Posts Tagged ‘Economics’

Report On The State Of Hillsboro

Sunday, February 25th, 2024

Hillsboro is a large town/small city of some 8,000+ people that most Texans have probably driven through at some point. They’re a county seat, sit smack dab in the great plains agricultural belt and have some light manufacturing, but their main economic advantage is being right where I-35E and I-35W join/split to I-35 traveling south to Waco, Austin and San Antonio. Hillsboro is perfectly positioned to be a road trip snack and restroom break stop.

For years one of Hillsboro’s most notable features was its outlet mall, with a variety of national brands. I bought a Fossil watch from their store many, many years ago.

Well, I traveled through there to and from the Metroplex for a funeral, the outlet mall is dead. Though the two open air mall segments have space for some 86 stores, there’s now precisely one open, a Bath and Body Works. The Hillsboro outlet mall was already ailing before the Flu Manchu lockdowns, but that seems top have accelerated the decline. (San Marcos outlet malls, also on the I-35 corridor, seem to done a much better job weathering the economic headwinds.) This would suggest Hillsboro has entered a period of economic stagnation and decline.

Not so fast! Buc-ess, the Texas mega convenience store chain, is opening a store in Hillsboro. Also, Buc-ess pays pretty good wages for a convenience store: “$18.00 * Medical * Dental * Vision * 3 Weeks Paid Time Off * 401k 100% Match up to 6%.”

This is the point where I’m supposed to insert some pithy “when one door closes another opens” aphorism. But I rather strongly suspect this particular mall closing scenario plays out very differently in a blue locale like New York or California, where everyone with the means to do so is moving away from those failing high-tax, high-crime states as fast as they can.

There’s no one coming to save those towns.

Zeihan on Evergrande: 1.5 BILLION Unsold Condos?

Tuesday, February 6th, 2024

I haven’t been updating every twist and turn of the Evergrande collapse, but we’re going to look at it again because this Peter Zeihan video has a fairly staggering statistic. He asserts that there are 1.5 BILLION (with a B) unoccupied housing units in China. Even though we already knew about the ghost cities, that’s like an entire ghost nation for a China that was already headed down the economic crapper.

  • “A Hong Kong court has ruled that China’s largest property development group, Evergrande, is bankrupt and needs to be broken up. This is something that the Chinese government has spent a lot of effort on the last two years not happening.”
  • “There’s two big things that dominate the Chinese economy. The first is something I call hyperfinancialization: The idea that the government both de facto confiscates the savings of the citizen population so it can only go into projects funded by Chinese State Banks, as well as massively expanding the money supply to a tune of like almost triple what we have here in the United States.”
  • “It’s a public stability political control approach to finance. It’s not about profit, it’s about throughput, because throughput requires a lot of bodies.”
  • “Number one, you get companies like Evergrande, who gorge on all this bottomless supply of debt to build build, build, build, build, even if there’s no demand.”
  • “Second, you get a population who knows that their private savings is almost worthless, because the Chinese government is forcing them to keep it in the state banks, and they want to put it into a hard asset that preferably the state can’t control. And if they can’t get their money out of the country, then the next best thing is a hard asset in the country, which typically is property.”
  • “You have somewhere probably in the vicinity of 1.5 billion units in the country that have never been lived in, never will be lived in. So you’re talking about 100% overbuild, conservatively. Some estimates say it’s as high as three billion, which is just so far beyond stupid.”
  • This is such a huge number that I’m having trouble believing it. After all, 1.5 billion is more than at least once current estimate for the current total number of houses in Asia. Is there supporting evidence? Well, I found this.

    “How many vacant homes are there now? Each expert gives a very different number, with the most extreme believing the current number of vacant homes are enough for 3 billion people,” said He Keng, 81, a former deputy head of the statistics bureau.

    “That estimate might be a bit much, but 1.4 billion people probably can’t fill them,” He said at a forum in the southern Chinese city Dongguan, according to a video released by the official media China News Service.

    That’s people, not homes. Still, even if you cut it in half, to 750 million vacant condos, that’s a huge number. That’s the equivalent of 30 empty Shanghais.

    Back to Zeihan:

  • “Evergrande going down means that their debts aren’t going to be serviced anymore, and the physical assets they have are going to be parceled up and foreign investors are going to be coming in seeing what bits that they can get.” Any foreigners investing in Chinese real estate need their heads examined.
  • “These things are things that the Chinese Communist Party would not normally allow to happen, so there’s a couple ways that this can go, none of them are good.”
  • “Option number one is we follow a western style bankruptcy and restitution program where this system is broken up and a lot of their assets are sold at pennies, maybe dimes, on a dollar.”
  • “You can count on private citizens being up in arms. I mean, the best estimate I’ve seen out of China is at 70% of total private savings is wrapped up in real estate, and most of these assets are worth no more than 10 cents on the dollar.”
  • “You have a fire sale of the single largest player which controls one sixth of the market, holy shit, things are going to get real very, very, very quickly.”
  • “Option number two is that the Chinese step in and abrogate the Hong Kong ruling. Now legally this cannot happen, but the Chinese Communist party is not really big on legal details when it comes to Hong Kong in particular.”
  • “Then Evergrande goes on some sort of state drip and everything with the system just kind of limps on, with the understanding now that Hong Kong has no legal authority over its own holdings, which will start an exodus of what few international firms are still there.”
  • “Regardless how this goes, don’t expect anything in the market to get better.”
  • “Evergrande may be the biggest player in this market, but it is by far not the only one who’s been doing stupid things like this, building condos that have no demand or running it like a Ponzi scheme. Every development company in the country basically operates this this way, and the second and third largest players in the industry are state-owned.”
  • “Even if all of a sudden this place were run by a bunch of Austrian economists, it’s too late.” Because of the one-child policy, there simply aren’t enough people of home-buying age.”
  • “I don’t want to say anything overly dramatic as ‘This is where it all starts to fall apart,’ because we’ve had a lot of things like that go down in the last 18 months. But this cuts to the core of what enables the average [Chinese] citizen to actually support the government, and there’s no way we move forward from this without a lot of side damage.”
  • The Chinese economy is already sucking. If the housing oversupply is really as bad as Zeihan makes out, China is in for an economic upheaval that makes 1929 look like a mild case of the hiccups.

    Ukraine Switching To A War Of Attrition Against Russia?

    Sunday, February 4th, 2024

    Two videos on increasing Russian logistics difficulties in the Russo-Ukrainian War. First up: A video that suggests Ukraine has switched from a territory recapture strategy to an attrition strategy.

  • “Russia is burning whether it’s oil terminals on the Baltic and the Black Sea, factories in far-flung Siberia, or military bases in Crimea, it seems almost every day something bursts into flames in Putin’s backyard. And Ukraine is thought to be the one behind it.” It’s an open question whether structure hits in places like Siberia are Ukrainian “werewolf” teams operating behind enemy lines, or native anti-Putin/anti-war (or even anti-Russian) partisans, but the effect seems the same: Russia now has to worry about attacks to its military, transport, energy, and manufacturing infrastructure far from the frontlines in Ukraine.
  • Zelensky warned Putin that if Russia attacked Ukrainian cities with indiscriminate missile attacks again, Ukraine would hit back. When it did, “Ukraine struck back a fire at the electrical substation outside Moscow, plunged three districts of the capital into darkness. Water pipes also burst, leaving people freezing in their homes. The plague of accidents soon spread to the cities of Omsk and Novosibirsk, deep in Siberia, which were left without heating as temperatures fell below -2.” Actually, Omsk and Novosibirsk aren’t “deep” in Siberia, because the place is so vast there another five time zones east of there.
  • “Soon after attacks began on critical infrastructure, including oil refineries upon which Putin’s economy relies. To date, three refineries have been blown up or set on fire, including two which were hit by long-range Ukrainian drones. One of those the Ust-Luga oil refinery near St. Petersburg, is almost 600 miles from Ukraine.”
  • “Railways and factories have also been blown up or burned down at the same time the Ukrainians have stepped up their campaign against Crimea.” Naval successes we’ve covered here already skipped.
  • At this point the video argues that Ukraine’s strategy was to liberate Ukrainian territory, no matter the strategic value. I don’t think that was the case.
  • Following the “failure” of the summer offensive (I would say “limited gains”), “Ukraine is digging in and refocusing liberation of territory is no longer the main goal hitting Russia where it hurts most.”
  • “Ukraine knows that victory in a long war depends on two things above all else: The will of people to keep fighting, and the ability of the country to provide weapons for them to fight with, and that’s where these drone missile and sabotage attacks come in.”
  • It then argues (as many others have) that Crimea is Putin’s main weakness, and that losing it will cripple his prestige and ability to stay in power and continue the war.
  • I think there has been a shift in Ukrainian strategy, but that shift has mainly been driven by the development and availability of longer-ranged weapons Ukraine lacked earlier in the war, combined with the effects of a long-term campaign to degrade Russia air power, naval assets and SAM systems, opening up avenues for longer range strikes. Ukraine focused on attacking Russia’s logistics systems right after the Battle of Kiev was won, but now they have the capability to hit much deeper into Russia’s logistics infrastructure.

    Actually, I’m surprised there haven’t been any reported attacks on the Trans-Siberian Railway, given what a long, slender link that is. A few medium-to-long range drone teams inserted into northern Kazakhstan or Mongolia could wreck real havoc on trains, lines, bridges, etc.

    Next, a video from Kanal 13 (very much a pro-Ukrainian source) suggests that the war and sanctions are cratering Russia’s military industrial complex.

  • “The Russian military industrial complex is being destroyed because of the war against Ukraine.”
  • Dimitri Fidive, CEO of the Muram Machine Building Plant, wrote in an email intercepted by the activists, that inflation and the shortcomings of Russia’s bureaucratic approach prevents plants that form the country’s military industrial complex from fulfilling government orders.”
  • “Plants are forced to sell their goods at prices set in 2019, but are at the same time expected to purchase details at market prices and in advance.”
  • “The money received from the government was not enough to cover the interest on the credit that his firm would need to take out to pay its suppliers.”
  • “Money is tied up until the completion of the government contracts, which normally last 3 to 5 years, meaning during this time the money is effectively frozen.”
  • “There is a shortage of staff at the plants due to both mass mobilization and a lack of accommodation [housing] in the area.”
  • Hell of a way to run a railroad. One wonders how extensive these problems are with other companies in Russia’s military industrial complex

    Ukraine’s strategy has shifted more in relation to the way the war developed, and the changing availability of western weapons, than any fundamental shift in strategy. It became apparent that this was going to be a war of attrition in the first year, and the question of which would break first: The west’s willingness to send Ukraine weapons, or Russia’s economy and ability to wage it’s illegal war of territorial aggression?

    Nothing about that strategy has changed, only Ukraine’s greater reach to affect the latter.

    “A Mass Extinction Event For Startups”

    Thursday, January 25th, 2024

    The Biden recession and other trends made 2023 a horrible year for startups.

  • “Big startups are shutting down. According to PitchBook, more than 3,000 private venture backed startups failed in the last year.”
  • “Of the startups raising money, 19% were funded at a lower valuation than in prior funding rounds.”
  • “38% of VCs disappeared from dealmaking last year and more than a quarter of a million workers at tech companies were laid off over the same period.”
  • “US corporate bankruptcy filings closed out 2023 with the most filings since 2010. The year has been described as a mass extinction event for startups in the press.”
  • Some of the startup failures Boyle namechecks (Hyperloop, Bird) seemed like stupid ideas from the git-go. “Bird the electric scooter rental company—which was also supposed to reinvent public transportation—filed for chapter 11 bankruptcy protection. It was the fastest startup to ever land a billion-dollar valuation, and at its peak was worth two and a half billion dollars. It was delisted from the New York Stock Exchange in September after failing to maintain a market cap of above $15 million dollars for 30 consecutive days.”
  • “Who would have thought that renting scooters to drunk people for a dollar (who would then throw them in a canal on their way home) would be a money losing business? Bird ran up more than $1.6bn in net losses since 2018 before finally running out of money.”
  • Smile Direct Club: $8.9 billion valuation at 2019 IPO. “The stock fell in value over time as the company proved to be unprofitable year after year. The company shut down last month $900 million dollars in debt.”
  • One I never heard of: “The health tech startup Olive AI which reached a peak valuation of $4 billion dollars in 2020 driven by the need for automation in healthcare during the pandemic. The company raised over 900 million dollars from investors. In 2022 the company began laying off staff citing ‘tough economic conditions.’ The company was allegedly trying to raise money when it abruptly shut down in November. Going out of business in 2023 was particularly surprising for a company with AI in its name.” Indeed, AI seems to be the current space where stupid money goes to die.
  • Another one I never heard of: Zume.

    No.

    “Zume – the robot pizza delivery company which had raised $445 million dollars in VC funding, the majority of which came from SoftBank in 2018 at a two and a quarter billion-dollar valuation, shut down this summer.” Stupid, but at least I can see why California companies would invest heavily in food automation with that $16 (and rising) minimum wage.

  • WeWork “set out to revolutionize office real estate – by having an app – which I’m told didn’t work very well, and free beer on tap filed for bankruptcy in November.” I’ve covered WeWork previously.
  • “WeWork and its founder Adam Neumann were the poster boys of how a blitzscaled business model led by a charismatic founder could apply a veneer of technology to an old business idea and attract venture capital funding to achieve a multibillion dollar valuation.”
  • “At its peak, WeWork was valued in private markets at $47 billion dollars. Softbank alone invested 16 billion dollars into the company. Masayoshi Son, SoftBank’s founder, allegedly invested his first $4.4 billion dollars in the shared office space company after Neumann gave him a 12-minute tour of a WeWork in 2016. With such a short tour, it’s unlikely that the free beer even had an impact.”
  • “Softbank – run by Masayoshi Son (Japan’s Cathie Wood) was one of the biggest startup investors in the last decade. They invested in all sorts of non tech companies that were made to look like tech in order to attain a sky-high valuation. According to Bloomberg, the SoftBank Vision Fund alone lost $53 billion dollars over the last two years on startup investments.”
  • “We have seen a very difficult period for startups over the last year or two, but it comes in the wake of probably the best period for VC backed startups in decades. During the decade from 2011 to 2021 VC investment in private start-ups grew more than sevenfold, from 46 billion dollars in 2011 to $345 billion dollars in 2021.”
  • “In 2022 when the federal reserve began hiking interest rates, this money began drying up as investors lost their taste for unprofitable, but high growth, investments.”
  • That investment boom was driven by two things: Low interest rates and “a recent history of profitable exits from VC funded startups like Facebook, Google, Whatsapp and Snap meant that investors were suddenly paying a lot of attention to tech startups – hoping to repeat those successes.”
  • “Venture capital went from being a small asset class run out of offices on Sand Hill Road that had burned investors in the dot com bubble to a massive global asset class like hedge funds or private equity.”
  • The Flu Manchu lockdowns brought investment from “‘working from home’ companies like Zoom and Peloton.” I always thought of Peloton as a lifestyle luxury brand.
  • “People were using apps like Uber and DoorDash for food delivery, and booking rentals on Airbnb to get out of big cities now that they no longer had to turn up in the office.”
  • “While the prior wave of profitable high growth tech stocks had been (one way or another) in the advertising space, or in businesses like cloud computing, the new wave of startups had untested business models—gig economy businesses which attracted a lot of competition and might never flip to profitability—or robot-made pizza which would be cooked on route to a customer’s home.”
  • “A lot of the VC’s possibly believed in many of the questionable investments that have since gone bust, but a venture capital fund isn’t really there to hold on to these investments until the underlying business flips to profitability. They invest at the idea stage with the goal of selling these businesses on to the public when the hype is at its peak.”
  • “They did manage to unload a number of the biggest flops like WeWork – but not at the valuations they were hoping for, and have found themselves holding the bag on a lot of investments that they bought into at peak valuation.”
  • “The huge valuations many of these companies were attaining in the private market may have been more of a function of how much money had flowed into the private tech startup market since 2011 rather than necessarily reflecting the quality of these companies and their business models.”
  • “According to Erin Griffith at The New York Times, $27.2 billion dollars in VC funding had gone into the 3,200 venture-backed companies that went out of business in the first 11 months of 2023.” And that’s just the firms trackable on PitchBook. The true total is almost certainly higher.
  • “That 27.2 billion dollar number excluded many of the largest startup failures that went public, like WeWork, or that found buyers at much lower prices than VC investors had invested at.”
  • “The hype around AI that we have seen in the last year has masked a lot of the losses in the tech space.”
  • “Meta was up 178 percent last year due to a combination of AI hype and cost cutting within their core business. This covers up the 46.5 billion dollars lost on the Metaverse – which no one will venture into, for fear that they run into Mark Zuckerberg.” I strongly suspect that a lot of those VR losses are actually money siphoned off for something else.
  • Despite this, stocks like Meta, Microsoft and Nvidia have hit all-time highs.
  • “One of the negative economic effects of startup shutdowns is that in such an environment it becomes harder for founders with good business ideas to get funding.”
  • “According to PitchBook, the number of active investors in US Venture Capital, which was defined as firms that made two or more deals in the last year, plummeted by 38% in the first three quarters of 2023 compared to the same period the prior year.”
  • Many of the startup failures were zombie companies, those that should have failed earlier but were kept alive by VC money and low interest rates.
  • “No one wants to see firms going out of business, especially startups which are often the most exciting and innovative firms, but if a business model makes no sense, or only works in a zero-interest rate environment, then its disappearance means that capital can again flow in the direction of the best businesses.”
  • (Previously.)

    The startup bust has direct negative effects on me personally, as I’m still between technical writing positions, and a lot of the jobs I’ve gotten over the past two decades have been with startups.





    How A Coffee Shortage Almost Ended East Germany

    Saturday, January 6th, 2024

    East Germany was widely cited as the most successful of the Warsaw Pact puppet states, the one whose industrious nature “made communism work.” That was never true, but East Germany did seem to function more efficiently than the rest of the bloc.

    One reason: Coffee.

  • “In the fall of 1977 the Ministry for State Security, the Stasi, East Germany’s feared secret police, warned the government that the country was on the verge of revolt. The trust lost in this incident would never be restored.”
  • “From the beginning, East Germany did not have access to the same level of luxury goods as the non-Soviet bloc West. Immediately after the second World War and through the 1950s, the Soviet Union supplied most of the coffee in the German Democratic Republic.”
  • “As East Germany became more autarkic from the Soviet Union, so followed its need to supply coffee independently.”
  • “The average East German coffee household expenditure was twice the amount spent on shoes, and equal to the amount spent on furniture.”
  • “This accounted for 4% of all retail sales in the GDR. As the East German state attempted to gain coffee independence, they also pushed as a core part of East German identity. Coffee allowed workers to be more productive, which contributed to a more prosperous society while maintaining an aesthetic of an invigorated society.”
  • “There was a problem though: it was a scarce resource and it was expensive to import. But, because of its importance, the Socialist Unity Party (the SED, who were effectively the state) saw a bargain that could be had from it. By being able to provide a scarce resource, it gave them legitimacy. But to gain this legitimacy they were constantly fighting back against a black market.”
  • “Officially any interaction with the black market
    was illegal. Unofficially everyone knew it existed, and the Socialist Unity Party wasn’t happy with it, but it offered a window into what scarce resources would engender support if they could provide them.”

  • “Even before the Cold War, coffee in Germany was scarce – the blends were often not real coffee but blends of varying quality. This continued on after the post-war division and a fight between the Socialist Unity Party and the people of East Germany. The SED wanted to be the ones to provide coffee – the public wanted more of it and at a better quality. Thus developed a black market that the SED was constantly trying to stay ahead of.”
  • “One of the reasons for the Berlin Wall was that the SED couldn’t regulate the black market. It allowed goods to flood in from the West they were trying to provide, while allowing goods from the East (with subsidized prices) to flow out.”
  • “But, by 1973, things in East Germany had stabilized and things were, well, good. At least according to the CIA.”
  • “The SED had achieved a Faustian bargain: A black market where people had to depend upon relationships with each other to get access to goods meant that the populace actively grew in solidarity with each other.”
  • “The average East German citizen was willing to deal with shortages because it was something everyone was enduring together. In short, East Germany had entered a period of political stability, with a relatively high standard of living, and the shortcomings of the system reinforced the ideals that the system preached.”
  • “Two events at the beginning of the 1970s shook the East German economy to its core: the 1973 oil shock, and a failed coffee crop in Brazil. These events compounded within the fragile East German economy: to import goods from the west (such as oil) they needed to use western currency. As the price of oil skyrocketed, so did the rate at which East Germany drained its reserves of Western currency.” This part I’m not so sure of. I believe that East Germany imported most (but not all) of its oil from the Soviet Union under the Comecon plan. Oil prices from that did increase, but not immediately.
  • “Luxury goods, like coffee, became prohibitively expensive in an economy planned out to the penny. Before the failed coffee crop, East Germany spent 150 million marks per year on coffee imports. After the crisis began, this number had skyrocketed to 700 million. The SED was faced with a dilemma: money for oil, or marks for mocha?”
  • “They attempted to split the difference. The only coffee imported would be the higher end blends that the party leadership used. Lower end brands were either eliminated completely, or the recipe adjusted to use less coffee. Further, certain blends would only be available in Intershops, which required the use of Western currency – which would help the state refill it’s currency coffers.”
  • “East Germans rejected the new coffee mixes in a way the state was not prepared for. In a report to SED leadership on September 1, 1977, the Ministry for State stated that, ‘the quality and price of [the new coffee mixes] are rejected by broad circles of the population.'”
  • “Complaints recorded by the Stasi included ‘critical indications of taste,’ and a first indication that the new mixes were unable to be processed to the ‘full filtering capability in household machines.’ The coffee mixes were breaking the machines.”
  • “The Stasi further expressed in this report that workers resented party officials requesting austerity for workers, while still importing ‘expensive Western cars for officials.'”
  • “Additionally, Stasi reports say that citizen did not believe the ‘information policy.’ Far from just rejecting the new coffee mixes, were rejecting the SED’s handling of the crisis.”
  • “By September 12, the frustration over austerity moved to unrest. A Stasi report stated that in discussions among workers, ‘skeptical, resigned, pessimistic and negative opinions up to aggressive arguments become clear.'”
  • “While blaming Western media for this development, the Stasi also states that there are rumors of ‘warning strikes.'” These strikes would demand wages be paid in Western currency so that they could shop at the Intershops.”
  • “In relation, the report states growing frustration with the expansion of Intershop stores, with the simultaneous ‘elimination of low-price coffees and the limited supply in restaurants.’
  • Workers also believed that the classless East German society was now stratified, with three distinct categories: those without western currency who would be forced to endure austerity, those with access to western currency who could shop at Intershops, and ‘privileged persons and high officials who…drove expensive Western cars and [weren’t] affected by austerity.'”
  • “These last two categories were contrasted with the common worker and pensioner who ‘have returned to the point where begging letters have been sent to [West Germany]’ for coffee.'”
  • They were even criticizing Party officials! “East Germany was on the precipice of a revolt.”
  • “The SED would finally act on 23 September to contain the growing unrest. The price of the lowest quality mixes was reduced, and a communication was published on the coffee shortage, explaining the reasoning behind austerity measures.”
  • East Germany also started sourcing coffee from Vietnam.
  • Eventually, of course, East Germany would cease to exist due to the “internal contradictions” of communism and because the Soviet Union could no longer afford to keep it’s foot on Eastern Europe’s neck.

    Note: Bluehost has been dog slow for the last 24 hours. If this keeps up tomorrow I’ll try to go through the agonizing technical support process to do something about it…

    LinkSwarm For January 5, 2024

    Friday, January 5th, 2024

    Happy New Year, everyone! The Biden Recession bites deeper, Israel dirtnaps a top terrorist, Harvard’s chief plagiarist finally steps down, and the crypto CEO who wasn’t there. It’s the Friday LinkSwarm!

    

  • Once again, the new job numbers are horrible.

    The monthly nonfarm payrolls (from the Establishment Survey) may have been weak at 216K but the far more accurate Household Survey showed that the number of Employed workers actually collapsed by an unprecedented 683K, the biggest drop since the US economy was shutdown by covid!

    Even scarier, while the monthly grind higher in the payrolls number (pulled from the far less accurate Establishment Survey) means that US jobs hit a record high every month with bizarre consistency and in December this was certainly the case, the total nonfarm employment number rose to an all time high 157.232 million, the abovementioned collapse in US Employment (per Household survey) meant that there were only 161.183 million employed people in the US, the lowest since June, with the now traditional divergence between these two surveys glaringly obvious.

  • Israel takes out senior Hamas leader in Beirut.

    A senior Hamas leader was killed Tuesday in a drone strike in Beirut, Lebanon, during a meeting between Palestinian factions at a Hamas office.

    Saleh al-Arouri, deputy chairman of Hamas’s political bureau and commander of the terror group’s military wing in the West Bank, and at least five others died from the explosion, which occurred near Hezbollah’s headquarters in Beirut, Lebanese state media reported. Several more were injured. Following the blast, Hamas blamed Israel for the “Zionist raid” amid its ongoing war with the Jewish state. Israel has not claimed responsibility for the strike.

    Many Israeli officials declined to comment. However, Israeli finance minister Bezalel Smotrich posted a statement on X shortly after the attack: “Surely your enemies will perish, O Israel.”

    In November, Israeli prime minister Benjamin Netanyahu indicated he ordered the nation’s Mossad spy agency to eliminate Hamas leaders around the world after the militant group’s coordinated October 7 attack. Netanyahu’s office also declined to comment about the explosion.

    Al-Arouri, whom Hamas described as “one of the architects” of the terror attack on Israel, had close ties with Yahwa Sinwar, the group’s leader in Gaza. Al-Arouri is the most senior Hamas leader to have been killed since the war began in early October.

  • Supreme Court to take up Trump’s Colorado ballot case.
  • A good chunk of the Epstein files have finally been released. Some revelations: Bill Clinton “likes them young” and Donald Trump didn’t have sex with at least one girl who was asked under oath about it.
  • Harvard President Claudine Gay finally does the right thing and resigns in wake of burgeoning plagiarism scandal.
  • A three act farce: Act 1: “Ohio governor Mike DeWine (R.) on Friday vetoed a bill that would have banned both transgender procedures for minors and trans student-athlete participation in school sports in the state.” Act 2: Turns out DeWine has taken taken over $40,000 in donations from pro-child-genital-mutilation hospitals. Act 3: “Republican Ohio governor Mike DeWine issued an “emergency” executive order Friday banning child gender-transition surgeries after receiving intense backlash last week for vetoing a bill with a broader but similar mandate.” Ohio’s Republican legislature can and should override DeWine’s foolish veto.
  • “President of Illinois NAACP suspended after saying migrants are ‘savages who are ‘raping people, breaking into homes.'” Speaking the truth is now crime
  • Border Protection Officer Charged with Human Smuggling. Emanuel Celedon is also charged with bribery and drug trafficking.”
  • Robert F. Kennedy, jr. qualifies for the presidential ballot in Utah.

    Last month, American Values 2024, a super PAC supporting the third-party candidate, announced a plan to spend nearly $15 million to get Kennedy on the ballot in ten states: Arizona, California, Colorado, Georgia, Illinois, Indiana, Michigan, Nevada, New York and Texas. All are important to winning the 2024 race.

    I don’t see RFK Jr. doing even as well in Utah as Egg McMuffin did in 2016, and of the other states, only Arizona, Colorado, Michigan and Nevada might have any effect on the election, all four of which went (however fraudulently) for Biden in 2020.

  • Harris County Criminal Court Judge Arrested for Domestic Violence on New Year’s Eve. Harris County Judge Frank Aguilar is alleged to have assaulted and impeded the breathing of a female victim.” Aguilar is, of course, a Democrat.
  • “Louisiana sporting goods employees fired for chasing shoplifter who stole gun.” Get bent, Academy. (Hat tip: Dwight.)
  • Crypto hedge fund CEO may not have actually existed. That’s some mighty fine vetting there, investors…
  • Ricky Gervais has a great idea: He and Dave Chappelle should co-host the Oscars. That would indeed be a smash ratings success, and I would watch the Oscars for the first time this century.
  • New commie gaming regulations lop $80 billion off Chinese video game company values.
  • TGIFriday’s just closed 36 locations in 12 states, including four in Texas. Thanks, Joe Biden.
  • Plus for Sephora “Body Butter”: Smoother skin. Minus: Attracts Spiders.
  • Mythbuster‘s Adam Savage keeps buying replica torturer baby masks from Terry Gilliam’s Brazil. Also, he watched it once a day, every day, for six months while working at a movie theater. Which explains a lot.
  • “Texas Agrees To Two-State Solution With Austin.”

    This is the only way for us to live in peace,” said Texas Governor Greg Abbot. “The citizens of Austin have been at war with the people of Texas for many years now, and to end the bloodshed for future generations, we are willing to recognize Austin as its own separate and sovereign land.”

    The resolution brought much-needed relief to the war-torn area, where battle lines had been drawn along the border of Austin. “The weirdo hipsters of Austin can stand down now,” said Texas Senator Ted Cruz in a statement acknowledging the resolution. “The people of Austin can now stop patrolling the perimeter of the city in armored tanks and go back to driving electric vehicles, painting strange murals nobody understands, and hating everything the United States stands for.”

  • “Detroit Pistons relegated to the WNBA.”
  • Bluehost is dog slow today, so I should wrap this up.

    Hit the tip jar if you’re so inclined.





    No Wonder the Left Hates “Argentina’s Trump”

    Sunday, November 26th, 2023

    One reason to be cautiously optimistic of anarcho-capitalist outsider Javier Milei’s victory in their presidential election is just how freaked out the international left is over it.

    In a world with two (or more) major wars going on, China imploding, and a major U.S. recession, a libertarian winning election in Argentina is suddenly the new Worst Thing Ever.

  • “This came after years of far left fascist rule which has plunged the country into crisis, with the inflation rate hitting 143% earlier this month. Argentina has gone from a wealthy nation with an enviable standard of living to one destroyed by socialist lunacy.”
  • “That’s why firebrand Javier Milei, a conservative, a libertarian, a vehemently anti-socialist, anti-woke outsider won the presidential election in a landslide.”
  • “The world’s media went into a predictable meltdown, similar to when Italy’s center-right Giorgia Meloni was elected prime minister last year.”
  • “But the election results show Argentinians, including young Argentinians, importantly, have finally woken up to the lunacy of watching close to half the population live in poverty despite being blessed with abundant natural resources.”
  • Milei “has been clear in his desire to tackle the bloated bureaucracy that has so poorly served the country.”
  • And yes, he still intends to shut down Argentina’s central bank. “This weekend he confirmed that it was an absolute, non-negotiable.”
  • He wants to eliminate the Ministry of Sports and Tourism, the Ministry of Culture, the Ministry of the Environment and Sustainable Development, the Ministry of Women, Genders and Diversity, and Ministry of Public Works.

  • Says Milei: “We are crushing them in the cultural battle! We are not only economically superior, we’re culturally superior, we are aesthetically superior, we are better than them at everything, and that triggers them!”
  • And since they can’t beat him in the field of ideas, “they use the repressive power of the state to destroy their enemies.”
  • You know who else likes the cut of Milei’s jib? Donald Trump.

    “Congratulations to Javier Milei on a great race for President of Argentina! The whole world was watching, and I’m very proud of you! You will turn your country around and truly make Argentina great again!”

    Trump also plans to visit him in Buenos Aires.

    Argentina’s President Not A Fan Of Communist China

    Saturday, November 25th, 2023

    There are a lot of reasons to celebrate Javier Milei’s election as president of Argentina, the biggest of which is that he’s going to apply free market, limited government principles to reviving Argentina’s moribund economy.

    But he’s also not a fan of communist China.

    “People are not free in China, they can’t do what they want and when they do it, they get killed,” he told Bloomberg News on Wednesday, referring to Beijing’s government. “Would you trade with an assassin?”

    Milei shook Argentina’s political establishment last weekend after receiving more votes than a probusiness opposition bloc and the ruling Peronist coalition, putting him in the lead to be the country’s next president. His election in October would generate shock waves across a region largely ruled by leftist leaders.

    In his blanket refusal to do any kind of business with “socialists,” he lumped Communist China in the same category as Argentina’s biggest trade partner, Brazil, led by leftist President Luiz Inacio Lula da Silva. China is the second-largest buyer of Argentine exports and provides a crucial $18 billion swap line with the central bank that’s being used to pay the International Monetary Fund.

    He described his foreign policy proposals as a global “fight against socialists and statists.”

    Libertarians critical of communists? What are the odds?

    It probably means that Argentina won’t be buying any of China’s crappy jet fighters, either.

    How Bad Off Is The Russian Ruble?

    Saturday, November 4th, 2023

    An important but less dramatic aspect of the Russo-Ukrainian War is just what effects the war and resulting sanctions are having on the Russian economy. It’s hard for outsiders to get a handle on just how badly the Russian economy is doing. Since Russia was a net grain and oil exporter before invading Ukraine, it’s not likely to have obvious shortages in food and fuel.

    One economic proxy is exchange rates on the Russian ruble, which is now stuck right around 100 to the dollar. But as Joe Blogs explains, Russia has recently undertaken several actions that indicate the situation is worse than just the exchange rates would have you believe.

  • “The Russian authorities have now imposed additional currency controls, which restrict Western companies that sell their Russian assets from taking the proceeds in dollars and Euros. International companies that want to exit Russia now have to sell their assets in rubles, and if they insist on receiving foreign currency for their assets, they face delays or even losses on the sums that can be transferred abroad.” Obviously I have zero sympathy for any western company still doing business in Russia, as they should have extracted themselves shortly after Russia launched their illegal war of territorial aggression in 2022, but it’s hardly going to encourage the ones that remain to put more resources into their businesses there.
  • Russia first started slapping currency controls down when the ruble weakened in July, with various repatriation restrictions and limiting schemes. Also, businesses wanting to get their money out were forced to pay “a contribution to the Russian budget, which is deemed to be ‘voluntary’ but in reality is mandatory, which was recently raised from 10% to 15% of the total transaction value.” The line item on that should probably read “Vlad’s Protection Money.”
  • Plus: “The sale of any Russian assets must take place at a discount of at least 50%.” You lie down with jackals and you wake up with fleas.
  • Various other indignities visited upon foreign businesses doing Russia snipped because, really, screw those guys.
  • Then there are the foreign income controls:

    On October 11 “President Putin signed a decree mandating the reintroduction of capital controls for an undisclosed list of 43 exporting firms. The controls will last for six months, and Russia has not published the list of which companies these measures will apply to. However, they are companies in the fuel, energy, metal, chemical, timber and grain industries. Starting from October the 16th, certain Russian exporters within 60 days from the moment of receiving funds are obliged to credit their accounts in Russian banks with no less than 80% of all foreign currency received in accordance with the conditions of their export contracts. They also required within two weeks to sell on the country’s domestic market no less than 90% of foreign currency revenues credited to their accounts at Russian banks.

  • “President Putin believes that this will solve the problems with the ruble, and stated there are reasons to believe that the ruble rate is fluctuating because foreign currency earnings are not being returned in sufficient volume to mobilize the money supply on the domestic market.” Or, and here’s an alternate theory, rubles are worthless because no one inside or outside the country wants to keep them.
  • “Twelve months ago, one US dollar was trading for 61 Russian rubles, to today it’s trading for 93, which represents a fall in value of more than 50% in the last year, which is an absolute disaster from a currency perspective. The long-term value of the ruble has declined significantly.”
  • “There is absolutely no way that the Kremlin is happy with an exchange rate of 93 to 1.”
  • “Let’s not forget that the current exchange rate has only been achieved after four interest rate rises over the last three months, which means that it’s doubled in a three month period.” Russia’s interest rate is currently at 15%, which is one of the highest in the world.
  • Had Russia not intervened, “the ruble [to dollar exchange rate] could have hit 120 or 130. So Russia is currently doing everything within its powers to maintain the value of the ruble. But even after all of that effort the ruble is trading at its worst level at any time in history” save that right after the Ukraine invasion.
  • With all those rules and declining ruble values, Russian companies have less and less money to spend in international markets, which demand hard currency.
  • Even though sanctions are leaky, Russia’s crashing economy means the ruble is worth less, and Russian companies will find it harder and harder to buy things (like computer chips) on the international market that requires hard currency. And remember that that BRICS currency idea is going nowhere.

    Expect Russia’s economy to continue declining as long as Russia is still trying to occupy Ukraine.

    Kowloon City as Rhizome

    Thursday, September 28th, 2023

    The now-torn down Kowloon Walled City was a megastructure/hyperslum/gangster paradise situated just outside Hong Kong proper.

    Kowloon City was an acknowledged influence on William Gibson’s urban dystopian cyberpunk: A hyper-dense, interconnected, lawless locale whose buildings and infrastructure grew organically without rhyme, reason, planning or building codes. It was one inspiration for the phrase “Temporary Autonomous Zone” briefly popular among anarchists and Libertarians in the 1980s and 90s.

    In this video, YouTuber Dami Lee argues that Kowloon City is best understood as a rhizome, a kind of horizontal-growing root that intertwines with everything.

  • “When we first started looking into the Kowloon Walled City, also known as the densest city in the world, we thought for a place that’s essentially a slum full of crime and drugs, with subhuman living conditions, there sure is a lot of romanticization about this place.”
  • “The city looks like it came straight out of a dystopian sci-fi novel.”
  • “It’s a giant megastructure part architecture, part living organism, and it’s actually something architects have been dreaming about for years. One continuous structure where you could access all the necessities of daily life but evolves and grows with time.”
  • New York City has a population density of 11,000 per square kilometer. Kowloon City had a population density of 1,255,000 per square kilometer.
  • “Kowloon Walled City was a city within Hong Kong that was technically a part of China.” It started as a fort, but after being abandoned Chinese refugees flooded there after World War II.
  • “It was known as the only Chinese enclave that the Hong Kong government couldn’t touch. But after that, it included anyone and everyone from gangs, criminals to doctors to entrepreneurs, people trying to escape poverty or people trying to capitalize on this unregulated haven.”
  • “Crime naturally flourished there with gangs, drugs, brothels. If you had an industrial business, you could ignore the fire codes, the labor codes or safety codes So you could produce goods at a fraction of the cost. You could also sell things that were banned anywhere else, like dog meat.”
  • “With unbeatable prices, industry kind of thrived here and lots of things made in Kowloon Walled City made their way back to China, Hong Kong, and sometimes even overseas. They were known especially for their fish balls and dumplings.”
  • “in Kowloon, buildings will get built, leaving these small gaps for air and light. But very quickly they get filled in with stairways, which sometimes connect it to three or four buildings. The city of Kowloon had around 350 buildings, but eventually the all merge into this one giant megastructure. The rooftops would connect, forming one giant rooftop, and even the residential units were connected to each other. And since not all the units had electricity or other resources, it allowed them to share things like power out of a single source.”
  • “It especially allowed businesses to expand strategically and organically.” Such as a strip club that lured people in to make real money in the gambling den a floor down.
  • “New buildings could attach and be integrated to existing structures. And with every new building, new circulation paths and collection points are formed which evolve and expand with the growth of the city. And at the intersection of these connections or stairs or alleys, nodes would organically merge.”
  • “Chinese doctors and dentists who couldn’t afford to get relicensed in Hong Kong, set up shop here and offer services for bargain prices, which attracted customers from outside the city.”
  • Factories gravitated to ground floors with vehicle and water access, while residential went to higher floors. “But most of the residents actually moved through the hundreds of alleys and secret paths, which all twisted and turned and stepped up and down and cut through multiple buildings. So unlike a typical city where you have one point of connection, you had multiple points of connection vertically and horizontally between multiple spaces.”
  • The hard limits of the city forced it to expand upward and inward.
  • “Even though they didn’t have a government, the residents self-organized to fix problems as they came up to deal with crime. They formed groups of volunteers to escort single women. And when the Hong Kong government released plans to demolish the city, they organized the Kowloon City Anti Demolition Committee that fought against the plan for years. Even the five Triad gangs organized garbage cleaning teams and helped settle disputes between businesses.”
  • Kowloon City was demolished in 1994.
  • At it’s height, Kowloon City was an an example of “spontaneous order” that can arise from the intersection of capitalism and low- or no-regulation environments. But much of its success was based on a rare combination of things, namely its proximity to a huge, thriving, international city, private ownership of land, ethnic homogeneity, and a ready populace of low-wage workers, many of whom had fled communism.

    By contrast, Seattle’s antifa “Autonomous Zone” thugocracy had none of these things going for it, and the only industry they brought to the area was shaking down existing businesses for protection money ‘donations.”

    I can imagine it both as a place of tremendous economic dynamism as well as someplace I personally would never want to live. Just imagine if you had a factory using deadly chemicals right below you. And I imagine the illegal activity providing a significant portion of Kowloon City’s income.

    It was an interesting, unintentional experiment, and I’m sure the vast majority of residents there fared better than they would have under the Great Leap Forward…