The Rabid Independent, Nonpartisan solutions, independent policy ideas

The stock market mess started when China decided to devalue its currency by a paltry 3%. The panic that followed has apparently stopped them from doing more, if they ever had more in mind. Their stock market (if we can call it that) has fallen by 42% after rising spectacularly over the preceding year. That “market” is extremely illiquid and composed of odds and sods that hardly represent their macro-economy.

But even if it were the perfect cap-weighted index with every major company included, why should I care if it fell 42%? Do western banks lend to Chinese companies? No. Do western investors invest in their stocks? No.

If it’s indicative of a Chinese economic collapse, I still don’t care! China buys (virtually) nothing from the west so our companies would lose no orders. Sure Australia would sell them less iron ore but is that what we are so worried about? The question is, how does a decline in an irrelevant economy – spread to the west? What is the transmission mechanism?

Perhaps investors in Japan will get scared by a decline in that market and then we get scared by a decline in the Nikkei -etc etc but that sounds more like a limited decline. Oil prices will fall since China is a huge buyer and anyone with oil stocks or stocks of banks that lend to oil companies will get hurt. There is of course a benefit on the other side- we are all richer since we will save money at the pumps.

There are clear losers: Canada, Russia, Venezuela, Australia, Saudi Arabia etc. but can they cause fear to spread and explode. How much do we care about Toronto real estate or negative Venezuelan GDP? The answer is murky since transmission lines are often opaque so I don’t want to get too cavalier. Perhaps Chinese economic weakness is a symbol of weaker US import demand. China may just be the leech in the coal mine simply telling us that our own growth is flagging.

Wage growth has completely stalled as I predicted it would years ago. No wage growth -> no consumption growth -> no import growth. Competition from Chinese peasant labor has killed the glorious US consumer who they (the Chinese) depend on for work. The cycle is almost complete.

The parasite has sucked too much blood from the host.


The Value of Trump

On August 21, 2015 By

Yes it’s self evident that Donald will be gone soon. Everything he does and says just makes it more obvious that he is not a serious candidate. It will be sad when he’s gone because then we’ll back to the same morbid crowd repeating how much they prefer to save the life of a fetus over […]

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Searching for A New Vein

On August 13, 2015 By

Test Question: Can you name one Asian country that relies on domestic demand to fuel its growth?

I can’t.

China has failed for obvious reasons- poverty and corruption. You just can’t get enough spending from $4500/year laborers to generate new domestic production and tax revenue. Even the upper middle class has nothing left to […]

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Living In The Past

On July 22, 2015 By

The new arms control pact with Iran is very hard to assess. The inspections come with limits. Why can’t Iran accept unlimited access to any possible enrichment site by IAEA inspectors? Why is there a twenty-four day wait period before they can get into suspicious buildings? On the other hand any inspections at all are […]

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Any historian will tell you that all governments are corrupt and many wars are unnecessary or stupid. Everyone who died in World War 1 didn’t do so protecting their country. In most cases their country should never have gotten involved. It’s hard to tell a family that their son or father died for no reason […]

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Toy Soldiers

On June 12, 2015 By

Yesterday Jeb Bush proclaimed that he would, if elected, send troops to Ukraine to attack or fend off Russian incursions. Ukraine is that lovely corrupt bankrupt state that Germany has said it would never support either militarily or economically. Russian aggression should mean more to Germany than us – right?

Marco Rubio has said he […]

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The list of Republican candidates is growing almost every day. There are 10 people on offer so far with more to come. We have two extreme Christians (as if even one ever had a chance), a retired forgotten former NY governor, a failed business executive, a brainless neuroscientist and a brother who needs no introduction. […]

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In this world of hostile partisan dysfunction, a President can’t get much done. The one area he is (normally) left alone in is international relations. He and his minions can negotiate peace treaties, arms reductions, trade pacts. The general rule is that everyone accepts that any new treaty or pact must be a good thing. […]

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When you are accused of a crime you have several options. You can:

Prove that you are innocent or that your accusers have no evidence. Confess, say you’re sorry and that you were either temporarily insane or got a lot of very bad advice. Act outraged at being accused and offer no defense or contrition. […]

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So you say you’re in favor of personal responsibility and “freedom”. You want to believe that people become indigent by virtue of their own failings not due to circumstances beyond their control. Don’t blame the drug or your body chemistry – blame yourself. As a loyal Republican this should be your position. Yes, Jesus would not […]

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Here’s my list of things that bug me. Some are big and some are petty. Feel free to offer new additions.


Mottos, Creeds, Rules

As we search for legitimate solutions to America’s problems everyone must obey these rules or we’ll never get anything done.

Mottos, Creeds and Rules

Reading List