Tag Archives: markets

A “Careful” Economy

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In a Wall Street Journal op-ed about the dangers we’re facing because we’re reopening our economy much too soon to suit him, John Cochrane had this remark:

…the most important thing government can give us is accurate and timely information on how widespread the virus is in each community—how dangerous it really is to go out—something we don’t have now.

The truly Critical Item on how dangerous it might be to go out is the mortality rate, and that’s down around 1% for Americans younger than 60-ish, which includes children and working age Americans, and it’s not much higher for those older.

That mortality rate is going down further as we learn more about the components of the denominator.

Of course, getting sick can be more than an inconvenience, but even hospitalization rates are falling, both in absolute terms and as we learn more about those denominator components.

Mortality rate information, contra Cochrane, in fact is well known to those of us who seek it out—which we have to work too hard to do because the press and Progressive-Democrat State governments studiously ignore it.

In the end, the medical dangers of restarting are overblown and the economic dangers of not restarting are underestimated if not ignored outright.

There’s nothing uncareful about reopening now or of pushing the pace of reopening.

Long Overdue

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The People’s Republic of China has been able to raise billions of dollars for its various business outlets by listing them on American stock exchanges—all while being exempt from the same public visibility and auditing requirements that other nations’ companies and our domestic ones must satisfy on our exchanges.

Maybe that’s changing.

Legislation passed by the Senate—and now introduced in the House—would kick Chinese companies off US stock exchanges unless their audits are inspected by US regulators.

And

The Senate legislation requires the Chinese companies with shares traded here to disclose to the Securities and Exchange Commission whether they are owned or controlled by state authorities.

This, though, would mean that all of them would have to admit disclose that they are controlled by state authorities. A 2017 intelligence law enacted by the PRC government requires all PRC companies to “cooperate” with intelligence requests of agencies of that government.

Now we have:

China says sharing audit work papers would violate its sovereignty and risk leaking state secrets.

There’s an effect of that 2017 law.

Michaels and Otani, at the first link, think that

economic tension between the two global superpowers, amplified by political outrage in the US over China’s role in the spread of the new coronavirus

are pushing this new emphasis. Emphasis maybe, but neither the economic war (now relabeled Cold War by the PRC) that the PRC has been inflicting on us for years nor the current Wuhan Virus situation and the PRC’s perfidy in the virus’ spread have anything to do with the substance of this. The secretiveness of the PRC’s outlets listed on our exchanges has been extant since they first were listed, and that’s what needs correction.

It’s enough that we gave the PRC Most Favored Nation status (mistakenly, in 20-20 hindsight). There’s nothing that warrants PRC companies on our exchanges being treated any differently than any other company—domestic or foreign—on our exchanges.

PRC companies need, badly, to be audited, and tossed from our exchanges at the slightest hesitation to be audited and for the same violations, should they be audited and any violations found, as any other company whose violations warrant expulsion.

This is especially important given that the PRC isn’t just any foreign nation; it’s an enemy of the United States. American dollars shouldn’t be involved in funding PRC companies.

House Relief Bill

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Here’s what’s in the House “relief” bill, written in House Speaker Nancy Pelosi’s (D, CA) kitchen where she could have ready access to her special ice cream. The bill was written with zero Republican input, zero Republican amendments, carefully limited debate on the House floor, and passed almost entirely along party lines; although the bill did make 14 Progressive-Democrats choke to the point of voting against it, and one Republican was too timid to oppose it.

  • $1 trillion in funding for state and local governments

Money that State and local government do not need. To the extent that Federal funds—the dollars of taxpayers who are citizens of other States—are needed in a particular State, those funds should go directly to the point of need: the individual citizens and those citizens’ individual businesses.

  • relief to wealthy residents of high-tax states like New York by waiving the $10,000 cap on the federal State and Local Tax (SALT) deduction for 2020 and 2021

These look like the same 1% that the Progressive-Democrats hate so much, and they look like the folks ex-President Barack Obama (D) disdained as having made enough money. But they’re not the same 1%—their the rich donors to the Progressive-Democratic Party and Party-supported causes.

  • explicitly omitting Hyde Amendment limits on Federal abortion funding
  • explicitly withdrawing the work requirement criterion for food stamps

It’s important to keep in mind, on that last, that the work requirement wasn’t limited to requiring actual work. In lieu of work, the recipient could seek work, train for work (vis., take community college classes, intern, etc), do volunteer work, and so on.

Other goodies include

  • student loan debt forgiveness
  • $25 billion for the Postal Service
  • $3.6 billion to states for planning and preparation of elections

That last contains a national requirement to hold elections by mail—the Progressive-Democrats’ unconstitutional attempt to Federalize our elections.

All that money, and all of it is irrelevant to the supposed need for additional relief from the economic dislocation to which the Wuhan Virus situation has led. The Progressive-Democrats could have passed an actual relief bill, but they’ve chosen—again—to hold relief hostage until they’re paid their ransom in the form of their leftist wish list.

The Progressive-Democrats also could have sat back and done nothing for the moment, following the Senate’s recommendation that Government stop throwing money around and instead observe the effects of the money already shoveled out into the firebox.

No. The Progressive-Democrats chose instead to provide in Bill form, Progressive-Democratic Party Presidential candidate Joe Biden’s campaign platform.

How cynical. Especially during this period of economic distress.

Time for a New Plan

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That’s what Dr Marty Makary, Professor of Surgery at Johns Hopkins Medicine, says.  Broad lockdowns might have been justified at the outset of the present Wuhan Virus situation, but new information has arisen.

Since that time, we have data that has taught us that this infection is associated with public transit, with density, with mass gatherings, with city-to-city travel and it is associated with climate[.]

And

What we do know, [is that] there are safe ways to conduct activities in society if we use certain precautions and we probably need a targeted approach where we find areas where there is either an outbreak or an ongoing increase in cases, and use some of the more aggressive strategies in that particular location.

A man once said, When the facts change, I change my mind—what do you do, sir?

Some State governors, when the facts change, reemphasize their original positions, denying that change has occurred.

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.