Xi Jinping Aims to Rein In Chinese Capitalism, Hew to Mao’s Socialist Vision

Rein in? Yeah, we need to rein in Beijing, the freakin' lyin', cheatin,' heathen rogue regime of the new new world order. 

Jeez, I can't stand China. (Though I'm around Chinese folks all the time in Irvine, and they're just fine; indeed, I see them as hitting the lottery, coming here, getting citizenship, bringing their folks over from the Mandarin prison state; hittin' the lottery indeed.)

At Wall Street Journal, "Going beyond curbing tech giants, he wants the Communist Party to steer flows of money and set tighter limits on profit making":

Xi Jinping’s campaign against private enterprise, it is increasingly clear, is far more ambitious than meets the eye.

The Chinese President is not just trying to rein in a few big tech and other companies and show who is boss in China.

He is trying to roll back China’s decadeslong evolution toward Western-style capitalism and put the country on a different path entirely, a close examination of Mr. Xi’s writings and his discussions with party officials, and interviews with people involved in policy making, show.

For most of the 40 years after Deng Xiaoping first unleashed economic reforms in China, Communist Party leaders gave market forces wider room to flourish. That opening helped lift hundreds of millions of people out of poverty and created trillions of dollars in wealth, but also led to rampant corruption and eroded the ideological basis for continued Communist rule.

In Mr. Xi’s opinion, private capital now has been allowed to run amok, menacing the party’s legitimacy, officials familiar with his priorities say. The Wall Street Journal examination shows he is trying forcefully to get China back to the vision of Mao Zedong, who saw capitalism as a transitory phase on the road to socialism.

Mr. Xi isn’t planning to eradicate market forces, the Journal examination indicates. But he appears to want a state in which the party does more to steer flows of money, sets tighter parameters for entrepreneurs and investors and their ability to make profits, and exercises even more control over the economy than now. In essence, this suggests that he aims to rewrite the rules of business in what could someday be the world’s biggest economy.

“China has entered a new stage of development,” Mr. Xi declared in a speech in January. The goal, he said, is to build China into a “modern socialist power.”

Mr. Xi’s overhaul has generated more than 100 regulatory actions, government directives and policy changes since late last year, according to a Journal tally, including steps aimed at breaking the market dominance of companies such as e-commerce behemoth Alibaba Group Holding Ltd., conglomerate Tencent Holdings Ltd. and ride-sharing leader Didi Global Inc.

The government’s recent measures to tame housing prices are worsening a cash crunch at China Evergrande Group , a heavily indebted real-estate developer, sending chills across global markets. Beijing is unlikely to bail out Evergrande the way it has rescued many state firms, analysts say, and could further tighten the regulatory screws on other private developers.

Mr. Xi has signaled plans to go much further. During a leadership meeting in August, he emphasized a goal of “common prosperity,” which calls for a more equal distribution of wealth. This would be achieved in part through more government intervention in the economy and more steps to get the rich to share the fruits of their success.

An Aug. 29 online commentary circulated by state media called it a “profound revolution” for the country.

“Xi does think he’s moving to a new kind of system that doesn’t exist anywhere in the world,” said Barry Naughton, a China economy expert at the University of California, San Diego. “I call it a government-steered economy.”

A number of countries closely regulate industry, labor and markets, set monetary policy and provide subsidies to help boost their economies. In Mr. Xi’s version, the government would have a level of control that would allow it to steer the economy and industry along a path of its choosing, and channel private resources into strengthening state power.

The big risk for China and Mr. Xi is that the push winds up suppressing much of the entrepreneurial energy that has powered China’s boom and years of innovation.

For foreign businesses, the campaign likely means more turbulence ahead. Western companies have always had to toe the party line in China, but they are increasingly asked to do more, including sharing personal user data and accepting party members as employees. They could be pressed to sacrifice more profits to help Beijing achieve its goals.

“Supervision over foreign capital will be strengthened,” said a person familiar with the thinking at China’s top markets regulator, “so it won’t be able to obtain ultra-high profits in China through monopoly and capital-market operations.”

The Information Office of the State Council, China’s top government body, didn’t respond to questions for this article.

Before this year, Mr. Xi was distrustful of capital, but he had other priorities. Now, having consolidated power, he is putting the whole government behind his plans to make private business serve the state.

A once-in-a-decade leadership transition due for late 2022, when Mr. Xi is expected to break the established system of succession to stay in power, provided an impetus to act and show he is doing something big for the people to justify longer rule, officials involved in policy making say.

At internal meetings, some of them say, Mr. Xi has talked about the need to differentiate China’s economic system. Western capitalism, in his view, focuses too heavily on the single-minded pursuit of profit and individual wealth, while letting big companies grow too powerful, leading to inequality, social injustice and other threats to social stability.

Early this year, when Facebook Inc. and Twitter Inc. took down former U.S. President Donald Trump’s accounts, Mr. Xi saw yet another sign America’s economic system was flawed—it let big business dictate what a political leader should do or say—officials familiar with his views said.

A few months later, when the Chinese Communist party celebrated its centenary on July 1, Mr. Xi donned a Mao suit and stood behind a podium adorned with a hammer and sickle, pledging to stand for the people. After the speech, he sang along with “The Internationale” broadcast across Tiananmen Square. In China, the song, a feature of the socialist movement since the late 1800s, has long symbolized a declaration of war by the working class on capitalism.

Such gestures, once dismissed as political stagecraft, are being taken more seriously by China watchers as it becomes evident Mr. Xi is more ideologically driven than his immediate predecessors.

The difference between his vision and Western-style capitalism, he has said at internal meetings, is that in China, “Capital serves the people.”

Industries that Mr. Xi views as being led astray by a capitalist spirit, including not only tech but also after-school tutoring, digital gaming and entertainment, are bearing the immediate brunt.

A policy aimed at turning private education companies into nonprofit entities all but killed New Oriental Education & Technology Group Inc., which has provided English lessons to generations of students studying abroad. Its shares have plunged about 90% this year.

Founder Yu Minhong, nicknamed “Godfather of English Training” in China, broke into tears during a recent company meeting, according to an employee. “It’s devastating to him, and to all of us,” the employee said.

Mr. Xi’s policy changes have dashed more than $1 trillion in stock-market value and erased over $100 billion of wealth for entrepreneurs such as Alibaba founder Jack Ma and Tencent’s Pony Ma. Private companies and their owners are being encouraged to donate profits and wealth to help with Mr. Xi’s common-prosperity goals. Alibaba alone has pledged the equivalent of $15.5 billion. State-owned companies, having already bulked up under Mr. Xi’s rule, are marching into areas that were pioneered by private firms but are increasingly seen as crucial to national security, such as management of digital data.

A ministry supervising state companies, the State-owned Assets Supervision and Administration Commission, is mapping plans to set up more government-controlled providers of cloud services for data storage, people familiar with the agency’s workings say. Such services have been dominated by private companies, including Alibaba and Tencent.

The city of Tianjin has ordered companies it supervises to migrate data from private-sector cloud platforms to state-owned ones within two months of the expiration of existing contracts, and by September 2022 at the latest, according to an official notice dated Aug. 12. More localities are expected to follow suit, the people say.

Government-controlled entities are acquiring stakes and filling board seats in more companies to make sure they fall in line with the state’s goals. ByteDance Ltd., owner of the video-sharing app TikTok, and Weibo Corp. , which runs Twitter-like microblogging platforms, recently have sold stakes to state-backed companies.

Mr. Xi is fully in charge of the campaign, instead of delegating details to Vice Premier Liu He, his chief economic adviser, as in the past. A central party office reporting directly to Mr. Xi has been sending out directives instructing ministries to take actions and coordinate policies...

 

Gross Domestic Product, Second Quarter 2021, Grows 6.5 Percent

At W.S.J., "U.S. Economy Grows Beyond Pre-Pandemic Level":

U.S. gross domestic product grew at a 6.5% annual rate in the second quarter, up slightly from earlier in the year, pushing the economy’s size beyond its pre-pandemic level.

The growth came as business reopenings and government aid powered a surge that is expected to gradually slow in coming months, with Covid-19 variants and materials and labor disruptions clouding the outlook.

Second-quarter growth fell short of economists’ forecasts. Economists surveyed by The Wall Street Journal estimated that gross domestic product, the broadest measure of goods and services made in the U.S., grew at an 8.4% annual rate in the April-to-June period.

Still, the growth propelled GDP beyond pre-pandemic levels, a milestone that underscores the speed of the recovery that began last summer. Widespread business reopenings, vaccinations and a big infusion of government pandemic aid this spring helped propel rapid gains in consumer spending, the economy’s main driver.

“The economy has come roaring back faster than people expected,” said Jay Bryson, chief economist at Wells Fargo Corporate and Investment Bank.

Economists expect growth to remain strong, fueled by job gains, pent-up savings and continued fiscal support. Still, many say growth likely peaked in the second quarter and will cool as the initial boost from reopenings and fiscal stimulus fades.

Rising inflation, continued supply-chain disruptions and a shortage of available workers are additional factors that could restrain growth. The highly contagious Delta variant of Covid-19 also poses an increasing risk to the economic outlook.

There are two main ways the spread of Delta could derail the robust recovery, economists say. Some state and local governments could reimpose restrictions on businesses. Second, consumers could curtail spending on travel, dining out and moviegoing out of heightened cautiousness toward the variant’s spread.

So far, new restrictions have been limited in scope. They include the reinstatement of indoor-mask rules in some localities such as Los Angeles County. The Centers for Disease Control and Prevention recommended Tuesday that vaccinated people resume masking indoors in places with high or substantial transmission of coronavirus.

Americans don’t appear to be retreating into their homes as the Delta variant spreads. Flight volumes and hotel-occupancy rates continue to rise, according to an analysis of real-time data by Jefferies LLC. Public-transit usage is also gaining ground, though it is down compared with pre-pandemic levels, Jefferies said.

The increasing level of vaccinations in the U.S. has made people more likely to keep working and spending money despite the rise in cases.

“I really don’t expect anything like we saw in the spring of last year,” said Ben Herzon, executive director at forecasting firm IHS Markit. “Going forward we’ll just see how high the case count gets and how nervous some people get.”

Consumer confidence rose in July to the highest level since February 2020, according to the Conference Board. The increase in confidence suggests consumers are positioned to continue driving economic growth this year...

Seems like good news to me.

Still more.

 

Toyota Bet on Hydrogen Power. Now It's Fallen Desperately Behind

A very interesting and informative piece.

There's a bit of muh for me though. 

I haven't driven a Toyota since the mid-1980s, when I drove a maroon little Toyota pickup. Once that thing wore out, my wife and switched to Honda, and we only recently switched makes: My wife now drives a KIA, and I'm cruising all cool and macho (and old) in my Dodge Challenger. *Wink.*

At NYT, "Toyota Led on Clean Cars. Now Critics Say It Works to Delay Them":

The Toyota Prius hybrid was a milestone in the history of clean cars, attracting millions of buyers worldwide who could do their part for the environment while saving money on gasoline.

But in recent months, Toyota, one of the world’s largest automakers, has quietly become the industry’s strongest voice opposing an all-out transition to electric vehicles — which proponents say is critical to fighting climate change.

Last month, Chris Reynolds, a senior executive who oversees government affairs for the company, traveled to Washington for closed-door meetings with congressional staff members and outlined Toyota’s opposition to an aggressive transition to all-electric cars. He argued that gas-electric hybrids like the Prius and hydrogen-powered cars should play a bigger role, according to four people familiar with the talks.

Behind that position is a business quandary: Even as other automakers have embraced electric cars, Toyota bet its future on the development of hydrogen fuel cells — a costlier technology that has fallen far behind electric batteries — with greater use of hybrids in the near term. That means a rapid shift from gasoline to electric on the roads could be devastating for the company’s market share and bottom line.

The recent push in Washington follows Toyota’s worldwide efforts — in markets including the United States, the United Kingdom, the European Union and Australia — to oppose stricter car emissions standards or fight electric vehicle mandates. For example, executives at Toyota’s Indian subsidiary publicly criticized India’s target for 100 percent electric vehicle sales by 2030, saying it was not practical.

Together with other automakers, Toyota also sided with the Trump administration in a battle with California over the Clean Air Act and sued Mexico over fuel efficiency rules. In Japan, Toyota officials argued against carbon taxes.

“Toyota has gone from a leading position to an industry laggard” in clean-car policy even as other automakers push ahead with ambitious electric vehicle plans, said Danny Magill, an analyst at InfluenceMap, a London-based think tank that tracks corporate climate lobbying. InfluenceMap gives Toyota a “D-” grade, the worst among automakers, saying it exerts policy influence to undermine public climate goals.

In statements, Toyota said that it was in no way opposed to electric vehicles. “We agree and embrace the fact that all-electric vehicles are the future,” Eric Booth, a Toyota spokesman, said. But Toyota thinks that “too little attention is being paid to what happens between today, when 98 percent of the cars and trucks sold are powered at least in part by gasoline, and that fully electrified future,” he said.

Until then, Mr. Booth said, it makes sense for Toyota to lean on its existing hybrid and plug-in hybrid vehicles to reduce emissions. Hydrogen fuel cell technology should also play a role. And any efficiency standards should “be informed by what technology can realistically deliver and help keep vehicles affordable,” the company said in a statement. Last year in the United States, a group of leading automakers reached a compromise on tailpipe emissions standards with California, which sought to impose tougher emissions standards than the Trump administration wanted. Toyota didn’t join that compromise agreement.

More recently, the Alliance for Automotive Innovation, an industry lobby group, argued in closed-door meetings in Washington that the California compromise, which is expected to be a model for new standards from the Biden administration, is in fact not feasible for all of its members, according to two of the people with direct knowledge of the discussions. The chairman of the alliance is Mr. Reynolds, the Toyota executive.

The Biden administration wants to use tougher emissions rules to rapidly increase sales of electric vehicles. Congress could also approve billions of dollars for construction of charging stations as well as tax incentives for electric cars and trucks.

 

Businesses Struggle to Hire Workers as Economy Picks Up Steam

There are signs of this all over. 

Here's a report out of Kansas, "Burger King workers in Nebraska depart and leave message: 'We all quit'."

And out of Jackson Hole, "Businesses struggle to hire, keep workers as housing stock disappears: Out-of-town hires, even those with higher salaries, can’t find a place."

Consumer Prices Surged 5.4 Percent in Year-Over-Year in New Labor Department Report (VIDEO)

At the Wall Street Journal, "June Consumer Prices Climbed Sharply Again as Economy Rebounded":

U.S. consumer prices continued to climb swiftly in June, as the economic recovery gained steam and demand outpaced the supply of labor and materials.

The Labor Department said last month’s consumer-price index increased 5.4% from a year ago, the highest 12-month rate since August 2008. The so-called core price index, which excludes the often-volatile categories of food and energy, rose 4.5% from a year before. The index measures what consumers pay for goods and services, including clothes, groceries, restaurant meals, recreational activities and vehicles. It increased a seasonally adjusted 0.9% in June from May, the largest one-month change since June 2008. Prices for used cars and trucks leapt 10.5% from the previous month, driving one-third of the rise in the overall index, the department said. The indexes for airline fares and apparel also rose sharply in June.

Consumers are seeing prices rise for numerous reasons, as the U.S. economic recovery picks up. Richard F. Moody, chief economist at Regions Financial Corp., said the main driver of June inflation was booming demand that outpaced the ability of businesses to keep up. Another factor, he said, was the recovery in prices for air travel, hotels, rental cars, entertainment and recreation—all services hit hard by the Covid-19 pandemic.

“Demand is coming back very rapidly, and businesses are normalizing prices in the sense that they are making up for declines” earlier in the pandemic, he said.

Supply shortages and higher shipping costs also continue to drive rapid increases in goods inflation. Prices of goods, excluding food and energy, saw the two biggest monthly increases on record in April and May, Mr. Moody said.

Rising prices reflect robust consumer demand boosted by widespread vaccinations, the ending of many business restrictions, trillions of dollars in federal pandemic relief and ample household savings. Stronger demand also has pushed employers to seek more workers and pay higher wages, as they struggle to hire...

 

The Right Way on Trade?

From Gordon Hanson, at Foreign Affairs, "Can Trade Work for Workers? The Right Way to Redress Harms and Redistribute Gains":

For decades, the promise of globalization has rested on a vision of a world in which goods, services, and capital would flow across borders as never before; whatever its other features and components, contemporary globalization has been primarily about trade and foreign investment. Today’s globalized economy has been shaped to a large extent by a series of major trade agreements that were sold as win-win propositions: corporations, investors, workers, and consumers would all benefit from lowered barriers and harmonized standards. American advocates of this view claimed that deals such as the North American Free Trade Agreement would supercharge growth, create jobs, and strengthen the United States’ standing as the world’s largest and most important economy. According to then President George H. W. Bush, “NAFTA means more exports, and more exports means more American jobs.”

A quarter of a century later, such optimism appears profoundly misplaced. NAFTA and other deals did boost growth, and free trade remains a net benefit for the U.S. economy as a whole. But the overall gains have been far less dramatic than promised, and many American workers suffered when well-paid manufacturing jobs dried up as factories moved abroad. Those who managed to stay employed saw their wages stagnate. The federal government, meanwhile, did little to build a safety net to catch those who lost out.

Unsurprisingly, Americans have complicated views on trade. Although a majority of voters see free trade as a good thing, barely one-third believe that it creates jobs or lowers prices. In response, political elites and elected officials across the ideological spectrum have scrambled to distance themselves from free-trade policies and from the major pacts of the past. For its part, the Biden administration has made a noble-sounding but vague pledge to pursue a “worker-centric” trade policy. The specifics are still unclear, but such an approach will likely include more aggressive so-called Buy American provisions, which require government agencies to give preference to U.S. products when making purchases; increased pressure on trading partners to respect workers’ collective-bargaining rights; and a hawkish relationship with China. Despite the rhetoric, these proposals put the administration well within the bounds of existing U.S. trade policy—tweaking margins here and there.

That approach is unlikely to fix the problems caused by free trade—which, despite the appeal of protectionist talking points, isn’t going anywhere. Instead, the Biden administration should establish targeted domestic programs that protect workers from the downsides of globalization. A responsible policy would capture the gains of free trade but make up for domestic losses. In recent years, the United States has done neither...

Still more.

 

This State is So F*cked (VIDEO)

First up is the news that idiot Democrat state legislators have introduced legislation to ban separate "boys" and "girls" sections in department stores. Yep. That's how psycho the deranged leadership in Sacramento has become (and these people continue to shock in their utter indifference to the real issues facing Californians).

At the Sacramento Bee, "California would ban boys and girls sections at big retailers under proposed law," and Reason, "California Bill Would Give $1,000 Fines to Retailers With Separate 'Girls' and 'Boys' Toy Sections."

In more sheer idiocy, the governor, along with the California Department of Public Health, has issues new guidelines for the states' residents to "double up" on mask wearing, which is so stupid I'm shaking my head *Eye-roll.* Next thing you know, they'll be mandating residents to wear three masks, which of course defeats the purpose anyway, since folks will suffocate to death. 

At LAT, "California urges double masking to prevent COVID spread as Texas relaxes mask rules."

Our idiot governor slammed Texas for relaxing its requirements, and I'll tell you, I was in Houston last November, and even then Texas had indoor dining, and my wife and I had no problems. I think it's the nice weather here that remains the only thing attractive about this "Left Coast" dumphole of a state. 

More at CBS News 2 Los Angeles:

 

What Jeff Bezos Hath Wrought

It's Moe Tkacik, who I once had a long Twitter convo with, back in the day. She's actually kinda hot, although maybe those old MySpace photos still swirling around online might not be that flattering.

In any case, kudos for her for scoring an opinion piece at NYT, as that leftist craphole is no doubt right up her ideological alley. That said, she did once say that she "sometimes pays attention to [Robert Stacy McCain] because he's so radical." 

In any case, see, "The Amazon founder prepares to step back just as Washington turns up the heat on the mega-retailer and cloud company:

If I had to guess who inspired Amazon’s founder, Jeff Bezos, to kick himself upstairs and appoint Andy Jassy, a deputy, as his successor as chief executive, I might wager that at least part of the blame can be laid on Lucy McBath, the freshman Georgia congresswoman, and her understated grilling of one of the world’s richest men at a July hearing held by the House antitrust subcommittee.

At the hearing, widely regarded as a watershed moment for America’s tech giants, most of the subcommittee members — and all the Democrats — had coalesced around a consensus: The business models of the four biggest tech companies depend on cementing and exploiting their statuses as gatekeepers to the internet, and scheming to bring down anyone who threatens their power to exact ever higher tolls on every minute we spend on the internet.

Only Mr. Bezos, however, had explicitly set out to become a ubiquitous “middleman” of all internet commerce. So most of the lawmakers pushed him to admit that he had systematically bought rivals and lost money selling goods and services below cost solely to destroy the competition, in violation of numerous federal laws that had long gone unenforced — or, as the antitrust scholar Lina Khan has put it, “charted the company’s growth by first drawing a map of antitrust laws, and then devising routes to smoothly bypass them.”

Before the hearing, Ms. McBath had shown little interest in waging class war on billionaire elites. A flight attendant who entered politics after the murder of her teenage son in a crime enabled by Florida’s infamous Stand Your Ground law, she had endorsed Mike Bloomberg in the Democratic presidential primary race. But interviews she and her staff had conducted with small business owners who sold their goods on Amazon’s platform had clearly left her in no mood to suffer fools.

During her questioning, Ms. McBath played an audio recording from a woman later described in a congressional report as a successful textbook seller who said Amazon had cut off her account 10 months earlier. “This business feeds a total of 14 people, which includes three children and one 90-year-old granny,” she said in the recording.

The report said the bookseller’s listings had been kicked off the platform with no explanation. Like virtually all successful Amazon sellers, she purchased fulfillment and storage services from the company because the algorithms would bury her listings if she fulfilled orders herself. But Amazon returned only a small portion of her inventory, continuing instead to charge her for storing it in its warehouses...

Rep. McBath is a radical Democrat who can go get screwed, for all I care. 

But it is what it is, and Moe's seemingly gotten more radical since I interacted with on Twitter a decade ago.

Besides, Amazon's never treated this blog badly, so I'm not going to gripe about a company that not only sends me money once a month, but one that also provides all kind of services that have improved my consumer life (like my own book-buying habit). 

So whatever. Bezos will still be pulling the strings at Amazon no matter who he names as the new "C.E.O."

More at that top link, FWIW.

 

Hedge Fund Manager Claims Victim Status; Claims 'We Have to Work Together and Pull Together'

It's AoSHQ.

Just head over there for your morning jolt, anyway, including this "flaming skull" bombshell post, "Kevin Clinesmith, the Corrupt FBI Lawyer Who Forged Documents to Frame an Innocent Man, Gets... NO JAIL TIME, HAS TO PAY A HUNDRED DOLLAR FINE," not to mention all the other tricks and treats the gang over there is wont to post from time to time, lol.

Have a great day, the proud but few "Band of Brothers" who continue to log on to visit my humble blog, lol. 

I appreciate your support as readers, but I probably don't say that enough.

Have a great weekend.

'How is That Not Rigging The Game?' CNN's Poppy Harlow Questions Ethics of Cutting Off Reddit Investors but Not Hedge Funds (VIDEO)

Watch, at Mediaite.

PREVIOUSLY: "GameStop Stock Soars as Reddit Investors Take on Wall Street Elites!"

GameStop Stock Soars as Reddit Investors Take on Wall Street Elites!

This is the best, I'm telling you, lol!

At the Other McCain, "GameStop: The Best Story EVER!":

Oh, my! Oh, my! What a storm of hilarious schadenfreude has overtaken the stock market this week! The hero of this saga is a guy with a Reddit account called “DeepF**kingValue” who, in September 2019, accumulated $53,000 in stock in the retail chain GameStop.

From any objective analysis, this was the Stupidest Investment Ever, because GameStop’s business model — selling physical copies of videogames and equipment in brick-and-mortar stores, mostly at shopping malls — is doomed in the online digital era. And yet . . .

“DeepF**kingValue” had a hunch that GameStop was drastically undervalued when it was selling as low as 30 cents per share. His argument was that the retailer was shifting to online sales, competing with Amazon, while cutting costs by closing many of its brick-and-mortar stores. So he kept buying, and the share price kept going up, and as “DeepF**kingValue” shared his story on the Reddit channel WallStreetBets, a cult following developed. By December, with GameStop selling at $4 a share, “DeepF**kingValue” was a legit millionaire.

God Bless America, land that I love!

You can imagine every agent in Hollywood trying to get their client the lead role of “DeepF**kingValue” in The GameStop Story, a yet-to-be-made movie that will win every Academy Award. And the brilliant plot twist, the Second Act turn, is when actual corporate guys started to notice what was happening with this Reddit-driven phenomenon. Ryan Cohen, CEO of the online pet-supply business Chewy-dot-com, ploughed $82 million into GameStop at an average price around $9 a share (as much as 30 times what “DeepF**kingValue” had paid for his shares in 2019), which got Cohen a seat on GameStop’s board. Meanwhile, the Reddit crew on WallStreetBets discerned that hedge funds, which considered GameStop a sure loser, had gone short on the company, i.e., investing money on the proposition that its share price would go down.

Billions. B-I-L-L-I-O-N-S — these hedge fund wizards were so sure that GameStop was overpriced that they shorted the stock to the tune of something like $13 billion. And they got screwed. Bad.

Prison gang rape is the only metaphor that comes to mind for how badly the hedge funds got screwed on their GameStop shorts. How bad was it? So bad that NASDAQ intervened, so bad that Discord shut down the WallStreetBets chat channel, so bad that the Securities and Exchange Commission is now investigating the Reddit crew.

The “creative destruction” of capitalism can be a beautiful thing to watch, and if I were asked to write the script for The GameStop Story, the closing scene would be when “DeepF**kingValue” (played by Seth Rogen with a neckbeard) drives up to Mar-a-Lago in his gull-wing Lamborghini, with a Swedish supermodel named Elsa in the passenger seat.

Donald Trump comes out to greet him, personally...

Sill more.

Also, at Memeorandum, "Robinhood Stops Users From Trading GameStop Stocks, Other Reddit YOLO Picks."

Putting Aside the Attacks on Trump, This Is an Interesting Piece

From self-declared mean person, Kara Swisher, of (you guessed it) the New York Times, "Goodbye, Twitter Trump! And Other Predictions for 2021."

It's the other predictions that are interesting, such as:

Speaking of media companies: While the reverberations of the Warner Bros. decision to put all its 2021 movies on its HBOMax streaming service are sorting themselves out, the shift is permanent — whether offended filmmakers like it or not. Creators who adapt will benefit, especially if they devise new models of payment.

The longtime entertainment business model was built on powerful gatekeepers that made most of the money and relied on a vast network of middlemen. But in the new world, those who can assemble a fan base that they directly service will profit. Imagine the future relationship between creators and fans as a subscription business, and the economics get much more interesting. Hollywood will have to become much more nimble and entrepreneurial.

So, too, will more Americans in general, since the pandemic has accelerated the introduction of what will be permanent changes in how we work. Last December, I urged tech to be at the forefront of this major overhaul:

“And rather than accept that poor pay and poor protections for gig workers are inevitable and that the pressures of a global work force are too hard to push back, tech companies should figure out how to creatively and humanely deploy talent across the world to show that they are interested in dealing with the consequences of their inventions.”

This was pre-coronavirus — an exogenous circumstance. Now I am often asked when will work go back to normal, which is really a question of when will we get back to physical workplaces. That will certainly happen in the coming year, but in all kinds of new ways.

The coronavirus has forced the kind of work experimentation that would have taken a decade to eventually happen: limiting business travel, cutting in-person office time, questioning every cost associated with the analog workplace. Technology is making doing business cheaper and more efficient and, as it has turned out, more productive.

These changes have proved nearly useless and even dangerous when it comes to education, where physical presence is much more of an asset than we thought. More consideration will be put into how to make technology and schooling mesh better and how to provide students with the kind of experience that they are not getting, as well as a bigger focus on universal connectivity for those who are without it.

While pandemics are short term, the looming climate disaster is not. So, lastly, I’ll repeat my 2019 declaration that the “world’s first trillionaire will be a green-tech entrepreneur.” President-elect Biden, who is championing green technology, will be more successful if his efforts are seen as job creators, and not so much as giant government programs...

 

Baldwin Hills' Crenshaw Mall is Busted

It's a "black" mall, I guess. Nice part of town too. 

Who knows? It's probably just the bad economy and consumer trends away from brick-and-mortar. But someone, somewhere, will make this about racism, amirite? 

At LAT, "‘This mall has been devastated.’ A lean Christmas, empty stores and an unsettling future":

The food court is mostly shuttered. The Museum of African American Art, located improbably inside a Macy’s, is closed for now. And Black Santa is not coming to town.

The Baldwin Hills Crenshaw Plaza may be open, but it doesn’t much feel that way.

Gone is the classic mall background noise — Top 40 music drowned out by people talking, walking, rustling shopping bags. Gone are the free weekly workouts and the book readings. The stores have signs in the windows noting that they are open with limited capacity, but more often than not there’s only a lone shopkeeper inside.

A few determined shoppers remain.

“I could have gone to Fox Hills mall but I said I’m coming here to Crenshaw, and I want to patronize it because it is struggling to come back,” said Yvette Archie, a 60-year-old veterinarian who visited the mall recently to do some Christmas shopping. “I’m hoping that we can keep it in our community and for our community.”

For decades, the Crenshaw mall has been a gathering place for Black Los Angeles and a prime venue for small businesses. Even during the pandemic, the mall has continued to serve the community with food drives and a coronavirus testing site. The mall also holds a weekly farmers market and Melanin Market LA, a showcase for small Black-owned businesses, in its parking lot.

But like its counterparts across the country, the mall has been pushed to the brink by the COVID-19 pandemic. Now, the holiday shopping season — when big and small businesses alike depend on a boost in sales to help pad margins in the new year — has coincided with the worst surge in COVID-19 cases of the pandemic.

Health and government officials have urged people to stay at home but stopped short of closing malls as they had done earlier in the pandemic. Recent orders from the Los Angeles County health department limited indoor mall capacity to 20% and prohibited dining on site...

More.

 

Jill Schlesinger Talks Surging Dow (VIDEO)

"Stock markets got a major boost from news of Pfizer’s #coronavirus vaccine trial success, and the results from #Election2020."

Yeah, and Trump should be getting the political credit for the vaccine, but you know, the pharma-deep state coordinated with the Biden campaign to delay the news of the successful trial? I mean, c'mon, a 90 percent success rate isn't something to be hiding, that is, unless you're colluding with the Democrat-Media-Complex.

At CBS This Morning: 

I'm glad my Roth IRA and 403(b) retirement funds are recovering, sheesh. 

Tesla Utterly Dominates Electric Vehicle Market

It's seems blatantly obvious, but it's only when you get down to the data and history of the EV market do you see how dominant Tesla is.

At NYT, "In Electric Car Market, It’s Tesla and a Jumbled Field of Also-Rans":

“Obviously from the numbers we’re seeing, these cars aren’t setting the world on fire,” an auto analyst said https://t.co/qpuGRg86RG

— NYT Business (@nytimesbusiness) July 22, 2020

Although it has develop into the world’s most beneficial automaker, Tesla nonetheless has to determine tips on how to develop into persistently worthwhile, cut back high quality issues in its luxurious vehicles and extra rapidly flip alluring prototypes into mass-produced autos.

One space the place it hasn’t had a lot to worry about: competitors.

Over the final 12 months or so, a number of automakers, together with Audi, Jaguar and Porsche, have added heralded new fashions supposed to chop into Tesla’s electrical dominance. But they’ve barely made a dent, at the least within the United States. Sales of the Jaguar I-Pace, an electrical sport utility car much like the Tesla Model Y, have totaled simply over 1,000 this 12 months. Porsche has reported related gross sales for its electrical sedan, the Taycan.

Audi, which has grown steadily within the United States over the past decade, launched an electrical S.U.V., the E-tron, final 12 months, and gross sales have sputtered. So far this 12 months, Audi has bought just below 2,900. In many states, the automotive is marketed at costs 13 % or extra under its record value — uncommon for an Audi.

“Obviously from the numbers we’re seeing, these cars aren’t setting the world on fire,” stated Karl Brauer, an unbiased auto analyst. “It was a mistake to think that just because these cars were on the market that people were going to buy them.”

General Motors has fared considerably higher with its Chevrolet Bolt, which the corporate launched in 2016. The firm has bought over 8,000 Bolts this 12 months. Sales of the Nissan Leaf have topped 3,000.

Tesla, which doesn’t escape gross sales by nation, is clearly working at a completely different degree. State information analyzed by Cross-Sell exhibits that 56,000 new Teslas have been registered this 12 months in 23 states, together with California, Florida, New York and Texas. Analysts stated Tesla’s 50-state gross sales whole most likely exceeded 70,000 vehicles. Globally, the corporate delivered about 180,000 vehicles within the first six months of the 12 months.

Of course, electrical autos, together with Tesla’s, characterize a tiny proportion of auto gross sales, which totaled greater than 17 million within the United States final 12 months. Electrics are a larger half of the new-car market in Europe, and Tesla faces extra competitors there than within the United States, however not a lot extra. China has many homegrown electrical carmakers, however they have a tendency to make cheaper autos that don’t immediately compete with Tesla’s choices. Regardless of the market, although, E.V.s are the fastest-growing section of the auto trade.

Tesla’s dominance could be defined partially by its head begin. It has been promoting electrical vehicles in important numbers since 2012. The firm and its chief government, Elon Musk, have additionally constructed a fervent fan base that few different automakers, save maybe high-end sports activities automotive manufacturers like Porsche or Ferrari, can declare. Tesla has lengthy supplied improvements different firms are solely now attempting to match, comparable to wi-fi software program updates that may add options or repair glitches with out journeys to dealerships.

One of the largest shortcomings of competing fashions is vary — the gap an electrical automotive can go earlier than needing to be recharged. The most for the E-tron and Taycan is about 200 miles. The I-Pace and Bolt go about 235 to 260 miles. The least costly Tesla Model Three has a vary of 250 miles, and most of the corporate’s vehicles go 300 miles or extra on a single cost.

Sam Abuelsamid, an analyst at Guidehouse Insights, stated that the Audi, Jaguar and Porsche autos had been superior to Teslas in some methods, comparable to look, really feel and end, however that their restricted vary had postpone many patrons.

“The difference is too great for a lot of consumers to ignore,” he stated.

Mercedes-Benz and BMW have been slower to introduce electrical autos within the United States, the place each firms plan to begin promoting new electrical S.U.V.s subsequent 12 months. Mercedes late final 12 months delayed the introduction of its mannequin, the EQC. And BMW, which launched its i3 in 2014, has not constructed on that early begin.

That has left the sector open for Tesla, and traders have taken observe. The firm’s inventory has soared this 12 months, climbing from $510 in early January to about $1,600. The opening of a second meeting plant in China and the introduction of the Model Y have lifted optimism that Tesla will lead a international transition from gasoline-powered vehicles and vehicles to zero-emission electrical autos.

Of course, Tesla’s success is just not assured. It hasn’t reported an annual revenue since its founding in 2003. The firm has struggled to match the standard ranges of conventional automakers, and it’s spending closely on Model Y manufacturing and creating a pickup truck, a semi truck and different autos. It can be constructing a third manufacturing facility in Germany, and planning a fourth.

Its Autopilot driver-assistance system has gained widespread consideration, however its shortcomings have come below scrutiny after deadly accidents throughout its use. This month, a German courtroom dominated that Tesla had exaggerated the system’s skills and created the misunderstanding that Tesla vehicles with Autopilot may drive themselves. The firm has lengthy claimed that the information collected by its vehicles exhibits that the system makes its vehicles safer than others on the street.

Officials at Tesla didn’t reply to requests for remark.

Moreover, a stronger aggressive push might come quickly. By the top of this 12 months, Ford Motor expects to begin promoting an electrical S.U.V., the Mustang Mach-E, that’s styled to appear to be the corporate’s well-known sports activities automotive. It is promising a model of the automotive with a vary of 300 miles or extra. G.M. has stated it would provide a new Bolt with longer vary by the top of this 12 months, adopted by greater than 20 different electrical fashions over the subsequent three years.

Volkswagen subsequent 12 months will start promoting an electrical S.U.V., the ID4, which may also have a vary of 300 miles. The firm on Monday began taking orders in Europe for the ID3, a hatchback that can promote for about 10,000 euros lower than the Model 3; the automotive is just not anticipated to be bought within the United States.

And varied start-ups are elevating billions of {dollars} to problem Tesla...

Here's the Polestar:

Hopes for Economic Recovery Fizzle Amid Coronavirus Resurgence

I called the second California lockdown weeks ago. My wife works retail, and I suspect her employer is going back to curbside business soon, although they haven't yet. Frankly, everything else is locked down again, just like back in March.

Next, I'm predicting California colleges and universities will announce their spring 2021 classes will be all online.

We'll see.

At NYT, "A Resurgence of the Virus, and Lockdowns, Threatens Economic Recovery":

The U.S. economy is headed for a tumultuous autumn, with the threat of closed schools, renewed government lockdowns, empty stadiums and uncertainty in federal support for businesses and the unemployed all clouding hopes for a rapid rebound from recession https://t.co/5R9puWpvrn

— NYT Politics (@nytpolitics) July 15, 2020

WASHINGTON — The United States economy is headed for a tumultuous autumn, with the threat of closed schools, renewed government lockdowns, empty stadiums and an uncertain amount of federal support for businesses and unemployed workers all clouding hopes for a rapid rebound from recession.

For months, the prevailing wisdom among investors, Trump administration officials and many economic forecasters was that after plunging into recession this spring, the country’s recovery would accelerate in late summer and take off in the fall as the virus receded, restrictions on commerce loosened, and consumers reverted to more normal spending patterns. Job gains in May and June fueled those rosy predictions.

But failure to suppress a resurgence of confirmed infections is threatening to choke the recovery and push the country back into a recessionary spiral — one that could inflict long-term damage on workers and businesses large and small, unless Congress reconsiders the scale of federal aid that may be required in the months to come.

The looming economic pain was evident this week as big companies forecast gloomy months ahead and government data showed renewed struggles in the job market. A weekly census survey on Wednesday showed 1.3 million fewer Americans held jobs last week than the previous week. A new American Enterprise Institute analysis from Safegraph.com of shopper traffic to stores showed business activity had plunged in the second week of July, in part from renewed virus fears.

Amazon on Wednesday extended a work-from-home order for eligible employees from October to January, and Delta Air Lines said on Tuesday it was cutting back plans to add flights in August and beyond, citing flagging consumer demand.

The nation’s biggest banks also warned this week that they are setting aside billions of dollars to cover anticipated losses as customers fail to pay their mortgages and other loans in the months to come.

May and June will prove to be “easy” in terms of recovery, Jennifer Piepszak, the chief financial officer of JPMorgan Chase, said during an analyst call on Tuesday. “We’re really hitting the moment of truth, I think, in the months ahead,” she said.

Jamie Dimon, the bank’s chief executive, said much of the economic pain had been blunted by federal spending, which was now running out. “You will see the effect of this recession,” he said.

Some companies that used small-business loans to retain or rehire workers are now beginning to lay off employees as those funds run out while business activity remains depressed. Expanded benefits for unemployed workers, which research shows have been propping up consumer spending throughout the spring and early summer, are scheduled to expire at the end of July, while more than 18 million Americans continue to claim unemployment.

Many states are already renewing lockdowns, including California, where officials have ordered indoor bars, restaurants, gyms and other establishments to close. College sports conferences are beginning to cancel fall sports, including the lucrative football season, and concert tours are out of the picture.

“The earlier-than-anticipated resumption in activity has been accompanied by a sharp increase in the virus spread in many areas,” Lael Brainard, a Federal Reserve governor, said on Tuesday. “Even if the virus spread flattens, the recovery is likely to face headwinds from diminished activity and costly adjustments in some sectors, along with impaired incomes among many consumers and businesses.”

Most economists abandoned hope for a “V-shaped” recovery long ago. Now they are warning of an outright reversal, with mounting job losses and business failures. And this time, much of the damage is likely to be permanent.

“Our assumption has to be that we’re going into re-lockdown in the fall,” said Karl Smith, the vice president of federal policy at the conservative Tax Foundation in Washington.

Until recently, Mr. Smith said, he had been pushing administration officials and members of Congress to begin phasing out an extra $600 per week for unemployed workers — perhaps replacing it with an incentive payment for Americans who return to work — and to shift spending toward tax incentives.

The last two weeks of coronavirus data changed his mind. He is now calling for another large economic rescue package from Washington, including extending the enhanced unemployment benefits, offering more aid to small businesses and perhaps sending another round of stimulus checks to American households.

More.

'I'm afraid a lot of these stores are going to go out of business. I see that Pier 1 died, but I couldn't understand how it could still be around after all these years. What was all that junk they were selling? Did anyone need anything they had on offer?'

That's Althouse on the economy, "'Retailers that have spent years trying to get customers to linger, in hopes they’ll buy more than they need, are reimagining their stores'..."

The Day Coronavirus Nearly Broke the Financial Markets

At WSJ, "The March 16 stock crash was part of a broader liquidity crisis that threatened the viability of America’s companies and municipalities":

On March 16, coronavirus brought the financial system to the brink. Few realized how close it came to going over the edge entirely. https://t.co/kGg568pU1D

— The Wall Street Journal (@WSJ) May 20, 2020

An urgent call reached Ronald O’Hanley, State Street Corp.’s chief executive, as he sat in his office in downtown Boston. It was 8 a.m. on Monday, March 16.

A senior deputy told him corporate treasurers and pension managers, panicked by the growing economic damage from the Covid-19 pandemic, were pulling billions of dollars from certain money-market funds. This was forcing the funds to try to sell some of the bonds they held.

But there were almost no buyers. Everybody was suddenly desperate for cash.

He and the deputy, asset-management executive Cyrus Taraporevala, had spoken the night before, wrestling with how investors would respond to an emergency interest-rate cut from the Federal Reserve.

Now, they had their answer. In his 34 years in finance, Mr. O’Hanley had weathered plenty of meltdowns, but never one like this.

“The market is fearing the worst,” Mr. O’Hanley told him.

March 16 was the day a microscopic virus brought the financial system to the brink. Few realized how close it came to going over the edge entirely.

The Dow Jones Industrial Average plunged nearly 13% that day, the second-biggest one-day fall in history. Stock-market volatility spiked to a record high. Investors struggled to unload even safe bonds, like Treasurys. Companies and government officials were losing access to the lending markets on which they rely to make payroll and build schools.

Prime money-market funds that are owned by big institutional investors and buy a lot of short-term corporate debt—normally safe and boring—had outflows of $60 billion in the week ending that Wednesday, financial-data firm Refinitiv said, among the worst ever. Some $56 billion in client money fled bond funds.

Interest rates on short-term corporate debt surged, peaking on March 25 at 2.43 percentage points above the federal-funds rate—the highest it has been since October 2008, according to the Federal Reserve Bank of St. Louis.

The financial system has endured numerous credit crunches and market crashes, and memories of the 1987 and 2008 crises set a high bar for market dysfunction. But longtime investors and those who make a living on Wall Street say mid-March of this year was far more severe in a short period. Moreover, the stresses to the financial system were broader than many had seen.

“The 2008 financial crisis was a car crash in slow motion,” said Adam Lollos, head of short-term credit at Citigroup Inc. “This was like, ‘Boom!’ ”

A barrage of government programs has since pulled the system back from collapse. This account of what happened on one of the worst days the financial markets have ever seen, from many of the executives, money managers and Wall Street veterans who lived it, shows why the rescue effort was so urgent.

The Federal Reserve set the stage for the downturn on Sunday, March 15. Most investors were expecting the central bank to announce its latest response to the crisis the following Wednesday. Instead, it announced at 5 p.m. that evening that it was slashing interest rates and planning to buy $700 billion in bonds to help unclog the markets.

Rather than take comfort in the Fed’s actions, many companies, governments, bankers and investors viewed the decision as reason to prepare for the worst possible outcome from the coronavirus pandemic.

A downdraft in bonds was now a rout.

Mr. O’Hanley was in a good position to see the crisis unfold. His bank provides vital, if unheralded, administrative and bookkeeping services for most of the world’s biggest investors, and runs its own trillion-dollar money manager.

Companies and pension managers have long relied on money-market funds that invest in short-term corporate and municipal-debt holdings considered safe and liquid enough to be classified as “cash equivalents.” They function almost like checking accounts—helping firms manage payroll, pay office leases and move cash around to finance their daily operations.

But that Monday, investors no longer believed certain money funds were cash-like at all. As they pulled their money out, managers struggled to sell bonds to meet redemptions.

In theory, there should have been some give in the system. U.S. regulators had rewritten the rules on money funds in the wake of the 2008 financial crisis, replacing their fixed, $1 price with a floating one that moved with the value of their holdings. The changes headed off the panic that could ensue when a fund’s price “breaks the buck,” as one prominent fund had in 2008.

But the rules couldn’t stop a panicked assault like this one. Rumors circulated that some of State Street’s rivals would be forced to prop up their funds. Within days, both Goldman Sachs Group Inc. and Bank of New York Mellon Corp. stepped in to buy assets from their money funds. Both firms declined to comment.

This was bad news for not only those funds and their investors, but also for the thousands of companies and communities dependent on short-term loan markets to pay their employees. “If junk bonds back up, people can rationalize that away,” Mr. O’Hanley said. “There’s very little ability to rationalize trouble in cash.”

A debt-investing unit of Prudential Financial Inc., one of the largest insurance companies in the world, was also struggling with normally safe securities.

When traders at PGIM Fixed Income tried that Monday to sell a batch of short-term bonds issued by highly rated companies, they found few takers. And banks were reluctant to step in as intermediaries.

“The broker-dealer community was frozen,” said Michael Collins, a senior fixed-income manager at PGIM. “It was as bad as at any point during the great financial crisis.”

Across the country in Southern California, the head of the debt-trading desk at investment firm Capital Group Cos., Vikram Rao, tried to make sense of the dysfunction.

Mr. Rao, who was working remotely that Monday, walked down the 20 steps to his home office at 4:30 a.m. to discover the debt markets were already in disarray. He started calling the senior Wall Street executives he knew at many of the big banks.

Executives told him that Sunday’s emergency Fed rate cut had swung a swath of interest-rate swap contracts in banks’ favor. Companies had locked in superlow interest rates on future debt sales over the past year. But when rates fell even further, the companies suddenly owed additional collateral.

On that Monday, banks had to account for all that new collateral as assets on their books.

So when Mr. Rao called senior executives for an explanation on why they wouldn’t trade, they had the same refrain: There was no room to buy bonds and other assets and still remain in compliance with tougher guidelines imposed by regulators after the previous financial crisis. In other words, capital rules intended to make the financial system safer were, at least in this instance, draining liquidity from the markets.

One senior bank executive leveled with him: “We can’t bid on anything that adds to the balance sheet right now.”

At the same time, the surge in stock-market volatility, along with falling prices on mortgage bonds, had forced margin calls on many investment funds. The additional collateral they owed banks was also booked as assets, adding billions more.

The slump in mortgage bonds was so vast it crushed a group of investors that had borrowed from banks to juice their returns: real-estate investment funds.

The Fed’s bond-buying program, unveiled that Sunday, had earmarked some $200 billion for mortgage-bond purchases. But by Monday bond managers discovered the Fed purchases, while well-intentioned, weren’t nearly enough.

“On that first day, the Fed got completely run over by the market,” said Dan Ivascyn, who manages one of the world’s biggest bond funds and serves as investment chief at Pacific Investment Management Co. “That’s where REITs and other leveraged-mortgage products started getting into serious trouble.”

That Tuesday, UBS Group AG closed two exchange-traded notes tied to mortgage real-estate investment trusts. By Friday, a mortgage trust run by hedge-fund firm Angelo Gordon & Co. had warned its lenders it wouldn’t be able to meet its obligations on future margin calls...

Still more.

Benjamin J. Cohen, Currency Statecraft

Following-up, "China and the Future of the Dollar."

From my former professor and mentor at UCSB, Dr. Benjamin J. Cohen, Currency Statecraft: Monetary Rivalry and Geopolitical Ambition.

China and the Future of the Dollar

From Henry Paulson, former U.S. Secretary of the Treasury, at Foreign Affairs, "The Future of the Dollar: U.S. Financial Power Depends on Washington, Not Beijing":

NEW: The enduring dominance of the US dollar is remarkable, but its status will be tested by Washington’s ability to weather the COVID-19 storm and emerge with prudent economic policies, writes Hank Paulson in @ForeignAffairs. https://t.co/kVNFM2kxA4

— Paulson Institute (@PaulsonInst) May 19, 2020

In late March, global financial markets were collapsing amid the chaos of the novel coronavirus pandemic. International investors immediately sought refuge in the U.S. dollar, just as they had done during the 2008 financial crisis, and the U.S. Federal Reserve had to make huge sums of dollars available to its global counterparts. Seventy-five years after the end of World War II, the primacy of the dollar has not waned.

The enduring dominance of the dollar is remarkable—especially given the rise of emerging markets and the relative decline of the U.S. economy, from nearly 40 percent of world GDP in 1960 to just 25 percent today. But the dollar’s status will be tested by Washington’s ability to weather the COVID-19 storm and emerge with economic policies that allow the country, over time, to manage its national debt and curb its structural fiscal deficit.

The stature of the dollar matters. The dollar’s role as the primary global reserve currency makes it possible for the United States to pay lower rates on dollar assets than it otherwise would. Equally significant, it enables the country to run larger trade deficits, reduces exchange-rate risk, and makes American financial markets more liquid. Finally, it favors U.S. banks because of their enhanced access to dollar funding.

That the dollar has maintained this stature for so long is a historic anomaly, particularly in the context of a rising China. The Chinese renminbi (RMB) has by far the greatest potential to assume a role rivaling that of the dollar. China’s economic size, prospects for future growth, integration into the global economy, and accelerated efforts to internationalize the RMB all favor an expanded role for the Chinese currency. But by themselves, these conditions are insufficient. And China’s much-touted successes in the realm of fintech—including its rapid deployment of mobile payment systems and the recent pilot project by the People’s Bank of China to test a digital RMB—will not change that. A central bank–backed digital currency does not alter the fundamental nature of the RMB.

Beijing still has major hurdles to overcome before the RMB can truly emerge as a primary global reserve currency. Among other transformative measures, it needs to make more progress in moving to a market-driven economy, improve corporate governance, and develop efficient, well-regulated financial markets that earn the respect of international investors so that Beijing can eliminate capital controls and turn the RMB into a market-determined currency.

Washington should be clear-eyed about what is actually at stake in the competition with China. The United States should maintain its lead in financial and tech innovation, but there is no need to exaggerate the impact of a Chinese digital reserve currency on the U.S. dollar. Above all, the United States must preserve the conditions that created the dollar’s primacy in the first place: a vibrant economy rooted in sound macroeconomic and fiscal policies; a transparent, open political system; and economic, political, and security leadership abroad. In short, sustaining the dollar’s status will not be determined by what happens in China. Rather, it will depend almost entirely on the United States’ ability to adapt its post-COVID-19 economy so that it remains a model of success...

Fuck China. The more the U.S. can do to weaken that communist kleptocracy the better.

Keep reading.