 think tech Hawaii. Civil engagement lives here. Good afternoon. Welcome to what's on your mind Hawaii. I'm your host, Tim Apachella. Our show is dedicated to what you have on your mind about news topics important to you and to your community. This week, we will discuss the $600 billion trade tariff against China. President Trump recently announced our guest is Damon Reyes, a successful realtor and in the past have operated his own company out of China and Malaysia. Damon shares his concerns about the impact a $600 billion tariff will have on the national economy, home interest rates and potential effects on the local real estate market. Our second interview is with Daniel, who is a volunteer at the homeless encampment at the Y&I small boat harbor. The camp is comprised of 200 to 300 homeless people and hasn't been placed on state lands for close to 10 years. Its leader, Twinkle Borges, or affectionately known as Auntie Twinkle, has been a guiding force to serve as a leader, a friend, a resident and to ensure the rules of the camps are followed. An informal government has been set up of other representatives and they're responsible for their section of the camp. No rules, the rules are simple. No motor vehicles, no loud noises, no stealing, dogs are to be locked up and the gates are locked by 9 p.m. Rules are strictly enforced and they seem to be working. The sign posted in the camp is clear, it states, anyone found in violation will be given one a verbal warning, two a written warning and three out, you have to go. No ambiguity there. Last month the public was invited to tour the camp to see how it operates. It's a model of residents taking care of one another, a place not only where physical healing takes place but also spiritual healing. As spending an afternoon there I was both impressed and convinced that it is a model that could serve as something that works in the state of Hawaii could replicate it in other areas of the island to address our growing homeless issues. Recently there were communications at a Waianae neighborhood board meeting that the camp would be shut down by the Department of Natural Land Resources and its residents would be swept out. Governor Igay decided to intercede on the matter. He sat down with Twinko and an agreement made to look at long range plans on where the camp could be relocated on other state lands was discussed. So for now it remains that the 250s, the 300 residents have a place they call home and a person they trust named Auntie Twinko. And now here are those interviews. This is Tim Apachella with Think Tech Hawaii and our show is What's on Your Mind Hawaii. I'm here today with David Reese and today's topic and what's on our mind is the $60 billion tariff announced recently from Donald Trump, specifically the tariff that's going to be against China. Damon, you've got a background in economics and also you have a master's in international business affairs, is that correct? Master's of Pacific international relations, yes. Okay, so you've worked professionally in Indonesia and Malaysia and things like that. And I did business in China all throughout Asia basically. And now I'm a realtor here in Hawaii. So recently the Dow Jones has fallen about 1,100 points in two days. Today dropped a 1.77% for the last five days where the Dow is down about 5.26%. As you know, companies that could be affected by this tariff would be Boeing. They're one of the Dow Jones. They're one of the 30 in the Dow Jones. And certainly some, you know, farming commodities and products like that. In your mind, what impact would this $60 billion tariff have not only from what we ship out but just on the economy generally? Yeah. Well, there's two parts of this. One part is the inflation factor. As you know, the US imports so many of its goods from China. Everything from apparel, footwear, appliances, everything that's most of everything being sold out of Costco, which is just down in the valley here. So what will happen there is that prices will go up. They'll not just buy a little, but they will go up by quite a bit. And what has kept the damper on our business cycle recently fluctuating, going so high and going so low like boom and bust is the fact that essentially we have exported our inflation in bust and boom times to China. Everything gets so manufactured. They're so inexpensively that it's really kept a lid on inflation and also services to some degree we farm those out to India. So basically inflation is going to go up. And we're not talking about a little bit. It could be go up as much as one and a half, two percent. What happens when inflation goes up in most business cycles is that the Fed starts turning up interest rates. So what we will see happening is the Fed turning up interest rates probably a little bit quicker than they had planned to. And inflation could be as high as let's say it's two percent right now. It could go up to as high as four percent. Let me jump in at that point because the Fed does use both fiscal and monetary policy to regulate interest rates and basically the flow of dollars in the economy. In addition to what products may have a trade war, we may have a tariff war on, also China has a substantial amount of our treasury debt. We have a $21 trillion national debt of which I think it's about 6.7 percent is funded by outside other countries. And the leading country that buys our treasuries, our notes, our bonds is China at $1.2 trillion. So if this really got ugly, if we did get into this tit for tat trade war, there's no saying that China could not start not renewing their treasuries as they mature and find other places to park their cash. And then that would mean that our treasury or the Fed would have to raise rates to attract other investors to buy all those treasuries. So not only is it inflation that can affect interest rates, but also how much debt is being renewed and rolled over by China. Exactly. And so what happens is, so the treasury, we have a mountain of treasury bills that are bought by both the United States and also China. China contributes to a lot of that. If they stop buying or stop renewing the buying of the treasury bills, the treasury bills would start to, the price of those treasury bills would start to go down. Now I know this sounds, it's hard, it's a little hard to grasp, but when treasury bills, the price of treasury bills goes down, it's inversely correlated to the interest rate or the yield. It's really called the yield. And so as treasuries go down, the prices go down, the yields go up. And so things like the 10-year treasury actually compete with 30-year mortgages. And so the reason for that is because average mortgages, even though they're 30 years, people keep them on average for 10 years when they sell their home and such like that. So those two things compete with each other. So when you see yields on the 10-year treasuries going up, mortgage interest rates will also go up. And so right now the median home price in Hawaii is about $800,000, which is three times the national average. And a lot of that is people have to get mortgages. They have to finance for those homes. So we're looking at two things and it's kind of the perfect storm. Like you mentioned, we'll have the yields on 10-year treasuries go up, which will cause 30-year mortgage rates to go up as well. And then on top of that, we also have the trade war with China, which causes inflation. Once inflation comes in, then there's more pressure from the Fed to actually increase those rates as well. So it'll be sort of like a double whammy. Well, let me ask you this because it was just in the paper yesterday, about 20% of all purchases are outside investors that are buying Anahu. That's give or take a percentage here and there. So if the dollar goes weaker, isn't that advantageous for outside investors that come in and buy here in Honolulu? Yes, absolutely if the dollar gets weaker. And the thing about the outside investors that are coming to Hawaiian buying property, they're not so much the medium price homes. They are mostly the luxury homes and luxury condos. A lot of what is getting bought in Kakaako, the new high-rise luxury condominiums, are bought by Japanese, just to give you quick numbers here. In 2016, it was the same for 2017, just about. There was about $1 billion worth of foreign outside of the U.S. investment of real estate and properties here in Hawaii. Of that billion, about 500, I think 575, almost 60% of that was bought by Japanese. A lot of people think it's the Chinese that are buying up, but it's very difficult for them to even get their money out of their country. So on the scale of things, yes, China is the number two purchaser of real estate here in Hawaii for foreigners, but Japanese purchase 15 times what the Chinese do. So if you were to add up the second place through 10th place of foreign buyers of real estate in Hawaii, they wouldn't even add up to what the Japanese do. So to my point, to my point, if trade war happens and the U.S. dollar goes down, the yen is actually inversely going to get stronger. And when that happens, basically for the Japanese, it's luxury real estate on sale for them. So this actually could be a buying bonanza for foreign investors coming into Honolulu and Oahu. So we're going to have a two, it's going to be a tale of two cities here. You'll have the median range homes, which will probably start falling in prices because the interest rates. And then you'll see on the luxury side, Japanese and foreigners with the week U.S. dollar coming in on going on a buying spree. Now this was all positioned originally as to help Middle America, specifically the Midwest and the steel production towns and how that jobs are going to come back to America and put employee Americans back to work. In fact, though, if there is a tariff war and a trade war, a lot of those things that Middle America produces, particularly farming products and soybeans and things of that nature, that actually can come back to haunt them. And because there is a higher tariff on those kind of products. That is absolutely true. And then the other thing where it's going to come back and hit us hard is at Costco, at Walmart, they employ so many people in here in Hawaii as well. There will be layoffs there and it will cause unemployment. I figure that if it turns out to be a full blown trade war that we're probably looking at recession mid 2019 and unemployment rates in general in the U.S. maybe as high as 10 percent. We haven't seen 10 percent in well over three or four years now since the rates came down significantly from that point. Also the impact though, let's say Middle America is shopping at Walmart because that's where the prices are that people are going to afford. Wouldn't a trade war also cause the cost of those items sold at Walmart because many of them are from China actually increased? So you have an inflationary factor from the products themselves at the store that Middle America buys from. Absolutely. And then it will be exacerbated by so many people being laid off and they won't even be able to buy those goods from China at the higher tariff prices. So do you think there's any coincidence of the recent change in personnel as far as who's going to be handling foreign affairs and things of that nature or do you think it was just coincidental? It could be a little bit of both. Our president could be running out of people to actually point to these offices like the national security advisor. John Bolton was just appointed and he is just a super hawk. I'm thinking of Larry Kudlow who's basically a TV personality, certainly not an economist yet he has one of the most important positions in the administration. So one has to wonder is whether this was all part of a strategy or just kind of came together because President Trump is watching TV one day. We, you know, this is a whole new era for us. On a daily basis, we're getting tweet bombs and so it could have just all coalesced together naturally but it is a little bit worrisome seeing ultra hawks that we'll be having the president's ear and we've seen the stock market. They're indicative that the stock market going down is indicative of the same thing that I'm actually saying right now. Well I think we'll leave it at that. I think our neighbors to the North Canada and our neighbors to the south of Mexico are a little relieved that the tariffs on steel and aluminum they were exempt from that and that's where we get the majority of our steel and aluminum from and so from that standpoint I think there was a sigh of relief from a lot of people around the world that they were exempt from that particular tariff on those two products. One point on that. You know we are such an integrated global economy now that supply lines and distribution. If there's a trade war between China everybody will get affected. The some of the things that go into the the manufactured goods from China come from Mexico, they come from Europe. Everyone gets disrupted. I think the term was one world economy. So yeah okay well Damon I want to thank you very much for spending the time to join us on what's on your mind Hawaii. I'm Tim Apachele for Think Tech Hawaii and Aloha. Aloha. Welcome back this is what's on your mind Hawaii. I'm Tim Apachele your host and before our next interview about the YNI homeless camp we're going to take a commercial break. Aloha I'm Dave Stevens host of the Cyber Underground. This is where we discuss everything that relates to computers that's just going to scare you out of your mind. So come join us every week here on ThinkTechHawaii.com 1 p.m. on Friday afternoons and then you can go see all our episodes on YouTube. Just look up the Cyber Underground on YouTube. All our shows will show up and please follow us. We're always giving you current relevant information to protect you. Keeping you safe. Aloha. I'm Jay Fidel ThinkTech. ThinkTech loves energy. I'm the host of MENA, Marco and me which is Mina Morita former chair of the PUC, former legislator and energy dynamics a consulting organization in energy. Marco Mangostorf is the CEO of Provision Solar in Hilo. Every two weeks we talk about energy everything about energy. Come around and watch us. We're on at noon on Mondays every two weeks on ThinkTech. Aloha. Our next interview is with Daniel who's a volunteer at the YNI homeless camp. His interview is very insightful and I hope you enjoy it. With Daniel and Daniel there's an open house for the village here out here in YNI and it's been published in the paper for last last week at least and from the judging from how many people have come here looks like it's a success. Tell me why you guys did this. Why why you have an open house and what is the message you're trying to get across? The main message is that this is a place of healing and an important place because there's a lot of people that could use healing and and that this place should be preserved the way it is and the community here that does the healing and is also made up of people being healed is allowed to exist here because the threat is that everyone will be forced to leave and all the building and community structure will be taken away and yeah. Well it seems there's a bigger message here and you know just by my walking around and listening to you is there seems to be a bigger message that this community is a people that have trust in one another and there's relationships formed and built and more than a quote-unquote homeless camp or shelter this is a community a real village. Yes and it is a village and also a shelter and there are people who are in places of desperation they've had one too many hard knocks and and just are not feeling safe they're not feeling like they're in a place of stability or safety and they need a place to stay to be and to heal and yeah and so this place is a perfect place for that because it is like you said a community with people that have built relationships and and with people that can come in and be a part of the community and build relationships and and be part of the healing How do you compare this village compared to what many people out have a negative stereotype of the homeless and how does this village counteract that stereotype? Well I would say that what makes this village a village is a common vision and value and that is that this place needs to be maintained as a place of healing and the person who pioneered that vision is kind of the the leader of this village because everyone got behind the vision that she had and her vision was basically I know we're all hurting all of us are probably here because we need healing but that doesn't mean that we can lash out at each other you know we can't vent on each other I know we're all frustrated scared hungry whatever but we can't take it on each other we got to work together we got to help each other out to heal because we all need healing and so she would go if she heard fights she heard drama she would go in and intervene and be like hey guys we cannot lash out at each other we got to heal we got to work together you need help I'll help you you know I'll cook for you all whatever you know and so she started doing that and just cooking for a lot of kids a lot of people feeding and just taking care and being an example of how to heal you know and to take care of each other right well what impressed me was to hear that those who have been through the journey and trying to heal they are also required to kind of give back and community service at least eight hours I believe yeah but also even after they leave they still come back yeah because um there is mandatory community service and that is obviously within that idea of everyone needs to work together to heal each other so everyone needs to give in put in to help take care of each other whether that's cleaning the the paths or volunteering in the the donation tent the free store um or helping the twinkle in her house cook food for everybody um or help with the trash cleanups everyone is um getting a chance to contribute and that not only is a chance to help with the healing but it's also healing yourself because part of the healing is um realizing how good it feels to help others and I think that a lot of us when we first get our hard knock and and we're like unstable and we feel like oh my god I'm so afraid and I just want to grab grab grab give me give me give me give me um we need to snap out of that because really the way to feel good again is to be like give me some I'll give back give me some I'll give back you know that's the that's the real healing and so well that's the the antithesis of really the stereotypes that people have about the homelessness they just want to take and take and they never give back to anyone or anything so this village is really a model for what's going on here on this island and what would you say to those people that just have such a negative opinion about the homeless and you know for lack of better term just a negative stereotype well I would say I could see where the stereotype comes from because a lot of people who are houseless are in that state of like oh my god I'm so scared I need I need give me give me give me you know I'll feel give me give me give me you know or whatever right but um so they're acting out of fear acting out of fear and and desperation uh but if they're given the chance to be part of a community where they're safe and they can give back I've seen a lot of people their minds have changed even anti twinkle she said that she was in a place of desperation she was self medicating even using ice and it wasn't until she felt like I need this this idea of I need to heal we need to heal each other you know that's when she healed and it changed her life and um and but it's not just her running this village now this village has what anywhere from 200 to 300 people here yeah exactly and so this team captains um she started by herself basically you know helping but then other people anti locate there's a lot of people that caught on and they're like yes I feel it too I'm not I'm gonna medicate less you know I'm gonna start thinking just by myself my healing is gonna come from helping others and so some of them um they got so into it that they just want to do it now even though they're like heal they're good they just love helping so they're gonna stay and help some of us they they heal others enough just to be healed enough so they can go back into the you know as a state of Hawaii learned anything from this lesson from this village and particularly have they been out here for this open house I think I think the state of Hawaii is learning a lot you can tell by um there's a new uh pro uh project um kind of by the the airport where there's this there was sort of encampment under under the bridges and stuff over there and rather than just raiding them and banishing them and forcing them to go somewhere else like they used to they built these like plantation houses and and and I think that's them sort of getting the idea of like hey maybe people are kind of congregating together because uh that is the solution like people will come together help each other heal maybe we should just help that instead of trying to steer them somewhere else like maybe there's something to this like people coming together and helping each other is the best way because it's really efficient because if you have the people who are healing needing healing healing by helping others to heal it cuts down on so much cost you don't need to pay for our social work as much and you know it's it's sort of like a self-directing so if let me ask you this if if more people on this island were to understand this model do you think there'd be less fear or not have the not my backyard syndrome where I don't want any homeless in my community and it doesn't belong there and uh do you think if they saw this model that that would change their opinions and their values and their attitudes I think it would change a lot because it would be like oh I don't want a hospital on my backyard it's like what why you know you don't want to um a healing place of healing everyone wants to heal well I think people their stereotype is that there's going to be crime and there's going to be you know there's going to be an adverse element to a neighborhood and and so I don't know to what degree do you think you guys can take this model and extend it forward so that other people understand what's going on here I think that um if people come like the people who are taking this tour they'll realize that this isn't a dump it's not a prison it's it's a hospital it's like a garden it's a place of healing and then they'll realize wow I want that in my backyard because wait what if I have too one too many traumas in my life what if um I have sexual harassment at work and my dad dies and my dog dies and you know things get overwhelming well I could just go here and I can heal right here and I can help people heal or or if I'm feeling depressed I can just go and volunteer and this is my um new way of finding comfort in life and helping others and building my community and um so it's uh it'll it's I think people will see it as um a place like this is a it's something you want to have around because it's a it's a source of comfort and for you and others well change takes time and it doesn't happen you know on a on an accelerated line upward it's you know it's up it's down and it takes time what message you think you would have for either the state legislature or the city council particularly those politicians that have fear about the homeless and and what would you say to them on how to basically have more of these kind of villages around the island to help the many many homeless that are that we're faced with well I would say to them um please uh pay attention and take seriously some of the bills that are being written now um there are some legislatures that are I think getting the idea and they're introducing bills already that are sort of uh basically making exceptions for places like this like um and and uh no um allowing for places like this and so I would just say to those senators that have fears that um uh get give this place a chance learn more because it's not a uh um it's a it's a place of healing and it's a place of growth and and it's an important place these kinds of places and and it's it's it's not the problem it's the uh kind of the solution to the problem the problem is whatever it is that makes people so hurt you know um so uh yes yeah well Daniel I want to take thank you for taking the time to share this experience and this model this village on how it could be a model for everywhere on the island so Daniel thank you for your time for coming on what's what's on our mind hawaii I'm tim abachella for think tech hawaii aloha that's our show for this week I want to thank you for taking the time to watch us on what's on your mind hawaii our next show is on April the 10th and until then aloha