China Eats America’s Lunch in Africa

Over the last 30 years, China has focused on efforts to “develop” Africa, through direct foreign investment, infrastructure projects, and allowing private financing from China to make its way to Africa.  In return, China has essentially locked up Africa’s entire flow of oil and other precious mineral resources that China has used for its own development at home.

China has quickly moved into the number two position, behind the U.S., in terms of money flowing into Africa.  And its clear that China will very soon, if not already, move into the #1 position.  China’s rapid success is based on its willingness to do business with any willing African government–unlike the U.S., it does not look down on murderous dictators or regimes that suppress civil rights.  Thus, it has been able to do a lot of business with African governments that have not gotten much attention from other world powers like the U.S. and EU.

America has sat by the sidelines, allowing China to economically dominate Africa while the U.S. has maintained its military partnerships on the continent.  But it appears that China is now moving to challenge America on that front as well by burying African countries in so much debt that they have to in some sense turn over their sovereignty to China:

Djibouti is projected to take on public debt worth around 88 percent of the country’s overall $1.72 billion GDP, with China owning the lion’s share of it, according to a report published in March by the Center for Global Development.

It, too, may face the possibility of handing over some key assets to China.

China is increasing its military ties on the continent:

Until recently, many experts considered China’s relations with African states to be economically focused for the most part — and far less interested in military matters. Africa’s relations with big powers seemed to follow a certain pattern — with the United States collaborating on military and counterterrorism aspects, and China on trade and economic development.

As China ties down African governments with debt and builds military installations, it continues to focus on infrastructure development.  The African nations, for example, would get a new transportation network while China would get the contract to build it and own the debt used to finance construction:

Why don’t we [African nations] have these highways some 60 years after independence? Funding, for one thing. The Chinese government, in line with its Belt and Road Initiative, sees the potential and opportunity of 54 markets, with more than one billion more accessible consumers. As van Staden notes, China helped with the one completed highway, Highway No.5, which runs for 4,500 km through seven countries from Dakar, Senegal to N’Djamena, Chad.

Many analysts are rightly concerned about African governments’ rising debt to China, a topic that was top of mind when Chinese president Xi Jinping visited four countries last week. These concerns are weighed against the potential economic return of better infrastructure, rather than whether these networks fulfill the long-held pan-African dream.

While America continues to fight with its closest allies and neighbors like Canada, Mexico, Germany (the EU on the whole, really), China will continue to pump money into the developing world the same way America did through the IMF, only China appears to be doing it smarter and faster and in a way that will ensure its strong political, military and economic foothold in Africa for many years to come.

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Southern California home sales crash, a warning sign to the nation

Home sales are coming to a hard stop amid record-high prices.  People are just giving up on trying to buy a house they can’t afford and have no business buying:

Sales of both new and existing houses and condominiums dropped 11.8 percent year over year, as prices shot up to a record high, according to CoreLogic.

The nonsensical explanation of this by real estate “experts” is that supply is too low and therefore prices are now higher than what people can afford:

While prices continue their steady incline, it is inventory that is concerning Adam Contos, CEO of RE/MAX.

Contos harbors a positive outlook on the price gains, saying, “Year-over-year prices have been climbing for more than two years now, which is great news for homeowners and sellers.”

Contos suggested declining sales are not driven by rising prices. Instead, “The slower sales figures we’re seeing are tied to inventory more than anything else,” he said.

Lack of inventory has become a theme for the year,” Contos said.

Of course, listening to a real estate professional about why homes are so expensive is like listening to a used care salesman explain why you should buy an over priced jalopy.  They have a personal investment in you continuing to buy overpriced homes.

The reality is, there is no inventory problem, so this whole “lack of inventory” is complete made up fantasy.

The inventory of existing homes did increase in June, climbing 4.3 percent to 1.95 million units. This is 0.5 percent above the level in June 2017 and marks the first time the inventory has grown year-over-year since June 2015. The unsold inventory is estimated to be a 4.3-month supply at the current sales pace, up from 4.2 months the previous June.  The increase in inventory did not affect marketing time which was typically 26 days in June, unchanged from the previous three months and two days shorter than in June 2017.   Fifty-eight percent of homes sold in June were on the market for less than a month.

Oh, so the inventory is going up for “preexisting” (which is a fancy word for USED) homes as the prices go up and sales go down.  Doesn’t sound like inventory is a problem there, chief, unless you are a real estate “expert”:

“It’s important to note that despite the modest year-over-year rise in inventory, the current level is far from what’s needed to satisfy demand levels,” added Yun. “Furthermore, it remains to be seen if this modest increase will stick, given the fact that the robust economy is bringing more interested buyers into the market, and new home construction is failing to keep up.”

In other words even though inventory is going up and sales are stopping, there isn’t enough supply to meet demand.  How does that work exactly?

Ok so maybe people are looking for new homes instead of a used house?  Nope:

Sales of new U.S. single-family homes fell to an eight-month low in June and data for the prior month was revised sharply down, the latest indications that the housing market was slowing down.

The Commerce Department said on Wednesday new home sales dropped 5.3 percent to a seasonally adjusted annual rate of 631,000 units last month, the lowest level since October 2017. May’s sales pace was revised down to 666,000 units from the previously reported 689,000 units.

Meanwhile, the stocks of construction developer companies are taking a hit because of the bad news reality that nobody wants to buy their over-priced product.

Housing prices are divorced from reality and are more expensive than what people can afford even though people still want a home.    Since building a house is so expensive with increasing labor costs and material costs that are skyrocketing due to Trump’s “genius” trade policies, you end up with a lethal result: people can’t afford the houses that are being built and builders can’t afford to build the cheaper starter homes that people do actually really want.

If you are a developer, the answer has been to just build the expensive “luxury” stuff where you can still make a profit.  And that worked for several years with cheap money and a large supply of wealthy people.  But the supply of rich people seems to be running out, and interest rates are rising making money more expensive, so the bites are turning into nibbles.

Historically low interest rates for several years made money “cheap” and therefore caused housing prices go up artificially, far beyond what people could actually afford based on their financial situation.  Now that interest rates are going back up, the money is no longer that “cheap,” people can’t afford the inflated prices, and they are just starting to give up on buying all together or “waiting.”

The market is screwed up and is divorced from standard supply versus demand principles.  You have demand on the lower end of the market without enough supply, while you have supply at the higher end of the market without enough demand.

So what happens next?

Either the high end oversupply starts to become cheaper in order to increase sales or the lower end supply increases.  Since the cost of construction of lower end units doesn’t look likely to be going down with President Trump doing his best to make things very expensive for Americans, the second option seems unlikely unless and until the cost of building a “starter home” goes down.  That leaves the high end coming down, and if the high end prices start to come down, that will naturally pull down everything underneath it as well.

There are some wildcard factors that could play a role like decreasing interest rates, which the Fed has made very clear ain’t gonna happen any time soonThe other big factor is a potential Trump Recession, and that could cause all the demand to blow away very quickly as people sock everything away to ride out a recession.

The likely outcome appears to be that prices will gradually come down in short brackets, 10k to 30k depending on the price of the home until all potential buyers in that bracket have purchased, and then the next lowering of the prices would occur. Of course people could react to this by simply waiting, thinking that the next lowering is coming, which would cause prices to fall even harder in a bubble popping fashion. And as stated above, a recession would also strangle this type of scenario.

Regardless of the potential outcomes, none of them seem like a happy ending for the construction industry.  Nobody wants the higher priced units they can turn a profit on and they can’t afford to build the lower priced units they will not be able to turn any profit on.  Housing, on the whole, makes up 15% to 18% of the U.S.’s entire GDP, not exactly a sector of the economy you want to see in trouble.

Trump Continues Economic War On American Farmers

Trump’s trade war with China is now starting to bite the very people who put Trump into office–mid-western farmers and ranchers are feeling the pressure.  In case you forgot, Trump began a trade war with China by imposing billions of dollars in tarriffs on Chinese goods coming to America (except he of course protected his garbage daughter Ivanka’s Chinese made trash products).

In response, China imposed $34 billion in tarriffs against American farmers.  Now people are starting to feel the sting.

Where’s the Beef?

Let’s start with beef ranchers:

According to a new report by the Wall Street Journal, more than 2.5 billion pounds of U.S. beef, pork, and poultry are currently in cold storage, waiting for buyers. One analyst told the Journal that those stockpiles, combined with modest U.S. demand growth and serious uncertainty surrounding export conditions, could lead to “one of the biggest corrections we’ve seen in the industry in several years.”

Translation?  There’s a bunch of beef sitting in American freezers that was supposed to go to China.  And if things don’t get better, that beef is going to have to get sold in the USA.  Dumping all that meet on the market will cause the price of beef to crash in a way that it hasn’t crashed in several years.  That will put a lot of beef ranchers out of business.  Winning?

Soybean Blues

Now let’s take a look at the soybean farmers.  After China put a tarriff on soybeans, the price immediately dropped from $10.50 a bushel to $8.50 a bushel.   Imagine if you were in the business of selling something, and the price of that something dropped 20%. How would your business be doing? Well, let’s ask a soybean farmer:

“Once it dropped more than a dollar (per bushel), insurance picked up the cost,” Kiefner said. “Every penny we lose, an insurance company is making up. I want my income to come from China, not Washington (D.C.)”

More:

WERTHEIMER: Tell me. Are you concerned about the tariffs that China has laid on American farmers?

HEISDORFFER: Well, sure. You can’t help but be concerned. And American farmers should be concerned that it’s taken at least a dollar and a half off the price of soybeans here within the last several months. And we’re running in the red on soybeans right now.

WERTHEIMER: How important are foreign markets to keep your business moving in the way you want it to?

HEISDORFFER: Oh, we rely a lot on foreign markets. Sixty percent of our soybeans in the U.S. go to exports, and over half of the soybeans exported go to China – $14 billion worth of soybean and soybean products each year.

Not anymore!

Getting Porked

It’s amazing to watch these farmers get porked by Trump with tarriffs that were imposed in a stupid way, and continue to ask to get porked again.  Maybe they will get porked to death and still vote for the pig that’s porking them?

Speaking of pork . . .

“We’re certainly concerned,” the executive director of the Oklahoma Pork Council, Roy Lee Lindsey, told Oklahoma’s NewsOK.

“We are an industry that’s growing … rapidly, not just here in Oklahoma but across the country. And that growth is all predicated on exports,” Lindsey said. The newspaper noted that pork farmers exported 27.5 percent of their product in May.

“The administration has told us, the president has said repeatedly that he’s going to take care of our farmers and ranchers,” Lindsey continued. “We’re going to believe him, and we’re going to hold him to that. But the longer this goes on, the harder it gets.”

Dairy DayDreams

Dairy farmers are getting hit hard in the pocketbook:

“The market in the last two weeks of June dramatically dropped,” Frank Konyn, owner of Konyn Dairy, said.  “I am losing $1,400 a day, about $40,000 a month here in this dairy.”

The tariffs increased the price of milk coming from the United States, meaning more milk is staying in the local economy. And that’s bad for business.

“Because all those products are staying here at the market, there is a greater supply,” Konyn said. “And as a result of the great supply, the price goes down.”

According to the California Council of Milk Producers, losses for the industry surpassed $380 million in the last six weeks, though it notes that not all the losses can be blamed on the trade war.

Going Nuts

Because of Trump’s almost global tarriffs, other countries beyond China are also hitting back.  Mexico is taking out our dairy farmers (see above), and now India is getting ready to impose massive tarriffs on American fruit, vegetables and nuts.

India notified the World Trade Organization back in May it planned to implement tariffs on a variety of U.S. products, including walnuts, almonds and apples, in retaliation for President Donald Trump’s duties on steel and aluminum imports. India is the second-largest destination of California almonds after the European Union and one of the top overseas markets for U.S. apples.

This is what winning looks like, folks.

SmallKindlyDogfish

Donald Trump is not a Traitor and is not “Dangerous”

Is Donald Trump a racist?  Yes.  Is Donald Trump a sexist?  Yes.  Is Donald Trump an idiot who can’t keep his bullshit straight?  Yes.  Is he a failed business man?  Yes.  Is he actively violating the constitution?  Yes.  But is Donald Trump a traitor?  NO.  Is Donald Trump “Dangerous”?  NO.

After Donald Trump’s thorough ass kissing and boot licking of Putin on Monday, as well as his repeated statements trashing his own country on foreign soil, Trump’s critics have taken to calling him “dangerous” and a traitor.  The reality is he is neither.

For what is a traitor? Article 3, section 3 of the Constitution gives us the definition:

Treason against the United States, shall consist only in levying War against them, or in adhering to their Enemies, giving them Aid and Comfort. No Person shall be convicted of Treason unless on the Testimony of two Witnesses to the same overt Act, or on Confession in open Court.

Has Donald Trump levied war against the United States?  No.  Is Donald Trump giving aid and comfort to enemies of the United States?  No.  Is he giving aid and comfort to an adversary or competitor of the United States?  Sure, by trashing our country and kissing up to the murderous Russian dictator and protecting Russia, he is giving aid to Russia, a foreign power.  But we are not at war with Russia, and Russia is not our enemy.  To throw around a word like “traitor” without evidence or proof waters it down and turns it into nothing but another partisan soundbite.

In 2003, President George W Bush started a war in Iraq that lead to the deaths of 4,000+ American military personnel, the wounding and maiming of thousands more, the deaths of 200,000+ Iraqis, including thousands of innocent people, and cost trillions of dollars.  The war was based on a pure manufactured and intentional lie of WMDs, and has led to Iran extending its influence into Iraq and the creation of ISIS. That was dangerous.  That got people killed and all for an evil lie of WMDs.

What dangerous activity has Trump engaged in?  He had a useless meeting with a fat little slovenly dictator in North Korea and turned himself into a clown by saluting a North Korean military officer.  He turned himself into a clown in front of our allies.  He showed himself to be a brown-nosing kiss-ass to Putin and is probably on Putin’s payroll.  But is any of that going to lead to the deaths of thousands of Americans?

Some may say fine, Trump has not engaged in treason or dangerous activity, but he is evil. What evil has Trump engaged in?  He has put thousands of children in cages at the border and separated them from their parents for no reason other than to scare people away from lawfully claiming asylum or trying to come to the United States.  That is, without a doubt, evil.  He uses his office to enrich himself and his family.  That is corrupt and evil.  But it pales in comparison to the evils committed by Bush.  Trump is an incompetent president, but he is better than Bush and less evil than Bush.

What Trump has done with Russia is corrupt and embarrassment.  And his corruption and lies will be exposed for what they are–a part of a Trump scam where he is being paid off by Russia (and maybe China) to put in place policies that harm the United States’ national interest to Russia’s (and maybe China’s) benefit.  Impeachable, if true?  Yes.  Criminal if true? Probably.

Treasonous? No.

Trump Supporters Don’t Care that Trump is Putin’s Servant

After witnessing Trump slobber all over Putin’s manhood yesterday during the press conference, while at the same time trashing his own country, many people, including myself once again returned to the question: will this be enough to convince Trump supporters?  The answer is no, it will never be enough.  Most people already know that, but not too many people can answer the follow up question, why won’t Trump supporters admit reality?

You have to understand that there are only two kinds of Trump supporters:  racist fanatics (including closet racists who pretend not to be or have a pretext for being racist), and conservatives who will support a racist if it means they will get a right-wing supreme court and right-wing laws pushed through under Trump.

There is arguably a third category of Trump supporters, but those people have long abandoned Tump.  These were the people fed up with our supposedly “booming” economy, union blue collar folks who have been told that globalization and China’s gutting of our industrial jobs sector is a “good thing” by the “smart people” in the Democratic and Republican parties.  But these people have now seen through Trump’s fraud and lies and know he’s not really there to help them or to protect their jobs.

The first category, the racists, don’t care if Trump bows down to Putin.  To them, the U.S. is a multicultural toilet and is quickly going down the drain due to all of the ‘poor ignorant people’ from shithole countries coming here and mixing in with white people and watering down our white values and religion.

The second category of “conservative at any cost” is pretty self explanatory–the ends justify the means.

But perhaps you are now wondering, how could even racist Americans (or closet racists) support a guy that is Putin’s clear bitch and who trashes his own country?  Well this is where you need to go talk to them, as I did the other day.  I received a full explanation of how the FBI conducted the mass murder of nearly 60 people at Mandalay Bay in Las Vegas last year in order to take away people’s gun rights.  This is what they really, truly believe.

So if you are a racist and see white man and fellow racist Trump standing up next to a mass murdering white man, Putin, who will you trust?  You’re multicultural country that just recently elected a black guy president, with an FBI that murders dozens of people to take away guns, or Trump?

This is the reality these people are living in, it is a delusional racist fantasy world, and they will not see facts or evidence.  They will only see hate.  You can never win over a Trump supporter.  Don’t ever try.  But you sure can learn what drives their insane, delusional, fact and and evidence free racist fantasies.