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Blume Industries CEO Balding 大老板 Profile picture
@BaldingsWorld
Oct 3, 2020 • 5 tweets • 1 min read • Read on X
War and Peace is considered Tolstoy's master piece and by some the greatest novel of all time. It is truly a master piece. The philosophical point of the book is summed up in the second epilogue... not the first one. In it Tolstoy speaks to man's hubris as generals believe 1/n
They sit astride history moving the fortune of war with their decisions. Tolstoy argued in reality, history was much less predictable with events being decided by thousands of small decisions outside the control of rulers. It is easy to believe in our data driven age this 2/n
Changed despite lacking strong supporting evidence. The US economy largely preforms the same regardless of political party. ACA has not fundamentally changed American health outcomes. We can't explain why observable data like mobility is so tightly correlated but corona 3/n
Rates differ so widely between localities and countries. It's so easy and tempting to believe like the Tolstoyan general that we or our leaders control the destiny of man but we really don't. We are subject to the same randomness and unknown events as our ancestors. 4/n
That scares us as humans but hopefully it relieves us off the burden of having to control our destiny. Bless and protect all leaders and may we treat each other with grace and mercy.

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More from @BaldingsWorld

Blume Industries CEO Balding 大老板 Profile picture
Apr 3
Ever so often I find things written about China that are the kind of things, I almost wish I had written it myself they are just so good. This is one of those pieces. Allow me a moment to highlight what I think are some of the key pieces a couple of key extrapolations. 1/n
This piece is about local government financing vehicles (LGFVs) and how they came to be in China and their importance for both growth and their outsized importance to debt composition in China. As the author notes, the overall financial picture is bad. Really bad. 2/n
For the uninitiated, LGFVs are basically qusi-public entities that are not technically owned by the local government but for multiple reasons effectively local government vehicles that avoid government debt limits and fund primarily government projects. Their debt does not 3/n
Read 11 tweets
Blume Industries CEO Balding 大老板 Profile picture
Mar 28
This is a very good article and if I may say, I've been telling you this for a couple years. That said while continuing to say it is a very good article I would like to nibble at the edge of things I think are a little more important. First, making the transition from 1/n
Investment to consumption driven economy is not the matter of flipping a switch or changing some tax law but is literally just a little short remaking the entire economy. I don't think the magnitude of what is being asked is appreciated by these authors or others 2/n
Second, and the authors allude to this but I think still come up a little short in appreciating its importance, not only does Beijing not want to shift to a consumption driven economy but they really can not. Let me give you 2 simple examples. A. Assume (very simple example) 3/n
Read 7 tweets
Blume Industries CEO Balding 大老板 Profile picture
Mar 11
Sure. Let me provide two examples. Trans-shipment example: China produces the t-shirts WITHOUT a made in label, ships the t-shirts to Vietnam, someone in Vietnam prints "Made in Vietnam", ships to US. In this case, the Chinese controlled company and its representative 1/n
a) do almost no work in Vietnam b) control the USD outside of China earned from exporting. Now let's tackle the arbitrage example. Let's assume (hyper simplistic example) that China can make t-shirts at $1 and Vietnam at $1.05. China however, faces a 10% tariff so their 2/n
T-shirts cost $1.10 in the US. Vietnam is better off arbitraging the spread here so what they do is: a) export all the t-shirts they make to the US b) buy t-shirts from China for their own consumption(people in Vietnam need t-shirts too). This pushes up t-shirt consumption 3/n
Read 5 tweets
Blume Industries CEO Balding 大老板 Profile picture
Feb 21
This is an excellent follow up question to the Beijing move to centralize control over tech firms. This could easily house multiple dissertations but let me give you the broad outlines. First, 10-30 years ago centralization played minimal role in Chinese domination of 1/n
In fact, Chinese firms generally succeeded in spite of the state not because of it. Huawei legendarily had to fight for all kinds of things. Even sectors like low wage/skill garment manufacturers were not centralized but even were locked out of access to finance mostly 2/n
Second, Chinse centralization is multilayered and doesnt operate like people think. The most direct way China exercises central control not through input output directives (though they very much do in some cases) but more through channeling finance to preferred sectors 3/n
Read 12 tweets
Blume Industries CEO Balding 大老板 Profile picture
Feb 6
So after this thread from yesterday, I had multiple people ask me a very reasonable question responding to the "how do you pay for it?" question. Why can't they just print money to bailout the bad loans? Totally fair question. Ready to get crazy? 1/n
Before we even dive in, especially when we look at the balance sheet expansions of like the Fed and BoJ, it makes perfect sense to use that as a framework to both ask the question and whether this could be applied in China. So let's review a couple of things specific to China 2/n
It is worth noting that while countries like China, Japan, and the US share some similarities in different areas (think demographics or bad debt) the severity of these problems are much worse in China. It's also worth noting, focusing on the finances, much worse relatively 3/n
Read 17 tweets
Blume Industries CEO Balding 大老板 Profile picture
Feb 5
So since I see so many opeds from China and other places that China needs to bailout or public support for its stock market/banking/housing or other sector and these people have a pathological inability to understand second order conditions let me pose a simple question: 1/n
Now this is where it gets complicated so only Phd economists will understand my question: how do you pay for it? Since I'm feeling feisty let me impose a second crazy condition: how do you pay for it that actually accomplishes anything other than lighting money on fire? 2/n
So let's start with the first part: how do you pay for it? I can already hear the tourists and know nothing saying things like China has FX reserves, a sovereign wealth fund and SOEs they can sell off. For simplicity sake, let's assume the data is accurate 3/n
Read 15 tweets

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