Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment - Eric Janszen

[thriftyandboringinohio]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

... From a more reliable source, land used for grazing and croplands (agriculture) in the United States exceeds 45 percent.

That makes sense intuitively. The true sandy deserts won't graze or grow (awfully dry scrub land will support light grazing), same with the steepest and stoniest mountains. Most of the rest of the US is good for agriculture, except the portion we've paved.

I would believe the lower figure (20%) if they mean "currently in use", rather than "suitable for use".

[touchring]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

David Pierson wrote in the Los Angeles Times, “In contrast to large, highly mechanized American farms, a typical Chinese farm is less than an acre in size and worked by hand. It's a legacy of communist reform, when the state seized control of China's farmland and subdivided it into tiny plots. Although this system has kept rural dwellers employed, it has slowed China's ability to boost their incomes.

I know, 4 out of 5 chinese are working in the fields. Who are the 5?

Grandpa and Grandma in their 60s working the fields.
Dad and Mommy in their late 40s working the fields.
21 year old son -> enjoying life in the city and his iphone.


Almost everything about China is distorted, not just economics or finance.

The population makeup is distorted. There are more boys and girls. The kids are spoilt.

Morals are non-existent - remember the hit-and-run incident with the baby girl?

The environment is scrwed.

There are too many unoccupied buildings and underutilized infrastructure. Municipal governments borrow money without the need to return. Debt is rolled over forever.

China is a disaster in the making. Not just finance or economic like less potato chips for poorer Americans or delayed retirement for the Greeks, but real disaster, famine of the 60s type of disaster. People dying by the millions.

[doom&gloom]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

cropland, 442 million acres (19.5 percent);.

People tend to think when they see "cropland" it is all soy or corn or wheat or similar. Not true. Crops are as diverse as hops for beer, walnuts, apples, and similar. You can probably also toss in there all the wineries we now have. Not everything grows everywhere. And we cannot forget such cash crops as cotton and tobacco, neither of which anyone would want to eat.

In the end, when we are talking about what I refer to as "industrial ag" of grains, you are much better off looking at actual harvest tonnage each year than potential acres.

[pianodoctor]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment - Eric Janszen

CE: And you’re going to give it all away here?
EJ: No. I’m going to explain the thought process, the rules-based analytical frame work, so that readers can judge the quality of theory and how actionable it is without publishing the trades that the rules lead to. We haven’t decided exactly how to do that but will have figured that out by the time I finish with the argument. Simply giving the background will take several articles. A short book, in reality.

EJ, I am a little bit bothered here. I am a blue-collar person with no background in economics. I can appreciate this approach as a teaching tool, since you are essentially assigning us to read and understand everything about the theory if we want to deduce what the trade is. But if I take your paragraph above at face value, it's also implied that if we fail to understand it as well as you understand it, we may fail to ascertain the trade correctly. With your approach coupled with my lack of background, I may misapprehend things and make a disastrous investing mistake.

Am I assessing your words correctly, and will there be some way to determine if we are comprehending your theory well enough to make the correct type of trade?

[photon555]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

Hungry young men make motivated soldiers. An economic disaster in China could easily become a military disaster for the world.

[oboy]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment - Eric Janszen

+1

EJ, I am a little bit bothered here. I am a blue-collar person with no background in economics. I can appreciate this approach as a teaching tool, since you are essentially assigning us to read and understand everything about the theory if we want to deduce what the trade is. But if I take your paragraph above at face value, it's also implied that if we fail to understand it as well as you understand it, we may fail to ascertain the trade correctly. With your approach coupled with my lack of background, I may misapprehend things and make a disastrous investing mistake.

Am I assessing your words correctly, and will there be some way to determine if we are comprehending your theory well enough to make the correct type of trade?

[jpatter666]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

Hungry young men make motivated soldiers. An economic disaster in China could easily become a military disaster for the world.

Hungry *unmarried* young men with no families to lose are going to make it a lot worse. Female infanticide in China could backfire very badly.

[jk]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

Hungry young men make motivated soldiers. An economic disaster in China could easily become a military disaster for the world.

the commodities squeeze, chinese exports and the cold war "solution"

[c1ue]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

Hungry young men make motivated soldiers. An economic disaster in China could easily become a military disaster for the world.

the commodities squeeze, chinese exports and the cold war "solution"

The problem with the "Cold War solution" is that China isn't Communist. How exactly do you tax the entire 'free world' as the US did in the Cold War era in order to fight...a market economy?

I do agree the nationalism flag is likely to get played if China seriously falters in their economic growth, but there are plenty of small players around China which excess energy can be bled off to: Vietnam, the Philippines, other parts of SE Asia and the South China Sea, plus machinations in/around Afghanistan/Pakistan.

A purely economic overview of the (first?) US involvement in Vietnam shows that the massive budget deficits engendered by the 500K American troops in Vietnam was directly offset by the US' Western allies funding (and depleting the US gold reserve).

Who will play that role in the "Cold War solution"?

Europe and Japan both have their own severe economic issues; the former with PIIGS, the latter with the aftermath of Fukushima plus 2 decades of deflation.

[jk]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

The problem with the "Cold War solution" is that China isn't Communist. How exactly do you tax the entire 'free world' as the US did in the Cold War era in order to fight...a market economy?

I do agree the nationalism flag is likely to get played if China seriously falters in their economic growth, but there are plenty of small players around China which excess energy can be bled off to: Vietnam, the Philippines, other parts of SE Asia and the South China Sea, plus machinations in/around Afghanistan/Pakistan.

A purely economic overview of the (first?) US involvement in Vietnam shows that the massive budget deficits engendered by the 500K American troops in Vietnam was directly offset by the US' Western allies funding (and depleting the US gold reserve).

Who will play that role in the "Cold War solution"?

Europe and Japan both have their own severe economic issues; the former with PIIGS, the latter with the aftermath of Fukushima plus 2 decades of deflation.

c1ue, i'm not sure i understand your response. i don't think the u.s. needs outside funding for a military build up. instead the u.s. will print the money in some fashion, using inflation to indirectly tax savers for the resources required.

[Alvaro Spain]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment - Eric Janszen

+1

I am just an average guy with no kwnoledge of economics, nor any special desire to become an expert in this field. I subscribe to iTulip mainly because I expect to obtain some information about potentially good investments. For example: investing in gold in 2001, selling my stocks in 2007 and so on.

I suppose that this clear flow of information from iTulip to its subscribers is not going to change and that EJ will keep telling us clearly what his current investments are. If I was forced to deduce them based on any set of rules I guess that my interest in iTulip would disappear.

[vt]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment - Eric Janszen

If you are looking for a trading letter, Itulip is not it. My reading it it was meant to be an ongoing discussion and research forum where EJ told us what he thought was happening and updated us with changes as event occurred. He had only two major investment calls in the last 12 years: But 10 year treasuries in 2000n and 15% of that money to gold in 2001. He did not tell us he had invested in silver until April of 2011, and said he was selling with silver near 50.

You can't get anywhere near those results in any investment letters or wall street research I've seen, especially on a risk adjusted basis. For my own investment purposes, which are far more active, Itulip gives me a much richer framework to understand what is happening in the global community.

Of course there is the added benefit of every other contributor in this remarkable community for which I am thankful.

[lakedaemonian]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

The problem with the "Cold War solution" is that China isn't Communist. How exactly do you tax the entire 'free world' as the US did in the Cold War era in order to fight...a market economy?

I do agree the nationalism flag is likely to get played if China seriously falters in their economic growth, but there are plenty of small players around China which excess energy can be bled off to: Vietnam, the Philippines, other parts of SE Asia and the South China Sea, plus machinations in/around Afghanistan/Pakistan.

A purely economic overview of the (first?) US involvement in Vietnam shows that the massive budget deficits engendered by the 500K American troops in Vietnam was directly offset by the US' Western allies funding (and depleting the US gold reserve).

Who will play that role in the "Cold War solution"?

Europe and Japan both have their own severe economic issues; the former with PIIGS, the latter with the aftermath of Fukushima plus 2 decades of deflation.

The last few weeks in Cambodia was a bit of an eye opener.

With the ASEAN meeting and visit by China's President the news was centered on basically two things:

*China pressuring Cambodia to kowtow to China regarding the Philippines/Spratley Islands issue.

*Concern that the diplomatic sea change by the US towards Myanmar/Burma could take the shine off of Cambodia for foreign investment.

While I'm biased by a just completed trip with lots of shiny and interesting stuff to look at......South East Asia looks like it has considerable potential to be the "new black" in geopolitics....economy/military/diplomacy.

Whether it be from the US perspective to attempt to contain China a la Cold War 2.0, Chinese efforts to solidify it's influence/control over the region as it's power grows and expands, or whether it's regional nations like Myanmar, Cambodia, Vietnam, and Philippines working hard to ride the fence between the two. Some very interesting developments when you add some of the puzzle pieces together.

Indonesia from the 50's onwards might be a decent regional example of how a nation attempted to play one major power off of another with a reasonable degree of success, rather than crystal clean political/economic/military alignment...I think we will see more of that or attempts at that.

While there were quite a few government billboards promoting the friendship between Cambodia and China(China is THE foreign investment power in Cambodia), at the coalface amongst the Cambodian people there seemed to be considerable concern about excessive Chinese influence over Cambodia.....as well as the usual concern about Thailand and Vietnam...and a desire to see increased investment/support from the US/West.

I certainly hope to be able to return on a regularish basis to see how things go.

[touchring]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

The last few weeks in Cambodia was a bit of an eye opener.

With the ASEAN meeting and visit by China's President the news was centered on basically two things:

*China pressuring Cambodia to kowtow to China regarding the Philippines/Spratley Islands issue.

*Concern that the diplomatic sea change by the US towards Myanmar/Burma could take the shine off of Cambodia for foreign investment.

While I'm biased by a just completed trip with lots of shiny and interesting stuff to look at......South East Asia looks like it has considerable potential to be the "new black" in geopolitics....economy/military/diplomacy.

Whether it be from the US perspective to attempt to contain China a la Cold War 2.0, Chinese efforts to solidify it's influence/control over the region as it's power grows and expands, or whether it's regional nations like Myanmar, Cambodia, Vietnam, and Philippines working hard to ride the fence between the two. Some very interesting developments when you add some of the puzzle pieces together.

Indonesia from the 50's onwards might be a decent regional example of how a nation attempted to play one major power off of another with a reasonable degree of success, rather than crystal clean political/economic/military alignment...I think we will see more of that or attempts at that.

While there were quite a few government billboards promoting the friendship between Cambodia and China(China is THE foreign investment power in Cambodia), at the coalface amongst the Cambodian people there seemed to be considerable concern about excessive Chinese influence over Cambodia.....as well as the usual concern about Thailand and Vietnam...and a desire to see increased investment/support from the US/West.

I certainly hope to be able to return on a regularish basis to see how things go.

China was the colonial power in south east asia in the past, so it is reasonable that the countries are wary.

[c1ue]

Re: Ka-Poom Theory Update Two – Preamble: Theory of a Sudden Adjustment

c1ue, i'm not sure i understand your response. i don't think the u.s. needs outside funding for a military build up. instead the u.s. will print the money in some fashion, using inflation to indirectly tax savers for the resources required.

My view is different.

Dr. Michael Hudson has noted many times in the past that the entire US foreign deficit in the '70s was equal to the spending on Vietnam. While you might not agree that this link is direct, I do think it is clear that Vietnam spending was a major factor behind the US going off the gold standard.

Fast forwarding to today: it can be argued that US "Defense" spending is again paid for by foreigners buying Treasury bonds - and Dr. Michael Hudson has said so.

If in fact the US attempts to implement a "Cold War" solution by taxing its domestic population - don't you think there will be pushback? Particularly as the US economy is far from healthy and has much less excess to tax outside of the 1%?

My view is unless there is a Pearl Harbor equivalent, it will be impossible to impose sufficient taxation to pay for a "Cold War' solution. To be explicitly clear: China would have to directly attack and kill a large number of US soldiers in order for the US to be able to start a patriotic campaign of significant economic extraction.

China is well aware of this, and there has been extensive study in the CAS regarding how to avoid providing this form of provocation to the US while still achieving China's foreign policy goals.

Whether it be from the US perspective to attempt to contain China a la Cold War 2.0, Chinese efforts to solidify it's influence/control over the region as it's power grows and expands, or whether it's regional nations like Myanmar, Cambodia, Vietnam, and Philippines working hard to ride the fence between the two. Some very interesting developments when you add some of the puzzle pieces together.

Even in the Cold War era, China had land conflicts with a number of its neighbors. In the modern era, an extension into water borders is completely unsurprising, and even less so given potential oil and natural gas deposits.

However, there are one large difference between China's tool box in its neighbors and the US' tool box in the same area: the bamboo network. There are literally tens and perhaps hundreds of millions of ethnic Chinese outside of China's borders in East Asia. In the past, many of them were antithetical to mainland China as these ethnic Chinese were in many cases refugees, or had extended family trapped/mistreated on the mainland.

Today, however, the bamboo network is mostly positive for China, because so much of the historical trade volume has picked back up with China's 'controlled market' economic strategy. Much as Taiwan businesses opening factories in mainland China has significantly split the business interests in Taiwan from the politicals, so too is this same dynamic at work in the rest of East Asia.