Archive for the 'General' Category

Unpleasant numbers

Monday, October 16th, 2017


On average, 27,000 people perished on each day between the invasion of Poland (September 1, 1939) and the formal surrender of Japan (September 2, 1945) — bombed, shot, stabbed, blown apart, incinerated, gassed, starved, or infected. The Axis losers killed or starved to death about 80 percent of all those who died during the war. The Allied victors largely killed Axis soldiers; the defeated Axis, mostly civilians. More German and Russian soldiers were killed in tanks at Kursk (well over 2,000 tanks lost) than at any other battle of armor in history. The greatest loss of life of both civilians and soldiers on a single ship (9,400 fatalities) occurred when a Soviet submarine sank the German troop transport Wilhelm Gustloff in the Baltic Sea in January 1945. The costliest land battle in history took place at Stalingrad; Leningrad was civilization’s most lethal siege. The death machinery of the Holocaust made past mass murdering from Attila to Tamerlane to the Aztecs seem like child’s play. The deadliest single day in military history occurred in World War II during the March 10, 1945, firebombing of Tokyo, when 100,000 people, perhaps many more, lost their lives. The only atomic bombs ever dropped in war immediately killed more than 100,000 at Hiroshima and Nagasaki together, most of them civilians, while tens of thousands more ultimately died and were maimed from radiation exposure.

Hard to imagine the snowflakes and their teachers storming Omaha beach. Changing the subject to Steyn’s play of the day, it occurs to us that Pulp Fiction should have been called “Hollywood Studio.”

Unparalleled wealth, health, ease and longevity breed madness

Sunday, October 15th, 2017

And double the madness if you add tenure to the mix. In 4.5 billion years of earth history, never has there been greater longevity, ease, prosperity, access to knowledge, sickness-curing, and all the rest, than exist in the young in this country today. (“The American boy of 1854 stood closer to the year 1 than to the year 1900.”) Now we see that such ease breeds madness of a specific sort. If you are better off than 99% of all the humans that have ever lived, you have to make up stuff to be oppressed by. (Did we mention that tenure adds to the mix mightily?) And don’t bother saying true things in most of big corporate America; you’ll either get fired or have to grovel in apology. It is telling that the apologizer works for the company that took down Big Brother just 30 years ago.

Yes, we know that there are real problems, but you’d have to be an 80 year old like Walter Williams to dare speak such things without apology.

China changing to a consumer economy, and other news

Saturday, October 14th, 2017


China’s consumer confidence index last month hit a new high since 2000 of about 115 after a rally of 16 months, suggesting China’s consumption is on track to remain high, according to Bloomberg. In fact, according to the National Bureau of Statistics, the total retail sales of consumer goods in August reached 3.03 trillion yuan (US$460.3 billion), up 10.1 per cent from the previous month.

The accumulated growth rate from January to August has also kept its pace at 10.4%, a record high unchanged for three consecutive months, according to the bureau. In contrast, the accumulated growth of fixed-asset investment from January to August was only 7.8%, 0.5% lower than that from January to July, and a new low since January 2002.

In July, Yan Pengcheng, director of Policy Research Office at the National Development and Reform Commission, said consumption has become an increasingly important driver of economic growth under the national policy of consumption expansion.

“The contribution of consumption expenditure to overall economic growth has risen consecutively for the last three years from 49% to 64%, all higher than that of investment expenditure,” Yan said. “[Consumption expenditure] in the first half of the year stood at 63%, 31% higher than that of investment expenditure.”

The contribution of consumption expenditure to overall economic growth in the second half of the year will stand at about 65%, according to a report by Aijian Securities in Shanghai released last month.

In other fun news, the wealth of the top 2100 Chinese is about the same number as the GDP of the UK. Meanwhile, Wretchard ruminates on the civil war. Finally, the NFL, which only pretends to prefer diversity to performance, has seen its approval go from 70% to 40%. Keep it up, guys!

Good news, if true

Friday, October 13th, 2017


Exports to North Korea fell 6.7% last month, according to official figures, while imports from its north eastern neighbour plunged 38%, putting the country’s trade deficit with Beijing at just over $1 billion for the first nine months of the year.

In other news, “Goldman Sachs expects online consumer purchases of groceries, including fresh food, to grow 34% between 2016 and 2020 in China.” Get those freighters flying.

Super fun: which is funnier, Honey Badger, Rodney Dangerfield, or the philosopher-king?

Today’s astounding numbers

Thursday, October 12th, 2017


According to corporate filings, Alphabet spent $13.9 billion on R&D in 2016, about 16% of its revenue. Amazon spent $16 billion in the same period. In contrast, Alibaba spent 17.1 billion yuan ($2.6 billion) on R&D in its financial year that ended in March, or about 11% of its 158.3 billion yuan in annual revenue. Alibaba said it plans to hire 100 researchers for its new academy, which will open in seven locations, including two in the U.S.: in San Mateo, Calif. and Bellevue, Wash.

What the heck are Google and Amazon doing that generates $30 billion a year in R&D? Very odd. Bonus: a couple of City Journal pieces (this and that) are worth a look, and Wretchard has a take similar to ours on NK.

Parting shot, etc.

Wednesday, October 11th, 2017


In what could be one of his last major interviews in the top job, Zhou Xiaochuan, the veteran People’s Bank of China (PBOC) governor who is expected to retire soon, told Chinese magazine Caijing that China should seize the moment to let the market decide the yuan’s value and scrap capital account controls. Zhou’s call for reform came amid speculation that China’s leadership is veering away from liberalisation towards a more nationalistic and centralised approach to managing the world’s second-biggest economy. The interview, published days before the Communist Party meets to decide on a new leadership line-up, underscored Zhou’s long-standing liberal monetary views. Analysts said it was also reminder to the country’s future leaders and financial technocrats of what needs to be done to make China an open economy.

Zhao Yang, chief China economist at Nomura International in Hong Kong, said freeing up the capital account was a long-term task and leaders had other priorities now. “Given the capital outflow pressure, the government priority will be to lure capital inflows,” Zhao said. As a pro-market champion, Zhou can count the International Monetary Fund’s decision to give the yuan nominal international reserve currency status as one of his achievements in his 15 years as PBOC governor. In the interview published on Monday, Zhou said risk aversion and turf wars had held back further market liberalisation in China. He said free trade, a free exchange rate and free capital flows were an indivisible “trinity” but China’s bureaucracy had turned them into separate entities.

Central planning versus markets, one of the greatest debates in our time re China. What? You’re not interested? Then listen to a philosopher-king.

Lady Baden-Powell spoke at the 1964 Boy Scout Jamboree at Valley Forge, which we attended. She was very funny, alas, not intentionality. We heard an odd sound today, like someone flipping over in her grave. Two generations of destructive foolishness is more than Western Civ can survive without catastrophic intervention.

We recommend Dylan and the Baez version to ease the pain.

Cheers not from the peanut gallery

Tuesday, October 10th, 2017


From 2013 to 2016, China had an average GDP growth rate of 7.2 percent, far higher than the global average of 2.6 percent and 4 percent of developing economies, NBS data shows. China’s strong GDP growth has allowed the country to contribute an average of 30 percent to the global economy in the past five years, ranking first in the world, Ning said. The International Monetary Fund on Tuesday expects the Chinese economy to grow by 6.8 percent this year and 6.5 percent next year, both 0.1 of a percentage point higher than its previous forecast in July. the services sector has become an economic pillar. In 2016, the additional value of the tertiary industry represented 51.6 percent of China’s GDP, up 6.3 percentage points from 2012, NBS data shows. And China’s manufacturing PMI, a main gauge of industrial activity, stood at 52.4 in September, its highest level since May 2012 – a sign of improving industrial performance.

Of course GT is all about the rah-rah.

Bonus fun: pow zoom to the moon. We can think of many good candidates for that.

Q: what is $5,676,000?

Monday, October 9th, 2017

A: in case you missed it, $5,676,000 is systemic oppression. Also, Jack Cashill (you remember him) has a funny and sad piece on the systemic replacement of American culture with dreck.

Hey, let’s put on a Private Sector!

Sunday, October 8th, 2017


The People’s Bank of China (PBOC) announced on September 30 that it would cut the required reserve ratio, or the amount of money it requires banks to keep at the central bank, for banks that met the requirements to lend to small businesses and the agricultural sector. These banks have three months to work on their target customers before the reserve cut takes effect from 2018.

The selective cut, Tao said, was an innovative monetary policy that intends to steer liquidity into the real economy, particularly providing funds for private firms and start-ups, instead of financial speculative sectors.

Easier credit aside, Beijing has also tried to reassured its support to businessmen in an unprecedented directive that stresses guidance and protection over entrepreneurship on September 25.

The directive for the first time raised the idea of setting up a mechanism to “compensate the losses of entrepreneurs due to changes in government planning or policies”, in addition to the usual promises to protect their properties, legitimate rights, and ensure fair market competition.

China’s private sector has had a lacklustre year, even though overall economic growth in the country is beating expectations of foreign investors on the back of a strong profit rebound by state-owned enterprises (SOEs). Year-on-year industrial profit growth of SOEs rose 44.2 per cent for the first seven months, while growth of privately-owned enterprises (POEs) was at 14.2 per cent.

“We can see SOEs, which dominate the upstream industries largely benefiting from the rebound of commodities’ prices, while factories of POEs are closed down as the authority pushes for capacity reduction or environmental protection,” Tao said.

What’s more, private companies and their investments have been scrutinised by intrusive state agencies in the past year, often leaving them with no available recourse but to give up the market to SOEs.

To thrive, an increasing number of private companies have looked abroad for opportunities in the recent years. But their overseas ambitions have hit a wall since late 2016 when Beijing began to curb capital outflows.

Reminds us of the movie. We’ll have to see how real it is.

More fun than jihad du jour

Saturday, October 7th, 2017

A little something we’re working on:

1) Background West: Amazon’s revenues will grow 60% next year to $224 billion, but it already has over $500 billion in sales including pass-throughs from the US, Europe, Asia, South America, China, and elsewhere; non-US revenue will near 50% shortly

2) Background Asia: Alibaba’s revenues this year are $30 billion, and they will increase 50% to $45 billion next fiscal year, but Alibaba already has $470 billion in sales including pass-throughs from the US, Europe, South America, China and elsewhere

3) To repeat, Alibaba and Amazon have $1 trillion in online retail sales and recently are growing over 50% a year

4) Together they have less than 10% of global online retail sales, and probably half of those are streaming video, so the growth of global product sales will be unprecedented

5) Events are now moving at a much faster pace as dictated by the global e-commerce revolution beginning in earnest around 2014 in Asia and elsewhere, and continuing indefinitely, possibly the greatest speed advancement since the telephone, car, jet airplane, and the internet

6) (We have requested to purchase from Cargo Facts a series of charts detailing the remarkable additions to air routes and retail distribution in Europe, North America, and Asia by Amazon, Alibaba, their airlines and others; when you see the complexities already taken to transform e-retail into a global 24-hour home delivery nexus, you will be impressed)

7) Historically, the on-line revenue growth rates and volumes have been supported by ever expanding freighter and express aircraft fleets servicing Amazon, Alibaba,, and others, and including support from DHL, UPS, TNT (FedEx), YTO, SF Express, ZTO, FedEx etc, now numbering over 900 aircraft and growing quickly

8) Some widebody freighters are new, but all narrowbody freighters are passenger-to-freighter conversions, with lower prices and greater operating flexibility

9) Leading MRO’s that do conversions conservatively estimate 80 a year this year and beyond

10) These estimates may well be very low – to give you just one example, e-commerce leader Alibaba, with its uncanny growth and $440 billion market cap, has just committed (9/2017) to 24 hour deliveries to every person in China in five years; since FedEx and its competitors have 850 freighters and China’s express companies have 80 or so, they will have to add freighters at an astonishing rate to meet this goal

11) We note for the record that both Amazon and Alibaba, as well as others, are also establishing huge regional warehouses to hold inventories for deliveries of “slow” as opposed to “fast” (pharma, high-value, perishable, etc) goods, which will enhance the growth rates of start-up and smaller regional express carriers, in most regions around the globe, as the 24 hour, home delivery nexus expands worldwide

Global e-commerce is going from under $2 trillion to $5 trillion in a few years, a lot of the growth in Asia. At least somebody is having a good time. BTW while you weren’t looking Amazon started an airline that’s already up to 60 planes. (Better than focusing on the idiots who are close to ruining this country.)


Friday, October 6th, 2017

Alright, we don’t want to get into some of the things that are going on, but this is just too weird. Argumentative, not “he was a swell guy to us, and I’m so sad and can’t explain what happened.” BTW, the last time we saw a gambler make money, Sammy Davis Jr was singing about it. Something very strange is going on.

Excellent piece on a logical China slowdown

Thursday, October 5th, 2017


The next 10 years will see each of the four conditions that aided the reform era’s outsize productivity gains approach exhaustion. Technological progress will decelerate as firms must innovate rather than imitate, urbanization will slow as the rural labor surplus is exhausted, returns on capital will deteriorate as overinvestment makes high-return projects ever scarcer, and the country’s demographic window of opportunity will close. Productivity growth is likely to slow from its recent pace of about 2.3%, dragging GDP growth down with it.

But by how much? History offers some clues. Over the past five decades, the typical country at China’s rung on the income ladder generated 0.7% average productivity growth in the subsequent 10 years. Notably, less than one fourth of those countries enjoyed the 2%-plus annual gains implicit in consensus forecasts for China.

More ominous is the possibility that productivity growth utterly stagnates–roughly one third of countries at China’s income level saw flat to negative productivity growth for an entire decade. Academic research suggests flatlining productivity is especially common among previously fast-growing middle-income countries, a phenomenon economists refer to as the middle-income trap.

RTWT. We’ll come back to this shortly, when we have time, but it contains a lot worth pondering, since there’s a lot of what seem to be good parallels from other developing economies. Meanwhile, this is good, but everyone should cool it since almost no one knows what they’re talking about.

Report from the skies

Wednesday, October 4th, 2017

You’ve heard of Amazon and maybe Alibaba as we’ve discussed. But did you know that if you add transactions they process to their GAAP revenue, they account for over $1 trillion, $1 trillion in global sales, and are sometimes growing at 50% a year? Did you know that both companies have or control airlines in multiple countries? Fascinating. Check out Cargo Facts once in a while and enjoy a world that is probably currently invisible to you. BTW, we’re on a domestic American flight now, and, unlike the flight we took Monday whose previous stage was SYD LAX, the current domestic flight dares not show the Blazing Saddles that the international flights do. If it did, the snowflakes would melt and there would be 24 / 7 protests calling for the firing of the CEO. Safe travels!

Party time

Tuesday, October 3rd, 2017


The country’s central bank moved over the weekend to allow commercial lenders to dish out more loans by cutting the amount of cash they have to keep in reserve. The cut “is clearly signifying additional concern about the sustainability of economic growth in China absent credit injections,” said Christopher Balding, an associate professor at the HSBC School of Business at Peking University in Shenzhen. He estimated the move could unleash up to $100 billion in additional lending.

In other news, ugh.

Possible leaks in North Korea’s protective dam

Monday, October 2nd, 2017

Thomas Lifson tells the story well. For all the tactical advantages to China of pushing around Japan, South Korea, the Philippines, and even the US in matters like the South China Sea, China’s strategic interests re North Korea seem simple enough — there’s a madman who threatens both China’s economic boom and the lives of tens of millions. Let’s hope rationality prevails.

No one knows the end of either movie

Sunday, October 1st, 2017

On the one hand, Reuters: The official Purchasing Managers’ Index (PMI) released on Saturday rose to 52.4 in September, from 51.7 in August and well above the 50-point mark that separates growth from contraction on a monthly basis. It marked the 14th straight month of expansion for China’s massive manufacturing industry and the highest reading since April 2012.

On the other hand, Jim Rogers: “I expect things to go wrong by next year, sometime in the next several months something will happen and he will take action.” Asked what effect this conflict would have on the global economy, he replied: “It’s going to be the worst financial situation in your lifetime.”

How does that movie end? Who knows?

We’ve previously noted the discrimination practiced by Google against some fine websites of the conservative persuasion, as well as others who dare think for themselves. Scott Johnson has been particularly funny lately, not quite Mark Steyn but getting up there. These things are very pleasant to read, but you really have to get in the muck to write them, and that’s not for us right now. There are very important arguments to be had, but they can’t take place as long as the Left (HT: Clarice) just shouts, calls its opponents names, and says shut up.

Example: Professor Walter Williams is 81 years old, has been through a lot in his life, and has some clear thinking about the sensitive matters underlying the NFL nonsense. How do you think he’d be treated while giving a speech at Berkeley, Middlebury, etc?

So there’s a big China movie playing, maybe more than one (NK), and a big movie about the US’s second civil war, at least of a sort. If we focus on the former, and let the latter pass, at least we’ll learn some pretty incredible things, like this and that.

Brainwashing in two countries

Saturday, September 30th, 2017


Some look like high-tech firms, promising young college graduates a fast track to riches. Others pose as charitable groups on a membership drive, or companies building a sales network for a new product. Tens of millions across China are signing up — and learning that all is not as advertised.

Behind these groups is a looming challenge for the ruling Communist Party: A proliferation of pyramid schemes that have attracted enormous followings and huge sums of money, exploiting — and exacerbating — widespread anxiety over a slowing economy.

More than 40 million people are now ensnared, perhaps many more, according to the China Anti-Pyramid Selling Association, a nongovernmental group. One scheme shut down this summer was reported to have registered more than five million people alone, while another in southern China took in at least $54 million. Last year, the authorities investigated more than 2,800 cases, a 19 percent increase from 2015.

New recruits are asked to hand over cash and persuade others to do the same. The more people they bring in, the more they and their bosses earn. But if too many people quit or the schemes run out of new members willing to pay, the pyramids collapse, bankrupting families in a chain reaction and adding to the strains on the Chinese financial system.

The schemes take many forms, but China’s news media has labeled the worst of them “business cults” because they masquerade as elite companies or start-ups hiring college graduates, use high-pressure indoctrination tactics and demand cultlike loyalty. Sometimes, they resort to kidnapping and violence to keep the money coming in.

“They promise the dream of making a fortune,” said Liu Libing, a former victim who runs a business helping families find missing relatives. “In reality, they brainwash you and hold you against your will.”

So they’re tricked into thinking they’re in a fancy start-up and it’s a giant Ponzi scheme where “they brainwash you and hold you against your will.” Hmmm. The US has a version of that except that the geniuses with graduate degrees don’t know they’ve been brainwashed into hilarious stupidity and aren’t being held against their wills. (More higher education news here and here.)

Question 45

Friday, September 29th, 2017

Check out question 45, including the demographic breakdown that follows in this poll. A cause for some optimism.

Amazon, Alibaba and Google — some incredible numbers

Friday, September 29th, 2017

We’re working on a project regarding narrowbody freighters, which are the backbone of the express delivery industry worldwide. We looked at a few numbers to see what’s in store globally over the next few years, as the e-commerce boom translates into the need for more express freighters. At present FedEx and its competitors have over 800 aircraft, while narrowbody express freighters in China number only about 50, so Asia and China are going to see record growth in the fleets of SF Express, YTO and others.

In China, Alibaba continues to expand at a strong pace. Its forecast for 2018 revenues is nearly a 50% increase over current sales, up to $45 billion. Its market cap is $440 billion. That’s more than pretty good. However, we were shocked by the Amazon numbers. Next year revenue is forecast to be $224 billion, up 40% from the current $160 billion. Can you believe that? The company is nearly a monopoly, accounting for 43% of online sales, and has a market cap of $462 billion. No wonder the CEO bought the WaPo — best to be well connected in DC if you’re looking to become one.

Speaking of monopolies, Google has a 64% market share of search, 72,000 employees (minus one, oops), $90 billion in revenues, and a market cap of $670 billion. The company is growing at over 20% a year, even though searches are probably not growing that fast. Some mainstream searches are even penalized by Google. Ugh.

To give you a comparison of old world economy versus the companies above, GE’s 2017 revenue is forecast at less than $130 billion. Amazon is almost twice as big as GE, Alibaba will be bigger than GE in 2021, and Google will be bigger than GE in 2019. (BTW, where do you think the senior managements of the American companies come down on the NFL kerfuffle?)

We hope you enjoyed the numbers. They were pretty shocking in some respects. Anyway, it’s more enjoyable than commenting on the insanity born of ignorance and two generations of Americans being dumbed down at so-called institutions of higher education.

The unbelievable ambitions of Alibaba

Thursday, September 28th, 2017


Alibaba is getting serious about logistics after it agreed to invest RMB 5.3 billion ($807 million) in order to take majority ownership in subsidiary company Cainiao.

Cainiao was created four years ago alongside eight other backers to bring organization in Chinese logistics, particularly around e-commerce deliveries. The company raised its first outside funding in March 2016 — reportedly RMB 10 billion ($1.54 billion) at a RMB 50 billion ($7.7 billion) valuation — from backers including Temasek Holdings and GIC in Singapore, Malaysia’s Khazanah Nasional and China-based Primavera Capital.

It is currently not profitable, but investors see its close relationship with Alibaba as the ticket to developing a lucrative business. Alibaba said the goal is to enable e-commerce services in China to fulfill customer orders within 24 hours, and those overseas within 72 hours, and Cainiao is a core part of that.

Indeed, Alibaba said it plans to invest over $15 billion in the next five years to develop its global logistics network.

The company is growing over 50% a year and has a market cap of $440 billion, and now they’re soon going to have 24 hour delivery to every person in China in a few years. Wow!

Maybe Spengler’s right about China; after all, here at home the insane seem to be besting the sane.