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I have my name back, Still looking for a Purrfect picture. I have friends. Time to restart. SA isn't perfect but then I'm not either. But Life is far too short, and as the Roman Gladiators used to say: Eat, drink and make merry because tommorow, you may die. Why hasten your demise, don't worry,... More
  • Trade War: A potential Black Swan 13 comments
    Oct 9, 2011 9:13 AM

    Will Congress ignite a Trade War with China via passage of a Bill to revalue Their Currency InRe the USD?

    My take is as follows:

    1. Massive future inflation as the prices of "Made In China" products skyrocket. I maintain it is hard to find products without this label.

    2. Chinese curtail all purchases of US Debt as the value of the Trillion or so they already hold plummets. And will other Nations feel constrained to review their own holdings in this for fear of similar action?

    3. China becomes the Beneficiary as  Future purchases of commodities priced in $$$ become that much cheaper while the price paid for REEs skyrockets.

    4. China can retaliate by dumping US Debt and Embargoing REEs. Any nation selling REEs to the USA will not receive any themselves.

    The US Economy goes Kerplunk; USD goes Kerplunk; US Debt...pffft.

    All things "Natural Gas" skyrocket as people realize the full impact REEs have on "Green" products

    I imagine that this small listing can be expanded, probably by multiples.

    Thoughtful relevant comments welcome.

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Comments (13)
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  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Freya: Greetings. I posted some information on this last week on the breakfast club and the Q.C. While it does arouse certain factions to get boisterous and serves as a political chip to blame republican legislators for "Doing nothing." it is widely perceived as a political ploy with little hope of passing the house. http://bit.ly/p84TFo? Harry, Reid used the "Nuclear option." on Thursday to prevent Republicans from amending or filibustering the so called jobs bill docId=CNG.c12f3c439169... http://bit.ly/o8ywgA A move that Senate Democrats decried when they filibustered judicial appointments for the first time in Senate history under the Bush administration when the Republican majority leader Senator Frist threatened it. http://exm.nr/npQjMe Senate Democrats will have to live with the new reality they have created during the next session when they will likely be in the minority. Those who advocate the currency bill directed against China and unfettered majority power in the Senate had best be well aware of what they wish for as it may be a far cry from what they actually wanted when they get it.
    11 Oct 2011, 12:21 PM Reply Like
  • Jon Springer
    , contributor
    Comments (4073) | Send Message
     
    I've posted this before, but it seems germane to this instablog. September 2010 interview, President of Li & Fung (major Chinese Wal-Mart supplier) Bruce Rockowitz discusses why inflation is coming (4 minutes):
    http://bloom.bg/rj3CSz/
    11 Oct 2011, 03:33 PM Reply Like
  • H. T. Love
    , contributor
    Comments (19394) | Send Message
     
    "2. Chinese curtail all purchases of US Debt as the value of the Trillion or so they already hold plummets. And will other Nations feel constrained to review their own holdings in this for fear of similar action?"

     

    So far, with "Operation Twist", the long-term bond prices have been holding up rather well. Will it continue as the Fed rolls out of short-term and into long-term bonds?

     

    If so, maybe this particular items becomes less of an irritant?

     

    As to REEs, *if* China really expects to run out of their own supply in 10 years or so, I would think they would not want to do anything that might dampen the growth of ex-China suppliers that are trying to ramp up. Since China wants high-tech industries to locate in-country, I would think a good supply of REEs, both within China and ex-China (long-term) would be in their best interest.

     

    Of course, I'm *really* ignorant about these things ... too! :-((

     

    HardToLove
    11 Oct 2011, 03:51 PM Reply Like
  • Freya
    , contributor
    Comments (3318) | Send Message
     
    Author’s reply » The Currency Bill passed in the Senate and, I'm assuming that, so will the Job's.

     

    Will the 2 be ribbon tied as a package?
    11 Oct 2011, 09:13 PM Reply Like
  • Freya
    , contributor
    Comments (3318) | Send Message
     
    Author’s reply » Interesting, Reid changed his vote to No on the Jobs Bill. The Vote ended at 50-49, 51 would have passed it.
    12 Oct 2011, 12:17 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Freya: Greetings. IMHO dingy Harry changed his vote to spare some Democrat Senators up for election in more conservative states from a difficult position. He will now break up the bill into smaller items in order to pass something in support of the Presidents campaign strategy of running against the do nothing party of NO and class warfare. Senate Democrats know full well that House Republicans won't pass the tax rate increases they desire and wish to paint them as obstructionists. Keep in mind that he has changed the rules in the Senate and can over ride a filibuster any time he wants.
    12 Oct 2011, 12:57 PM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    Freya: Greetings. The currency bill will likely meet it's demise in the House. IMHO dingy Harry changed his vote to avoid putting some Democrat Senators who are up for election in more conservative states in a difficult position. He will now break the bill up into individual pieces in order to move something out of Senate in order to support the Presidents campaign strategy of running against the party of NO and class warfare.
    12 Oct 2011, 01:59 PM Reply Like
  • optionsgirl
    , contributor
    Comments (5183) | Send Message
     
    Jim Rogers agrees with you, Freya. Per the 5 Min Forecast:

     

    “This could be terribly, terribly dangerous if we turn into a trade war,” says Jim Rogers. “Whenever people get slapped in the face, they always think they have to slap back.”
    “If America does put tariffs on the Chinese, the Chinese have various weapons at their disposal; they can stop buying American government bonds; they can sell American government bonds.”
    “If they did that, interest rates in America would go through the roof.”
    13 Oct 2011, 01:21 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    My apologies to all for the double post. When I checked back it looked like my post didn't get published. The site has been behaving badly for the last two days. I hope the SA web elves can fix the problem soon.
    13 Oct 2011, 11:35 AM Reply Like
  • H. T. Love
    , contributor
    Comments (19394) | Send Message
     
    Robert, we can't get enough of you! A double-post helps alleviate the symptoms of deprivation! :-))

     

    FYI: the web problems must be quite severe. On JP's articles with over 200 comments, it only shows me about 30, shows no time stamp or "link to this comment", ..., gives error messages saying some script-thingy failed and all the while it told me I have xxx new comments on the articles.

     

    I posted to support and they thanked me and say they are working on it. Been about two days now. And I've got no new notifications on JP's articles.

     

    *That's* hard to believe!

     

    I *suspect* SA *caused* it trying to make some change.

     

    HardToLove
    13 Oct 2011, 11:44 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    H.T.Love: Greetings. Thanks for the encouragement. They are undoubtedly still trying to figure out the social justice angle for like counts. LOL.
    13 Oct 2011, 11:48 AM Reply Like
  • robert.b.ferguson
    , contributor
    Comments (10491) | Send Message
     
    China is experiencing trade contraction which is pressuring them to suppress the Yuan which has appreciated faster against the USD than all other currencies for the past four years. http://bloom.bg/nnevWP These circumstances don't bode well for global economic growth and may spur protectionist policies around the world as economic conditions continue to deteriorate. Conditions globally will only improve significantly if conditions in the U.S. improve significantly. Something I'm not counting on in the immediate future.
    13 Oct 2011, 11:43 AM Reply Like
  • Valley Boy
    , contributor
    Comments (2220) | Send Message
     
    I've been browsing through the various articles and instablogs lately for trying to make up my mind what to think about the global debt burdens. I've been reading them with a certain amount of consternation.
    I was wondering if by chance the Federal Reserve gets discontinued or split up because they are politically unpopular, then who would be in charge of buying up the Chinese portfolio of U.S. treasuries when they decide to sell them? Would that be up to the Dept. of Treasury? Would other countries be interested in buying the equivalent amount of our debt? Would it be better to keep the Federal Reserve as is in order to meet this potential problem with their newly printed dollars? Should Congress pass a "Bond Resolution Trust Corporation" type of operation to meet this threat? Should we figure that higher interest rates would be okay if those rates would entice more people to purchase the bonds (knowing that the Federal Government will do everything it can to keep the cost of their debt service down)? Realizing that paying off China instead of fixing our roads would be politically unrealistic, could the Federal Government arrange some kind of barter with China instead?
    24 Oct 2011, 05:13 PM Reply Like
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