Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

[c1ue]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

EJ,

Perhaps this is discussed in the Select section, but the above analysis does not talk about the possibility (or probability?) of a China slowdown due to a bursting of the China real estate bubble. This, and/or the pain of transition from an export economy to an internal demand economy, would seem to be significant pain points for China to execute its 'slow bleed out' strategy, as the US is still a very major customer for China exports.

My question then is whether the above points affect either the outcome or trajectory of the 3 possible paths mentioned in your excellent article.

[jiimbergin]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

EJ,

Perhaps this is discussed in the Select section, but the above analysis does not talk about the possibility (or probability?) of a China slowdown due to a bursting of the China real estate bubble. This, and/or the pain of transition from an export economy to an internal demand economy, would seem to be significant pain points for China to execute its 'slow bleed out' strategy, as the US is still a very major customer for China exports.

My question then is whether the above points affect either the outcome or trajectory of the 3 possible paths mentioned in your excellent article.

C1ue, I still suggest that you finally break your principle of not paying for investment advice and join us behind the paywall where you might find your answer.

[flintlock]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Too much foreign debt is the amount that causes a nation to stop making political decisions in its own interest.

Best definition of too much foreign debt I've seen yet.

[EJ]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

EJ,

Perhaps this is discussed in the Select section, but the above analysis does not talk about the possibility (or probability?) of a China slowdown due to a bursting of the China real estate bubble. This, and/or the pain of transition from an export economy to an internal demand economy, would seem to be significant pain points for China to execute its 'slow bleed out' strategy, as the US is still a very major customer for China exports.

My question then is whether the above points affect either the outcome or trajectory of the 3 possible paths mentioned in your excellent article.

I appreciate questions from readers. They hone the arguments that each article makes. In the process of answering subscriber questions, our understanding is further refined. Occasionally the investigation of a subscriber question will lead to a contradiction of an argument. These are the most useful questions of all because they disabuse us of misconceptions and improve our chances of getting our forecasts right.

Unfortunately, I do not have time to do justice to all the thoughtful questions I get. To be fair to subscribers I must give them priority and even then I am not always able to get to all of them.

To give readers a sense of what I strive for in my replies to subscriber questions, the following is my answer from a question from JK in Part II related to the significance of US consumer demand for Chinese exports, the relationship between US consumer demand and Chinese lending, and speculation on China's motives to increase lending to the US when the importance of US consumer demand is waning.

China is the world's largest merchandise exporter, exporting more than 10% of world merchandise in 2010.
The US is second at over 8%, Germany roughly equal to the US, Japan following at under 4%, and the rest
between 4% and 2%. The Top 10 export 51% of the world's merchandise.


Of the top 10 merchandise exporters, all run merchandise trade surpluses except the US, France, Italy
and the UK. The US ran a staggering $691 billion trade deficit with the world in 2010.


Of the $691 billion trade deficit that the US ran in 2010, $291 billion was with China, $88 billion
with the EU, $69 billion with Mexico, $63 billion with Japan, and $31 billion with Canada.


China's $383 billion in exports to the US in 2010 were 24% of China's nearly $1.6 trillion in
exports worldwide.


The US share of China's exports has fallen 25% since before the recession. It was 32% of the world share
in 2006. The US continues to be a less and less relevant source of demand for China's exports.
The US consumer market has been shrinking as a portion of the whole for many years.
Current course and speed, the US portion of China's export demand will decline into single digits
within 10 years.


Thee US and China traded places in the wake of the American Financial Crisis with the US share of
global merchandise trade falling from 8.2% to 8% while China's increased from 8% to 10%.

At the same time as the US share of global marchandise trade falls and the US share of China's export dwindles, China's investment in the US tripled.

China increased its holdings of US Treasury bonds 300% from $400 billion before the American Financial Crisis
To $1,200 after. Japan increased holdings 30% from $600 billion to $900 billion.
Russia increased holdings 1,309% from $34 billion to $138 billion.

China's "investment" in the USA is increasingly uneconomical, leading me to conclude that the loans are political, for leverage over US foreign policy toward China.

What does China want?

China wants the US to:

1. Acquiesce to China's USD currency peg to permit continued de-industrialization of the West
2. Leave China alone to buy Africa and gradually develop its own protection racket for Middle East Oil
3. Leave China alone as it develops Central and South America and right up to our doorstep in the Caribbean
4. Not interfere in China's thuggish treatment of its citizens
5. Fade away

This is related back to Triffin's original point that the IMS is a relic of the Cold War. China is exploiting the IMS to gain strategic leverage over the US.

Obviously I cannot answer all questions this throughly but I do when they are central to the argument.

[flintlock]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Very clear China is maneuvering itself into a position where it will be able to cut the US adrift at some point. I watched a Dan Rather special the other night on China's involvement in the Caribbean. I was shocked at how invested they are there. I seriously doubt most Americans realize the extent of what China is doing and the ramifications. Is this even on the political radar in America today? Amazing how far we've come from the days of the Red scare. People could not be less concerned. Or will China do itself in by expanding too fast, saving the US from disaster? Are our politicians even concerned about this?

[bart]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

...
Indeed, there's an overall ricketiness about this website, an absence of slick presentation and an understated emphasis of substance over style, that I find enjoyable.

+1

This place is truly delightfully unique, nowhere else is even vaguely like it. It's the only forum I've stayed active on since 2005.

[thriftyandboringinohio]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Very clear China is maneuvering itself into a position where it will be able to cut the US adrift at some point. I watched a Dan Rather special the other night on China's involvement in the Caribbean. I was shocked at how invested they are there. I seriously doubt most Americans realize the extent of what China is doing and the ramifications. Is this even on the political radar in America today? Amazing how far we've come from the days of the Red scare. People could not be less concerned. Or will China do itself in by expanding too fast, saving the US from disaster? Are our politicians even concerned about this?

Part of me hopes for the US to stop being boss-of-the-world. It costs all of us a ton of tax money to keep this giant military astride the planet, and I don't see that our constant meddling in things abroad has had outcomes all good for us or for them.

It might be a welcome change to become a second-tier nation among the G-8, strong but not preeminent, with our attention focused mostly within our own borders and on our own affairs. I'm getting weary of being the schoolyard bully constantly threatening to beat up the others, or being the bossy neighbor that just has to be in charge of every single thing at the church picnic and PTA.

[jpatter666]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Very clear China is maneuvering itself into a position where it will be able to cut the US adrift at some point. I watched a Dan Rather special the other night on China's involvement in the Caribbean. I was shocked at how invested they are there. I seriously doubt most Americans realize the extent of what China is doing and the ramifications. Is this even on the political radar in America today? Amazing how far we've come from the days of the Red scare. People could not be less concerned. Or will China do itself in by expanding too fast, saving the US from disaster? Are our politicians even concerned about this?

No. Because everyone has convinced themselves that this must be a repeat of the 80s when Japan was buying everything. In the end it turned out that they had massively overpaid for many "showcase" items and that the US titans of finance had pulled a great one on the overseas rubes.

Most people see what they want to see.

[Prazak]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

No. Because everyone has convinced themselves that this must be a repeat of the 80s when Japan was buying everything. In the end it turned out that they had massively overpaid for many "showcase" items and that the US titans of finance had pulled a great one on the overseas rubes.

Most people see what they want to see.

There was a pretty good interview with Ed Luce in a recent FP on this topic of the unwillingness or inability of the U.S. leadership and populace to face up to its relative decline: http://www.foreignpolicy.com/article...=0,0&page=full

[ER59]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

+1

No other place like iTulip. iTulip and its community is the first place on internet I visit when I have time. It's essential for my family survival.

[raja]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Indeed, there's an overall ricketiness about this website, an absence of slick presentation and an understated emphasis of substance over style, that I find enjoyable.

Don't get me wrong . . . .
I look forward to EJ's articles, and read them all because I usually find something of value in them.

And, yes, the occasional spelling error is no big deal in the big picture.
But in the last article there was one sentence that was jumbled in such a way that I simple could not understand it, and it's not the first time that's occurred. Clearly no one with competent editing skill is proofing the articles, and it makes me wonder why.

I also think that whatever tendency causes iTulip to not take the trouble to spend one minute to run the articles through a spell checker is indicative of some underlying problem, which makes me wary of the objectivity of the economic analysis.

Will I stop reading EJ's analysis because of a few spelling errors and the occasional incomprehensible senctence? Of course not.
Does the failure to use a spell checker or employ the services of a good proofreader over the last 6 years suggest some underlying problem. Yes.
So, despite the objections and accusation of trolling, I think my criticism is valid.

[lakedaemonian]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Don't get me wrong . . . .
I look forward to EJ's articles, and read them all because I usually find something of value in them.

And, yes, the occasional spelling error is no big deal in the big picture.
But in the last article there was one sentence that was jumbled in such a way that I simple could not understand it, and it's not the first time that's occurred. Clearly no one with competent editing skill is proofing the articles, and it makes me wonder why.

I also think that whatever tendency causes iTulip to not take the trouble to spend one minute to run the articles through a spell checker is indicative of some underlying problem, which makes me wary of the objectivity of the economic analysis.

Will I stop reading EJ's analysis because of a few spelling errors and the occasional incomprehensible senctence? Of course not.
Does the failure to use a spell checker or employ the services of a good proofreader over the last 6 years suggest some underlying problem. Yes.
So, despite the objections and accusation of trolling, I think my criticism is valid.

I'd sort of agree to a point.

I'm more concerned about a desire to see an underpromise/overdeliver ethos......we've had a few "head's ups" about upcoming forum/website changes......but I'm the type best NOT to tell that to....I guess I prefer a happy suprise over an unfortunate delay.

And I guess my frustration goes along the lines of, like with the recent private equity deal and investment fund deals.....I just want to see MORE of that stuff SOONER......but you can't force quality.

I just see a lot of yet unexploited potential with the iTulip community....and it's not just of the EJ variety.

I'm a strong believer in my own businesses that the greatest asset I "have" is in my employees/partners/friends that turn up to work each and every day...not the brands we actually own and manage.

I can imagine the iTulip network being leveraged even better in the future.....I just want to see it yesterday

I'm not worried about any underlying issues with the odd spelling mistake and failure to spellcheck/edit.

To me it's a very minor annoyance......I know my staff get a bit aggro with me and take the piss of me for keeping a messy office desk, the rest of our facilities are spotless and highly organized.....but that's my idiosyncracy I'm sort of allowed to h=get away with by being the boss.....in my case I think it's endearing until enough folks think it's not.

[astonas]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Don't get me wrong . . . .
I look forward to EJ's articles, and read them all because I usually find something of value in them.

And, yes, the occasional spelling error is no big deal in the big picture.
But in the last article there was one sentence that was jumbled in such a way that I simple could not understand it, and it's not the first time that's occurred. Clearly no one with competent editing skill is proofing the articles, and it makes me wonder why.

I also think that whatever tendency causes iTulip to not take the trouble to spend one minute to run the articles through a spell checker is indicative of some underlying problem, which makes me wary of the objectivity of the economic analysis.

Will I stop reading EJ's analysis because of a few spelling errors and the occasional incomprehensible senctence? Of course not.
Does the failure to use a spell checker or employ the services of a good proofreader over the last 6 years suggest some underlying problem. Yes.
So, despite the objections and accusation of trolling, I think my criticism is valid.

Don't get me wrong, Raja, I can absolutely nit-pick with the best of them when I'm so inclined. There are even a few fellow 'tulipers who will readily agree that if anything, I do so to a fault. I do think that clarity of communication is related to clarity of thought, and I do take care to check my own work as best I can, so I can certainly sympathize with your viewpoint. I'll even say that I have in the past quietly grumbled to myself over the editing of EJ's texts on iTulip from time to time, in spite of the fact that I should know better than to do so.

HOWEVER, for me, the matter of "why it's not edited" ultimately boils down to two issues: comparative advantage, and diminishing returns.

When EJ is faced with a choice of focusing more on wrestling with big thoughts, or focusing more on editing, I would certainly hope he chooses substantial work over editing minutia every time. That produces the greater value for me as a reader, since it maximizes comparative advantage: That is the part that EJ does better than anyone. Everyone wins if he focuses on doing that.

And regarding hiring someone else to fill the role of editor, this is when diminishing returns comes into play. Would the text be more polished? Certainly. Might I be able to read it slightly more quickly? I would. But do I really want my subscription rate to be raised just to clarify a few muddled sentences? Not really. And more importantly, do I really want to delay or filter the writing process more than necessary? Certainly not! If I really value a "clean" text, I should sit down again with one of his books. But I come to this site for a different reason.


Perhaps the dissonance between our views is that you see yourself as buying a finished product with your subscription, rather than a constantly-evolving work-in-progress? In that case, I must disagree with you about the advisability of this expectation. A finished product is by definition unchanging. In a changing world, that also means it is obsolete. It is better by far to seek a transitory, evolving answer, even if it begins flawed, as such an answer will be further refined by discussion, and so be clarified. I generally assume (just my guess, I haven't checked with EJ on this) that EJ has most likely chosen his process intentionally: presenting MOSTLY complete ideas to critical review in the forums, might be one of the things that helps EJ take his work to the next level. It's not exactly peer-review (for who among us claims to be his peer?) but nevertheless one can see an evolution of his ideas over time, and a great part of the fun in coming to this site is the opportunity to participate in the dialogue, and perhaps even contribute a new perspective oneself on occasion.

In a sense, I see this community not as merely a dry blog, but as a dialogue that, on good days, furthers EJ's thinking, as well as ours. Demanding a perfect product essentially requires that he not take advantage of the community's feedback until after the work is "finished." I am of course not speaking for him, but if I were in his place, I would consider a requirement to work with less feedback to be an unnecessary disadvantage. And this is why I am willing to give him the benefit of the doubt when it comes to the occasional error. The method he has chosen is the one that produces the best thinking, if not always the best text. And I respect that. If anything, the world could do with more people who focus on substance over form.

I personally think the best way to deal with the issues you describe is by crowd-sourcing the problem. If you see a minor edit, send a quick P.M. to FRED clearly identifying the line, and the text will generally be clarified in short order, for the benefit of all. Everyone wins: you get your answer, and the text is now improved so that the next reader has an easier time with it. And the best part is that in struggling with the text a little, one generally is forced to engage with it at a deeper level than one might a more polished text, which one is more likely to skim over quickly.

Just my perspective, no claims that it's the best one out there.

[jiimbergin]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

Don't get me wrong, Raja, I can absolutely nit-pick with the best of them when I'm so inclined. There are even a few fellow 'tulipers who will readily agree that if anything, I do so to a fault. I do think that clarity of communication is related to clarity of thought, and I do take care to check my own work as best I can, so I can certainly sympathize with your viewpoint. I'll even say that I have in the past quietly grumbled to myself over the editing of EJ's texts on iTulip from time to time, in spite of the fact that I should know better than to do so.

HOWEVER, for me, the matter of "why it's not edited" ultimately boils down to two issues: comparative advantage, and diminishing returns.

When EJ is faced with a choice of focusing more on wrestling with big thoughts, or focusing more on editing, I would certainly hope he chooses substantial work over editing minutia every time. That produces the greater value for me as a reader, since it maximizes comparative advantage: That is the part that EJ does better than anyone. Everyone wins if he focuses on doing that.

And regarding hiring someone else to fill the role of editor, this is when diminishing returns comes into play. Would the text be more polished? Certainly. Might I be able to read it slightly more quickly? I would. But do I really want my subscription rate to be raised just to clarify a few muddled sentences? Not really. And more importantly, do I really want to delay or filter the writing process more than necessary? Certainly not! If I really value a "clean" text, I should sit down again with one of his books. But I come to this site for a different reason.


Perhaps the dissonance between our views is that you see yourself as buying a finished product with your subscription, rather than a constantly-evolving work-in-progress? In that case, I must disagree with you about the advisability of this expectation. A finished product is by definition unchanging. In a changing world, that also means it is obsolete. It is better by far to seek a transitory, evolving answer, even if it begins flawed, as such an answer will be further refined by discussion, and so be clarified. I generally assume (just my guess, I haven't checked with EJ on this) that EJ has most likely chosen his process intentionally: presenting MOSTLY complete ideas to critical review in the forums, might be one of the things that helps EJ take his work to the next level. It's not exactly peer-review (for who among us claims to be his peer?) but nevertheless one can see an evolution of his ideas over time, and a great part of the fun in coming to this site is the opportunity to participate in the dialogue, and perhaps even contribute a new perspective oneself on occasion.

In a sense, I see this community not as merely a dry blog, but as a dialogue that, on good days, furthers EJ's thinking, as well as ours. Demanding a perfect product essentially requires that he not take advantage of the community's feedback until after the work is "finished." I am of course not speaking for him, but if I were in his place, I would consider a requirement to work with less feedback to be an unnecessary disadvantage. And this is why I am willing to give him the benefit of the doubt when it comes to the occasional error. The method he has chosen is the one that produces the best thinking, if not always the best text. And I respect that. If anything, the world could do with more people who focus on substance over form.

I personally think the best way to deal with the issues you describe is by crowd-sourcing the problem. If you see a minor edit, send a quick P.M. to FRED clearly identifying the line, and the text will generally be clarified in short order, for the benefit of all. Everyone wins: you get your answer, and the text is now improved so that the next reader has an easier time with it. And the best part is that in struggling with the text a little, one generally is forced to engage with it at a deeper level than one might a more polished text, which one is more likely to skim over quickly.

Just my perspective, no claims that it's the best one out there.

+1

[EJ]

Re: Ka-Poom Theory Update Two – Part I: Bang or a whimper - Eric Janszen

I'd sort of agree to a point.

I'm more concerned about a desire to see an underpromise/overdeliver ethos......we've had a few "head's ups" about upcoming forum/website changes......but I'm the type best NOT to tell that to....I guess I prefer a happy suprise over an unfortunate delay.

And I guess my frustration goes along the lines of, like with the recent private equity deal and investment fund deals.....I just want to see MORE of that stuff SOONER......but you can't force quality.

I just see a lot of yet unexploited potential with the iTulip community....and it's not just of the EJ variety.

I'm a strong believer in my own businesses that the greatest asset I "have" is in my employees/partners/friends that turn up to work each and every day...not the brands we actually own and manage.

I can imagine the iTulip network being leveraged even better in the future.....I just want to see it yesterday

I'm not worried about any underlying issues with the odd spelling mistake and failure to spellcheck/edit.

To me it's a very minor annoyance......I know my staff get a bit aggro with me and take the piss of me for keeping a messy office desk, the rest of our facilities are spotless and highly organized.....but that's my idiosyncracy I'm sort of allowed to h=get away with by being the boss.....in my case I think it's endearing until enough folks think it's not.

I regret that grammatical and spelling errors are perceived as inconsiderate. Unfortunately they are an unavoidable side effect of our unique process of insite discovery. We follow the path that the data take us on rather than, as is done everywhere else, search out data to support an argument. For every word you see in a finished article we throw away three and for every chart we throw away ten. Eliminating every blemish from the result is not practical.