More numbers

July 10th, 2019

Stratfor, from late last year:

China is again looking toward its state-owned enterprises (SOE) to help it navigate its economic course. In the decade since the 2008 global financial crisis, Beijing has increasingly relied on these businesses to drive its economy. As it faced sweeping unemployment and scrambled to prop up growth after that meltdown, it saw no better option than to pump up its state-owned giants with infrastructure, transportation and real estate projects. The stimulus ended in the early 2010s, but Beijing has continued to turn to SOEs to lead the country’s economic transition, raising fears of favoritism among its privately owned businesses.

Beijing has sought to strengthen the SOEs with moves to consolidate industries, reduce output capacity and shrink the amount of debt in the economy. But in doing so, it has strengthened government control over many private businesses and created additional uncertainty and anxiety in both the private sector and in society at large. The increasing SOE dominance over several domestic industries and their rapid expansion overseas has put them in the crosshairs of the Western world, particularly the United States. Despite those issues, if China should be hit by another economic downturn, the government could once again turn to these giants to keep the economy rolling.

While China’s SOEs remain strong, decades of market reform have dramatically reduced their role in China’s economy. Their share of the gross domestic product fell from more than 50 percent to 25 percent in just 15 years; and they account for only 5 percent of industrial enterprises today, compared with 18 percent in 2003. Nonetheless, the significance of the state sector has strengthened.

Despite their receding role in almost every industry they once dominated — raw materials, transportation and construction — 80 to 90 percent of SOEs are now concentrated in vital or high-profit industries such as finance, power, energy, telecommunications and defense manufacturing. And these enterprises — particularly the roughly 100 centrally administered SOEs — have grown much bigger. By 2017, the assets of these enterprises alone had reached 72 trillion yuan ($10.4 trillion), up more than tenfold from 2003 and almost equivalent to China’s total GDP for that year.

Thanks to easy loans and unfettered access to government funding and assistance, these giants have been able to amass assets in areas where their private and foreign partners were either restricted or found it harder to compete. Since 2013, SOEs have received more than 60 percent of all new loans in China each year, peaking at 78 percent in 2016.

In many ways, the expansion and growing strength of the SOEs are what Beijing sought with its reform strategy. Despite its push to eliminate ineffective enterprises and to introduce market competition in most areas, its objective wasn’t to weaken the state sector. Instead, it sought to consolidate the businesses through painful and risky restructuring in order to keep them focused and strong. That objective has been particularly obvious over the past five years as the central government repeatedly stressed “stronger, better and bigger” SOEs in pushing its reform agenda. In part, it called for further reductions of centrally administered SOEs, forced thousands of local “zombie” companies into bankruptcy, and aggressively sought mergers among large SOEs to reinforce their domination. Its sweeping capacity cuts in the industries that process raw materials, such as the coal and steel sectors, helped stabilize prices and led to double-digit profits for those debt-laden giants over the past decade.

At the same time, the country’s private sector has been showing signs of increasing strain. Private enterprises often lack the capacity to weather the storms of reform, and they are also hit hardest by the dual threats of a slowing economy and an extended trade war. In comparison with the state-owned giants, many private companies — particularly those low-end manufacturers and service providers that operate on thin margins — lack the resources to withstand a slowdown. They also have less access to financing and don’t have the advantage of preferential policies that their state sector and foreign competitors enjoy.

Therefore, a large number of private companies rely on investments in property and fixed assets to support their businesses, or they seek shadow loans that have higher financing costs. After property values flattened and investment returns peaked during 2014-15, these companies have struggled with loan costs, and Beijing’s push to reduce debt in the economy worsened the problem. To make matters worse, more than 90 percent of the businesses hurt by Beijing’s push to cut industrial capacity and add pollution controls are private coal, steel and chemical companies. They are being forced to close or to submit to acquisition by the state giants. Indeed, as state-owned industries overall reported record profit growth of 30 to 40 percent in the past two years, profit growth in private industries slowed to roughly 10 percent — among the lowest levels in a decade.

This part of the sharp divergence between the state and private sectors has more to do with the unintended consequences of policy goals and the ongoing economic slowdown and transition than any intentional aims. Forcing the Chinese economy higher up the value chain of production — a key objective for Beijing — has led to suffering among smaller or weaker businesses, including some local SOEs. With the private sector contributing 60 percent of GDP, 70 percent of technological innovation and 80 percent of employment, the central authorities in Beijing can no longer afford to be perceived as favoring the state sector over the private. This apparent favoritism is reinforced by its policy priorities toward state-led initiatives such as the Made in China 2025 program and its overseas infrastructure development. In addition, the government has combined a financial crackdown with a push for political conformity to ensure that large private businesses toe the state and Communist Party line.

This state-private conflict has led to intense debates within China, prompting the central authorities to try to clarify the country’s economic course. In recent weeks, several top leaders have delivered messages trying to appease private business. This push culminated in President Xi Jinping’s speech on Nov. 1; he reiterated the Party’s continued support and called for better policy execution to help finance and protect private businesses as well as ease their burdens. Many of these speeches simply reflected Beijing’s long-standing policy positions. The actual improvements for private business continue to hinge on substantial reform of the financial system, the tax structure and more. And work on those policies has either slowed or stalled since last year. More importantly, the call to revitalize private business is pushing the central authorities to further loosen the regulations controlling SOEs, but that reform process has been stumbling.

To make SOEs more competitive, the government has been pushing for public-private ownership in the power, energy and railway sectors. But that proposal met resistance from state interests that wanted to maintain controlling shares and reluctance from private and foreign investors. Reform has also been hindered by the government’s strong preference for SOEs as leaders of key development initiatives. It has repeatedly turned to the politically loyal and capital-rich state-owned giants over other choices for a host of massive industrial, technological and infrastructure initiatives at home and abroad. According to official estimates, centrally administered SOEs alone accounted for over 70 percent of the total value of infrastructure projects in the Belt and Road Initiative.

In the meantime, SOEs have continued to aggressively campaign for railway, road and port projects overseas, as well as to acquire high-tech and strategic assets. This drive has fed suspicions and led to accusations about their unfair competitive advantage from foreign businesses and governments, and it has reinforced criticism of the country’s restrictive market access. This advantage included subsidies and support for industries in the Made in China 2025 program and has taken center stage in the ongoing China-U.S. trade war and economic competition. Washington also sought to strengthen trade rules — from its initial draft of the Trans-Pacific Partnership (TPP) treaty (before it withdrew from the pact) to its current push for World Trade Organization reforms — in part to isolate China’s state-led system.

The combined internal and external pressure on China’s SOEs will likely push Beijing to extend reforms that offer greater market access and boost competitiveness. Indeed, policy debates in recent months have intensified, and officials are increasingly speaking of “competitive neutrality” when hinting at the next stage of reforms. The term is used by the Organization for Economic Cooperation and Development and was included in the TPP deal to broadly refer to a level playing field. Of course, it may be unrealistic to expect Western-style competitive neutrality within a Chinese social-capitalist system. The country lacks even basic neutrality in finance, subsidies, debt responsibility and supervision. But altering one of those areas comes at the expense of the others and of Beijing’s objective to keep the state sector strong.

While Beijing aims to assure both domestic and foreign private businesses of its commitment to reform, any changes will likely be used to defend the practices of its overseas SOEs from foreign governments. Still, Beijing may be compelled to gradually create more access for foreign and private capital in selected industries, such as finance, high-tech, telecom and energy, and to widen SOE ownership to lessen the influence of state capital. But it is unlikely to reduce state support in key sectors, such as semiconductors and aviation, where China is racing to gain greater independence. Furthermore, as the economy slows and the trade war continues, Beijing may again find its resolve tested, and it may once again be forced to turn to the SOEs to help salvage the economy — as it did during the financial crisis a decade ago.

More via SCMP: “Chinese banks do not have adequate capital to support the sort of large-scale lending that could bolster economic growth in the world’s second-largest economy, Fitch Ratings has said. China’s banks have accumulated a mountain of debt by lending to cash-strapped companies and loss-making projects. The economic slowdown has risen the stakes for both banks and businesses, especially the private enterprises that are traditionally shunned by state-owned lenders.”

Whatever the particulars, the arrows seem to pretty much all point in the same direction.

Something there is that doesn’t love a crowd

July 9th, 2019

Yes, we know it’s Robert Frost and Wall, but we like a wall. More to the point, in this PJ piece, Glenn Reynolds is quoted re social media and ancient cities. He’s got a point – the crazy crowds are very infecting and destructive.

Hide the decline

July 9th, 2019

A guy from the West Village of all places:

The scandal that I call “The Greatest Scientific Fraud Of All Time” is the alteration of official world temperature data by a small number of government employees in the US and the UK. Uniformly, the alterations have the effect of lowering temperatures early in the record, and raising recent temperatures, in order to create and enhance a warming trend that does not exist in the data as originally reported. The purpose of the fraudulent data alteration is to support the continuation of the “global warming” climate scare.

Hide the Decline, as the guy who wiped out the MWP did.

Infrastructure, trade deal, etc.

July 8th, 2019

Asian Review:

The Chinese government has set its 2019 growth target at 6% to 6.5%. Many economists believe it will implement additional stimulus measures if the economy continues to lose pace. Cheng Shi, chief economist at ICBIC, thinks regional governments will issue more bonds to finance infrastructure projects and introduce incentives to spur personal spending on automobiles and other items.

Iris Pang, greater China economist at ING Bank, expects stimulus spending to double from the previous estimate of 2 trillion yuan to 4 trillion yuan ($295 billion to $590 billion), mainly in the environment and transportation sectors.

Kenny Wen, a wealth management strategist at Everbright Sun Hung Kai, calls the trade talks the biggest variable for the second half of 2019. He said there is a 55% likelihood that Beijing and Washington will reach some kind of consensus by the end of the year. If negotiations break down, he said, “financial markets would become volatile and the economic slowdown will pick up pace.”

“If there is no deal,” said Sean Taylor, chief investment officer for Asia Pacific at DWS, “we could expect: 1) Chinese exports to shrink further; 2) export oriented companies would lay off more employees. The growth rate will fall to around 5% and China will fall into a serious economic crisis.”

The WSJ piece we quoted extensively from leads us to a different conclusion from saying infrastructure spending and a trade deal will fix things. When you

– increase debt 4x to 3xGDP in a mere decade to $40 trillion,
– have company bankruptcies increasing 2x to 18,000 in a single year, 2018,
– bond defaults increasing 5x in four years and 2019 getting worse,
– the failure last month of a tiny bank causing “panic that spread into money markets”

and so forth, you have systemic problems – none of them caused by the so-called “trade war” BTW. Hang on; it could be a rough ride.

You heard it here first

July 8th, 2019

WSJ:

When she was a teenager in the 1970s, Zhou Xiaoguang peddled trinkets city to city and slept on trains, a formative chapter in her creation of the world’s largest costume jeweler, Neoglory Holdings Group Co.

Leveraging her empire of baubles, China’s “fashion-accessory queen” added hotels, offices and malls. The magnate took a seat in China’s national parliament, accepted business accolades, including Ernst & Young’s “Entrepreneur of the Year,” and erected the tallest skyscraper in Yiwu, a trading city south of Shanghai.

Now, China’s economic slowdown is making Ms. Zhou known for something else: her billions of dollars in debt. A bankruptcy court in April said Neoglory “is unable to repay a due debt, has insufficient assets for repaying all its debts and is apparently insolvent.” Ms. Zhou’s turn of fortune is part of a reckoning that is ensnaring many of the star entrepreneurs who produced China’s great economic boom.

For a generation, China’s explosive growth rewarded bold expansion and many borrowed heavily to seize the moment. Shanghai wealth tracking service Hurun Report said China minted four billionaires a week in 2018 and is No. 1 globally in self-made fortunes.

Full-steam growth also masked companies’ strategic mistakes—in addition to excessive debt, many overexpanded into unfamiliar and crowded business sectors. These problems are becoming increasingly apparent as China’s economy slows to its weakest growth in more than 25 years. The companies’ struggles foretell a further drag on the expansion.

In the past decade, China’s overall debt quadrupled, to around three times the value of last year’s national output. Corporate debt accounts for two-thirds of the total, or more than $26 trillion last year, according to the Bank for International Settlements.

Government-run companies owe most of that money, but signs of distress are appearing most dramatically at private companies, which have less pull with creditors and less support under President Xi Jinping, who sees the state sector as the economy’s mainstay.

China’s onetime soybean king and formerly the richest man in prosperous Shandong province, Shao Zhongyi, said his Chenxi Group was felled last year by lenders who suddenly called in loans in what he termed a “high-speed bleed.” Early in that year, industrial machine maker Zhejiang Jindun Group’s founder leapt to his death, leading the company to reveal in a stock exchange notice that it owed over 9.9 billion yuan, or about $1.4 billion, some to loan sharks.

This year, banker Dong Wenbiao’s jet-maintenance to elder-care conglomerate, China Minsheng Investment Group, has unsettled local markets after missing debt payments several times by days or weeks, before making good on its obligations.

Many Chinese entrepreneurs tend to “borrow as much as possible, even if the core business doesn’t need it,” said Joseph P.H. Fan, a professor of finance and accounting at Chinese University of Hong Kong. China’s top-down system showers successful entrepreneurs with new business opportunities and the political backing to get them done, he said. It is a winning strategy to capitalize on the boom times—but doesn’t offer much shelter in a slowdown.

Professor Fan got to know Mrs. Zhou while researching private wealth in China. Neoglory, he said, is a textbook example of China’s “misallocation of financial resources.”

Neoglory fueled its evolution into a conglomerate through expansive borrowings, which ballooned to $6.8 billion, even as financial filings show cash was tight and profits were weak. Behind the scenes, the company was taking on new risks to borrow, including ever-shorter payback schedules. The troubles burst into view in mid-September when Neoglory defaulted on a bond payment. Several more defaults followed.

Ms. Zhou has ranked among China’s richest people. “Though winter may be tough to live through, it’s a good time to do introspection,” the 56-year-old recently told a business group. She declined interview requests.

Neoglory said it embarked on a rollout of retail outlets when online selling was more promising, and it overbuilt real estate in undesirable locations. “We were too optimistic about the economic trends and didn’t prepare to evolve,” said Neoglory spokesman Xu Jun, adding that the company’s situation isn’t unique.

In 2017, Beijing began trying to dial back what it termed excessive lending by the financial sector, including banks and informal firms that manage money online, a deleveraging that caused cash shortages at many private companies.

The money crunch exposed Neoglory’s fundamental problems: The once niche jewelry sector had become overrun with competition, shrinking profit margins. Developers across China were unloading malls and apartments like the ones Ms. Zhou built.

China’s broader economy had been losing momentum. The expansion maxed out at 10.6% in 2010, and economists are increasingly pessimistic the government’s bottom-line target of 6% growth will be achieved this year. The slowdown leaves major unfinished business in China, such as lifting incomes in the country’s poor rural areas.

Sorely needed are companies that might lead China to a new stage of development that is less dependent on construction and exports. Big debts make it hard for business owners to invest in reinventing the economy, and are sapping confidence along with the country’s trade disputes with the U.S.

Investors last month again felt China’s debt jitters when a government takeover of a tiny lender in the country’s northwest, Baoshang Bank, sparked funding problems for other small banks and headaches for their corporate customers. The first bank takeover by regulators in China in decades caused near panic that spread into money markets and bonds.

The corporate bond market is a small part of the credit puzzle in China, but it is relatively transparent compared with bank lending, and sheds light on the accelerated pace of borrowing and defaults by private companies.

From negligible amounts a decade ago, Chinese companies last year had $1.72 trillion in debt securities outstanding, the second-highest amount after American companies, which carried $5.81 trillion, according to the Organization for Economic Cooperation and Development.

To help private businesses, Beijing is cutting business taxes and red tape, and recently reversed earlier credit controls by leaning on banks to lend more. It is also signaling some of yesterday’s stars aren’t worth saving. Construction billionaire Wang Wenliang developed political connections in Beijing and in the U.S. through donations to politicians. After his Dandong Port Group Co., which operates a port near North Korea, fell into what the company called a crisis and defaulted on bonds in late 2017, its hometown government issued statements declining to come to the rescue.

More than 18,000 companies successfully filed bankruptcy petitions with Chinese courts last year, nearly twice as many as the previous year and until now a rare step in China. Also hitting a record last year was the number of defaults on bonds, with 125, Neoglory’s included, five times the number in 2015. Defaults are running at an even faster pace so far in 2019.

The face value of Neoglory’s outstanding bonds, at $2.5 billion, is a huge chunk of the $3.2 billion pre-default estimate of the Zhou family’s net worth. In January, China’s Supreme Court ordered Ms. Zhou’s assets frozen. Creditors are also chasing Ms. Zhou’s husband, while their son has resigned from senior executive positions at group companies, public filings show.

For about six years, Neoglory’s inaugural bond traded uneventfully, close to its 8.1% promised interest payment. Last year, that bond suddenly fell so out of favor that buyers stood to earn above 125%. Neoglory defaulted on the issue.

The private company reports only selective financial information, such as through a listed subsidiary. Property unit Neoglory Prosperity Inc. reported a 215 million yuan loss for 2018 and said it was owed over 4.2 billion yuan from the parent company.

Almost all of Neoglory’s dozen or so bond issues—one billion yuan to two billion yuan a pop a few times annually—piled on more risk. It was borrowing on shorter payback timetables, with its initial seven-year bond followed by five-year issues, then three-year debt and, most recently, five in a row due for payback in 365 days.

We’ve been following this leverage situation for well over a decade now, and things finally seem to be coming to a head, what with the combination of massive leverage and, all of a sudden, very slow growth. We think this is going to get very bad, since most of the tricks have now been used up.

That’s Entertainment!

July 7th, 2019

We were going to focus on silly things like having the Godfather be a song and dance man, but someone told us about a Showtime series called Our Cartoon President. He’s a crook who hates the military and minorities and has a severely retarded son. If even one episode of such a series had been made in 2010, impossible of course, everyone involved would never work in the industry again, and probably would be serving life in prison. But now it’s a series made by CBS, kind of an evil Captain Kangaroo on LSD.

Meh

July 7th, 2019

Question: if you had a net worth of over $100 billion and bought a newspaper, what would you allow to be published in it? Answer: garbage.

Bonus nonsense: Until today, we thought the Singing Nun song was about a girl. Meh indeed!

Miscellany

July 6th, 2019

We’ll probably have some fun tomorrow on the entertainment side (hey, Victor Fleming directed two movies that aired in 1939), but for now briefly: (a) Wretchard on the very odd Russian sub; (b) things to avoid in Saudi Arabia; (c) Newt has a piece that’s very unusual re 2020 – it’s actually fun to read; (d) the first few PL pictures of the week might not be fully understood at CNN; (e) we occasionally re-link to that piece about the last century of inventions, but the other day someone pointed out a more amazing fact: that the time between the first airplane flight of 852 feet and landing on the moon 1,480,000x further away was less than 66 years. Wow!

Dum de dum dum – or Doom de Doom Doom

July 5th, 2019

Bloomberg:

Without slashing emissions, the world could lose an additional 850,000 square miles of forest by 2050, mostly in the tropics, as growing conditions change.

Chazdon and colleagues on Wednesday published research in the journal Science Advances, examining where to focus limited resources on regrowing forests destroyed by agriculture and industry. Scoring countries for both conservation opportunities and the feasibility of restoring forests, they found that the top six nations with potential for productive investment are all in Africa: Rwanda, Uganda, Burundi, Togo, South Sudan and Madagascar.

“One of the best things people can do is to reduce the consumption of beef,” she said. “A big driver of deforestation has been the creation of cattle pasture.”

Yikes! All that darn parping! Apologies to Dragnet.

The Svensmark Effect and other things

July 5th, 2019

Cosmic rays, man. Or at least Cosmic Ray. Now we know exactly who has really been causing all this climate change. He also flew the spaceship in 1775.

Some fun for the 4th

July 4th, 2019

Really fun piece from Mark Steyn on George M. Cohan’s You’re A Grand Old Flag, as well as James Cagney in Yankee Doodle Dandy with bonus appearance by the 2 FDR’s there, one of them dancing. On the other hand, you could read the NYT and just say Bah humbug!

Parades and the military, then and now

July 4th, 2019

The NYT says the armed forces are freaking out over the military aspect of the 4th of July parade. CNN agrees that the Trumpster “could put military personnel in the position of violating Defense Department guidelines prohibiting men and women in uniform from engaging in political activity.” Yikes!!!!

Looking back a few years, here’s another Washington parade featuring armed Army and Navy military marchers, and, at the one minute mark of the video, a US Navy torpedo-armed fast attack vessel (MTB) used by the United States Navy in World War II. The next year, the boat was immortalized in pop music (here’s a video), to indoctrinate the young with its vile, hateful lyrics:

In ’43 they put to sea, thirteen men and Kennedy
Aboard the P.T. 109, to fight the brazen enemy
And off the isle of ol’ Lusana, in the strait beyond Nehru
A Jap deatroyer in the night cut the ‘109 in two

Smoke and fire upon the sea
Everywhere they looked was the enemy
The heathen gods of old Japan
Yeah, the thought they had the best of a mighty good man

And on the coast of Kolombangaro, looking through his telescope
Australian Evans saw the battle for the crew had little hope
Two were dead, some were wounded, all were clinging to the bow
Fighting fire and a-fighting water trying to save their lives somehow

Smoke and fire upon the sea
Everywhere they looked was the enemy
The heathen gods of old Japan
Yeah, they thought they had the best of a mighty good man

McMahon the Irishman was burned so badly, he couldn’t swim
Leave me, here go on, he said ’cause if you don’t we’ll all be dead
The PT skipper couldn’t leave him, a man to die alone at sea
And with a strap between his teeth, he towed the Irishman through the sea

Smoke and fire upon the sea
Everywhere they looked was the enemy
The heathen gods of old Japan
Yeah, they thought they had the best of a mighty good man

He led his men through waters dark, rocky reefs and hungry sharks
Braved the ennemy’s bayonets, a .38 hung ’round his neck
Four more days and four more nights a rescue boat pulled into sight
The P.T. 109 was gone but Kennedy and his crew lived on

Now who could guess or who could possibly know
That this same man named Kennedy

Would be the leader of the nation, be the one to take command?
The P.T. 109 was gone but Kennedy lived to fight again

Smoke and fire upon the sea
Everywhere they looked was the enemy
But JFK and his crew lived on

Which proves it’s hard to get the best of a man named John

(Big John)
(Big John)
(Big John)
(Big John)

So at the NYT and CNN, are they “proud of our ancient heritage?” Do they think “the same revolutionary beliefs for which our forebears fought are still at issue around the globe — the belief that the rights of man come not from the generosity of the state but from the hand of God.”

Just asking.

Fascinating – cash inflows into China encouraged, hmmm…

July 4th, 2019

WSJ:

China will speed up the timeline for opening its financial sector, Premier Li Keqiang said, an effort to attract more business and investment as the trade dispute with the U.S. continues.

In a speech to the World Economic Forum on Tuesday, Mr. Li said China would let foreigners freely invest in futures, securities and life insurance in 2020, one year ahead of Beijing’s previous schedule, to show its commitment to opening up. He also pitched China to foreigners broadly, saying the country would continue to improve the business environment for all sorts of companies and relax restrictions in the services sector. “Our opening-up pace will only be accelerated,” he said.

Premier Li spoke days after the U.S. and China got trade talks back on track following a six-week hiatus. President Trump agreed to hold off on new tariffs on $300 billion in Chinese imports, and China agreed to buy more U.S. farm goods. The U.S. began imposing punitive tariffs on Chinese goods a year ago to pressure the country into opening its markets and improving treatment of American companies.

Mr. Li didn’t speak directly to the trade dispute, although he said the Chinese economy faces renewed downward pressure, given uncertainties abroad and slowing investment at home.

China began last year to allow foreign companies to own majority stakes in certain financial industries, saying it would remove all restrictions by 2021. A quicker timeline shows how policy makers are addressing concern over their handling of the economy.

This week, two Wall Street banks got closer to obtaining control of key Chinese joint ventures in which they own 49% stakes, as their local partners said they would put 2% holdings up for sale. Majority ownership of businesses in China has been a long-coveted goal for foreign financial institutions.

Morgan Stanley ’s brokerage partner and JPMorgan Chase & Co.’s partner in asset management both said they would take bids this month for the stakes, setting minimum prices of 376 million yuan ($55 million) and 241 million yuan, respectively.

Still, participants at the World Economic Forum expressed worries about China’s treatment of foreign businesses in practice and how they would fare as trade negotiations resume.

Referring to the new 2020 timeline, Zhu Ning, a professor at the People’s Bank of China School of Finance at Tsinghua University, said it would take time for financial companies to gain permission and licenses in their specific business areas. For now, he said, China’s intention to signal its openness to the world is clear: “They might have been too confrontational before.”

Addressing concerns of the international community, Mr. Li said China would treat state-owned, private and foreign enterprises equally, so they could enjoy similar tax cuts and intellectual-property protections. In credit ratings, he said, foreign investors would get “national treatment.” Beijing approved a wholly owned foreign business in the sector for the first time this year.

China is targeting 6% to 6.5% growth for its economy this year, a range Mr. Li expressed confidence in achieving. He said Beijing would deliver on promises to cut taxes and other fees of nearly $300 billion, and support small companies by easing reserve requirements for banks. He said, however, that China would refrain from massive stimulus measures like its credit pumping after the global financial crisis.

On the Chinese yuan, Mr. Li promised a “broadly stable” value. He reiterated Beijing’s stance that it wouldn’t competitively devalue the currency, without mentioning pressures from the trade dispute. The yuan is roughly flat this year against the U.S. dollar after weakening in May when trade talks fell apart.

Over the weekend, China relaxed investment restrictions on foreigners in sectors including oil and natural gas and movie theaters. Forty sectors will remain wholly or partially off-limits to foreigners, including the development of rare earths.

Good moves. Now get that GAAP accounting fixed.

Hey you D-Day suckers, screw you

July 3rd, 2019

First watch this charming NYT video re July 4. It’s made by this person and that person, mid-thirties to early forties. They don’t seem to have much in the way of real jobs, though one of them worked at Google (surprise!) for a few months. One has fancy university degrees and one was an actor. Here and here are some critiques of their charming work. Anyone surprised that they “work” for the NYT? Hey, watch the video again. Ugh!!!

Yet another thing you didn’t need to know

July 3rd, 2019

Wiki: The Monkees’ Micky Dolenz wrote in his autobiography that while tripping on LSD with Wilson, John Lennon, and Harry Nilsson, he remembers Wilson playing “Shortenin’ Bread” on piano “over and over again”. Elton John and Iggy Pop were also bemused by an extended, contumacious Wilson-led singalong of “Shortenin’ Bread”, leading Pop to flee the room proclaiming, “I gotta get out of here, man. This guy is nuts!” Alice Cooper recalled that Wilson considered “Shortnin’ Bread” to be the greatest song ever written

Not everyone is HNA

July 2nd, 2019

From 1993 to December 31, 2018, BOC Aviation has generated $3.7 billion in net profit through the following activities: (1) Purchased more than 800 aircraft totaling more than $44 billion; (2) Executed more than 870 leases with over 160 airlines in 57 jurisdictions; (3) Raised more than $24 billion in debt since January 1, 2007; (4) Sold more than 330 aircraft; (5) Transitioned more than 80 aircraft to new lessees; (6) Repossessed 39 aircraft in 14 different jurisdictions

In terms of risk management, BOC Aviation’s experienced credit team holds estimates on 200 airlines and they focus on leasing to airlines ranking in the top 20% of the world’s fleet. If any airline is as much as one day late on their lease payment senior management at BOC Aviation is notified. A meeting each morning is conducted around collections for both managed and owned aircraft, for which no distinction is made internally. In addition, the risk management team visit and conduct diligence with any late paying airlines rather than the sales/marketing team.

Source is a Kroll report on a recent Bank of China ABS deal. BOC Aviation seems very well run, unlike HNA, and some other China financial institutions.

Another question

July 2nd, 2019

What do these 14 people, average age around 60 and total net worth $1B, have in common? Their boss is a 30 year old creep. HT: Betsy

Hey

July 2nd, 2019

We really think this climate change garbage is a great political, electoral weapon. If you disagree, let us know why. Thanks.

More than ever, a good line in the sand

July 2nd, 2019

We can’t find a transcript, but Beto’s telling the folks in Mexico that the “refugees” have no alternative but to flee their countries due to climate change is a good place to draw a line.

And Politico has a nice hysterical piece about the evil Trumpster burying climate stuff – it’s pretty good too (MadCow cited it). Of course the piece quotes the disgrace to the profession while it’s getting the vapors.

In terms of dollars, climate change is second only to communism in being the Big Boss and taking OPM – but it’s also Catholicism without the seven sacraments, etc. – an empty place. We also like it because it defines your opponents as stupid without your ever having to say “stupid” explicitly.

Hey, you can even make jokes: there must be some funny line or two coming from living in NYC, DC, Chicago, etc., and seeing 110-120 degrees of climate change in a single year. Aghhhh!!!

Finally, we’d always conclude the argument with our favorite question: what percent CO2 is in 1000 parts of air – they can’t be too happy that the answer is a tiny ZERO in a thing that plants need to nourish for humans and so many animals to survive.

Anyway, we continue to think it’s a good line in the sand in the battle of reason versus one of the stupidest religions ever created.

Living through Marat / Sade

July 1st, 2019

Wretchard quotes Robespierre in a very interesting piece on the Revolution against the Deplorables taking place in the US, current Oregon NGO chapter. From the song Fifteen Glorious Years in Marat / Sade: “Robespierre has to get on, He gets rid of Danton, That was Spring, Comes July, and Old Robespierre has to die.” It is no accident that in Oregon, the esteemed, university educated legislators just introduced a bill to cut the negligible levels of the beneficial gas CO2 by 80%. Stay tuned for more horrors.