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A quiet week, markets and rates unchanged. There’s a lot going on in the world, but oddly self-canceling or unresolved.

So, a small rumination here.

I was born in 1949 into a family deeply interested in public policy. Not all that unusual for a bunch of Okies who had recently survived the Dust Bowl, the Great Depression, and the “big war” -- and who were a collection of western settlers and land rush characters from North and South, the Civil War fresh in family histories.

Listening to them in the 1950s, watching news reels of the big war, coming to awareness at the zenith of American power and unprecedented achievement as world-pacifier and ethical standard-bearer... why, I took it hook, line and sinker. Mankind had moved to a higher plane. Winston’s “broad, sunlit upland.”

That youthful exultation and expectation held together pretty well through civil rights acts (and strife), a more broad safety net (a tad too expensive), losing Vietnam but winning the Cold War, and the great burst of IT creativity.

Then, the years since 2000. From a balanced budget to unsustainable finances. From political disagreements settled in orderly fashion, now unable to speak to each other.

What is possible? Really? We should not spend time mourning or trying to recreate that incredible period 1945-2000, but what are we going to do to live with each other? Some want no government, others nothing but. Where are the wise people who want and expect good government?

Look elsewhere. A couple of weeks ago I mentioned schadenfreude, that wonderful German word for enjoying someone else’s misery, and I don’t mean that, either. Look outside at other nations and cultures to ask what is possible. With good humor, to escape the current American trap of dug-in absolutes, perhaps to remind us of the possibilities of compromise.

China. Haven’t been there, don’t speak Mandarin, but there is a new ocean of English language reporting on China politics and economy.

In July a bad fight erupted in the open. Xi Jinping (studied in the US, spent most of a year living in Iowa) intensified China’s effort to deleverage, dramatically to slow China’s reliance on debt for growth. To the surprise of few, China’s economy is slowing. Xi’s cabinet “requested” more infrastructure spending by the Finance Ministry, which is trying to tidy its own ship by raising taxes and cutting the federal deficit, which it has. The Ministry said that instead of more spending the People’s Bank of China (PBOC) should expand monetary ease.

The Research Director of the People’s Bank of China, Xu Zhong in public on July 13 said that the Ministry was “acting indecently,” and violating the command for a “proactive fiscal policy.” Caixin, the English-language service reported on the occasion under the headline, “Jostling Eunuchs.” The story said that Xu holds a Ph.D., but not where he got it and google is silent on his education. An e-mail to the reporter bounced instantly, “rejecting banned content.” The PBOC has a new chair, Yi Gang (for a time a tenured professor at Indiana) replacing long-time genius and reformer Zhou Xiaochuan (U Cal), chair 2002-2018 and things apparently a little touchy now.

One week after Xu’s blast, in Caixin under a pseudonym came return fire from the Finance Ministry. Deleveraging is not going well because the PBOC has failed to supervise lenders, and in its resistance to monetary stimulus, “officials act as if they were managing a small country’s central bank.”

Between the PBOC and the Ministry lie the “SOEs” -- state-owned enterprises, anti-productive relics of revolution, rice bowl of unemployable Party functionaries, and home to much of China’s industrial overcapacity and pollution. The PBOC says the Ministry has provided insufficient support (stimulus) to the SOEs. Reformers suggest closing the SOEs, to which another official replied, “But then how can we be a socialist nation?”

Wang Huning, the Party’s chief ideologue (U of Iowa and Berkeley) issued propaganda making trade negotiations worse. Liu He, vice-premier (Harvard JFK School) now handles negotiations.

As alien as China’s culture and politics may seem... all of the above feels mighty familiar. Maybe they should have stayed away from US universities. (Xi Jinping’s daughter went to Harvard under an assumed name.)

I’m going to reduce my expectations from childhood, but not too far.

10-year T-note, snoring along:

2-year T-note may be forecasting a Fed stop next spring, two or three hikes to go, not six:

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