The Future of Protectionism

        It is clear, America has lost manufacturing jobs to third world countries. These poorer countries are unfair competition that are willing to ruin the environment, abuse human rights, pay employees nearly nothing, and likely have unrespectable government policies. Any wealthy country would automatically be destroyed by these unfair trade advantages. In the modern world, total companies can be obliterated by cheap, foreign competition (it is hard for a steel company to adapt into a different industry). I propose that wealthy nations should have free trade only amongst themselves. Then the poorer countries will be taxed at an appropriate rate.

          This would truly allow the “rich” countries of the world to become richer. Plus, it may be in the political interest to curb rising totalitarian superpowers with a tax that will damper the countries growth. First world countries are more “equal” competition, while a “third world” country may be an unfair competition.

China’s First Recession

       Economics states that China will contract. In every free market it is normal to have boom and bust cycles often. After Deng Xiaoping allowed China to institute capitalistic economy around 1979, the PRC has been growing at a miraculous rate. Boom and bust sequence. It is natural after a 30 year boom that there will be a relatively small bust compared to the overall growth. The housing bubble collapse in China is nothing less than a bust of a 30 year boom in China. It will be the world’s greatest bust because china has been the economic miracle of the century. 

        Boom and bust sequence principally goes up in the long term. The only thing interesting about China is that most countries in the past have had a bust along the way. China is long overdue for a bust, like an earthquake that is long overdue and the quake becomes quite large because pressure is not relieved. This is an excellent opportunity for foreign investors to short China’s real estate at the right time because, the Chinese people literally do not know that the economy can punish them with unemployment. Foreign investors are much different in that they are familiar with market collapses every few years. The Chinese real estate will not drop to 1979 levels, but it will drop significantly when compared to the top of the bubble. This bust is healthy and will be a short-term sickness for China. Booms with no busts are probably unhealthy.

Default Risk Formula

         Many wealthy countries hold debt that is more than their entire yearly GDP! Some very highly rated countries hold a large percentage of debt. In the case of a depression, countries may find it hard to meet the payments. Countries with large amounts of wealth can subsist for a long time. But if a country has large debt payments, low amounts of wealth, and a low GDP—they’re doomed. Throughout history investors ride bubbles and then bail out all at once. Countries like The United States can be a bubble if debt to GDP becomes too large.

        Countries with vast common wealth like Switzerland may be able to hold out longer than countries like the USA where common people have little wealth. Rating agencies like Moody’s and Fitch can give a country like USA a high credit rating, but when a depression sets in—debt will hurt each country differently. We saw in 2008 how Moody’s and Fitch were so inaccurate about their ratings for mortgage products. When a crises sets in, USA treasury bonds will be dramatic, and things will happen FAST! 2008 was a private sector problem. When the USD fails, it will be a government problem.

       I propose that USA treasury bonds currently do not show the correct “risk yield” or “default risk”. I say this because the risk is constant, but the realization or “spark” of a government debt catastrophe will be the real corrector in government debt yields. This shows that bond yield of the USA treasury do not adequately show the default risk. There needs to be a non-emotional and nonhuman indicator of some form of default risk indicator that is unbiased in a way that can show the REAL default risk!

        There needs to be a formula that tells of the likelihood of a government failing… Or measuring when a government will default. Also Known As, not being able to meet its debt payments. We are seeing this government debt crises now in Greece! If only there was some sort of indicator to predict that Greece would have these troubles. Looking back at how reckless the Greek government has spent its money, it is so obvious there were problems. Nobody cares until it hurts! I fully support bankruptcy, but politicians may never say yes to that! (Bankruptcy is superior to debt restructuring because the country has already tarnished its reputation, and debt is not good). Yet a formula to calculate this debt risk must be created. It must involved debt payments, private wealth in a country, and maybe GDP is a small factor of this equation.

Debt will squeeze a country to its knees and eventually kill it… Look at Venezuela.

Monetary Policy By Country

How does one find out the monetary policy of another country??? How does its central banking system work. Sadly, there is no updated encyclopedia that explains how the various central banks operate. Something so vital to society, and yet the information is not available to the public. Hopefully, soon macro investors will demand an updated encyclopedia of the central banks around the world. But, for now it's a guessing game. But I guess we all think the FED is confusing enough.

https://en.wikipedia.org/wiki/Category:Monetary_policy_by_country

Prison Island, the Answer for Drug Addicts

        Would you want to go to an island to spend the rest of your life??? No visits from family, no help, only marooned.. United States has a severe drug problem, friends and family are in bondage to the powerful addiction from strong illegal drugs. I see a "middle ground" political position on drugs as hopeless. A country can either be as strict as killing all who carry drugs in a country or completely legalize all drugs. There is no other answer. Until the public of the USA can find these as the only options. Drugs will continue to ruin American societies and families.

         What about a prison island. Do what the British did for Australia. Of course, only addicts without wealth and hope can go to prison island. Of course, the island would need one boat to guard the island to prevent gangs from picking up fresh prisoner recruits. 

           Many addicts want to quit but they physically can't, some convicts function well in the military but cannot cope with regular society. Some people need a harder life on an island to keep them happy and under control. I would say that most humans do not want to end up in the bars of prison, but would rather risk their life in the wild. This prison island is not for everyone and the prisoners would have to survive by themselves. The only cost is a guard boat for the whole island and the flight to the island. I know families that would pay for their addicted and hopeless families to escape their dark environments. 

          This could be a charity idea. With donated flights. Micronesia is a perfect experiment place. We just need to convince the courts that this is paradise, not a cruel and unusual punishment. In my opinion, Guantanamo Bay and life in prison is the worst type of cruel and unusual punishment. Why not an island life??? It would be popular and this idea should be tested. And can be paid for by charities. What happens on the island, stays on the island. No news leaves. Rules can be adjusted as we learn more about this idea. But Indian Tribes run their own land, apart from the USA government. Why not convicts?? 

       Convicts built Australia, convicts are people like us that are kind and have skills. I've met a lot of convicts that simply make poor decisions in the developed world. Maybe these prisoners need the stimulation of survival on an island and it is not for everyone--but it is for many convict like people. People will learn to govern themselves. Sure, there will be violence on the island. But if these convicts go on parole in America, there may be more violence and pain in the long run. I think everyone benefits from this idea. 

         Radical it is, I say people can only choose to go there from their own will. These convicts may even build something beautiful on this prison island. Drugs will surely eventually be grown on the island, maybe depending on the strictness of everything. Legalize it. People on the island know how to rule their own. Drug infested cultures rule themselves--surprisingly. The new Liberia.

Historical World Bull Markets

Historical world bull markets put into one graph

You gotta see this, look at how much worse the Great Depression was compared to the Great Recession

"got this picture from zerohedge.com"

Does Minimum Wage Build a Rich Country?????

Median Household Income

Look at these two charts. These countries with high minimum wages seem to correlate with other countries with high median income. Is having a high minimum wage great for the finances of a country? Many companies worry that minimum wage will destroy their businesses. This is true, but only the worst companies that barely survive will hurt from a high minimum wage. A high $15 hourly wage to Walmart workers will not destroy the Walmart corporation. Maybe minimum wage does nothing but help workers to survive in these high standard of living countries, but maybe minimum wage is healthy for a nation.....