Is China's Economy a House of Cards?

How long can any nation sustain high economic growth rates without a correction?

Who would know better than the Chinese that things are not so good?

How would Chinese "investors" signal that they did not think things were good?

As noted in todays WSJ ( HT:Instapundit), the Chinese stock markets have plunged in the last few months. The story reveals some very juicy details that is just bad and disturbing news to this cowpuncher who has seen drought and cattle cycles destroy a lot of people.

First, the Chinese Communist Government owns 2/3 of the shares on the market. Second, neither the listed firms nor the Chinese version of the SEC are transparent or accountable. Third, Chinese state-owned banks have provided most of the capital outside of the stock market to the tune of over 2.3 trillion dollars. Fourth, the Chinese government admitted that "we dont know" what we are doing. And fifth, most of the firms listed on the exchanges are dinks that got there by cronism. Sixth, it was the PRC media that pushed the stocks.

Who loaned out 2.3 trillion in China? I did not know China had so many homegrown Goulds and Morgans and Carnegies. Does something sound funny? How can a nation that was once Communist and is still dominated by the Communists make prescient investments?

I sense a lot of hat here, but still dont see a lot of cow..

If the Chinese government cannot run something as simple as a stock market, then what kind of oversight is there in the banking sector? If the majority of firms getting listed on the exchanges are dogs, then which firms are getting the bank loans today? If the majority of investors got duped on the exchanges, then who is duping whom in the bank offices? If the PRC media is pushing useless stocks, then where else is it cheerleading becoming empty and hollow?

Take China Aviation Oil for instance. This firm was touted as among the best and now they are belly up. How does an energy firm go under in a sellers market for fuel?

Does anyone remember the Japanese Economic Miracle? It was driven by an expansionary monetary policy that invested in state-guided ventures which led to massive speculation in non-productive assets - ie stocks and land, both in Japan and overseas.

If this sounds familiar its because the Chinese have been investing heavily overseas in many business ventures.

Could this "investment" be driven by loose banks at home?

Consider this - The Chinese as a nation have little experience in building and sustaining busineses over the long run. Most of the firms in China are either state owned or state sponsored in some way. And the banks are not independent. Does it seem weird that they are "investing" all that money?

Finally, there is the huge foreign reserves that China has amassed so quickly. Up over 50% in one year?

Doesn't this seem unsustainable?

Could all the little protests be the canary in the coal mine?

I am glad I am in the cow business.

Feral Cat Law and Texas Animal Cruelty Bill

It looks like Wiscsonsin will take the next step to listing feral cats as nusiance species. However, the plan faces uphill opposition from urban lawmakers.

http://insider.washingtontimes.com/articles/normal.php?StoryID=20050413-122945-1783r

"MADISON, Wis. -- Wisconsin residents ignored passionate opposition from cat lovers and supported a plan that would allow hunters to take out wild felines that kill birds and other small mammals. Residents who attended the meetings of the Wisconsin Conservation Congress voted Monday night to allow hunters to kill cats at will, just like skunks or gophers -- something the Humane Society of the United States called cruel and archaic. A total of 6,830 persons voted for the plan and 5,201 voted against it. Fifty-one counties approved the plan, 20 rejected it, and one had a tie, according to results released last night by the Wisconsin Department of Natural Resources (DNR). At the Monday night meetings, animal lovers held pictures of cats, clutched stuffed animals and wore whiskers as they denounced the plan. Katy Francis of Madison was one of about 1,200 people who attended the Monday evening meeting at Exhibition Hall at the Alliant Energy Center in Madison. She wore cat ears, whiskers and a cat nose and held a sign that read, "Too Cute to Kill." "The cat hunting thing brought me out because it was very extreme," Miss Francis said. The congress, which acts as an advisory group to the DNR, asked residents in 72 counties whether free-roaming cats -- including any domestic cat that isn't under the owner's direct control or any cat without a collar -- should be listed as an unprotected species. If so listed, the cats could be hunted, as they have been for decades in South Dakota and Minnesota. Firefighter Mark Smith proposed the hunting idea at the La Crosse County congress last year, noting that feral cats killed small mammals and birds. Mr. Smith has faced death threats over the plan.... "



This is an example of one of the fault lines between urban and rural voters.

Rural voters like myself get the feeling that urbanites see the country as a place to dump their trash including strays.

If you have spent a few thousand dollars to reintroduce quail into your farm, only to lose them to a few cats, it makes you very upset. If you have two strays show up and chase your calves around, it makes you upset. But if you shoot them, then some nutjob city slicker will get upset - but ignore the economic damage that causes you as well as the all the other stress.

Texas is considering a new law to broaden the definition of animal cruelty. Hunters are already against it because it is vaguely written. It is just matter of time until the Texas Farm Bureau opposes it as well.

The problem I have with the bill is that is makes it unlawful to harm strays. Ask any rancher how many dogs he has killed and most cannot tell you the number. Ask a rancher how many calves he seen chased by dogs and he cannot tell you the number.

Will they pass a law making it illegal for a dog to chase livestock?

The Texas law must make exemptions for farmers, ranchers, and hunters. Or there will be trouble.

Shame on the City of Greenville, Texas

Someone in the City Hall of Greenville needs to get their head out of their backside.

Last summer the very popular local fertilizer seller Eldorado Chemical caught fire and burned. It has yet to be rebuilt due to the ridiculous demands of the City of Greenville, Texas.

To recap, the Eldorado Fertilizer dealership at the corner of US Highway 380 and US Highway 69 saw its fertilizer storage building catch fire one early morning last summer. The fire department had to use bulldozers to smother the fire because water would have caused the fertilizer to run off and pollute the local groundwater.

As a frequent customer, I was told that the plant would be rebuilt in a few weeks. Surprisingly, not only did the fall planting season come and go with no activity at the site, but the Spring season is in full swing, and nothing has been rebuilt.

The story I was told by two employees and a banker makes my blood boil.

In order to rebuild, the City of Greenville told Elorado that it had to run a water main for a fire hydrant out to the site, pave the entire site in concrete, and then brick facade all the new buildings. These items would cost Eldorado $750,000 in additional costs.

The fire hydrant is pretty stupid - water and fertilizer are a no-no. And there are no other buildings within a mile of the plant site.

Second, brick and fertilizer do not go together. The caustic agents in the fertilizer would break down the mortar and brick very quickly. The foundation of the building must be specially engineered to support the weight of the fertilizer so as not to cause the brick to crack and fall apart.

Finally, the Eldorado site consists of about 2 acres and very heavy trucks come and go all the time, necessitating a very strong and reinforced pad with major storm runoff provisions.

The old metal and wood building worked just fine, the gravel pad is still fully functional, and the fire hydrant is a dumb idea. So why the requirements on Eldorado? It just does not make sense.

The last word I heard was that an Eldorado VP of was in town last week to try to sort out the mess with the City. Good luck.

The worst thing about the fire is the fact that 7 employees are now out of a job thanks to the city of Greenville. In addition, you cant tax an empty gravel pad. And everyone who went into Greenville for fertilizer now goes somewhere else and spends their money somewhere else.

I have not been there in 7 months when I used to go two to three times a week because thats where I got my seed and fertilizer. My receipts from last year show over $8000 in taxable goods purchased in Greenville not counting tens of thousands for fertilizer. I now go to to a city 50 miles North of town.

I am not sure how much money the Greenville economy has lost, but its got to be in the hundreds of thousands so far if one factors in the lost wages and hundreds of fewer vistors to the City. And Greenville is spitting in the eyes of the farmers and ranchers who have supported the city in the past. Whats the point of having a Cotton Museum if no one can fertilize their Cotton?

And this is not an isolated incident. Armadillo Collision operated by Brian Goodwin on I-30 SW of town was almost run out of business when the city tried to zone his brand new, immaculately run, and very busy firm out of existence. Brian perservered by taking his fight to the city and to the press and he succeeded.

Had he failed, he would have been financially ruined.

Think about this - how does a city which answers to the people have the power to ruin local firms? How can any man or woman who works for Greenville go home to their familes knowing they have ruined someone elses' lives? They should be ashamed of themselves.

You would think a city with the word Green in its name and a yearly Cotton Festival would like to have a fertilizer dealer in town.

Shame on the City of Greenville.