State-Directed Exponential Growth

Exponential Growth Cannot Last

To make this more vivid and memorable, imagine the following as an animated cartoon. For the first 99 hours the bacteria are just partying and congratulating themselves on how smart and successful they are. It’s party hats and noisemakers, Conga lines and champagne, the bacterial Dow Jones going through the roof. Woo hoo! No limits! After 99 hours, some of the bacteria start to worry, but the rest party on — after all, the dish is only half full. Plenty of room left, plenty of nutrients. The first half lasted 99 hours, and there's another whole half to go! Sure, somebody’s gonna have to figure something out eventually, but meanwhile life is good, and nonstop growth will only make it better! An hour later — the world ends.

When growth is exponential, limits are sudden.

January 5, 2009
2009: China's Year of Rising Opportunities, and Challenges

There is no doubt that China's growth is speeding up.

I don't know about you, but I have had and continue to have some serious doubts. Using hindsight, it was one of my better pre-crash heckles.

November 6, 2007
Savvy Chinese Know Exactly When Bubble Will Burst!

I'd also like to point out that much of our manufacturing base is apparently in China these days. Therefore, if manufacturing plummets, it isn't even our problem. It is their problem. Hurray!

January 5, 2009
A darker view of the Chinese economic 'miracle'

Huang marshals a vast array of statistics to buttress his claim that the welfare of ordinary Chinese did not keep pace with economic growth under the state-directed capitalism of the 1990s.

What an amazing coincidence that is. The ordinary American did not keep up with economic growth under our state-directed capitalism of the 2000s. The ordinary American did not keep up with economic growth heading into the Great Depression either.

But hey, what do I know? I'm just one scared bacterium in the petri dish. I sold my party hat in 2004 and used some of the proceeds to buy the relative safety of extra toilet paper. Call me a believer in the darker view.

I'm still an optimist though! I think I can even prove it. Things are much worse than I thought they would be. I had unrealistic expectations that things would only be very bad. If I had known for sure that things would have turned out THIS bad, I would have made money shorting the entire US Banking System. I also would have sold my house at the peak and become a renter. I just wasn't THAT sure. Hindsight sure is 20/20 though.

Now let's talk of the recovery under a system in which exponential growth must eventually fail.

January 5, 2009
China Accelerates Filling Up Its Oil Reserves

On Friday, the U.S. Department of Energy said that amid low oil prices, it aims to fill the country's Strategic Petroleum Reserve to capacity this year.

It makes me think of a locust eyeing that last piece of food. That leaves me with two predictions for 2009.

1. IF we have a strong global recovery AND we can somehow miraculously get a billion Chinese to start driving cars in the name of apparently much needed continued exponential growth, THEN I would expect to see a much, much higher price of oil.

2. IF unemployment continues to rise thanks to our amazing ability to automate and outsource our jobs to the poorest nations on earth, THEN I would NOT expect to see a much, much higher price of oil.

Hey, what more do you want from me? You already know I'm not a big risk taker. I'm sticking with the sure things! In either event, toilet paper still seems like a decent investment. D'oh! ;)

This post inspired by a comment MAB left for me.