Professor Elam

Yovela Rico posed a good question to my observation that Russia may well loan money to Iceland. What does it mean in their relationship?  Well, the creditor pretty well owns the debtor. If the debtor fails to do what the creditor wants, no more credit, just like the bank loaning a business money.

The lady with Craftsman, we want lower priced tool pouches, did not know what to make of the current situation, nor did anyone else.  Somehow this presented opportunities though they were not specified. What has happened is this.

We export our light manufacturing to a cheaper country.

That country takes the money they earn and buy US bonds.

Now China is our creditor, and banker.  Are we in any position to tell China anything?  Where will the money come from for the bailout?  We have to sell bonds to the Chinese and anyone else still buying to finance all these bailout schemes or stimulation schemes.

My question

Was the cheap tool pouch really worth it? Now we go tin cup in hand begging the world to loan us money to continue this lifestyle?  Wouldn't we have been better off to make our own tool pouch, buy our own bonds, and cut back on lifestyle?  As it is we will have to cut back on our overseas commitments as the Buchanan column suggested I linked to. We will be watching the end of the US empire just as Greece, Rome, Holland, Spain, France, and Britain have seen their expansion and decline.

Meanwhile in San Antonio….

I have been looking at houses, and now rental houses in San Antonio.  What has happened is this. so many marginal houses have been built that now owners cannot sell them. So they are going up for rent. The first ones coming up are marginal, usually too far from the loop 410 to be handy to any job. As more and more houses go to rental instead of sale, what will happen to the rents, I suspect they will go down. A 1500 sf House becomes the new apartment.  This was all a foolish attempt to stimulate the economy by building marginal houses for people that cannot afford them. Now the price of material to build the house has fallen, so the house is not literally worth the cost to construct it last year.  With falling commodity prices, unemployment up so that there are plenty of carpenters, and financing not available, we will have more and more poorly maintained homes. No wonder muni bond prices are falling. Who will pay the property taxes on all these homes if they are vacant?  How can the city claim that property values are not falling?