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The Demoralization is just Beginning

geohot.github.io

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Re: The Demoralization is just Beginning

#171

Post by ryandamm »

csomar wrote: post #164
ryandamm wrote: post #16

Earlier quoted context omitted.

China has major structural weaknesses in its economy that are currently overshadowed by the US cr*pping its own and its allies’ pants. Specifically: there is not much of a home grown consumer economy; they have driven growth too heavily on exports and infrastructure build, leading to a massive overhang in building, a housing bubble that is teetering dangerously close to unwinding, and a major shortage of domestic con…

Since the pandemic China on Western TVs is about to "collapse". However, what I saw is new EVs, new Phones, record high exports, record high solar panels installations, new metros/airports etc... Something must be very wrong in your assessment, right?

https://carnegieendowment.org/china-financial-markets/2023/0...

I like Michael Pettis's analysis, though I'll grant you that the distortions he cites in the Chinese economy have gone on longer than he predicted possible. But the health of the Chinese economy is not just the visible things you cite, but also the distribution of assets and balance sheets in the economy.

Per Pettis (and other sources), the banking system is dealing with a large debt overhang in society. Pettis's proposed policy fix is to assign that debt to the state, to state-owned-enterprises, or to the corporate sector. Because the long-term growth of China's economy depends on being less reliant on exports, and having a more "normal" mix of domestic demand. There are nuances there, but Pettis does a better job than I do in explaining it.

The trouble is that it's not politically expedient to assign the losses due to (unrealized) bad debt to those entities. And the result is a slow, grinding failure in the housing sector. The government does have a tight lid on dissent, but I understand that the Chinese people are in a more precarious position than they should be due to many households having overinvested in nonproductive real estate projects. How that unwinds will be fascinating to watch, and extremely relevant to world economics and geopolitics.

To be clear, I really am hoping for the best for China and its people. The right policy is sometimes well-known but hard to execute, and that's the tragedy. (It's playing out now, in spectacular style, in the US.)

Re: The Demoralization is just Beginning

#172

Post by fwipsy »

hayst4ck wrote: post #170
ryandamm wrote: post #11

I prefer my economic takes from economists, or people who actually study these things. -there is more to an economy than manufacturing. Using manufacturing metrics to rate an economy is like scoring a soccer game based on how far your players run: in some contexts correlated with “winning” but in others it’s not. -gold is not a good currency or basis for monetary policy. -these ideas only sound self consistent withou…

I think I disagree, specifically because geohot does security. Security is fundamentally about finding the difference between what people wish or think is true, and what is actually true on a mechanical physical real and actionable level. That involves deep analysis skills and disregarding common consensuses in order to rebuild how things actually work from the ground up. Questioning establishment dogma is largely fo…

Your first paragraph is like saying "this train conductor does transportation, so we should let him fly a plane." Perhaps knowing security proves that the author is intelligent, and perhaps some of the same skills apply, but it's not a given that he will have good ideas, especially on fraught topics where it's easy to be misled by ideological bias. The author doesn't deserve any more consideration than any other outsider perspective.

Re: The Demoralization is just Beginning

#173

Post by ryandamm »

ryandamm wrote: post #171
csomar wrote: post #164

Earlier quoted context omitted.

Since the pandemic China on Western TVs is about to "collapse". However, what I saw is new EVs, new Phones, record high exports, record high solar panels installations, new metros/airports etc... Something must be very wrong in your assessment, right?

https://carnegieendowment.org/china-financial-markets/2023/0... I like Michael Pettis's analysis, though I'll grant you that the distortions he cites in the Chinese economy have gone on longer than he predicted possible. But the health of the Chinese economy is not just the visible things you cite, but also the distribution of assets and balance sheets in the economy. Per Pettis (and other sources), the banking syste…

A more succinct point: the US economy looked really strong in mid-2008. Consumption was very strong, but it turns out that consumption was fueled by unsustainable debt.

China has a serious debt problem in its economy. Not government debt like in the US, but shadow banking debt. My fear, based on reading Pettis primarily, is that the Chinese people will end up paying for that debt. Households that have expensive second homes as investment vehicles will suffer those losses (since there isn't sufficient population to fill those homes), unless those losses are socialized or redistributed.

Re: The Demoralization is just Beginning

#174

Post by __loam »

EmpireoftheSun wrote: post #9
jfengel wrote: post #6

For his solutions: "Brain drain" is what we had been doing for the past 80 years or so. It worked great. We're specifically driving people away now. "Gold standard" is an idea every sane economist rejected decades ago.

I dont think Brin Drain is a win-win outcome in a globalized world. USA benefits but at expense of mostly poor nations sending their elite talent.

Yeah that's the point.

Re: The Demoralization is just Beginning

#175

Post by karel-3d »

ryandamm wrote: post #11

I prefer my economic takes from economists, or people who actually study these things. -there is more to an economy than manufacturing. Using manufacturing metrics to rate an economy is like scoring a soccer game based on how far your players run: in some contexts correlated with “winning” but in others it’s not. -gold is not a good currency or basis for monetary policy. -these ideas only sound self consistent withou…

Well at least he is not writing how he got himself addicted to meth because he wanted an extra challenge

Re: The Demoralization is just Beginning

#176

Post by unclebucknasty »

rayiner wrote: post #42
Spartan-S63 wrote: post #25

Earlier quoted context omitted.

> But solution point 1 — brain drain the rest of the world — is an absolutely first rate policy. The fact that the US requires newly-minted PhDs educated here to get a different visa or leave is absolutely self-defeating. We should be welcoming skilled immigration from everywhere. Even better, let them keep their visa and if they revoke their citizenship, we'll relocate their entire family if they come from a repress…

> Brain-draining the world is really the key to cementing American Hegemony in a post-Cold War world. Why should we want that instead of an orderly, well-governed democracy? Do you think people in Sweden or Denmark are upset their countries aren't hegemons? And what would that do to the country? Do you really think that, say, the top 5% of India and China (100 million people) would do better maintaining a democracy t…

>Do you think people in Sweden or Denmark are upset their countries aren't hegemons?

Funny that you chose those two countries. Denmark is a founding member of NATO. Sweden is one of the two most recent admitted, almost a year ago.

My point is that it's U.S. hegemony that has protected its own democracy and that of liberal democratic Europe to a large extent.

Sweden and Denmark haven't been hegemons because they haven't needed to be.

Re: The Demoralization is just Beginning

#177

Post by ryandamm »

fwipsy wrote: post #172
hayst4ck wrote: post #170

Earlier quoted context omitted.

I think I disagree, specifically because geohot does security. Security is fundamentally about finding the difference between what people wish or think is true, and what is actually true on a mechanical physical real and actionable level. That involves deep analysis skills and disregarding common consensuses in order to rebuild how things actually work from the ground up. Questioning establishment dogma is largely fo…

Your first paragraph is like saying "this train conductor does transportation, so we should let him fly a plane." Perhaps knowing security proves that the author is intelligent, and perhaps some of the same skills apply, but it's not a given that he will have good ideas, especially on fraught topics where it's easy to be misled by ideological bias. The author doesn't deserve any more consideration than any other outs…

Yeah, there's a known problem with smart, technical people approaching fields about which they know very little. The analysis, to a third party, often sounds smart (the author is undeniably smart!), but without having expert context, you miss why it's so, so, so wrong.

And I'm not even an economics expert. I've just read more about it, or read more critically, than geohot. And I can tell you he's wrong, not because he's an outsider but because his analysis does not make sense.

Copernicus had well-reasoned, self-consistent arguments that incorporated previous models, and produced better results. This doesn't. There is a rubric for how one should score outsider contributions, even if you want to allow for revolutions in a particular field. This essay doesn't rise to that level.

In fact, it matches the first pattern -- smart person outside their field, makes ass of self -- much better.

https://en.wikipedia.org/wiki/Nobel_disease

Re: The Demoralization is just Beginning

#178

Post by troupo »

tomrod wrote: post #152
lxgr wrote: post #83

Earlier quoted context omitted.

But even in a world of only Bitcoin and no way to make alternate coins, all kinds of bad things are still possible, as there is no mechanism to prevent people from starting fractional reserve banking all over. The only way to prevent that is to somehow completely eliminate all trust from all economic activity. Without trust, breach of trust becomes trivially impossible.

Of course. My comment doesn't claim it doesn't. My only point was that BTC has limited supply. In almost all other ways, crypto is not great.

BTC being limited isn't great either. Because it only stimulates saving up.

Re: The Demoralization is just Beginning

#179

Post by unclebucknasty »

kawaiikouhai wrote: post #128
lxgr wrote: post #87

Earlier quoted context omitted.

My suspicion is that for a lot of people that grew up in and only know the US, there's a sense of impending doom if "American hegemony" ever were to be replaced by something else. But since there's no real practical experience of how that would actually feel (or rather, how a very high quality of life and subjective happiness are possible without an US salary in many other countries), they instead project from someth…

Exactly. I had this exact thought experiment of "What if America were no longer Hegemon". So, I looked at other historic examples. The British, Dutch, and Spanish. (You can add German/Austrian and the French, close contenders). They're all still very well-off!

What you're missing is the role the U.S. has historically played in preserving and protecting democracy in the world and, particularly, Europe.

If America was suddenly no longer a hegemon, it would be qualitatively different. There are other hegemons in the world that would step into the void left by the U.S., and it would be their influence that would be felt most the world over, including by the countries you named.

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