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Milei dropping a massive turd in the punchbowl at Davos

tommyguns2

tommyguns2

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Dec 25, 2010
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An interesting article about Germany in the NYT today. It's correct in IDing that a problem exists, but laughable in discussing solutions. As predictable in the NYT, the problem is not enough government action and spending... LOL


Here are a couple of example paragraphs that'll make someone with even a modest understanding of macroeconomics chuckle.

NYT: "The restrictions on borrowing are preventing the government from making badly needed investments in public infrastructure, from schools and public administration to railways and energy networks."

My comment: what a joke. Germany didn't contract last year by 0.3% because there was insufficient gov't "investment" in public schools, public administration (gov't employees) and energy networks. That's laughable. Economic growth stalled because it's too expensive to run a factory in Germany with energy prices having increased 20-40% in the past 18 months. The cost of goods has to rise when the cost to produce increases dramatically, and the demand for more expensive goods (at no change in quality) goes down. That's basic. Why are energy prices going through the roof? Well, Germany got in bed with Russia on a natural gas supply agreement. Their previous German PM was lobbying for the Russians, and I'm sure has been well compensated. Putin then decided that since he had Germany by the balls, he'd threaten their gas supply unless they shut up on Ukraine. I recall Trump telling Germany not to be stupid, but they laughed at him, because he's so unsophisticated. Trump is classless, but he was absolutely correct on Russia energy. Also, Germany proceeded to shut down all their nuclear power plants because Fukushima. You read that correct, a tsunami in Japan caused the greenies in Germany to kill their nuclear power program. When was the last time in the last 50,000 years that Germany has experienced a tsunami? LOL Don't worry, they killed a clean, cheap source of non-intermittent power with wind and solar that are expensive and intermittent. What could possible go wrong.

NYT: "He pointed to the country’s growing green tech sector as a bright spot in the economy, those industries that develop technology for environmental protection, renewable energies and the efficient use of resources. Semiconductor makers are another source of investment. Intel and Taiwan Semiconductor Manufacturing Company plan to build factories in eastern Germany, helped by subsidies worth €20 billion, which have survived government budget cuts."

My comment: Gov't doesn't "invest" in anything. It subsidizes things. Green energy is all well and good. Let it develop with venture capital investment, but it has to stand on its own. Otherwise, when gov'ts pull back on the subsidies the entire sector collapses because the market is artificial. And why wasn't Intel and TSMC building $20B fabs in Germany before the gov't shelled out free money for them? Because the regulatory framework didn't make it a good idea. I'm intimately familiar with both companies, and I know TSMC is not averse to building fabs elsewhere in the world that isn't a stone's throw from China that wants to invade them. But a skilled, hard-working labor force is crucial, and significant environmental compliance issues exist, and Germany is not easy to deal with. So now fabs will be built in Dresden that would not otherwise have been built. that creates the possibility of supply gluts in the future and the semiconductor industry is well familiar with these boom and bust cycles. When gov'ts create incentives to build that were not otherwise there, you get dislocation in the supply/demand cycles. The DRAM industry is a graveyard of such cycles (anyone remember Qimonda, FASL, and other memory manufacturers?)

Germany needs to talk to German industry and find out what is driving their de-industrialization, and then make the structural changes that create a business environment where private industry will make the investments that make sense. It's really not that complicated. But the solution is the gov't getting out of the way.
 
tommyguns2

tommyguns2

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Dec 25, 2010
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Decent article in the WSJ about Davos today. Sounds like reality is starting exert itself and the elites are trying to figure out why all their centralized state planning could go so wrong when they're all so darn smart!


My theory on state planning vs. free market capitalism is as follows: one is no smarter than the other. Both are littered with failed ideas. However, in statism, bad ideas never die, rather they get more funding and continue in perpetuity. In capitalism, bad ideas fail, and the problem is either corrected or the business dies. In either case, the bad idea goes away. In capitalism there is a corrective feedback loop that causes bad ideas to be abandoned or at least minimized, while good ideas are permitted to flourish.

A perfect example is ESG on Wall Street (a bad idea). Normal interest rates are showing that entire framework to be a BS sham. It'll be corrected because Wall Street firms can fail. Another good example is InBev and Disney. Both very successful companies that were pretty much "money trees." But both took their eye off the ball, forgot who their customers were, and starting acting stupid. They are now in the painful process of figuring out whether/how to correct the problem or suffer further decline. In the long run, they'll fix it or die.
 
Bigtex

Bigtex

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Aug 14, 2012
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My wife and I know people who are from or still live in Venezuela, Cuba, Argentina, Brazil, Ecuador, and China. All of them would rather live under capitalism.. One of my wife's friends is in the upper level of the Castro regime and is in the tourism department. She loves the dictatorship because she is getting rich. This woman had no problem blaming the USA for all Cuba's problems, but would not talk about how Cuba freely trades with half the world so there is no reason the people there should be starving. After my wife brought this subject up, this woman refused to talk to my wife about this subject again. Communists rulers don't want the people to know they are being ripped off. As my wife says, there is really no such thing as communist or socialism, it is just being used be a few greedy people to take every thing a country has to offer. Castro managed to do this.

The Cuban dictator Fidel Castro, throughout his reign, claimed to live in a humble fisherman’s hut. “The fisherman’s hut was really a luxury vacation home,” Castro’s former bodyguard, Juan Reinaldo Sanchez, writes in “The Double Life of Fidel Castro.” According to the bodyguard, the Cuban dictator obtained more than 20 fancy properties throughout the island. Castro also frequently relaxed on a 90-foot yacht decorated with exotic wood imported from Angola. He also had nearly endless beachfront property to himself. Castro eventually made it to No. 7 on Forbes’ list of richest world leaders, which estimated his wealth at $900 million. Castro denied being so wealthy. With all his wealth and power, Castro also had at least five mistresses, according to his bodyguard.


Hugo Chavez who told the people of Venezuela it is "bad" to be rich was worth $4.2 billion. Meanwhile the people of this socialist shit hole are starving to death. Muammar Gaddafi $200,000. The socialist/communist dictator list of the rich and famous just goes on and on. This is why they take over countries promising the world to the poor. This is why the educated, middle class and wealthy leave as quick as they can.
 
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