To start this episode, Jason Hartman shares an article from Newser about Saudi Arabia buying up US Farmlands and another article from Business Insider about rental prices in 10 major US cities. In the interview segment, he talks to Dr. Peter Navarro, author of the Crouching Tiger book. He explains that the book is designed to educate financial analysts about the geopolitical risks in Asia. The discussion also revolves around China’s economic failure and foreign policy as talking points for the presidential candidates.
Announcer 0:00
This show is produced by the Hartman media company. For more information and links to all our great podcasts, visit Hartman media.com.
Announcer 0:13
Welcome to the creating wealth show with Jason Hartman. You’re about to learn a new slant on investing some exciting techniques and fresh new approaches to the world’s most historically proven asset class that will enable you to create more wealth and freedom than you ever thought possible. Jason is a genuine self made multi millionaire who’s actually been there and done it. He’s a successful investor, lender, developer and entrepreneur who’s owned properties in 11 states had hundreds of tenants and been involved in 1000s of real estate transactions. This program will help you follow in Jason’s footsteps on the road to your financial independence day, you really can do it. And now here’s your host, Jason Hartman with the complete solution for real estate investors.
Jason Hartman 1:04
Welcome, welcome. Welcome. This is episode number 623 623. And this is your host, Jason Hartman. Thank you so much for joining me today, our guest will be Dr. Peter Navarro, talking about Crouching Tiger, about China and some of the stuff that’s going on there that is fascinating, and rather disconcerting. But you know, we go into everything with eyes wide open on this show, the good, the bad, and the ugly. So we will get into that here in a few minutes. And speaking of good, bad and ugly, I’m not sure which way you’ll view this next one. But you know, the Middle East is an interesting place, as we all know. And we are going there soon to Dubai, with our venture Alliance mastermind group, if you’d like to join us and a few more of you have and thank you, by the way, listeners from Dubai, or from Abu Dhabi as well for reaching out to us now that is so nice of you to offer to help with our trip. And, you know, come hang out with us and just make it an extra special event where we get some guidance from local people. So we very much appreciate that. Thank you so much. We look forward to meeting you in Dubai and Abu Dhabi as well. So we really, really appreciate that. That’s just super awesome. It’s really great to be able to talk to people in 164 countries worldwide. We absolutely love it. But yeah, if you want to join us in Dubai go to venture Alliance mastermind.com venture Alliance mastermind.com, where we do something four times a year, called the Add venture Alliance, and we do some adventures. So some interesting stuff there. But speaking of the Middle East, Saudi Arabia, me as Saudi Arabia, oil prices are obviously crashing. I mean, it is mind boggling. Do you know that gasoline went under under $1 per gallon in parts of the US last weekend? Yep, it did. In fact, I heard that in. Someone told me this. By the way, I did not verify this. So I’m just gonna make that disclaimer. But someone told me today that in Montana, gasoline went to 47 cents a gallon. Now, either that was just a loss leader to get some publicity. If that’s true, that’s just mind boggling. I mean, that’s shocking. Yeah, things they are changing. And you know what’s interesting, when you think of, you know, you’ve heard me talk before about the concept of a false flag. You’ve heard me talk before about the concept of the, you know, these conspiratorial things that we do entertain on occasion here, some of these conspiracy theories about how things are engineered, from a top level, you know, the way a good chess player, like our new venture Alliance member, Mike plays chess, you know, you don’t play chess, one move ahead, or two moves ahead, hopefully, you play it several moves ahead. And it becomes incredibly complex, because there are so many different possible combinations. And that’s why it was amazing that a computer could be the world’s chess champion, right? That’s Watson, and also Jeopardy and soon to be your doctor and your songwriter, and you’re a composer of symphonies and, and your composer of EDM music. You know, it’s, it’s amazing, which, by the way, leads me to another small tangent here, one of my experiences in having my, quote, college experience, unquote, when I lived in Arizona for a few years, you know, one of the things I learned about you know, in, in meeting all these very young people, I learned about a lot of new music, right, that stuff that I probably never would have paid much attention to. I mean, I heard it, I was familiar with it, but probably didn’t pay much attention to it. And I gotta tell you, some of this electronic music that I had first scoffed at and said, well, that’s not real music. They’re not playing instruments. They’re just designing things on a computer. But you know, some of it is really quite good. I mean, Take, for example of Vici. I think a Vici is like this brilliant composer, who, you know, could be like, you know, the Beethoven or the Mozart of our era, you know, I mean, I don’t know, maybe I’m nuts for saying that, but I’m probably not nevermind, discount everything I say, except when it comes to the economy and investing.
Jason Hartman 5:35
Okay. But anyway, yeah, there’s some really amazing music designed by computers nowadays, but but it’s not designed by computers yet. It’s designed on computers, I should say, but common right around the corner. Artificial Intelligence, and computer algorithms are starting to design music. And you know, there’s, it’s formulaic like anything like the plot to a movie. I mean, there’s a company called narrative science that basically has software with algorithms and I don’t know if it’s actually artificial intelligence because that’s a different distinction that writes articles and you know, can write articles in English, you know, real regular English, probably better than most people do it nowadays. It does it shock you as much as it does. Is it does I that, you know, you look at social media, I mean, the way people have just bastardize the language. And it doesn’t mean just English. I’m sure this isn’t every language around the world. I mean, things have become so casual people so uneducated, I mean, it blows my mind that people with college degrees can’t compose three sentences. Does it blow your mind as much as it does mine or her that they’re so freaking lazy? They can’t push the shift key on their keyboard to capitalize things. Or they can’t tell the difference between why Oh, you are and why oh, you apostrophe r e. I mean, seriously, really? This is amazing. It’s amazing. It’s amazing. But whatever. It’s an amazing time to be alive. Right? What was I saying? The Middle East Saudi Arabia. Well guess what is happening now. We have a new big real estate investor on the scene. and Saudi Arabia. This is an article in Newser by Rob Quinn, just the other day, Saudi Arabia is snapping up us farmland. See the folks in the Middle East? They’re pretty smart. You know, they are they are realizing that oil is not a long term business. Probably one of the big reasons they created Dubai, this amazing place that is a tourist Mecca, and it’s a business Mecca. And you know, I mean, they are diversifying there. They see that coming, they see alternative energy coming, they see. And who knows if that’ll really come very soon. I don’t know if it’s going to be solar, which by the way, I have another bone to pick as a Tesla owner. So, you know, my friend, Elon Musk. I mean, he’s not really my friend. I guess he’s much my friend is all the people on Facebook are. Oh, you know, friend has a new definition nowadays, of course. But anyway, our friend, Elon Musk, a great CEO, by the way, I’m a huge fan.
Jason Hartman 8:29
You know, I don’t know about his electric car deal, right? So I’ve got my Tesla. And you know, it’s pretty amazing and a lot of ways which by the way, remind me folks to tell you about the last software update to the Tesla. mind boggling. Well, why don’t I just tell you now, the car will you can summon the car now. And Ilan musk says that within a couple of years. By 2018. He says you could be in Los Angeles and your car could be in New York, and you could summon your car, and it will drive across country stopping at charging stations to charge itself without any buddy in the car to charge yourself along the way and it will come pick you up in Los Angeles. It’s an amazing time to be alive. The self driving car revolution is right upon us. And you know what I say about that is real. estate’s always been about three primary rules, location, location, location. Watch out high end real estate, because you have a big competitor and your competitor is the autonomous vehicle. It’s the autonomous vehicle because you may not need to live in that swanky high end area anymore. times they are changing as was that Bob Dylan that said that right. So Saudi Arabia is snapping up us farmland in southwestern states, including Arizona and California. The Saudis are making hay while the sun shines, and local farmers aren’t happy about it. Last week, a Saudi company bought 17 190 acres of farm farmland in Blythe, California, the Saudi Gazette. Wow, it’s a very Americanized name for a newspaper, The Saudi Gazette reports, adding that the amount of farmland bought by Saudi investors to grow alfalfa hay on and save water in their homeland. Okay, see, they’re basically outsourcing, right? Because they don’t want to use the water, the precious water they have in the desert, right? So the farmers are upset, because, you know, they say, as the article goes on that, you know, the water is not free, and they’re not getting oil for free. So, you know, here’s the big battle. But, you know, this is foreign direct investment. And this is, overall, I think, a good thing, because what happens is the same thing that happened with Japan, in the late 80s, you know, there was this incredible xenophobia going on, where everybody in the EU, not everybody, it’s a figure of speech, calm down, okay. But a lot of people in the US were really concerned about the Japanese, they were buying up movie studios, they were buying up land, they bought Rockefeller Center, trophy properties all over the country. And guess what they did, it was actually quite a good deal for the folks in the good old USA. They basically took the money that we sent them for their exports that we were importing, right? So we got the benefit of their high quality, inexpensive stuff, huh, Toyota, okay, namely, and we got all that. And we got the lifestyle benefits of that, with the money that we printed and well created in a real economy and also printed out of thin air, fiat money. And then they spent it back here to buy up our real estate, our movie studios and other companies. Okay. And then what they did is they paid property taxes for several years on the property. And the property declined in value. And then they sold it back. So that was actually a pretty good deal for the good old US of A Okay. Now, I don’t know if that’ll happen with the Saudis buying up the US farmland, but it is interesting, nonetheless. Some interesting stuff going on there to be sure. So another interesting article is from Business Insider, and it says, here’s what you can expect to pay for a rental in 10 major US cities. Now, because our listeners are brilliant, and most of the world just does not get it. I didn’t say they were dumb. I just said they don’t get it. They’re low information people. They don’t really understand the theory of relativity as an apply as it applies to economics and real estate.
Okay, so this article is actually from US News and World Report, but published in Business Insider, and it says, you know, most bang for your buck. Okay, now you tell me if this is true, I’m just going to share with you the two bedroom rental rates, okay. Okay, so it says moving to a new city, but not sure what you’ll find in your price range. Here’s the average rents for one and two bedroom apartments, average square footage, and the top five most common amenities in 10 major US cities based on rent.com data. Now, the first thing you should know is that I have a feeling these are pretty swanky places, they’re probably high end Class A apartment complexes, I can just tell by the rental rates. But if you compare them and we’re going to have to take some guesses here to compare them properly, to what it would cost to buy that apartment if it were a condo. You tell me where the good deals are. Now, here’s, here’s how I’m, I want you to understand this, by the way. You know, people will say well, gee, you know, it’s so expensive to rent in Los Angeles. And here they have the two bedroom at 30 $188 per month for 11 142 square feet versus Houston at 24 $127 a month for 11 185 square feet. But what you do Okay, so I’m just going to list off some of these markets real quickly. I’m only going to look at the two bedroom price. Atlanta 1700 I’m even going to round off to make it faster. Atlanta, Georgia, one of our markets 1700 bucks for two bedroom. Boston 30 $700 Chicago 30 $300 Houston 25 or 20 $400 rounding Los Angeles 30 $200. Miami 20 $400. Minneapolis $2,000, New York City 30 $900 Philadelphia 20 $500 in Seattle, 20 $500. Okay, but what can you Tell from that. listeners, you know this, think about it. Think about it, you know the answer here. Here’s what you can tell, you can tell that renting in Houston. Okay, so there are, let’s see, out of these markets, there are three markets that we do business in. That would be Atlanta, Houston, Chicago. Okay. But really, you have to throw out unfortunately have to throw out Chicago, because when they’re doing the survey, I’m sure they’re talking about the the more urban core area of Chicago, you know, that’s really expensive, like New York City would be okay. They’re not talking about the suburban areas that we recommend. Okay. So really only two of these markets, Atlanta, and Houston. Alright. And Houston yellow light warning, oil prices. I’m concerned. So we stopped recommending Houston A long time ago. But if you have a property there and it’s stabilized, fine and dandy, keep your Houston property. I’ve got Houston property. And you know, I’m not doing anything at the moment. Okay. But whatever.
So, here’s what you can tell, you can tell that it is not a very good deal to be a renter in Atlanta or Houston. Yet, it’s probably a pretty darn good deal to be a renter in Boston, Chicago in the core area, okay of Chicago. That’s expensive. The expensive area in Los Angeles, my hometown, Miami, good deal, Minneapolis. Now that’s a market that’s a more linear market. We’ve not done business in Minneapolis, we’re not too interested in it, frankly, you know, that’s like a linear market. It’s not one of the high flying markets. And I think it’s probably a pretty bad deal to be a renter there. Okay, just like it is in Atlanta and Houston in this example, because the rent to value ratio is not in favor of the renter. But New York City, probably a great deal to be a renter. I mean, you can rent for 30 $900 on this survey, a 1200 square foot place in New York City with a doorman, a gym, a dishwasher, whoo. That’s an amenities, hardwood floors. And what is this? Oh, and on site laundry, okay, that property is probably going to cost you 1,000,005 in New York City, if not more, actually. So you see how they just don’t get it? How these, if people casually read this stuff, they would think, well, if I’m going to be an investor, I should invest in Boston or Los Angeles or New York City because their rents are higher, though, you know, they just don’t get it. You’re gonna pay so much more for the property. It’s just idiotic. Anyway, you know, we’ve discussed that so much ad nauseum that I think our listeners get it now. Jason? Yes, they probably do. Okay, there’s a bunch of other stuff I want to talk to you about, of course, but once again, this intro is going long, we’re not going to do that.
Be sure you check out our meet the masters of income property home study course, it’s pretty awesome. By the way, all professionally produced, and really well outlined its video and audio content. And that’s it, Hartman, h AR, t ma n education.com. That’s Hartman education.com. Check that course out, I think you’ll really like it. And you can get all of that meet the Masters content, at your leisure, on your device, on your computer, at your desk, whatever, you can put it up on your Apple TV or your what’s the other one Roku that you guys use? Yeah, the other one, you know, Roku, I don’t think you can do that on Amazon. But you can put the screen up there and watch it there. You know, and your easy chair, whatever, curl up with some popcorn, and learn, learn learn the shortest distance between where you are, and where you want to be is education. And don’t pay a lot for that education. It is not expensive nowadays. Our products are inexpensive. You don’t have to join some, you know, $50,000 coaching program to get this education. Okay, it’s out there, and it’s really reasonably priced.
Alright, let’s jump over to Dr. Peter Navarro. Let’s talk about China, and how it impacts the geopolitical situation, the global economy, and so forth. And we got a bunch of great shows coming up for you, by the way, a bunch of good stuff. So let’s go to our guest.
It’s my pleasure to welcome Dr. Peter Navarro. He’s a professor of economics and Public Policy at UC Irvine. And he’s author of Crouching Tiger what China’s militarism means for the world. Peter, welcome. How are you?
Dr. Peter Navarro 19:45
Doing great, my friend. How are you today?
Jason Hartman 19:47
Doing well. Thanks. And you’re coming to us from Laguna Beach, California. Right?
Dr. Peter Navarro 19:51
I am indeed and from my porch here in Laguna, I can see Chinese container ships going into Long Beach taking all these holiday toys in. And then 20 miles down the road and Camp Pendleton. We’ve got US Marines training the Japanese defense forces on a Chinese possible invasion of the sea Kaku islands in the East China Sea. And then of course down in San Diego, which you’re familiar with. We’ve got Aircraft Carrier Strike groups leaving from San Diego to confront Chinese warships in the South China Sea. So what is wrong with that picture, please?
Jason Hartman 20:33
Well, there’s a lot wrong with that picture. But Peter, I got to ask you just as a, an overall backdrop for this discussion. Why would China ever want to hurt its best customer? The US? I mean, won’t won’t, won’t trade keep us safe? Won’t capitalism keep us safe?
Dr. Peter Navarro 20:50
Yeah, therein lies the tale of the Crouching Tiger book because the book is actually written as what I call a geopolitical detective story. And, and it asks precisely that question, will there be war with China? Why would China want to engage in conflict with its largest trading partner and with a country America that over the last 30 years has helped provide China with 10% annual GDP growth? and need the answer goes back to probably Imperial Japan, and the whole notion of China in Asia wanting to control their markets and resources there. And over time, the US has begun to get in its way if you look very carefully about what China is doing militarily, and what it is actually saying. It’s it’s acting much like Vladimir Putin is and you Eastern Europe, in the Baltics, and in the Ukraine, that is, Putin is asserting historical base claim to those territories and using his military and cyber attacks, to advance those claims that’s led to economic sanctions and conflict in that region of the world with America. In Asia, Xi Jinping, the new president of China is doing exactly the same thing. Xi Jinping claims, this incoco Islands controlled by Japan for over 100 years, China claims 80%, my friend of the South China Sea, which is one third of all global shipping and a key strategic sea line of communication. China also, of course, claims the renegade province, that’s what it calls it, of Taiwan. That’s a democracy of over 20 million people. It even claims a Wounded Child per day Pradesh, which is a state a complete state in India. And China refers to it as Southern Tibet. So why would it want conflict with us? It doesn’t want conflict, but it is prepared to advance its territorial claims and hopes, ultimately, that if it builds a military big enough and strong enough, the US will simply go away.
Jason Hartman 23:08
That is a mind-boggling ambition. I mean, the US is the largest economy in the world, the largest military power in the world. It’s got a great piece of geography, obviously, from a military from a geopolitical and military perspective. And it is China’s biggest customer. I mean, if the US was to wither away or be destroyed, the Chinese economy would be in shambles. I mean, it that that’s just that’s an impossible idea to me.
Dr. Peter Navarro 23:38
I think, I think that’s rearview mirror thinking. And I think it reflects the kind of the arrogance and hubris of this country in a way and let’s let’s think that through. If you look at China itself, for 5000 years, essentially was the most powerful economy and nation in the world. And it has dreams of restoring that now. Yes, we have been the most powerful military in the world. It was our military that vanquished Kaiser Germany in World War One, Nazi Germany and Imperial Japan in World War Two. And the Soviet Union broke up because of Ronald Reagan and the power of arm American military to essentially bankrupt the Soviet Soviets. And so yeah, we have a track record there. But let’s let’s think about what we’ve done in the last 15 years. As China’s entered our markets, we basically shut down over 70,000 factories, we’ve got over 10 million people unemployed here, our GDP growth rate has shrunk from an historical level of three and a half percent, down to below 2%. And all of that come at China’s expense at the Americans expense in which China Basically pushing that now, in contrast, China has become the world’s factory floor. They’re the ones that have the ability to turn out the weapon systems even as we stopped building things like the F 22. And at the Pentagon, you walk into the Pentagon and you say you, will China ever be as powerful as the United States militarily? And everyone in that building will say, yes. And it’s not a question of if it’s just a matter of when 2020 2030 2050? Who knows. And so, from China’s point of view, Asia is 70% of the future growth of the world. Would you rather control lattes or rely on a Feeding America for your fortunes? I mean, I think that’s the way to look at this.
Jason Hartman 25:53
Right. Right. Well, and I, you know, I totally understand the Empire, hubris perspective of America. And I felt that all the time, you know, it’s kind of a bully pulpit, for sure. But, you know, I mean, I think a lot of it boils down to the fact that the US can really play financial games, since it has the reserve currency, at least for now. And I think it has the, the economy, the military, and, frankly, the brand name to maintain that reserve currency status for a long, long time. Many people would disagree with me, of course, mathematically, I don’t think it does. But with those other factors, I think it it really does. We’re basically playing the game of, you know, financial repression, and the sort of the smoke and mirrors Financial Innovation game that wall street plays, you know, we’re doing that on a global scale as the US is because because of that reserve currency status, I think it really all boils down to that, you know, we can export in inflation to other countries. You know, you can certainly see why, you know, some of the world doesn’t, doesn’t like the US too well.
Dr. Peter Navarro 27:01
Well, I mean, I love your show, called creating wealth, it’s like, it’s about people trying to figure out what to do with their money. And then one of the functions of the Crouching Tiger book is basically to educate financial analysts, investment portfolio managers, bond market managers about the geopolitical risk in Asia that’s growing. And, you know, the Crouching Tiger book again, it’s a it’s a detective story, it asked you either to figure this out, you start with the one of China’s intentions, do they have really peaceful intentions and only want to defend themselves without military? Or are they going to try to seize the Senkaku Islands from Japan? Or take Taiwan? Or take more of the Spratly Islands from the Philippines and Vietnam? You see, Jason, if the answer to that question is yes, if they have bad intentions, then as a financial analyst, or Portfolio Manager, you’ve got to ask the question, what happens if shots are fired? And what you have to remember, in 2012? over 100 cities in China, there were anti Japanese riots, factories were burned, cars overturned giant Japanese citizens assaulted. And that’s just one data point. I mean, imagine if there are shots fired between Japan and China over those islands, and America comes to the defense. I mean, those are the kinds of things that investors need to be prepared for these things can happen.
Jason Hartman 28:33
Yeah, they certainly can. So I mean, would we have to defend Japan? And and get involved with that? I mean, you know, can the US just sort of stay out of this business? I mean, that that conflict isn’t directed at us, but maybe it is, you know, by proxy?
Dr. Peter Navarro 28:51
That’s a great question, Jason. It’s asked, really against the backdrop of an America which is totally tired award fatigue. I mean, since 2001, we went off the deep end in the Middle East with wars in Afghanistan and Iraq, we spent literally trillions of dollars of our treasure dealing with that last thing people want to do is get involved in more conflict in Asia. And so the Neo a isolationist argument, it’s like, yeah, just let’s just pull back to Hawaii, and be done with it. That’s very attractive. But I mean, in the Crouching Tiger, look, I kind of work through that. And there’s some considerations. I mean, if we have the longest running defense treaty with Japan, in any in history, and we have pledged, they have their back and we reaffirm that but jewelry Clinton is a firm that Barack Obama has affirmed it. So if China attacks Japan, we have said we will come to their defense. Now. Let’s suppose Japan attacks Japan, and we don’t do that. Right. So then what happens well is faced with a choice of either giving in to China and then bandwagoning. And abandoning us may be entering into some kind of economic condominium with China, which would have helped exclude us from the region in terms of trade and economics. That’s not good or, more likely, Japan would, within months have its own nuclear weapons to defend itself, because there’s any country in the world that has the technological ability to produce nuclear weapons. It’s Japan, they have had for many, many years, the civilian nuclear reactor program to generate electricity, then generated mountains and mountains official material. So you want that you want a more nuclear? Asia? So you know, that mitigates that. And then, you know, if you abandon Japan, and what is South Korea do? What is Taiwan do? And then all of a sudden, 70% of the world’s economic growth in Asia looks more like it’s going to be controlled by China, rather than open to us. So yeah, let’s go back to why and forget about it. I don’t know. That’s a tough one.
Jason Hartman 31:10
Yeah. Yeah. No, that’s it’s always a tough issue. And, and you know, God forbid, you didn’t even mention North Korea, we got the problems just mount.
Dr. Peter Navarro 31:20
It’s funny you said that. Because that’s another reason. Why are we in Asia, we have 300,000 troops there. And why are we here? We’re there. Because back in 1941, Japan, bombed Pearl Harbor and expose the fact to America that, you know, the Pacific is not a barrier. Basically, they’re attacking us. And so if North Korea and here’s the point, Jason, could you mess around North Korea, with North Korea launches one of its kn o eight missiles that China provided it. And that missile has a nuclear bomb on it, with the technology that China provided North Korea. And if that weapon starts heading toward Seattle, San Francisco or La Jolla, right, one of the things that’s going to save us are the tracking stations in Australia, Japan, South Korea, and the Philippines to help us track that missile and neutralize it before it reaches American soil. So that’s another reason to be forward deployed in Asia,
Jason Hartman 32:23
So what so what should we do? What is the best strategy overall for the US?
Dr. Peter Navarro 32:28
Well, for for people listening to this show, who are worried about their desert portfolios, the first thing they need to do is like, learn about the region learn about the risk involved. And don’t get caught by surprise. From a policy point of view, what we need to do is we need to have a presidential election for change. That’s about foreign policy and economics rather than a bunch of wedge issues. And I’m trying my best, and I hope your listeners will try their best to bring to the attention the to the presidential candidates, these kinds of issues. That why are there questions about China, during the presidential debates, it’s virtually ignored, that I believe this is the longest long term economic and strategic threat to us as to what we should do. This gets back to a Chinese doctrine called comprehensive national power. And the idea that a nation strength is not just for how many weapons it has in its arsenal, but rather, how strong its economy and manufacturing base is. So we can generate the tax base to pay for the weapons and have the factory floor to produce the weapons, China’s beating us on those things. And in order, of course, to have a strong economic base, you have to have a strong education system, you have to have a strong business climate, in order to generate innovation and new technologies. And on top of all this, you have to have a stable, functioning political system, which can provide businesses and society with the roads and bridges and infrastructure it needs in order to have a strong economy and it’s all so warm together. And I guess my point here, you ask me what you can do. I mean, there’s no magic bullet, there’s a there’s like 1000 bullets we need to shoot. And it’s about having a president in the White House, who recognizes the totality of what we need to do across all these fronts. So these presidential candidates, whether it’s Donald Trump, or Hillary Clinton, or everybody in between, they need to be saying not just that we need more weapons, or that we need more jobs. It’s that we need a system here in this country to work against we become the preeminent economic power in the world like we used to be.
Jason Hartman 34:51
Talk to us for a moment if you would, since we’re so Asia-focused in this talk about Japan and the Japanese debt crisis. Does that come into play here? I mean, Japan is uh, wow. You know, I had a guy in my show that’s talking about, you know, shorting Japanese debt, and how that’s a winning trade. Maybe you know, but who’d I think I’ll probably just get a bailout or something of some sort, you know, Japan’s and a lot of trouble.
Dr. Peter Navarro 35:18
Well, look, let’s let’s let’s look at Japan geographically, right? It’s an island nation with virtually no natural resources. And if you think about America, what are the two biggest drivers here in America for economic growth? It’s like housing, and automobiles, right? If you look at Japan, they don’t have any land to speak of, they have any ality boom, so that’s not driving their economy. And they don’t have a lot of roads or highways, and a lot of cars because you just can’t operate a car cheaply in that country, and there’s just not a lot of place to go. So. So what is Japan do? Well, historically, it’s basically run its growth by exploiting and using a lot of foreign labor to do that. Well, that that shows over that show’s been over for probably close to 20 years. And that’s why it’s been 20 years, Japan’s been in the toilet as an economy. So yeah, I wouldn’t be betting anytime soon on a resurgent Japanese economy. But although on the other hand, I’d be buying Japanese defense stocks, because what little money they have is going to be put in there. China, in the meantime, is just just choking them, just overwhelming them economically. And at the same time making Japan essentially a colony by making Japan dependent on the China trade for its prosperity. So they’re between a rock and a hard place. You know, economically, they’re tied to China, strategically, they’re tied to us. China has tremendous pressure with Japan. I don’t know what’s going to happen, but it scares me because that’s a proud nation, Jason. And when push comes to shove, they’d rather go to war and get on their knees.
Jason Hartman 37:13
Yeah, yeah. What about India? You know, when we talk about the the elephant in the dragon, as it were, were if at all do they play into this?
Dr. Peter Navarro 37:20
Oh, hideous, fascinating. I’ve got a whole chapter in Crouching Tiger on top of the Indian China connection, there was a famous saying the chapter is called Hindi Chinny by by and that’s for your Indian listeners here. He was saying that may we’ve said the mile back in the day in the 50s, about our Chinese and Indians are brothers. And within a two years two mile, stabbed, they were in the back, stole a bunch of territory. And by 1961, I think it was 62. We had China invading India and defeating it in its most humiliating defeat in history. Right now, on the Tibetan Plateau, China is massing a very large missile and Air Force, which could easily range New Delhi and India’s extremely concerned at the same time, China’s sending its aircraft carrier, and submarines into the Indian Ocean for the first time to the Strait of Malacca. So there’s rising military conflict between the two countries. At the same time, China’s ironically been doing the same damn thing to India that it does to us, which is to flood the country with the legally subsidized exports. And that kind of tells a lie, Jason, that it’s cheap labor rather than unfair trade practices that are at the heart of China’s competitive advantage, because many other countries has a lot of cheap labor in India. So India’s got got huge issues. The new guy, the renda Modi, who got elected is kind of cut from the same cloth is Ronald Reagan here in the US in a day, or Shinto lobby in Japan. They’re both strong men that are focused on economic growth. And both of those men got elected in the Modi in marinda, Modi and India and sugar ABI in Japan, both of them got elected on the strength of anti Chinese sentiment, because China has been gauged in territorial adventurism in both of those countries. So yeah, the future state I mean, I you listeners, I think, I mean, what I liked about the Crouching Tiger book is it’s written to gonna educate and inform and it’s kind of fun to read and if people don’t know whom to read Mobius as I’m talking to Shinto albia, as you’re well aware of Luna Chow pradesh is or how many ports there are in this in Taiwan that are susceptible to Chinese sea mines. They really need to learn about that stuff if they’re going to manage their investment portfolio as well, because it’s a it’s a global stock market bond market these days, and you can’t really create wealth. If you don’t know anything about the world.
Jason Hartman 40:25
Yeah, no, no question about that. You know, overall, Peter, I’d like to ask you, regardless of the militarism, you know, just in general, when it comes to China, would you say are you bearish or bullish on China? And then I want to give you my opinion, and maybe have you attack that or or agree with it, whatever you like?
Dr. Peter Navarro 40:47
Well, yeah, I’m I’m on record. Way back, as it was back in April on CNBC basically said, should no short get out of the market shorter. Don’t be going along the China market. And over time, I think that China is not a good place to invest, for a lot of reasons. And we could start with the demographics.
Jason Hartman 41:17
That’s exactly where I was going. Yeah.
Dr. Peter Navarro 41:19
Yeah. I mean, they’re getting the the phrase there. I wrote an earlier book, coming China wars about that economic relationship, and the phrase there was getting old before they’re getting rich, right. And so you see even Chinese manufacturers, offshoring now to places like Vietnam. So I think the Chinese economic miracle as we know, it, is over pending some major changes in Chinese policy, which are unlikely to occur. So there’s that there’s a labor issue, there’s an environmental issue. I mean, they’re literally choking to death, on their pollution. And by the way, at least some of that comes over on the Jetstream and descends on La Jolla in Los Angeles and goes in as far as Colorado. So that’s going to slow things down, we have a water crisis. And then on top of that, on top of all that, you got the Crouching Tiger theme, the rise of the Chinese military and their adventurism. So, you know, China’s China’s certainly not my favorite place to invest. I think that if you want to play China, if you want to play it like cyclically, and think there might be short term upturns in the Chinese economy, you’re much better off investing in Australia, and Brazil and Canada, which provided with a lot of its commodities, rather than Chinese stocks themselves, which are notoriously non transparent. So give me a counter view of that, because I’m happy to attack it. Tell me tell me Give me the bullish view?
Jason Hartman 42:58
No, I’m not gonna give you the bullish view. Because I’m a bear. I’m a china bear. I think I think China has huge problems. First of all, that government seems to me to be very insecure as to their concerns about civil unrest. I think they’ve got giant demographic problems that are really going to play out over the next 10 years. I can’t imagine the Chinese population, wanting their country spending money on war resources when they’ve got, you know, so so many economic problems that are only going to get worse, in my opinion. You know, this was I think this was a pretty short ride for China. Thankfully, they reverse their one child policy. But you know, it’s too late. I mean, they’ve got a giant demographic problem, they got too many men, not enough women, for the men, they don’t have enough young people to support the aging population, you know, the next 10 years or are going to be when this plays out. And boy wasting money on war is not going to be their best investment.
Dr. Peter Navarro 43:59
That’s going to. That’s why it’s going to be the most dangerous over the next 10 to 15 years because China, China’s
Jason Hartman 44:05
Yeah. You can exploit the discontent. No question. Yeah,
Dr. Peter Navarro 44:08
Yeah, they see a window which is going to close on them. And one of my favorite chapters in Crouching Tiger is is the wag the dog chapter, if you remember that movie, wag the dog.
Jason Hartman 44:20
Oh, yeah, that was a great movie.
Dr. Peter Navarro 44:22
For your listeners. The theme of that movie was simply when domestic politicians get into trouble with their own people. And there’s unrest, the tendency is to create a foreign enemy to distract the public, right. And so, so so in this case, my concern is that as the protests rise over the things you mentioned, whether it’s religious freedom or pollution, or the loss of jobs, the tendency is going to be To make Japan and the bill won, the US and Illinois I don’t know. But like one of the things that really just rips me off is that China, their public television, they will show nuclear bombs being launched from Mainland China in 18. Things like the Statue of Liberty, and they’ll show them right on their public television. Right. And then during the day, all of their soaps feature Japanese villains, I mean, if you just watch Chinese TV, all day long, all you want to do is kill a Japanese person at the end of the day. So my point is that these leaders in China, the Communist Party’s stoking this national model, as a way of mobilizing the public to support the regime. And this is only going to get worse as your resumes problems get worse, which you and I agree they’re going to get worse.
Jason Hartman 45:59
Yeah. Boy, it’s, it’s a messy world we’re in. Really, is. It is a messy, messy world. Well, Peter, thank you. This is a fascinating discussion, although I can’t say it’s too uplifting, but it’s necessary for sure.
Dr. Peter Navarro 46:15
Can I say one thing for your listeners, I got a great website. It’s Crouching Tiger dotnet, Crouching Tiger dotnet. And if you go there, what’s cool about it is that there’s a bunch of video clips, because this is not just a book, I did like a companion film to it. It’s a documentary film, it’s my second one that I’ve done on China. And if you go to that website, you can see a bunch of free clips of the experts because they actually interviewed 35 of the top experts in the world on this. And if he asked you to buy the book, off the website, I see a free copy of the film.
Jason Hartman 46:52
Very good stuff. So that’s Crouching Tiger dotnet and Dr. Peter Navarro, thank you so much for joining us today.
Dr. Peter Navarro 46:58
My pleasure. Take care, Jason.
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