Tag Archives: markets

What’s the Value?

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Cities in the People’s Republic of China are running out of cash while their debts, already vastly excessive, are rapidly growing.

What to do?

In August, a gas supplier [Xinjiang East Universe Gas] in China’s far western Xinjiang region struck a solution to settle $25 million [¥183.3 million] of overdue gas bills racked up by a few state-owned entities in Changji city. Instead of cash, the gas supplier will effectively take over 260 unfinished apartments in a French-themed residential compound being developed by its clients.

That’s become the go-to technique for city governments to welch on settle their debts.

Starting last year, Monalisa Group, a Guangdong-based ceramic tiles manufacturer, accepted apartments as payment instead of cash from its real-estate clients. By September, it had accumulated $19 million [¥139.3 million] worth of investment properties on its balance sheet.
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More recently in June, Shanghai Urban Architecture Design proposed to take over 115 apartments from developer Greenland Holdings—a Fortune 500 company that defaulted on its bonds in 2023—to settle some $10 million [¥73.3 million] of debts. In December, Sunfly Intelligent Technology, a producer of LED lighting and other electrical equipment, settled $50 million [¥366.6 million] of debts with a group of developers including Country.
In the past three months, three unusual debtors emerged—the county-level police departments in China’s poor, mountainous Guizhou province.

The PRC already has accumulated as many as 90 million empty housing units, units still unsold after all this time.

For companies like Xinjiang East Universe that provide services to China’s cash-strapped local governments, getting half-built apartments “is better than getting nothing[.]”

But only if those structures actually get sold. These unsold apartments are unsold for a reason. How does using them to pay debts make their creditors whole? All the move does is unload the borrower’s white elephant onto the creditor, leaving the creditor still out in the cold with no functional, practical repayment.

White elephants, indeed: most of those apartment structures aren’t even completely built. It’ll cost those creditors additional money to finish them and make them habitable. With that glut of finished housing units already clogging the market, peddling these for less than anything like what might pass for market rates, a depressed price necessary to get them sold, or even rented, will only further depress the PRC’s housing market.

That’s not good for an economy where so much private wealth—family wealth—already is tied up in real estate from the housing boom of a few years before the Wuhan Virus Situation. Residential property represents some 25%-30% of the PRC’s GDP.

So What?

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Fred Krupp, President of the Environmental Defense Fund, is worried that if the incoming Trump administration cuts off subsidies for battery cars, we’ll be ceding battery car leadership to the People’s Republic of China.

Leave aside the fact that our battery car component supply chain (as with so many other of our industry production) remains dependent on the PRC. Pushing battery cars on Americans will increase our dependence on that enemy nation.

Be that as it may, Americans don’t want battery cars. This is demonstrated by the continued need for government subsidies—the tax monies us average Americans remit to our Federal government—in an ongoing effort to con us into buying them anyway, along with outgoing Biden administration efforts to dragoon us into buying these white elephants by raising fuel and emission “standards” to usurious levels intended to ban ICE vehicles.

More than that, satisfying the so-called need for battery cars, the blandishments of left-wing climate Know Betters like the EDF notwithstanding, will not have any material effect whatsoever on slowing the non-existent existential climate crisis that the climatistas are on about.

The subsidies are a waste of our tax money and badly want elimination.

Let the PRC be saddled with—dare I say hobbled by—that transportation dead end and its enormous costs.

Retreating from Net-Zero?

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That’s the claim of The Wall Street Journal editors.

The climate policy retreat is accelerating as Citigroup, Bank of America, and Morgan Stanley this week joined an exodus from the Net-Zero Banking Alliance. Energy reality can bite.

The “retreat” consists of five banks out of the 140 that are members of the NZBA, a gang of banks sworn to refuse the business of any enterprise that isn’t sufficiently climate-sensitive and -activist enough to suit the syndicate. It’s true enough that the five are major players in the world of banking, but they’re still only five.

The editors wrote, also, that mutual fund manager Vanguard had pulled out of the Net Zero Asset Managers pledge. That’s one out of 350 enterprises that took that pledge. The editors wrote further that JPMorgan Asset Management, BlackRock, and State Street Global Advisors have left Climate Action 100+, a collection of some 600 investors who pressure businesses to comply. Three are part of this “retreat.”

However.

Leaving these syndicates and changing their ways of climate-woke behaviors are two different things. We need to see these banks’, investors’, and business’ altered behaviors over some period of time before it’s believable that they’ve changed more than their public rhetoric.

Food Stamps and Consumer Choice

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A Wall Street Journal article on soda companies and their lobbying efforts to keep their drinks eligible for the Federal Supplemental Nutrition Assistance Program and related programs closed with this bit:

The Republican Party has long been divided over policing what people on food stamps eat. Some GOP lawmakers favor consumer choice.

For instance, Congressman Frank Lucas (R, OK), of the House Agriculture Committee:

I believe in educating consumers on what is in their best interest. I’ve always had a hard time telling people what they cannot have.

I agree with Lucas regarding Government dictating to consumers what they can—or must—buy and what they cannot or must not buy. However, Lucas and his ilk need to better understand who the consumer is in the present case.

The consumer in the milieu of welfare programs like SNAP is not the welfare recipient. That person merely is picking out welfare package handouts. The consumer, the one who’s actually doing the buying, or not, of those package contents, is us taxpayers. We’re the ones paying for—buying—the food stamp products, in the particular case, with our tax remittals. That food stamp recipients can pick and choose among the variety of food packages we purchase for them in no way alters this fundamental fact.

It’s absolutely the case that we should be the ones deciding what we buy with our tax money, what we buy for inclusion in those package varieties, not the recipients of our welfare packages.

Why Would We Want To?

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Toyota Motor North America’s COO, Jack Hollis, has a plan for how Trump Can Get EVs Back on Track. The question is why would Trump, or any of us average Americans, want to? Hollis’ subheadline is promising:

Ditch the mandates and subsidies. Let consumer choice drive the market.

Then he goes off the rails.

Our approach provides consumers with many choices: hybrids, plug-in hybrids, fuel-cell electric, and battery-electric vehicles. We believe this is the best way to achieve meaningful emissions reductions while meeting customer needs.

What about the emissions from mining, transporting, smelting, transporting, transforming into relevant parts, transporting, assembling into the final vehicle that occur in the production of lithium, cobalt, nickel, copper—and all that oil that’s used for plastic materials production?

What about the other forms of pollution—from mining to spent battery disposal: all those tailings, the handling of those intrinsically toxic metals (lithium, cobalt, nickel, even copper), the pollution of landfills by all that lithium, cobalt, nickel in those spent batteries?

What about the false claim that atmospheric CO2—plant food—is a pollutant in the first place? That’s never addressed except via the pseudo-science of an erstwhile head of the EPA; this is an underlying assumption that is made only tacitly and conclusorily?

All of these are blithely elided by the pushers of EVs and the punishers of internal combustion engine-powered vehicles.

I haven’t even gotten to the need to expand our electric grid to support the demands a sound EV market would impose. We need to expand, upgrade, and harden our electric grid, along with our electricity production capabilities, for a whole host of reasons beyond just supporting battery-charging.

That brings me back to my opening question: why would we want to put EVs on any sort of track, much less on Hollis’ original one? Ditch the mandates and subsidies, and let consumer choice drive the market, indeed. Add into the free market decision that heretofore omitted information regarding the intrinsically destructive nature of EV production and disposal.

The Left loves to talk about externalities and the need for pricing them into the final product—except when that’s inconvenient to their demands on the rest of us.