Archive for the 'business' Category

Sense and nonsense regarding Ebola

Wednesday, September 17th, 2014

First, nonsense (insanity really) via NYT:

Senior administration officials said Monday night that the Department of Defense would open a joint command operation in Monrovia, Liberia, to coordinate the international effort to combat the disease. The military will also provide engineers to help construct the additional treatment facilities and will send enough people to train up to 500 health care workers a week to deal with the crisis. Officials said the military expected to send as many as 3,000 people to Africa to take charge of responding to the Ebola outbreak.

The American government will also provide 400,000 Ebola home health and treatment kits to Liberia, as well as tens of thousands of kits intended to test whether people have the disease. The Pentagon will provide some logistical equipment for health workers going to West Africa and what administration officials described as “command and control” organizational assistance on how to coordinate the overall relief work. The Army Corps of Engineers is expected to be part of the Defense Department effort. Administration officials did not say how soon the 17 treatment centers would be built in Liberia; officials there, as well as international aid officials, have said that 1,000 beds are needed in Liberia in the next week alone

Now here’s Bloomberg:

Mapp Biopharmaceutical Inc., which has nine employees, released its experimental ZMapp drug, until now only tested on infected animals, for the two health workers…The two scientists behind Mapp, President Larry Zeitlin and Chief Executive Officer Kevin Whaley, “are both brilliant,” said Charles Arntzen, a plant biotechnology expert at Arizona State University who collaborated with the two researchers years ago. “They are very, very bright guys and free spirits”…

Mapp’s drug is being developed with Toronto-based Defyrus Inc., which has six employees, according to Defyrus CEO Jeff Turner. ZMapp is a “cocktail” of monoclonal antibodies that help the immune system attack the virus…Kentucky BioProcessing LLC, a subsidiary of tobacco giant Reynolds American Inc. (RAI), manufactures the treatment for Mapp from tobacco plants…

The tobacco plant production system was developed because it was a method that could produce antibodies rapidly in the event of an emergency, he said. To produce therapeutic proteins inside a tobacco plant, genes for the desired antibodies are fused to genes for a natural tobacco virus, said Arntzen. The tobacco plants are then infected with this new artificial virus, he said. “The infection results in the production of antibodies inside the plant,” Arntzen said. The plant is eventually ground up and the antibody is extracted, he said. The whole process takes a matter of weeks.

We have no idea if ZMapp is the best treatment for ebola, but we know it worked in several cases. We also know that the San Diego and Toronto companies total 15 employees between them. Instead of putting American soldiers in harm’s way for no apparent benefit, wouldn’t it have been a better idea to clone Mapp and its promising rivals in multiple US, European and other medical research centers, and devote massive resources to ramping up production of ZMapp and other drugs with similar laboratory success? This is real and real-time, not silly fantasy like Solyndra.

You had no idea

Tuesday, September 16th, 2014

Um, correct that — we had no idea. CFR:

Shia identity is rooted in victimhood over the killing of Husayn, the Prophet Mohammed’s grandson, in the seventh century, and a long history of marginalization by the Sunni majority. Islam’s dominant sect, which roughly 85 percent of the world’s 1.6 billion Muslims follow, viewed Shia Islam with suspicion, and extremist Sunnis have portrayed Shias as heretics and apostates.

Mohammed unveiled a new faith to the people of Mecca in 610. Known as Islam, or submission to God, the monotheistic religion incorporated some Jewish and Christian traditions and expanded with a set of laws that governed most aspects of life, including political authority. By the time of his death in 632, Mohammed had consolidated power in Arabia. His followers subsequently built an empire that would stretch from Central Asia to Spain less than a century after his death. But a debate over succession split the community, with some arguing that leadership should be awarded to qualified individuals and others insisting that the only legitimate ruler must come through Mohammed’s bloodline.

A group of prominent early followers of Islam elected Abu Bakr, a companion of Mohammed, to be the first caliph, or leader of the Islamic community, over the objections of those who favored Ali ibn Abi Talib, Mohammed’s cousin and son-in-law. The opposing camps in the succession debate eventually evolved into Islam’s two main sects. Shias, a term that stems from shi’atu Ali, Arabic for “partisans of Ali,” believe that Ali and his descendants are part of a divine order. Sunnis, meaning followers of the sunna, or “way” in Arabic, of Mohammed, are opposed to political succession based on Mohammed’s bloodline.

Ali became caliph in 656 and ruled only five years before he was assassinated. The caliphate, which was based in the Arabian Peninsula, passed to the Umayyad dynasty in Damascus and later the Abbasids in Baghdad. Shias rejected the authority of these rulers. In 680, soldiers of the second Umayyad caliph killed Ali’s son, Husayn, and many of his companions in Karbala, located in modern-day Iraq. Karbala became a defining moral story for Shias, and Sunni caliphs worried that the Shia Imams—the descendants of Husayn who were seen as the legitimate leaders of Muslims (Sunnis use the term “imam” for the men who lead prayers in mosques)—would use this massacre to capture public imagination and topple monarchs. This fear resulted in the further persecution and marginalization of Shias.

Even as Sunnis triumphed politically in the Muslim world, Shias continued to look to the Imams—the blood descendants of Ali and Husayn—as their legitimate political and religious leaders. Even within the Shia community, however, there arose differences over the proper line of succession. Mainstream Shias believe there were twelve Imams. Zaydi Shias, found mostly in Yemen, broke off from the majority Shia community at the fifth Imam, and sustained imamate rule in parts of Yemen up to the 1960s. Ismaili Shias, centered in South Asia but with important diaspora communities throughout the world, broke off at the seventh Imam. Ismailis revere the Aga Khan as the living representative of their Imam. The majority of Shias, particularly those in Iran and the eastern Arab world, believe that the twelfth Imam entered a state of occultation, or hiddenness, in 939 and that he will return at the end of time. Since then, “Twelvers,” or Ithna Ashari Shias, have vested religious authority in their senior clerical leaders, called ayatollahs (Arabic for “sign of God”)…

Sunnis dominated the first nine centuries of Islamic rule (excluding the Shia Fatimid dynasty) until the Safavid dynasty was established in Persia in 1501. The Safavids made Shia Islam the state religion, and over the following two centuries they fought with the Ottomans, the seat of the Sunni caliphate. As these empires faded, their battles roughly settled the political borders of modern Iran and Turkey by the seventeenth century, and their legacies resulted in the current demographic distribution of Islam’s sects. Shias comprise a majority in Iran, Iraq, Azerbaijan, and Bahrain, and a plurality in Lebanon, while Sunnis make up the majority of more than forty countries from Morocco to Indonesia.

Iran’s Islamic Revolution in 1979 gave Shia cleric Ayatollah Ruhollah Khomeini the opportunity to implement his vision for an Islamic government ruled by the “guardianship of the jurist” (velayat-e faqih), a controversial concept among Shia scholars that is opposed by Sunnis, who have historically differentiated between political leadership and religious scholarship. Shia ayatollahs have always been the guardians of the faith. Khomeini argued that clerics had to rule to properly perform their function: implementing Islam as God intended, through the mandate of the Shia Imams.

Under Khomeini, Iran began an experiment in Islamic rule. Khomeini tried to inspire further Islamic revival, preaching Muslim unity, but supported groups in Lebanon, Iraq, Afghanistan, Bahrain, and Pakistan that had specific Shia agendas. Sunni Islamists, such as the Muslim Brotherhood and Hamas, admired Khomeini’s success, but did not accept his leadership, underscoring the depth of sectarian suspicions.

Saudi Arabia has a sizable Shia minority of roughly 10 percent, and millions of adherents of a puritanical brand of Sunni Islam known as Wahhabism (an offshoot of the Sunni Hanbali school) that is antagonistic to Shia Islam. The transformation of Iran into an overtly Shia power after the Islamic revolution induced Saudi Arabia to accelerate the propagation of Wahhabism, as both countries revived a centuries-old sectarian rivalry over the true interpretation of Islam. Many of the groups responsible for sectarian violence that has occurred in the region and across the Muslim world since 1979 can be traced to Saudi and Iranian sources.

Wiki:

Sunnis believe that Abu Bakr, the father of Muhammad’s wife Aisha, was Muhammad’s rightful successor and that the method of choosing or electing leaders (Shura) endorsed by the Quran is the consensus of the Ummah (the Muslim community).

Shias believe that Muhammad divinely ordained his cousin and son-in-law Ali (the father of his grandsons Hasan ibn Ali and Hussein ibn Ali) in accordance with the command of God to be the next caliph, making Ali and his direct descendants Muhammad’s successors. Ali was married to Fatimah, Muhammad’s daughter from his wife Khadijah bint Khuwaylid.

Aisha endorsed her father Abu Bakr as the successor to Muhammad. In the Battle of the Camel (656), Aisha opposed her step son-in-law Ali outside the city of Basra because she wanted justice on the perpetrators of the assassination of the previous caliph, Uthman. Aisha’s forces were defeated and Muhammad’s widow was respectfully escorted back to Medina.

Sunnis follow the Rashidun “rightly guided Caliphs”, who were the first four caliphs who ruled after the death of Muhammad: Abu Bakr (632-634), Umar ibn al-Khattab (634-644), Uthman ibn Affan (644-656), and the aforementioned Ali Ibn Abi Talib (656-661).

Shia theology discounts the legitimacy of the first three caliphs and believes that Ali is the second-most divinely inspired man (after Muhammed) and that he and his descendants by Fatimah, the Imams, are the sole legitimate Islamic leaders.

The Imamate of the Shia encompasses far more of a prophetic function than the Caliphate of the Sunnis. Unlike Sunni, Shias believe special spiritual qualities have been granted not only to Muhammad but also to Ali and the other Imams. Twelvers believe the imams are immaculate from sin and human error (ma’sūm), and can understand and interpret the hidden inner meaning of the teachings of Islam. In this way the Imams are trustees (wasi) who bear the light of Muhammad (Nūr Muhammadin).

While Shias and Sunnis differ on the nature of the Mahdi, many members of both groups, especially Sufis, believe that the Mahdi will appear at the end of the world to bring about a perfect and just Islamic society.

In Shia Islam “the Mahdi symbol has developed into a powerful and central religious idea.” Twelvers believe the Mahdi will be Muhammad al-Mahdi, the twelfth Imam returned from the Occultation, where he has been hidden by God since 874. In contrast, mainstream Sunnis believe the Mahdi will be named Muhammad, be a descendant of Muhammad, and will revive the faith, but will not necessarily be connected with the end of the world…

Sunni–Shia…violence persists to this day from Pakistan to Yemen and is a major element of friction throughout the Middle East. Tensions between communities have intensified during power struggles, such as the Bahraini uprising, the Iraq War, and most recently the Syrian Civil War and the formation of the self-styled Islamic State in Iraq and the Levant and its advancement on Syria and Northern Iraq.

Britannica:

The Thirty Years’ War…is conventionally held to have begun in 1618, when the future Holy Roman emperor Ferdinand II, in his role as king of Bohemia, attempted to impose Roman Catholic absolutism on his domains, and the Protestant nobles of both Bohemia and Austria rose up in rebellion. Ferdinand won after a five-year struggle. In 1625 King Christian IV of Denmark saw an opportunity to gain valuable territory in Germany to balance his earlier loss of Baltic provinces to Sweden. Christian’s defeat and the Peace of Lübeck in 1629 finished Denmark as a European power, but Sweden’s Gustav II Adolf, having ended a four-year war with Poland, invaded Germany and won many German princes to his anti-Roman Catholic, anti-imperial cause.

Meanwhile the conflict widened, fueled by political ambitions of the various powers. Poland, having been drawn in as a Baltic power coveted by Sweden, pushed its own ambitions by attacking Russia and establishing a dictatorship in Moscow under Władysław, Poland’s future king. The Russo-Polish Peace of Polyanov in 1634 ended Poland’s claim to the tsarist throne but freed Poland to resume hostilities against its Baltic archenemy, Sweden, which was now deeply embroiled in Germany. Here, in the heartland of Europe, three denominations vied for dominance: Roman Catholicism, Lutheranism, and Calvinism. This resulted in a Gordian tangle of alliances as princes and prelates called in foreign powers to aid them. Overall, the struggle was between the Holy Roman Empire, which was Roman Catholic and Habsburg, and a network of Protestant towns and principalities that relied on the chief anti-Catholic powers of Sweden and the United Netherlands, which had at last thrown off the yoke of Spain after a struggle lasting 80 years. A parallel struggle involved the rivalry of France with the Habsburgs of the empire and with the Habsburgs of Spain, who had been attempting to construct a cordon of anti-French alliances.

The principal battlefield for all these intermittent conflicts was the towns and principalities of Germany, which suffered severely. During the Thirty Years’ War, many of the contending armies were mercenaries, many of whom could not collect their pay. This threw them on the countryside for their supplies, and thus began the “wolf-strategy” that typified this war. The armies of both sides plundered as they marched, leaving cities, towns, villages, and farms ravaged. When the contending powers finally met in the German province of Westphalia to end the bloodshed, the balance of power in Europe had been radically changed. Spain had lost not only the Netherlands but its dominant position in western Europe. France was now the chief Western power. Sweden had control of the Baltic. The United Netherlands was recognized as an independent republic. The member states of the Holy Roman Empire were granted full sovereignty. The ancient notion of a Roman Catholic empire of Europe, headed spiritually by a pope and temporally by an emperor, was permanently abandoned, and the essential structure of modern Europe as a community of sovereign states was established.

Points: (a) were the Catholics the Varsity team and the Protestants the JV team? (b) we included such lengthy passages for a reason: anyone who thinks that a complex theological war that has been going on for over a millenium is going to end anytime soon is a fool; (c) the overwhelming strategic imperative for the US is to produce oil like crazy, both for complete energy independence and to reduce the income and importance of the Gulf states — the CAGW hucksters with their stupid, fraudulent arguments are truly enemies of the American people.

Why didn’t the Barbary Pirates get regular jobs?

Sunday, September 14th, 2014

Wretchard answers the question. Certain things follow if your nation subscribes to the belief that a 1400 year old book and related documents are all you’ll ever need to get through life. Do we exaggerate? Look at the issue of patents and make up your own mind. Still not persuaded? How’s this for a Top Ten List?

Real and imagined threats

Saturday, September 13th, 2014

Real:

deadly Ebola outbreak sweeping across three countries in West Africa is likely to last 12 to 18 months more, much longer than anticipated, and could infect hundreds of thousands of people

Real: “I had a choice. I could be an insider or I could be an outsider.” (We heard this on Ralph Nader’s KFPK program today BTW.) Imagined. Today the best and the brightest are neither.

Deflation here and there

Thursday, September 11th, 2014

Reuters:

China’s consumer inflation cooled more than expected in August, further evidence that the economy is losing momentum. Weak Chinese data had helped support markets on the bet that authorities would unleash new stimulus measures, but investors are becoming increasingly worried, said Eugen Weinberg, head of commodity research at Commerzbank in Frankfurt. “There’s no commitment yet from China to stimulate the economy in the short term,” he said. “Copper is the leading metal so it’s not surprising to see it coming under massive pressure with this overwhelming pessimism right now in the market.”

Three-month copper on the LME dropped to its weakest since June 20 at $6,770 a tonne before paring losses to close at $6,835 a tonne, down 0.5 percent. Adding to pressure on copper, the global refined copper market was seen flipping into a surplus. “The expectation of a surplus was postponed by a couple of different factors … but we still expect you’re probably going to see that by the end of the year,” analyst James Glenn of National Australia Bank in Melbourne said.

Aluminium was vulnerable to more losses, said Paul Adkins of consultancy AZ China in Beijing. “We feel the aluminium price is a little bit overbought at the moment. And we don’t see enough support from the fundamentals,” he told the Reuters Global Base Metals Forum. “All those restarted (Chinese) smelters are now starting to bring metal to the market and there is still 1 million tonnes of new capacity set to enter the picture through the rest of this year.” Commerzbank’s Weinberg said the metal was a candidate for a short position with a target of $1,900 a tonne by year end.

Deflation and devaluations also observed in language.

More good news

Tuesday, September 9th, 2014

Foreign Policy:

Disease fighters reckon the contagious potential of an outbreak in terms of its RO, or reproduction number. (RO = 1 means that each infected person is statistically likely to infect one more person, so the epidemic will neither grow, nor shrink in size. RO = 0 signifies that the disease cannot be passed from person to person. Any RO above 1 connotes an expanding epidemic.) Christian Althaus of the University of Bern in Switzerland just released a grim new calculation of the RO for this epidemic that finds that when the outbreak began in Guinea, it was RO = 1.5, so each person infected one and a half other people, for a moderate rate of epidemic growth. But by early July, the RO in Sierra Leone was a hideous 2.53, so the epidemic was more than doubling in size with each round of transmission. Today in Liberia, the virus is spreading so rapidly that no RO has been computed. Back in the spring, however, when matters were conceivably controllable, Liberia’s then-small rural outbreak was 1.59.

HT: BC

Downsize

Saturday, September 6th, 2014

Radically.

Sadly, we’ve become a nation of idiots

Saturday, September 6th, 2014

A leading contender for president: “Climate change is the most consequential, urgent, sweeping collection of challenges we face.” BTW, she’s hardly the only idiot. Take it away, George.

The magic bean that almost destroyed the earth

Friday, September 5th, 2014

WSJ:

When the climate scientist and geologist Bob Carter of James Cook University in Australia wrote an article in 2006 saying that there had been no global warming since 1998 according to the most widely used measure of average global air temperatures, there was an outcry. A year later, when David Whitehouse of the Global Warming Policy Foundation in London made the same point, the environmentalist and journalist Mark Lynas said in the New Statesman that Mr. Whitehouse was “wrong, completely wrong,” and was “deliberately, or otherwise, misleading the public.”

We know now that it was Mr. Lynas who was wrong. Two years before Mr. Whitehouse’s article, climate scientists were already admitting in emails among themselves that there had been no warming since the late 1990s. “The scientific community would come down on me in no uncertain terms if I said the world had cooled from 1998,” wrote Phil Jones of the University of East Anglia in Britain in 2005. He went on: “Okay it has but it is only seven years of data and it isn’t statistically significant.”

If the pause lasted 15 years, they conceded, then it would be so significant that it would invalidate the climate-change models upon which policy was being built. A report from the National Oceanic and Atmospheric Administration (NOAA) written in 2008 made this clear: “The simulations rule out (at the 95% level) zero trends for intervals of 15 yr or more.” Well, the pause has now lasted for 16, 19 or 26 years

We put together 2499 blue beans and one magic red bean; we’ll post a picture one of these days. It was the magic bean that was supposed to kill the earth.

Look, of course there are warming and cooling cycles. Ask MIT’s Lindzen. But what you’ve got to get through your thick skull is that it overwhelmingly offends common sense that one bit of CO2 among 2499 others of nitrogen, oxygen, etc., will somehow imperil the planet should it increase its presence a little. Heck, the magic bean is already magic enough, since without it, there’d be no plants and thus no us. Don’t demand that it work overtime!

It’s getting really weird

Thursday, September 4th, 2014

Yes, we know, it’s WND, but still…… And Benghazi is back. Then there’s this sad story from a Nigerian daily. Wretchard discusses Ozymandias. Bonus fun: America becomes a country where it takes decades to do something simple, when it used to take mere months. Good luck to us all.

China’s productivity growth slows

Tuesday, September 2nd, 2014

WSJ:

“China is now at this critical juncture, and maybe has been for several years,” writes Harry X. Wu, a senior advisor to The Conference Board’s China Center and an economics professor at Japan’s Hitotsubashi University. “This explains the ongoing ‘soft fall’ slowdown in economic growth despite the government’s continued stimulus exercises and continuing high-levels of investment and supporting credit expansion.”

Mr. Wu argues in a Conference Board paper that China’s economic ascent may have been less miraculous than it appeared, with total factor productivity – a measure of an economy’s technological dynamism – badly lagging other Asian high-growth economies at a similar stage in their development.

China’s 1% average annual growth in total factor productivity between 1978 and 2012 – a period when average per capita annual incomes rose from $2,000 to $8,000 — compares with 4% annual gains for Japan during its comparable 1950-1970 high-growth period, 3% for Taiwan from 1966-1990 and 2% for South Korea from 1966-1990, he said, when purchasing power in the relative economies is taken into account.

“Our study shows that China’s spectacular growth in the reform period has been mainly investment-driven and quite inefficient,” Mr. Wu wrote.

A big problem, which often complicates efforts to assess the health of China’s economy, is the reliability of Chinese data. Using three measures of productivity, J.P. Morgan economist Haibin Zhu concludes in a research note that China’s total factor productivity grew 1.1% in 2013 from a 3.2% expansion in 2008. Mr. Wu draws on different methodology to argue that total factor productivity turned negative from 2007 to 2012.

China’s cooked books have been a problem for many years. Without explosive growth to cover up the issue, it’s going to be an interesting time shortly.

Cui bono?

Saturday, August 30th, 2014

What’s Russia got going for it? Bad demographics but it is currently the largest oil producer in the world. Russia certainly knows how to act in its own interests, or those of Mr. Putin. Was it a surprise that Putin decided to strongly control the area around its only warm water naval base in moves that seemed to come out of nowhere? Similarly would it be a surprise to find some Russian money in ISIS, another thing that seemed to come out of nowhere? Iran and Qatar versus Saudi Arabia et al should be a good thing for the world’s largest oil producer. (Of course we understand that things cut all kinds of ways in the region; Russia relies on Syria for a large naval maintenance facility, for example.) In any event lowering the power of OPEC and being more of a global lynchpin in oil prices would seem to be an obvious Russian goal.

Hugh Hewitt regularly asks journalists a series of questions to see if they know anything at all. One of the questions is about Alger Hiss, and many times the reporters don’t know much about hisstory. We started wondering the other day: who are the current Russian spies in the US government? You’d be a fool to think that there aren’t quite a few. Along the same line, does Russia even have to funnel money to the nutty environmental groups that oppose vastly increasing US oil production? Many of these come by their anti-Americanism naturally, and think they are intellectually and morally superior to boot. How Putin must laugh at us!

In case you hadn’t noticed

Wednesday, August 27th, 2014

The average person is both ill-informed and not too bright, at least if you poll the right campuses and industries where they prattle on about micro-aggressions and so forth. Add that to the college professor class, and oops! the high school history curriculum, and you have a formula for continued degeneration into a fantasy world until things get up close and personal. It’s all so obvious. Appeasement does not work. Unbelievably sad and pathetic and to no avail.

Update: if figures like this are true, this conflict could be a kind of an internecine hundred years’ war, except that with the armaments available today, there seems a pretty high probability that someone will choose to go out with a bang.

The absurd and the serious

Monday, August 25th, 2014

Cause and effect? College am good. The miracle of solar and wind power. On a serious note, Angelo Codevilla considers what it will take to take down ISIS; there’s no way it’s going to happen until things get far worse, which they will.

As predicted, but far worse

Saturday, August 16th, 2014

Eight years ago we took a look at some periods of relative calm, peace and prosperity, and how they often end with a bang, not a whimper. Wretchard has a nice list of today’s bangs. JOM too. Steyn notes nastiness on all sides in Missouri. IHTM has a joke about a massacre which is actually amusing, if such a thing is possible. KW has sober reflections on urban governance, which if anything seem out of place because of their, um, rationality. This isn’t a rational time, L&G, and the thing is, virtually all of the horrible situations referenced in the linked material can get far worse.

China’s restructuring challenges

Saturday, August 9th, 2014

Stratfor:

Chinese President Xi Jinping’s anti-corruption campaign is the broadest and deepest effort to purge, reorganize and rectify the Communist Party leadership since the death of Mao Zedong in 1976 and the rise of Deng Xiaoping two years later. It has already probed more than 182,000 officials…

China is in the midst of an economic transformation that is in many ways unprecedented. The core of this transformation is the shift from a growth model heavily reliant on low-cost, low value-added exports and state-led investment into construction to one grounded in a much greater dependence on high value-added industries, services and above all, domestic consumption. China is not the first country to attempt this. Others, including the United States, achieved it long ago. But China has unique constraints: its size, its political system and imperatives, and its profound regional geographic and social and economic imbalances. These constraints are exacerbated by a final and perhaps greatest limit: time. China is attempting to make this transition, one which took smaller and more geographically, socially and politically cohesive countries many decades to achieve, in less than 20 years.

The bulk of this work will take place over the next 10 years at most, and more likely sooner, not because the Xi administration wants it to, but because it must. The global financial crisis in 2007-08 brought China’s decadeslong export boom cycle to a premature close. For the past six years, the Chinese government has kept the economy on life support in the form of massively expanded credit creation, government-directed investment into urban and transport infrastructure development and, most important, real estate construction. In the process, local governments, banks and businesses across China have amassed extraordinary levels of debt. Outstanding credit in China is now equivalent to 251 percent of the country’s gross domestic product, up from 147 percent in 2008. Local governments alone owe more than $3 trillion. It is unknown — deliberately so, most likely — what portion of outstanding debts are nonperforming, but it is likely far higher than the official rate of 1 percent.

Despite claims that China’s investment drive was and is irresponsible — and certainly there are myriad anecdotal cases of gross misallocation of capital — it nonetheless fulfills the essential role of jumpstarting the country’s effort to “rebalance” to a new, more urban and more consumption-based economic model. But the problem, again, is time. China’s real estate sector is slowing. Sales, home prices and market sentiment are falling, even in the face of continued expansion of the overall credit supply. The days of high growth in the housing construction sector are numbered and prices, along with overall activity, are on a downward trend — one that can and will be hedged by continued high levels of investment and credit expansion, but not one that can be stopped for long. Real estate and related construction activity will remain the crucial component of China’s economy for the foreseeable future, but they will no longer be the national economic growth engines they were between 2009 and 2011.

This means that in the next few years, China faces inexorable and potentially very rapid decline in the two sectors that have underpinned economic growth and social and political stability for the past two or more decades: exports and construction. And it does so in an environment of rapidly mounting local government and corporate debt, rising wages and input costs, rising cost of capital and falling return on investment (exacerbated by new environmental controls and efforts to combat corruption) and more. Add to these a surge in the number of workers entering the workforce and beginning to build careers between the late 2010s and early 2020s, the last of China’s great population boom generations, and the contours emerge of an economic correction and employment crisis on a scale not seen in China since Deng came to power.

The solution, it would seem, lies in the Chinese urban consumer class. But here, once more, time is China’s enemy. Chinese household consumption is extraordinarily weak. In 2013, it was equivalent to only 34 percent of gross domestic product, compared to 69-70 percent in the United States, 61 percent in Japan, 57 percent in Germany and 52 percent in South Korea. In fact, it has fallen by two percentage points since 2011, possibly on the back of the anti-corruption campaign, which has curbed spending by officials that appears to have been erroneously counted as private consumption. There is reason to believe that household consumption is somewhat stronger than the statistics let on, but it is not nearly strong enough to pick up the slack from China’s depressed export sector and depressive construction industries. China’s low rates of urbanization relative to advanced industrial economies underscore this fundamental incapacity.

Whatever the Chinese government’s stated reform goals, it is very difficult to see how economic rebalancing toward a consumption- and services-based economy succeeds within the decade. It is very difficult to see how exports recover. And it is very difficult, but slightly less so, to see how the government maintains stable growth through continued investment into housing and infrastructure construction, especially as the real estate market inevitably cools. This leaves us with a central government that either accepts economic recession or persists in keeping the economy alive for the sake of providing jobs but at risk of peril to its reform initiatives, banks and local governments. The latter is ugly and very likely untenable under the current political model, which for three decades has staked its claim to legitimacy in the promise of stable employment, growth and rising material prosperity. The former is absolutely untenable under the current political model.

The pressures stemming from China’s economy — and emanating upward through Chinese society and politics — will remain paramount over the next 5-10 years. The above has described only a very small selection of the internal social and economic constraints facing China’s government today. It completely neglects public anger over pollution, the myriad economic and industrial constraints posed by both pollution and pervasive low-level corruption, the impact of changes in Chinese labor flows and dynamics, rising education levels and much more. It completely neglects the ambivalence with which many ordinary Chinese regard the Communist Party government.

CNN: Chinese President Xi Jinping has vowed to clean up the tarnished image of the Communist Party, pushing anti-graft campaigns and pledging to target “mosquitoes” — minor officials — as well as “tigers” — top officials…A report by the Ministry of Commerce cited in the English-language China Daily showed 4,000 corrupt officials had fled the country with at least $50 billion between 1978 and 2003.

2003? Just imagine how many expats and how many billions have fled since then. There is structural unrest in China as it seeks to make a very difficult transition. If push comes to shove, how do you quickly create unity and patriotic spirit? How do you spell Crimea in Chinese?

Common core and other absurdities

Thursday, August 7th, 2014

A professor at Cal of all places:

when teaching fractions, the teacher required that students draw pictures of everything: of 6 divided by 8, of 4 divided by 2/7, of 0.8 x 0.4, and so forth. In doing so, the teacher followed the instructions: “Interpret and compute quotients of fractions, and solve word problems involving division of fractions by fractions, e.g., by using visual fraction models and equations to represent the problem. For example, create a story context for 2/3 divided by 3/4 and use a visual fraction model to show the quotient.” Who would draw a picture to divide 2/3 by 3/4?

This requirement of visual models and creating stories is all over the Common Core. The students were constantly told to draw models to answer trivial questions, such as finding 20% of 80 or finding the time for a car to drive 10 miles if it drives 4 miles in 10 minutes, or finding the number of benches one can make from 48 feet of wood if each bench requires 6 feet. A student who gives the correct answer right away (as one should) and doesn’t draw anything loses points.

Here are some more examples of the Common Core’s convoluted and meaningless manipulations of simple concepts: “draw a series of tape diagrams to represent (12 divided by 3) x 3=12, or: rewrite (30 divided by 5) = 6 as a subtraction expression”…

the most astounding statement I have read is the claim that Common Core standards are “internationally benchmarked.” They are not. The Common Core fails any comparison with the standards of high-achieving countries, just as they fail compared to the old California standards. They are lower in the total scope of learned material, in the depth and rigor of the treatment of mathematical subjects, and in the delayed and often inconsistent and incoherent introductions of mathematical concepts and skills.

For California, the adoption of the Common Core standards represents a huge step backward which puts an end to its hard-won standing as having the top math standards in the nation. The Common Core standards will move the U.S. even closer to the bottom in international ranking.

We grew up in an unenlightened time when the nuns gave us all addition and subtraction speed tests in first grade, multiplication and division speed tests to follow shortly. If we had to do the things above, we might have reduced our math SAT score by 800 points or so. In another example of government insanity, Michael Barone laments the acceleration of the regulatory state when Moore’s Law, twitter, yelp and uber all point in precisely the opposite direction.

Today’s reading

Saturday, August 2nd, 2014

Alan Dershowitz again. Jon Voight. Questions for journalists. And a writer at The New Yorker, of all places, takes on Rashid Khalidi. What a world. Meanwhile, did you know that the Gaza tunnels were a jobs program? Or that Andrew Jackson was a “genocidal maniac“? Or that if you think illegal immigration is bad now, soon “millions of people are driven north from the parched landscapes of a world degraded by intensifying climate change?” (Must be why they’re sending the kids to Alaska!) Finally, on some station that shows vintage TV, there today was an episode of Flipper from 1966. Almost every minute features something that is unacceptable or illegal now.

Compassion or the opposite?

Wednesday, July 30th, 2014

NYT:

black Americans are twice as likely to be unemployed as whites (13.1 percent of blacks versus 6.5 percent of whites, according to data from the Bureau of Labor Statistics). The rate for Hispanics was 9.1 percent. The report also focused on underemployment which includes those who are jobless and not looking or working part-time jobs but desiring full-time work. According to the report, the underemployment rate for black workers was 20.5 percent, compared with 18.4 percent for Hispanic workers

So three disasters minimum: (a) black unemployment unacceptably high; (b) ditto for Hispanics; and (c) the overall US labor force participation rate is at 30 year disastrous lows. A sane and compassionate country would make fixing these things a top priority. What conclusion is therefore to be drawn about an administration that wants millions of new illegal immigrants to compete for these already inadequate job and income resources. Oh, yeah, the current thoughtful administration policy is stop hatin’, as opposed to, for example, consulting with the some of the experts from the US Commission on Civil Rights.

Why not promote them………and other matters

Friday, July 25th, 2014

Jim Fox, the leader of the Mid-Iowa Boy Scout Troop 111:

The scouts and their leaders were on a 21-day trek from Iowa to Alaska – a trip that had been three years in the planning. As their vans were moving through a checkpoint into the United States, one of the scouts snapped a photograph. Agents stopped the van and ordered all the passengers to get out. They told the underage photographer that he had committed a federal crime. It was unclear which agency with the Department of Homeland Security’s CBP agency was involved in the incident. “The agent immediately confiscated his camera, informed him he would be arrested, fined possibly $10,000 and ten years in prison,” Fox told Des Moines television station KCCI. During the search, one of the scouts tried to retrieve a bag from the roof carrier. When he turned around, Fox said an agent had a loaded pistol pointed at the child. “He heard a snap of the holster, turns around, and here’s this agent, both hands on a loaded pistol, pointing at the young man’s head,” Fox told the television station. The scoutmaster wrote a detailed account of the incident on his Facebook page. He said he tried to watch the agents search the van but was ordered to return to his vehicle. An agent followed him and told the youngsters “that the next one to leave the van would be handcuffed and detained.” “The agent in charge informed me of the potential charges against (the) scout and informed me it is a violation of federal law for any American to take a picture of a federal agent or any federal building,” Fox wrote. Fox said he and another member of the troop were interrogated by agents – forced to answer questions about their background. They also wanted to know why the Boy Scouts were hauling “excessive amounts of lighters, matches and knives,” Fox said. After a lengthy delay, the Scouts were released

Too bad they were released, or we’d might recommend that the agents be promoted 1500 miles south to stem this disaster. And in other news, “killing bald and golden eagles remains a felony punishable by a $250,000 fine and prison time…In 2009, the agency first instituted a permit system to allow exemptions from prosecution—for five years—for wind farms and certain other projects that inadvertently harm or kill eagles. Last year, it extended the duration of permits for ‘non-purposeful take of eagles’ to 30 years.”

Final thoughts: Joan Rivers, and in lighter fare, “By Grabthar’s Hammer…what a savings.”