R.I.P. David Broder, China Property Bubble, Ron Paul on Libyan No-Flight Zone, and Bernanke Schooled

 David Broder, famed columnist of the Washington Post and Pulitzer Prize recipient, died today.  While Broder may have been even in his criticism for Democrats and Republicans alike, he was sympathetic for big government from what I have read from him over the years.  Perhaps this is why he is second to George Will in number of media circulation he appears in.  Though good, Broder was no Will in articulateness.

Both Margus Berkstrom and Mish have great articles/blog posts out today on China's looming property bubble.  Berkstrom's Mises Daily lays out how and why China is financing (printing) this unsustainable boom:

This absurd demand is in turn enabled by the aforementioned credit expansion. Officially, Chinese M2 grew by 58 percent between November 2008 and December 2010, while total bank lending (including informal lending) is said to have doubled in 2009 compared to 2008.

Monetary Aggregates for China (measured in 100 million Yuan)
Source: The People's Bank of China (Central Bank of China)

 A contributing factor to the real-estate mania is that, to most Chinese, real estate is the most lucrative and (seemingly) the safest investment option available compared to the alternatives; bank deposit rates are below CPI inflation, domestic stocks and other equity have performed poorly in recent years (to say the least), and capital controls still prevent citizens from investing overseas.

I am a little skeptical on using The People's Bank of China as a source, but Berkstrom's article is great.  Mish's Bloodstained Property Map and Trampled Rights; China's Population: 1.3 Billion; Construction Underway: 43 Billion Square Feet is a lot more morbid:

In the past couple of years, there has been an epidemic of violent confrontations over forced demolitions as the urbanisation drive that has accelerated in the past decade has spread away from the coast, boosted by the massive stimulus programme that began in late 2008. The demolitions are behind as many as 65 per cent of large protests in rural areas, according to research by the Chinese Academy of Social Sciences.

In January, a 38-year-old woman was killed by a digger in Henan province, north-central China, as she protested against a construction project. In November, a man in the north-east set himself on fire during a stand-off with a demolition crew. One citizen has set up a website called Bloodstained Property Map to chart the incidents. It uses Google maps to mark violent evictions, and provides background information and media links. So far, there are nearly 200 incidents on the map, with regular additions.

“When I say that new housing is being built right now on land covered in blood, people know what I mean,” the site’s founder, who prefers to remain nameless, told Chinese media last year. “Media coverage can gradually fade out, so we need a new way to constrain the problem.



The danger posed by urban development is not only the creation of a property bubble but also of widespread political conflict.

China has been raising interest rates recently but I don't think it will be able to do it fast enough to cushion the crash landing.  But who knows, Jim Rogers may be right and maybe it will all work out on the backs of those who protest their own government.  See both posts to read about the infamous ghost cities.

Need some sanity on the idiotic proposal from both Democrats and Republicans to establish a no-flight zone over Libya?  Ron Paul lays it out with Neil Cavuto:

Why is this so hard to understand for those idiots in Congress who act like cutting some $60 billion from a $1.5 trillion budget is either a huge spending cut or destroys the country?  Congrats to Robert Wenzel for getting named though!

If you wanna watch another great video check out Senator Kirk giving the Bernank a history lesson:

Oh what oh what would the country be without a trillion dollar deficit!!??

Did You Know that the world's largest bond trust, Pimco's Total Return Fund, has dropped all of its U.S. government related securities.  This means Treasuries too.  See the below charts:

Also, if you want to see why the U.S. health care system is not free market in any sense, see Kel Kelly's awesome Mises Daily.  The best part is easily his description of the American Medical Association:

To start with, the American Medical Association (AMA) has had a government-granted monopoly on the healthcare system for over 100 years. It has intentionally restricted the number of doctors allowed to practice medicine so as to raise physician incomes artificially. The primary way it does this is by using the coercive power of the state to restrict the number of approved medical schools in operation. After the AMA created its Council on Medical Education in 1904, state medical boards complied with the AMA's recommendation to close down medical schools.

Within three years, 25 schools had been shut down, and the number of students at remaining schools was reduced by 50 percent. After three more years, 10 more schools were closed. Since that time, the US population has increased by 284 percent, while the number of medical schools has declined by 26 percent to 123. In 1996, the peak year for applications, only 16,500 candidates were accepted out of 47,000. While high rejection rates can be common in many schools, applicants to medical schools are usually among the brightest and highest-quality students and have put themselves through a very costly admissions process.