Political Posts

[Luke]

https://interestingengineering.com/innovation/core-module-small-modular-reactor-completed-china

 

China completes core module of world's first commercial onshore small modular reactor:

 

The nuclear reactor has achieved a significant milestone in its construction by completing its core module. Built by China First Heavy Industries, the core module is the most critical part of the reactor and has been built using technology developed in China.

Once completed, the reactor will produce one billion kilowatt hours of electricity annually to power 526,000 households. In addition to providing carbon-free energy, the reactor will provide additional benefits such as urban heating and cooling, steam production, and seawater desalination. This is expected to fresh water in areas where conventional reactors are not feasible.

The technology has potential offshore applications in disputed areas like the South China Sea. The country is also looking at deploying SMRs on small islands with relatively smaller populations of a few thousand people, where they will also be able to serve as a freshwater source.

The technology could also be exported to countries that are part of the Belt and Road Initiative (BRI) and China's neighbors in Asia, such as the Philippines and Indonesia, with multiple islands in their geography.

Edited July 19, 2023 by Luca

[Xerxes]

 

Building relationships based on common values can go a long way 

 

 

 

Edited July 19, 2023 by Xerxes

[John Hjorth]

On weaponizing food :

 

The Conversation [June 21^st 2022] : Starving civilians is an ancient military tactic, but today it’s a war crime in Ukraine, Yemen, Tigray and elsewhere, &

The Conversation [July 19^th 2023] : Why Russia pulled out of its grain deal with Ukraine – and what that means for the global food system.

[tnp20]

Continuation from BABA thread as I think it belongs here...

 

You can boil the whole China investment thesis into Pragmatism versus Rigid orthodoxy of Xi (what ever crazy idea Xi has in his head ...taking on geopolitical war, tech war, education war, housing war at the same time in the middle of a freaking once in 100 year extreme economic and social event - the covid pandemic).

 

Xi likes to create an alternate model to the West that he thinks will be better model both for China and others. He sees himself in the Moaist mold (which any smart person would tell you is utterly stupid and has nothing to offer). He begrudgingly accepts the free market capitalism because it catches mice. He fundamentally fails to understand the Western model and this has a lot to do with his key advisor Wang Huning who thinks West is failing utterly and this is their chance to come up with the "China model" as an alternative. The problem with Xi is his model based on new made up ideas is untested and lot of the factors that go into it are interlinked and not well balanced at all. Wang takes the western model's failure and adopts the opposite but the opposite is not the answer as it breaks other things in a delicate fine balance of the Western model of freedom, property rights, free market etc.  Yes USA model is failing but it needs tweaking not an overhaul (and probably same with lot of other Western systems).

 

My Chinese friends decades ago expected China to open up and become more liberal and democratic as well as capitalistic. Under Xi, the first two has been reversed and there is a question mark on the third. The chances of a new model working for China that is better than the West is low (as its untested and there is no history of it) and the odds are even lower of it being adopted by others even if it works for China simply because people are not willing to give up there freedoms for long. Rich Chinese are leaving or at least have one foot outside just in case. My recent conversations with those who know China and have lived in China and are China native falls into two camps. (i) China will get prosperous because they want to be to prove model superiority. (ii) You can't trust the CCP long term because leadership has no checks and balances.

 

Edited July 20, 2023 by tnp20

[SharperDingaan]

Keep in mind that 'economic busts' are routine events; and the subsequent 'market clearing' is both highly disruptive and messy. The consequent recessions &/or depressions suck at the time, but they reliably clear the market, and usher in the next round of growth.

 

The less governmental interference, the more an economy resembles the natural fire cycle; more frequent, lower temperature, less intense burns, that keep down the fuel load and pests; versus the high temperature, high intensity, uncontrollable burns that take everything in their path. Economic resiliency, and anti-fragility, by burning often, and allowing it to happen.

 

China has made enormous strides over the last 50+ years, and the nation has a great deal to be proud of, all good. However, periodic burns didn't happen as regularly as they should have, and there is now way too much fuel on the ground. A lightning strike in the wrong place, and it could go very badly. 

 

Very bad news when social order is a primary metric, there is a material in-county 'bad-debt' problem, a material 'youth employment' problem, and a significantly worsening demographic. Suffer enough lightning strikes ... at least one of them is inevitably going to strike in the wrong place.

 

Fixable, but not without repeated doses of short-term pain, and very carefully administered! More about reliable, competent execution, versus who is in charge at the time.

 

SD

 

 

 

Edited July 23, 2023 by SharperDingaan

[tnp20]

26 minutes ago, SharperDingaan said:

Fixable, but not without repeated doses of short-term pain, and very carefully administered! More about reliable, competent execution, versus who is charge at the time.

 

I see it more clearly as Xi failure.

 

Why on "god's earth" would you try and create multiple battle grounds in the middle of gigantic covid crisis ? That is a strategic blunder of magnanimous proportions.....

 

Multiple battles started by Xi during covid...

(i) Geopolitical war

(ii) Tech war

(iii) Education war

(iv) National security drive

(v) Pop housing

(vi) Consequences of covid war (that no one else in the world adopted):-

            - Load up local governments with huge debts fighting endless covid lockdowns

            - Scare foreigners - both from an investment perspective and from a tourist and resident perspective - many have left and are not coming back and few are going there now

 

Should you not do a controlled burn in small areas one at  a time making it more manageable and less severe ?

 

Sounds like he is an hurry ...but for what and at what risk?

Edited July 20, 2023 by tnp20

[Spekulatius]

1 hour ago, tnp20 said:

Continuation from BABA thread as I think it belongs here...

 

You can boil the whole China investment thesis into Pragmatism versus Rigid orthodoxy of Xi (what ever crazy idea Xi has in his head ...taking on geopolitical war, tech war, education war, housing war at the same time in the middle of a freaking once in 100 year extreme economic and social event - the covid pandemic).

 

Xi likes to create an alternate model to the West that he thinks will be better model both for China and others. He sees himself in the Moaist mold (which any smart person would tell you is utterly stupid and has nothing to offer). He begrudgingly accepts the free market capitalism because it catches mice. He fundamentally fails to understand the Western model and this has a lot to do with his key advisor Wang Huning who thinks West is failing utterly and this is their chance to come up with the "China model" as an alternative. The problem with Xi is his model based on new made up ideas is untested and lot of the factors that go into it are interlinked and not well balanced at all. Wang takes the western model's failure and adopts the opposite but the opposite is not the answer as it breaks other things in a delicate fine balance of the Western model of freedom, property rights, free market etc.  Yes USA model is failing but it needs tweaking not an overhaul (and probably same with lot of other Western systems).

 

My Chinese friends decades ago expected China to open up and become more liberal and democratic as well as capitalistic. Under Xi, the first two has been reversed and there is a question mark on the third. The chances of a new model working for China that is better than the West is low (as its untested and there is no history of it) and the odds are even lower of it being adopted by others even if it works for China simply because people are not willing to give up there freedoms for long. Rich Chinese are leaving or at least have one foot outside just in case. My recent conversations with those who know China and have lived in China and are China native falls into two camps. (i) China will get prosperous because they want to be to prove model superiority. (ii) You can't trust the CCP long term because leadership has no checks and balances.

 

Yes, that's a good one page summary of the situation. Now how to handicap the risk that is the question here and where we differ.

 

I was of the opinion that China continues to open up and the CCP through internal reform over time become more democratic. Whether that leads to some western style democracy or stays a benevolent a one party state run by committee that balances different fractions was unclear but either state would be fine, at least from an investing POV.

 

Having this moving towards a personality cult with all the negative ramifications was not something I considered likely until about 2020 but here we are. Hopefully the pendulum swings back at some point but that's a different judgement to make and will only happen post XJP reign.

Edited July 20, 2023 by Spekulatius

[SharperDingaan]

On 7/20/2023 at 11:53 AM, tnp20 said:

Should you not do a controlled burn in small areas one at  a time making it more manageable and less severe ?

Sounds like he is an hurry ...but for what and at what risk?

 

Each burn will turnover some supporters, he needs to demonstrate that supporters can be changed, and he needs to keep the circle of supporters as small as possible; The Dictator's Handbook. One burn at a time, and another 'to follow' ... to keep everyone in line.

 

The 2018 term limit abolishment probably had strings; performance review every X years or so. He was 65 when the limit was abolished (a young man!); but if there is a rolling 10 year review, he only has another 4+ years over which to deliver. Most would also not expect a 10 year renewal, when you are already 75!    

 

Different cultures, different strokes.

 

SD

Edited July 23, 2023 by SharperDingaan

[Dinar]

Ukraine’s Lack of Weaponry and Training Risks Stalemate in Fight With Russia - WSJ

 

Sadly, this is what I worried about a year ago, neither plan nor foresight on the part of the Western countries, and recklessness on the part of Ukrainians.  

[tnp20]

http://www.aastocks.com/en/stocks/news/aafn-news/NOW.1280596/2

 

" Xi said the capital market should be enlivened to boost investor confidence."

 

Lots of words...need actions and follow through....

[rogermunibond]

Crackdown and tough talk prior to the Party Congress.  Now that a third term has been secured, ease up and let the good times roll again.

 

We'll see a repeat of this in five years prior to the next Party Congress.

[rogermunibond]

Adam Tooze has a very good post on the problems with young adult unemployment in China.  Definitely bears watching.

 

https://adamtooze.substack.com/p/chartbook-228-polarization-the-bigger?utm_source=post-email-title&publication_id=192845&post_id=135351585&isFreemail=true&utm_medium=email

[rogermunibond]

https://www.ft.com/content/f7922fdb-01bf-4ffd-9c5c-79f15468aa71

 

PLA strategy of winning without fighting.

[tnp20]

https://archive.ph/rtLxo

 

Good piece

[ValueArb]

On 7/17/2023 at 1:43 PM, cubsfan said:

Trump’s wind down in Afghanistan resulted in no dead Americans for 18 months and stability in Kabul. His statement was to withdraw ONCE the domestic Afghan forces could provide their own security under the few thousand remaining American forces. Joe Biden threw away Trump’s plan in favor of his own - a lightening withdrawal to meet a 9/11 parade deadline.

 

Against the wishes of his military advisors. 
 

Biden’s plan was Biden plan only.

 

He was handed a stable plan on a silver platter in Afghanistan by his predecessor

Trump gave the Taliban 18 months to rebuild their forces without worry of air strikes and the date to plan for their offensive. His plan was ridiculous, he was the one who made “cut and run” our strategic plan for Afghanistan. 
 

And to be honest, he was right to pull out. Twenty years of wasted US tax dollars after we already got the goat herders who did 9/11. There never should have been a $1B base and it was a sunk cost, not an asset.

[tnp20]

Is it a coincidence that China gets a property bubble top coincident with a stock market bottom ?

 

Makes the money flow from one to another perfect for a multi-decade boom in the stock market.

 

If we just look at the money flow aspect of the Chinese market, there are several tail winds:-

 

(i) CHina has created IRA like accounts for pension savings - annual tail wind long term

(ii) More non-IRA pension funds also being invested in stocks - annual tail wind long term

(iii) EM index managers are underweight china - they will have to get correctly weighted - one off

(iv) Sovereign wealth funds are diversifying some of their holding to CHina as it a number 1 or 2 economy some 20-30 years out. A balance between US, Europe, China, India (and possibly Indonesia and Brazil) makes most sense. - continuous tail wind

(v) Now that property market is not where the money goes, the suitable alternatives are stocks, gold, commodities, antiques. - long term flows

(vi) Chinese animal spirits are at rock bottom and once those get ignited with stock prices moving up, it will have a mo-mo/confidence effect. Chinese by nature are big gamblers judging by the Casinos I have seen. - medium term flows in and out

(vi) Short covering - short term flows

(vii) Yuan appreciation and lower dollar drives wealth creation and margin buying power. HKD stability and strength will drive further foreign inflows. - medium/long term flows

(viii) Chinese Insurance companies will allocate more to chinese stocks. - long term flows

(xi) Revenue expansion, margin expansion, profit expansion, multiple expansion  - long term flows

 

Xi is the risk. Xi can also light a fire to move the market in the right direction. Apparently national team is buying right now.

 

You can either take the approach that this will result in Sugar Rush or that this is a long term decades long bull market. Both cases results in favorable outcome from here.

 

10-15% of Chinese own stocks. Figure in Europe/US is 35-55%.

 

 

 

 

Edited July 28, 2023 by tnp20

[sleepydragon]

1 hour ago, tnp20 said:

Is it a coincidence that China gets a property bubble top coincident with a stock market bottom ?

 

Makes the money flow from one to another perfect for a multi-decade boom in the stock market.

 

If we just look at the money flow aspect of the Chinese market, there are several tail winds:-

 

(i) CHina has created IRA like accounts for pension savings - annual tail wind long term

(ii) More non-IRA pension funds also being invested in stocks - annual tail wind long term

(iii) EM index managers are underweight china - they will have to get correctly weighted - one off

(iv) Sovereign wealth funds are diversifying some of their holding to CHina as it a number 1 or 2 economy some 20-30 years out. A balance between US, Europe, China, India (and possibly Indonesia and Brazil) makes most sense. - continuous tail wind

(v) Now that property market is not where the money goes, the suitable alternatives are stocks, gold, commodities, antiques. - long term flows

(vi) Chinese animal spirits are at rock bottom and once those get ignited with stock prices moving up, it will have a mo-mo/confidence effect. Chinese by nature are big gamblers judging by the Casinos I have seen. - medium term flows in and out

(vi) Short covering - short term flows

(vii) Yuan appreciation and lower dollar drives wealth creation and margin buying power. HKD stability and strength will drive further foreign inflows. - medium/long term flows

(viii) Chinese Insurance companies will allocate more to chinese stocks. - long term flows

(xi) Revenue expansion, margin expansion, profit expansion, multiple expansion  - long term flows

 

Xi is the risk. Xi can also light a fire to move the market in the right direction. Apparently national team is buying right now.

 

You can either take the approach that this will result in Sugar Rush or that this is a long term decades long bull market. Both cases results in favorable outcome from here.

 

10-15% of Chinese own stocks. Figure in Europe/US is 35-55%.

 

 

 

 

agree. I think westerners underestimated the influence of the Chinese leadership has on the stock markets. The leadership is like the emperor. When they want to give some breathing rooms to the people, just a little bit of air the ball can bounce up very aggressive. People are eager to make money. And now is the time that they are releasing some fresh airs to the market. 

 

 

[UK]

https://www.economist.com/united-states/2023/07/28/joe-biden-donates-weapons-to-taiwan-as-he-does-to-ukraine

 

On July 28th it took that reasoning a leap forward by announcing it would for the first time start to arm Taiwan from America’s own military stocks, as it has done repeatedly for Ukraine. The main difference is that it has not invoked an “emergency” to justify the move. Instead, it believes the arms supplies will help forestall a war across the Taiwan Strait. The military move may instead provoke a new crisis. China will not accept American claims that it is nothing out of the ordinary, and represents “no change” in America’s Taiwan policy. After all, America is shifting from selling weapons to Taiwan to subsidising its armed forces. 

[UK]

https://www.economist.com/international/2023/07/27/the-ukrainian-army-commits-new-forces-in-a-big-southward-push

 

These factors explain why General Valery Zaluzhny, Ukraine’s top general, decided to throw in fresh legs on July 26th. He has been forced to adapt his original plan. Brigades from Ukraine’s 9th Corps had been expected to fight their way to Russia’s main line of defence. Then the 10th Corps, in essence a second echelon, including three Western-equipped brigades, were to be deployed to fight their way through the strongest defences. Finally, light, fast-moving air-assault units were supposed to exploit any breakthrough, pouring through the hard-won breach.

In the event, 9th Corps struggled. Advances that were supposed to be completed in days ended up taking weeks. Ukraine was unable to deploy whole brigades, instead breaking them down into smaller units. Some experts worry that 10th Corps has now been thrown in prematurely. The main Russian line is still kilometres away and 10th Corps’s units might be worn down before they get there, leaving them too exhausted to punch through.

 

Western officials play down these concerns. “I think they timed it well,” says one. Ukraine is in a “very strong operational position”, says another, pointing to the turmoil in Russia’s senior ranks, including the decision in early July to sack General Ivan Popov, who commanded a big portion of Russian forces in southern Ukraine. Russian military bloggers have described heavy losses of Russian artillery pieces in recent weeks.

 

However, a fluid war of manoeuvre is likely to remain a stretch for a force cobbled together in a few months. The Russian verb peremalyvat (to grind through) is invoked on both sides. But Ukraine’s junior commanders, having seen their units gutted over the past 18 months, refuse to send their new citizen army into a meat-grinder in the way that Russia did in Bakhmut. As Ukraine has become more European, Ben Wallace, Britain’s defence minister, recently suggested, it has acquired “a Western European caution”.

 

Some American and European military officials argue that Ukrainian commanders have in fact been too slow to strike with their new brigades, a mistake that they think Ukraine committed last year in Kherson, when tens of thousands of Russian troops withdrew east over the Dnieper river with their equipment. Ukrainian commanders chafe at the idea that they should gamble their army in circumstances that nato generals have never faced.

 

The 10th Corps’s assault is a break with that hesitation. And the upside of the aversion to casualties thus far is that many Ukrainian units are in better shape than planners had assumed. Brigades that assaulted Russian positions were expected to be left with only a third of their original strength. Thanks in part to well-armoured Western vehicles, they have taken a lighter knock. Even so, the commitment of 10th Corps is a fateful moment for General Zaluzhny, a cautious commander with the weight of Ukrainian and allied expectations on his shoulders. “This is the last big decision for Zaluzhny to make this summer,” says the Western official. “The die is cast.”

[scorpioncapital]

is anyone worried about a nuclear war, followed by deflation, a rush to certain continents vs others, panic, and some companies doing well that sell radiation monitors, or even Amazon delivering essential goods via robots?

[UK]

2 hours ago, scorpioncapital said:

is anyone worried about a nuclear war, followed by deflation, a rush to certain continents vs others, panic, and some companies doing well that sell radiation monitors, or even Amazon delivering essential goods via robots?

 

Not necessarily about such scenarios, but sure I am worried about what is going on. But then again: 'If a problem is fixable, then there is no need to worry. If it is not fixable, then there is no help in worrying'.

[Xerxes]

11 hours ago, scorpioncapital said:

is anyone worried about a nuclear war, followed by deflation, a rush to certain continents vs others, panic, and some companies doing well that sell radiation monitors, or even Amazon delivering essential goods via robots?

In all candidness, I was concerned about tactical nuke exchange in the early phase, but the probability has gone down a lot. In the early phases of war, he could have stunned the West by going nuclear, stunning Sleepin’ Joe and Kiev, instead he stunned himself. 
 

In 2023, the mutiny, and a shaky chain of command structure, and a Tsar that still playing the peace-time game of creating division within Kremlin, all speak to indecision and indecisiveness. Will even his orders be followed if orders are given to activate the small-yield nukes  …

 

I think in this war, we are exploring how much we can push the non nuclear envelope, and I suspect it can be push further. 
 

That said, in a post-Putin world, will only have uncertainty and ambiguity on the nuclear front. The world indeed has changed and not for the better.  
 

The Economist had a few good article (as always) in the July 1st edition. They described Putin as a “rusty nail” holding the charade together, even as mutiny was unfolding. With stakeholders not sure which direction to bet on, but sure what the rusty nail is. 

[cubsfan]

^^^ I think that’s a great summary of where we are at now. No one knows what Putin will do on the nuke front, but this makes lots of sense.

 

 

[John Hjorth]

13 hours ago, scorpioncapital said:

is anyone worried about a nuclear war, followed by deflation, a rush to certain continents vs others, panic, and some companies doing well that sell radiation monitors, or even Amazon delivering essential goods via robots?

 

I personally have a hard time thinking about such a screnario, it is just so deeply unpleasant to think about. Where would you try to go, if this sceninario eventually would end to get real?

[maplevalue]

13 hours ago, scorpioncapital said:

is anyone worried about a nuclear war, followed by deflation, a rush to certain continents vs others, panic, and some companies doing well that sell radiation monitors, or even Amazon delivering essential goods via robots?

 

Nuclear war is inflationary. Governments will hit the print button immediately, making COVID handouts look small in comparison.