Generational Dynamics Forum - New Site

https://rubino.substack.com/p/recession ... is-already

Let’s take the office building story step-by-step:

Between 2010 and 2020, millions of square feet of office space were financed with unnaturally cheap credit.

During the pandemic, millions of Americans discovered that they prefer working from home and refused to return to the office. Occupancy rates for many office buildings, as a result, are now so low that cash flow doesn’t cover expenses.

The post-pandemic inflation spike forced governments to raise interest rates just as loans on thousands of office buildings are coming up for refinancing. Combine lower cash flow with higher interest expense, and the result is plummeting valuations for many office buildings.

The Trump administration begins cutting the federal workforce, further emptying already underused offices. The result: a mountain of bad commercial real estate paper festering on bank balance sheets, threatening a banking crisis in the coming year.

Can An Economy Grow While Its Real Estate Tanks? Nope

Housing is a lead weight, while office space is a ticking time bomb. Neither is conducive to steady 3% non-inflationary growth. They might be the first dominoes to fall, as in 2008, or they might contribute to a crisis caused by geopolitics or an equities bear market. Either way, real estate is definitely part of the “imminent recession” story.

Tensions soar as India weighs how to hit Pakistan
After the Kashmir attack, military action is possible but comes with huge risks
Photograph: AFP
Apr 27th 2025|Delhi and Islamabad
https://www.economist.com/asia/2025/04/ ... t-pakistan

India Seems to Be Building Its Case for Striking Pakistan
As world powers face multiple crises, the one set off by a terror attack in Kashmir is getting scant attention or help in de-escalating between nuclear-armed neighbors
Mujib Mashal
By Mujib Mashal
Reporting from New Delhi
April 27, 2025
Updated 7:02 a.m. ET
https://www.nytimes.com/2025/04/27/worl ... shmir.html

Phong Tran wrote: ↑

Thu Apr 24, 2025 12:03 pm

As the India/Pakistan conflict is becoming heated again, due to the 26 tourists killed, I found this 1 year old video fairly informative as to the issues that Pakistan has been dealing with. They may be looking to enter a war against India as a way to distract their own population from their domestic and economic issues, just like China may.

Pakistan is dying (and that is a global problem) by CaspianReport
https://www.youtube.com/watch?v=Xqm3kcHpIsI

Another one that's longer but gives a more geopolitical discussion.
Sushant Sareen Explains Pakistan's Real Truth - Military, Politics, Economy & Chaos by BeerBiceps
https://www.youtube.com/watch?v=VUs7JPf3rsg

Here is Mike Snyder's take on this:
http://themostimportantnews.com/archive ... any-moment

As the India/Pakistan conflict is becoming heated again, due to the 26 tourists killed, I found this 1 year old video fairly informative as to the issues that Pakistan has been dealing with. They may be looking to enter a war against India as a way to distract their own population from their domestic and economic issues, just like China may.

Pakistan is dying (and that is a global problem) by CaspianReport
https://www.youtube.com/watch?v=Xqm3kcHpIsI

Another one that's longer but gives a more geopolitical discussion.
Sushant Sareen Explains Pakistan's Real Truth - Military, Politics, Economy & Chaos by BeerBiceps
https://www.youtube.com/watch?v=VUs7JPf3rsg

https://youtu.be/c-V7niGPY9s?si=fFawS42zkgSuDH5U

This China analyst thinks that Navigator's Island hopping strategy is the most likely scenario in the year half year. It's a good argument and she is very knowledgeable anddwells on Chinese politics quite deeply. She starts by saying that the question now regarding war is not if, but when.
We can see how fast things are ramping up and starting to feel like being out of control.
Time for preparing is ending and time for using what you have is very near. Both on an individual level and national. PRC will have to account for it's good and energy access. USA should be self sufficient. SHOULD BE. Hopefully this critical infrastructure is hardened to attack... They'll have to secure their supply lines, echoes to WW2...

The CCP's only hope of successfully invading Taiwan is if they are able to neutralize the USN (and USAF) at the start. Also, they would need some dramatic wins at the beginning in order to capture/solidify popular support in China.

I think it is highly likely that they will use nukes at sea, and probably also against the US airbases in Guam and Okinawa. They would then swear that they are not hitting civilian targets, and would talk down nuclear exchange (which, right now, they are not ready for).

It is certainly questionable if they would be successful in taking Taiwan, but the war would most certainly devolve into a ground war (the true Chinese strength) on multiple, multiple fronts.

Navigator wrote: ↑

Mon Apr 21, 2025 5:55 pm

Instead, I do see them going for a much more aggressive approach, probably a surprise attack against USN targets and western Pacific US bases (Guam, Okinawa), once they decide to pull the trigger.

Navi,

That would really be an incredibly aggressive response. Do you really think they're that desperate? That would awaken the (hopefully still there, currently sleeping) U.S. war machine, while not damaging the homeland. Possibly the worst choice for the CCP. The only thing more aggressive would be nuking the U.S. homeland, which even the CCP knows would probably not work out in anyone's favor.

The CCP didn't just make a monumental disaster in the one child policy. More recently they shut down Tutoring, which was a major industry/employer of younger university grads. Then they put serious clamps on their domestic computer gaming industry, also causing that sector to go into a serious downturn. Both of these decisions erased a large number of good jobs that youthful university graduates were looking for.

Now they have a very serious cultural problem with what is called "Let it Rot" (a term youth are using to explain why they are dropping out of society). Young people with little/no prospects are refusing to enter the workforce and live a subsistence lifestyle at home. This is causing further contraction of the economy, and is enabling anti-CCP sentiment.

Taiwan seems to be the issue that the CCP has chosen to rally its people around the flag (and CCP leadership). So in a crisis of confidence concerning CCP rule, they will most likely move against Taiwan. A blockade against Taiwan might seem a pragmatic approach, but I don't think the CCP will opt for that. As you point out, the USN could break the blockade, and the CCP would lose serious face (if not collapse). Also, it would be tough to institute martial law if they only went with this option.

Instead, I do see them going for a much more aggressive approach, probably a surprise attack against USN targets and western Pacific US bases (Guam, Okinawa), once they decide to pull the trigger.

China definitely has internal societal problems as Trevor and Navigator have pointed out. Whether those issues could be the catalyst that allow the CCP to enforce martial law and to attack Taiwan, or at least create a naval blockade around the country, I'm still not sure. If they were to attempt a naval blockade, the advantage would be that it's at least much closer to their military sphere of influence and would require less naval capacity and force, however, if that military demonstration were to be quickly defeated by the US/Coalition Naval forces, the CCP would never live it down. An external humiliation such as that would almost surely result in an internal revolution and CCP downfall.

It's easy to criticize their one-child policy based on the negative resulting consequences, especially female infanticide, however there were positive factors that actually contributed to China's economic development and growth during it's incredible GDP rise from 1980 to the early 2010's. It is estimated that it reduced births during those years by approximately 400 million. Those births would have slowed China's economic growth as more agricultural imports would have been required to support that population growth. As well, looking at their youth unemployment and surging unemployment today due to the trade war, it could be argued that had they not enforced the one-child policy, they would have been in an even worse internal situation by early 2010s. At least the extra 10-15 years has allowed them to move a greater population out of poverty while increasing their middle class population. The problem was that they ultimately relied too much on manufacturing and construction for their economic growth.

The weakness of the CCP, just like most political communist governments is that they unfortunately don't realize when they should let go of their control. The key reason why their economic innovation and structures to develop internal consumerism are absent is because no one trusts that the CCP would not just confiscate anything and everything they have if they wanted to. Thus, capital does not stay to help build a middle class feedback loop; it instead flees for self-preservation, thus, the housing bubbles in places like Australia, Canada, US, etc, the cross-border escape and growth in cryptocurrency (Bitcoin), Gold, etc.

Circling back to the trade war, and the US and China's struggle for dominance, I believe the US made a miscalculation. I believe their intention was to reiterate to the world that they were and still are the only superpower in the world; that if you want access to the latest technological advancements and best manufactured products, then you should be willing to pay for it. But in doing it the way they did, instead of reinforcing their identity and US Dollar as the reserve currency, they actually did more harm than good. Not to say that the reserve status will crumble tomorrow or next year or even in 10 years, but the seeds have been planted for the US Dollar to be replaced; by what, who's to say. One of the requirements for a reserve currency is that the currency has to be readily available for trade, and the US has basically told the world that they will be reducing the amount of US currency availability for global trade. I know John has always said that there will be a global deflationary depression, and that would make sense if no there was no longer a true reserve currency that anyone would use except gold or bitcoin. Good currencies always chase out bad and once hoarding starts, countries will only purchase what they need and keep the rest.

Yes, China is indeed playing the long game. However, the short term has a way of making the long term obsolete. How many of our lives went as we planned them?

Let's not forget they've done one unbelievably idiotic thing after another. Their one-child policy has been a complete disaster, and they're only beginning to find out how badly they've screwed themselves doing it. Foolish as our policies have sometimes been, none of them can compare to the kind of misery that's brought. Having tens of millions of young men with no economic or marriage prospects isn't great for stability. Youth unemployment was so horrible that they stopped publishing anything on it, and if China's admitting their population is shrinking, it's likely been doing so for a decade now.

Their obsession with Taiwan is why I don't believe they can back down. Taiwan might not be a threat in the military sense, but they're a threat to the CCP's power. Taiwan is proof that dictatorship isn't innate to Chinese soldier, that they can thrive under a democracy. China spends about twice as much on internal security as they do on their exterior military, and they stopped reporting so-called "mass incidents" over a decade ago.

I'm not happy about Trump, to put it mildly, but he's absolutely right in taking a hard line on China. I know people like to say he's provoking them, but when the Philippines congratulated the Taiwanese president on his victory, standard diplomatic protocol, the CCP threatened to burn all their cities to the ground if they didn't retract the message. They're more than a rival, they're an enemy, even if many of those in power would rather obsess over climate change and pronouns.
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It's not that we don't still have our industrial capacity, even with all the jobs being outsourced to poor countries. It's that it's been drowned in red tape and bureaucracy. If you want to build something, you first need a 600-page environmental impact report to make sure it doesn't hurt in any way some tiny creature most people have never heard of. In my home state of California, they've used trillions upon trillions of gallons for the Delta Smelt, a fish about the size of my pinky.

And while constructing something, you need another 600 page environmental impact report, so little wonder we have so many cost overruns and delays. I might be exaggerating, but not by much. In a world war, this would be removed, but it would still take a couple of years to make up for all this, especially since I suspect our leaders will be slow to recognize what's likely to happen.

Conservatives have been complaining about this for as long as I can remember. What I find interesting is that some liberals are starting to agree. We have California's train to nowhere, Biden's effort to build electric vehicle charging stations that cost billions, with only a literal handful of stations. A multi-billion dollar project to provide high-speed internet to rural areas didn't connect a single home. I suspect it's gotten so egregious that even some liberals are appalled.