The Coming Macro Shock of 2023: China

As Paul Krugman notes,

“[Chinese President] Xi has abruptly ended his signature “zero Covid” policy, with all indications pointing to a huge surge in hospitalizations and deaths that will stress health care to the breaking point; the Chinese economy seems set to face major problems over the next two or three years”

From IHME, as of 16 December 2022:

Source: IHME, accessed 12/24/2022.

The question in my mind is how the Chinese authorities will react as infections, and subsequently hospitalizations and deaths, surge. Will they reinstitute lockdowns, or will they try to muddle through with re-opening. Either choice will have ramifications on economic activity, exports, and hence price developments in the rest-of-the-world. Four days ago, the World Bank marked down estimated 2022 growth to 2.7% (Reuters). This is close to the 2.6% y/y growth forecast from Goldman Sachs, and slightly down from consensus of 3%.


Addendum, 12/25/2022:

From Deutsche Welle, 12/23:

Hospitalizations peaked early in December

Beijing decided to ease restrictions on movement on December 7, ending the country’s zero-COVID policy.

Hospitalizations peaked at 28,859 through to December 4, which is the highest reported figure in China since the start of the pandemic.

Figures have been absent in the last two reports in December.

The WHO said that it may be that Chinese authorities are struggling to register all cases. “I wouldn’t like to say that China is actively not telling us what’s going on. I think they’re behind the curve,” WHO emergencies chief Mike Ryan said.

Reuters said it was told by WHO spokesperson Margaret Harris to direct questions to the country concerned.





70 thoughts on “The Coming Macro Shock of 2023: China

  1. David O’Rear

    In my opinion, the response is likely to be decentralized: some areas (provinces, cities) will try one approach, and others a different way. A centralized approach — “everyone in China subject to the same rules” — risks any failure reflecting badly on The Core, which cannot be allowed to happen.

    More, the “cross the river by feeling the stones” approach allows for experimentation with various levels of restriction. What works can then be rolled out further. That harkens back to the Era of Common Sense (1979-2012), and might appease anyone considering raising a voice (or something else) against He Who Must Be Obeyed.

  2. ltr

    The question in my mind is how the Chinese authorities will react as infections, and subsequently hospitalizations and deaths, surge. Will they reinstitute lockdowns, or will they try to muddle through with re-opening….

    [ There has as yet been no surge of deaths in China, and Chinese health authorities have taken and are taking precautions to prevent any surge. An example of precautions beyond booster vaccines and masks can be found in the explicit protections of students just taking graduate school exams. Should further precautions prove necessary, decisive actions to protect life and health will be taken as has been the case since January 2000. ]

    1. ltr

      December 24, 2022

      a ) There were 5,226 coronavirus deaths in China on May 26, 2022.
      b ) There were no coronavirus deaths from May 26, for nearly 6 months, through November 19.
      c ) From November 20 through December 23, 2022 there have been 15 coronavirus deaths in China, bringing the total from 5,226 to 5,241.

      d ) During the nearly 6 months of no coronavirus deaths in China, there were 300 to 500 coronavirus deaths each day in the United States.
      e ) Coronavirus deaths in the United States continue at 200 to 400 each day.
      f ) There have been 1,115,913 coronavirus deaths in the United States through December 23, 2022.

      1. David O’Rear

        It almost seems as if you think the quality of data from the US and the PRC are so highly similar as to be worthy of comparison.
        That is not the case.

    2. Macroduck

      “An example of precautions beyond booster vaccines and masks can be found in the explicit protections of students just taking graduate school exams.”

      This weak effort at arguing away China’s Covid problem is evidence enough of the utter helplessness of China’s government. What share of the population is grad students taking exams? Tiny. If there were a better example, ltr would have used it. Chinese authorities don’t have any good tools. ltr is paid to pretend otherwise. David’s point is well made.

      Grad students are China’s next generation of elites, so must be protected. The masses will have to fend for themselves.

    3. Bruce Hall

      China, along with the rest of the world, has realized that the choices in dealing with COVID are: 1) kill your economy or 2) do your best to manage the infections and recognize that it is a disease that primarily kills the old and infirm.

      The vaccines have been somewhat successful in dampening the symptoms of the infections, but not successful in the same regard as traditional vaccines for diseases such as measles, polio, mumps, etc. If some of those many $billions had been focused on effective treatments, the case counts would probably have been similar, but there may have been far fewer deaths. While there are some approved antivirals, they are often not prescribed soon enough or patients are told to stay home and (hopefully) recover. This erratic approach to antivirals generally has been ineffective.

      The use of Evusheld for elderly/immune compromised patients has been discontinued because the variants appear faster than the antibody treatments can be reformulated.
      Due to rising COVID-19 variants that are resistant to tixagevimab-cilgavimab (EVUSHELD), we anticipate that soon EVUSHELD will no longer significantly reduce your risk of getting COVID-19. For that reason, we have decided to suspend further routine scheduling of EVUSHELD preventative therapy. Michigan Medicine strongly encourages staying up to date on vaccination against COVID-19 and influenza, as immunosuppressed people are at increased risk of severe disease from respiratory viruses. The new COVID-19 booster is recommended for those who have not yet received a bivalent (new) booster dose and have not had COVID-19 for at least 3 months.

      Further information about COVID-19 vaccination and other ways to reduce your risk of COVID-19 are available at

      Your Michigan Medicine Care Team

      In other words, “good luck and see ya.”

      1. pgl

        “This erratic approach to antivirals generally has been ineffective.”

        If one followed this advice it would not be erratic and it would be effective. The problem is that certain MAGA hat wearing fools like Bruce Hall actively did their best to dissuade people from taking prudent advice.

        “do your best to manage the infections and recognize that it is a disease that primarily kills the old and infirm.”

        There Brucie cheering on the possibility that his own mother might needlessly die. Which is kind of sick since Brucie still hides in his basement dependent on his mommy buying Brucie boy’s food for him.

        BTW Brucie – stock up on your bleach as I hear there may be a shortage this winter.

  3. Not Trampis

    Lockdowns do not work because the new variants are very very transmissible.
    The Chinese have only themselves to blame. Their drugs are poor and they wil lnot import western ones that work.

    It is Christmas down under and usual hot so all the best up there trying to get through the artic blast

  4. JohnH

    Maybe Krugman’s crystal ball will be better than it was in 2014, when he was predicting gloom and doom for the Russian economy:

    “The kind of crisis Russia now faces is what you get when bad things happen to an economy made vulnerable by large-scale borrowing from abroad — specifically, large-scale borrowing by the private sector, with the debts denominated in foreign currency, not the currency of the debtor country.

    In that situation, an adverse shock like a fall in exports can start a vicious downward spiral. When the nation’s currency falls, the balance sheets of local businesses — which have assets in rubles (or pesos or rupiah) but debts in dollars or euros — implode. This, in turn, inflicts severe damage on the domestic economy, undermining confidence and depressing the currency even more. And Russia fits the standard playbook.”

    Sure, a 2% decline in the economy is not great, but it’s hardly the kind of crisis Krugman was suggesting (hoping for).

    Of course, maybe he’ll get it right this time, though he doesn’t have a great track record on economic forecasting for countries the US doesn’t like.

    1. pgl

      Fired by the Tories as Cameron’s mouth piece – Jonny boy is now the mouth piece for war criminal Putin! You pick the most glorious leaders to shill for!

      1. JohnH

        What? You’re not going to include Xi, PolPot, Saddam, Somoza, Emperor Hirohito, and Godzilla on the list of people I’m shilling for? I’m surprised!!!

        1. Noneconomist

          Well, JH, your slobbering over anything Putin is sufficient. You’re, by far, this site’s #1 Putin apologist.
          Own it.

          1. pgl

            Notice something else about Jonny boy. He pulls out a 2014 oped from Krugman on the Russian economy and decides to mock Krugman’s little forecast. But wait – what happened to the Russian economy in 2015 was exactly what Krugman suggested might happen.

            So what does Jonny boy do when the historical facts slap in the face again – he decides to misrepresent Krugman on something else in the most disgusting.

            This has been Jonny boy for years not just here but over at Mark Thoma’s former blog. It is just the obvious fact that Jonny boy is incredibly dumb. He also has some serious emotional issues.

        2. pgl

          Xi fired you. A lot of the others are dead. I guess it is hard for a troll to pay the rent under these conditions.

    2. pgl

      It is disgusting to suggest Krugman hoped for Russian woes back in 2014 but then you are a disgusting troll. I guess you did not notice he predicated this on the performance of Russian exports. And we know you are incapable of doing any real research so here goes:

      Russian exports did fall in 2015 and 2016 but then they recovered after that. Do you have a clue what drives Russian exports? Oh yea – you think UK inflation rates drive Russian exports. No MORON – try world oil prices.

    3. pgl

      “an adverse shock like a fall in exports can start a vicious downward spiral. When the nation’s currency falls”
      Krugman writing in 2014,

      As I noted earlier, Russian exports did fall in 2015 and guess what happened to the Russin rouble:
      National Currency to US Dollar Exchange Rate: Average of Daily Rates for the Russian Federation

      A rather massive devaluation. Yea when oil prices later rose and Russian exports went back, this slide stopped.

      Once again score this for the Noble Prize winner and not for the utterly incompetent JohnH!

      Jonny – we have asked you before to do a little research before mouthing off but I guess we are expecting too much from you.

    4. pgl

      More on the Russian economy the year after Krugman wrote that oped that Jonny boy tried to mock:

      Russia has just joined a club it would rather not belong to.

      Official data published Monday confirmed that its economy shrank by 3.7% in 2015, putting it deep into recession and making it one of the world’s 10 worst performing emerging markets for the year. Russia has been slammed by the collapse in oil prices since the middle of 2014, and by Western sanctions imposed the same year because of its support for separatist forces in Ukraine. Its currency has collapsed to a record low against the U.S. dollar, driving up inflation and impoverishing millions. President Vladimir Putin and his government have been forced to make deep cuts to public spending as oil and gas revenues have plunged.

      It seems Krugman’s 2014 forecast sort of panned out. And we are over 6 years later our Economic Know Nothing JohnH still does not get what happened. Yea – Jonny boy is kind of dumb.

      1. JohnH

        This has to rank as the STUPIDEST comment pgl wrote: “Official data published Monday confirmed that its economy shrank by 3.7% in 2015”

        “Monday” was almost seven years ago. The source was CNN. There was no official data provided.

        I thought that our host had warned about using sketchy sources…and pgl has repeatedly mocked others for using excellent data sources he happens not to like. Now pgl takes the cake, using CNN as a data source. Good job, pgl. LOL

        BTW, as I wrote earlier, FRED data shows that Russian GDP fell by about 2% in 2015, nothing like the cataclysm that Krugman was hoping for!

        1. pgl

          How effing dumb are you? The discussion here was about Russia’s real GDP in 2015. And yea I cited a CNN story back then. I did not say the report was this week moron. But if you do not believe CNN, try FRED.


          Yes Russian’s real GDP fell in 2015 like I said.

          Jonny – I know you are desperate to make a point for once in your pathetic little life but this fell short as usual.

        2. pgl

          BTW – maybe Jonny boy does not realize this FRED data has this little legend

          Millions of 2017 U.S. Dollars

          CNN was relying on IMF data, which uses official sources aka rouble based data. So when Jonny boy writes:

          There was no official data provided. I thought that our host had warned about using sketchy sources

          He either is too dumb to READ or he LIED again. The IMF as a sketchy source? Thank you once again Jonny boy for proving that you are the DUMBEST TROLL God ever created.

        3. pgl

          BTW troll. I posted a discussion of how pathetic the Russian economy was in 2015 which dovetails Krugman’s prediction. My source did show Russian real GDP over time using Worldbank data, which I guess in your view is as sketchy as IMF data. Huh – my two sources use official ruble information whereas you stupidly rely on something that reports things in US$. I guess you do not know the difference – as usual.

    5. JohnH

      Krugman has been forecasting doomsday scenarios for China for years.

      2013: “Hitting China’s Wall”

      2016: “When China Stumbles”

      So what’s going on? Why does Krugman keep crying “Wolf” about the imagined woes of countries the US doesn’t like? Why not talk about the miseries of allies whose economies could really be in big trouble…like Germany?

      Krugman could well be right about Russia and China one of these days…even a clock is right twice a day. But until then he’s just giving hope to neocons and liberal interventionists who revel in schadenfreude…and then just leaving them frustrated when doomsday fails to arrive.

      1. Menzie Chinn Post author

        JohnH: I don’t call myself a neoliberal or a neocon, but reasonable people can still see the internal contradictions of the Chinese model, built upon repression of the financial sector and a housing sector as engine of growth and asset repository built on debt.

        1. pgl

          Someone over the holidays asked me what I thought about Stephen Leeb and his RED ALERT – How China’s Growing Prosperity Threatens the American Way of Life.

          I had never heard of this fellow but it seems he is a lot like JohnH – attacking Krugman for whatever and promoting the kind of hatred towards the Chinese economy akin to the stuff that put Navarro up as one of Trump’s favorite advisors. I’m not recommending this book as this kind of nonsense is already too prevalent.

        2. Moses Herzog

          I’m trying to stay neutral in this individual sword clanging (or cowardly riding the fence if the reader prefers) but any person who thinks that Krugman has not given Germany a large “helping” or proportion of criticism in the past (98% of it probably on target) hasn’t been reading Krugman very carefully.

          1. pgl

            Just one example:


            Paul Krugman Vs. Germany
            Should Germany be punished for embracing austerity measures?
            Now let us come to the serious part of his claim. If Germany opposes another expensive public spending program and saves €80 billion in the next four years, so his main argument goes, it hurts the world economy severely. Not only is domestic demand in Germany too little, but the world economy may also be missing a locomotive. Without more deficit spending, the world is on the brink of another recession, if not a second great depression (even with similarly severe political consequences). Another argument is the availability of cheap money. Currently, Germany can indeed borrow at historically record low interest rates. In my opinion, the cheap money is the true trigger of the next crisis, if it is to come. It is too cheap to borrow, and it gives the impression that spending is costless. However, spending even with low interest rates today may prove to be expensive, particularly if the money is not invested but rather consumed. Given that the government will repay the debt, future generations have an ever-increasing burden. This burden will be even higher if interest rates increase in the future — a very likely scenario. One has to consider that the interest payments today already make up 12% of federal public spending. Instead of helping the world economy, Professor Krugman laments further, Germany is trying to weaken the euro to boost its exports. It remains unclear as to why austerity and fiscal stability is a recipe to weaken the euro.

            Oh wait – Cameron was pursuing fiscal austerity in 2010. And we know Jonny boy thinks this Tory policy was great.

          2. pgl

            Well just one more:

            Germany, the Euro, and Currency Manipulation

            Yes, Germany in effect has an undervalued currency relative to what it would have without the euro. The figure shows German prices (GDP deflator) relative to Spain (which I take to represent Southern Europe in general) since the euro was created. There was a large real depreciation during the euro’s good years, when Spain had massive capital inflows and an inflationary boom. This has only been partly reversed, despite an incredible depression in Spain. Why? Because wages are downward sticky, and Germany has refused to support the kind of monetary and fiscal stimulus that would raise overall euro area inflation, which remains stuck at far too low a level. So the euro system has kept Germany undervalued, on a sustained basis, against its neighbors.

            But does this mean that the euro as a whole is undervalued against the dollar? Probably not. The euro is weak because investors see poor investment opportunities in Europe, to an important extent because of bad demography, and better opportunities in the U.S.. The travails of the euro system may add to poor European perceptions. But there’s no clear relationship between the problems of Germany’s role within the euro and questions of the relationship between the euro and other currencies.

          3. JohnH

            pgl tries to refute my observation that Krugman doesn’t seem to be writing about Germany’s current economic situation by providing articles that are 5 and 12 years old. Good job, pgl. They address Germany’s current problems!!! LOL!!!

          4. pgl

            December 26, 2022 at 2:56 pm
            pgl tries to refute my observation that Krugman doesn’t seem to be writing about Germany’s current economic situation by providing articles that are 5 and 12 years old. Good job, pgl. They address Germany’s current problems!!! LOL!!!”

            This is an old debating trick from this worthless troll. Krugman has been writing about Germany’s fiscal and currency issues for a long time. I bet if anyone took the time – one could find something he wrote for the NYTimes this year. But no – your point was self evident to most of us and by now I’m so completely bored with Jonny boy’s pathetic rants, I’ll leave this to you and Macroduck,

          5. pgl

            December 26, 2022 at 2:56 pm
            pgl tries to refute my observation that Krugman doesn’t seem to be writing about Germany’s current economic situation by providing articles that are 5 and 12 years old. Good job, pgl. They address Germany’s current problems!!! LOL!!!”

            Jonny boy cites stuff written in 2014 but no one else is allowed to? OK! But let’s look at German real GDP:


            Huh fully recovered from the pandemic and rising – just like it was in 2011 after Germany came back from the Great Recession rather quickly.

            Hey Jonny boy – Krugman has not claimed that the German economy has tanked because it has not tanked. Krugman is not like Jonny boy. Krugman tells the truth while Jonny boy is a serial liar.

        3. JohnH

          Absolutely. Reasonable people can see the internal contradictions of the Chinese model. But they can also see that the Chinese economy has grown 64% since 2013, when Krugman wrote his first gloom and doom outlook for China. That’s 6.4% per year in real terms. That should be reason to pause and reconsider China’s ability to cope with the contradictions.

          The question really boils down to whether Krugman is an impartial observer of the Chinese economy or whether he has an anti-China bias consistent with the official US government anti-China narrative.

          1. Menzie Chinn Post author

            JohnH: I’ve never detected an anti-China perspective with Dr. Krugman when I have interacted with him. No more anti-China than anti-Japan, in fact. Just analysis.

          2. Moses Herzog

            One of the funniest comedic skits (because it was largely “played straight” with dry type humor) was when Paul Krugman voluntarily took part in (what I am sure he knew was going to be largely satirical before he agreed to do it) an “interview” on the Colbert show. This kind of reminded me of the glory days of early David Letterman when he used to do the Chris Elliot skits:

            I suppose the usual “woke” morons here (or those who THINK they are “woke”) will say that sitting in a Chinese restaurant and pigging out doesn’t make you broadminded and tolerant on Chinese people and culture. My tip for those people is, quit patting yourself on the back for falsely lecturing others and projecting.

            I swear to God, everytime Bootsie says to Krugman “We can’t judge each other, right Paul??” The look and expression on Krugman’s face has me about on the floor dying of laughter. It’s roughly at the 5:49 part of the CBS video.

          3. pgl

            Gee Jonny boy has never heard of the Solow growth model. Income per capita in China is only 25% of income per capita in the US. So one would expect higher growth rates if one even remotely understood basic economics. But of course Jonny boy barely gets 2 + 2. So hey.

          4. pgl

            Moses Herzog
            December 26, 2022 at 7:17 pm
            One of the funniest comedic skits (because it was largely “played straight” with dry type humor) was when Paul Krugman voluntarily took part in (what I am sure he knew was going to be largely satirical before he agreed to do it) an “interview” on the Colbert show.

            Moses – that was a true delight. First of all I have to try having dinner there someday. And Bootsie is a delight.

  5. pgl

    The Senate voted for the recent spending bill sent to Biden’s desk on 12/23/2022 68-29. Now – catch this dishonest hyperbole from Kevin McCarthy:

    Nancy Pelosi (D-Calif.) used what could be her last floor speech as House speaker to slam her possible replacement, House Minority Leader Kevin McCarthy (R-Calif.), after he said the omnibus spending bill was “one of the most shameful acts [he’s] ever seen in this body.” Pelosi, who previously announced she was stepping down as leader of the House Democrats, responded to the GOP congressman’s comments that the bill — a $1.7 trillion measure to fund the federal government through September — was a “monstrosity.” McCarthy gave a roughly 25-minute address railing against what he called “left-wing pet projects” funded by the bill. “It is one of the most shameful acts I’ve ever seen in his body,” said McCarthy, who is seeking to become speaker as Republicans take the House majority next year. “The appropriations process has failed the American public, and there’s no greater example of the nail in the coffin of the greatest failure of a one-party rule of the House, the Senate and the presidency.”

    Good thing I was not Speaker Pelosi at that moment I would have called out McCarthy is the harshest of ways. But Pelosi kept her cool:

    Pelosi, in what she said may be her last speech as speaker on the House floor, said McCarthy’s remarks were “sad to hear.” “I can’t help but wonder, had he forgotten January 6?” Pelosi asked.

    Actually little Kevin did go down to Maro Lago to kiss Trump’s ring.

    1. JohnH

      I’m sure that all those Big Money lobbyists that Pelosi solicited donations from will be really sad to see her go. She obviously delivered for them, else she wouldn’t have ruled the roost for as long she did. Big Money must be eternally grateful for her squelching of the union card check initiative that Democrats ran on in 2008.

      1. pgl

        What happened Jonny boy? Did Putin fire you or what? Working for Kevin McCarthy should be a lot of fun as Kevin flip flops even faster than you.

  6. pgl

    I cheated a bit finding this link to his oped:

    The world’s two most-powerful leaders have just had very different years. At the beginning of 2022, Joe Biden was widely portrayed as a failed president. His legislative agenda appeared stalled, while economic troubles seemed to guarantee devastating losses in the midterms. What happened instead was that the Inflation Reduction Act — which is mainly a game-changing climate bill — was enacted; the much-hyped “red wave” was a ripple; and while many economists are still predicting a recession, unemployment is still low and inflation has been subsiding.

    Gee Krugman put coal in the stockings of our MAGA hatters with that one!

  7. pgl

    Krugman went beyond China’s COVID woes:

    China’s long-running macroeconomic problems seem to be reaching a tipping point. It has been obvious for years that China’s economy, despite an awesome history of economic growth, is wildly unbalanced. Too few of the gains from growth have trickled down to households, keeping consumer spending low as a share of gross domestic product. Extremely high rates of investment have filled the gap — but all indications are that investment is running into severely diminishing returns, with businesses ever more reluctant to spend on new ventures. China has nonetheless managed to retain full employment — but mainly by promoting an enormous housing bubble. China’s real estate sector is incredibly bloated: According to one estimate it accounts for 29 percent of GDP, with investment in real estate as a share of GDP running twice as high as it did in the United States at the height of the 2000s bubble. This isn’t a sustainable state of affairs. Economists often cite Stein’s Law: “If something cannot go on forever, it will stop.” Exactly how China’s bubble will end isn’t clear — it might be a sharp slowdown, or it might be a period of “low quality” growth that masks the true extent of the problem, but it won’t be pretty. What has really struck me, however, is the way analysts have been marking down their longer-term projections for Chinese growth.

    1. JohnH

      Krugman’s Xmas wish is a big one. I wonder how Santa will deliver that one. Definitely needs more reindeer. I wonder if the DOD has some stockpiled.

      1. pgl

        Again – another disgusting comment from Putin’s pet poodle. Look Jonny boy – it is not the fault of Krugman that you are the dumbest troll God ever invented.

  8. pgl

    Trump spends Christmas Day flaming his blatant racism:

    Former President Donald Trump shared a Christmas message on Truth Social to Americans on Sunday, saying the United States is “dying from within” due to the “horror show” at the U.S.-Mexico border. “On this very cold but beautiful Christmas Day, look at our Nation NOW on the Southern Border compared to only a short time ago during the Trump Administration,” Trump wrote on his social media platform. He continued: “We had the most SECURE Border in our history, versus the “horror show” that is happening now, with record setting numbers of people, many of them hardened Criminals (including Killers, Human Traffickers and Drug Dealers), POURING INTO OUR COUNRTY at a rate the likes of which we have never seen before. The USA is dying from within.”

    Yea I get Trump has been a flaming racist likely from the day this disgusting human being was born. But could he at least take Christmas Day off from this divisive evil of his?


      Oh please. Republican globalism is driving people to the border. Religious and business associations tell them to come. Trump loves illegal immigrants and when the rate collapses in 2023, nostrils will flare.

      1. pgl

        Remember CALI governor Pete Wilson. In bed with big agriculture who wanted cheap labor so immigration was encouraged. Until the racists in California’s farm country got tired of living next to Hispanics. So Wilson gave us Prop 197 – and bam, the Republican Party in CALI was toast.

        1. Noneconomist

          In the recent election, Gavin Newsom was re-elected governor with 59.2% of the vote (6.47million votes). Prop. 1, which cements constitutional guarantees for abortion and contraception, passed with 66.9% (7.12 million votes). Message? This “liberal” proposition had plenty of support from independents AND Republicans,
          In still very red {and very prosperous) Placer County, Newsom got around 40% while Prop 1 got 54%. Big message there too.
          While California has gradually left socially, Republicans generally long for a return to 1957. Or earlier.
          California farm country would be lost without undocumented workers. No reliable data exists, but estimates of the percent of undocumented laborers range from 40 to as much as 70%. That includes the southern San Joaquin Valley, whose representative in the House, Kevin McCarthy, is big on border security and was a cheerleader for Trump’s border wall. (Yes, wink, wink, nudge, nudge, eyes roll).
          Of course, California’s largely Republican agriculture/farm base is solidly in McCarty’s corner (More wink, wink, nudge, nudge,eyes roll) The need those workers while publicly lamenting their supposed social costs.

  9. pgl

    A couple of reminders that Forbes hires some real goofballs as writers since Bruce Hall thinks I’m too hard on Forbes. Both relate to some serious BS from Tim Worstall who thinks he is the know it all when it comes to tax and transfer pricing. He did write something on that corporate inversion issue where I had to question whether he knew a damn thing about Walgreens – which does not generate all that much profit abroad:

    Let me find the other post I wrote as you enjoy that cup of coffee and open the IKEA gifts.

    1. Bruce Hall

      Well, ProGrowthLiberal, you just made an argument for not hiring 87,000 new IRS agents:
      Tim is referring to section 367(d) which says migration of IP requires that the original owner of the IP be compensated at fair market value. Tim assumes that the IRS is incredibly effective at enforcing this sensible requirement. I guess he has no clue that most of these transfers occur at something like 10 cents on the dollar of what the market suggests is the fair market value.

      Let’s just have a bigger ineffective bureaucracy.

      For a world-class nitpicker of technicalities, you chide Worstall, for being technically correct.

      1. pgl

        You on opining on the valuation of transferred intangible assets? Now this is funny. Do you even know what a discounted cash flow model even is? Yea I just happened to review one of those 10% on the dollar valuations. This would have been litigated but when the sketchy assumptions of the taxpayer’s approach were exposed, the scumbags folded and the IRS collected as mere $2 billion. So yea – the IRS can win when they do not rely on morons like Tim Worstall and Bruce Hall.

        Now tell us about how Trump inflated the value of his Upper Side residence by a factor of ten by pretending its square footage covered several entire blocks. Careful talking about valuations Brucie as this one may land your hero in jail.

      2. pgl

        “Let’s just have a bigger ineffective bureaucracy.”

        I guess you have no clue how little the IRS is allowed to spend on enforcing transfer pricing and how much the Big Four and law firms spend on this stuff. Your Republican buddies have rigged the game. Clinton had some successes when he beefed up the IRS but then Newt Gingrich decided to undermine everything.

        Bruce Hall – defender of dishonesty to promote massive tax cheating by the rich. He is that kind of guy!

        1. pgl

          It seems that Bruce’s “ineffective bureaucracy” saved itself some resources by NOT auditing Trump’s tax returns even though they are required by law to do so. Of course when the Republicans make sure the IRS is horribly understaffed, they can’t spend resources going after Trump the tax cheat or all those multinationals who are serially cheating on their taxes too. Of course, this is by design when right wing nutcases like Bruce Hall gets to decide on how we fund tax collection efforts. Reasonable people would think – we should spend a little more to make sure the fat cats pay their own share but not Brucie boy!

  10. pgl

    “The Green Party Doesn’t Grasp EU Tax Laws Concerning IKEA” is the title of a 2/15/2016 discussion of IKEA’s transfer pricing by the arrogant idiot Tim Worstall. That Forbes allowed this clown (who Bruce Hall adores) to write this is beyond me:

    “At the top of Ikea there’re two tax free foundations. Tax free foundations do not, as the name implies, pay tax. One owns the operation of the stores and network, the other owns the trademark. The one that owns the trademark charges 3% to the other for the use. Those royalties flow around Europe and then into that tax free foundation.”

    We he did frame the issue but here is his defense of this 3% trademark royalty:

    “3% is actually fairly low by the standards of these things. Starbucks , an unrelated EU investigation found, charges itself 4% and this is considered just fine. So, Ikea must charge its local stores a royalty, the amount seems reasonable enough, related at least to an arm’s length price, we don’t have a problem here.”

    Actually Starbucks charges third party franchisees 6% not 4%. Worstall knows nothing about Starbucks I guess including the fact that it is a highly profitable enterprise. To suggest the trademark for a do it yourself furniture manufacturer is the same as the trademark for Starbucks has to be the dumbest thing I had ever read as of 2016.

    But then I started reading the comments from Bruce Hall and I realized that Worstall is far from the dumbest clown ever.

  11. pgl

    I hope Harry Litman is right:

    “During an appearance of MSNBC’s “The Sunday Show,” former Department of Justice official Harry Litman called the report issued by the House select committee investigating the Jan. 6 insurrection “a goldmine” for DOJ prosecutors and set it likely has set off a rush by members of Donald Trump’s inner circle heading to the DOJ to swing a deal before the others show up. Speaking with host Jonathan Capehart, Litman claimed the report contained multiple tips and possible leads that could blossom into criminal investigations. Asked about evidence about how deeply Trump’s people were involved in trying to overturn the 2020 presidential election, the attorney said what is contained in the report should be cause for concern by anyone whose name was mentioned.”

    Rats leaving the ship!

  12. joseph

    I am baffled by the Chinese response to Covid. They have a very effective vaccine that is comparable to the mRNA vaccines for prevention of hospitalization and death. They did a better job than the U.S. getting people vaccinated in 2021 for the first round– and then they just stopped.

    Why can’t a government that can effectively lock down millions of people use the same efforts to stick a needle in their arms. The lack of boosters, especially for the elderly, is behind their resurgence today. They have the vaccines. They just seem to lack the will to dispense them.

    1. pgl

      “Why can’t a government that can effectively lock down millions of people use the same efforts to stick a needle in their arms.”

      Good question – we sucked before the vaccine came on line but hey we had a moron like Trump for President. The first rounds of US vaccination efforts went well but we sort of also lost our way since.

      Our host probably knows better than I do but my understanding is the PRC basic health care system leaves a lot to be desired.

    2. joseph

      My only guess is that the Chinese were victims of their own success. Their zero-Covid policy prevented millions of deaths compared to the U.S. So maybe they thought that they could get away without vaccine boosters and now they are finding out the error of that.

      So after two years of zero-Covid they are having to fall back on “herd immunity”, just letting it rip. It’s too bad because they could have used that time to get everyone boosted multiple times and avoided this.

      1. pgl

        You are likely right again. The actual medical professionals told us from the beginning we needed a multi-pronged approach. Lockdowns followed by masking with test and trace and when available vaccines followed by boosters adapted to address virus mutations. All sensible. And I repeat we used to have a President (45) who told us that a 30 day lockdown was all we needed. After all it would all below away by Easter 2021.

      2. baffling

        many of the older Chinese have failed to get shots, particularly boosters. there is a lot of doubt in the minds of many older Chinese with respect to government actions. they understand the ccp is not trustworthy. that is why many older Chinese have moved money outside of china. the older generation has doubts about the vaccines.

  13. Moses Herzog

    Figures have been absent in the last two reports in December.

    The WHO said that it may be that Chinese authorities are struggling to register all cases. “I wouldn’t like to say that China is actively not telling us what’s going on. I think they’re behind the curve,” WHO emergencies chief Mike Ryan said.

    Reuters said it was told by WHO spokesperson Margaret Harris to direct questions to the country concerned.

    If the W.H.O. continues in this pattern of continually bending over and placating crummy and inadequate China government leadership, WHO risk greatly resembling the U.N.~~~A complete joke of an “institution” which does more damage to the world than any good at all. Is W.H.O. there to help the world stave off deaths from pandemics, or is W.H.O. there as a public relations arm of China’s Politburo??

    1. Moses Herzog

      I messed up and forgot to include this link in the just above comment:

      It’s obviously a consistent pattern of poor judgement by the W.H.O. The obvious question here relating to the video focusing on W.H.O. leaked audio about behavior going back to 2003 and SARS (something I experienced personally, and only found mildly stressing, if you regard not being able to see your girlfriend X number of weeks as “mildly stressing”): Why did WHO make the extra effort to PRAISE China’s behavior on Covid-19?!?!?! Why not, if there is nothing GENUINELY good to say about the China government’s behavior, why wouldn’t W.H.O. just STFU?!?!?!!?

      1. Ulenspiegel

        “Why did WHO make the extra effort to PRAISE China’s behavior on Covid-19?!?!?!”

        By brown-nosing the WHO at least got data at the beginning of 2020, a more confrontational approach would have resulted in less data. Sometimes you have to fight to get the lesser of two evils.


      The Chinese method of testing and tracking under lockdown was to combine 9 swabs in a single bottle, then test. A positive result led to calling up all nine for further testing. That process saves on tests, but falls apart when infections surge. There isn’t yet a replacement system,

      Adding to the problem is a doubling rate that outruns testing.


    I doubt it. A bunch of old people will die with little fanfare . The West overreacted and tried a medical intensive care to save feeble people.. China will just mitten the dead. Like ants.

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