Letter Re: China In Perspective

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HJL,

I heard the investment officer of a life insurance company speak this weekend. He characterized China as having accomplished what they set out to accomplish, creating infrastructure on a scale that took us 75 years, in only fifteen. We are placing our value system on their decisions and wonder how they are going to get things to pay off or out in three years. They don’t care.

We of the west assumed there was a trend that was more of a trajectory. Their activity level will now travel back to the mean as will all the commodity prices of material that everyone ramped up to produce. Commodities will offset inflation in other items. Producers are cutting production that will blunt deflation. Bankruptcy will cut production.

All this becomes apparent when you use a long enough term on your graph.

He also mentioned that there is hiring out there, and he based his points on U-6– an unemployment measure, not youth soccer. There are measures that show employers want workers. There is a measure out there that shows they are not actually hiring. He attributed this to a mismatch in skills. Our people are trained for yesterday, but companies are hiring for tomorrow. He says learn to weld. You can make more than a banker.

A look at the back drop of Star Wars reveals that people are either slaves and destitute or they own the tools of production and know how to use them. I am learning to weld, and I am attempting to understand electronics.

The world is full of boogers, so keep prepping. My daughter insists that the closet door be completely closed every night. She is rarely wrong. If some rascal hacks the EBT system, your worst fears will be realized. The iterations go on. Fear is your enemy in this stock market. Don’t be one of the pigs and get slaughtered. – RV

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