Tag Archives: economics

Chinese stocks lost 30% this year, has China’s lost decade begun?

Leave a reply

I predicted dire times for China six years ago, when Xi Jinping amended the constitution to make himself leader for life, in charge of the government, the party, the military, and the banks. Emperor, I called him, here. It now seems the collapse has begun, or at least stagnation. Chinese history is cyclic. Good times of peace and plenty give rise to a supreme emperor whose excesses bring war and famine, or at least stagnation. The cycle repeats every 50 to 100 years. Since Nixon opened China in 1973, the country has seen 50 years of prosperity and spectacular growth, but the growth has stopped and may be in decline. The stock market (Shanghai Shenzen 300) peaked in 2021 and has declined 50% from there. It’s down 30% for the last 12 months to levels seen in December 2010. US growth seemed slower than China’s but it’s been more steady. The main US stock market, the S+P 500, has more than tripled since 2010, up 24.5% this year.

Five years of the Shanghai 300 index with hardly any change. There has hardly been change in 15 years. One could argue that the lost decade is here and on-going. .

Each year Chairman Xi’s behaves more dictatorial. Last year he arrested his predecessor, Hu Jintao in front of the Communist party. He now tracks all his citizens actions by way of face recognition and phone software, and gives demerits for wrong thinking and wrong behaviors. You lose merits by buying western cars or visiting western internet sites. Taking money abroad is generally illegal. Needless to say, such behavior causes people to want to take money abroad, just in case. Last week, Xi proposed a limit on video game playing and clamped down on banks, demanding low interest rates. This is bad for the gaming corporations and teenagers, and banks, but so far there are no protests as there is no war.

Kissinger said that war was likely, though. Xi is building the navy at a fast pace, adding fast surface ships, nuclear submarines, aircraft carriers, and new attack airplanes. They’ve added hypersonic missiles too, and added listening stations and bases. There’s now a naval base in Djibouti, at the entrance to the Red Sea, where they oversee (or promote?) Iran’s attacks on Western shipping. Then there are the new Chinese Islands that were built to take oil and fishing rights, and to provide yet more military bases on key trade routes. These could easily be a trigger for war, but so far just one military interaction in the region. Last month, the Chinese and Philippines navy clashed over fishing!

In the Gulf of Finland last Month, a Chinese ship, New New Polarbear, destroyed the offshore cables and gas pipes between Finland and Estonia, in protest of Finland’s entry into NATO. It’s belligerent but not war. Undersea cables are not covered by the UN charter, law of the sea. Then there is the evidence that COVID-19 was the result of Chinese bioweapon development, and the Chinese spy ballon that was sent over the US. We maintain at peace, but an unsettled sort of peace — is it a preface to war? Wars don’t have to be big war against the west or Taiwan, more likely is Vietnam, IMHO.

China’s negative population growth means that property values will drop along with product consumption. Kids buy stuff; old folks don’t.

News from China is increasingly unreliable so it’s hard to tell what’s going on. There were claims of a coupe, but perhaps it was fake news. Reporters and spies have been arrested or shot so there is no window on anyone who knows. There are claims of high unemployment, and COVID deaths, and claims of a movement to “lie flat” and stop working. Perhaps that was behind the ban on excessive gaming. Who knows? Xi claims that China is self sufficient in food production, but record food shipments from the US to China suggest otherwise.

Major businesspeople have disappeared, often to reappear as changed men or women. Most recently, Jimmy Lai, the Hong Kong clothing magnate, was indicted for sedition by tweets. Perhaps he just wanted to fire workers, or pay down debt, or move abroad (his daughter is). Many businesses exist just to make jobs, it seems. Not all of these businesses are efficient, or profitable. Some exist to violate US patents or steal technology, particularly military technology. I suspect that China’s hot new car company, BYD, is a money-losing, job factory, behind Tesla in every open market. Some 91 public firms have delisted over the last two years, effectively vanishing from oversight. Are they gone, or still operating as employment zombies. Will BYD join them? If China manages to avoid war, I have to expect stagnation, a “lost decade” or two, as in Japan saw from 1990 to 2010, as they unwound their unprofitable businesses.

A sign suggesting that a Chinese lost decade has begun is that China’s is seeing deflation, a negative inflation rate of -0.2%/year according to the world bank. It seems people want to hold money, and don’t want Chinese products, services, or investment. Japan saw this and tried a mix of regulation and negative interest rates to revive the interest, basically paying people to borrow in hopes they spend.

In Japan, the main cause of their deflation seems to have been an excess of borrowing against overvalued and unoccupied real estate. The borrowed money was used to support unprofitable businesses to buy more real estate. This seems to be happening in China too. As in Japan, China originally needed new lots of new apartments when they opened up and people started moving to the cities. The first apartments increased in value greatly so people built more. But now they have about 100% oversupply: one unoccupied or half-built apartment for every one occupied, with many mortgaged to the hilt against other overvalued apartments and flailing businesses.

Chinese Dept, personal and corporate match Japan’s at the start of the lost decade(s). Personal debt is at 150% of GDP, corporate debt is at65% of GDP, all propped up by real estate.

As in Japan 30 years ago, China’s corporate + personal debt is now about two times their GDP. Japan tried to stop the deflation and collapse by increased lending, and wasteful infrastructure projects. People in the know sent the borrowed money abroad confident that they would repay less when they repaid. We are already seeing this; low interest loans, money flowing abroad and a profusion of fast trains, unused roads, and unused bridges. I suspect most fast trains don’t pay off, as planes are faster and cheaper. These investments are just postponing the collapse. China is also seeing a birth dearth, 1.1 children per woman. This means that within a generation there will be half as many new workers and families to use the trains, or occupy the apartments. As the country ages, retirees will need more services with fewer people to provide them. China’s culture promotes abortion. China’s working population will decline for the next 30 years at least.

Japan came through all this without war, somewhat poorer, but unified and modern. It helped that Japan was a democracy, unified in culture, with an open press and good leaders (Abe). There was no collapse, as such, but 20 years of stagnation. China is a dictatorship, with a disunited culture, and a closed press. I think it will get through this, but it will have a much rougher time.

Robert Buxbaum January 9, 2024. China isn’t alone in facing collapse and/or lost decades. Germany is in a similar state, especially since the start of the Ukraine war. It’s a democracy like Japan, and pacifist for now.

Cybertruck an almost certain success

3 Replies

Leading up to the Cybertruck launch 4 weeks ago, the expert opinion was that it was a failure. Morgan Stanley, here dubbed it as one, as did Rolling Stone here. Without having driven the vehicle, the experts at Motor trend, here, declared it was worse than you thought, “a novelty” car. I’d like to differ. The experts point out that the design is fundamentally different from what we’ve made for years. They claim it’s ugly, undesirable, and hard to build. Ford’s F-150 trucks are the standard, the top selling vehicle in the US, and Cybertruck looks nothing like an F-150. I suspect that, because of the differences, the Cybertruck can hardly fail to be a success in both profit and market share.

Cybertruck pulls a flat-bed trailer at Starbase.

Start with profit. Profit is the main measure of company success. High profit is achieved by selling significant numbers at a significant profit margin. Any decent profit is a success. This vehicle could trail the F-150 sales forever and Musk could be the stupidest human on the planet, so long as Tesla sells at a profit, and does so legally, the company will succeed. Tesla already has some 2 million pre-orders, and so far they show no immediate sign of leaving despite the current price of about $80,000. Unless you think they are all lying or that Musk has horribly mispriced the product, he should make a very decent profit. My guess is he’s priced to make over $10,000 per vehicle, or $20B on 2 million vehicles. Meanwhile, no other eV company seems to be making a profit.

The largest competing electric pickup company is Rivian. They sold 16,000 electric trucks in Q3 2023, but the profit margin is -100%. This is to say, they lose $1 for every $1 worth of sales –and that’s unsustainable. Despite claims to the contrary, a money-losing business is a failure. The other main competitors are losing too. Ford is reported to lose about $50,00 per eV. According to Automotive News, here, last week, Ford decided to cut production of its electric F-150, the Lightning, by 50%. This makes sense, but provides Cybertruck a market fairly clear of US e-competition.

2024 BYD, Chinese pickup truck

Perhaps the most serious competitor is BYD, a Chinese company backed by the communist government, and Warren Buffet. They are entering the US market this month with a new pickup. It might be profitable, but BYD is relatively immune to profitability. The Chinese want dominance of the eV market and are willing to lose money for years until they get it. Fortunately for Tesla, the BYD truck looks like Rivian’s. Tesla’s trucks should exceed them in range, towing, and safety. BYD, it seems, is aiming for a lower price point and a different market, Rivian’s.

A video, here, shows the skin of a Cybertruck is bulletproof to 9mm, shotgun, and 45 caliber machine gun fire. Experts scoff at the significance of bulletproof skin — good for folks working among Mexican drug lords, or politicians, or Israelis. Tesla is aiming currently for a more upscale customer, someone who might buy a Hummer or an F-250. This is more usable and cheaper.

Don’t try this with other trucks.

Another way Cybertruck could fail is through criminal activity. Musk could be caught paying off politicians or cheating on taxes or if the trucks fail their safety tests. So far, Cybertruck seems to meet Federal Motor Vehicle Safety Standards by a good margin. In a video comparison, here, it appears to take front end collisions as well as an F-150, and appears better in side collisions.

This leaves production difficulty. This could prevent the cybertruck from being a big success, and the experts have all harped on this. The vehicle body is a proprietary stainless steel, 0.07″ thick. Admittedly it’s is hard to form, but Tesla seems to manage it. VIN number records indicate that Tesla had delivered 448 cybertrucks as Friday last week, many of them to showrooms, but some to customers. Drone surveys of the Gigafactory lot show that about 19 are made per day. That’s a lot more than you’d see if assembly was by hand. Assuming a typical learning curve, it’s reasonable to expect some 600 will be delivered by December 31, and that production should reach 6000 per month in mid 2024. At that rate, they’ll be making and selling at the same rate as Rivian or Ford, and making real money doing it. The stainless body might even be a plus, deterring copycat competition. Other pluses are the add-ons, like the base-camp tent option, a battery extension, a ramp, and (it’s claimed) some degree of sea worthiness. Add-ons add profit and deter direct copying (for a time).

Basecamp, tent option.

So why do I think the experts are so wrong? My sense is that these people are experts because of long experience at other companies — the competitors. They know what was tried, and that innovation failed. They know that their companies chose not to make anything like a Cybertruck, and not to provide the add-ons. They know that the big boys avoid “novelty cars” and add-ons. There is an affinity among experts for consensus and sure success, the success that comes from Chinese companies, government support and international banking. If the Cybertruck success is an insult to them and their expertise. Nonetheless, if Cybertruck succeeds, they will push their companies towards a more angular design plus add-ons. And they will claim cybertruck is no way novel, but that government support is needed to copy it.

Robert Buxbaum, December 25, 2023.

The UAW’s minimally-effective strike.

Leave a reply

The aim of a strike, generally, is the same as the aim of war: it is to win concessions fast. To do this, one must strike to the utmost extent, as Von Clausewitz points out. The target company must come to understand that they need the workers, and that they need a quick settlement. In the case of the current united auto worker strike, the UAW asked for 40% and concessions, but only struck at a few plants. The resulting strike lasted 6 weeks, with Ford settling for a 25% raise over 4.5 years, to April 2028. Viewed on an average, that’s a 5.6% raise per year, assuming the Ford workers accept the deal.

I’m not sure how the UAW boss chose which plants to strike AGAINST. They were mostly low-profit ones at first. Workers at other plants kept on working and received a full salary. The suffering was borne some 45,000 UAW workers (1/4 of the UAW autoworkers) who left the job for strike pay, $500/week. This is a tiny fraction of the 4.36 million auto workers in the US. Auto production was reduced by 80,000 vehicles, we’re told, again a small fraction of several million vehicles typically made in the US in a year.

The strike does not seem to have affected vehicle sales or profits, as best I can tell. The remaining plants ran at higher capacity, and some production was made up by imports from Canada, Mexico, and China. Inventories today are at 60 days, the industry target. In a sense, the major lessons of the strike are that the auto companies don’t need so many workers, and that the UAW can direct suffering to whichever workers they wish.

The gasoline-powered F-150, left, is the most popular vehicle in the US. The Tesla Cybertruck, right, is an EV challenger of a sort that will soon be mandated. EVs require fewer workers and manufacture is non-union.

Ford’s settlement sounds good, but if viewed as a 5.6% raise per year, it barely covers inflation. Inflation is 3.6% now and was 8% last year. Ford retained the right to shed workers and close plants as the economy slows or production shifts. That’s a minimal gain for a 4.5 year commitment.

Battery plants may be covered or not; we’ve not been told. Production is expected to shift to battery vehicles, and these require fewer workers per car. President Biden has mandated a shift as part of his plan to stop global warming (a plan that I find misguided). He’s provided financial incentives for EV owners too, under the “inflation reduction act,” an effort to cause consumers to buy cars they would not otherwise. Largesse of this type is problematic, and highly inflationary, at least in the short term (the next few years). It is supposed to help out down the road, but workers pay their bills in the short term, the here and now.

Despite Biden’s financial incentives to buy electric, most consumers prefer to buy gasoline. The gasoline F150 is the most popular vehicle in America, selling over 600,000 per year. Trump claims that US workers would be better off if we stopped pushing EVs. Less incentives means less inflation, more internal combustion cars, and more union jobs he says. Biden has recently funded a Chinese battery plant, non-union in Michigan, suggesting that Trump is on to something. The strike has produced a raise, but its main contribution, it seems was to punish those UAW workers that the union boss didn’t like.

Robert Buxbaum, October 29, 2023. As I write, Stellantis has offered a tentative deal, but GM is still holding out, and we’ve yet to see if the workers ratify any of these deals.

I’d like to expand the Jones act so more ships can do US trade.

2 Replies

If you visit most any European port city, you’ll see a lot more shipping than in the Midwestern US. In Detroit, where I am, your’ll see an occasional ore boat from Wisconsin, and an occasional tourist cruise, but nothing to compare to German, Belgian, or Turkish ports. The reason for the difference is “The Jones act.”

The port of Istanbul with many ships

The Jones act , also known as “The Merchant Marine Act of 1920”, requires that all ships depositing cargo or people between US ports must be US owned, US built, US captained, US flagged, and at least 70% US manned. This raises costs and reduces options. The result is that few ships can move people or cargo between US cities, and these ships are older and less efficient than you’ll see elsewhere. World wide water traffic costs about 1/8 that of rail traffic per ton-mile, but in the US, the prices are more comparable. The original justification was to make sure the US would always have a merchant marine. The Jones act does that, sort of, but mostly, it just makes goods more expensive and travel more restrictive.

The port of Detroit — we rarely see more than one ship at a time.

Because it does some good, I don’t want to get rid of the Jones act entirely, but I’d like to see US shipping options expanded. Almost any expansion would do, e.g. allowing 50% US manned ships delivering along US rivers, or expanding to allow Canadian built ships or flagged, and ships that are more than 50% US owned, or expanding to any NAFTA vessel that meets safety standards. Any expansion of the number of ships available and would help.

The jones act increase the price of oil transport by a factor of five, about.

Currently, the only exceptions to the Jones act are for emergencies (Trump voided the act during several storms) and for ships that visit a foreign port along the route. This exception is how every cruise ship between California and Hawaii works. They’re all foreign, but they stop in Mexico along the way. Similarly, cruises between Florida and Puerto Rico will stop in Bermuda typically, because the ships are foreign owned. Generally, passengers are not allowed to get off in Puerto Rico, but must sleep on board. This is another aspect of the Maritime act that I’d like to see go away.

Because of the Jones act, there is some US freight-ship building, and a supply of sailors and captains. A new, US ore-ship for the Great Lakes was launched last year, so far it’s been used to carry salt. There is also a US built and operated cruise ship in Hawaii, the “Pride of America,” that makes no stop in Mexico. I’d like to see these numbers expanded, and the suggestions above seem like they’d do more good than harm, lowering prices, and allowing modern container ships plus roll-on-roll-off car transports. Our rivers and lakes are super highways; I’d like to see them used more.

The port of Antwerp – far busier than Detroit.

Another way to expand the Jones act while perhaps increasing the number of US-built and operated ship would be through a deal with Canada so that ships from either country could ply trade on either countries rivers. As things stand, Canada has its own version of the Jones act, called the Coastal Trade Act where Canadian vessels must be used for domestic transport (cabotage) unless no such vessel is available. Maybe we can strike a deal with Canada so that the crew can be Canadian or US, and where built ships in either country are chosen on routes in either country, providing they meet the safety and environmental requirements of both.

Robert Buxbaum, June 14, 2023.

Canada’s doctor-assisted suicide killed 10,064 in 2021

Leave a reply

Canada’s healthcare is free to the user. It’s paid for by taxes, and it includes a benefit you can’t get in the US: free, doctor assisted suicide, euthanasia. This is a controversial benefit, forbidden in the Hippocratic oath because it’s close to murder, and includes the strong possibility of misuse of trust. Assistance by a trusted professional can be a bit likes coercion, and that starts to look like murder — especially since the professional often has a financial incentive to see you off.

From Charlie Hebdot (a French, humor magazine): The medical association refuses to participate in euthanasia — Why? People are already dining quite well on their own waiting in the emergency room.

In 2021, according to Statistics Canada, Canada assisted the suicide of 10,064 people, 3.3% of all Canadian deaths. There were about 4,000 more, non-assisted suicides. In Quebec, the Canadian Provence where Medical Assistance in Dying (MAiD) is most popular, 5.1% of deaths result from MAID. The Netherlands has a similar program that results in 4.8% of deaths. In Belgium, it’s 2.3%. These countries’ suicide rates are far higher than in the US, and account for far more deaths, per capita than from guns in the US. My guess is that suicide is common because it is free and professional. It’s called “Dignity in Dying,” in Europe, a title that suggests that old folks who don’t die this way are undignified.

In Canada, about 80% of those who requested MAiD were approved. A lot of the remainder were folks who died or changed their mind before receiving the fatal dose. If you attempt suicide on your own, it’s likely you won’t succeed, and you may not try again. With doctor assisted suicide, you’re sure to succeed (even if you change your mind after you get your lethal shot?)

In Canada you don’t have to be terminally ill to get MAiD, you just have to be in pain, and extreme psychological pain counts. Beginning March 17, 2024, depression will be added as a legitimate reason. According to Canadian TV news, depressives are lining up (read some interviews here). Belgium and Netherlands allows elders to be euthanized for dementia, and children to be euthanized on the recommendation of their parents. France passed similar legislation, but the doctors refused to go along, see cartoon. I applaud the French doctors.

Rodger Foley says he’s being pressured to ask for medical suicide, picture from the NY Post

There have been persistent claims that Canadian doctors and nurses push assisted suicide on poor patients, telling them how much bother they are and how much resources they are using. There has been an outcry in British and American newspapers, e.g. here in the Guardian, and in the NY Post, but not in Canada, so far. Rodger Foley, a patient interviewed by the NY Post, recorded conversations where his doctors and nurses put financial pressure on him. “They asked if I want an assisted death. I don’t. I was told that I would be charged $1,800 per day [for hospital care]. “I have $2 million worth of bills. Nurses here told me that I should end my life.” He claims they went so far as to send a collection agency to further pressure him. In another case, a disabled Canadian veteran asked for a wheelchair ramp, and was told to apply for MAiD.

Even without outside pressure, many people seeking MAiD often cite financial need as part of the reason. A 40 year old writer interviewed by Canadian television said that he can’t work and lives in poverty on a disability payment of just under $1,200 a month. “You know what your life is worth to you. And mine is worthless.”

The center of the argument is the value of a person in a social healthcare state when their economic value is less than the cost of keeping them alive. Here, Sabine Hossenfelder, an excellent physicist, argues that the best thing one could do for global warm and to preserve resources is to have fewer people. Elon Musk says otherwise, but Ms Hossenfelder claims this only shows he is particularly unworthy. There’s a Germanic logic here that gave us forced euthanasia in the 1940s.

I find euthanasia abhorrent, especially when it’s forced on children, the elderly, and depressed folks. I also reject the scary view of global warming, that it is the death of the earth. I’ve argued that a warm earth is good, and that a cold earth is bad. Also, that people are good, that they are the reason for the world, not its misfortune. It seems to me that, if suicide aid must be provided, state-funded hospitals should not provide it. They have a financial incentive to drop non-paying, annoying patients. That seems to be happening in Canada. A patient must be able to trust his or her doctor, and that requires a belief that the doctor’s advice is for his or her good. Unfortunately, Canadian politicians have decided otherwise. I say hurray for the doctors of France for not going along.

Robert Buxbaum, April 25, 2023. The medical profession is shady even when you pay for services, see Elvis Presley’s prescription. There’s always a financial interest. Even based on old data, the US is not a particularly high-murder country if suicide is considered murder.

Britons did better than Germans since Brexit

Leave a reply

Britain and Germany are the two largest economies in Europe. When Britain voted to leave the EU seven years ago, 23 June 2016, economists, royals, and the richer, smarter set predicted disaster. The unemployment rate at the time was 5.2% in the UK; economists guaranteed it would rise with Brexit due to the loss of access to the common market. Unemployment fell to 3.7% today: Embarrassing for economists, a bonus for British workers. Germany unemployment today is 5.6%, basically slightly higher than the 4.3% of 2016. There has been a large influx of Ukrainians into both countries, and of illegal boat people into the UK. These are people coming to get jobs, seeking a better life than available in the rest of the EU. That boat people don’t go the other way suggests that things are better in the UK.

Fromm Bloomberg, October 2022. See full article here. UK unemployment is down to 2.5% in February 2023.

Britain’s GDP was supposed to suffer from Brexit, too. Instead, GDP has grown by 18% since 2016, about 2.5% per year on average, outpacing Germany’s 10.6% total growth, 1.5% per year. Between 2016 and 2022, the British GDP rose to $3.19T from $2.7 T. Germany’s GDP increased to $3.57T, from $3.14T (data from the world bank). Separating from the EU helped, it seems and helped us too something Trump promoted. Germany chose close ties to Russia instead. That does not seem to be a big plus.

German Inflation has traditionally been low. It has increased in the past few months due to rising food and energy costs.

Inflation is higher in the UK than in Germany, 10.4% as of February 2023 versus 8.7% in Germany, or 9.9% in the European Union and a whole. I don’t think that’s Brexit. The UK typically has seen higher inflation rate than Germany, something seen by the steady drop of the pound. They have a tradition of inefficiency and silliness. Part of the problem today is that Britain gets much of its electricity from natural gas, while the French use nuclear power. Nuclear is cheap and clean, compared to natural gas. Coal is cheap and dirty; China uses it extensively and plans to use more. But the real cause of the UK’s higher inflation is inherent in the British and Germans, IMHO. The Germans hate inflation, the Brits don’t mind.

Population growth (green) or decline (orange) in Europe

For high-power, white collar workers, Britain seems to be as good a spot as Germany, maybe better. Maximum tax rates are slightly lower than in Germany (45% vs 47.45%), and the population is growing (slowly). Apparently, people like it enough to come there and have children; children are a good sign, IMHO. It’s harder to get good workers, but population growth suggests that the problems won’t be catastrophic (as they were in Japan, and likely will be in Germany). If you want a developed economy with yet-lower taxes, plus good workers, the US is the place to be, IMHO. Our maximum tax rate is 37%. You get fewer free services (healthcare), but you can earn enough to afford it. Prince Harry moved to the US recently, joining foot-baller David Beckham, and Pele a few years back. Former Python, John Cleese, came here too… They complain that Americans are cheap when it comes to helping others (but that’s out attraction). They claim that we’re violent and crass (true enough!) but say that the UK isn’t what it was. The fact that refugees seem to prefer the UK to Germany, suggests that Britain is a place to go. Britain, I’d say seems to have come out pretty well from Brexit.

Robert Buxbaum, April 11, 2023

Birth dearth in China => collapse? war?

1 Reply

China passed us in life-expectancy in 2022, and also in fertility, going the other way. In China lifespan at birth increased to 77.3 years. In the US it dropped an additional 0.9 years, to 76.8. US lifespans suffered from continuing COVID and an increase in accidents, heart disease, suicide, drugs, and alcohol abuse. Black men were hit particularly hard, so that today, a black man in the US has the same life expectancy as he would in Rwanda. China seems to have avoided this, but should expect problems due to declining fertility and birth rates.

China passed us in life expectancy in 2022.

Fertility rates will eventually burden the US too, as US fertility is only slightly greater than in China, 1.78 children per woman, lifetime, compared to 1.702 in China. But China has far fewer people of childbearing ages, relatively, and only 47% are women. Three decades of one child policy resulted in few young adults and a tendency to abort girls. Currently, the birthrate in China is barely more than half ours: 6.77 per 1000, compared to 12.01 per 1000. And the proportion of the aged keeps rising. China will soon face a severe shortage of care-givers, and an excess of housing.

Years of low birthrate preceded the “Lost decades” of financial crisis in Japan and the USSR. Between 1990 and 2011, business stagnated and house prices dropped. China faces the same; few workers and more need for care: it’s not a good recipe.

Beginning about 1991, Japan saw a major financial collapse with banks failing, and home values falling. China seems over-due.

Few children also signals a psychic lack of confidence in the country, and suggests that, going forward, there will be a lack of something to work for. Already Chinese citizens don’t trust the state to allow them to raise healthy children. They have stopped getting married, especially in the cities, and look more to have fun.

Affluent women claim they can’t find a good man to marry: one who’s manly, who will love them, and who will reliably raise their standard of life. Women seem less picky in China’s rural areas, or perhaps they find better men there. However it goes, urban women get married late and have few children, both in China and here. China produces great, sappy, soap operas though: a country girl or secretary in a high-power job meets a manly, urban manager who lovers her intensely. A fine example is “The Eternal Love” (watch it here). It involves time travel, and a noble romance from the past. Japan produced similar fiction before the crisis. And a crisis seems to be coming.

While Japan and Korea responded quietly to crisis and “the lost decades,” allowing banks to fail and home values to fall, Russia’s response was more violent. It went to war with Chechnya, then with Belarus and Ukraine, and now with NATO. I fear that China will go to war too — with Taiwan, Japan, and the US. It’s a scary thought; China is a much tougher enemy than Russia. There is already trouble brewing over new islands that they are building.

Robert Buxbaum January 25, 2023. If you want to see a Korean soap opera on the Secretary – manager theme, watch: “What’s wrong with Secretary Kim”. (I credit my wife with the research here.) I suspect that Americans too would like sappy shows like this.

Biden stops fracking and gas prices go up 300% — Surprise!

Leave a reply
Natural gas prices for June 2022 as of May 6, 2022.

Natural gas prices have quadrupled in the last 17 months. It’s gone from $2.07 per million BTU in mid January 2021 when Joe Biden took office, to nearly $9 today. It’s a huge increase in the cost to heat your home, and adds to the cost of any manufactured product you buy. Gasoline prices have risen too, going from $2/gallon when Biden took office to about $4.40 today. Biden blames the war with Russia, but the rise began almost as soon as he took office, and it far outstrips the rise in the price of wheat shown below (wheat is grown in Ukraine — it’s their major export). The likely cause is Biden’s moratorium on fracking, including his decision to stop permitting oil exploration and drilling on federal land. In recent weeks Biden has walked back some of this, to the consternation of the environmentalists. On April 15, 2022, the Interior Department announced this significant change including its first onshore lease sale since the moratorium.

Biden also cancelled the Keystone XL oil pipeline that would have brought tar-sands oil from Canada and North Dakota to Texas for refining. Blocking the pipeline helped increase gas prices here and helped cause a recession in Alberta and North Dakota. The protesters who claimed to speak for the natives are not affected.

Another issue fueling price increases is that Biden is printing money. Bidenflation is running at 8%/year. It’s not hyperinflation, but it’s getting close. It’s money taken from your pocket and from your savings. Much of the money is given to friends: to groups that Biden thinks will use it virtuously, but inflation is money taken from us, from our pockets and savings. Another beneficiary are those who are rich enough to take no salary, but live by borrowing against their real estate and corporate equity. The richest people in the US do this, earning $1 per year or less, (here’s a list compiled by Bloomberg, it’s basically every rich person). They pay no taxes, as they have no income. The only way to tax them is by tariffs, taxing what they import, but the government is against tariffs.

What you can do, personally about energy-cost inflation is not much. I would recommend insulating your home. I plan to repaint the roof white, and put in a layer of roof insulation. I also have fruit trees: an apple tree and a peach tree, grapes and a juneberry. They provide summer shade, and you get a lot of fruit with minimal work. Curtains are a good investment. Another thought is to buy solar cells. A vegetable garden is fun too, but it’s unlikely to pay you back.

Winter wheat prices are up by about 40%, likely due to the loss of supply from Ukraine and Russia

Speaking of wheat prices, they are up. They increased 40% when Russian troops invaded Ukraine, and have held steady at that level since. This is far less increase than for natural gas. Corn and rice prices are up too, but nowhere near as much. Fertilizer prices are up 300%, though, and Biden has indicated he’d like to push for a sustainable alternative; is that poop? There is a baby formula shortage too. We can handle it, I think, unless Biden get involved, or starts a hot war with Russia.

Robert Buxbaum May 10, 2022. As a fun sidelight, here is Biden answering questions about Pakistan when someone in a Bunny costume grabs him and walks him away from the reporters. Who is that masked handler? What’s going on in Pakistan?

Professors being replaced by videos, entertainers.

Leave a reply

In a previous post, I presented data to the effect that, while college is a benefit to those who major in moneymaking fields, STEM, English, and philosophy, it is a money loser for those in film, history, language, political science, etc.

Most students don’t mind if the information itself can be forgotten on graduation day, but the better students do mind. Professors in these fields motivate their better students by luring them with the chance to become professors. A vision of stylish offices, and deep satisfaction is dangled before the student, while tuition and a total commitment is asked in return. The chance of an actual job is virtually nil. This is the background to murder in popular, dark-academia stories like “The Secret History” by Danna Tartt, and a Hitchcock movie, “rope” (see my essay here).

Things are getting more depressing for those aspiring to become professors. Now, aspiring professors have to compete with taped programs made by other professors, some well known, some already dead. And some professors — those without tenure — have to compete with their own taped programs. Tapes of old lectures are available free to the university. It’s a financial boon for the university to be able to collect tuition without having to pay a living professor who gives essentially the same lecture year after year. If the professor is untenured, the university can fire him or her, and use the tape from last year, or they can purchase a series of lectures by a Nobel laureate. It’s a great deal for the majority of students and for the university, but deadly to the aspiring few.

Robert Buxbaum, December 3, 2021

The Pope’s crusade against agricultural greed.

Leave a reply

The Pope goes to long lengths to show how much he supports the poor, oppressed people of the world; he washes the feet of Muslim prisoners, he campaigns against Israeli occupation of Palestine, and scolds America, but not China they must reduce carbon output. Usually he picks the wrong villains, in my opinion. His latest effort is against the producers and distributors of food, the agribusinessmen. If only they would charge less, everyone would have more, or so he says.

On World Food Day, Pope Francis placed the blame on capitalism in the food market. Some examples of his speech and tweets follow: “The fight against hunger demands we overcome the cold logic of the market, which is greedily focused on mere economic profit and the reduction of food to a commodity, and strengthening the logic of solidarity.”

In the Pope’s view the cold logic of the market is the source of hunger. I think it is the source of his food and mine, and for the most part everyone’s.

“Thinking about these situations, in God’s name I want to ask The big food corporations to stop imposing monopolistic production and distribution structures that inflate prices and end up withholding bread from the hungry.”

The Pope blames high food prices on producers and distributors who are, in his words, “withholding bread from the hungry.”  Of course, all the bread the Pope eats comes from these producers and distributors. It is the same for the bread of all the Archbishops and virtually all the priests; it all comes from these agribusinessmen, who charge more than he would like. They are also the source of the church’s wine, and meat, and vegetables. Folks who do not grow food themselves, and who do not transport it, or process charge those who do these things as greedy, withholding monsters. That any of them have food is only because of these monsters; without them, the poor of the world would starve to death. If he thinks he can do better, he should try, perhaps giving up his time washing feet.

The Pope believes that big food corporations are causing starvation and withholding food from the hungry.

Free market pricing is how farmers know what to produce, where, and who to sell too. It’s also how customers know what to buy and keep, and what to throw away, or save for a special occasion. Without these clues, farmers would grow things people don’t want, and much of the good stuff would go to waste.

High prices for some foods is the indicator that causes agribusiness individuals (the so-called greedy) to see an unmet need. They then employ people in the manufacture and distribution of these foods reducing the employment in the production of other foods where the margins are smaller. These food-price signals are also the fuel for technological innovation — the innovation that has made food abundant and relatively affordable, especially in the capitalist west.

The west has lead in food innovation precisely because of the motivation of food profit. Monsanto invents and distributes seeds for fast-growing grains precisely because there is profit in it, and it is these seeds that reduces the price to the consumer. Colonel Sanders invented the high-pressure fryer because it allowed him to fry more chicken faster. The result is profits for KFC and lower prices for the consumers. It is only because of the so-called corporate greed that western consumers have so many options at such low prices that obesity is a big problem, and starvation is virtually unknown. In the US you can buy $1 hamburgers when the minimum wage is about $10/hour. That is, you can buy a hamburger with the income from 6 minutes of work. You can not do that in any country ruled by enlightened leaders where profit is banned.

Charity proliferates in a free market because many of the people have excess give it willingly targeted to help. They give to the Church, or to the poor directly, or in ways that help the poor indirectly. Such giving makes a bond between giver and recipient and cheers both. Almost immediately, the recipient of the charity enters the capitalist market to trade excess and unneeded items for items that are needed. Perhaps the recipient got too many cans of food, but no shoes, or no can-opener. The market allows a rectification at a fair exchange.

And as for the mandate to lecture world leaders on the evils of capitalism, there is none. Moses, in the desert offers to buy food and water at the market prices. On a similar note Jesus pointed out that financial authority rested with the Emperor, not with the religious leaders. In this vein, Pope Galasius I wrote to Emperor Anastasius in AD 494 that there were two systems: the sacred authority of the priests, and the royal power. In the west, the royal power over food is the marketplace, and it has shown itself to be smarter and more giving than the smartest, most charitable religious leaders.

Robert Buxbaum, November 29, 2021. Having complained about the pope I would like to say that Cardinal Tim Dolan, Archbishop of New York does a wonderful job. His main efforts are education and helping immigrants: needed work. And, as best I know, he has never criticized any productive business for charging too much.