| To: E_K_S who wrote (12694) | 5/14/2024 7:56:04 AM | | From: elmatador | | | | Milei is already proving the Left-wing economic establishment wrong
Argentina’s reforms prove it’s possible to slash a bloated state
MATTHEW LYNN4 May 2024 • 2:00pm
Argentina has historically been a country of failed governments, economic collapses, and debt defaults. Yet incredibly there are signs that – against all the odds – the bold, free market reforms of its libertarian President Javier Milei are beginning to work.
With inflation falling, interest rates coming down, and the peso on fire in one market, Milei is already proving the global Left-wing economic establishment – addicted to bigger government and endless deficits – wrong. Indeed, it may provide a template for other countries to escape from zero growth.
First, what’s changed in the country: inflation has fallen to 11pc and Milei predicts it will fall further. While a monthly figure (this is Argentina after all), price rises may be coming back under control after soaring above 300pc annually.
Last week, Milei announced that the country had recorded its first quarterly budget surplus since 2008, a modest 0.2pc of GDP, but still an astonishing achievement in such a short space of time, especially for a country that has run deficits for 113 of the last 123 years.
Then, earlier this week, the central bank, which Milei has not yet gotten around to abolishing as he pledged, cut interest rates for the third time in three weeks. While they are still at an eye-watering 50pc, that will start to feed through into the economy very soon. Investors have started to notice.
According to Bloomberg data, in the blue-chip swap market the peso was the best-performing currency in the world in the first quarter of this year, and the bond markets are rallying as well.
It may also get better over the months ahead. With stabilising prices, and a rising currency, investment should start flowing again into a country rich in natural resources and hyper-competitive on wages costs.
If Milei can make good on his promise to unlock the country’s vast reserves of shale oil and gas – using technologies that have proved safe and successful in the US – then the economy could even start to boom.
If so, Argentina would be defying a global economic establishment addicted to bigger government, more regulation, and rising deficits.
We keep being lectured, not least by the shadow chancellor Rachel Reeves, and by President Biden and his acolytes in the United States, on the need for an active state, an industrial strategy, and more borrowing to pay for investment, and that regulation is the key to industrial and economic leadership, not its enemy.
The IMF, meanwhile, was too often a huge cheerleader for the failed Argentinian administrations of the past, extending the biggest loans in its history to the country.
On Milei’s election, he was dismissed as a madman who would be removed from office within a matter of months, if not weeks. In proving that narrative wrong, he would show that even after the short-lived catastrophe of the Liz Truss government, free market reforms are far from impossible.
So how is he en route to deliver such a massive shock to the stale economic orthodoxy? Fundamentally, he got three big calls right.
First, even without a majority in parliament, he has been ruthless. Whole government departments have been closed down overnight, regardless of the immediate consequences. The Ministry of Culture was axed, so was the anti-discrimination agency, and the state-owned news service. Only last month, he unveiled plans to fire another 70,000 state employees.
Milei hasn’t attempted to cut gradually, to control budgets, or to ease people out with early retirement, or hiring freezes. Instead, he has, as promised, taken a ‘chainsaw’ to the machinery of the state, yielding huge savings in the process.
Next, he has been bold. The president massively devalued the peso on day one, taking the financial hit upfront, and then tore up rent controls, price restrictions and state subsidies. He pared back workers’ rights, reducing maternity leave and severance compensation, and allowed companies to fire workers who went on strike.
He ripped away fuel subsidies, even though it meant a temporary spike in inflation. Sure, there has been some short-term pain, but the results are now becoming evident.
Rents, for example, are falling by 20pc a year as landlords, freed from controls, put more supply on the market, instead of withdrawing it as they do in countries where the price is set by the government.
Finally, Milei has never stopped making the argument. He promotes freedom, liberalisation and a smaller state with a messianic zeal.
Many of the measures he has taken might be rough, but the president has never attempted to dismiss that, instead explaining patiently and persistently why the reforms are justified, and how they will create greater prosperity for everyone in the long run.
Much of the developed world, and the UK in particular, are gradually slipping into Argentinian-style stagnation before Milei came along.
Governments are hooked on subsidies and price controls, trying to buy their way out of every challenge with higher spending. Deficits are allowed to rise relentlessly, with no meaningful plan for ever bringing them down again. A corrupt, crony capitalism is allowed to flourish, killing competition.
But the Argentine leader is providing a blueprint for how to break free. The global economic elite keeps lecturing us on why we need more government and a more powerful state despite the painful lack of results. Argentina is challenging it in dramatic fashion.
It is just possible that it is starting to work. |
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| From: Elroy Jetson | 5/14/2024 3:11:22 PM | | | | | | Los Angeles County has 3.3% fewer residents than the ten million living here in 2019.
Yet it's claimed this population reduction, with the addition of 2.5 million new homes, condos and apartments since 2019, has somehow created a housing shortage with nearly three-quarters of renters and those younger than 35 have given consideration to moving out of L.A. About 37% of homeowners and 26% of those 65 or older have also considered moving, the poll found.
Apparently our work of discouraging people from living in Los Angeles is not yet finished.
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| To: Elroy Jetson who wrote (12697) | 5/16/2024 4:48:51 AM | | From: elmatador | | | | Brookfield Asset Management needs to come to Africa to help Microsoft. Brookfield Asset Management signed a deal with Microsoft to deliver 10.5 gigawatts of renewable energy for Microsoft between 2026 and 2030 in the U.S. and Europe under the agreement.
https://www.cnbc.com/2024/05/01/microsoft-brookfield-to-develop-more-than-10point5-gigawatts-of-renewable-energy.html
The graphic shows that for the past 18 years the Net electricity generation in the United States from 1950 to 2023 (in terawatt-hours) has been flat.
It is tough for the US to grow its electricity generation like they did between 1985-2005. Delivering that additional power to where the data centers face challenges.
The U.S. is a post-industrial economy. Post-industrial economies use less electricity per unit of GDP. Hence that flat electricity generation for the past 18 years. Being the first to develop an industrial economy means the transmission system in the U.S. is old too.
The data center A.I. fuelled boom surging electricity demand coincides with the expansion of domestic manufacturing -keep in mind the investments in re-shoring- and the electrification of the nation’s vehicle fleet.
Camilla Hodgson today's article pointed out Microsoft’s emissions jump almost 30% as it races to meet AI demand. Data centers can be built much faster than electricity can be delivered.
https://www.ft.com/content/61bd45d9-2c0f-479a-8b24-605d5e72f1ab
Add to that the United States is a hyper-competitive economy. Those grids are further divided into a patchwork of operators with competing interests. That makes it hard to build the long-distance power lines needed to transport wind and solar nationwide.
Africa can build big data centers because it has abundant renewable energy. As a bit of advice to Brookfield Asset Management: It does not matter the color of the cat as long as it catches the mouse...
Before I forget: We are building the fiber optic to connect those data centers too! |
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| From: elmatador | 5/16/2024 5:00:08 AM | | | | | | Data centres have turned Big Tech into big spenders
Companies need AI services revenues, not cost savings, to fuel data centre boom Data centres are expensive to construct and maintain
In their rush to fill rural America with vast, windowless data centres, US tech companies are taking a capital intensive bet on artificial intelligence. If that does not pay off, the rise in investment could drag on profit margins for years.
Excitement around generative AI means post-pandemic cost-cutting programmes have given way to investor-sanctioned spending plans. At the start of the year, Meta announced a new $800mn data centre in Indiana. Alphabet is planning a $3bn project to set up a data centre campus in Indiana and expand capacity in Virginia. Microsoft plans to create a $3.3bn “hub for AI” in Wisconsin. International projects include Amazon’s multibillion-dollar plans in Germany and Singapore. Data centres, like custom chips, are intended to act as a moat around cloud computing and AI services.
The result is an increase in capital expenditure, much of it directed towards plant, property and equipment. Between the end of 2019 and 2023 fiscal years, gross PPE at Meta and Microsoft more than doubled. It almost doubled at Amazon and Alphabet.
Apple is one outlier, with PPE up less than a third between 2019 and 2023. The company has yet to choose its generative AI strategy and has been punished in markets accordingly. It is possible that spending will rise when Apple opts to release AI services to customers.
Data centres, which can be the size of multiple football pitches, are expensive to construct and maintain. Power consumption for US data centres will more than double between 2022 and 2030, according to McKinsey. Hardware needs to be replaced and upgraded over time.
Capex forecasts show that spending plans are still accelerating and will show up in rising depreciation expenses. Alphabet has suggested that the annual investment tally this year could be close to $50bn. So has Microsoft. In both cases, this would be about a 50 per cent increase on 2023. Amazon, which cut spending last year, says $14bn in capex for the first quarter could be on the low end for the year. That suggests annual capex could rise at least a tenth, though it has yet to return to pandemic-era highs.
For now, profit margins are holding up. Positive year-over-year earnings growth was supported by cost-cutting elsewhere and aided by companies extending the expected life of their equipment. Last year, for example, Alphabet and Meta increased the estimated lifespan of their servers from four to five and six years respectively. But the boost this provided to net income is not something that can be repeated. Companies need AI services revenues, not cost savings, to fuel the data centre boom.
elaine.moore@ft.com |
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| From: elmatador | 5/21/2024 8:28:42 AM | | | | | | Yellen will gang up with Europe to push back against China’s excess industrial capacity, warning that a wave of cheap Chinese exports represents a grave threat to the global economy.
China says the US wants to halt China’s development using overcapacity as an excuse for trade protectionism,”
U.S. Seeks to Join Forces With Europe to Combat Excess Chinese Goods
Treasury Secretary Janet L. Yellen warned that China’s industrial strategy posed a global threat that requires a united response.
 
By Alan Rappeport and Liz Alderman
Alan Rappeport is traveling with Treasury Secretary Janet L. Yellen in Germany and Italy this week. Liz Alderman is the chief European business correspondent.
May 21, 2024, 5:08 a.m. ET
Treasury Secretary Janet L. Yellen said on Tuesday that the United States and Europe needed to work together to push back against China’s excess industrial capacity, warning that a wave of cheap Chinese exports represents a grave threat to the global economy.
Ms. Yellen’s remarks, delivered during a speech in Germany, highlighted what is expected to be a central topic of discussion when the Group of 7 finance ministers meet in Italy this week.
“China’s industrial policy may seem remote as we sit here in this room, but if we do not respond strategically and in a united way, the viability of businesses in both our countries and around the world could be at risk,” Ms. Yellen said at the Frankfurt School of Finance and Management, where she received an honorary doctoral degree.
China’s excessive production of green energy technology has become a pressing trans-Atlantic concern in recent months. Officials in President Biden’s administration have grown increasingly worried that his efforts to finance domestic manufacturing of clean energy and other next-generation technologies will be undercut by China, which is churning out steel, electric cars and solar panels at a rapid clip.
The Biden administration is now looking to Europe to help the developed world prevent the kind of China shock of the early 2000s, which helped decimate manufacturing in exchange for cheap goods. Last week, Mr. Biden increased tariffs on some Chinese imports, including levying a 100 percent tax on electric vehicles. He also formally left in place levies on more than $300 billion worth of Chinese goods that President Donald J. Trump had imposed.
The United States hopes that a united front will convince China that its largest trading partners are prepared to erect trade barriers that will prevent Chinese electric vehicles, batteries and panels from dominating Western markets.
Ms. Yellen emphasized on Tuesday that the United States was not trying to carry out an anti-China policy, but said China’s actions posed a threat to the global economy that warranted a coordinated response.
She pointed to China’s push to dominate clean energy technology and other sectors, saying that ambition “could also prevent countries around the world, including emerging markets, from building the industries that could power their growth.”
The trend toward protectionist policies is likely to become another point of contention between China and the world’s most advanced economies. Liu Pengyu, a spokesman for the Chinese Embassy in Washington, derided Mr. Biden’s decision to impose new tariffs on Chinese goods last week as a “political maneuver.”
“We hope the U.S. can take a positive view of China’s development and stop using overcapacity as an excuse for trade protectionism,” Mr. Liu said.
The new U.S. tariffs could put additional pressure on Europe to erect trade barriers of its own to prevent China from redirecting more of its exports there. Europe’s officials are already considering additional levies on Chinese cars, which pose a particular threat to Germany.
A BMW factory in Munich. The European Union could impose preliminary duties on Chinese electric vehicle imports as soon as July.Credit...Laetitia Vancon for The New York Times
About 37 percent of all electric vehicle imports to Europe are produced in China, including Chinese brands and ones made by Tesla and German automakers with plants there. Europe is the world’s second-biggest E.V. market, and imports there skyrocketed last year to $11.5 billion, from $1.6 billion in 2020.
The European Commission is investigating whether Chinese state subsidies intended to help the country’s companies make cheap cars are damaging Europe’s auto industry. The sector provides nearly 14 million direct and indirect jobs in Europe, and the six million cars that it exported last year generated a trade surplus of more than 100 billion euros.
Europe’s investigation could result in preliminary duties on Chinese electric vehicle imports as soon as July, though any tariffs are likely to be far lower than the 100 percent imposed by the Biden administration. But unlike Europe, which is already importing cars from China, the United States has erected several barriers to prevent Chinese E.V.s from coming to its shores.
Europe’s investigation into China’s subsidies and whether they merit tariffs has aggravated a political divide. Some countries, such as Germany, which is Europe’s biggest maker of electric cars, have been against an investigation. German officials are wary of pressing penalties that might incite Beijing to shut out German carmakers such as BMW and Volkswagen.
Chancellor Olaf Scholz said in a speech in Stockholm last week, “We should not forget: European manufacturers, and also some American ones, are successful on the Chinese market and also sell a lot of vehicles that are produced in Europe to China.” He added that at least half of electric vehicles imported to Europe from China were Western brands.
Ursula von der Leyen, the European Commission president, has been pushing for “de-risking” Europe’s relationship with China. Her approach is backed by President Emmanuel Macron of France, who hosted his Chinese counterpart, Xi Jinping, this month and has urged Brussels to step up protection against what his administration sees as unfair Chinese competition.
The Brussels investigation has focused less on whether China is dumping large numbers of cars into Europe and more on how subsidies have allowed E.V.s made by BYD, Geely and SAIC, the three biggest Chinese E.V. makers, to offer cut-rate prices. The Chinese government has criticized the European Union for not investigating Western brands with factories in China — including Tesla, which exports more E.V.s from China to the European Union than any other producer.
The Rhodium Group, an independent think tank that focuses on China, said that to compensate for Chinese state subsidies, the European Commission would have to impose duties of up to 50 percent on Chinese E.V.s. But the group suggested that such a move would be unlikely in Europe unless officials took a more “drastic” review of World Trade Organization rules, and suggested that tariff rates of 15 to 30 percent were more realistic.
In the meantime, Chinese electric vehicle makers, including BYD and Great Wall Motor, are setting up factories in Hungary to build cars that would be viewed as European-made products, which could raise trade issues eventually with the United States.
The Biden administration is watching with similar concern as Chinese car companies invest in factories in Mexico, which could potentially be used to enter the U.S. market.
The approach by the United States and Europe to work together to confront China does pose the risk of retaliation, inflaming trade tensions that could weigh on the world economy. Chinese officials said last week that they would respond to the new trade measures imposed by the United States.
In an interview with The New York Times this week, Ms. Yellen argued that the new U.S. tariffs were targeted and that she did not believe that China wanted to escalate tensions.
“I anticipate some response on China’s part, but my hope is that it’s moderate and proportional,” Ms. Yellen said.
Alan Rappeport is an economic policy reporter, based in Washington. He covers the Treasury Department and writes about taxes, trade and fiscal matters. More about Alan Rappeport
Liz Alderman is the chief European business correspondent, writing about economic, social and policy developments around Europe. More about Liz Alderman |
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| To: elmatador who wrote (12720) | 5/21/2024 11:52:41 AM | | From: robert b furman | | | | Time to quit favoring China as an emerging market within the WTO.
Once they have to play fair or get fined, they'll either rein in their inevitable over production of what the CCP declares, of we'll have us a WWIII.
That will require blowing them into a perpetual third world economy, where they belong!
JMHO
Bob |
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| To: robert b furman who wrote (12721) | 5/21/2024 12:25:32 PM | | From: E_K_S | | | | Who will buy Our Treasury Bills if that happens? lol
China & the other BRICK Countries have a role to play, I think the US has to look in the mirror and work on things here at home.
The US could be the best manufacturer, producer in the World if we just got out of it's way (ie regulations).
Not sure if we really need all those tariffs but I like that approach as along as we limit them with some sort of time period, so US could build supper efficient, smart (AI robot) manufacturing plants. Problem Solved! |
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| From: Elroy Jetson | 5/22/2024 12:03:14 AM | | | | | | Political analyst Jon Delano at KDKA-TV in Pittsburgh, today asked Donald Trump if he supports restrictions on a person's right to contraception.
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"We’re looking at that and I'm going to have a policy on that very shortly and I think it’s something you’ll find interesting," Trump said. "I think it’s a smart decision. We’ll be releasing it very soon."
Asked if that means he supports some restrictions on birth control, Trump said, "You know also, things really do have a lot to do with the states and some states are going to have different policy than others."
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Later today, someone used Donald Trump's account on his Truth Social website to type,
"I have never, and will never advocate imposing restrictions on birth control.
I DO NOT SUPPORT A BAN ON BIRTH CONTROL AND NEITHER WITH THE REPUBLICAN PARTY." |
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