Category Archives: Economics

Miscellaneous economy stuff

A Thought on Oil

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The surviving governing mullahs in Iran have moved to close the Strait of Hormuz, impacting global oil flows and prices. The US has moved to continue destroying Iran’s military capability (along with Israel’s moves against Iran’s government and military officials), but shorter range drones and mines can functionally close the Strait for some time to come.

The US has asked its allies, especially those of Europe, for help in reopening the Strait and holding it open. Europe’s navies, after all, have more, and more experienced, anti-mine capabilities than ours does.

They refused initially, and are foot dragging presently.

That brings up my thought on oil flows in the Arabian Gulf and through the Strait. Iran’s oil exports are continuing apace, on Iranian oil tankers, and it already has some 50 days’ worth of oil on tankers in the seas around Singapore and quite a bit more in transit or on floating storage vessels. Iran also has just two oil exporting ports available to it: Kharg Island, in the northern reaches of the Gulf, from which 90% of Iran’s oil and natural gas exports are shipped, and at Bandar-e-Jask, just outside the Strait, from which the rest of Iran’s oil and natural gas are shipped.

One US move would be to stop Iranian oil exports altogether. Destroy the oil jetty on Kharg so oil and natural as present on the island can’t be moved offshore, and destroy the port at Bandar-e-Jask so oil and natural gas can’t be exported from there, either. In anticipation of a more peaceable government in future, it likely would be sufficient to destroy the pipelines entering and leaving those facilities. With Iran at war with us for the last 50-ish years and with us, alongside Israel, against whom Iran has been warring for just long, finally shooting back, Iranian ships and storage facilities are legitimate targets. We should seize and sequester Iran’s tankers at sea, with the possible exception of those tankers actually within Singapore’s territorial waters, along with its floating storage sites, sell the oil to other customers, and sell the seized ships and floating storage sites or send them to the breakers.

One more move: the US Navy could begin escorting convoys of oil tankers and other cargo ships through the Strait, except for the tankers and cargo shipping bound for Europe. Those nations continue to insist on freeloading off US blood and treasure while doing nothing for themselves. Let them pay the price of their freeloading or pick up their responsibility for escorting those vessels.

Black Boxes

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Folks buying into a private lending fund are learning, I trust, a valuable lesson, and the rest of us should take that lesson to heart, also. This is especially the case when the fund restricts withdrawals. The fund singled out by The Wall Street Journal for its example is Cliffwater Corporate Lending Fund.

Investors are fleeing the $42 billion Cliffwater Corporate Lending Fund, among the latest of its kind to limit redemptions for shareholders. Many investors appear to believe the private-credit fund’s official net asset value is inflated, prompting them to sell their shares, or try to.
One reason many are rushing for the exits: it can be difficult for shareholders to understand what they own. The disclosures at funds like this often are as impenetrable as they are voluminous.

If the claims are not independently verifiable, including by a potential investor, they are not reliable, and a potential investor should not invest.

This, though, is not an excuse for Government to step in and “regulate.” Caveat emptor; investors, like any other American, ought to face the consequences—good or bad—of their decisions on their own, without government taking tastes from successes or doing bailouts for failures.

What He Said

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Mississippi’s Republican governor, Tate Reeves, had a few words to say in response to Vermont’s nominally Independent Senator, Bernie Sanders, the latter whom wants a moratorium on building data centers to support AI development or any other uses. Reeves’ words, though, have much broader implication, and I’ve repeated them below in their entirety.

I understand individuals who would rather not have any industrial project in their backyard. We all choose where to live, whether it’s urban, suburban, agrarian, or industrial. I do not understand the impulse to prevent our country from advancing technologically—except as civilizational suicide.
This instinct seems to infect the far left across lots of domains: immigration, crime fighting, and the national debt to name a few. You can tell they’re just sort of yearning to submit our society to outside forces: mobs, international councils, or communist China. Maybe they’re exhausted and just want a few years of taxpayer-funded rest before they shuffle off.
I don’t want to go gently. I love this country, and want her to rise. That’s why Mississippi has become the home of the world’s most impressive supercomputers. We are committed to America and American power. We know that being the hub of the world’s most awesome technology will inevitably bring prosperity and authority to our state. There is nobody better than Mississippians to wield it.
I am tempted to sit back and let other states fritter away the generational chance to build. To laugh at their short-sightedness. But the best path for all of us would be to see America dominate, because our foes are not like us. They don’t believe in order, except brutal order under their heels. They don’t believe in prosperity, except for that gained through fraud and plunder. They don’t think or act in a way I can respect as an American.
So, let’s see Americans (and Mississippians) dominate this space—no matter how many leftists want us to roll over and die instead.

That last is especially important; I’ll say it again:

So, let’s see Americans (and Mississippians) dominate this space—no matter how many leftists want us to roll over and die instead.

An Overblown Concern

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Citrini Research wrote a report that’s associated with Monday’s stock market spike down. Its report centered on the risk of heavy white collar job losses from AI’s alleged ability to do white collar work and completely replace those white collars.

For the entirety of modern economic history, human intelligence has been the scarce input. We are now experiencing the unwind of that premium.

And so on.

Not so much, though. It took more mental acumen to run the steam drill than John Henry needed to run his hammer. It takes more mental acumen to work a modern auto production line, with all of that automated equipment, than it did—and does—to work an artisan, unautomated auto production line. The move extends into the white collar milieu, also. It begins with requiring more mental acumen to check AI’s work than it does to work the spreadsheets or do the research oneself. It takes a great deal of mental acumen to ask the right questions and then give AI the tasks of answering them—and then checking AI’s responses. Creativity is something AI cannot do.

AI is good at the artificial part; it’ll be quite some time before AI gets good at the intelligence part. Alan Turing once said that when a computer can answer certain kinds of questions, they’ll be impossible to distinguish from humans. That doesn’t prove computers’—AI’s—superiority, though. Answering questions isn’t the same as asking them.

Who Owns our Economy?

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Greg Ip, a writer for The Wall Street Journal, says those of us older than 65 do.

As of the third quarter of last year, people 70 and over controlled roughly 39% of all equities and mutual funds owned by households, compared with 22% in 2007, according to Federal Reserve data. Their share of net worth—assets minus debts—was 32%, up from 20% two decades earlier.

And

Wealth accumulates with age, so people at retirement tend to have much more than younger generations, a pattern evident in Fed surveys back to 1989.

And so on.

Even were that true, it’s only a temporary ownership. What Ip missed is this truism: we can’t take the economy, or our wealth, with us when we relocate to Dirt Nap Acres. We leave that wealth to those younger generations, our children, and to a variety of charities and endowments, all of which benefit those younger generations.

All that means that tomorrow, those younger generations will own our economy, starting well before they become the next geezer owners of the economy.

It’s a generational cycle, and that background is the framework within which the economy’s business and political cycles play out.