Farmer Zhang Hailin remembers the day in 2010 when he watched as helicopters flew in over fields of corn and wheat here, hovering in spots to drop balloon-shaped markers. “Three days later, a hundred bulldozers were here,” Mr. Zhang said.

The iPhone was coming, and it wouldn’t be long before a new industrial town on the edge of Zhengzhou would be known as iPhone City. Within months, boxy beige factory buildings appeared, power lines were connected and buses packed with workers began rolling up to Foxconn Technology Group, which assembles most of Apple Inc.’s smartphones.

A year later, Foxconn’s billionaire chairman Terry Gou said the iPhone factory complex had 100,000 workers. Today, Foxconn says it employs about 250,000, roughly the population of Madison, Wis.

Analysts estimate that Foxconn, formally known as Hon Hai Precision Industry Co, makes 150 million iPhones each year, along with 20 million iPads and other electronics. Foxconn said it employs 1 million people across China and elsewhere, including southern Shenzhen, where it began manufacturing the first iPhone amid great secrecy.

It’s pretty amazing that the iPhone just had its 10th anniversary a few days ago, and now over half the people on the planet have a smartphone. What happens in the next ten years?