Ian's Blogspot Mirror

31/12/2022

Contrary to what many people like to believe Musk isn't actually stupid. Stupid people don;t get into doctoral programs at Stanford.

He actually has a record of founding and running highly successful companies. Tesla is the first successful new mass market automaker in decades (outside China).

But his biggest achievement has to be convincing investors to value Tesla as a tech company not a car company. Even after a recent 70% fall in the stock price, Tesla is valued twice as high as Toyota, four times as high as BYD and nearly ten times as high as any of the Big Three US carmakers. That;s despite the fact that Tela makes far fewer cars than Ford, GM or Stellantis and is far less profitable.

Supposedly, it's a "growth story", - except it has the oldest model line-up of any major carmaker. The Cybertruck and Semi will supposedly be released in 2023 - years late. The updated Roadster will also supposedly be released in 023 but isalsolikley to be dleayed. Best scenario is Tesla will have three new models in 2023 - only two of which will be mass market automobiles. Beyond that there's a small lower-priced sedan on the way - which has been repeatedly promised for a decade or more.

Meanwhile competitors like Volkswagen areplanning 15 or more new electric models. Chinese carmakers like BYD and Great Wall will likely beat any Tesla entry in the lower price market sector and in the luxury market sector Tesla is facing increasing competition from established luxury brands like BMW. (Did I mention Tesla has consistently been rated the worst US carmaker for build quality?)

It's easy to forget now that for years Musk carefully cultivated a public persona as a scientific visionary and business genius. He was on The Simpsons for example.

Now he wants people to believe he's a far right Trump supporter. If we look at his past political stances and donations that seems like it may just be another front. Maybe he thinks Twitter can attract and consolidate the right wing Americans flitting between Parler, Gab and Truth Social (Of course, even if he does, there just aren't enough of them to create a company capable of servicing Twitter's massive debt load.)

In summary, wecan be pretty sure he's lying and dissembling we just can;t be sure exactly what he's lying about.

""While often described as libertarian, Musk has called himself "politically moderate" and was a registered independent voter when he lived in California. The New York Times wrote that Musk "expresses views that don't fit neatly into [the American] binary, left-right political framework".[341] Historically, Musk has donated to both Democrats and Republicans,[342] many of whom are in states in which he has a vested interest.[341] Beginning in the late 2010s, Musk's political contributions have shifted to almost entirely supporting Republicans.[343]

Musk voted for Hillary Clinton in the 2016 U.S. presidential election.[344] In the 2020 Democratic Party presidential primaries, Musk endorsed candidate Andrew Yang and expressed support for his proposed universal basic income.[345] He also endorsed Kanye West's 2020 presidential campaign.[346] He said he voted for Joe Biden in the 2020 U.S. presidential election.[344] In 2022, Musk said that he could "no longer support" the Democrats because they are the "party of division & hate",[347][348] and wrote a tweet encouraging "independent-minded voters" to vote Republican in the 2022 U.S. elections, which was an outlier among social media executives who typically avoid partisan political advocacy.[349][350] He also leaned towards supporting Republican Ron DeSantis in the 2024 U.S. presidential election if DeSantis were a candidate.[351][352]""

Later in 1999, Musk co-founded X.com, an online financial services and e-mail payment company.[59] X.com was one of the first federally insured online banks, and over 200,000 customers joined in its initial months of operation.[60] Even though Musk founded the company, investors regarded him as inex...

08/03/2022

Nikkei survey says China's GDP will grow 5.1% in 2022 (1), Moody's say 4.8%. Morgan Stanley says 5.5% (2).

Given the uncertainties involved - such as whether China can avoid much larger COVID outbreaks and how the Evergrande bankruptcy and the related showdown in the Chinese property market - the difference between the two figures hardly matter.

Nor does it really matter that China's official GDP figures are almost definitely overstated. Lots of foreign banks and economists have constructed shadow indices to estimate Chinese GDP based on stuff like market indices and share volume; inbound and outbound tourism numbers (that one'll take hit this year), home sales; car registrations, loan and bank deposit growth and import and export volumes and values. There's a pretty good consensus that you can deduct about 1% from Chinese official GDP numbers to arrive at the real figure.

It's worth noting that the CPC Politburo broke with tradition by not announcing a formal target this year underscoring the uncertainties.

But barring some major downside event, it's probably safe to conclude that China's GDP will grow between 4 and 4.5% in 2022.

Here's why that's significant and why the exact figure isn't that important.
China's GDP growth will almost definitely exceed that of the US which is mostly predicted to be between 3 and 4%. Of course the caveat about "no major unforeseen events" applies to the US too. For that matter, trade between the two countries is so important that a major adverse economic event in one would probably also have a negative impact on the other.

So why does it matter if China's economy grows faster than America's?

Well's lets go back to the fall of the Soviet Union. Deng Xiaoping and other CCP leaders concluded that the Soviet Union collapsed because they became involved in an arms race with the US and expensive foreign military adventures in Afghanistan and elsewhere. This overemphasis on defense spending led to economic stagnation (not enough investment in productive sectors) and popular discontent (not enough resources devoted consumer goods.)

So the PRC needed to avoid an arms race with the US. This strategy was eventually formulated as Hu Jintao's "Peaceful Rise" strategy. (3).While this sounds nice, it could better be understood as "avoid major foreign conflicts until we've achieved military parity with the other great powers".

Currently and perhaps overly optimistically, the date for that process to be completed is 2035. That doesn't mean China plans to start a war in 2035. It means that they believe that by 2035 if there is a war they have a decent chance of winning.

The key to this strategy is to achieve military expansion and modernization without triggering a Soviet-style economic collapse, this implies limiting annual increases i the defense budget to not much more than the increase in GDP. Currently, the Chinese focus is on building advanced weapons systems and developing doctrine for their use rather than mass deployment. In fact, they've been aggressively reducing total troop numbers.


the key to this strategy is that the Chinese economy needs to keep growing faster than the US economy (and that of US allies) so they can afford to build up their military without either cutting investment in other economic sectors or failing to deliver continuous improvements in material living standards.

So how can the US counter this strategy? (Assuming they should since as I've already noted the Chinese plan isn't to attack the US, it's to reach a point where if such a war does occur they have a chance of winning.)

Well they can either cripple China's economy growth, provoke a war with China before China achieves strategic parity or - wait for it - they could grow their own economy faster. So far Biden is vacillating between the first two options.

(1) https://asia.nikkei.com/Economy/China-GDP-forecast-to-grow-5.1-in-2022-Nikkei-survey

(2) https://www.cnbc.com/2022/01/03/morgan-stanley-on-chinas-gdp-economy-in-2022.html

(3) https://en.wikipedia.org/wiki/China%27s_peaceful_rise

(4) https://en.wikipedia.org/wiki/Modernization_of_the_People%27s_Liberation_Army

08/03/2022

The Real Ukrainian Threat to Russia

Russia's GDP per capita at PPP nearly doubled in Putin's first ten years in office. since then it's essentially stagnated. This data cuts off before COVID and the current war and sanctions. currently things are probably significantly worse. (Purchasing Power Parity compensates for changes in exchange rates and essentially measures what your income can purchase inside Russia, Because of the collapse in the Ruble the fall in nominal GDP (i.e. measured in US dollars at current exchange rates) is much, much worse. That overstates how much ordinary Russians have been affected - unless they want to travel abroad or buy imported goods.

The thing is though: Russia's population is still falling. Russians are not getting any better off.

Russia should be an economic and cultural superpower, a key exponent of soft power. But that would require an open society, free speech, free media and an end to massive corruption. None of that is possible while Putin remains in power.

https://tradingeconomics.com/russia/gdp-per-capita-ppp

Ukraine meanwhile remains significantly poorer than Russia - their current GDP at PPP is around US$12,000 versus circa $25,000 for Russia.

But since 2015, the Ukrainian economy has been growing faster than Russia, That's despite the impact of the Crimean annexation and the war in Donbas. The difference is especially marked in nominal terms. Because the Kryna hasn't collapsed like the Ruble, Ukraine's nominal GDP per capita has nearly doubled.

If we look at the HDI -which measures life expectancy and educational achievement as well as income at PPP - Ukraine is nearly on par with Russia. That's because Russia is much more unequal than Ukraine. Russia may have more rich people but most Russians live no better than most Ukrainians. That vast Russian oil and mineral wealth only benefits the Russian elite.

https://hdr.undp.org/sites/default/files/Country-Profiles/UKR.pdf

Both Russia and Ukraine are viewed as being highly corrupt - but Russia is worse.

https://www.transparency.org/en/cpi/2021

Russia's press is much less free than Ukraine's
https://rsf.org/en/ranking

So let me sum up: despite Russia's massive economic advantages, despite the incredible wealth of human intellectual capital in Russia; despite the Russian war on Ukraine, Ukraine is outperforming Russia and catching up with Russia.

When Putin speaks about Ukraine as the spearpoint of a western threat to Russia, if he's being honest it isn't a military threat: it's an economic and political threat to HIS vision of Russia as an illiberal, authoritarian, deeply unequal state.

If Ukraine were allowed to continue to grow its economy faster than Russia's, if it continued, painfully and slowly to become less corrupt and more free if Russians saw their "Slavic brothers" in Ukraine simply living better lives than them, they might ask if clinging to 19th century dreams of imperial power and national "glory" were worth it.

Reporters Without Borders (RSF) presents the 2020 World Press Freedom Index.