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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (14183)	6/20/2013 11:27:13 AM
From: Jorj X Mckie	Read Replies (3) \| Respond to of 33421

The one thing about the global money centers of Hong Kong, Sydney, London etc... is that they have had major real estate bubbles that never popped.... I have talked with Long time residents of Sydney and they are saying that Sydney real estate can never go down in price.... that is kind of dangerous talk...... Hong Kong has a very similar view regarding their real estate........ all Big Bubbles tend to deflate and correct for a while at some point..... If China ever did get pressed by it's citizens and we had a large military conflict with them... JP, I'm not sure what the theme of your post is...is it that we are likely going to see a popping of real estate bubbles or that China's actions will either intentionally or unintentionally precipitate those bubbles popping? I believe those bubbles are safe as long as the overall world economies are expanding and the cities don't somehow stop being global money centers. The RE bubbles exist in these places because people can make a lot of money there. It's the same reason that Los Angeles RE prices are high...it's not because it's a great place to live, it's because there are jobs here that pay good money. Of course, as the cost of living gets higher locally, the high paying jobs become normalized compared to the cost of living in other lower paying locales. The point that I am making is that I don't see RE bubbles popping dramatically unless there is something that disrupts the economy significantly. Of course, war with china would do this, but I don't see that as your implication. It seemed that you were suggesting that China raising funds for their war chest could precipitate the bubble popping. This of course would be counterproductive for China as a popping bubble would decrease the amount going into their war chest. I am far more worried about the long term effects of environmentalists than I am china. If you think about it, our entire economy hinges on the relatively small number of people who produce the first tier of wealth. That would be the people who create basic wealth from the earth. I am talking about miners, farmers, loggers. Without farmers creating the food that we all eat in totals that support our population..well, we die. Without loggers, a huge part of our construction industry dies. And without miners (including oil & gas), we don't have energy and the raw materials to make pretty much everything else that we value in our lives (TVs, iPhones, refrigerators, buildings, etc...). Look at the attacks on Monsanto for GMOs. Environmentalists haven't taken the time to figure out that the reason that we are able to produce the amount of food to feed our population is because of advancements in farming technologies that include pesticides and genetic modifications of produce. Look at the attacks on every type of mining. Mosaic Phosphates has had to fight lawsuit after lawsuit to continue mining phosphates. If we didn't mine phosphates, our production of vegetables would drop significantly. Basically, the soil has to be replenished with phosphates because the plants take them out of the soil as they grow. No phosphates, no food for the world. And yet we make it hard for Mosaic and other phosphate miners to operate. Obviously there is a war on coal, oil and gas. The environmental regulations for any mine to operate are outrageous. I'm not saying that requiring reclamation of mined lands is a bad thing. It's the crap where mines are shut down because of some "endangered" species. Oh, oh, oh, that brings up the Delta Smelt that the progressive environmentalists used to cripple California's agriculture industry. And the spotted owl that was just a slight local genetic variation of the owl population that is not even a separate species, that was used to stop logging in Oregon. As many as 160,000 jobs were lost because of the environmentalists using the spotted owl. So....to my belabored point....the actions of progressive environmentalists creates scarcity in vital resources. This of course raises prices in the foundations of our economy. This means that all prices of all products must also rise. Which makes it more difficult for lower income folks to survive. At some point, this conflict will become existential. And it is this that could precipitate the war that causes the global economies to collapse. Now let's look at China. Do they have a war on mining? no. Do they have a war on food producers? no. Logging? I don't think so. They understand that with 1.6 Billion people, if they close the spigots on raw materials, they cannot survive. They wouldn't even be able to fulfill the one bowl of rice promise. Don't get me wrong, I believe in conservation and recycling and not polluting unnecessarily. Hell, I even view recycling to be a form of mining (as long as it is economically viable to get raw materials from waste). But not when it means that people will have less food and no roof over their head. China gets it. They also have the most to lose in an economic collapse. We gave them inflated dollars, they gave us "stuff". They gave us some of those inflated dollars back in exchange for land and buildings that they can't take with them. That land and those buildings are still U.S. property, even if they hold the deeds. And as someone once pointed out, if you think that you own your property, try not paying the taxes on it and see who really owns it. Oh, and finally....bubbles never really pop. Sure it seems like it to some degree, but did the dotcom bubble totally deflate? no, the excesses were wrung out of the market and the real value is being found. Like the japanese bubble, there was an initial "popping" and then it turns into a prolonged stagnation while the true value catches up to the paper value. As long as our population grows, our economy will grow. It's just whether the instruments that we use to measure the value will accurately reflect the economic condition. Sure, isolated bubbles will pop and correct, but I don't believe we are looking at any global economic collapse as a result of China's actions. Our demons are within.