Archive for the 'General' Category

Name that year

Friday, March 22nd, 2019

AP:

A senior U.N. environmental official says entire nations could be wiped off the face of the Earth by rising sea levels if the global warming trend is not reversed by the year xxxx.

Coastal flooding and crop failures would create an exodus of eco-refugees, threatening political chaos, said Noel Brown, director of the New York office of the U.N. Environment Program, or UNEP.

He said governments have a 10-year window of opportunity to solve the greenhouse effect before it goes beyond human control.

As the warming melts polar icecaps, ocean levels will rise by up to three feet, enough to cover the Maldives and other flat island nations, Brown told The Associated Press in an interview on Wednesday.

Coastal regions will be inundated; one-sixth of Bangladesh could be flooded, displacing a fourth of its 90 million people. A fifth of Egypt’s arable land in the Nile Delta would be flooded, cutting off its food supply, according to a joint UNEP and U.S. Environmental Protection Agency study.

Ecological refugees will become a major concern, and what’s worse is you may find that people can move to drier ground, but the soils and the natural resources may not support life. Africa doesn’t have to worry about land, but would you want to live in the Sahara?? he said.

UNEP estimates it would cost the United States at least $100 billion to protect its east coast alone.

Shifting climate patterns would bring back 1930s Dust Bowl conditions to Canadian and U.S. wheatlands, while the Soviet Union could reap bumper crops if it adapts its agriculture in time, according to a study by UNEP and the International Institute for Applied Systems Analysis.

Excess carbon dioxide is pouring into the atmosphere because of humanity’s use of fossil fuels and burning of rain forests, the study says. The atmosphere is retaining more heat than it radiates, much like a greenhouse.

The most conservative scientific estimate that the Earth’s temperature will rise 1 to 7 degrees in the next 30 years, said Brown.

The difference may seem slight, he said, but the planet is only 9 degrees warmer now than during the 8,000-year Ice Age that ended 10,000 years ago.

Brown said if the warming trend continues, ?the question is will we be able to reverse the process in time? We say that within the next 10 years, given the present loads that the atmosphere has to bear, we have an opportunity to start the stabilizing process.

He said even the most conservative scientists already tell us there’s nothing we can do now to stop a change of about 3 degrees.

Anything beyond that, and we have to start thinking about the significant rise of the sea levels – we can expect more ferocious storms, hurricanes, wind shear, dust erosion.

He said there is time to act, but there is no time to waste.

UNEP is working toward forming a scientific plan of action by the end of xxxx, and the adoption of a global climate treaty. In May, delegates from 103 nations met in Nairobi, Kenya – where UNEP is based – and decided to open negotiations on the treaty next year.

Nations will be asked to reduce the use of fossil fuels, cut the emission of carbon dioxide and other greenhouse gases such as methane and fluorocarbons, and preserve the rain forests.

We have no clear idea about the ecological minimum of green space that the planet needs to function effectively. What we do know is that we are destroying the tropical rain forest at the rate of 50 acres a minute, about one football field per second,? said Brown.

Each acre of rain forest can store 100 tons of carbon dioxide and reprocess it into oxygen.

Brown suggested that compensating Brazil, Indonesia and Kenya for preserving rain forests may be necessary.

The European Community is talking about a half-cent levy on each kilowatt- hour of fossil fuels to raise $55 million a year to protect the rain forests, and other direct subsidies may be possible, he said.

The treaty could also call for improved energy efficiency, increasing conservation, and for developed nations to transfer technology to Third World nations to help them save energy and cut greenhouse gas emissions, said Brown.

This “news” story is from 1989, and destructorama was set for the year 2000, not that AOC or Bozo will know or care.

Oh well

Friday, March 22nd, 2019

Martin Feldstein via WSJ:

The most dangerous domestic problem facing America’s federal government is the rapid growth of its budget deficit and national debt.

According to the Congressional Budget Office, the deficit this year will be $900 billion, more than 4% of gross domestic product. It will surpass $1 trillion in 2022. The federal debt is now 78% of GDP. By 2028, it is projected to be nearly 100% of GDP and still rising. All this will have very serious economic consequences, and the CBO understates the problem. It has to base its projections on current law—in this case, the levels of spending and the future tax rules and rates that appear in law today.

Those levels don’t match realistic predictions. Current law projects that defense spending will decline as a share of GDP, from a very low 3.1% now to about 2.5% over the next 10 years. None of the military and civilian defense experts with whom I’ve spoken believe that will happen, given America’s global responsibilities and the need to modernize U.S. military equipment. It is likelier that defense spending will stay around 3% of GDP or even increase in the coming decade. And if the outlook for defense spending is increased, the Democratic House majority will insist that the nondefense discretionary spending should rise to match its trajectory.

If defense and other discretionary spending stays steady as a share of GDP, the annual deficit will increase by nearly 1% of GDP—from 4.2% of GDP now to about 5% of GDP 10 years from now. At the same time, the tax increases in current law that the CBO assumes will occur during the next decade as some of the recent cuts are phased out probably won’t happen. Congress will face strong political pressure to avoid a functional tax increase.

What does that mean for the long-run ratio of the federal debt to GDP? Federal debt will probably surpass 100% much sooner than 2028. If discretionary spending increases, debt growth will jump to 100% even quicker.

So much for not writing. When we started in commercial banking at FNCB, the fed funds rate was in single digits, but zoomed to 20% by 1980. Given today’s good economy and relatively low interest rates, not to lower the deficit is fiscal malpractice. We needn’t remind you that the Social Security Ponzi scheme that “reduced” Vietnam costs is gonna get really bad shortly, and reducing deficits now will help deal with that looming problem.

Goodbye perhaps for a little while

Thursday, March 21st, 2019

For the most part, we have the same views as Thomas Lifson, the Powerline guys, Roger Simon, and a little less than GP’s excitement. So what’s to learn that’s different from our thoughts? Not that much, though we are much more engaged on things like China.

Right now we’re very involved in creating a mid-life aircraft lessor, which is very difficult to do, even though the need for companies like this is monumental — e.g., China will expand its airline fleets 3-4x in a short number of years, but has almost no expertise in the highly technical things that come with managing and repositioning mid-life and older aircraft.

Big Need. Big example: Air Force One is 35 years old and most countries have zero clue in managing older aircraft, which can be a super-profitable business if you know how to manage $10-20MM engine and parts MRO costs – oh, did we already lose you?

So here’s our thought: if you’re a zillionaire reading Dino, fund our leaseco and we’ll provide (our attempt at) entertainment hourly. Otherwise we mostly have to work at getting the leaseco fully funded. All help appreciated.

The Shootist – end of an era

Thursday, March 21st, 2019

The 1976 Shootist, just on TCM, got decent reviews, which is fine, but most of all, it marked the end of an era. It has TV’s Wyatt Earp as a bad guy, as well as TV’s Paladin, both good guys in their TV series. It had Mrs. Humphrey Bogart, who lost her husband at a young age, 16 years from the death of her real husband. But most of all, it was a real-time obituary for the number one good guy action figure of several generations, the Duke. In many ways, The Shootist was an obituary for the dozens of TV Westerns of the 50s and 60s, where the American law enforcer was always the good guy.

We’ve previously written that the early TV Westerns were so popular in part because they were an unconscious treatment of PTSD for so many American men caught in the horrors of WWII and to a more modest extent Korea, and we continue to believe that. But many of the Westerns were just good entertainment as well. In any event, by 1976 the media and much of the country had moved on (“I will never lie to you, or make a misleading statement,” and so forth.)

In any event, major parts of the USA had changed by the time of this movie, and often for the worse, as is so evident today.

The new gunpowder, or not – China style

Wednesday, March 20th, 2019

Spengler:

The Chinese economic model is only a souped-up, bigger and more ruthless version of the Asian model that began with Japan’s restoration of the Emperor Meiji in 1868, and was replicated by South Korea and Taiwan: Move subsistence farmers to the cities and build factories for them to work in. While its per capita GDP rose 35 times, China moved 550 million people from the countryside to the cities, and it built the equivalent of all of the cities of Europe to house them.

Modernization in China isn’t the enclave of a middle-class modernity, as in India, but a movement that reaches into the capillaries of society. Entrepreneurs in Chinese villages connect to the world market through mobile broadband, sell their products and buy supplies on the Alibaba platform, and obtain credit from microfinancing platforms. Information and capital flow down to the roots of the economy and products flow back up to the world market.

China now proposes to export its model to Southeast Asia, Central Asia, Latin America, parts of the Middle East and Africa. This involves a Faustian bargain of sorts; the same technologies that have lifted billions of East Asians out of dire poverty and the ever-present risk of starvation into prosperity and economic security can also give dictatorial regimes previously unimagined tools for social control. China’s Belt and Road Initiative (BRI) has a $1 trillion war chest for infrastructure investments and export loans.

In making such offers, Chinese planners are thinking a generation ahead. The scarcest resource in the world is labor, specifically workers who can read an instruction manual, learn skilled or semi-skilled jobs, and show up for work on time. Virtually all of the world’s population growth during the 21st century will take place in sub-Saharan Africa and the Indian subcontinent—this last mostly in Pakistan, where the average female has four children compared with 2.2 in India.

The problem is that the productive parts of the world are all aging together. There are plenty of young people in the world, but low educational levels, abysmal infrastructure and political instability sideline the regions where population growth is most rapid. The people of aging countries with shrinking populations cannot find enough young people to absorb the investments they need to make to fund their prospective retirements. China’s own labor force stopped growing a couple of years ago. In 2018, kindergarten admissions in China fell by 740,000, the first decline on record, and the birth rate fell to 11 per 1,000 people in 2018 from 13 per 1,000 people in 2016.

The good news is that the prospects are good for a quantum jump in productivity in the developing world. The bad news is that China is acting aggressively to position itself as the dominant equipment supplier, investor, joint venture partner and technology provider in this revolution. By contrast, the United States is drifting toward the export profile of Brazil, with strength in agricultural commodities and energy but overall weakness in high-technology manufacturing and exports.

5G technology, a source of bitter contention between the United States and China, is a game changer. For the military, it makes possible the control of vast numbers of autonomous weapons systems, like drone swarms that can overwhelm anti-missile defenses. For industry, it allows robots and control devices to exchange vast amounts of data at speeds 2,000 times that of 4G LTE. It also cheapens the cost of delivering broadband to homes, by transmitting over the airwaves more data than fiber-optic cable now can carry. Developing countries will therefore be able to go straight to 5G at much lower cost, and Huawei is both the cheapest and the most technologically advanced provider. It spends $20 billion a year on R&D, about double the combined R&D budgets of its only major competitors, Sweden’s Ericsson and Finland’s Nokia.

Not since the invention of gunpowder has China led the world in the introduction of a disruptive new technology

We’re not sure what to make of this, but we’ll think about it and report. Frankly, as we’ve said, something might be going very wrong in China now, so fancy dreams might just be dreams. We’ll report as things develop.

Life just might be a movie – let’s hope it’s a good one

Tuesday, March 19th, 2019

Alas, not Stanley Kubrick. Here’s R. Here’s D. The film is allegedly a comedy. See if you can name it. Odd, or not, that stoopid and stoopider is on the same day as the the beautiful and sad WWII film.

Update: it appears to be a generational thing we were not aware of.

Another weird one

Monday, March 18th, 2019

Chinese science fiction. No comment for the moment.

Hmmmm, first time we’ve heard this

Sunday, March 17th, 2019

BI:

According to a paper published in January by Hurun Report, a Shanghai-based research firm, just over one-third of the superrich Chinese citizens in a survey described themselves as “very confident” about the future of the Chinese economy. On the surface, that seems like a solid number, but it is startling when compared with the same survey two years ago, which showed that nearly two-thirds were very confident in China’s economic future. It is also the lowest number in the 15 years the survey has been produced, Hurun said.

The same survey from Hurun also found that the number of wealthy Chinese who had “no confidence at all” in China’s economic future had doubled from last year’s survey to 14%. Hurun’s survey of 465 superrich Chinese citizens also found that almost half were considering emigrating or had already made moves to emigrate from China.

NYT: Chen, a former judge and lawyer, shared on social media a 28-page article explaining himself. “Why I Left China,” read the headline, “An Entrepreneur’s Farewell Admonition.” “China’s economy is like a giant ship heading to the precipice,” Mr. Chen wrote. “Without fundamental changes, it’s inevitable that the ship will be wrecked and the passengers will die. In the eyes of some senior officials, even people like Jack Ma and Pony Ma are just small-time businessmen,” Mr. Chen said.

First we’ve heard of this and it sounds very serious. Xi Jinping isn’t one to take matters like this lying down. Watch out, Taiwan!

More about then and now

Saturday, March 16th, 2019

Our version of a song goes: Great Green Gobs of Greasy Grimy Gopher Guts, Mutilated Money Meat, etc. And at recess in 5th grade, we loved to listen to the version of My Boomerang Won’t Come Back that had not been banned in Australia. And the funny TV themes of course: Let’s Ride with the family down the street through the courtesy of Fred’s two feet, and So get a witch’s shawl on, a broom that you can crawl on, etc. But on Friday’s assembly at a nearby grammar school, the first to eighth graders get to listen to lovely lyrics like these. Ah, progress, isn’t it great?

More numbers, some conflicting

Saturday, March 16th, 2019

WSJ:

China’s leadership is adopting what some traders dub a “cocktail approach” to arresting its economic slowdown. Its remedies include a mix of greater deficit spending, tax cuts and easier credit.

In a national address in early March, Premier Li Keqiang announced the government will cut taxes and fees for businesses by a total of 2 trillion yuan ($298 billion), or 2% of China’s $13 trillion economy. That includes reductions in value-added taxes—which hit products as they move from raw material to finished goods for sale—and required corporate contributions to pensions.

The scale of the reduction exceeded market expectations. Mr. Li also announced big-ticket spending initiatives, including an investment of 800 billion yuan in railway construction and 1.8 trillion yuan to build roads and waterway transportation.

The tax-cut and spending measures add up to 4.6 trillion yuan to the economy, exceeding the 4-trillion-yuan pro-growth package Beijing rolled out in late 2008. However, China’s economy has become bigger since then, meaning a similar amount of stimulus doesn’t go as far as it used to go. The 4-trillion-yuan package represented 13% of China’s GDP in 2008—and that doesn’t count a massive lending spree that accompanied the spending—and less than 5% now.

“Whether China’s stimulus still has a big impact, or how big an impact it will have for the rest of the world, mostly depends on how large the stimulus is,” says Wang Tao, chief China economist at UBS Group. Relatively speaking, the stimulus then was much bigger, she said.

Another metric of stimulus is the expansion of China’s so-called augmented fiscal deficit, which takes into account the government’s own spending and spending funded by government-controlled financial firms. By that measure, UBS’s study shows that China’s stimulus this time is much smaller than the one launched during the financial crisis. Such deficit spending is expected to increase by as much as 1.8 percentage points in 2019 from last year, compared to a jump of 9.6 percentage points in 2009 from 2008.

According to an analysis by Ms. Wang and her team, overall credit growth—including bank loans, corporate bond issuance, local government bond issuance and other debt—will accelerate to 11.5% as of the end of this year from about 9.5% at the end of 2018. By contrast, China’s credit jumped 36% in 2009 after an 18% increase a year earlier.

By 2018, total debt outstanding of companies, central and local governments, and households hit nearly 250% of gross domestic product in 2018, up from less than 150% a decade earlier. Debt growth like that is dangerous, the International Monetary Fund has warned repeatedly. In a January 2018 report, for instance, it noted nearly every case of credit boom similar to China’s was followed by “a major growth slowdown or a financial crisis.”

Total debt of U.S. companies, households, and federal and local governments, by comparison, was 247% of GDP in 2018, with a big spurt in household debt coming in the years before the 2007-09 housing crisis.

Most of China’s debt growth comes from state-owned companies and finance firms controlled by various levels of government, which often use the money to fund projects that are politically appealing but not always commercially viable.

So in this article, debt is 247% in the US and 250% in the US, compared to GDP. But in this previous piece, China’s is actually 300% of GDP or so. Economies this large should eschew such funny business. It’s going to come back to bite them.

Bad debts in China

Saturday, March 16th, 2019

So we wrote a little about non-performing loans in China the other day, and two credible sources had way different views. Then we looked back at 2006, early on in the time we started thinking these things like this. The numbers show bad to worse in general of course, but they are all over the place. It would be nice to find a chart from a single source that tracked both total loans and NPL’s. Any suggestions welcome.

A little point and counterpoint

Friday, March 15th, 2019

Niall Ferguson:

“What made war inevitable,” wrote Thucydides, “was the growth of Athenian power and the fear this caused in Sparta.” In the space of barely a year, Americans have suddenly grown fearful of the growth of Chinese power. What was once the position of a few alarmists is the new orthodoxy in Washington, shared by Republicans and many Democrats, foreign policy wonks and technology nerds. We may not be destined for a hot war, but we certainly are on track for a cold one.

As in the First Cold War, the two superpowers are ideologically divided, with President Xi Jinping reasserting the importance of Marxism as the foundation of party ideology even as Trump insists: “America will never be a socialist country.” And, as in the First Cold War, both superpowers are seeking to project their economic power overseas.So what are the big differences? First, China is now a match for America in terms of GDP

Um, no, not close. Barrons:

Li Keqiang memorably told the U.S. ambassador that China’s main economic statistics are “man-made” and “for reference only.” He recommended looking at rail freight, bank lending, and electricity consumption. The official numbers have been systematically overstating economic output since 2008. They estimate that China’s real gross domestic product was about 15% lower than reported in 2016, and that the discrepancy has likely widened

Officially, debt owed by China’s governments, households, and nonfinancial businesses rose from 146% of GDP at the end of 2007 to 253% by the end of 2018. That was already one of the most extreme increases in indebtedness of all time. Dividing the existing debt numbers by the new estimates of China’s national income implies an overall debt ratio closer to 300% of GDP. This suggests its problems with underlying productivity growth could be even worse than previously thought.

consider what all this means for China’s long-term prospects. According to data compiled by the Maddison Project, Chinese output per person has increased from about 6% of the U.S. level in the late 1970s to roughly 25% today.

Also, it has been estimated that 2018 GDP growth was 2%, Yikes!

Now, for an enjoyable moment, identify the movies (and the authors if possible) of three of the best delivered lines: (a) Try the wine; (b) Eggnog?; and (c) Here’s Johnny. No peeking! The last one’s an ad lib BTW.

Caution, genius at work

Thursday, March 14th, 2019

DM, and we have a question below:

If you think 300,000 immigrants and asylum-seekers apprehended on the southern border is a problem, and I don’t necessarily think that it is, the kind of migration and refugee flows that we will see when entire bands of this world are no longer habitable will be a crisis of a different magnitude altogether. We face catastrophe and crisis on this planet even if we were to stop emitting carbon today right now at this moment.

Some will criticize the Green New Deal for being too bold or being unmanageable. I tell you what: I haven’t seen anything better that addresses this singular crisis we face, a crisis that could at its worst lead to extinction. Literally, not to be melodramatic, but the future of the world depends on us, right now, here where we are.

along this current trajectory there will be people who can no longer live in the cities that they call home today. There is food grown in the country that will no longer prosper in these soils. There is going to be massive migration of tens or hundreds of millions of people from countries that are literally uninhabitable or under water, that are above the sea right now. This is our final chance. The scientists are absolutely unanimous on this, that we have no more than 12 years to take incredibly bold action on this crisis.

Question: are you allowed to vote if you’re this stupid? Answer: possibly no, but you can run for president.

We’re trapped in that Twilight Zone episode where the earth seemed to be heating but was actually freezing. Los Angeles just recorded the only February in its history where temperatures never reached 70 degrees on any day.

What could they have been thinking?

Wednesday, March 13th, 2019

WSJ:

A company spokesman confirmed the update would use feeds from multiple sensors in the MAX’s stall-prevention system — instead of the current reliance on a single sensor.

A stall prevention system that relies on a single sensor – how nuts is that? We’re reminded of the pitot tube problem a decade ago on an A330. What’s your backup plan? (Our first solo flight to another town went to Mount Airy, NC, better known as Mayberry; flying like that is a serious business so we quit doing it.)

Today’s amusements

Tuesday, March 12th, 2019

(1) Best not to get VDH angry at you (what’s up with these guys anyhow? – very very odd). (2) How did Fauxcohontas and Murdoch get on the same page? Oh wait, we’re there too as is Ralph Nader. (3) It’s long past time to get the SEC on the case as well.

Brief miscellany

Monday, March 11th, 2019

1) Churchill and lotsa private planes. 2) They should have called it the “smart wall” or something highlighting the drones and all the technology. Easier to market that. 3) Drones – did we say drones?

More later.

New name

Monday, March 11th, 2019

NK premier Kim-aoc, or someone:

We should not be haunted by the specter of being automated out of work. We should be excited by that. But the reason we’re not excited by it is because we live in a society where if you don’t have a job, you are left to die.

We should be excited about automation, because what it could potentially mean is more time educating ourselves, more time creating art, more time investing in and investigating the sciences, more time focused on invention, more time going to space, more time enjoying the world. We should be working the least amount we’ve ever worked, if we were actually paid based on how much wealth we were producing.

But we’re not. We’re paid on how little we’re desperate enough to accept. And then the rest is skimmed off and given to a billionaire.

Hey, life is swell in North Korea.

Encore!

Sunday, March 10th, 2019

The President continued:

You know just as there’s all this fear mongering that government is going to take over every corporation and government is going to take over every business or every form of production, um, we should be scared right now because corporations have taken over our government.

And in my opinion, we should be weary of any entity in which both of those things are combined, whether it’s through one way or the other. Um, and that’s why the emphasis in Democratic Socialism is on democracy. And it’s not about, you know, it, it’s, it’s just as much a transformation about bringing democracy to the workplace so that we have a say, and that we don’t check all of our rights at the door every time we cross the threshold into our workplace.

Because at the end of the day as workers and as people in society, we’re the ones creating wealth. Not a corporate CEO. It’s not a CEO that’s actually creating four billion dollars a year. It is the millions of workers in this country that’s creating billions of dollars of economic productivity a year. And our system should reflect that.

We’d report more, but at that moment the lights went out.

Brilliant is as brilliant does

Sunday, March 10th, 2019

Ladies and Gentlemen, the President of the United States:

One perfect example, I think a perfect example of how special interests and the powerful have pitted white working class Americans against brown and black working class Americans in order to just screw over all working class Americans, is Reaganism in the ’80s when he started talking about welfare queens. So you think about this image of welfare queens and what he was really trying to talk about was this like really resentful vision of essentially black women who were doing nothing that were sucks on our country.

it’s this whole tragedy of the commons type of thinking where it’s like because these one, this one specific group of people, that you are already kind of subconsciously primed to resent, you give them a different reason that’s not explicit racism but still rooted in a racist caricature. It gives people a logical reason, a logical reason to say, oh yeah, no, toss out the whole social safety net.

I think the thing that is really hard for people to sometimes see is that when we are on this path of a slow erosion and a slow, slow, slow, just like move away from what we’ve always been, we’ll be a hundred miles, you’ll, you know you won’t even realize that you’ve drifted a hundred miles. So, when someone’s talking about our core, it’s like oh this is radical, but this isn’t radical, this is what we’ve always been.

It’s just that now we’ve strayed so far away from what has really made us powerful, and just, and good, and equitable, and productive, and so I think all of these things sound radical compared to where we are but where we are is not a good thing. And this idea of like 10% better from garbage, is, shouldn’t be what we settle for, it’s like this like it feels like moderate is not a stance it’s just an attitude toward life of like hmmm.

Very entertaining. HT: PL

More disturbing numbers

Saturday, March 9th, 2019

Bloomberg:

China’s official figures for the size of its economy are about 16 percent larger than they should be, and measures of real GDP growth were overstated by about 2 percentage points between 2008 and 2016, according to a study published by the Brookings Institution Thursday. Combined with the country’s own downgrade of its GDP growth for this year to a range of between 6 percent and 6.5 percent earlier in the week, that represents a sort of profit warning for the hchineconomy.

The Brookings study is here and it will make your head spin. More via CNBC: “China’s February dollar-denominated exports fell 20.7 percent, compared to an expected 4.8 percent fall.” The whole thing is very odd.