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.....

How to Fix China's Housing Bubble

Everybody knows that China has one of the world’s largest real estate bubbles, but it may be possible to fix this bubble from popping. I believe that China’s real estate bubble can be possibly prevented if a certain policy is enacted. My theory assumes that retirement funds and pension funds drive up stock market prices over time. 

       This is what makes some stock markets go up in the long run and other stock markets stagnant. China’s stock market has been quite bipolar or stagnant over time and is not trusted. The stock market in China is not like America’s where only professional analysts rate stocks. China’s stock market does not increase in value over time because pension and retirement funds are not allowed to participate in the stock market. Retail investors are pretty much the only investors in China. Chinese pension funds have been limited to speculating/investing in real estate. These pension funds having been limited to investing in only private companies and real estate. Private companies and real estate may not super attractive returns. 

        These limits in capital allocation has led to an unhealthy, overinvested, bubble-like real estate sector. Pension funds suffer because they are not offered a wide variety of investment choices. Thus, people invest on their own and often regular people invest in real estate because it is easier to understand than the stock market. The U.S. pension industry is massive! And over a long period of time more people in China will embrace pension plans if the returns are decent and if pension companies can invest in the public markets. If pension funds can invest in the Chinese stock market then the stock market will become more stable and real estate may steadily become a less appealing investment. 

       Hence the real estate bubble will not immediately pop, but it will be stagnant or have more realistic growth. Real estate will still be a great investment with pension funds, but pension funds will balance out its asset allocation with stocks and real estate to a more reasonable level. This transition from interest in real estate switching to pension funds will take years. This will ensure a bright future for both real estate and the Chinese stock market in China. A slow transition like this which may take 10 or 20 years, and it will have little immediate effect on the stock market or real estate. That means no crashing real estate bubbles popping which wipes out trillions of dollars in wealth. But the long term effect is substantial in that the overinvestment in real estate will become more balanced. This being said, pension funds having access to the public market may have long term effects as opposed to short term effects. And this will “slow down” the real estate frenzy that is currently going wildly up in value. 

      A countering view is that pension funds having access to public markets will actually POP the real estate bubble. This is not my view. I think pension plans having access to the stock market, will make the entire asset allocation in China safer.

Taiwan And Japan May Annex Each Other (Mergers and Acquisitions of these two countries)

       Taiwan is a country which is technically still at war with the Peoples Republic of China. The people of Taiwan are a small speck under the largest economy in the world--China. Taiwan is constantly under the threat of the People's Republic of China invading. Which would geographically not take very long. The PRC has the third most powerful military in the world and Taiwan is based on a small small island with the thirteenth most powerful military. Taiwan is not match for a super power. Of course, the USA may back Taiwan in the case of war. But USA cannot always be relied on for protection. Of course, USA has a military that currently far surpasses any other military in the world--but USA has shown less concern over Taiwan.
       I propose that Taiwan and Japan should unite over the fear of the PRC. It is a possibility that the PRC in the next few decades may surpass the USA in virtually everything. And the PRC will dominate Asia and show aggressive imperialistic behavior towards all nations in the eastern hemisphere. South Korea, Japan, the Philippines, Indonesia, Singapore, and even India are seriously threatened by the PRC powerhouse. Growth in China is still extremely fast and Taiwan is sure to be easily crushed and annexed into the PRC. Japan is threatened by the PRC and is one rank under the PRC in military strength-but heres the difference: Japan will become less powerful and China will increase in power. China is a threat to Japan. If Taiwan and Japan combined then their military may be a force to be reckoned with. Taiwan and Japan's military spending combined would be over $15 billion. China is currently spending just over $11 billion on defense. Taiwan is desperate for an ally and Japan may have it's own self interest in allying with Taiwan or even combining the two nations. Japan has the fourth largest economy in the world but has serious economic problems. Japan has a debt to GDP ratio of a unheard approximately 230%!!! Japan is a nation in trouble economically and on the decline. Japan's people are negatively effected by this huge debt and Japanese people understand that they need help. Taiwan would be a great fit! Taiwan is the world's 22nd largest economy. Taiwans yearly GDP (ppp) was $520 million compared to Japan's yearly GDP (ppp) of almost $5 trillion. Taiwan has a miniscule economy compared to Japan but Taiwan is heavily invests in their military compared to their GDP. It is extremely probable that Japan puts much less of their budget towards military. Japan is less threatened by the PRC than Taiwan. But Japan needs financial help and Taiwan needs security and protection from the Peoples Republic of China. Taiwan has debt of 38% of their GDP. Taiwan has extremely small debts and Japan would benefit in annexing Taiwan. The relationship would be mutually beneficial. Japan has a nation collapsing 230% of Debt to GDP and Taiwan has only 38% of debt to GDP. Taiwan is no poor country either. Taiwan has a HDI or standard of living of .883, while Japan has an HDI of .891. These countries are similar and Japan's massive debt can be repaid much faster by using Taiwans money that would have been sped on the military. Over the years Taiwan can significantly help reduce Japan's debt and surely Taiwan will benefit with the security of Japan. Taiwan will no longer have to spend an excess of their tax revenues on the military. Japan and Taiwan combined are big enough to resist the colossal PRC. Japan and Taiwan also have a similar GDP per capita of about $37,000. This relationship and annexing Taiwan to Japan cannot wait, war can overtake Taiwan at any day. I am confident that the Japanese and Taiwan people will support this idea and over the years will embrace this relationship. These island countries are extremely close to each other, already have good feelings towards each other--and are only 600 km away from each other. Their militaries will compliment each other perfectly as if they were always combined and their economies are similar and different in such a way that there will be an ideal chemistry. If this happens then Japan will have increased power in southeast Asia. The democratic world will prevail. And other threatened countries and territories of the PRC will know who to turn to for help. Japan is a staunch American ally as well as Taiwan. They both embrace democracy. Together they can stabilize Southeast Asia as the PRC gains reach in it's influence.

Taiwans debt $770 billion
Japan's debt $9 trillion

*The Taiwan people may be willing to sacrifice for this security & the timing is perfect for this to happen.
*An alliance will not be enough for Taiwan to reduce military spending and a unification of the two countries will be the only answer for the fullest security.

All this may sound nice and great one might wonder, but what if democratic nations like Japan, South Korea, Singapore, Malaysia, Thailand, and Taiwan all formed an alliance to protect themselves against The Peoples Republic of China??? The answer is that nobody wants to be in an alliance with Taiwan because Taiwan is the most likely country to be attacked by a full scale amphibian war from the confronting PRC. No country wants to be pulled into a war over Taiwan. When a war happens... Will the USA help another democratic nation?? Who will come to save Taiwan? A prosperous island Mandarin speaking country that was temporarily ruled by the Japanese. Taiwanese appreciated the technology that the Japanese brought to the island while the Japanese controlled the island. Japan and Taiwan unification are the answer to this situation. If another proposition could be brought up to save Taiwan from the PRC, I would love to discuss it.
Even a "European Union" of the nations in South East Asia may be a probable solution.

THE ONLY PROBLEMS I FORESEE IN JAPAN ANNEXING TAIWAN IS THAT JAPANESE DO NOT LIKE TO GRANT CITIZENSHIP TO FOREIGNERS AND THAT JAPANESE/TAIWANESE BUSINESS RELATIONS WITH THE PEOPLES REPUBLIC OF CHINA COULD BE DESTROYED OVER NIGHT. THE PEOPLES REPUBLIC OF CHINA CLEARLY HAS THE UPPER HAND IN THIS RELATIONSHIP. MAYBE A MILITARY DEFENSE ALLIANCE AGAINST CHINA IS THE MOST PREDICTABLE COURSE OF ACTION IN THE FUTURE.

...or we could just give taiwan nuclear weapons... but that could lead to unpredictable results. hey Iran almost has them--why not Taiwan.

How To Prevent A Chinese Housing Collapse

Of course, I believe that the Chinese Housing Bubble is real and it will happen. But there may be evidence that the housing bubble is sustainable. Sustainability is only possible if buyers can consistently buy houses and the price continues to increase in price. Many Chinese over the last decade have participated a speculative buying of houses in which they hope that it will increase in price. Housing has turned into a investment and it is possible that housing is the traditional Chinese investment. Just as the the stock market has been America's main investment in the last century, China may view real estate in the same way. China may view real estate as such a traditional investment because they have not always had a stock market. The stock market in China is relatively new and was founded in 1990. Normal civilians may still be adjusting to this new "stock market" idea. Many companies on the stock exchanges in mainland China are nationalized. A regular Chinese person cannot be expected to invest in private companies for their retirement. And such an unstable and unproven Chinese stock market may not be convincing to the Chinese people. Real estate is the answer, where it is easy to buy, familiar, popular, and many Chinese families buy their beloved child a home. In China it is normal for parents to buy their child a home and for that home to remain empty. The property value is expected to go up. Of course building the house may be cheap but location will always sustain a decent value in a small Chinese city of 15 million people. If real estate is China's traditional investment then real estate may continue to provide the best returns. Trust in markets are small and real estate is something you can see. Time will tell whether the Chinese Housing Bubble will pop. Of course, I continue to believe that this bubble will pop--but it is important to understand WHY this bubble is building and what may cause housing prices to be sustainable.

Of course a decreasing population will increase the supply of homes, and if people stop migrating to cities--there may be an epic collapse.

-The Case for a Stronger Russian Ruble and Growth in its Economy?????

Under President Obama's reign Russia has suffered from USA and possibly international sanctions while Russia has been in a depression due to a collapse of oil prices ( which is one of Russia's biggest exports). President Trump wants to remove sanctions, which will allow for Russia's economy to improve. Also, the USA will have a hands off approach in Syria which will allow Russia and Syria to gain control of Syria and win the war. Russia will have full power over Syria due to its extreme help during the war. Because of a possible Russian victory in Syria the Russian currency will strengthen as well. A strong economy and a stronger currency will possibly be a scenario.

The most important concept of stock market trading

-the most important question is, " why now?, why will the stock go up now? Out of all moments? Price targets and mentally our brains can interpret prime technical analysis without us even knowing it. This technical analysis is subconscious, we know when a stock has hit its lowest point. A money manager can know what a stock will do in the future, but that stock will only be a buy if he KNOWS that NOW is the time to buy. He must feel it, see it, and know that this will unavoidably come to pass. A winning stock pick is less about what the ticker is and more about "NOW IS THE TIME"

*High debt to GDP ratios are scarier in 3rd world countries than in 1st world countries*

Is debt to GDP important in 1st world countries?

GDP is the TOTAL products in the country. It includes services and products sold, correct?

In the East Asian Financial Crisis, at its WORST countries has up to 180% debt to GDP ratios. These countries had currencies that were quickly becoming worthless. Debt can cripple a country, but USA already has about a 100% debt to GDP ratio.  This country of course is credible enough to get more lenders to pump up to 180% debt to GDP ratio! But this 100% ratio is not scary because the government is powerful enough to collect even more taxes. But poor countries with such high Debt to GDP ratio are extremely risky because those governments often do not have the power or the organization to collect more taxes. His high debt to GDP ratios in rich countries are not as credible of a threat-as it would be in a poor country. Think about the infrastructure in India- only CANNOT find those who refuse to pay taxes. People can easily slip through the corners in India because there are probably no government identification, and many people live under bridges or in hard to find locations without mailboxes. One cannot tax a nation of untrackable people. And taxing the people more may cause more unrest in a poor country because often they are taxed little.