What is Vietnam’s strategy for resisting Chinese coercion?
International media coverage of the confrontation between China and Vietnam over Beijing’s placement of a mega oil rig in waters claimed by Vietnam has dried up with the passage of time. But daily confrontations continue. The present situation is not a standoff but a determined effort by China to alter the status quo by pushing the Vietnamese Coast Guard and Fishery Surveillance Forces back beyond China’s self-proclaimed nine-dash line.
Vietnamese government sources express concern that China will move the oil rig closer to Vietnam than its original placement. They worry about where it will be placed because, these sources argue, neither China nor Vietnam knows precisely where the nine-dash line is located.
Media coverage of Chinese Coast Guard ships using water cannons to douse Vietnamese boats and Chinese ships ramming Vietnamese maritime enforcement vessels made for good visual news clips but fell far short of serious analysis. China is engaged in an unequal “war of attrition” with Vietnam. China’s tactics of ramming Vietnamese vessels two to four times lighter in weight is designed to damage them sufficiently to require repair.
Some Vietnamese analysts speculate that if the current rate of damage continues, Vietnam may not have enough vessels to confront China in the waters surrounding the rig.
DYI Comments: No doubt war is coming in South East Asia with China being the instigator flexing their new found economic and regional naval strength. A war with Vietnam is an attempt to scare the major players, Philippines, Japan and Australia into Chinese compliance. With the U.S. citizens so worn down from the two conflicts of Iraq and Afghanistan they may not have the stomach for a slug fest with China. Throw in the possibility of nuclear weapons it is difficult to see the U.S. having direct involvement.
DYI
It does not take much analysis to see that these bell ringers do not represent sustainable prosperity unfolding across the land. For example, around 1990 real median income was $56k per household and now, 25 years later, its just $51k—-meaning that main street living standards have plunged by about 9% during the last quarter century. But what has not dropped is the opportunity for Americans to drop shopping: square footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present.
This complete contradiction—declining real living standards and soaring investment in retail space—did not occur due to some embedded irrational impulse in America to speculate in real estate, or because capitalism has an inherent tendency to go off the deep-end. The fact that in equally “prosperous” Germany today there is only 12 square feet of retail space per capita is an obvious tip-off, and this is not a teutonic aberration. America’s prize-winning number of 47 square feet of retail space per capita is 3-8X higher than anywhere else in the developed world!
The answer is the relentless drive for yield among fixed income investors during a period when time and again the Fed intervened in financial markets to prevent the benchmark rate—that is, the 10 year treasury note—- from finding its natural economic price/yield in what was becoming a savings parched economy. Accordingly, there developed a massive tidal wave called “retail operating leases” that quenched this thirst for yield—helped along by accounting loopholes which allowed trillions of these operating leases to be kept off borrower balance sheets and which thrived on the illusion that the proliferating chains of new retail concepts served up by the Wall Street IPO machine were “national credit tenants” That is, these overnight sensations had such solid and sustainable “business models” as to imply blue chip credit status—meaning such attractive terms (10-15 years) and interest rate spreads over benchmark rates that retail occupancy costs were dirt cheap relative to the true long-run economics and risks.
DYI Comments: REIT's valuations are on top of the mountain; no matter which direction they go it is down hill. A broad sector of our economy that is over blown, add in internet sales brick and mortar retail outlet's will be in for a long decline. Note our sentiment indicator for REIT's.
Market Sentiment
Smart Money buys aggressively!
Capitulation
Despondency--Short Term Bonds
Max-Pessimism *Market Bottoms*MMF
Depression
Hope
Relief *Market returns to Mean*
Smart Money buys the Dips!
Optimism
Media Attention--Gold
Enthusiasm
Smart Money - Sells the Rallies!
Thrill
Greed
Delusional---Long Term Bonds
Max-Optimism *Market Tops*--REITs
Denial of Problem--U.S. Stocks
Anxiety
Fear
Desperation
Smart Money Buys Aggressively!
Capitulation
DYI
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