mna

The Truth Behind the U.S Government's Stealth Stimulus Plan

haha, thanks for the article. This is true outside the box, original thinking. I agree with everything said. Deadbeat stimulus it is.

Also just to add fuel to the fire: not only are deadbeats leeching off the system, but savers are being punished for saving by dollar devaluation. In the meantime, nothing is being done about the unsustainable fiscal policy while we run a loose monetary policy.

I'd say we're screwed, but that would be the understatement of the year.

What Will the U.S. Economy Look Like in 10 Years? Look to Greece

I think the EU will have to assume the role of the IMF in this case. Greece will be given even more loans, in exchange for politically painful reforms. If they don't, the entire union is in danger of dissolving. The greek economy is small enough that a bailout is affordable. It's a small price to pay for the integrity of the EU.

The US, on the other hand... won't have any one large enough to bail us out if we get in trouble. If we do get to the same point as Greece... then hold on to your hats folks, it's hyperinflation time.

Global Warming Models: 'Out of Order'?

I'd agree with this. Scientists should be concerned about finding the truth, however troubling the conclusions might be. Populism should have no place in science.

Unfortunately populism controls the politicians, who in turn control scientific funding. He who holds the purse strings ultimately has the final say, I'm afraid.

On Nov 28 05:59 PM conceptwizard wrote:

> It is not the fraud of Global warming that is the main issue. It
> is the profession of science itself that is in question. When a scam
> of this magnitude that has the potential to drain trillions of dollars
> from economies, is uncovered. And no major media is covering this
> for the fraud that it is. With Obama still going forward with Copenhagen
> he is still perpetrating the lie.
> The system is being hijacked by the very people charged to protect
> it.
>
> If no formal inquiry in forthcoming from the Science community in
> particular, politicians and Media, that will prove my point.

Global Warming Models: 'Out of Order'?

The science simply says that we don't know if global warming's actually occurring as part of a longer natural trend or if it's the direct result of man-made pollution. If anything, the evidence clearly shows that natural forces such as volcanoes and micro-organic makeup of the oceans are much more powerful than man-made additions of CO2 to the atmosphere.

It's pretty sad that we're not thinking this through fully and already are rushing head over heels to commit trillions of dollars to fix a problem that may not even exist.

The Next Phase of the Crisis Is Beginning with an Eye on China

kbigley,
lol, I dunno where to begin laughing. Should I start at the "1000%
inflation is likely" or "Renting is unthinkable"? or maybe the "Selling home to self" scenario conjured out of thin air?

Back to the article at hand though. It's an admirable effort, especially for a guy still in college, but you're not adding in actual numbers in your article, only speculation on "10% growth" and "stagnant demand".

China's GDP is much less dependent on Western demand than the media would have you believe. The media focuses on the total export/GDP ratio, while the true useful number is *NET* export/GDP. When you do that, the contribution of net exports to total Chinese GDP is less than 8% (instead of the 35%, as often touted in the media). The west's responsible for about half the trade with China, so its contribution would be less than 4% to Chinese GDP growth.

Think about that for a second. What that means is, IF the Chinese surplus with the West collapsed by 25% YET AGAIN, as it has the past year, it would affect the Chinese GDP by less than 1%. Indeed if the deficit was somehow completely erased next year, and the west achieves COMPLETE PARITY in trade, it would take off the topline Chinese GDP by less than 4%. In a country that is getting 8% growth, shaving 4% off is hardly earthshattering. Indeed, it's miles beyond the negative gdp rates experienced by most of the world this past year.

Now lets look at the Chinese internal demand picture. 15% retail sale is a strong sign that internal demand is picking up. If nothing else, the surge in auto sales should tell you that internal demand is strong.

How does this all go back to your premise that China has an asset bubble and is collapsing? It's simple. China does definitely have an asset bubble in the making(especially in real estate, as evidenced by the salary/price and rent/price ratios). However, the western media greatly exaggerates the problem. With the underlying growth so strong... it'll take years, if not decades, for the Chinese asset bubble to outrun growth and the currency appreciation and pop.

On Nov 28 06:50 PM kbigley7 wrote:

> Several observations in China.
> 1). Home size in China include walls, balcony and doorway, 130 sqm
> is equivalent to about 1050 sq ft in the USA while the price is based
> on 130 sqm, not the 96 sqm.
> 2). When you buy property based on listing price, you can only buy
> "maopi fan", bare bone apartment, there is no window, no bathroom,
> no electric outlet, no wall, no floor, it's all brick/cement and
> you need to spend another 30% to make it livable.
> 3). Most homes were sold long before they are finished.
> 4). What you buy in China is 70 years use, you do not have other
> rights, but you can sell at any time.
> 5). Since it is apartment instead of single family house, the exterior
> gets dirty in a few years and looks terrible, also it is standard
> practice for builders to cut corners to boost profit, rarely a cement
> building can last 30 years, some even collapse before completed,
> look at the 10-y old apartment complex：
> img.scol.com.cn/200906...
> img.blog.163.com/photo...
>
> 6). In small cities, average home price (including the additional
> 30%)of 130 sqm apartment (1050 sq ft by US Standard) equivalent to
> 20 years salary, in Beijing and Shanghai, the ratio is about 40-50.
>
> 7). There is no property tax at this moment, but that can change
> at any time.
> 8). Renting is almost unthinkable (disgracefully), main reason is
> landlord can kick you out at anytime, there is no protection for
> tenant, most owners simply buy "Maopi Fan" and never bother to spend
> money to make it livable, only waiting to sell it later. Monthly
> rent vs. house price is about 1:300 to 1:800.
> 9). When you driving along the apartment complexes at night, only
> about 10-25% have lights, everything else are dark without being
> occupied, but owned by speculators, looks very surreal.
> 10). Private person NOT allowed to have land and build his/her house,
> land is obtained by local government for virtually nothing and sold
> at auction to developers at max price, usually about 20-100 times
> of the purchase price from farmers/peasants.
> 11). The vast majority of income for local government is from land
> auction, and proceeds are used to build luxury office for local government
> or buy German luxury cars, local government will intervene if the
> developer sell things at reduced price for any reason. Standard vehicle
> for government employee is Audi, many even buy BMW in large numbers,
> they do not buy Chinese vehicles. GM benefits the most from government
> purchases due to perceived luxury. Picture of government office
> in Hefei where average salary about $200/month.
> yq.ahxf.gov.cn/uploadp...
> 12). Often owners sell house to himself, this is how it works: Adan
> buy a "Maopi Fang" for RMB 400,000 in 2008, she ask her relative
> at the bank to finance another mortgage and sell to herself for RMB600,000,
> so the RMB200,000 profit is partially shared by the bank employee,
> and then the "Maopi Fang" is officialy worth RMB600,000 and everyone
> is happy.
> 13). China do not have a social security system, so people put all
> their money in buying a house and hope for appreciation. People also
> believe the bank won't fail because it is government owned. At the
> same time, there is no official guarantee like the FDIC $250,000
> insurance. If there is bank run, the bank will be wiped out with
> 48h.
>
> Based on the observation, no doubt there is huge bubble in China
> and something bad will happen sooner or later, but not necessarily
> resulting in price crash, there is good possibility that government
> will intervene by forbidding owners sell at reduced price, instead,
> printing more and more RMB, so 1000% inflation is likely.

On the Limitations of Government

Government can and will creep in a democratic system. Everyone wants something for nothing. It's human nature. You can't get rid of it once it sets in. The time to stop it is before it becomes systematic. Otherwise, the system buckles under its own weight and topples over. We've seen this time and time again in history.

Only in the failing will the masses realize their folly. Even then people will proceed to blame something else for their failures. "it's someone else's fault!" we will loudly proclaim.

In 1930's Germany, that "someone else" is the Jew. Who's gonna be the "someone else" of today? Chinese? Russians? I don't know. But I'm sure we'll find a scapegoat. I just hope we don't cause World War 3 when it happens.

Artificial Economy? Yes. Artificial Inflation? No

The price inflation will move to consumer goods when we force China to revalue the Yuan. Adding insult to injury, even though there's easy money, consumers will NOT get the money because the government will crowd out the private sector's cash.

In other words, consumers will not get the money because it's government allocated. The groups that will get the money are:

- Public sector employees
- Unions
- Special interest groups

If you're in the private sector and creating real wealth, get ready for your wages to stagnate as benefit costs continue to spiral out of control. Also expect your prices to go up when China relents and revalues the Yuan. What a wonderful world we live in.

On Nov 23 09:11 AM D. McHattie wrote:


> But I'm still not sure how/when this price inflation moves to consumer
> goods.
>
> Like your example of student loans and real estate, prices rise when
> you make more money or credit available to purchase that good, service
> or asset.
>
> So since the banks have been given so much money I see that the prices
> of things that banks buy will rise. And these banks buy investments
> so their prices are rising: equities, fixed income (for now), precious
> metals.
>
> But the question is when do consumers get their hands on this money?
> Because, it seems to me, that's what's necessary in order for consumer
> prices to rise.

China's Nine Nations

Thank you for a most interesting read. The info on the different regions are invaluable to a china investor. It's insights like this that make sifting through all of the other seeking alpha trash worthwhile.

More articles like this are needed to educate the American Public about China. Americans are notoriously self centered and generally lack world perspective. It's about time we got away from the "me, myself, and I" of American policy. The world is changing, and we need to get on the bus.

Why Traders Are Abandoning DryShips

Is it any surprise? The CEO has publicly stated before that American investors are suckers. He has publicly stated in his records that he's granting family favors through the company (i.e. stealing from company coffers). Yet, people still pour money in, hoping there'll be more suckers. Unbelievable.

U.S. Share of World GDP Remains Remarkably Constant

Currencies do not reflect the true fundamentals of the economy yet. When they do, you'll know what the true US share is. Here's a hint, it will be lower.

Why Krugman Is Wrong About the Yuan

Krugman is just parroting the official democrat position. Just know the political motives behind his comments and you'll be fine. It's fine to point the fingers at China, because we avoid having to point the finger at ourselves.

That said, I do think the Yuan needs to be appreciated. It's actually in the interest of the Chinese to see it rise. A rising Yuan will do 2 things:
1) shut the American public up
2) increase their relative wealth in the world

What it will NOT do, is decrease the trade deficit appreciably. It didn't work for Japanese deficit (think plaza accord), and it won't work for the Chinese deficit. When the Chinese do appreciate the Yuan, and the trade surplus doesn't get any smaller as so many predicted, the light bulb will finally come on. The average American will not have anyone to blame but themselves anymore. Then maybe we'll get some real fixes to the system.

Whitney Gets Bearish: Will She Be Right Again?

She made ONE good call on Citigroup 2 years ago. The media then seized on the opportunity to interview uber-bear analysts and made her into a star. Like Rubini, Mayo, and many other mediocre analysts, they don't deserve the media pedestal they're put on.

For real good bears, look to Marc Faber, Jeremy Gratham, and James Grant. They're the ones with real, useful insight.

Asset Allocation: Is the Old Normal Becoming the New Normal?

That's the most common view, and it's the wrong one. Assets tend to outperform after a period of low performance, and vice versa. So relatively speaking, you should actually be putting more into stocks (barring any overpowering external macro trends). The results are born out by research, check out Michael Mauboussin's books, it's an eye opener.


On Nov 18 02:13 AM dividend_growth wrote:

> It seems to me that Americans still put too much in stocks:
>
> Even after the bloody 2008, they still allocate as much to stocks
> as they were doing at the peak of the last great bull market in 1969.
>
>
> If you look carefully at the first chart, great bull markets do not
> begin until Americans allocate less than 40% of their money to stocks.

21st Century Unemployment Insurance

Charles Dickens was writing fiction. We're dealing with real life. The term "harsh" is relative; no one in his right mind is advocating slave labor. However, the program absolutely needs to be tough to prevent crowding out of private sector investment. If conditions are too comfortable, it will most definitely result in people staying in and abusing the public sector program. The goal of the program is to provide a social safety net and keep job skills fresh, not to guarantee easy employment for life.

Bottom line is, Most workers at private businesses don't get paid when they don't show up for work. The public programs should be no exception.

On Nov 13 07:43 PM bob adamson wrote:

> mna -
>
> You will be interested to note that your analysis is an almost exact
> duplicate of that given by Liberal reformers in the 1830s and 1840s
> in the UK to justify the establishment of Work Houses and the maintenance
> of harsh conditions for inmates therein.
>
> Charles Dickens had a few observations to make about all this.<br/>
>
> bob adamson

21st Century Unemployment Insurance

If such a program is implemented, it should be punishing enough so that people would not want to stay in the program if it's at all possible. This means mandatory work hours (and not receiving benefits if you don't show up or are lazy).

But as this is a government social program, pretty soon it will morph into a gigantic mess with overbudget benefits and huge bureaucracy. In other words, I think such a program sounds nice on paper, but will be ineffectual in practice.