Messing with Mother Nature

Chinese Mass Wedding

Chinese Mass Wedding

China is worried. The all-powerful Communist Party has messed with Mother Nature once too often. For many years, they banned having more than one child per family. That led, not surprisingly, to an excess of male newborns over female newborns. (Accidents sometimes happened to infant girls, when it was boys who were desired.)

Although the Party has eased up on its child restrictions, there are two serious consequences:

  1. The number of marriages is dropping, possibly because many young men cannot find a sufficient number of marriage-age women to wed. I also remember reading stories about suicides of male factory workers because they had no hope of being able to raise a family.
  2. A disconcerting 500,000 elderly have wandered off—most of them suffering from dementia—partly because there are not enough children to bear the burden of their support.

China has been in this type of situation before. One of the decrees during the Great Leap Forward period (1958-1962) was that the “Four Pests” were to be eradicated. The pests in question were rats, flies, mosquitoes, and sparrows. One effect of killing massive numbers of sparrows was that the ecological balance was upset as crops were eaten by insects that were kept under control by the birds.

Maybe having too much power over men and animals is dangerous in the long run.


Meanwhile, Back in the Ukraine

Battle on January 10, 2014 at Kiev’s “Euromaidan”

Battle on January 10, 2014 at Kiev’s “Euromaidan”

The one Ukrainian author I have read is Andrey Kurkov, a Russian who lives in Kiev and considers himself Ukrainian. He is best known for three mystery novels, the first two of which feature a penguin named Mischa: Death and the Penguin, Penguin Lost, and The Case of the General’s Thumb.

During the 2013-2014 revolution that sent President Viktor Yanukovych to Russia requesting asylum from Putin, Kurkov kept a diary of daily events in Kiev, the Crimea, and Eastern Ukraine. It was published in 2014 as Ukrainian Diaries: Dispatches from Kiev. His mystery novels have a wry sense of humor which also carries over to this diary:

Posters and signs have been put up all over the country with images showing that all Ukrainians, after the signature of the Association Agreement with the EU, will become homosexuals. Even in the metro, each time you take an escalator, you have to pass dozens of these posters. In Kiev, he propaganda campaign is considered laughable, but I am afraid that in the east and in the provinces, people will naively believe that universal conversion to homosexuality is the condition imposed by Europe on Ukraine for the signature of the treaty. (November 28, 2013)

And: “Yesterday, Parliament announced an open forum day. Everyone was given the chance to speak. Or, in other words, no one listened.” (February 5, 2014)

Ukrainian Author Andrey Yuryevich Kurkov

Ukrainian Author Andrey Yuryevich Kurkov

Since it declared its independence from the former Soviet Union in 1991, the Ukraine has had a succession of governments that could only be described as a combination of thuggery and rapine—in fact, pretty much the sort of governing we could expect from a Donald J. Trump. You can see in Kurkov’s penguin mysteries the dysfunctionality of Ukrainian politics at work. Now, in the diaries, we see Kurkov losing sleep whether he would be dragged out of his flat by security forces, tortured, and killed.

Fortunately for us, he wasn’t. I look forward for his other works to be translated from Russian to English.





I have seen it coming over the years, the burgeoning diversification of wheeled transport for young people. When I first came to L.A. late in 1966, there was a concert film (which included the Rolling Stones) called The T.A.M.I. Show, which was filmed in 1964. It began with a prologue of a couple of young skateboarders rolling down a steep street in what looked like Pacific Palisades. I have even seen a few motorized skateboards recently that look clearly illegal, but their owners must think they are powerful chick magnets.

Of course, bicycles have been around since the 1800s, but now they are getting ever more popular, with occasional street closures called CicLAvia. (I remember getting stuck on Venice Boulevard in Mar Vista for over half hour during one of those.)

Next were inline skates, which infuriated bikers because skaters wound up taking too much of the lateral space in bicycle lanes as they moved from side to side.

Although scooters have been around since my childhood, the Razor scooter came in around 1999. (BTW, I’ve seen a few motorized versions of this as well.) Around the same time, the first Segways started coming out. And we mustn’t forget the infamous hoverboard, which is under fire for safety reasons.

I hesitate to think of what’s next. Unfortunately, the devotees of all these modes of transportation act as if they were the only game in town. Their devotees like to get into “the zone” as they speed up past all obstacles, such as stop signs, traffic signals, and unwary pedestrians.

Perhaps it’s like the United States as a whole, which is rapidly fragmenting into ever smaller subsets of wheeled transportation. In future, will there be separate lanes for pogo sticks? Will toddlers’ strollers be motorized and driven by their occupants? Will little red wagons ever come back?



The Chiltern Hundreds

The House of Commons in Session

The House of Commons in Session

Let us say that you were a member of Britain’s House of Commons and wanted to quit your job. If it were anyplace other than the United Kingdom, it would probably be a no-brainer. But in Britain, you have to apply to quit, whereupon you are assigned to a royal stewardship from which you can ease out of office. The two stewardships available for this purpose are:

  • Crown Steward and Bailiff of the Three Chiltern Hundreds of Stoke, Desborough, and Burnham—located in Buckinghamshire.
  • Crown Steward and Bailiff of the Manor of Northstead—located in North Yorkshire.

The Chiltern Hundreds figure in two novels by Anthony Trollope, Phineas Finn and The Three Clerks.

In 1624, the House of Commons passed a measure making it illegal for an Member of Parliament to quit or willfully give up his seat. The Act of Settlement of 1701, amended by subsequent legislation, MPs were excepted who accepted an office of profit under the crown. (Originally, MPs were not paid.)

Over the years, there have been several other crown offices which served the same purposes, but only the Chiltern Hundreds and Northstead remain.

Fast and Furious

Too Many Tragedies

Too Many Tragedies in Too Short a Time Frame

It seems that flags have been at half mast for so long— beginning with the Dallas police shootings—that one no longer knows which disaster is being commemorated. With the 24-hour news cycle, the shootings are coming fast and furious, and the border between events is being blurred.

When one big news event happens, it triggers a news orgy in which the particular story fills all the news time until it is abruptly replaced by the next disaster. I cannot help but think that all the breaking news stories work on the minds of disturbed individuals, making them think that a mass shooting would be a good idea.

I don’t think the perpetrators do it with suicide in mind, but, hey, their minds don’t work all that well anyhow. The San Bernardino shooters, for instance, thought they could stage a getaway. If one is unable to reason well, one gets a certain amount of magical thinking going that, once “the point” has been made, an escape path is possible. Killing multiple human beings with a Bushmaster, however, is so traumatic that it isn’t likely that the shooters could waltz out of the slaughterhouse they have created.

So I never ask why the flag is at half mast any more. It might as well always be at half mast. I wonder if the person who raises and lowers the flag even knows.


Belgian Cats Against Terrorism

General Bonkers Will Explain the Situation

General Bonkers Will Explain the Situation

When Brussels was placed under a terrorism alert in November, security officials requested that the public remain silent regarding ongoing counter-terrorism operations lest they alert potential targets of police raids. So how did the Belgians react? With cat pictures … hundreds of them! All relate in one way or another to the terror alert, but with a sense of humor that no one knew the Belgians had.

They Said to Stay Inside!

They Said to Stay Inside!

These are just three images for your enterrainment. For more images, I suggest you click here.

All Clear Yet?

All Clear Yet?

I wish to thank Martine for bringing these pictures to my attention.

Will China Overtake the U.S.?

Daniel Rohr of Morningstar Thinks Not

Daniel Rohr of Morningstar Thinks Not

The following article was published in March by Morningstar on the subject “What Will China Look Like in 2025?” I was rather surprised by its findings and would like to share it with you.

China’s faltering economy has sent shivers through the global markets in 2016, and for good reason. As the world’s second-largest economy and leading source of global growth for the past decade, China matters more than ever. Guessing what comes next for China and the implications for the rest of the world is an exercise fraught with uncertainty, but we believe China’s arrival at two major and near-certain inflection points will alleviate some of that uncertainty. First is China’s economic rebalancing. As we’ve argued for the past five years, excess capacity across broad swaths of the economy and mounting bad debt will force a transition to consumption-led growth. The second inflection point concerns China’s demographics. The country’s working-age population will shrink by 43 million by 2030, by which time China will have more seniors than the European Union, Japan, and the United States combined. These two inflection points shape much of our long-term outlook, which we’ve summarized here with 10 predictions for the next 10 years.

First, we expect China’s GDP growth to slow to less than half the pace of the past 10 years. The historical experience of economies making the transition from investment-led to consumption-led growth shapes much of this outlook. In every case, the rebalancing economy experiences not only a sharp deceleration in investment growth, but also weaker consumption growth. Historical precedent also suggests magnitude matters; the bigger the boom, the weaker the ensuing GDP growth. China’s boom has been greater in magnitude and duration than anything that has come before. In our view, consensus expectations, while moderated, remain too optimistic in the 5%-6% range. We expect GDP growth to average 1.5%-4.5% in the next 10 years. Attaining the upper end of that range would require major reforms to unleash household consumption, reallocate credit from the state to the private sector, and boost productivity at China’s bloated state-owned enterprises.

Second, we believe reforms are likely to disappoint, making even 4.5% GDP growth a challenge. Our skepticism is rooted in the inherent conflict between key reforms and Beijing’s two overriding political aims: control and stability. For example, we think it is unlikely Beijing will allow the major defaults that would be necessary to eliminate state-owned enterprises’ preferential credit access and reallocate credit to more productive borrowers. Doing so would risk massive social disruption and diminish the state’s control over capital allocation. For similar reasons, we doubt meaningful interest rate liberalization is a near-term prospect, as many state-owned borrowers would be unable to afford market-set interest rates. Consequently, the implicit wealth transfer from household savers to state-owned borrowers is likely to persist, hindering consumption growth.

Third, stimulus is likely to prove ineffective at best. Questions of whether Beijing will go back to its old growth playbook overlook evidence that the government has been trying to stimulate the economy since November 2014. Multiple interest rate cuts and reductions to the portion of deposits that banks must hold in reserve haven’t delivered the sort of boost they did in prior years. This is partly because of borrowers’ unwillingness to invest amid a deteriorating economic outlook, a reticence reflected in all-time low readings on the central bank’s loan demand survey. It’s also because of capital outflows from China, which we estimate at roughly $640 billion in 2015. The case against stimulus extends beyond doubts over its efficacy. Many of the problems China is dealing with today, from excess capacity to bad debt to falling prices, are the consequences of too much stimulus. At this point, stimulus is a shot of whiskey to cure a hangover.

Fourth, despite looser family-planning laws, we expect births to fall by 25 million versus the past 10 years. The female population of child-bearing age will fall by 50 million by 2025, with 41 million of that decline concentrated in women with the highest fertility rates: those ages 20-29. Assuming no change in age-specific fertility rates, births would decline 30% by 2025. A comparison of Chinese fertility rates versus those of neighboring countries at similar points in their economic development suggests economic and cultural factors account for China’s low birth rate, not government policy.

Fifth, China’s urban population growth will fall by nearly half. Over the past 10 years, as China urbanized roughly 200 million people, it traversed the steep portion of the urbanization-to-income curve we observe globally. Looking ahead, that curve will flatten considerably, with lower urbanization growth for each percentage point of GDP growth. Moreover, China will be moving along that curve at a slower pace because of weaker GDP growth. We forecast China will urbanize 115 million over the next 10 years. While this would mark a significant deceleration, it would nonetheless see China add the equivalent of Japan’s entire urban population.

Sixth, we believe the yuan will fall 20% against the U.S. dollar. Defending the de facto dollar peg amid massive capital outflows has cost the People’s Bank of China billions in foreign exchange. Unless the underlying causes of capital flight are addressed, including expectations of falling interest rates and a weaker yuan, we see little reason for those outflows to end. By devaluing the yuan to a level approximating market expectations, Beijing would reduce a major incentive for capital to leave China. A fair value estimate that draws on the global relationship between market exchange rates and purchasing power parity exchange rates across income levels suggests that level is roughly CNY 8 per $1.

Seventh, we expect China’s economic rebalancing to trigger another “Dark Age” for industrial commodities such as copper, coal, and steel. China is the dominant consumer of industrial commodities and has accounted for the overwhelming majority of global demand growth in the past decade. We forecast China’s industrial commodity demand to decline in the next several years as investment growth wanes. As a result, demand growth globally is likely to expand far more slowly than global GDP. Historically, sub-GDP demand growth has been associated with falling real commodities prices, a situation that prevailed in the decades before China’s investment boom.

Eighth, we doubt India will fill China’s shoes as far as commodity demand is concerned. India is the only country that can match China’s demographic heft. The fact that Indian GDP per capita now approximates that of Chinese GDP per capita 10 years ago has led many to suggest that Indian commodity demand is on the verge of takeoff. This line of thinking confuses the origins of China’s commodity demand growth. It wasn’t so much China’s level of development a decade ago nor the economic growth it registered in subsequent years that led to the country’s insatiable appetite for commodities. Rather, it was the heavy investment orientation of the Chinese economy. Unless India duplicates China’s growth model, India will not deliver the same boost to global commodity demand. Because of India’s pluralistic political structure and because New Delhi lacks Beijing’s tools to shape economywide capital allocation, we doubt India’s growth pattern is likely to follow that of China.

Ninth, we believe China’s health spending will more than double. We expect healthcare outlays to grow far faster than GDP for a couple of broad reasons. First is the tendency of healthcare to claim a larger share of total spending as incomes rise. This trend is evident globally and within China itself. Second is the fact that China is aging at an incredible pace. China’s population 65 and older will be 50% larger by 2025 and 130% larger by 2030, by which time it will have more seniors than the EU, U.S., and Japan combined. China will be an “old” country by middle-income standards, and we expect it to spend proportionately more on healthcare than the typical middle-income country.

Tenth, despite many high-profile predictions that China will overtake the U.S. as the world’s largest economy in the relatively near future, we don’t see that happening in the next decade. At prevailing exchange rates and assuming the U.S. musters 2.2% annual GDP growth (in line with the International Monetary Fund’s forecast) while China grows at 4.5% (the upper end of our 10-year forecast), the U.S. economy would be roughly 30% larger than China’s by 2025.