Category Archives: markets

Trade Needs

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In an article about, among other things, the People’s Republic of China’s attempt to extort Australia into sitting down and shutting up about the PRC’s role in the Wuhan Virus’ spread across Earth, David Thomas, a consultant who for several decades has advised Australian businesses on investing in the PRC, said this:

The world is going to need China’s capital, manufacturing, and consumption power when this is all over.

That’s so wrong it’s foolish. We’re discovering that now, and after the Wuhan Virus situation has been dealt with from medical and economic perspectives, that we can’t afford to be very economically involved in the PRC.

The size of the PRC’s consumer population would be nice to access, but it’s unaffordable from economic and national security perspectives. The barriers erected to entry into that market are excessively high. The intellectual property and technology transfer demands exacted as a condition of doing business there and the outright theft of those things done not only from the foreign companies extant inside the PRC but from those foreign companies’ home nations are overt threats to security.

The world does not need the PRC’s manufacturing power at all. There are lots of other nations scattered around Asia, Europe, North America, and South America that are fully capable of filling the manufacturing role in place of the PRC, and there are many nations in Africa that are fully capable of developing into viable manufacturing sources.

Nor does the world need the PRC’s capital. Like its consumer market, it would be nice to access some of it, but it will be accessed adequately to the extent the world’s nations sell their goods and services to consumers in the PRC. However, we can’t afford that part of PRC capital that would be used to buy technology-oriented businesses in order to acquire those technologies.

Kerry Stokes, a billionaire mining-equipment and media magnate is just as foolish.

If we’re going to go into the biggest debt we’ve had in our life and then simultaneously poke our biggest provider of income in the eye it’s not necessarily the smartest thing you can do. We are a trading nation. We have nothing else to do but trade[.]

Australia does, indeed, need to trade. But it doesn’t need to trade with an enemy. It does need to change trading partners, and there are a planet-ful of nations that can substitute, individually or in groups, for that enemy.

It’s time for the free nations, the free market nations, of the globe to stop letting themselves be cowed by where their next trade dollar is going to come from and start thinking, instead, about the material and security cost of that dollar and to start thinking about where the trade dollar after the next will come from.

Economic Recovery Post-Wuhan Virus

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Paul Hannon and Saabira Chaudhuri wonder, in their Wall Street Journal piece, whether we’ll have the V-shaped recovery that President Donald Trump confidently predicts, or whether we’ll have a swoosh-shaped recovery a la the Panic of 2008 recovery. They don’t, though, seem to recognize key differences between the two situations, beginning with the underlying causes of the two dislocations.

The Panic was driven by economics: a credit crunch. The present situation is created by a Government-mandated closure of our economy in response to the rapid spread of the Wuhan Virus and its perceived danger; economics has nothing to do with it.

Recoveries from these also will be driven by entirely differing responses, as well.

The Panic of 2008 had a swoosh-shaped recovery because Obama’s regulatory environment inhibited recovery with its excessive and excessively micromanaging regulations, which produced the slowest post-recession recovery since WWII.

Whether the recovery from the Wuhan Virus situation and its associated government-mandated turnoff of our economy will be V-shaped or swoosh-shaped is yet to be seen, and its shape will be heavily dependent on how timid employees and employers are about reopening and consumers are about going out and…consuming.

The present recovery also will be heavily influenced by Progressive-Democrat governors standing in the way of reopening and recovery with their excessive and excessively long lockdown diktats.

Off-Books Lending in the People’s Republic of China

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The People’s Republic of China may be approaching a problem with off-books lending as its economy—restarting though it is—still is stumbling badly, which coupled with the government’s attempts to rein in debt creation generally, is making it difficult for businesses and individuals to obtain credit.

Off-balance-sheet entities are selling bonds to finance projects such as investing in warehouses, expanding underground metro networks, building data centers or renovating shantytowns.

Such debts, though, afford government at any level little direct oversight—which the PRC government levels especially desire—and they have often fed wasteful spending.

And

In all, borrowings by such local-financing vehicles make up about 9.5% of China’s total yuan bonds outstanding….

That’s a lot of hidden debt. To give some concreteness to such debt, in just the first four months of this year, the “local government financing vehicles” sector of such lending produced 1.46 trillion yuan ($206 billion).

These off-books lending efforts, though, have a more serious shortcoming than just lack of control by a controlling government: there is little recourse when borrowers default on the loans. Not all of those 9.5% will be defaulted on, but if even a third of those borrowings fail, that would be an even more severe hit to the PRC’s economy.

In contrast, crowdfunding—the process where an individual or private enterprise advertises a venture on a Web site and individual citizens voluntarily commit their own dollars to the project via that site—in the US raised almost $14 billion in voluntary cash payments via just four such Web sites—6.7% of that PRC hidden-debt financing.

Crowdfunding also has a distinct advantage over borrowing, especially when the borrowing is off the books of the lender: default is irrelevant; crowdfunding disburses only the cash actually raised. Think what a population an order of magnitude larger than ours could do with crowdfunding.

Fat chance, though, a government so desperate to maintain microcontrol over every individual citizen would ever afford the population over which it rules the freedoms that unfettered crowdfunding would represent—and fund.

Economic Reopening, Resistance, and Perspective

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As States reopen for business, and as increasing numbers of businesses reopen and customers patronize them against State government encouragements or outright diktats to the contrary, Progressive-Democratic Party Presidential candidate Joe Biden is nattering on that President Donald Trump’s policies are undermining the core pillars of our economic strength. In the meantime, the NLMSM is focusing ghoulishly on body counts and not mentioning any other relevant information.

The following table looks at some data for three States mentioned in one Wall Street Journal article, another State mentioned in a different WSJ article, and two States mentioned by Fox News.

State Wuhan Virus Deaths Wuhan Virus Recoveries Ratio of Wuhan Virus Recoveries to Deaths
Illinois 3,406 Not Reported
California 2,719 Not Reported
New York 26,682 58,006 2.17
Georgia 1,441 Not Reported
Michigan 4,555 22,686 4.98
Texas 1,095 21,022 19.20

Wuhan Virus data are from Johns Hopkins University’s CSSE Dashboard and were current as of 11 May.

Carefully ignored by Biden in his meandering and by the NLMSM in their panic-mongering are those recovery rates and ratios. Check the CSSE data—all of the States reporting recovery rates are reporting recovery-to-death ratios of at least 2:1, and generally much larger.

Progressive-Democrats in charge of their States, despite these favorable trends though, want to keep their States locked down and having no economic activity—all in the claimed name of safety. Of course the longer States stay shut down, the deeper will be the economic recession we’re facing at the end of summer and into the November elections.

Note, though, that wanting a recession explicitly as a means of defeating President Donald Trump in this election has been a key part of the Progressive-Democrats’ playbook for two years.

Be very heads up this November.

Control of the Internet

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ICANN (Internet Corporation for Assigned Names and Numbers) is the American manager of Internet domains and Domain Name Service under contract to the Internet Assigned Numbers Authority, the globally agreed agency responsible for the global Internet. It had been about to sell the Internet domain .org to a private enterprise.

The .org registry is a database of more than ten million websites managed since 2003 by the nonprofit Internet Society. The group decided .org could be better served by a company that could invest returns back into the service.

The sale would have been for $1.1 billion, which ICANN could have put to good use, too.

No more.

California Attorney General Xavier Becerra instructed ICANN just two and a half weeks ago that it “must” refuse the sale. ICANN’s acceptance of Bacerra’s diktat was prompt.

As the WSJ put it,

Some readers may remember when Senator Ted Cruz [R, TX] in 2016 warned that ICANN would come under the influence of authoritarian countries once it became independent of the US government.

With its abject surrender, ICANN has placed itself under the influence of [the] authoritarian California Attorney General. The authority consciously ceded to this far left Attorney General sends an ugly message to other companies headquartered, or otherwise operating, in California. Look for further bullying of those companies whose business imperatives clash with Bacerra’s whims. Such businesses might want to think again about their locations.