The CCP's Olympic Backsliding

We Need To Discuss This China Economic News

In the 1980s I read that the USSR's rate of capital investment was growing yearly and way higher than in the USA, and I thought "Uh-oh for us." Then I read that all that capital investment was producing a negative return -- that they weren't just running on a treadmill to get ahead, but running on a treadmill and falling behind -- and I thought "Uh-oh for them." As regards Communist China, have we transitioned from the "Uh-Oh for us" stage and into "Uh-Oh for them?"

The Chinese leadership blamed political reform in the USSR for the collapse of the communist regime and vowed not to make that mistake. This is like blaming the cancer on the desperate remedies used to slow its spread. Now they've tossed that politically convenient "two systems" pledge (allowing limited political and economic freedom) onto the Ashheap of Chinese History. What desperate measures will Xi Jinping use to avoid that same fate?

Think of it as "Wet-landia"

Commentary: ‘The Swamp’ is everywhere — even in Republican Tennessee

I call the conglomeration of special interests that controls this country The Crony Class. The Crony Class has its Crony Class Consciousness and Crony Class interests. Its chief interest is a continually growing government, used to dispense favors and money to members of the Crony Class and the retainers who support their demands.

Naturally, they cannot be upfront about any of this. I would rather discuss the 2,200 billion dollars of borrowed money (just this year!) they are using to keep themselves in power, as well as the tens of thousands of additional pages of regulations they are using to solidify their class interests and pick winners (themselves) and losers (everyone else). They would prefer I focus my attention on the tribulations and trials (literally) of Donald Trump -- not that I blame them.

After all, they want to control the 7,200 billion dollars flowing through Washington DC every year (and grow it to 10,000 billion) and take control of everything in the nation through the regulatory and retaliatory bureaucracy. These are high stakes, and it would take a collection of saints to avoid temptation (and there are far more sociopaths in this class than saints). So they put some people in jail who shouldn't be there and release others who should be incarcerated, even when that seems detrimental to their political interest.

However, convicting the innocent while freeing the guilty displays their power and prepares their retainers for the harshers measures that will be inevitably called for. You see, their appetite grows with the eating, and they'll soon be short of food. Unfortunately, the rest of us will be starving (on account of the bad weather caused by Henry Ford providing cars to the workers, who should be kept in their place). I call this future end-state Feudalism with the Right People in Charge.

Inflatable Nation

Even a Recession Might Not Tame Inflation

Is it really that bad? Nah, it's worse. It's that "slowly, slowly all at once" problem.

Dealing with US inflation needs to account for the foreign entities that hold so many dollars for purposes that don't often align with our own (our declared enemies have a lot of it). Basically, the dollars will be used in a mercantilist manner to further the interest of these rulers -- often at the expense of the average American worker.

For the moment the dollar won't be replaced in international trade because it's backed by US real estate. We don't like the CCP buying American farmland in "State of Rode Island" sized batches, but the possibility of doing that in a pinch is a big attraction for the dollar (and land is an excellent inflation hedge). If we say, "No more of that, you'll have to buy Fords instead," then their dollars will flood back into the US to buy land and other assets while they still can. At this point, the world will stop trading its goods for our debt.

As international trade collapses, there's less need for US debt as "good" collateral for trade among third-party nations. With foreigners less willing to swap their goods for our debt, the supply of goods drys up just as more dollars race into the domestic market, sparking more asset inflation but not job creation. This likely results in high-interest rates to encourage foreigners to hold onto their bonds. Meanwhile, the Fed funds the government through the printing press and further fuels inflation.

Inflation could be used to lower the burden of the $31 trillion National Debt -- if we balanced the budget. But why do that if you can sell more and more debt at near-zero rates with foreigners willing to buy a lot of it? Well, things that can't go on forever, won't -- and we are heading for a wall of won't (so prepare a bolthole in New Zealand).

The Reel Dancing Bankers

I find Comic Lite-Opera provides the best means of commentary on our various Global Financial Crisis-see, Crisis-sis...Crisis-eye. Anyways, in 2009 I started work on The Prodigals of Penance.

With banks collapsing I'm back at it. The opening number uses "The Dancing Bankers and Contortionists" as the chorus line for Artful Shortseller's production number. So, imagine my surprise when I discover our current GFC features videos of real dancing bankers and contortionists! SVB mimics <i>Glee</i>. I was trying to be a satirist, not a bank examiner! I'm currently struggling with the lyrics for the following song: You will own nothing. You will be happy. Or else. Wait, I think I just finished it. The Dancing Bankers will have their own number, "When the Short Seller Starts his Steal," which will look something like this, only with bankers.

The Prodigals of Penance, the "You got me in stitches" edition

This is Act I, Scene 2  and Scene 3 of The Prodigals of Penance, rewritten for the ages. Scene 1 is here

The lyrics to "Diplomatic Creep" may be sung to the tune of "With Cat Like Tread." Why anyone would want to do that, I would not know.

Setting: The Estate of Artful Shortseller. Art is sponsoring "The World Conference to Solve All Your Problems with One Foul Swipe." Art had his moment center stage. After he departs, others arrive.

Characters:

Sadye "Sad" Poppins (former child activist, now a 18+ one)

Hamlet Omlet: The studier of studies in Shortseller's study. 

EU Leaders (in tuxes and top hats)

BBC Journalists (Pants Suits)

President Cleave

Sec. of State, Tempest Teapot (former Starlet and Yale Drama Major) 

Secretary of the Treasury, and Political Hack, Timothy "Tinny" Tinsmith

Administration Foreign Policy Advisers (Tie-dyed)

U.S. Journalists (They carry pom-poms, and file the same story)

Lawyer/Lobbyists

Scene 2: Europe Gets its Act Together.

As Artful Shortseller and "The Dancing Central Bankers" leave the stage, a sad Poppins enters. 

SAD POPPINS (spoken)

Geez. I wonder. Did Shortseller make his fortune in undergarments?

(Sings and sways) 

My name is Sadye Poppins!

But depressed I am, often.

I'm often depressed

'Cause the world is a mess.

I feel sad, I feel sad,

So-so sad -- often.

So call me sad -- sad, sad. Sad! Poppins.

  (looks)

But Hark, who approaches?

Is he a groper

Or a doper? (looks closer)

Oh, it's Hamlet Om-uh-let.

They say he's quite intellegent.

He has a cute rear...

But his expression is -- severe! (hides)

 

HAMLET OMLET (He calculates as he walks)

In Shortseller's Study,

I write my own study,

That studies...the studies of others. (He ponders)

Whose studies combined,

Bring no peace of mind...

They should be terrific.

Quite scien-tific!

 

But conclusions are often reached,

With a stretch -- sometimes a leap!

Simple arithmetic,

Could cause a science...rift! 

It's very confusing, brother.

My head's a mess, mother.

SAD POPPINS (to the audience)

If he calls me his sister,

His lip will get a blister.

HAMLET OMLET (wanders off)

Shortseller's actions, I fear,

Pour Poison in Science's ear.

Its spirit now haunts me,

Like some mental dis-ease.

The tables been set,

The eggs cracked, and yet,

The Omlets so frantically cooked,

Don't look, or taste, so good.

 

SAD POPPINS (to the audience)

Shortseller has all the bucks.

Hamlet should stay on the bus.

Ride into the dawn,

As Shortseller's fawn.

Then, what the heck,

Just cash the check. 

He's cute,

But a dispute,

Will turn ugly. 

 

HAMLET OMLET

If I fulfill my grant...as they insist...

My granters will be...mighty pissed.

The study performed

Will earn me their scorn. 

I find it very troublesome.

I fear I'm in...trouble...some...

(Hamlet Omlet wanders off) 

SAD POPPINS (spoken)

Gee. He's so depressed, I'm feeling better.

(looks in another direction, sings)

I see a new group approach.
Should I give them a pass...or a reproach?

They seem a well-dressed bunch.
Are they here...to serve us lunch?
Maybe it's food, but Maybe it's theft.
Should I call the guards, or the Chef?

(a line of people approaches from the right)

FIRST IN LINE

I shall eliminate your confusion.

I lead the European Union.

SAD POPPINS

Your union's a sight.

Are you leading a strike?

SECOND IN LINE (shoving the first)

I'm not second on the ladder!

I am also, the leader, who matters.

SAD POPPINS (warming to the cause)

For better pay! (fist shake)

More holidays!

FIRST IN LINE (to the second)

But she can plainly see

That I am in the lead.

I am, the leading -- leader!

THIRD IN LINE

We are all equals here,

Leading from the rear!

Stop the chatter!

There are...No rungs...On! Our ladder.

SECOND IN LINE

No rungs and what is more --

There's no rug upon our floor.

ALL

Or doormats at our door.

Our scoreboards don't keep score,

We live in -- one great crater!

We won't argue -- who's greater.

THIRD IN LINE

It isn't really news,

That we all lead this crew.

SECOND IN LINE

We're ho's without a pimp.

(points)

Except for him!

FOURTH IN LINE

But I'm a leader, too!

FIRST IN LINE (Pointing at four)

He's got me so confused.

Our Union's been abused!

But we can't show him the door...

So just bury him -- in the moor!

FOURTH IN LINE

That would mean war!

We are leaders all,

Unless...

 Our governments should fall.

ALL (To Sad Poppins)

Our ladder has no rungs.

That song's -- been sung.

We're now having a sale,
On everything -- that's stale.

FIRST IN LINE

And leadership is our loss leader!

FOURTH IN LINE (spoken)

We're a fellowship,

That practices follow-ship.

SAD POPPINS (spoken)

So...you're not on strike?

(Sad Poppins is quite confused and leaves while another group enters)

BBC JOURNALISTS (entering)

The Administration is on the March

From Jumbo Jets, they disembark.

It's like they've emptied Noah's ark.

VARIOUS EU LEADERS
Intelligence is what we need.
So we will hide among the trees
...listen from among the leaves.
Ah, BBC!
Watch those poisonous spiders march.
Report their wicked weaves with snark.

The BBC Journalists go to greet the Americans, chanting "Tarantulas! Tarantula, tarantula -- tarantulas!" as they go.

Scene Three: A Simulated Stimulus

As the PRESIDENTIAL ADVISERS enter they whisper amongst themselves:  "Remember, no arrogance! Those lackeys don't like it / Shush, no condescension, that's worse than arrogance! / We need a new song and dance. / Humble--but with newfound pride!"

Trumpets sound and they sing.

WITH DIPLOMATIC CREEP

PRESIDENTIAL ADVISERS

With Diplomatic Creep,

We stride History's Stage.

So shy and meek,

The World Turns, amazed.

Praise we spread in full

Without a boastful word.

We give credit to the Bull,

And the en-tire herd!

EU LEADERS

Like Mister Micawbers 
And in their Wimpy way;
 They'll borrow ten trillion dollars;
And say, "Some Tues-day, we'll re-pay."

BBC JOURNALISTS

Ta-ran-tulas, are spiders too.

And if they bite, then quickly sue.

Trumpets blare. Enter President Cleave, Sec. of State Tempest Teapot, Timothy Tinsmith, U. S. Journalistic Chorus (they double as backup singers), and the lawyer/lobbyist/activist mob.

US JOURNALISTS (pom-poms shaking)

Ra, ra, ra, ra, ra, ra...

 

PRESIDENT CLEAVE

I! Hail! Those who hail me!

Tell European Nations

Of Power abrogation!

EU LEADERS

War non-participation.

Ty-rants claim I’m a tease

As I implore “believe me, please.”

TEMPEST TEAPOT

Friends, speak of piracey,

And Risks to Navigation--

PRESIDENT CLEAVE (injects)

Have you seen my new Playstation?

BOTH (in harmony)

Mar-ry! Free Enterprise
With Socialism in disguise!

(Timothy Tinsmith carries a large bag of goodies, and croons to the lobbyists)

TIMOTHY TINSMITH 

Our national debt is huge,

It's true, 

Because we're indebted to you.
This debt we amass
'cause the past is an ass --

We owe you,
For the wonderful things you do,
And the horrible things, our nation has done.
Admitting -- is not much fun.

EU LEADERS

Much fun!

Confession is good for the soul.

So I'll say it again, quite slow.

It brings me no joy --
There's no need to be coy.
It makes me so sad...
That my nation's be-en-en-en bad.

EU LEADERS

Been so bad!

(Seems to hear an echo)

As the sins trickle down

From father to son

Our grandkids become...

The wet ones.

EU LEADERS

Grandchildren should not escape,

Their great-granddad's mistake.

TIMOTHY TINSMITH

For the mistakes our dads made,
Our grandchildren must pay.

They're in their playpens,
But The National Debt is on them.

EU LEADERS 

At our banquet, we shall toast,

After we've eaten the roast!

Those babies in their strollers,

The toddlers in their walkers...

The kids con-fined in,

Their little play-pens!

Since all our bills are for them.

TIMOTHY TINSMITH (Dances with the lawyers)

Here's your bail-out! And your stimulus money.

Do as you're told — and you’ll get more, Honey!

Your life preserver, please don’t go under.

For if you perish, you'll drown our thunder.

(To all) 

Piracy, should not be on the sea!

EVERYONE

It's an on-shored industry!

 

TIM (Throwing money to the wind; Cossack dancing)

Vary...fiscal...so-briety...

With a little Spending Spree!

EU LEADERS

Spree, Spree, Spree,

Spree, Spree,

Spree, Spree

Spree, Spre-e-e-e!

ALL ADVISERS (Shushing the crowd)

With Tim-o-thy!

We quietly deplore.

Income from Piracy

On Somalia’s shore.

And what about Kim,
Dear Leader’s Rocket Launch?
That’s why we scolded him
And told him “Lose your paunch.”

BBC JOURNALISTS:

Ta-ran-tulas! Are misunderstood.
Ta-ran-tulas! Do the world much good.
So meek-ah-ly, they point the way
That proud bow, is here to stay!

PRESIDENT CLEAVE (bowing)

As! I! approached King Saud.

I lost a contact lens

That's why I got the bends.

I! Told! Old King Saud,

“King, you better watch your step!”

EU LEADERS

Has he told Iran that yet?

PRESIDENTIAL ADVISERS/BBC JOURNALISTS

Our history is / a tarantula’s bite.

We admit that much / just ain't quite right.

We apologize / for trades in Slaves.

And to all those folks / who hide in caves.

We’re sorry for / the Atom bomb.

What Rock and Roll / has done to song.

We! Hail!
Those who hail Us...

EVERYONE

What's caused all the fuss!

 

END OF ACT ONE

US JOURNALISTS
Ra, ra, ra, ra, ra, ra...

Yes, there's more but I'll spare you (for now).

At first, I was concerned that I gave Art's private island a Private International Airport, but then I realized that playing host to so many Global Warming Conferences required one.

The Prodigals of Penance: Comic Lite-Opera Reality

 The Prodigals of Penance, loosely based on Gilbert and Sullivan's The Pirates of Penzance, takes place during "The Conference to Solve all the World's Problems in One Foul Swipe," which is held on the Private Island of Artful Shortseller, the wealthiest man in the world.

Art is center stage. He performs. The Central Banker Dancing Contortionists accompany him, much to Art's occasional irritation. The tune is modeled on "I Am the Very Model of the Modern Major General."

ART (Starts slow, speeds up)

I am the very model of the Modern Money Manager
I deal with sums, large and small, put into precise integers.
I do well when we race along and when the world is out of gear.
And when you want to leave the market I'm already out of there.

With theorems econometric and a carefully plotted longitude

You'll find I never give a calculated loss much latitude.
A careful study of my ways will show that that's my attitude.
And while I'll never take your money, I could do it for you, too.

Central Bankers (Kick-dancing)

While he'd never take our money he could do it for us, too!
We've learned this from the careful study of his attitude!

When I find bad apples, I don't throw that fruit away!
Why waste those subprime apples if you can make them pay?
You simply take the bad ones and mix them with the good.
In this way, those "bad apples" will sell better than they should!

I move vast sums from sun to sun from nearly half a world away.
I can buy and sell and do a deal at any time during the day.
In matters econometrical, I've created hedge fund spectacles.
Future earnings "theoretical" sound like profits "piratical."

In matters econometrical, he creates hedge fund spectacles.
His profits "theoretical" sound like bounties "piratical."

(Hand-stands lead to Flip-flops)

Before the Banks went in-the-tank, I speculated in the currencies.
I took advantage of Pound flights and Ministerial in-coherencies.
I made a billion, then another, and flew across the sea.
Where I entertained the pleas...of busted brokers on their knees.

I shelter money from tax loads that might seem quite preposterous
You'd think I'd make a payment that is monstrously --

(a bit perplexed)

Monster-us?

(explaining)

But with the politicians that I legally rent

to produce the tax codes that are legally bent --
After "all" that's bought and sold

And every taxing woe:

(With exuberance)

I've piled up wealth untold!

(Pounding Kettledrums that spray green paint)

He shelters money from great -- tax -- loads.

He loans to Politicians that -- he -- knows.
After "all" he's bought and sold,
And even taxes that he's owed:
He's piled up wealth untold.

(As they bang the drums Art calms them. They got green paint in their eyes)

I dabble now in politics as an artist or gourmet,
With the use of sweets; the use of sticks, as a means to prise my way.
I fund foundations -- academic deviations -- a terrific, Scientific, Tidal Wave!
That will sweep away the old "new world" before I'm in the grave.

The voters who agree with me -- are the most perceptive.

Especially those who agree with me -- when I'm at my most deceptive.

And should you disagree with me, others employ invective.

To win arguments with ease, invective is most -- effective.

(As they mop-up the excess green paint)

He dabbles now in politics and funds many foundations.

He does good acts while acting good, to improve his reputation.
He wants a single bundle to contain every nation,
As he promotes a Scientific Tidal Wave -- an academic mutation --
Meant to make the world anew in every permutation.

(explaining to the bankers)

Cryptos sold by kleptos offer money quick,

But Cryptos sold by kleptos carry quite a risk,

When fortunes made of Cryptos

Quickly end up in the crypt.

(spoken)

But trust me, I am a realist, and reality is my game, for...

(does the soft-shoe)

I am the very Model of the Modern Money Manager.
I deal with sums, large and small, placed into distinct integers.

(picking up the pace)

I do well when we race along and when the world is out of gear.
And when you want to leave a market I'm al-ready

Out! Of! Here!

(The Orchestra suddenly goes wild as he dances off-stage with the Central Bankers.)

Scene 2 and 3 can be found here

Dangerfield, Will Robinson, Dangerfield!

We don't get no respect. Our politicians tell us they identified lots of fat and colossal waste and would cut spending to trim it. Turns out the fat's on our waist and the spending they're targeting is ours -- on food. The good news: this will leave more room in the family budget for taxes and fees.

We don't get no respect.

Ever heard of The Continental Congress? That's the nation's founders. Now we got the con-man congress -- where the nation flounders. They only act continental when it impresses the league of woman voters. We should have listened closer during the campaign. They were actually saying, "Yes, we con." They're so good at it they could con a surgeon out of his scrubs -- and are, by the thousands. They're giving the entire nation a bath, charging us for the water before fining us for using the wrong soap. They help their lawyer buddies to eat our lunch, give our dinner to the government unions, and feed our breakfast to lobbyists and activists. Then they tell us not to complain 'cause they put it on our kid's tab -- only they're working on the grandkids now.

We don't get no respect. 

Wanna buy some health care deform? If you ask how much, you can't afford it. A decade ago it was all the rage. A House committee wrote a twelve-hundred-page bill to deform health care. The house then improved it by a thousand pages and sent it to the Senate. The Senate tossed all 2,200 pages in the can. They replaced it with 2,400 pages of their very own and sent it to the House. The House was appalled -- which means somebody read it. They came up with a fix. Some say it is one thousand pages of patches, some say two thousand, and some 36,482. Then they figured it out: put it online and you can do it in one really, really, really, really long page. I hear Hammurabi wanted to reform health care but the universe ran out of clay.

We don't get no respect.

You heard of "Hide the Salami," right? The Democrats play "who gets Salamied!" Then they go out on the town to do budget scoring. They want a budget with a big bust while they max out the credit card. They think the national debt means the nation owes them. They say a new program will cost two trillion over ten years but they don't include the cost overruns, so multiply by three. It's budget neutral, they say -- just like Belgium in World War II, it'll get rolled over by tanks four or five times. What about that trillion-dollar deficit? It could be worse and will be. Folks, this is not Smoke N. Mirrors' accounting. I know Smoke N. Mirrors. Smoke N. Mirrors is a friend of the Republicans. This is Smoking Fraud.

We don't get no respect.

Our rulers have low self-esteem. They think any nation that would put them in charge must be populated by stupid idiots and knuckle-dragging neanderthals. They want it to be an intelligent nation, like Denmark (but without the Vikings), one they can be proud of when they go to Bali in January for that global warming conference.

We don't get no respect.

We are blamed for global warming and are told to spend 100 trillion dollars to mitigate it. Politicians, bureaucrats, academics, and various fraudsters act as the mitigators -- meaning they get their mitts on the money.

We don't get no respect.

Our state department does not want to be allied with any nation that would be friends with us. Our Representatives take a tour of Arab Capitals. They expect the Arabs to suggest we bomb Iran. Turns out, they want us to bomb ourselves.

We don't get no respect.

The Chinese blame us for selling them bonds. The Europeans blame us for electing the guy they wanted us to elect. The world that wanted us to disengage from it is now disenchanted with our disengagement. They say we are disengaged when we should be concentrating on our disengagement. And everyone wants us to be poor and miserable while still buying their stuff, all at the same time. Solution: sell us junk.

We don't get no respect. And why should we? We put up with it. Budah-bing.

Does Credit Expansion lead to Waist Expansion or Waste Expansion?

Jeff Snider at EuroDollar Univesity discusses the Chinese Stimulant that ain't fentanyl -- increased availability of Bank Credit.

Back in the 1980's I read that the Soviet Union had the highest rate of capital investment in the world and on the whole (or rather, "hole"), that investment produced a negative return -- requiring more investment. I read that and thought, "Gee, that can't be good." I had the picture of being on a treadmill and running to stay in place but the treadmill speeds up so, in the end, you're running so you'll fall behind slower. In such a scenario, collapsing from exhaustion seems the logical outcome.

In "The Rise and Decline of Nations: Economic Growth, Stagflation, and Social Rigidities," Mancur Olson didn't discuss the credit markets so much as the "credit to" markets. In his view, the growth of self-dealing special interest groups in an otherwise growing economy produces economic sclerosis that leads to failure. The CCP is a collection of self-dealing special interest groups. Its near collapse during Mao's Cultural Revolution allowed a multi-decade spurt in economic development. Its reemergence as society's "guiding force" will likely herald its decline.

We face a similar danger in the good ol' USA. It's not the dealings of the Fed that will determine our economic future so much as the self-dealing of a web of special interests and influence peddlers I call "The Crony Class." Are they anti-climate change or pro their control of the nation's resources -- and do they see a difference? Crony class interests require a lot of lying-and-believing at the same time. ESG, anyone?

Looking for a New Thermometer

The leaders of Argentina and Brazil hope to create a common currency to break the trade-denominated link to the US dollar. Joe Blogs compares their efforts to the creation of the Euro around the turn of the century.

Historically, most Euro participants lean towards "easy money" but Germany, having suffered from hyperinflation, is a hard-money, hard-nut to crack. That isn't the case here. Argentina currently suffers from roaring inflation -- not for the first, second, or third time -- which has tanked the value of their currency in dollar terms. Brazil has a similar record. Since their bilateral trade is largely denominated in dollars, this is highly inconvenient for businessmen and, more recently, politicians. The two countries are suffering from inflation fever and the leaders want a new thermometer in lieu of treating their policy problems. Even in the Euro's case, there was a financial crisis in the area because some countries did not follow the program they signed onto (ie limiting budget deficits and so on).

The proposed currency union is a bit like fixing a leaky roof. It's a good idea. What's a bad idea is trusting the job to "roofers" who cause more leaks than they fix. Meanwhile, the bewildered homeowners at the job site find half of their valuables have disappeared before the job is done. When they complain it is explained that the poor result is all the fault of people who live on another continent thousands of miles to the north.