Recession 2020

[FlyerInHi]

This is this a recent NBC report on a Chinese “theft”.
I think there’s nothing wrong. The student came to learn and improve on the basic research he learned.
Now, if the Chinese government really planned it all along, years in advance, then their planning is sure brilliant. We should do some planning too.

[The-Shoveler]

Recent Talk of RE slow down maybe over hyped

See note below from Contrarian Smead Capital Management

The flattening of the yield curve and fears of a U.S. recession are creating stock-picking opportunities in banks, builders and entertainment. While the economic recovery is proving to be the nation’s second-longest on record, those expecting an end to this cycle look “foolishly premature,” CEO William Smead wrote in his latest letter to investors.

The best days are still ahead, he said, as “this recovery really started two years ago,” when home building began boosting growth. The money manager’s optimism stems largely from U.S. demographic data, which suggest to him that an increase in the number of 30 to 39-year-old Americans and an uptick in babies per household should fuel demand over the next five years.

Smead, which managed about $2.2 billion as of June 30 and is known for its contrarian views on tech, owns home builders NVR Inc. and Lennar Corp., and sees “a favorable entry point as they satisfy under-built home markets nationwide.”

Smead owns Bank of America Corp and American Express Co.

[phaster]

[quote=carlsbadworker]What signs?[/quote]

news report(s),…

[quote]
State Supreme Court orders appeals court review of San Diego pension overhaul

San Diego Mayor Kevin Faulconer did his best to put a positive spin on a California Supreme Court ruling that may force the city to pay millions of dollars to workers who lost benefits under the city’s 2012 pension reform effort.

“San Diego pension reform remains the law of the land and today’s Supreme Court decision keeps Proposition B in full force and effect,” Faulconer said in a statement. “While the court’s deference to an earlier ruling means the debate over this issue is not over, it does not change the fact that voters amended the City Charter to bring fairness to city pensions.”

Some 66% of San Diego voters approved the pension reform initiative in 2012, according to the mayor’s office.

The state’s highest court ruled on Thursday that the placement of San Diego’s pension cutbacks on the ballot was invalid because city officials failed to negotiate with labor unions before pursuing the measure.

https://www.bondbuyer.com/news/state-supremes-order-appeals-court-to-review-san-diego-pension-ruling
[/quote]

[quote]
San Diego’s pension mess just got a lot messier. Now what?

…the court sent the case back to an appellate court for “judicial remedy,” raising huge questions about whether the reforms — approved by two out of three San Diego voters in 2012 and unique in the state — would survive and how much — $20 million? $100 million? — the city might have to cough up to remedy the violation. No one knows.

http://www.sandiegouniontribune.com/opinion/sd-pension-reform-supreme-court-20180802-story.html
[/quote]

basically taxpayers lose again,…. all because the public pension portfolio as structured and operated is DISHONEST and DUMB

nothing will be done (until its vary obvious the system is about to crash or has crashed, 2020 timeframe???), because in the meantime politicians who voice support for the existing pension setup get to keep their office along w/ tacit union support AND retired public employee union members get to keep various benefits like the 13th pension payment (the nonsensical justification being EXCESS EARNING),… so seems its inevitable things are destined to end badly

http://www.TinyURL.com/ExcessEarningsBS

the only loser w/ the status quo is the taxpayers who have to endure fewer services AND are expected to pick up an ever increasing tab due to the “California Rule” (basically an understanding that taxpayers are suppose to make up any shortfalls)

a news report about the SD county, shows,…

[quote]

Transparent California, a research group that is critical of excessive government pensions and salaries, says in a new study that benefits promised by the San Diego County Employees’ Retirement Association (SDCERA) jumped 1,237 percent from 1986 to 2016 — a rise that was four times more than the 372 percent increase of personal income in the county.

https://www.sandiegoreader.com/news/2018/jul/26/ticker-study-county-pension-benefits-soar/
[/quote]

the chart tells me this trend is unsustainable AND given another “sign”

[quote]
Joe Nation (Stanford University “conference”) on California’s pension system

starting @ 2 min 56 sec

“let’s get a sense of how things [PUBLIC PENSIONS] are at the local level,… the share of payroll that those entities will need to pay in order to cover pension and OPEB unfunded liabilities as you see the worst one is the city of SAN DIEGO”

https://drive.google.com/file/d/0B66GMOho0KtxUE1pYVBhMERDVkE/view
[/quote]

the future does not look too bright,… as I see things, unfunded public pension debt is akin to stress slowly building up between tectonic plates,… so when there is too much stress on a fault line that has built up over time, in other words when the forces are too great to hold things together, the result is a “sudden” and “violent” earth quake event (2020 timeframe???)

BTW public pensions have no other back stop other than taxpayers, and existing troubled pension systems are using up existing pension insurance at a pretty alarming burn rate

http://www.crfb.org/blogs/pension-insurer-expects-be-out-funds-2022

https://www.nytimes.com/topic/organization/pension-benefit-guaranty-corporation

to give you some idea of the magnitude of just the “public pension” problem, consider a group out of stanford puts the “market basis” of the pension debt in the TRILLION$

http://us.pensiontracker.org

(note the “market basis” implies using the “risk free rate” or the rate of return of a hypothetical investment with no risk of financial loss, over a given period of time)

https://www.investopedia.com/terms/r/risk-freerate.asp

BOTTOM LINE the amount of public pensions promised is much greater than the ability of system to deliver,…

When TSHTF (2020???) what is going to prevent economic recovery is the “California Rule” because its implied tax payers are on the hook for the self inflected $hit that happened (caused by politicians AND public employee unions),…

PS

[quote]
…states that also use a contract rights approach to public pension benefits have chosen to follow the principles of the California Rule. Those states are:

Alaska
Colorado
Idaho
Kansas
Massachusetts
Nebraska
Nevada
Oklahoma
Oregon
Pennsylvania
Vermont
Washington

What is the California Rule and why does it matter?

[/quote]

PPS the final nail that is going to kill off the economy is derivatives (basically this is going to freeze money in big banks since these instruments have senior status over ordinary bank deposits)

https://www.thebalance.com/what-is-a-bail-in-and-how-does-it-work-1979089

[FlyerInHi]

So the trade war escalates.

Will we lose more overall sales than the Chinese. We will see…. as Trump likes to say.

BTW, lost sales aren’t good for either one. And bad for human standards of living. I really fail to see how this is good policy. But maybe someone can elucidate.

[Myriad]

I think this is a multi-decade cycle of de-globalization. Borders and major power competition is back.

Not sure the point of piece meal tariffs. Just tariff everything from China and get it over with. The politicians are just dancing around the issue that a national strategic policy to challenge China is needed (economic, education, investment, military, diplomatic, etc)

[The-Shoveler]

Actually IMO the end goal is to end up with “zero” tariffs (on both sides).

We will see I guess.

[FlyerInHi]

[quote=The-Shoveler]Actually IMO the end goal is to end up with “zero” tariffs (on both sides).

We will see I guess.[/quote]

That would be a huge win for China. It might work with Europe, but not China.

China confounded all experts in that it was able to globalize, become capitalist and still keep central planning, even doubling down on planning in certain areas while liberalizing in other areas.

We are not yet sure if the China model has long term staying power. But we are already very worried that it does.

[FlyerInHi]

[quote=Myriad]I think this is a multi-decade cycle of de-globalization. Borders and major power competition is back. [/quote]

I think it’s only a setback due to nationalist anxiety in the West.
the world will move on with or without us. Look at the growing China-Africa trade. Ethiopia growing over 10%.

I’m surprised that, at this stage of human development, people still don’t understand that trade means wealth and prosperity.

[The-Shoveler]

[quote=FlyerInHi][quote=The-Shoveler]Actually IMO the end goal is to end up with “zero” tariffs (on both sides).

We will see I guess.[/quote]

That would be a huge win for China. It might work with Europe, but not China.

China confounded all experts in that it was able to globalize, become capitalist and still keep central planning, even doubling down on planning in certain areas while liberalizing in other areas.

We are not yet sure if the China model has long term staying power. But we are already very worried that it does.[/quote]

It will be an even bigger win for the USA.

[FlyerInHi]

[quote=The-Shoveler]

It will be an even bigger win for the USA.[/quote]

Please explain the math. What products will be sell to China?
The trade deficit will widen unless we lift the export ban on high tech.

Perhaps you’re talking regulations of services such as google and facebook and banking. But those are not tariffs. btw, Chinese companies are already big customers of American internet companies to reach customers outside of China.

But I doubt the Chinese wll cave. Actually google is already now planning a return to China. They will have to place servers in China and allow the same, or more access to authorities that the NSA has in USA. The Chinese will never allow extra territorial access to their market by US internet companies. That’s where we have the competitive advantage, for now.

Btw, something Trump declares a win maybe a win for Trump, but not for the US of A, eg North Korea.

[The-Shoveler]

Cars, Robots, etc…

Making things in the USA is actually a lot more efficient due to energy cost etc…, once you subtract the labor costs.

Robots are bring manufacturing back
https://www.recode.net/2017/5/26/15656120/manufacturing-jobs-automation-ai-us-increase-robot-sales-reshoring-offshoring

IMO things like High Speed rail are a waste of time and resources as tech will soon make it obsolete, Tech actually enables independence from infrastructure (more off grid etc..).

[spdrun]

Tech makes things like high-speed rail more useful, not less. Basically, app-based electric rental cars (self-driving or driven) solve the “last mile” problem nicely. And, computers or not, it’s a lot safer to travel 150-200 mph on rails or some other hard guideway vs on a road.

If the rental cars only need a range of 50-100 miles, they can be more efficient, since they don’t need to lug around a heavy battery pack. Also, making fewer batteries is better for the environment. The trains can pick up power en route from a wire, of course.

Also, if trains can also be “self driving”, you can make them shorter and more frequent since you’re removing the fixed cost of a motorman.

Unless we end up with flying cars, which would be terrible energy-wise, we’ll need some kind of surface infrastructure, whether it’s roads or rail. Might as well pick the kind that’s easiest to electrify and least environmentally wasteful.

[FlyerInHi]

[quote=The-Shoveler]Cars, Robots, etc…

Making things in the USA is actually a lot more efficient due to energy cost etc…, once you subtract the labor costs.

Robots are bring manufacturing back
https://www.recode.net/2017/5/26/15656120/manufacturing-jobs-automation-ai-us-increase-robot-sales-reshoring-offshoring

IMO things like High Speed rail are a waste of time and resources as tech will soon make it obsolete, Tech actually enables independence from infrastructure (more off grid etc..).[/quote]

China is a race to innovate. They are buying high tech as fast as they can from USA, Germany, etc. but we won’t sell for national security reasons. Tariffs from China are not hindering sales.

China is also wanting to buy our companies and increase FDI. But we won’t let them. Protectionism, anyone?

As far as density goes…. I will let time prove me right. The top 10 metros are densifying and real estate appreciation is outpacing the second tier and third tier cities. More knowledge actually causes people to want to live in or near the centers of knowledge and culture. Then the economies of scale build on themselves. That’s China why is betting big on urbanization and creating mega metros. See the Hong Kong-Macau-Zuhai bridge.

[FlyerInHi]

Shoveler, here’s an example for you.

Next time you visit Vegas, stop at the new Lotus luxury apartment complex in Chinatown. A 2-bedroom 2-bath is $2500 per month. Right at the entrance to Chinatown for all tourists to drive by.

In comparison, a $350,000 3/2 1600sf house in Summerlin (the Carmel Valley of Vegas) rents for $1600. Go figure why people are willing to pay more to live in the City (if you can call Chinatown or Vegas a city, haha). Because suburb is so damn far. What people call a 20 min drive is really a 50 min drive with traffic, door to door.

You are seeing the same in Phoenix, Columbus, OH, etc….

[The-Shoveler]

All I can say is the future is not here yet.

Self driving cars, flying taxis buses etc..
Telecommuting, these are the future.

[Author]

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