82 thoughts on “China Downside Surprises

  1. Moses Herzog

    Found via Michael Pettis:

    How much of this could have been avoided simply by not being too arrogant to accept many nearly free offers of effective Covid-19 vaccines when China didn’t have an effective vaccine?? We’ll never know, and I strongly suspect if the same situation revisited China even now, they would still make the completely dumb ass move of not accepting more effective vaccines made outside of China. That strikes me as rather sad.

    1. Moses Herzog

      From Pettis himself, his twitter. He has been expressing this for awhile now. And here is exhibit A on why I don’t read “The Economist”; other than they renege on free trial issues and threaten people over the phone who notified them they chose not to take the subscription.

      This story was in Brad Setser’s feed:

        1. Moses Herzog

          You’re now describing the typical inner workings of my mind. Except the last sentence reads “Now I have to procrastinate on even more stuff.”

      1. Macroduck

        The farmland expansion story makes sense given the problems China faces. Weather hasn’t been kind to China lately:


        The FT story points out that China is attempting to depend less on the rest of the world for food. My response is “so will everybody.” Recall India’s response to Russia’s first round of closing off Black Sea grain shipments? Food export bans. As food scarcity increases with climate change, a shift toward autarky is going to be the obvious response.

        Gotta agree with Pettis, of course. In the abstract, dealing with China’s demand shortage is simply a matter of stimulating demand. China’s policy legacy during the period of rapid growth is, however, mostly one of stimulating supply. Today’s rate cut isn’t strictly supply or demand stimulus, but most of China’s credit and fiscal scheme aim at expanding supply. There may be a failure of imagination when it comes to stoking household demand.

  2. pgl

    JohnH has been on a tirade claiming China does things right while the US sucks. JohnH has been on another tirade claiming high interest rates are wonderful and anyone who advocates moves like China just took is some Wall Street homey.

    Yea – JohnH is a babbling moron with very malleable opinions.

    1. JohnH

      As I predicted, pgl is devastated by the likelihood of positive, real interest rates sticking around for a while. He hates the thought that ordinary people might get a boost via positive, real returns when they save money for a house, for their kids’ college education, or their own retirement. According to pgl, it’s better to subsidize wealthy Wall Street investors via low interest rates while the purchasing power of ordinary folks’ savings wastes away.

      Let’s all shed crocodile tears for pgl’s stock portfolio, which won’t grow as fast as he had hoped!

      1. pgl

        Your rather standard pack of dishonest and pointless little attempts at insults. I see you totally failed to address anything I noted. Of course a two faced liar never wants to address what he has said.

      2. Willie

        It cuts both ways. Higher interest rates make houses more expensive and make student loans harder to pay off. High interest rates don’t subsidize Wall Street as far as I can tell. Wall Street, like the rest of us who occasionally buy things like cars and houses on credit, likes low interest rates. It’s one of those things that benefits all of us until the economy overheats.

        A real economist can correct me if I’m wrong, but this has been my observation for several decades.

  3. pgl

    In his usual fashion JohnH has been cherry picking second sources this time on German real wages in some weird attempt to claim they are lower than real wages in Russia. Now the adults in the room are all on the floor laughing at John’s latest emotional breakdown. But it is true that real wages have been on a roller coaster since the pandemic. In the interest of clarity, I went to this reliable source on real wage growth in Germany since 2008:


    Note from 2008 to 2019 German real wages had consistently grown which one cannot say about Russian real wages. But yea I move the goalposts on little Jonny boy who wants them put on the 30 yard line.

  4. Bruce Hall

    Just curious… with all of the government central planning and massive spending on its military and infrastructure expansion, shouldn’t China’s economy be booming? Multiplier effect and all?

    1. pgl

      Gee Brucie – we have had posts and comments saying this is exactly what has been happening. Boy little Brucie once again is incapable of basic reading.

      1. Bruce Hall

        pgl, I missed you and your ambiguous, snarky comments. I’d like to point out that I don’t read every post here or all of your comments, pgl. The world is so much wider.

        But let’s review your comment: this is exactly what has been happening. Does “this” refer to the government central planning and massive spending on its military and infrastructure expansion or the Multiplier effect and all or shouldn’t China’s economy be booming? Are you saying that China’s economy is booming because of the government central planning and massive spending on its military and infrastructure expansion and that the Multiplier effect and all are working according to the Keynesian predictions? Or are you saying the idea that China’s economy is not doing so well is a false narrative because it must be growing because the Chinese government is doing all of the right things? Or are you saying something else? I’m not sure if you are defended ltr or disagreeing.

        Perhaps it would be helpful if you actually referenced the post(s) that elucidate your meaning.

        1. pgl

          You don’t visit this blog to keep up on the economic news? Gee Brucie – it shows. But you bother to write a lot of nonsense.

          I’ll give you a couple of clues. I’m not bothering with your usual stupid questions since if you did bother to keep up on the posts here – maybe the answers would become apparent even to an economic Know Nothing like you.

    2. Anonymous

      Stockholm International Peace Research Institute has a interactive data base to draw reports. I chose USA v China from 2001 to 2022. Used cnstant 2021 US $ and share of GDP.

      For 2022: USA $811,6b China $298b

      GDP% USA 3.45% China 1.6%

      however we have no idea how to compare since China has not revealed weapons with huge cost overruns and large contractor sustainment costs……..

      China is increasing its spending by 7.1% …. in 2023.

      Eisenhower and others suggest military spending comes with opportunity costs….. implies a multiplier < 1.0 however multipliers seem out of fashion.

    3. 2slugbaits

      Bruce Hall Short answer is no. And don’t confuse government actions to correct market failures with central planning.

      1. pgl

        But Brucie wants a detailed explanation to every single word in his dumb post. After all – Brucie just admitted he cannot be bothered to read the excellent posts here.

      2. Anonymous


        The Economist agrees that the CCP planning is not the same as the old Soviet command economy, but… “Rather than rigid agendas, they became more like manifestos for how the party wanted to steer the country. Yet these manifestos still pack a punch.”

        Regardless, that doesn’t answer the question about why China’s massive government spending hasn’t resulted in an avoidance of the current economic problems. Sure, some of it is external as the Biden Administration is pushing for some decoupling and Europe’s problems may be spilling over to China’s exports. But “don’t confuse government actions to correct market failures with central planning” seems a bit disconnected from the reality of decades of the government pumping money into grandiose visions that became ghost cities or environmental disasters hidden by the veneer of shiny infrastructure toys.

        Unfortunately, the US seems destined for similar problems as the current administration pours trillions of dollars into subsidizing its grand vision of how the economy should work.

        1. 2slugbaits

          Bruce Hall You missed my point. Your original comment was a none-too-subtle swipe at US government policies that you seem to think constitute centralized planning. As to China…well, the CCP has made a mess of it.

  5. Moses Herzog

    Anyone know if “New Deal Democrat” is still doing his grand number calculations for recession??

    But seriously kids, [ he said in his best Henny Youngman intonations ] does anyone know why this would be happening now??

    I had stated this on the blog/weeks/months ago, that in the metro area I reside in, I have seen more homeless in the last two years than I ever remember seeing in my life, after having lived here about 31 discontinuous years. Frankly, as much disdain as orthodox economists like Larry Summers have for working class people having a living wage that covers rent payments and clothes for their kids, I’m surprised WSJ etc even tabulate these numbers. Is this so Larry can have reading material for giggles while having his morning bagels and lox??

    1. Anonymous

      new deal dem is on angry bear every week, go over there and see what he is saying. iirc lately he is calling back on recession indicators.

      today retail sales beat!

      but alcoa hit one year lows yesterday and again today!

      keeping eye on commodities.

      jim cramer siad wti is a deal at $65. i think he is wrong on the high side, looking for <$60.

      what with china surprise and all.

      1. Moses Herzog

        Is this some kind of a trick to get me to visit Angry Bear blog?? Is this what the kiddies call “a thirst trap”?? (NO, wait, that’s something else isn’t it). What a sly way to get me to visit a blog. This reminds me of the time Ed McMahon got me to purchase 30 subscriptions to women’s house keeping magazines and recipe magazines so I could win the Publishers House sweepstakes. Can you believe the nerve of that McMahon guy??

        Don’t watch Jim Cramer, he is the Lsrry Kudlow of finance/stocks

  6. Macroduck

    Another sign of shakey credit in China:


    The big shadow lender has soured further right after last week’s defaults by property developer Country Gardens on ten of its bonds:


    Whether Zhongzhi holds defaulted Country Gardens paper is a mystery to me. Direct exposure often isn’t necessary in situations like this one. As Menzie’s “yuan also drops” link notes, there is a scramble underway toward safe assets in China. That’s connection enough to make Country Gardens bad for Zhongzhi and every other shakey credit in China.

    Weak economy. Weak credit. Positive feedback.

    1. Moses Herzog

      I tell yeh, those mainland Chinese are a kindly lot with their money. I can imagine ltr = let tyranny reign making a similar move with his investments, after, in a solitary moment of weeping for the disadvantaged, he could no longer withstand their quiet sufferings.

      “Another incident last week fueled more speculation over the company’s health. Chair Yang, the daughter of Country Garden’s founder, transferred almost $1bn of her shares in its property services arm to a Hong Kong charity.”

      Gosh, it’s getting where mainland Chinese are cynical about mainland Chinese. ( !!!!! ) What the hell has this world come to?? If they knew ltr like we do here on the blog, they’d know that Yang gave that money out of pure kindness and holy purity of her heart. Gee whiz gosh……

    2. Moses Herzog

      @ Macroduck
      One of the more clever/humorous comments under the FT article was made by an Asian gentleman (most likely Chinese), and I closely paraphrase “One thing communists and capitalists have in common, they both are accustomed to ‘using other people’s money’ “

      I suppose one could say it’s a self-evident comment, and a thought I had had before, in a more indirect type of thought, but never seen put so succinctly.

  7. Macroduck

    China has cut rates and Russia has hiked. In he overall scheme of things, that’s what you’d expect. But in the narrower context of trade between Russia and China, not so much. Despite recent sharp losses in the ruble, the yuan has weakened markedly against the ruble in recent months:


    For China, that may not matter much, but it certainly does for Russia. China is Russia’s largest trading partner, and so far this year, Russia’s trade dependence on China has increased rapidly. The yuan’s weakness is a buffer against inflation for Russia. Russia’s hike and China’s cut should shore up that buffer.

    1. Ivan

      No doubt it helps Russia control inflation but it also means China has to pay more yuan’s for Russian oil or Russia accept less Rubbles for the oil it sells to China (probably both).

    1. pgl

      ‘The Argentine peso plunged Monday after an anti-establishment candidate who admires former President Donald Trump came first in primary elections that will help determine the country’s next president. Javier Milei rocked Argentina’s political establishment by receiving the biggest share of primary votes for presidential candidates in the October general election to decide who leads a nation battered by economic woes. Milei, 52, wants to replace the peso with the dollar, and says that Argentina’s Central Bank should be abolished.’

      Could someone tell Milei that Argentina tried dollarization which led to a currency crisis and a massive recession a generation ago? Maybe he is actually dumber than Donald Trump.

    2. pgl

      I’m thinking of this paper, which I will try to find:

      Edwards, Sebastian. (2002) The Great Exchange Rate Debate after Argentina, The North American Journal of Economics and Finance, Volume 13, Issue 3, pp. 237–252.

    3. Steven Kopits

      Dollarization is fine. The Convertibility plan by the Argentine Currency Board pegged the Argentine peso to the U.S. dollar between 1991 and 2002 in an attempt to eliminate hyperinflation and stimulate economic growth. While it initially met with considerable success, the board’s actions ultimately failed. The peso was only pegged to the dollar until 2002. https://en.wikipedia.org/wiki/Convertibility_plan#External_links

      The underlying issue, however, is deficit spending. Argentina typically covers 1/4 of its national budget by printing money. Dollarization prevents this; that is, dollarization or a pegged currency is something close to a balanced budget amendment in Argentina. That’s not the way politics works down there, so the idea obviously has merit, but the governance structures are too weak, historically, to ensure continued adherence.

      Obviously, the way to fix this is pay-for-performance for politicians, but no one is ever going to consider that.

      1. pgl

        Did you rely on Wikipedia for your latest poor attempt at economic analysis or what? I provided a link to the excellent paper by Sebastian Edwards. Try READING it.

      2. pgl

        Even Wikipedia cites:

        Edwards, Sebastian. (2002) The Great Exchange Rate Debate after Argentina, The North American Journal of Economics and Finance, Volume 13, Issue 3, pp. 237–252.

        But little Stevie cannot bother to READ this excellent paper so he cuts and pastes Wikipedia? Come on dude – this is an economist blog not some Steno Sue shop.

      3. Macroduck

        Dollarization creates a shortage of cash unless the dollariIng cou try has a pretty healthy balance sheet. Theory is one thing. Living day to day, quite another.

        Argentina has very little access to U.S. reserves or currency. How does the average Charlie Paycheck buy food if there’s a shortage of cash?

        The babysitting economy and India’s elimination of large-denomination bills both offer examples of things that can go wrong when dollarizing.

        1. Steven Kopits

          A number of countries, mostly experiencing hyperinflation, have dollarized. Ecuador is one example:

          In the late 1990s, Ecuador experienced a severe economic crisis due to a combination of low oil prices, the low tax base of the non-oil sector, and big public sector wage increases.[6] The value of the sucre fell drastically, and the inflation rate galloped to 96.1 percent in 2000.[7] Ecuadorians first started adopting dollars informally in an effort to avoid losing their purchasing power, and massive capital flowed out of the country due to the exchange rate crisis.[8] In the same year, in order to halt capital outflow and hyperinflation, Ecuador decided to substitute its currency with the U.S. dollar. [9] The decision to dollarize the economy slowed hyperinflation, stopped the free fall of sucre, and stabilized the financial market, all of which significantly helped resolve the economic crisis. Although the exact impact of dollarization on Ecuador’s economic growth is beyond the scope of this study, after dollarization, Ecuador has enjoyed an average annual economic growth of 4.4 percent, higher than many Latin American countries.

          I am not an expert in the dollarization process, nor does it much interest me. I can assure you that there are quite hefty sums of dollars held under mattresses in Argentina. Probably other stores of value as well. When my mother worked as a secretary in Buenos Aires in the late 1950s, she would literally run out of her office when paid to buy gold, which was then reconverted into local currency when my parents went shopping. I imagine there’s plenty of that going on. But I don’t know the specific numbers related to Argentine dollarization. It may be impossible, for all I know, but other countries have done it.

          The underlying issue, however, is the same in any case: Unsterilized money injections to cover budget deficits. In a dollarized world, Argentina would have to borrow on international markets to cover such deficits, and it can’t do that right now. That means either big tax increases or big spending cuts. Good luck pushing that through on a cynical Argentine public.


          1. pgl

            “I am not an expert in the dollarization process”

            You are not an expert in a lot of things. But you still bore us with your worthless bloviating.

          2. pgl

            “In the late 1990s, Ecuador experienced a severe economic crisis due to a combination of low oil prices”

            You missed the importance of this statement, which is weird as you pretend to be THE expert on the oil sector. I guess you did not know that oil exports represents 35% of their total exports and about 10% of their GDP.

            Of maybe you did not know how low oil prices were in the late 1990’s. Now any real expert would have noticed this right away. But not Stevie boy.

    4. Moses Herzog

      A quote from JPMorgan Via FT
      “History shows that participation rate usually increases between the primaries and the general elections by about 4%-pt on average. That said, given the historically low participation rate and the strong underperformance of Massa and Larreta vis-à-vis polls (by about 4%-pt each), it seems fair to assume that participation rate could grow even higher than that observed on average. Against this backdrop, a higher turnover rate in the general elections could favor Juntos por el Cambio and Union Por la Patria, suggesting higher upside for traditional parties in the general elections as compared to Milei, which we see closer to its ceiling in terms of vote intention.”

      Still, enough chanciness (see how I dodged the dirty “U word” better than Walter Payton juking Andre Tippett??) to effect markets.

  8. Moses Herzog

    In the callous “couldn’t care less” dept, this stuff with China’s property market, defaulted bonds, ineffective Covid policies, will create much cheaper car gasoline in about 2-3 days, so if you can hold out on refilling your tank to about Thursday–Friday, you get it cheaper than if you refill this afternoon. That’s free wisdom from goofball Moses. And you won’t even need a James Hamilton continuous time series to figure that one out. No refunds from Uncle Moses if you refill today.

    If you purchase gasoline today, you’re “working on ‘CPT’ ” “CoRev Peabrained Time”

  9. pgl

    EV IPO and the Elon Musk of Vietnam!


    VinFast Auto Ltd. soared on its first day in the public markets, boosting the fortune of its billionaire founder….The company was established by Vuong in 2017, and forecasts sales will reach 45,000 to 50,000 this year. It began building a factory in North Carolina last month. Vuong and his relatives have invested at least $300 million into the automaker.
    Vuong moved to Ukraine in the early 1990s after studying geo-economic engineering in Russia. He started a business making instant noodles which was sold to Nestle SA in 2010, nine years after he had returned to Vietnam.

  10. Steven Kopits

    As I have said now for, what, seven years, China can’t both threaten the global community and expect to trade with them over the long haul The Ukraine war has highlighted just how great the risks are.

    The central problem in China is that its governance structures no longer meet the requirements of the country. That is, property rights are vested in one man, Xi. Prior to Xi, the Party held property rights, but exercised them more in a negative, than positive, sense. Put another way, the public lacked formal property rights, but the Party will willing to act as those the public did, in fact, have at least some of those rights.

    Under Xi, were are returning to a more totalitarian mold, in which he expects both negative and positive property rights, in the sense that nothing can be done without his approval. For a major, sophisticated and complex society like China, that will really throw some sand in the works.

    China needs democracy, but not because it is ‘morally superior’ or the like, but because of where property rights vest. In the current system, property rights vest in Xi. He can take away anything from anyone. This makes China an unreliable partner in international affairs. It’s a risky and scary country today.

    By contrast, were China a democracy, property rights would vest in the public, and their objective function, as we have discussed, is very different from that of an autocratic. The public wants property rights protected by rule, that is, rule of law. With this transition, China could move itself out of the ‘losers’ column, with friends like North Korea, Eritrea, Russia, Laos and other dark places; and instead take a or the leading role among the rule-of-law countries, that is, everyone else but the losers.

    Democracy is China is not a moral imperative, it is a functional requirement. Without it, China is stuck. In the best case.

    1. Moses Herzog

      Have you “adjusted” your time frame for when the countryside villagers throw Xi Jinping off the 44th floor terrace?? You said anytime between now and the year 2063, correct?? Can I still quote you, on that gutsy smidgeon of time, for your prediction on Xi’s violent overthrow to play out??

      1. Steven Kopits

        I have not. 2025-2026 remains the pro forma period. The caveat on this is that I have not adjusted China’s GDP for over-reporting by the government. Some think China’s GDP is materially lower than the country’s government reports. I think there is some truth in this, but how much? I haven’t run the numbers myself.

        In any event, on reported GDP, China turns to democracy in the next few years, or alternatively, must withdraw from the world or start a world war. I don’t have a handicap on any of those. As far as I am concerned, all are about equally likely. I’d note that historically China has withdrawn from the world.

          1. Moses Herzog

            The truly “shocking” thing in Kopits’ reply was it contained a “caveat” i.e. “I’m making a prediction, but if my prediction ends up being blatantly wrong, you can’t hold me to it” I still can’t believe the moron didn’t make it as a MAGA White House advisor. I’m not even joking. MAGA incompetence is encoded into Kopits’ genes. How on Earth did the man not get into the MAGA White House?? In the job interview did he forget to bring the Happy Meal with Hasbro toy for orange crinkly guy??

            Do you think if Kopits even made a serious legit effort to make a legit forecast on Chinese GDP (a concerted effort, nevermind a orthodox economic “model”) that he wouldn’t/couldn’t do it without throwing in about five caveats. The man is hilarious. Exasperatingly annoying, but still you can’t help but not lose the soda pop through your nose at his pompous…… buffet of refuse.

          2. Moses Herzog

            I still think that if Kopits and Barkley Rosser had made a double album vinyl LP, it could have been the best selling and most comedic media event in economics history:

            Highlights for those too lazy to click the hyperlink (you’re missing out on so much, including replies by yours truly:

            “Rumors are swirling that Xi may step down. If that’s true, it’s huge.”

            “So imagine my surprise when a story popped up that Li Keqiang was taking over the running of the economy.” [ <<—Moses here. Li Keqiang has since retired from politics ]

            “Thus, sidelining Xi and elevating Li is absolutely the right thing for China, and indeed, for the Communist Party. There is speculation that Li would, in steps, turn China into a democracy, along the lines of, say, the political development of Taiwan or Korea. Count on it.”
            [ Moses here, I like the way Kopits’ “counting on it” sort of hammers all of his “salient points” ]

            “A key issue exercising the minds of the Politburo will be the prevention of the re-emergence of dictatorship while retaining the ability to govern.” [ Moses here. Kopits proving his “mastery” of Chinese insider politics by pointing out the Communist Politburo’s “intense fear of dictatorships” ]

            “Let me again reiterate that China and the Chinese are not inherently inferior to any other culture or people in East Asia (far from it), and all of these have become democracies by the time their per capita income hit a certain level, a level which China will achieve around 2026.” [ Moses here. I like how Kopits clears up the, uh, “general confusion” that Chinese are “not inherently inferior to any other culture or people in East Asia”. As we all know / exaggeratingly clears throat / cough cough / all of the world had been very confused over this until Kopits’ declaration that Chinese “were not inherently inferior”. But Kopits never cleared up the Chinese noodles vs Japanese noodles vs Korean noodles vs Vietnamese noodles controversy, which will rage on and be our scourge until Kopits clears this perennial debate up with his expounding of “deep knowledge”. Oh the pain…… of not knowing whose noodles are best. The intense pain…… Please tell us Kopits]

            “At the same time, I don’t think China is going to shrink back into its box.” [ Moses here, this part is confusing, as more recently Kopits adds in more of his beloved “caveats” and seems to give this as one of the 3 possible outcomes. You know, if Kopits is wrong, but “not wrong” or unless he predicts something he is not predicting. For example, similar to Prof. Rosser’s “not~~not” predicting things happening in Ukraine ]

      2. Steven Kopits

        I did not, by the way, call for Xi’s violent overthrow. I said China faces three fundamental choices: War, turn to democracy, turn inward with autocracy. Xi is currently taking the country on the latter path, and this would be consistent with the historical behavior of Chinese emperor’s almost without exception. But China was not a middle class country at the time.

        The most logical step would be for Xi to call elections, to be the George Washington of China. That’s really his strategic play. All the rest end up in some version of tragedy. Nothing violent about that. Or Xi could be ousted by the politburo; or we could see a mini-civil war along the lines of 1991 Russia. There are also worse outcomes.

        1. Moses Herzog

          I want to say something, while I’m having a few drinks here–I know you didn’t “call for” Xi’s violent overthrow. This is why I really kinda hate you Kopits. You know “call for” and “predict” have different meanings. But you attempt to create confusion by conflating the two. You predicted Xi very well might be overthrown before or near 2026 in strong language That’s why you are a shit person. Your lies make you a shit person

    2. David O'Rear

      Mr Kopits,
      Please provide at least a shred of evidence of anything in your little essay.
      Just a fig leaf?

      1. Steven Kopits

        Here you go, David. From Reuters three days ago:

        China State Council issues guidelines in bid to increase foreign investment

        China’s State Council issued guidelines on Sunday that it said would further optimize the country’s foreign investment environment and attract more foreign investment.

        The State Council said in a document containing 24 guidelines that authorities should increase protection of the rights and interests of foreign investors, including strengthening enforcement of intellectual property rights.

        The document also announced guidelines to increase fiscal support and tax incentives for foreign-invested enterprises, such as temporarily exempting withholding income tax for foreign investors’ reinvestment of their profits into China.

        The State Council said it would explore a “convenient and secure management mechanism” for cross-border data flows. The proposal comes amid tensions between authorities and international enterprises, including global accounting firms, over data security.

        China has sought to court foreign capital as its economic recovery from the COVID pandemic slows in the face of weak export demand from key trade partners and ongoing tumult in the country’s property market.

        However, Beijing has so far struggled to attract foreign enterprises and investors, which are wary of political risk in an environment that increasingly prioritises national security measures, and concerned about the impact of deteriorating relations between China and many Western countries on their operations.

        I think this piece vividly illustrates the tension between rule of man and rule of law. It further illustrates the challenges of trading with people you are threatening. After a while, it scares them. And China is the ultimate in scary. Russia is a nuisance. China can end the post-Enlightenment world as we know it. Put another way, the one luxury China cannot afford is to present itself as scary, intimidating and threatening to the rest of the world.


        1. David O'Rear

          So, sort of like “Buy American,” is it?
          That’s the best you can do?

          And that covers “ The central problem in China is that its governance structures no longer meet the requirements of the country,” and the “only democracy can save China,” does it?

          Try again, sir.

    3. pgl

      You’ve been boring us with your zingoist babble for only 7 years? Huh – and it feels like an entirety.

  11. joseph

    Moses: “How much of this could have been avoided simply by not being too arrogant to accept many nearly free offers of effective Covid-19 vaccines when China didn’t have an effective vaccine??”

    China had a very effective vaccine and it was much cheaper than the mRNA vaccines. China also had a much more effective vaccination program than the U.S and higher rates of vaccination and much lower death rate than the U.S early on.

    But then for some unfathomable reason they simply stopped. They didn’t follow up with a booster program and they failed to get a large portion of the elderly vaccinated. It’s still a mystery how a country that could physically lock down billions of people couldn’t get nearly 100% vaccinated and boosted. This wasn’t a failure of technology but a failure of policy.

    Really, the China hawks should just stop with the jingoism about superior American technology. mRNA vaccines are great because they can be formulated and manufactured so quickly. But in the long run they are not a superior vaccine. There are lots of non-mRNA Covid vaccines being using by the billions that cost a couple of dollars a shot that are very effective and definitely more cost effective than $100 mRNA vaccines.

    1. Moses Herzog

      @ joseph
      Respectfully to you Joseph, the facts don’t bear out your contentions. And most scientists and those specializing in epidemiology would tell you mRNA vaccines are much more effective. Which is probably why China has made major efforts to produce and approve for use an mRNA vaccine:


      I make a pretty conscientious effort not to attack China government decisions “just for the sake of attacking China”. I do a lot of self-analysis and self-consternation in efforts not to do that. China can do as they like, but for the love of God and all that is holy, it would be nice if most of the Chinese government’s decisions weren’t both self-defeating and self-destructive. But you meet individuals like that, who hurt themselves continually and repeatedly and go around constantly hauling out “the victim card”. So if we meet individuals who are like that, why wouldn’t nation-states take on that personality/mantra?? It seems that is how it might go.

    2. Ivan

      There has been decades of failures to make traditional vaccines against Corona viruses. Only after mRNA technology was introduced did we get something truly effective. The main biological reason is that when the pathogen is too dangerous to use weakened virus for a vaccine, mRNA presents the best way to express the virus in natural target cells and induce a robust immune response with lasting memory. If you want to use less effective technology you have to have a much better vaccine compliance rate. So yes China also had a failure of policy and/or execution.

    1. Ivan

      The Fed is supposedly to focus on unemployment and inflation – not GDP. So as long as the robust GDP numbers don’t induce inflation they should not have any effect on rates.

      1. Macroduck

        I agree, but…

        “Should not” is the critical thing. If there is a lot of output-gap thinking inside the Fed, then the inflation mandate is kinda sorta an output gap mandate.

        Since so much of the evidence over the past couple of decades indicates that NAIRU is not easy to find, inflation isn’t as simple as money growth or the Phillips curve or the output gap or productivity shocks, there needs to be a willingness to be flexible. Instead I see evidence of a good bit of inflexible output-gap thinking.

  12. pgl


    Short-term government bond rate for China has dropped below 2%. Now when one points out that short-term real rates in China are lower than short-term real rates in the US, JohnH goes off on one of his fact free tirades of pointless insults.

    After all Jonny boy insists real interest rates are the cats meow and he also insists China is far superior than the US at everything. It must be nice to live in a fact free world!

  13. pgl

    Back in the US Home Depot thinks inflation is near zero:


    Home Depot HD 0.66%increase; green up pointing triangle expects cost inflation to ease in the back half of the year as pandemic-era pressures that plagued its supply chain finally recede. Chief Executive Ted Decker said on a call with analysts Tuesday that commodity inflation in the company’s second quarter declined year over year and is down meaningfully from peak levels. Inflation in product and transportation costs is coming down, and new requests from suppliers for price increases are “negligible” at this point, he said. “Net new requests for costs, and certainly cost increases in the supply chain, that’s completely abated,” Decker said.

    And we were told Home Depot was responsible for high lumber prices by economic Know Nothing JohnH. Of course, anyone worried about HD’s profit margin, it has always been insanely high and continues to be so.

    1. JohnH

      Pgl just makes it up as he goes along…and he can find nothing to substantiate his BS that JohnH said that “Home Depot was responsible for high lumber prices.”

      Another day…more like from pgl.

      1. pgl

        Noting an earnings report is making things up from the troll you thinks reading a single earnings report is a substitute for reading 10K filings? Gee Jonny – get a mirror. You’ll see the most two faced troll ever.

      2. pgl

        JohnH said that “Home Depot was responsible for high lumber prices.”

        Awww – you did not use this precise line. But you made this claim using different words many times. And you deny it now? Seriously? Enjoy Guide for a Married Man (1963) especially the Joey Bishop scene.

        1. JohnH

          Yeah, yeah, yeah…pgl just making stuff up as he goes. Of course, he can’t back up anything he says…

  14. pgl

    Kevin Drum was impressed by this from the WSJ:


    On Tuesday, the market’s best guess at the real, after-inflation, cost of money—the yield on 10-year Treasury inflation-protected securities, or TIPS—hit 1.89%, the highest since 2009 and back well within the range of what once counted as normal for the economy. America has put the era of low rates behind it.

    Wait – this blog featured a guest post from Dr. Frankel that had the same news and a lot more. Kevin – come on. We read your blog. Maybe you should read this blog.

  15. pgl

    I usually ignore Steve CHARTS Rattner but this was interesting as it relates to Trump’s crooked son in law:


    Economic analyst Steven Rattner on Monday shared a pie chart showing that all but 1% of the $3 billion in investments in former President Donald Trump’s son-in-law Jared Kushner’s private equity firm Affinity Partners came from foreign sources after he “spent much of his White House tenure cozying up” to Saudi Arabia and Crown Prince Mohamed bin Salman. The Saudis invested $2 billion in Kushner’s fund while the United Arab Emirates and Qatar each added another $200 million. About $625 million came from other non-U.S. sources while only $31 million came from sources inside the U.S. Rattner told MSNBC that he’s “never seen this” in 40 years in the business. “I’ve never seen somebody get two-thirds of their money from a single investor. Usually a single investor might be a few percent of the fund, might be 5 percent, occasionally 10 percent,” he said. While Kushner has hired some people for his fund, “I’ve seen nothing else about what he’s actually done with the money,” Rattner continued.

    1. Moses Herzog

      Terrific find. Thanks for sharing. I keep wondering why no one on the left discusses trump’s children, who are abundant with actions worthy of public derision. Junior and his fornicating slag showing up to a Republican Party convention high on God knows what drug, and screaming at the audience. Damn man, I feel guilty hours after I type something largely harmless while drunk online. How does she shame herself to an entire nation and then go on like all she did was whistle in the backyard hammock???



      How do Guilfoyle and Junior get “a pass” from Democrats in Congress, while Democrats watch Hunter being thrown on the burning hot orange coals?? Republicans take bricks and bash them into Democrats’ heads, while Democrats with a platform stand there with their hands in their pockets mumbling faintly “Gosh, isn’t that kinda sorta rude to blame the President for a long since adult son’s behavior?? Gee….. Gosh, boy howdy…… Well let’s go see what’s in the Congressional canteen soda machine, if we hit it before noon they’ll still have some Dr. Pepper and when we get back to the Congressional floor Republicans will stop bashing us for the TV news cameras. Right??”

      Have Democrats learned nothing from what the results are when all they can manage in response to severely caustic verbal attacks is 20 years of Pelosi’s shit-eating grin?? This is what Democrats learned?? Continue on being the punching bag?!?!?!?!

    2. Macroduck

      The NYT had this to say last year:

      Before Giving Billions to Jared Kushner, Saudi Investment Fund Had Big Doubts

      “Six months after leaving the White House, Jared Kushner secured a $2 billion investment from a fund led by the Saudi crown prince… despite objections from the fund’s advisers about the merits of the deal.”

      “Those objections included: “the inexperience of the Affinity Fund management”; the possibility that the kingdom would be responsible for “the bulk of the investment and risk”; due diligence on the fledgling firm’s operations that found them “unsatisfactory in all aspects”; a proposed asset management fee that “seems excessive”; and “public relations risks” from Mr. Kushner’s prior role as a senior adviser to his father-in-law, former President Donald J. Trump, according to minutes of the panel’s meeting last June 30.”


    3. Ivan

      Yet according to Fox the scandal is that Joe Biden’s son sat on a board and was paid $50K making his whole family a “crime family”. You can’t make this up, yet they continue to do just that.

    4. Macroduck

      And why are we giving Steve Mnuchun a pass?

      “After Donald Trump lost the 2020 election, Mnuchin established an investment fund, Liberty Strategic Capital. The fund obtained funds from the Saudis, Emirati and Qatari sovereign wealth funds.[53] According to the New York Times, “The scale of Mr. Mnuchin’s fund and its investments from countries where he traveled as Treasury secretary have raised questions about whether he used his government role to enrich himself.”


      It was a scandal:


      But what wasn’t in the Trump administration?

      1. pgl

        “The scale of Mr. Mnuchin’s fund and its investments from countries where he traveled as Treasury secretary have raised questions about whether he used his government role to enrich himself.”

        Have you ever seen his wife? One has to wonder how someone as ugly as he is landed such a hottie. Until you realize she is the ultimate gold digger. So Stevie needs to enrich himself so as to keep that gold digging hottie.

  16. pgl

    With all the talk of China’s debt relative to GDP, maybe something that provides the details on what this story claimed would be helpful:


    China’s Overwhelming Debt Burden Points To Still Deeper Problems
    The size of China’s debt problem is truly staggering. At last measure, debt of all sorts – public and private and in all sectors of the economy — amounted to the equivalent of $51.9 trillion, almost three times the size of China’s economy as measured by the country’s gross domestic product. This is the highest level recorded in the 27 years since Beijing first began to track such statistics. Matters seem set only to get worse. According to the Beijing-backed National Institution for Finance and Development, local authorities are set to issue new debt next year of some 4 trillion yuan, the equivalent of $570 billion. China’s debt overhang far exceeds the burdens facing the United States. As recently as 2020, total debt in the United States relative to GDP exceeded China’s. But as of mid-2022, China’s relative debt burden stood 40 percent higher than America’s.

    Of course this adds up government debt, household debt, and the debt of corporations (both state owned and private).

    Now I know certain whiny know nothings who plague this blog with stupidity are going to scream the US has a lot more debt relative to GDP than China does but that applies to government debt. China’s private sector tends to be much more debt financed v. equity financed that the private sector of the US.

    And yea there is one troll wants to focus on “external” debt even though he has no idea what net foreign assets are or the net income from abroad that is generated by this cross border holdings of assets and liabilities.

    So this Forbes story needs a little work from the adults here. To the know nothing trolls – do not bother as your comments are generally worthless trash.

  17. David O'Rear

    One of the reasons developing economies generally tend more toward debt than equity is the legal system. If you have a lien on collateral, you might get paid back, but if you have to sue your partners — who may have more shares than you — it all comes down to the courts.

    The most interesting comparison I’ve come across is Taiwan v. Korea. Equity was more common in Taiwan, because loans were too hard to obtain; in Korea, loans were relatively easy to arrange, at least for the largest chaebol.

Comments are closed.