Friday, December 31, 2010

China in a Real Estate Bubble Similar to Ours

I know I probably don't have much company, but I don't think China is as powerful as a growing number of people seem to think that they are.  Yes, they are, for all intents and purposes, our banker.  We also are very dependent on their many exported goods, as our manufacturing sector is dead and buried.  But at the same time, they also share a few of our problems in adjusting to this new economic world.  A big one is that they must import a great deal of their oil for domestic consumption, as we also do.  So, they are just as vulnerable to the peak oil bug as the United States.  Another problem we have in common is the subject of real estate.  Many contend that a main reason for our economic collapse in 2008 was the ponzi scheme model of our real estate bubble, in that mortgage companies and banks signed off on home loans for people who simply could not afford them.  This raised prices into the stratosphere and we all know what happened. 

As this article states, China is in the same bubble that we were as it pertains to real estate.  There is an oversupply of real estate, and many people simply cannot afford them.  One couple mentioned in the article says that they'd need to save their entire salaries for 15 years just to make a down payment on a 3-bedroom house.  Over 40 percent of recently built real estate is standing empty, either in the hands of the developer or rich people who just want to flip them in hopes of making a profit. 

It's a matter of when, not if, this bubble pops.  And when China hurts, there's no question we will be too, as they wouldn't be as willing to keep buying our debt. 

Thursday, December 30, 2010

The Flu

The death rate in Britain has increased by over 20 percent from a week ago, and it's felt that the flu, specifically the H1N1 virus, is to blame.  It is also said to have spread to other parts of the world, like Ukraine and India.  It's funny, because just this morning, I was mulling over whether to get a flu shot.  This was only due to being able to shave some money off my insurance premiums for the upcoming year.  In the end, I decided against it, as I have read too much stuff on the questionable effectiveness of these vaccines. 

I'm no scientist or doctor, so all I can do is give my opinions and the reader can judge them accordingly.  The day I decide to get a flu shot will probably be the day when people in peak physical condition start dropping dead from the flu.  Not to say that I'm Superman, but I try to keep in shape and watch what I eat.  I'm also only a few months shy of my 32nd birthday.  Which, I guess, isn't that old.  I think a lot of flu avoidance is just common sense; on top of what I mentioned (taking care of yourself), things like washing your hands frequently and avoiding people who look ill will probably be effective as well. 

I don't mean to minimize the potential dangers of these numerous visues that keep cropping up.  History is rich with them, and I suspect that we are past due for some kind of a major outbreak.  I guess my gripe is that the news media is rich in the business of selling fear, and it seems to always emphasize the things we shouldn't fear (a lot) while deemphasizing what we should fear. 

Tuesday, December 21, 2010

Song of the Day

While I'm here, I might as well put up a Song of the Day.  I was thinking of this song, and happened to find it on Youtube.  It plays over the end credits of one of my favorite movies, "Do The Right Thing".  It's "Never Explain Love" by Al Jarreau.  While I'm not a big Al Jarreau fan, it's a great song, and fits the ending like a glove. 

The Cost of Food

I know I haven't been blogging too much lately, sorry about that.  Just too much going on, not to mention the holidays.  I will try to post more after the new year, if not sooner.  Just wanted to remind you all that I'm still here.  Anyways, this is a noteworthy post to Jim Kunstler's blog Clusterfuck Nation, from two weeks ago, in which the writer, C.Cruz, ruminates on America's relationship with food.  I'm hoping that he (or she) doesn't mind that I'm lifting this.  I hate it by the way, it makes me feel very lazy.  Speaking of food, if you want to build on what you read here, I highly recommend the documentary Food Inc. 


It is a commonly accepted fact that people today actually spend much less income on food than people did in the past eras. Historically, the economists tell us that the percent of our incomes spent on foodstuffs has been consistently falling throughout the twentieth century. Economists tell us that this is due to much more efficient agriculture. This is code for kicking all the farmers and land workers out of their jobs and replacing them with fossil fuels. This was good news to economists, since the money that we weren't spending on foodstuffs we could spend on other stuff, which was mainly cars, houses, electronic doodads from the Pacific Rim, and cheap plastic crud imported from China. Economists proclaimed we were all getting richer by this development, and out economy was expanding. What was also expanding was our waistlines.


This is extremely deceptive, however, as what they bought before World War 2 was food, whereas what we buy is "food". People used to buy free-range chicken and eggs, grass-fed beef, fresh, seasonal vegetables, artisan cheese, fruits, milk, whole wheat bakery-produced bread etc. Before the Interstate highway system went in , most of these were relatively local. Today we buy waxy fruits and vegetables grown especially not to decay, thus devoid of flavor and nutrients, genetically modified crops, mass-produced loaves of processed white bread, antibiotic laden corn-fed CFO meat, pasteurized BGH processed milk, chicken and eggs from overcrowded dungeons, cheez, and of course massive amounts of corn-syrup drenched "processed" foods. To an economist there is no distinction however, eggs are eggs, beef is beef, and a head of lettuce is a head of lettuce. My guess is if you actually made an apples-to-apples comparison between the quality of food then, and food of comparable quality today which can be purchased at local co-ops and high-end groceries like Whole Foods you find the cost of food (not "food") to be as high as it has ever been, if not much higher. I'm amazed when people complain that healthy food costs too much while they have plenty to spend on cable television and World of Warcraft subscriptions.

The "cheapness" of food thanks to oil has masked and legitimized the thirty-plus years of falling actual wages. Food is cheap, so why pay extra? After all, no one in America is starving - the poor are even overweight! What a great country! Sadly, even the cheap food is getting unaffordable due to unemployment and falling incomes. People are turning to food banks to make ends meet in unprecedented numbers, but what food banks sell are mainly donated "nonperishable" items, meaning processed to the point of unrecognizability. This "food" is guaranteed to lead to all sorts of health problems and morbidity, leading to an increasingly unhealthy population. With healthcare already unaffordable, however, the new poor have no other option but a lifetime of ill-health, drug dependence, and hospital debt, that is, if they're not dying on the streets. The next time you hear about the cost of food, ponder that.

Thursday, December 9, 2010

U.S. Military Prepares for Economic Collapse

Do you think we're really in an "economic recovery?"  I don't either, and neither, apprently, does the U.S. military.  The Pentagon is planning simulated "war games" that are centered on a potential collapse of the U.S. economy, due to a variety of factors.  I was reminded of this Tom Clancy book I read not too long ago, "Debt of Honor", in which a powerful Japanese busiessman, seeking revenge for the deaths of his family during WWII, comes very close to sinking the U.S. economy through various forms of corporate and stock market manuipulation.  Although, from what I've been reading, this wounded U.S. economy seems more like a self-inflicted gunshot wound than anything. 

Also, in the past few years, the U.S. government has been the leading buyer of freeze-dried foods.  In addition, Russia is building thousands of underground bunkers, and the EU's seed depository (which is also known as the Doomsday Vault) is fully stocked, only years after coming into formation.  As this collapse becomes more pronounced, it won't only be individuals hoarding whatever they can, but entire governments as well. 

In addition, notice the price of gas going up?  This is to be expected, but for this time of year, it's interesting.  I wonder how this is going to affect the holiday shopping season, which is the most important time of year for retailers, big and small.  There was a front-page story about it yesterday in my local fish rag, Newsday, in which the usual suspects were mentioned ("speculation", falling dollar) but no mention of peak oil or anything related to it.  Just portrayed as being a temporary hassle for the sheeple.