Wednesday, January 11, 2017

Bitcoin Declines on Central Bank Scrutiny

China’s central bank is talking about heightened scrutiny of bitcoin exchanges. Just the mention of regulatory oversight was enough to send the value if bitcoin tumbling. Compared to the U.S. dollar, bitcoin fell 12 percent in about one day. The 12 percent move is not the crisis that a comparable move would represent in a national currency — bitcoin is more volatile by nature — but it is an indication of how much of bitcoin activity involves businesses that want their dealings to go unnoticed.

Thursday, January 5, 2017


Smog is the story of this month in China, with a “fog alert” in the early days of the month worsening to the point that the government issued a national air pollution alert. The smog was already so bad two weeks ago that some airplanes couldn’t land. By yesterday visibility was bad enough to disorient pedestrians in multiple northern cities. The pollution problems come in spite of a well-publicized central government initiative to reduce industrial coal use by one third. Eventually the wind will change direction, but the persistent pollution problem makes me wonder if China’s level of manufacturing activity already exceeds what the land area can properly support.

Tuesday, January 3, 2017

Ford Cuts Capacity

Ford has decided not to build a new $2 billion factory in Mexico. This is not merely a question of location but has more to do with the question of manufacturing capacity. The U.S. auto industry got burned nine years ago by building too much capacity for anticipated demand that never materialized. Now they are doing the same thing again — but the furloughs that cut across the industry starting last month are making them wonder if they have made a wrong turn. By not building too much unneeded capacity in 2006 and 2007, Ford weathered the crisis of 2008–2009 without the need for bankruptcy. The decision not to build a whole new facility this year will surely look like a smart decision by the time the year is over.