The Chinese are going for broke…
As Chris reports below in today’s Market Insight, iron ore prices are soaring. Bloomberg:
‘Iron ore soared the most ever after Chinese policy makers signaled their willingness to buttress economic growth, boosting the outlook for steel consumption in the top user and igniting speculation that some investors who’d bet against the market had been caught out. […]
‘“The iron ore and steel markets have gone berserk — they’ve departed from fundamentals and are heavily driven by sentiment,” Zhao Chaoyue, an analyst at China Merchants Futures Co. in Shenzhen, said before the Metal Bulletin price was published.
‘“Investors are expecting further monetary easing by the Chinese government to boost steel demand.”’
The markets have gone berserk because the Chinese authorities have gone berserk by increasing credit by a berserk amount.
China’s Ponzi crisis
Here comes an update that must stagger every sober observer…
In the first two months of the year, China’s total credit — including ‘shadow banking’ system loans (loans made by unregulated financial firms) — exploded by about $1 trillion.
Chinese debt is expanding at a pace equal to 5% of GDP — PER MONTH!
Why would credit increase so much…even as the world economy enters a slowdown?
Why would the demand for iron ore and steel go up when demand for finished products is slumpy and falling?
Because as it is somewhere recorded in the Bible, a berserk monetary policy begets berserk prices, which beget bad investments, excess capacity, and misallocation of resources…
…which beget booms and busts, which beget even more berserk monetary policies.
And now, China is in the grip of a misbegotten Ponzi crisis.
More than a quarter of its debt cannot be serviced out of revenues. Instead, it must be refinanced — new debt must be taken on to service old debt.
More than 50 trillion renminbi ($7.7 trillion) will be needed — a huge increase with no corresponding increase in output.
What happens next?
As always, we don’t know. But most likely, we’ll see wild whipsaws in the markets…and a lower exchange value for the renminbi versus other major world currencies.
As the price of Chinese imports falls, corporate profit margins, already falling, will drop further. Stock prices will collapse. And the hush of deflation will settle over the world, like a pillow pressed down on the face of a rich, old woman.
Ugly, dysfunctional, obnoxious
But wait…we promised to tell you about our weekend in Charleston.
We begin at the end…with a helpful suggestion.
Many readers write to question our contribution to civilization. The general tenor of the letters goes like this: ‘You are always criticising. But you never offer any solutions.’
Well, here we offer a helpful suggestion for at least one of the world’s woes: ugly, dysfunctional, and obnoxious architecture.
The solution is simple: Bad architects should be hanged.
And in keeping with the new Donald Trump era and the leitmotif of the day, we will go further: First, they should be publically tortured, by being forced to live in houses of their own design, before the coup de grace is finally delivered.
Who designed that horrible building to the south of the Charleston museum, in the direct line of sight of the historic Joseph Manigault House?
Don’t bother to tell us. We don’t want to know. We just want assurance that he has been collared and awaits execution.
The building is everything a public edifice shouldn’t be: in the wrong place with the wrong design at the wrong time.
It might have been perfectly appropriate for, say, a work camp in Siberia in Stalin’s Russia. Or even as a reasonably faithful and representative example of the socialist utilitarian style of public buildings popular in 1960s America.
But there it is today, like a wart on the face of a beautiful woman.
And there in front is a scaffolding. Is it being built…or having a facelift?
We don’t know, but the only appropriate remodelling would take a wrecking ball or a drone.
A walk around Aiken
Our interest in South Carolina architecture began as we were taking a walk around Aiken.
Many of the houses are stately, fine, well-proportioned, and graceful. Even many of the cottages are cute and attractive. But almost all of the successful ones seem to have been built before the Great Depression.
Houses put up more recently are simpler, lower, often porch-less, and generally charmless. They are often built of brick but without the warmth of 18th-or 19th-century bricks. These bricks are too red, too hard, and too uniform.
These new houses seem to have come down here from somewhere else — say, Cleveland or Chicago. They still don’t seem to know where they are.
They are squat…in a climate that desperately calls for high ceilings and free-flowing air. They have no overhanging roofs or porches; instead, they absorb the sun’s heat like a beached whale. And many of them have windows that are directly exposed to the sun without shutters…which must be disastrous in the summer.
What is it that causes a people to lose the good taste or penetrating judgment with which they were once endowed?
What causes them to stop thinking about things they once considered important?
What turns a people who voted for two Jeffersons into Clinton or Trump supporters?
We don’t know. But we blame the architects for the buildings. They are the ones with the responsibility for the manmade shapes and forms we see around us.
As for the churches in the town of Aiken, the Baptists, Methodists, and Episcopalians have done okay.
The Baptists have a handsome church complex on York Street. It is not imaginative in any way. Nor is it particularly graceful. But it is solid, in the classical style, and respectable.
Later architects added a series of arches and walkways. But the bricks are too harsh and heavy. And the annexes on Richland Street are unfortunate; a heavy band of what appears to be white concrete sits on the brick building like the cap on a tomb.
Likewise, near St. John’s United Methodist is an imposing, respectable collection of buildings.
The Episcopalians seem to have done the best for themselves.
St. Thaddeus is a dignified church with four fluted columns holding up a simple classical façade.
But what went wrong with the Presbyterians?
Their church complex on Barnwell Street is a catastrophe.
None of these churches — Episcopalian, Methodist, or Baptist — is especially attractive. Still, none is an embarrassment to the faithful.
But the poor Presbyterians…
They are condemned. They pass their solemn moments in a space that looks more like a military outpost or a US embassy than a church. The building is constructed of brick — dirty yellow in colour — and crowned with a large cap of grey asphalt shingles that dominate the entire ensemble.
Aiken’s embassy-like Presbyterian church
It reminds us of a church in Waterford, Ireland, which, in turn, reminds us of a gambling casino in Macau. All three buildings are marred by a particular upthrust centre roof, which in Macau was supposed to represent the centre of a roulette table.
We doubt the Christians of Waterford or Aiken wished to recall the axis of a roulette table.
God knows what the architect had in mind. But whatever it was, he should be punished for it.
‘This kind of architecture,’ said an old architect friend, now deceased, ‘is not just a mistake. It is a sin.’ He was referring to a house we designed and built ourselves…before we were old enough to appreciate architectural orthodoxy.
The sin is pride — the idea that you are so damned smart that you can safely ignore 2,000 years of architectural evolution and create something entirely from your own imagination and ingenuity.
In almost every instance, the effort fails. Like mutations, innovations in architecture are almost always sterile dead ends.
The architect should be encouraged to experiment; why not?
But when his experiments encumber the public with an eyesore that cannot be erased for at least a couple generations, he should suffer a capital punishment; it would put an end to him, if not to his bad architecture.
‘God doesn’t care’
But here we are…two pages into our tour of Charleston, and we haven’t yet left Aiken! Let’s hit the road.
The road from Aiken to Charleston is an old one. It runs from the highlands down to the lowlands over about 100 miles…coming off the hilly, poor farms of the piedmont and running down into the swampy low country along the Ashley River.
Between the two cities is the country that Baltimore newspaper man H.L. Mencken must have had in mind when he wrote his famous indictment of Southern culture, the ‘Sahara of the Bozart.’
There is not much of any Bozart along Routes 78 and Route 61. The houses are mean, low, miserable. The farms are poor. But the churches are numerous (in one stretch, we found a new Baptist church about every mile) and almost all disgraceful architecturally.
One has a barrel roof and looks like an airplane hangar. Another has a low flat roof, like a plumbing supply store. Still another must be a converted gas station.
This is no reflection on the religious fervour or doctrinal purity of the worshippers; we only comment on the buildings in which they do their thing.
Readers will accuse us of being a church snob. We do not deny it; we like grace and beauty in all its forms — especially when we are nodding off during a sermon.
Obviously, most people don’t care about it.
‘God doesn’t care either,’ the Baptist will reply, as though he had any idea what God would think.
But if God doesn’t give a hoot, He certainly won’t mind if your editor has an opinion.
That is one of the sad things about the South…or at least this part of it. It has surrendered its critical spirit.
People seem ready to put up with anything — architectural, philosophical, political…you name it.
In this bastion of Christendom, for example, there is a curious lack of rigor toward the Christian faith.
Driving along Route 78, we come to Bamberg, South Carolina. (Or was it Denmark, South Carolina?) It advertises itself as a ‘City of Pride.’
Right there in the Bible (Proverbs 16:18), it warns that ‘pride goeth before destruction and a haughty spirit before a fall.’ Our eyes opened widely, expecting to see the ‘City of Lust’ or the ‘City of Gluttony’ coming up next.
You’d think Christians and architects — and especially Christian architects — would think twice before calling their city a place of pride…or putting up a church that is either a monument to their own haughty spirit (as is the case of Aiken’s Presbyterians).
Near the city of Bamberg, by the way, is the Rivers Bridge State Park, the site of where ‘a small band of Confederate soldiers tried to hold off Sherman’s army.’
Without success, of course. Sherman’s troops rampaged through the entire area. They burned and looted the big plantation houses all along the Ashley River and laid thousands of South Carolinians in their graves.
But the residents of the area today don’t seem to harbor any hard feelings. Several times, we saw the flag of the conquering army flying from flagpoles.
Directly in front of Aiken’s Episcopal Church, for example, the side of a building is painted with the Yankee flag, with these words writ large: ‘In God We Trust.’
Has anyone bothered to ask…or even wonder…how the two connect?
Which master do these Christians serve?
Probably nobody asks.
Down in the low country, we visited Drayton Hall, an 18th-century plantation.
Stopping at the entrance to buy a ticket, the conversation went like this:
‘Are you ex-military?’
‘Why do you ask?’
‘Because if you are, you are entitled to a discount.’
‘Why do you give a discount to ex-military at a plantation house? Why not give a discount to architects or builders? Besides, I thought the US military burned this place down…’
‘Uh… We just give a discount to thank them…’
‘For what? Arson?’
‘Are you serious? We thank them for letting us keep speaking English.’
The habit of critical thinking either has gone out of them…or they never had it in the first place.
At the end of the road, in Charleston, we found an urban example of the network effect. A few elegant houses were built in the 18th century — with double-decker side porches, large windows, shutters, gardens, pergolas, high ceilings, and fine woodwork. Then, people who wanted to live among other elegant people in elegant houses joined them.
The place took off like Facebook…
And now, the old city sits like a bricks-and-mortar reproach to the rest of the state…and maybe to the entire nation.
‘What’s wrong with you?’ the dead architects seem to ask. ‘Did you forget how to build a nice house…a nice city…or a nice life?’
At a graveyard back in Aiken, a monument recalls the only invasion of the state of South Carolina in history. ‘To the Confederate Cavalry,’ it is dedicated, and to two soldiers, interred beneath it, ‘who died in defence of this city.’
‘What about us?’ voices seem to whisper from below.
For Markets and Money, Australia