San Diego Housing Bubble News and Analysis

Yet Krugman says we're not spending enough.

This is what Bob has been posting about.

The Gov. has moved heaven and earth to get rates down this low. Its unnatural and not sustainable.

This spring is one last coat of lip stick on the pig. One last chance to sucker a few fence stitters into buying while we enjoy the calm at the eye of the shitstorm.

Higher rates are coming and they bode unwell for RE.

Bode unwell or bode well? More affordable RE is a good thing IMO.

Whew its a good thing I have been warned about this! I feel much better now.

What a hypocrite!!! This to the guy that introduced a 3 Trillion dollar budget with a record $1.6 trillion dollar deficit. 4x bigger than bush's biggest ever deficit. 10x bigger that Bush's average.

Yeah, i hated bush's deficits..... but now the deficits are on Obama's plate. The buck stops there. As much as the media has painted him as the messaih he has the political clout to make a change.

Instead, he uses that influence to push a budget that makes Bush look like a penny pinching accountant. We wanted change, well, it's change. Change for the worse.

http://blog.heritage.org/2009/03/24/bush...

And don't start with this "well we had to do something because of the economy" junk. No, we didn't. Plenty of economists say we don't only the MSM never gives them airtime because we're all keynesians now.

Obama steals the middle class oppenhimer fund 401k money in Chrysler bonds and gives it to the UAW in the form of 55% equity ??? How did that happen. The pilot's union didnt end up with United Airlines when that bankruptcy happened. The poloroid pension fund was left stranded when they went belly up. Bonds are paid first, and if they arent paid, they own what's left. Pretty simple.

The executive branch is supposed to uphold the law, not invent new ways to circumvent it.

Bush had Guantanimo and now Obama has Chrysler.

Bush had Iraq. Obama has Afghanistan.

Bush had $200B deficits, Obama has $1,600B deficits.

From my viewpoint.....im seeing change in the direct objects, not in the subjects.

J

Current bond market forecast is for the 10-year to pass 5% sometime around 2014.

My money is where my moth is on that. Long TBT. My best guess is that will transpire closer to 2011.
As with most things......I could be wrong.

BTW anyone who does not see that there is no difference between the Democrats and Republicans is not looking at the facts...they must be looking at propaganda. We need a real new party in this country.....a second party.

he he he, this is how the game is played. Now, 3.5 years from now, he can quote himself as saying that he has always been for lower borrowing and that he has pushed and pushed and pushed for it but the "special interests" in Washington just wont allow it and that is why he needs another 4 years in office. To fight for us. To really bring the change, cause 4 years wasnt enough to take on the powers that be. Not really admitting that for the past four years, he and his party WERE the powers that be.
But on the flip side he wont have to really do anything right now, when it may actually matter, cause who is actually listening to him at a town hall meeting in Albuquerque? Have your cake, and eat it too, and screw the next generation, they dont vote.

http://www.businessinsider.com/roubini-c...

Nouriel Roubini has an interesting op-ed in the NYT today that's actually got very little to do with the financial crisis or the banks or the prospects for a recovery some time in the next year.

It's about the process that's already in place for China's Renmimbi to supplant the US dollar.

First, the conditions definitely seem in place for the Dollar's status to erode. We've got a stunning level of debt, and it's clear that the rest of the world is growing uneasy about financing it all. We've also got deep political problems, notably a Congress that's been thoroughly captured by special interests, and thus lacks the political will to take real action on anything

Arraya: One of my Army buddies has remained in the Army and is now with NATO in Brussels. He says most of the Pentagon's long-term forecasting has nothing to do with Low Intensity Conflicts (like Iraq and Afghanistan), but is focused on the Chinese threat, militarily and geo-politically. The reason the US formed the African Command is to ensure US control over African resources, specifically oil and to keep an eye on Chinese "incursions" into Africa and the Near East.

He also mentioned that the US is very interested in China's internal issues, specifically things like AIDS and SARS, along with student discontent arising from unemployment and the fact that there is a 200,000 man strong contingent of disaffected former People's Army officers who are unhappy about lack of benefits, pensions, etc.

What you are relaying all has a "ring" to it. One can't help but think of the possible ramifications alluded to here, when reserve currency and debt and trade policies are at at a point of potential disruption. Allan, (I'll be nice I promise), is it too naive to think China would go directly at the middle east, specifically Iran...what happened to the tensions over Taiwan?

Now on the other hand, isn't it possible that NWO and collusion of various countries supplants this old school geo-politcal jockeying that you describe.What will it be? Can we have both?

Rus: Taiwan's president is pro-China and we're already seeing something of a normalization of relations between the two countries.

China is moving rapidly to acquire a "blue water" navy and that means potential conflict somewhere down the road with the US. The Chinese already have a strong presence in Africa and are now moving into South America as well (they've just passed the US as Brazil's leading trading partner).

It's all about resources: Who has them and what it will take to acquire them. This is the only reason we're so heavily involved and invested in the Middle East and Central Asia.

It will be interesting to see if India develops as a counterweight to the Chinese.

Allan-That is very interesting and does not surprise me. China is our main competitor for oil and has been jockeying for position in Africa for about a decade now. It seems like they have formed, at least, a temporary alliance with Russia and Nato has the ME in lock down except for Iran.

In regards to the reserve currency issue. I suspect that it has already been decided that the dollar is going to be replaced and Obama and others are telegraphing this now. Kind of letting the public digest it. China sure has been warning for over a year now. With the amount of time Goldman executives and Chinese speaking, Asian economics expert Giethner have spent over there that they must have brokered and/or aware of this, as well as financially positioning themselves if it is going to happen.

Navy is useless without strong aviation support. Chinese air force is relatively outdated compared to Americans. They have lots of aircraft (mostly Russian-bought), but they lack stealth capabilities.

Also, aviation is only good if you can get it to where the action is. Fighter jets can't go much further than 1000 miles from the base. Which means (1) military bases on foreign soil and/or (2) aircraft carriers. US Navy has 11 aircraft carriers (more than all other countries in the world combined), they carry around 300 F/A-18's which will be gradually replaced with F-35's. Chinese have no aircraft carriers, though they are expected to launch two or three in the next ten years. Without aircraft carriers, their sphere of influence is limited to 1000 miles from their soil and any bases they manage to establish. They can't even do much in Iran because it's too far. They'd have to work with Russians (fighters launched from Russian bases in Caucasus could, in principle, bomb Tehran and make it back.)

Resources O.K., I get the central asian situation a little better now...

This is the last sentence from the abstract pasted below: "and the region is likely to diminish OPEC's influence of the global oil market over the long term."

Central Asia: A major emerging energy player in the 21st century

James P. Dorian

International Energy Economist, 6201 Benalder Drive, Bethesda, Maryland 20816, USA

Abstract
Energy is the most abundant and valuable natural resource of Central Asia and northwest China1 and includes oil, gas, coal, electricity, and renewables. Kazakhstan has large reserves of oil and coal. Turkmenistan and Uzbekistan have significant reserves of gas. Kyrgyzstan produces significant amounts of hydroelectric power. Xinjiang, China has significant coal resources and an uncertain, although generally promising, potential for oil in the Tarim basin. These energy reserves form the basis for future economic growth and development in the region, and energy exports are beginning to generate important foreign exchange revenues. Although Central Asia enjoys vast energy development potential, there are obstacles to exploiting these resources, including limited infrastructure for transporting energy—notably oil and gas pipelines and electric transmission lines—in the region, political turmoil, payment difficulties, and inadequate energy policies. Despite these challenges, however, with appropriate government planning Central Asia is poised to become a significant world supplier of energy, especially in the oil and gas sectors, and the region is likely to diminish OPEC's influence of the global oil market over the long term.

so, uh, how can i make a buck off this?

Eugene: No disagreement here. No one projects power like the US. However, China is coming on fast and they are proving quite adept at adapting MiG designs for homegrown manufacturer (e.g. the J6 and J11 fighters).

The "new" MiG 35 Fulcrum-F (which is a MiG 29 Fulcrum derivative) is actually a pretty good fighter plane and it incorporates look down AESA radar and improved avionics, including OLS (optical locator system). Russia has already approached China regarding selling them the Fulcrum-F design for licensed manufacture (as reported by Jane's Defence).

I would imagine the new Sino-Russian defense lash up postulates the establishment of air bases in Central Asia. Same undoubtedly goes for the Chinese presence in Africa.

Rus: Read "The Great Game" by Peter Hopkirk. It's a very enlightening book and it shows how little has changed over the last 150+ years.

Buy stock in Mikoyan-Gurevich (MiG) or CNOOC (China National Offshore Oil Corporation).

Just to put things in perspective:

Not too long ago I saw some articles by Russian designers of aircraft radars. They appeared to be designing their radars based on the assumption that their primary competitors' (F-22 and F-35) radar cross sections were on the order of -5 dbsm. (The actual figures are classified, but all western sources agree that F-22 is below -30.) The difference between -5 and -30 is 5x the range.

Russians are quite a bit behind in terms of technology (stealth & such). And if that's not bad enough, the amount of stupidity and corruption in Russian Army is quite staggering. Rather than acknowledge that their stealth sucks and try to deal with it, they instead invent a convenient RCS number for F-22.

At this point, rather than depend on Russians, Chinese should probably steal the design of F/A-18E or F-22, reverse engineer and learn to make their own.

All that military power is nothing if you don't control the oil spigots. You shut off the oil we are back to the stone ages. I think the US military is about 1/4 of our daily oil consumption. It requires a big gas tank.

Eugene: I don't doubt that the Chinese will do exactly that (steal American or Euro designs and reverse engineer them). There was some chatter regarding some of the JSF (Joint Strike Fighter) plans going missing.

The MiG-29 is a very flyable aircraft and has actually outperformed the F/A-18 in simulations. During the Korean War, the much-derided MiG-15 actually outperformed the USAF F-86 on a regular basis. During the Vietnam War, the Soviet made MiG-19s and MiG-21s the North Vietnamese were using outflew the USAF and USN F-105s and F-4s. This shoddy performance was the rationale behind the creation of the Navy's "Top Gun" program at Miramar and the USAF "Red Flag" school at Nellis.

My uncle was a Marine fighter pilot in WWII and the Korean War and he told me about all the propaganda surrounding Japanese pilots in WWII (poor eyesight, poor hand-eye coordination, etc). He said that, contrary to that nonsense, Japanese pilots were very good up till about late 1943, early 1944, when attrition took out most of the better pilots. I've heard the same sort of thing about Chinese pilots from USAF fighter jocks (the Chinese don't invest enough money in their pilot training programs, their aircraft are junk, etc).

I think we should be very careful and keep a close on both the Chinese and Russians. Those two getting together is a recipe for disaster.

Look at the charts that afx114 posted. Add China and Russia together and they are still insignificant. And the two don't exactly get along - so there would not be much synergy even if they combined their forces.

The US military is focused in China because they need a "big" enemy to justify the big budgets, the big weapons systems, and the big contracts. All those generals want to be sure that they have a cushy consulting job in some program office when they retire.

China needs Russia for energy. They just set up oil contract usurping the market. So, they are strategic alliances out of necessity.

Arraya: Yup. And anyone that doubts China has hegemonic ambitions outside of their own region clearly hasn't been following the news.

China very much wants to be a player on the world stage, geo-politically speaking, and they recognize that in order to maintain their economy, they're going to need energy and plenty of it.

Russia is starved for hard currency and has plenty of energy, weapons and technology to sell. China is a natural market for them because of proximity and demand.

You can also bet Putin has ambitions of his own. Whether or not these ambitions are realistic is beside the point. He is an ultra-nationalist with a virulent hatred of the US.

Nature abhors a vacuum and when the eventual US pullback occurs, someone will need to step up and fill the void.

Imagine if we took 1/4 of that defense budget and poured it all into.. oh, I dunno... energy independence research and technology. We'd have solar powered tanks in no time! And we'd still be spending 4+ times more on defense than all other countries combined.

Energy and defense are irrefutably intertwined, so why not slip some energy funding into the defense budget with the goal of eventually making obsolete the expensive and never-ending quest to secure energy in the Middle East and/or Africa?

"In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military-industrial complex." - Dwight D. Eisenhower

Soviets and Chinese lost more MiG-15's during the Korean War than Americans lost F-86's. By 1970's things were relatively even. MiG-29 first flew in 1977, not long after the end of the Vietnam War. It was a good aircraft at the time. It may have outperformed older F/A-18's (A & B). Most F/A-18's currently in Navy service are Super Hornets (E & F), which are newer, more powerful, and have stealth capabilities, though they are not as stealthy as F-22 and F-35.

During 1980's, Soviet military tech was already getting stagnant. Domestic computer industry was primitive (suffice to say that, by the end of the 80's, most Soviet computers were IBM 360 ripoffs), the whole system was mired in bureaucracy. 90's were a lost decade. They've been trying to turn things around recently, but it's hard.

Americans are expensive. Russians and Chinese are cheap. An average American military officer makes 10 times more than a Russian officer of comparable rank. I'm sure the numbers are comparable in China.

There's one other developed country that is as militaristic (or even more militaristic) as the United States. It's called Israel. It's not on afx114's charts because it's too small. But Israeli per capita defense spending is roughly equal to American.

If you have been following you see this pattern of his. He comes out with some dire situation then a few days later he will come out with something positive to say.

Rus: Read "The Great Game" by Peter Hopkirk. It's a very enlightening book and it shows how little has changed over the last 150+ years.

Thanks Allan, I have been reading the reviews on Amazon. It looks good. Made me wonder, Have you written any book reviews for that site?