China is, as we say, The Ultimate Crony Capitalist State. Business and government are an amalgam. Long a crony paradise where a premium was placed on compliance and government favor and not on real pricing.
It looks like reality is finally starting to hit however.
About 6 months ago I was talking to a China energy markets analyst and he explained the complexities of implementing a carbon tax regime in the country to me. One bit I found particularly interesting. He explained that no one knew what the real price of energy coming from a particular plant actually was. A mandate from Beijing had been handed down, that energy would cost X amount, and that was the number used for “business.” Everyone knew the official price was way below the actual market rate but it sounded like no one really knew what the market rate was.
One can’t keep running a country like this. One must have real pricing for long term prosperity. The problem is that real pricing can create problems for the political establishment, anywhere, but particularly in China.
Crony capitalism is a bipartisan endeavor. The Dems often get dinged pretty hard because they are particularly inclined toward mixing business and politics (and make no bones about it), but the Republicans love to do the the crony pony too.
Why is the stock market turning down now? Why the current carnage?
Regular readers of ACC already know this both because we often make the case against the Fed but also because, in our opinion our readers are just a particularly smart bunch. But that the Fed is no friend is a point which deserves to be made often.
The Fed is not on your side. It is on the side of the big banks. Always keep this in mind. In most cases Yellen and Company really couldn’t care less about you or me. But they care quite a lot about Goldman, and JPMorgan, and Citibank.
These protests are a massive reaction against a deeply crony and socialist government in Brazil. The economy is failing. The “Bolivarian” movement in South America embodied by the now dead Hugo Chavez is imploding. Wherever the statist cancer has spread, Venezuela, Brazil, Argentina, Bolivia, Ecuador, even Chile it has brought with it economic dysfunction. And that is saying something as this IS South America we are talking about.
But the anger exhibited above and below is not simply some Brazilian or South American phenomenon. The sentiment embodied in the streets of Sao Paulo, Rio, and Brasilia this week runs through the world. And it is increasing as middle class people are becoming more aware of the inner workings of their governments.
As the world economy continues to sputter (sputtering would be good) we will see more of this sort of thing in other parts of the globe. People are much better educated on political matters these days thanks to the Internet. They are sick of being abused. The veil of government has been lifted a bit and people, Brazilian, American, Chinese, European, Indian, do not like what they see.
These protesters don’t want bread (at least not now, and let’s hope that doesn’t ever become a concern) they want respect and transparency. It is their money that their government is giving away to the crony class.
Not all “intellectuals” but a good number of them. Many who populate sociology, and political science departments that’s for sure. And English, and, OK, pretty much every department except business, and even then.
I am guessing that the powers that be in China didn’t think Tianjin would “blossom” into a fireball of such massive size that it could be seen from space.
I’ll say from the outset that this article is not for everyone, (and it is LONG) but I found it intriguing and potentially very useful for people who are trying to get their heads around what the economy – what I would consider the REAL economy – is doing right now.
And on a personal note I have to give a nod to my dear old Dad who, back in the early early 80s was explaining to his kids why coders would someday roam the business world and change every facet of that world.
Read on for valuable insight.
CAREER PROFILE (SINCE 1989)
Senator Hillary Clinton
|JPMorgan Chase & Co
|Skadden, Arps et al
|University of California
|Kirkland & Ellis
|Squire Patton Boggs
|21st Century Fox
|National Amusements Inc
|Ernst & Young
|Credit Suisse Group
|Greenberg Traurig LLP
And if you have any question where official Washington is in its general disposition one need only look at the secondary headline of the attached article.
“Both are looking for ways to make the nation richer by helping … ordinary workers.”
This is what passes for political journalism in some circles folks. Granted it is an editorial from a guy at Envest.
The article is pretty blatant in it’s call for crony capitalism. Of course this crony capitalism is shrouded in words like “climate” and “invest” and “virtuous cycle(s).” You see if the government just “incentivises” industry, that is if government takes money from tax payers and gives it to companies which do what certain people think are “good”, the world will sprout rainbows and the children of the world will join hands in a chorus of kumbaya.
You see big business and Hillary are just trying to help “ordinary workers.”
This is a long fight and getting rid of the Export-Import Bank is just the beginning. A battle in a larger war to reduce the size and scope of government and to reduce the power of the current crony capitalist system. It will be a slog. Blood will be lost. But make sure most of the blood comes from the cronies and not from those who strive for a reasonably honest government and economy.
OK, so you lose Ex-Im and the sweetheart deal which goes with it. So you decide to take your ball and go play – wherever – outside of the United States. Fine.
But it seems reasonable then, going forward, not to award Boeing any lucrative military projects. That’s only fair. Go live off the Swedish taxpayers. They like socialism.
Ralph Nader is one our favorites here at ACC. We disagree with him on a myriad of issues. He likes government quite a lot. We, well are more skeptical of the state. Saying that though, there is no doubt that Mr. Nader is an enemy of crony capitalism and one of the good guys running around Washington. (There are a few.)
Below is a declaration. A call to town halls. A call to take the rhetorical fight directly to our elected officials during their summer recess. If our representatives are going to ignore us in DC they will have a much harder time ignoring us at community meetings and grandstanding events. Turn on your iPhones. Record responses to hard questions. See what happens.
They do work for us.
So it can’t dogfight. (Maybe not an issue but probably will be if history shows us anything.) It is also a single engine aircraft which means if one engine goes out, that’s it. Over land the situation may be salvageable. Over the ocean, where an extra engine is particularly valuable, it’s a much tougher spot. The Navy as I understand it wanted a dual engine jet for that reason. Others did not.The F-35 is also a manned aircraft in an era where this is less and less necessary.
And this is just for starters.
He also owns a whole bunch of race horses. Good to see that lobbying and Monsanto have been so good to him.
Obamacare is a giant jack. And no, single payer is not the solution. That is the last thing we need. Single payer is an excuse for all sorts of other cronyism. Not to mention that socializing healthcare in the 21st Century is just a backward idea. We should be opening up healthcare not centralizing it.