Money and Finance
- Links
Transcript of the chat between Sanjay Bakshi and Shane Parrish (LINK) Transcript of the FRMO Corporation Annual Meeting of Shareholders (LINK) Fred Wilson: Software Is The New Oil (LINK) It makes sense to me that software is the oil of the information...
- Stan Druckenmiller On China
Found via ValueWalk. Stan Druckenmiller: The growth in credit at a time when GDP growth is slowing is a problem for China. And I think this is the 2009-11 stimulus coming back to bite. I understand that it had to be done to fund entrepreneurs and the...
- Repost: A Conversation With Charlie Munger
It is interesting to go back and watch this after not watching it for a couple of years. I guess because I've grown and learned different things in between watching it then and now, I noticed and got different things from it than I remember when I...
- Corruption Threatens China’s Future – By Edward Chancellor
Widespread corruption at the local government level remains a threat to China’s economic development. If stories are to be believed, Chongqing’s disgraced party boss Bo Xilai even used an anti-corruption drive to put the squeeze on local business...
- How Do We Know That China Is Overinvesting? - By Michael Pettis
Of course the question of whether or not China is misallocating capital can be endlessly debated because it is very hard to prove except in retrospect. I would argue that there are several reasons why we should believe that capital has been wasted on...
Money and Finance
Building debt - By Michael Pettis
Before starting on the subject of debt I wanted to make a quick reference to something sent to me by Charles Horner, a senior fellow at the Hudson Institute. I am glad to say that the overinvestment thesis is much more widely acknowledged today than it was even two or three years ago, but one myth, I think, is that most of the overinvestment excesses in China are concentrated in the real estate sector. I have always argued that it is infrastructure where the most amount of investment has been wasted.
Its impossible to prove one way or the other, but Horner sent me a paper in the Oxford Review of Economic Policy, by Oxford’s Bent Flyvbjerg, with the rather alarming title “Survival of the unfittest: why the worst infrastructure gets built—and what we can do about it”, which suggests why we need to be so worried about infrastructure spending in China – aide from the fact that the numbers are simply huge.
In the paper Flyvbjerg looks at infrastructure projects in a number of countries (not in China, though, because he needed decent data) and shows how the benefits of these projects are systematically overstated and the costs systematically understated. More important, he shows how these terrible results are simply the expected outcomes of the way infrastructure projects are typically designed and implemented.
It is not a very happy paper in general, but I am pretty sure that many people who read it probably had a thought similar to mine: if infrastructure spending can be so seriously mismanaged in relatively transparent systems with greater political accountability, what might happen in a country with a huge infrastructure boom stretching over decades, much less transparency, and very little political accountability? Isn’t the potential for waste vast?
- Links
Transcript of the chat between Sanjay Bakshi and Shane Parrish (LINK) Transcript of the FRMO Corporation Annual Meeting of Shareholders (LINK) Fred Wilson: Software Is The New Oil (LINK) It makes sense to me that software is the oil of the information...
- Stan Druckenmiller On China
Found via ValueWalk. Stan Druckenmiller: The growth in credit at a time when GDP growth is slowing is a problem for China. And I think this is the 2009-11 stimulus coming back to bite. I understand that it had to be done to fund entrepreneurs and the...
- Repost: A Conversation With Charlie Munger
It is interesting to go back and watch this after not watching it for a couple of years. I guess because I've grown and learned different things in between watching it then and now, I noticed and got different things from it than I remember when I...
- Corruption Threatens China’s Future – By Edward Chancellor
Widespread corruption at the local government level remains a threat to China’s economic development. If stories are to be believed, Chongqing’s disgraced party boss Bo Xilai even used an anti-corruption drive to put the squeeze on local business...
- How Do We Know That China Is Overinvesting? - By Michael Pettis
Of course the question of whether or not China is misallocating capital can be endlessly debated because it is very hard to prove except in retrospect. I would argue that there are several reasons why we should believe that capital has been wasted on...