Commercial Loans and Fun Blog

The above image links to an impressive video, prepared by the People's Liberation Army and designed to scare the poop out of Americans.  It sure worked on me.  I am genuinely scared.

I went to dinner with some friends last weekend, and they said that World War III - even a conventional war against China with no nukes - was absolutely impossible.  Really?  War with Russia used to be impossible too.

My friends argued that the U.S. military has spent hundreds of billion of dollars on defense every year for decades.  No one can match the U.S. military and its huge defense budget.  Right?

 

 

 

 

Hmmm.  What if we had spent that money on wooden shields and stone-tipped javelins, while our enemy spent its gold on matchlock muskets, steel armor, steel swords, and cavalry horses?  The Spanish conquistador, Francisco Pizarro, conquered all of Peru and the Inca Empire with just 180 armored men and a handful of horses.  His enemy numbered in the thousands.  How?  Better technology.

For the past twenty years, America has been spending hundreds of billions of dollars to fight the last war.  Winston Churchill once said, "Generals always fight the last war."

There was only one large naval engagement in World War I, the Battle of Jutland.  The German Navy was much smaller than that of Britain, but it was extremely well-trained.  The German Navy finally sortied out to challenge Britain's dominance of the seas.  

 

 

 

 

The Battle of Jutland started out well for the Germans.  Britain's navy was scattered across the North Sea, while that of Germany was concentrated at the tip of the spear.  Four lightly-armored but fast British cruisers attacked the Germans, and three of them were promptly sunk.  By the end of the day, six thousand British sailors were dead.  Think about that, six-thousand young men.  

The problem?  The German dreadnoughts (battleships) were heavily armored, and the British gunners couldn't hit the broad side of a barn.  The British sailors had been taught to lay alongside the enemy and slug it out.  The Germans sat back, with longer-ranged guns and highly trained gunners, and blew the British cruisers out of the water.

But eventually Britain's own dreadnoughts, with even longer guns than those of the Germans, arrived and pounded the Germans from afar.  Even though only about one out of every fifteen British shells landed, the shells were so large and damaging that the Germans were finally driven off, with German losses of about 2,000 sailors.

 

 

The money in this business is in
loan servicing fees.

 

 

Advantage to the largest dreadnoughts.

So as World War II approached, the U.S. Navy built a dozen huge battleships.  After all, battleships ruled the seas, right?

Then the Japanese carrier air fleet destroyed our battleship fleet at Pearl Harbor.  All of that money spent on battleships was wasted.

I don't think a single U.S. battleship ever fired a round in anger at a Japanese aircraft carrier during all of World War II.  They couldn't get close enough.  Battleships were of little use.  They were obsolete.

 

 

 

 

Okay, so after World War II, the U.S. Navy began building an immense fleet of aircraft carriers.  Oops.  Our carrier jets can only fly out around 450 miles before they have to head back to their carriers.  Chinese missiles can sink a carrier from 1,000 miles away.  Our carriers can't get close enough.

Mark Twain once said, “History doesn’t repeat itself, but it often rhymes”  The war over Taiwan, which historians may mark as the start of World War III, is likely to start as a sneak attack, with Chinese hypersonic missiles destroying our carriers and our air bases on Guam in the opening moments of the war - Pearl Harbor Part II.

Finally We Reach the Point of This Article:

It is going to be very expensive for the U.S. to rebuild its Pacific Fleet.  We won't just lose aircraft carriers.  We will also lose cruisers (think of Russia's Moskva) and other support ships.  

 

 

 

 

The rebuilding of the Pacific Fleet will be a source of massive hyperinflation in the future.  (If you are a savvy, far-sighted investor, be sure to read that last sentence again.)  With our Pacific Fleet humiliated by a larger Chinese Navy, confidence in the dollar will plummet.  Who wants to own dollars when Hawaii is next on China's hit list?  

After Hawaii, California could even be next.  Think this impossible?  Ludicrous?  Imagine a Chinese fleet off the coast of California, firing missiles with pinpoint accuracy at our shipyards, our missile manufacturing plants, and our computer chip plants.  Occupying California would be easy.  The Chinese could easily field a land army of 5 million men.

Did you read how Congress just passed a huge spending bill to build new computer chip plants throughout the U.S.  Mark my words.  Those new computer chip plants will be constructed far inland from the California coast.  Not every American general is an idiot.  

 

 

 

 

So when they announce remote Des Moines, Iowa as the site of one of these new computer chip plants, be sure to spot it as evidence that World War III is not quite as impossible as you currently think.

If the war goes badly - for example, if missiles from a Chinese sub in the Gulf of Mexico take out the launch facilities of SpaceX - any chance of America counter-attacking becomes futile.  We must keep the Chinese fleet at least 2,000 miles from the coast of California.  

Let me say again:  The cost for America to rebuild its Pacific Fleet will be staggering, and inflation will soar.  What foreign country will want to sell us their precious raw materials for our potentially useless paper dollars?  We will surely need to print a whole lot of them.

 

 

 

Remember these words -

"History does not always happen to the other guy."

What makes you think that you can escape a devastating world war in your own lifetime? Both combatants - China and the U.S. - have tacitly agreed to use only conventional weapons.  A third world war is not only conceivable, but it could happen as early as this month, if China shoots down Nancy Pelosi's plane.

Think the U.S. will beat China in this war.  Take a look at this display of China's  military power.  Terrifying, huh?   Our Pacific Fleet is going to get mauled.  We have aircraft carriers with short-ranged jets, while they have mobile missiles on trucks that can pull off any road and fire DF-17 carrier-killer hypersonic missiles in minutes.

You'll know that war is imminent when the price of gold begins to soar.  Gold just hit a one-month high.  Makes sense.  Pelosi flies to Taiwan in the next two weeks.

 

 

 

Picture this.  The Chinese scramble jets to surround and threaten Pelosi's jet.  American jets, protecting Pelosi, tell the Chinese to, "Back off, Bucko."  Some Chinese pilot, who just had a fight with his girlfriend, tells the Americans to, "Sod off."  Macho pilots start to showing off their flying skills, one gets too close, guns chatter, missiles fly... and then far larger missiles fly.

Impossible?  When I went to look up the price of gold for this article, somehow I just knew that that price of gold would be up.  Not every American investor is an idiot.

 

 

 

 

 

Let me be very, very clear.  Even though China is our largest economic competitor, and even though there is scary chance we may soon go to war against China -

we do NOT want the Chinese
economy to crash.

If the Chinese economy were to crash, tens of millions of Chinese demonstrators would likely take to the streets.  Just imagine protests, like the pro-democracy protests in Hong Kong, taking place in every major city in China. 

 

 

 

 

They would protest the economic mismanagement of the country by the Chinese Communist Party ("CCP").  They would object to the CCP's authoritarian rule.  The protestors would demand freedom of speech.   The lifetime rule of Xi Jinping would suddenly end, almost certainly with his execution.

You can bet that President Xi would not be a huge fan of such an outcome.  Therefore, as soon as the Chinese economy started to tank and early protests started to appear, President Xi would order the invasion of Taiwan.  This would unite the Chinese people against a common enemy - the United States - and make them forget their economic frustrations.

President Xi would give no formal warning.  Those red Chinese jets that overfly Taiwan almost every day would suddenly continue on to real targets.  The Taiwanese Air Force would be wiped out on the ground.  Chinese DF-17 and DF-21 hypersonic missions would destroy U.S. airbases on Guam, as well as $150 billion worth of our F35-A's, still sitting on the ground.

 

Quokkas are real!

 

 

These same long-range missiles would likely destroy several, if not all, of our aircraft carriers in the South China Sea.  The U.S. Navy would never fully-recover.  If the Chinese were smart, Chinese submarines would surface off the coast of California and Washington State and destroy our shipyards.  Our ships destroyed in the South China Sea could therefore not easily be replaced.  Coincidentally a freighter passing through the Suez Canal will "accidentally" crash into one of the locks, making the Suez Canal unusable for the duration of the war.

Extremely accurate, submarine-launched, cruise missiles would fly into the windows of Northrup Grumman, Boeing, Lockheed, and Raytheon, crippling our ability to replace our tiny arsenal of conventionally-tipped missiles.  We lose this war.  Ten years later, China might even invade California.  China wants our land.  

Bottom line -

we do NOT want the Chinese economy to crash.

 

I admire clever, fun marketing.

 

 

Unfortunately, the Chinese economy is almost certain to crash in the next two years.  Imagine if 29% of the American workforce spent five years building anvils, and we stacked these unneeded anvils in huge piles north of the Arctic Circle.  This is what the Chinese have done.

The Evergrande default has revealed that the Emperor is buck naked.  China has built 50 million to 63 million unsold houses - more than enough unsold apartments (condo's) to house the entire populations of England, Italy, and Holland combined!  

Talk about some malinvestnments?  Wow.  A malinvestment is a boneheaded investment (think see-through office buildings, dot-com stocks, and subprime mortgages) that will never be repaid.

 

 

 

 

China financed all of this new construction with borrowed money, which of course the developers will never be able to repay.  President Xi and the CCP will bail out the banks, which is unfortunately the exact opposite of what they should do.  Xi needs to let the banks collapse.  He needs to allow dozens of large banks to fail.  Their presidents should go to jail.  Future generations of bankers need to remember with horror the consequences of reckless lending - but he won't.

The result of the bank bailouts will be the printing of more money, and painful inflation in China will follow.  But that's not the half of it.

The problem is not just with Evergrande, China's second largest residential builder.  Twenty-nine percent (29%) of China's GDP is new construction.  Almost certainly other large builders in China have made similar mistakes.  They have been borrowing huge amounts of money to essentially build anvils for the Arctic Circle.

 

 

 

 

 

"China is eating our lunch economically.  Their command economy is the better economic model."  Uh-huh.  This is certainly what we have all believed for years; but an 8% growth rate (now down to 6%) is not as impressive when a third of that so-called "growth" has been devoted to construction of anvils for the Arctic Circle.

And then one is tempted to ask, "If China's command economy was messed up enough to build 50 million to 63 million unsold apartments, what other boneheaded malinvestments have they made in other parts of the economy?"  Have they built 500 million buggy whips and counted their construction as "growth?"  

Since China has a command economy, can't they just print more money to cover their malinvestments?  China's Producer Price Index ("PPP") increased 9.5% in the past year, and that's the official rate.  A communist commissar would never lie about the PPP, would he?  I wonder what kind of inflation the average Chinese citizen is really enduring on his fixed salary?

 

 

 

 

The Evergrande default has made clear to me that China is not the economic miracle that has been touted in recent years.  Because the CCP will bail out Evergrande and the country's banks, the crash of the Chinese economy won't be some spectacular "Lehman Moment."

What is a Lehman moment?  Simply put, it's the fear that turmoil or crisis in one large company or country could spread to others.  When Lehman Brothers filed for bankruptcy, for example, it had a contagion effect on the other major financial institutions with which it had trading relationships.

I think a better definition of a Lehman moment is that moment when a bank, institution, or government suddenly realizes, "Oh, poop, we're NOT too big to fail!"  Haha!

 

 

 

 

But crash it will.  The CCP just can't keep creating more new money to paper over more and more boneheaded malinvestments (50 million unsold apartments - wtf?).  Eventually, this money creation binge will lead to raging inflation, and the average Chinese citizen will see his quality of his life plunging for the first time in decades.  

The average Chinese citizen will not be happy.  He will view the decline in living standards as a breach of his contract with the CCP.  He has tolerated the cruel thumb of the communists because the CCP promised to improve his life every year. 

I therefore make three predictions:  (1) Raging inflation will soon appear in China; (2) followed by massive, nationwide protests; (3) followed by a war against the United States.  Because our missiles absolutely suck and our arsenals of missiles are small, America will lose the coming missile war.

 

 

 

 

Still think I'm an amusing whack job?  Four Chinese warships sailed just 3.1 miles off the Alaskan coast ten days ago.  If I owned a home near a shipyard or a missile manufacturing plant in California or Washington State, I would at least buy a remote cabin in the mountains. 

 

 

Standing properties only, sorry.

 

 

 

 

My buddy and I were debating whether or not the U.S. will soon go to war against China.  His argument - an intellectually sound one - is that China would suffer horribly in such a war.  

Our bombs and missiles would destroy their harbors, shipyards, power plants, water treatment plants, railroad yards, and transport hubs.  Their international's trade would plummet by 50%.  (90%?)

 

 

 

 

In contrast, if the Chinese simply do nothing militarily, they will soon become the world's largest economic power.  Their people would only benefit from such restraint.  It's a compelling argument, right?

But here's the thing:  It won't be the Chinese people attacking us.  The Chinese people don't hate us.  Many of them would immigrate to America in a heartbeat.

No, the reason for the attack will be the ego of President Xi, their leader.  President Xi recently arranged to have himself appointed head of the Chinese Communist Party ("CCP") and the head of state for China for life.

 

 

 

The real money in CREF is in servicing fees.

 

 

President Xi has absolute power, and as the saying goes, "Absolute power corrupts absolutely."  Maybe this time is different, right?  Uh, huh.

Xi also has has very thin skin, and he angers easily.  For example, Chinese President Xi Jinping recently warned that, "Anyone who tries to bully China will face broken heads and bloodshed."  (July 1, 2021)

It's been thirteen months since I first made my prediction that the U.S. will be at war against China within three years.  I stand by that prediction.

 

 

 

 

 

Unfortunately, I also predicted that we will lose that war.  How can a democratic country like the U.S. or Germany defend itself against a sneak attack?  We are not likely to strike first.  This is why Russia and China are developing hypersonic missiles that can destroy our jets and missile launchers before they can even be used.

Russia is even working on a nuclear-powered (not nuclear-armed) hypersonic missile that can reach anywhere in the world.  Much of America's military might - aircraft carriers, airfields, jets, missile ships - will likely be wiped out in the opening minutes of the Taiwanese War.  Just remember what happened to the Egyptian and Syrian Air Forces in the opening hours of the Six-Day War.

Even if Biden died and appointed me king, I would have no solution to this first-strike vulnerability.  Missiles today are just too fast and accurate.  In a recent war game fought by the U.S. military, the Chinese Space Force quickly wiped out all of our satellites, leaving American forces blind.

 

 

 

 

After much of the American Fleet is decimated in the East China Sea, I have little doubt that the Chinese will come after our shipyards and missile factories on the West Coast.  That's what I would do.

Yes, we have shipyards on the East Coast, but the Panama Canal will be blocked.  It was no accident that both the Panama Canal and the Suez Canal were "accidentally" blocked by crashed cargo ships in the past 18 months.  Those were almost certainly Chinese (and/or Russian) trial runs for the coming war.

But the war won't affect you, right?  The war will be fought "over there" in the Second Island Chain, right?  You've got to stop smoking that California oregano.  :-)  Once our fleet is destroyed, Chinese subs and missile ships will be able to park 800 miles off the California coast and rain missiles down, with pinpoint accuracy, onto our power plants, our railroad yards, our water treatment plants, and our freeway interchanges.

 

 

 

 

Suddenly the American people will have no food, no power, and no water.  Please understand what I am saying.  When the Chinese win the huge battle for Taiwan, they are unlikely to stop.  

The Chinese want our land, and they are not afraid to use even biological warfare to eliminate our population.  COVID may or may not have escaped from that lab in Wuhan, but not 100% of that infectious disease lab was intended for civilian use.

Ancient Rome ruled the world for 800 years, until they lost just one battle - Andrianople in 378 A.D.  Just one battle doomed the entire empire.

 

 

 

 

It's not the Chinese people who hate us.  It's not that the Chinese people want war. The Chinese people will only suffer if they go to war.

Unfortunately, just one man - a man with absolute power over 1.4 billion Chinese - will decide whether or not China attacks. It is a terrifying truth that President Xi of China is becoming more aggressive and Hitler-like in his statements.  

And c'mon, once you've kissed 1,000 pretty girls and eaten hundreds of gourmet meals, wouldn't it be fun to play a Game of Thrones?  Kinda funny... and kinda not.

 

 

 

 

 

 

This really happened:  The other day I went to a medical laboratory for a blood draw.  As I sat down, I jokingly told the phlebotomist, "I need to warn you.  I'm a screamer."  She immediately quipped back, "That's okay, I'm a muzzler."  Oh, to have a wit that fast again.

 

Kinda cool:  Actual gold confiscation order from 1933.

 

 

CREF Training Lesson For the Day:

When trying to obtain a loan on a hotel, it makes a huge difference to most commercial lenders whether a hotel has interior corridors.  

Interior corridor hotels provide guests with access to all of the rooms from within the building.  All hotel room doors are located within an interior hallway.  Most rooms are designed with the bathroom at the entrance and a window at the opposite end of the room.

Why are interior corridors are so important?  Protection from rain and snow falling sideways is obviously an issue.  But the most important reason is security.  

Arguably, a hotel with exterior corridors is functionally obsolete; in other words, it has a feature so expensive to fix that the hotel is unable to be used to adequately perform the function for which it was intended.

 

 

 

 

The Motel 6 chain, for example, was having a real problem with bad guys watching their victims go to their rooms from the parking lot.  When the right victim was identified, the bad guys would simply kick in the door and then rape and/or rob the victim.  The police would often take seemingly three weeks to arrive, and by then the bad guys would be long gone.

If you are having trouble placing a loan on a motel or hotel with exterior corridors, you might apply to Blackburne & Sons.  We once even made a loan on the World Largest Female Mud Wrestling Palace.  The loan paid perfectly, but the owner made so much money that he paid us off early.  [Sob.]  And then there was the time when we (unknowingly) made a loan on a bar engaged in dwarf-throwing contests...  Haha!

Deadly Feasts and Prions:

Back in 1997, an author by the name of Richard Rhodes published fascinating book, Deadly Feasts: Tracking the Secrets of a Terrifying New Plague. 

 

 

Once again, the whole purpose of being in finance is to 
build a loan servicing portfolio.  That's where the money is!

 

 

In this brilliant and gripping non-fiction medical detective story, the author follows virus hunters on three continents as they tracked the emergence of a deadly new brain disease that first kills cannibals in New Guinea, then cattle and young people in Britain and France - and then is traced to food animals in the United States.

Virus hunters?  The truth is that a prion - the incredibly dangerous vector that they were chasing - is not a virus.  It is not alive.  It was never alive.  You can even torch it with one of Elon Musk's Not a Flamethrower (its a flamethrower, folks), but the evil pathogen cannot be destroyed.  If it gets in your food, you will die a blithering idiot.  It is the human form of Mad Cow Disease.

So what is a prion?  A prion is a protein that twists itself the wrong way.  Think of it as a Twizzler which twists to the left, instead of to the right.  The result is that the infected human cell always dies.

 

Free Kisses.

 

 

But that's not even the bad news.  If the protein twists "to the left", the proteins in the adjoining cell go, "Hey, the protein over there gets to twist to the left.  I wanna twist to the left too!"  So they also twist to the left, which kills their host cell, but not before badly influencing all the proteins around them.

The other piece of bad news us that prions migrate to the brain.  Yikes.  Mad Cow Disease is called bovine (cow) spongiform (looks like a sponge) encephalopathy (brain disease).  When you look at the brain of an infected cow under a microscope, it has so many holes in it, it looks like a sponge.  The cow gets so stupid that it forgets how to stand and eventually even how to breathe.

Okay, so back to the Deadly Feasts.  The children of the cannibals of Papua New Guinea were all dying.  Modern cannibals no longer slaughter innocent explorers and eat them.  Joke:  Cannibals capture two missionaries and throw them in the stew pot.  Suddenly, one of them suddenly starts to giggle.  "What could possibly be funny at a time like this?" asks one astounded missionary.  The other missionary replies, "I just peed in the soup!"  Haha!

 

Doggy Style Pet Grooming.
Heavens, I love good marketing.

 

 

But the cannibals of Papua New Guineas did have one strange, but compassionate, practice.  They would eat the flesh of a deceased loved one or respected member of the tribe.  Researchers discovered that prion disease had gotten into the cannibal population, and by eating this flesh, many more of the tribe's members contracted prion disease - what the natives called kuru.

So why were the cannibal children dying, but not the older members of the tribe?  (The elders died too, but it was much later, and their deaths looked like Alzheimer's.)  The brains of the children were grow more rapidly.  There is far more brain cell division in children, a time when prion disease spreads from cell to cell.  The brains of these children would develop huge holes, and eventually their brains would become so impaired that the children would die.

There is no cure for prion disease - known in humans as Creutzfeldt-Jakob Disease (CJD).  Medical instruments even coming into contact with any such diseased tissue have to disposed of entirely because no amount of heat will ever destroy the vector.  You could heat your meat in an industrial blast furnace, and it wouldn't help.  You can't kill something that was never alive.

 

 

 

 

 

Okay, so why is crazy George talking about prion disease?  An article came out in a medical journal this month suggesting some connection between some COVID vaccines and prion disease.  Be careful here.  Critics of the article have pointed out that the author of the article once opposed the influenza vaccine, and the medical journal that published the article is a, gasp, for-profit magazine.

I was just going to ignore the article in the medical journal and continue to get the younger children in my clan vaccinated, until I read an incredibly stupid article in USA Today trying to debunk the article.  The gist of the USA Today article was that none of the test subjects got Creutzfeldt-Jakob disease (CJD).   Uh, huh.  Hello, USA Today???  CJD often doesn't show up for years, especially in adult test subjects.

The only way to confirm a diagnosis of CJD is to examine the brain tissue by carrying out a brain biopsy or, more commonly, after death in a post-mortem examination of the brain.  The USA Today article, debunking the connection between two of the vaccines and prion disease, was so poorly reasoned that now I don't know what to think.

 

 

 

Now I am thinking to myself, "Oh, crap.  Oh, crap.  Did I just kill half my family by encouraging vaccinations?"  Folks, be careful here.  There may be a far-far greater risk from COVID than from some trillion-to-one risk of prion disease.  Just be aware of the issue.  Despite being vaccinated myself, I confess that I may discourage my son against vaccinating our grandchildren.

 

 

Forget any other course that I sell.
This is the course that 90% of you should take.

Update on the Coming War Against China:

Why do I insist on scaring the poop out of you with these reports about the coming war with China?  Answer:  Because I am praying that some "expert" will contact me privately and reassure me that America has the ability to instantly shoot down all of China's satellites, thereby blinding all of their carrier-killer (DF-21) missiles and Guam-killer (DF-26) missiles.  

Sadly, no one ever so reassures me.  Instead, the wisest of my friends are all out there getting dual citizenships, so they can quickly flee America.  We are so screwed.

 

 

 

 

1. I learned recently that China can only invade Taiwan during certain months of the year because of the weather in the South China Sea; otherwise, the seas get impossibly choppy.  When is the next window?  I dunno, but it's at least not for several months.
   
   
2. China will have to amass huge quantities of shipping, armor, troops, and supplies on their Eastern coast before they can invade, and our spy satellites should easily be able to spot this buildup.  The surprise missile barrage that will take out our carriers and our landing fields on Guam and Okinawa shouldn't therefore come as a complete surprise.
   
   
3. But if you think 'ole George is a complete whack job because of his worry about the coming war with China, consider what the Australian Minister of Defense (the equivalent to our Secretary of Defense) said this week, "The drums of war are beating and a war with China over Taiwan should not be discounted."
   
   
4. Do you remember when I warned you about that crazy dictator of the Philippines?  President Duarte is the guy who has had his police and army simply shoot drug dealers on the spot.  He has executed tens of thousands of them.  I warned you six weeks ago that Duarte was just crazy enough to attack the Chinese fishing fleet off the Spratlys Islands.  Well, his Secretary of State told the Chinese this week to get the f*ck out of there.  Hahahaha!  The Secretary of State is the chief diplomat for any country.  He is supposed to be the most tactful guy in his whole country.  "Get the f*ck out of there."  Ha!  I can see it as plain as day.  President Duarte is going to send his warships to the Spratlys and start shooting, and World War III will start.  Remember, folks, you heard it here first.
   
   
5. Please keep watching the price of gold!  If you ever see it soar $150 or more per ounce in a single day (please contact me!), buy some extra groceries, buy one or two more boxes of ammunition (they may be used someday as currency*), and definitely consider getting out of the market.  Live near a missile manufacturing plant, especially on the West Coast?  Move!  Sadly, we may lose this war.  With their long-range missiles, they are the school-yard bully, and we are the 98-lb. weakling who cannot reach.  *I once read about a spontaneous swap meet that sprang up after a horrible earthquake.  The only currency that most of the dozen vendors wanted was ammunition.
   
   
6. But what about America's vast and wildly expensive air force?  The range of our jets is so short that a senior U.S. Air Force general said this month that our mighty F35a's were not even worth including in any high-end war game.  Oh, crap, oh, crap.  

 

 

 

 

 

 

The image above places the disputed Spratly Islands, a location rich in oil and other raw materials.  

There is a famous song from the protest days of the 1960's entitled, Eve of Destruction.  The chorus goes:

But you tell me over and over and over again my friend
Ah, you don't believe we're on the eve of destruction

The Future Dictator of the World, President Xi of China, continues to poke and challenge the world.  His fighters routinely violate Taiwanese airspace, and the size of these incursions (the number the Chinese fighter jets involved) keeps growing.

 

 

 

 

The latest aerial incursion involved twenty of their most advanced fighter jets.  Taiwanese fighter pilots have become so exhausted, and their far inferior air force has become so depleted mechanically, from intercepting them every day for the past six months that Taiwan just gave up this week intercepting them.

The Future World Dictator also sent hordes of "fishing vessels" into the disputed waters off the Spratly Islands in the South China Sea and off the Senkaku Islands in the East China Sea.  Then he started filling those "fishing vessels" with Merchant Marine sailors and marines.  Now he is sending heavily-armed Merchant Marine ships, many of which are as formidable as a frigate.

In response, the Japanese are rapidly expanding their Navy.  The Filipinos are furious too, because they also have a claim to these islands.  President Duarte of the Philippines is a wild man.  You'll recall that Duarte is the guy who told his Army and Police to just shoot suspected drug dealers.  His forces have killed a whopping 7,000 drug dealers in the past six months.  Our cop shows go, "Drop your weapons.  You have the right to remain silent..."  In real life, Filipino cops go, "Bam.  Bam-bam-bam."  Haha!

 

 

 

 

President Duarte of the Philippines is just crazy enough to order the Filipino Navy to open fire on these Chinese "fishing boats" off the Spratly Islands.  

Ah, you don't believe we're on the eve of destruction

What Really Scares Me:

Everyone is reminded of the old saying, "Power corrupts, and absolute power corrupts absolutely."  President Xi of China is the absolute ruler of China for life, much like Hitler was the absolute ruler of Germany.  We all know what that absolute power did to Hitler's mind.

By poking India and Japan (along with the weak Philippines and Vietnam) recently, Xi has motivated them to rapidly increase their armed forces.  India is starting to produce fifth-generation fighters, under a license from Russia, that can match anything the Chinese can put in the air.  Indian air power can be used to help blockade Chinese shipping through the Indian Ocean.

 

 

 

 

WTFudge are you thinking, President Xi?  Why would you want your enemies to re-arm?  This next war will be a technological one (advanced missiles, drones, a war to control the satellites in space, etc.)  Why would you want to frighten Japan, arguably the best chip manufacturer in the world, into rapidly re-arming?  

This irrationality on the part of Xi is causing my "spider senses" to tingle.  The guy is already a megalomaniac (obsessed with his own power), and I think mentally he may be headed over the edge.  An insane man in charge of the largest Navy, the largest missile force, and the largest Army in the whole world is a very dangerous thing.

I stand by my prediction that we will be at war with China in less than three years.  This other crazy guy, Duarte, could easily start that war.  Bam.  Bam-bam-bam.

 

Tom Brady has seven rings and Michael Jordan has six.

I know.  So mean.  Lovely lady.

 

The outgoing commander of U.S. forces in the Pacific told the Senate Armed Forces Committee last week that China will have the power to take Taiwan by force in less than six years.  The incoming commander suggested to the same Senate Committee that the Chinese will have this power in much less than six years.

The Mormons keep an emergency one-year's food supply on hand.  If the Chinese start their surprise attack by taking out our GPS and telecommunications satellites, you'll be glad that you kept some emergency food on hand.  For example, canned hams last for many years.

 

 

I keep telling you, the money in CREF is in loan servicing fees!
Just hire a sub-servicer.

 

 

Some Thoughts on the Economy:

There is an old Chinese saying:

First Generation - Peasant
Second Generation - Buys land
Third Generation - Mortgages land
Fourth Generation - Peasant

The cycle starts with a family of peasants working in the fields.  In the second generation, a hard-working mom and dad make painful sacrifices and save money.   They buy land - say, a family farm.  They pay off the property over a lifetime of hard work, which provides the family with an income in their retirement.  Their children, raised in comfort, tend not to be as hard-working as their parents.  Too often they become spendthrifts (irresponsible with money).  To pay their debts, they eventually have to mortgage the land.  Unable to pay their mortgage, they eventually lose the land in foreclosure.  Their children grow up as poor peasants.

 

 

 

As I look at what's happening with the profligate spending by the Federal government, I worry that we have become that third generation.  It started with Trump's big tax cut.  That big tax cut plan had a lot of good and necessary features in it that encouraged American companies to move more of their operations back to the United States; but that corporate tax cut was just too large.  The Treasury lost too much revenue.  

Now Biden and the Democrats, with their $1.9 trillion pandemic relief bill, have ballooned the deficit and the national debt to even more absurd levels.  Last month I mentioned that the Federal government will probably get away with creating $1.9 trillion in new money.  Much of this new debt will be used to make the payments on our existing debt, thereby absorbing much of it, like a giant sponge; but there has to be an end to this irresponsible belief that deficits no longer matter.

 

 

On the other hand, the good credit of the United States is like keeping a credit card free of any outstanding balance.  This available credit can be used in an emergency.  Certainly the pandemic qualifies as a bona fide crisis.  It makes no sense to keep reserves for a rainy day and then fail to use this rainy day fund when it is pouring outside.

Therefore, I don't hate Biden's pandemic relief plan, just its size.  I worry.

 

 

 

A parrot sweetly pets a puppy.

 

In economic terms, I think China has gotten massively battered in the past two years. The economic statistics coming out of China look fine, but I simply don’t trust them.  I think the statistics from China have been doctored.  Just think about all of the economic body blows that China has recently absorbed.

It started with President Trump making it outright unpatriotic to move any more U.S. manufacturing plants to China.  Maybe even a few manufacturing jobs have come back home.

 

 

 

 

Then the U.S. slapped sanctions on many Chinese imports. Suddenly a few U.S. industries, like steel, could start to compete with China.

Trump’s hammering of China has resonated in Europe and throughout the Pacific Rim.  You might hate Trump’s sharp New York tongue, but he has been very influential in shaping a worldwide distrust of China.

International factories that otherwise might have been constructed in China are now going to Vietnam and India.  On the margin, China has surely lost a few sales, if a reasonably-priced competing product was available.

 

 

 

 

And then came the Coronavirus Crisis.  Was the virus really created in a Chinese lab? Who knows?  But President Trump has achieved some success convincing both Democrats and Republicans that China was to blame.  This could NOT have been good for business in China.

On top of that, tens of thousands of Chinese small businesses must have failed during the Coronavirus Crisis.  Eighty percent of all urban Chinese workers work for private businesses.  Millions must have lost their jobs.

I am starting to see signs that China is running out of U.S. dollars, the currency the world uses to buy raw materials and to trade.  They had something like $3 trillion in currency reserves several years ago.  I think they are down to just $1 trillion.  Be careful here.  I could be totally wrong on these numbers; but I doubt seriously whether the Chinese have been able to add to their currency reserves in the past two years.

 

 

Hahahaha!

 

Why should you care?  I recently exchanged emails with a Hong King citizen, and he pointed out that in a war, the U.S. could kill one billion Chinese citizens, and they would still have more people than we have.

President Xi of China has made himself President for life, so just one guy controls all 1.35 billion of them.  The Chinese are graduating five times more engineering students than we are.  In a war of attrition, we lose.

But why should you care?  If the economy in China starts to suffer, the people could start to get restless.  President Xi might start to lose political support.

 

 

 

 

There is nothing like a war to rally people around the flag.  I therefore predict, in order to distract the Chinese people from their worsening economic woes, that China will invade Taiwan within the next two-and-a-half years.

The U.S. will have no choice but to enter into a full-fledged conventional war with China.  No nukes will likely be used because that would mean the destruction of all life on Earth.  If we lose that first row of islands - Taiwan, Guam, the Senkaku Islands (called the Diaoyu Islands by the Chinese), and Okinawa - then the Solomons, Midway, Hawaii, and possibly even California would be next.

Imagine Chinese missile ships raining conventional, but highly-accurate, missiles down on California.  Our military policy is to fight World War III out there on that first row of islands, not on our own soil.

 

 

 

 

Fanciful?  China now has more modern warships than the U.S. Navy.   They are halfway done on their third aircraft carrier.  As I often tell my sons, “History doesn’t always happen to the other guy.”

Okay, so what can you do?  My oldest son, George IV, lives in Sacramento.  I've told him that his next car needs to be powerful enough to pull a trailer out here to the water-filled, food-stuffed State of Indiana.  Need water in Indiana?  There is a veritable ocean just thirty feet down.  

He is also to look for a cheap trailer, in case he ever has to bail out of California before the missiles start falling.  He'll probably never use that trailer.  Dad is probably just a Chicken Little;  but like I said, history doesn't always happen to the other guy.  If you are going to buy a new car, make sure its large enough to carry your family to safety.

 

 

 

 

My second son, Tom (the good one who gives me grandchildren - IV, hint, hint), here in Indianapolis, is already looking for a larger home with enough acreage for more chickens and even a Victory Garden.  Make it happen soon, son.  Fortunately, here in Indiana, my lovely wife and my 22-year-old daughter were able to get carry permits.  Carry permits in California are virtually impossible to get.  Yikes.  I'd hate for these ladies to be in California when law and order starts to break down.

In the years leading up to World War I, there was an arms race going on between England and Germany.  Each country was rushing to build dreadnoughts (battleships) with larger and larger guns.  Whichever country could build battleships with larger guns could sink the enemy's ships before they ever came into range.  The famous Spy versus Spy cartoons in Mad Magazine were based on the spy warfare on each other's ship designs that took place between 1910 and 1914.

My point is that the educated of both countries knew with an almost certainty that war was coming.  The likelihood of war between the U.S. and Japan in 1941 was thought to be so obvious that many people believed that President Roosevelt dangled our battleships in Pearl Harbor as an invitation for the Japanese to attack, so that we could finally enter World War II.

 

 

Finally.  Haha.  Hooray for Acme Industries.

 

My father, an Army captain at the time, was stationed at Pearl Harbor in 1941.  He was in charge of the French 75 howitzers defending the harbor.  He told me a story of how he was one day sighting his guns, when he spotted a Japanese spy on a Japanese fishing trawler using a sextant to plot his own guns.

You know what?  My father had no ammunition for this artillery pieces!!!  The Japanese could have just waltzed right onto Oahu.  He went to his General so many times to complain that they finally encouraged him to take a medical discharge, and he was sent home.  (Thank goodness.  I might not otherwise have been born.)  Six months later Japanese Zeroes strafed and destroyed virtually the entire U.S. Air Force on Oahu.  Our planes were conveniently arranged in a row for easy strafing.

Still think old George is a whacko?  The U.S. military just did a simulation of a Red Chinese invasion of Taiwan.  We lost.  Want to know why?  When our fighters and bombers tried to return to Guam, the airfields had all been destroyed by Chinese missiles.  History does not always happen to the other guy.

 

 

 

 

 

 

 

I am beginning to suspect that another World War may be coming, perhaps in as short as four or five (three?) years.  I hope I'm wrong.  I hope that I am a nothing more than Chicken Little.  "The sky is falling.  The sky is falling."   But I don't think so.  I have had this feeling of dread before, and I was spot on.

The last time I had this feeling of dread was during the three years leading up to the Great Recession.  I just knew that a deflationary collapse was coming, so I wrote my 2007 book, The Reverse Multiplier Effect - When Crushing Deflation Destroys America.  At the time, the mere thought of deflation was ludicrous.

 

 

 

 

So-called experts have told you that the big losses on subprime loans suffered by our banks were the cause of the Great Recession.  The truth is that our banks simply got scared.  They stopped lending, but they still kept raking in their monthly payments on their huge loan portfolios.

Since the Multiplier Effect also works in reverse, every time a bank accepted a $1,000 loan payment and didn't immediately lend it back out, a whopping $20,000 got sucked out of the U.S. money supply.

Twenty-to-one, that's how the Multiplier Effect works.  If a billion dollars flowed into the banks in the form of monthly payments (and the banks did not immediately loan it back out), TWENTY billion dollars got sucked out of the U.S. money supply.  Within a few months after the crash in 2008, much of the U.S. money supply started to disappear.

 

 

 

 

Have you ever wondered how the Fed could pump $3 to $4 ($5?) trillion into the U.S. money supply, and yet inflation today still remains at less than 1.6%?  Trillions and trillions of dollars were destroyed during the Great Recession.

Therefore the losses on subprime loans were not the real cause of the Great Recession.  They may have been the spark, but the Great Recession was really caused by the U.S. money supply collapsing like a black star.  As Al Pacino said in Scarface, "Say hello to my little friend - deflation."

"Wait a minute, George.  If we had another World War, the nuclear exchange would exterminate life on earth."

 

 

 

 

 

Correct.  Experts have predicted that a nuclear exchange between just India and Pakistan would create a nuclear winter so horrific that it would cause the starvation death of 2 billion people.

No, neither side will use nukes, just like neither side used poison gas during World War II.  Even with the vengeful Russians (they were really pissed) closing in on Berlin, the Germans didn't use poison gas.

I suspect that World War III will be fought instead with smart hypersonic missiles and space-based weapons.  Imagine waking up to find smart hypersonic missiles slamming into our chip manufacturing facilities (Intel and Micron); into the launchpads and engineering buildings of Space X (slows down our ability to launch new satellites); into our power plants and dams; into our oil refining plants; into the engineering buildings containing our brightest technological minds at Google, Microsoft and Intel; and into every one of our aircraft carriers.

 

 

 

 

"Generals always fight the last war."  Cavalry worked well during the Civil War and the Crimean War, so old French and Russian generals sent their cavalry against emplaced German machine guns in World War I.  See photo above.  British dreadnoughts (battleships) won the big sea battle at Jutland during World War I, so the old U.S. admirals maintained a dozen battleships in 1941, many of which were easily sunk during the war by dive bombers taking off from Japanese aircraft carriers.

Today America projects its might in the Pacific Ocean with aircraft carriers, but in the coming war, we could easily lose most of our carriers in the first two days, as they are easily spotted from space by Russian and Chinese spy satellites.  Smart hypersonic missiles can be directed from space right down their "smokestacks".

The Russians and Chinese are said to be two years ahead of us in the development of hypersonic missiles - missiles that can fly at up to 15 times the speed of sound.  They are almost impossible to shoot down, and they travel so fast that a large enough sneak attack could essentially end the war with the first salvo.

 

 

 

 

The next World War may be fought with missiles launched from thousands of miles away and directed to their targets by satellites in space.  President Trump had it right when he created our new Space Force two years ago.  If we can keep the Chinese and Russians blind in space, perhaps war can be discouraged.

It seems to me that the behavior of China recently is that of a belligerent who thinks that he can win.  Now that I've mentioned it, see if you too don't start spotting in the news hints and suggestions that China and Russia are preparing for war.  The Winds of War are blowing.

 

 

 

 

 

Final Note:

There is a gold rush going on.  Mortgage brokers are rushing to get their favorite bankers signed up on C-Loans.com, and thereby earn 20% of our fee on the first three loans closed by their bank.  One mortgage broker, Arnold Taylor, has added almost 30 banks to C-Loans in the past two weeks alone.  Arnold will be earning big fees from this for years.

It's very easy.  Just call your favorite banker and explain that C-Loans delivers carefully screened commercial real estate loans that perfectly fit his preferences. The bank merely has to bump its normal loan fee from 1.0 point to 1.375 points in order to cover our software licensing fee.  Next please email to your banker our Commercial Lending Preferences form.  Finally send an email to Tom Blackburne and register the banker with him.  We'll close the sale.

It's a gold rush.  It's a land rush.  Settlers are whipping their horses and driving their Calistoga wagons like crazy to be the first to register their bankers.  But you MUST call your banker first and make the verbal offer.  It doesn't matter if he says yes at the moment.  Just get your banker into us, along with your best understanding of his commercial lending programs.

 

 

And if you haven't used C-Loans.com recently, you will be thrilled with all of our new commercial lenders, including a dozen new hungry credit unions lending nationwide.