Tructor

The Great Shift: China Rising, U.S. Falling

In general, we are in a dire race with China:
In the US, "jobless recovery" blithely masks ominous social unrest (sales of guns & ammo outstripping all else). Where are the entry-level jobs coming from to re-employ the millions unemployed and the tens of thousands of badly-educated American youth and immigrants?
In China, unspoken/unknown by western economists is the looming disparity between China's newly affluent and vast rural hoardes (half a billion?) who threaten the PRC with real "revolution" or horrendous "population control" methods... Various "5-year plans" have been tried to no avail.
One-sided "carbon caps" will be the final nail in our coffin unless an amazing breakthrough in solar energy or nuclear fusion occurs.
The US Administration doesn't seem to have a clue, other than papering over the past 30 years of stupidity. I can't recall anytime that hyper-inflation ever solved anything.

The Great Shift: China Rising, U.S. Falling

Good work all!
On Unit(s) of Value: There are only two kinds: Units of work - Human effort as labor, innovation, procreation, food, etc and, Units of Inherently valuable tangibles: Gold, oil, coal & other minerals, water, land, air.
Units of energy pre-suppose viable economic systems in which to use it benignly.


On Oct 08 11:01 AM Chris Cook wrote:

> First rate post, Cynicus, and a very high standard of comments to
> follow.
>
> "Ambrose Evans-Pritchard argues that the currency of pricing commodities
> is of no importance, but this is something with which I disagree."
>
>
> Me, too.
>
> Firstly there is a need for a Unit of measure - or Value Standard
> - to be used as a reference point for pricing. It is often pointed
> out that the actual transaction currency is irrelevant - it is what
> happens to the proceeds which matters.
>
> Secondly, there is the requirement for a Unit of currency - a generally
> acceptable tradable token or object redeemable for value, and ideally
> representing a store of value.
>
> These need not be the same.
>
> As John Law said in 1705;
>
> "Money is not the Value FOR which Goods are exchanged, but the Value
> BY which they are exchanged"
>
> The distinction becomes apparent if you look at the Swiss WIR business
> barter/credit clearing system. On the WIR - which is essentially
> just an accounting system - goods and services change hands between
> thousands of Swiss SME businesse on credit terms, and discipline
> in respect of debit balances (ie defaults) is imposed through a charge
> over WIR members' property. This property backing probably accounts
> for the fact that the WIR is still humming away like a Swiss watch
> 75 years after being launched.
>
> The point I am getting to is that no 'fiat' Swiss Francs change hands,
> because all balances are settled in goods and services not FOR Swiss
> Francs (as a currency), but BY REFERENCE TO Swiss Francs as a Value
> Standard.
>
> There is no reason at all why global trade should not be carried
> out within a network of WIR style Credit Clearing Unions, but it
> will be seen that this would require a "Value Standard" which is
> meaningful to the average user.
>
> John Law again:
>
> 'Every thing receives a Value from its use, and the Value is raised,
> according to its Quality, Quantity and Demand.'
>
> I have difficulty in seeing that gold has much in the way of use
> value over time. You cannot live in it, heat your house or fuel your
> car with it, or type emails with it. Perhaps more natural candidates
> for acceptable (fungible) currencies would be Units redeemable in
> land rental value (nationally) and Units redeemable in energy (internationally)
> such as units redeemable in btu's of gas, gasoline and other carbon-based
> fuels/energy vectors in particular.
>
> As for a global Value Standard, it appears to me that a fixed Unit
> of
> energy is the natural candidate.
>
> So to sum up, rather than energy being priced in dollars or renmimbi,
> perhaps dollars and renmimbi might be priced in energy?

Why There Will Be No Recovery and Markets Will Trend Lower

Corson is correct and courageous to say what politicians won't. One scenario is that China's rural "have-nots" will revolt against the increasing disparity between their poverty and the coastal-industrial boom regions. The bloodbath will be of biblical proportions, forcing internal compromise, disrupting the export payments system. Or, the US will be forced to repudiate external debt... with horrendous consequences. It's pretty clear the next bubble will be "China-related".


On Sep 29 07:08 AM bluesky123 wrote:

> I'm optimistic the US will reduce its trade deficit by transitioning
> commercial vehicles to run on US natural gas and reduce oil imports.
> Oil is one of the largest components of US imports. Some US power
> plants are also transitioning to natural gas. We will be producing
> more power domestically as alt energy ramps up. Indeed US electricity
> consumption is declining, not increasing.
>
> On the national debt front, US hedge fund advisor Hennessee Group
> produced a startling table of debt to GDP this year. Note that Ireland,
> UK, France, Germany, Netherlands, Switzerland and Iceland all have
> ratios significantly higher than the US. Iceland and Ireland have
> debt to GDP ratios 9 times that of the US. Switzerland and the UK
> have debt to GDP ratios 4 times that of the US.
>
> www.hennesseegroup.com...
>
> China's population has a savings rate of 40%. Good luck turning that
> into a consumption society when there are thus far no social program
> safety nets. In China the consumer provides for their own health
> care, retirement etc. Those consumers aren't about to go wild in
> the shops at any point in the near future, creating a sustainable
> domestic Chinese economy. The world's exporting countries who have
> relied on the US consumer are potentially at greater risk than has
> been discussed in the media thus far.
>
> Our situation in the US is a mess. We have to save, cut costs and
> innovate like heck to produce growth. However, I look around at a
> lot of the rest of the developed world, and they have their own equally
> significant financial mess.

The Real Crisis Is Food: Beginning of the Bull for Agriculture

Land in Africa isn't used because it isn't platted or available as collateral; it is held in "tribal holdings", not as mortgageable tracts with ownership deeds. Tribal chiefs and policiticians decide who will "use" the land and for what. Until this basic reform is made to bring much of Africa into the market economy, the horrors and recurrent famines will continue.


On Jun 22 09:58 PM Dirk McCoy wrote:

> I hope agricultural commodities perform well going forward, it will
> be a key for America to work off its debt.
>
> But farmers are slaughtering dairy cows and the vast majority of
> arable land in Africa is going unused. Hydroponics promises huge
> increases in yields, and Monsanto earnings are in question as current
> prices aren't justifying the marginal improvement in yield.
>
> And implementation of leading edge agricultural practices in the
> Ukraine alone (look at their yields compared to US) could absorb
> the expected growth in consumption for decades.

Idearc and Crusader File for Bankruptcy

Also, IDEARC now guarantees customer satisfaction with YP advertisers' services or Idearc will refund up to $500 per incident to the consumer. What does Google do? -- G doesn't even have a 'scam-detector'.

Adding to My Short Position in Potash

PCS Phosphate's mine in Eastern North Carolina may not be granted permit to mine the next layers of phosphate. This open pit mine is the world's largest. If permits are denied, that may bring a shortage of phosphate and potash. Your "short" strategy could be short-lived.

Ford Sales: Dropping by Half

Ford has an opportunity to emerge from this depression in better shape, and with a more coherent product line-up than GM, assuming GM's huge gamble on the Chevy Volt will not be its salvation.
The immense "haircut" that consumers have undergone in their financial ability and in their delusions has made them more aware of value and durability in autos. Ford's reliability is far better than GM's, rivaling Toyota's, and, Ford parts and maintenance costs are lower than Toyota's (ever paid for a Toyota timing belt replacement?). Today's Ford vehicles easily provide 150,000-200,000 miles of service. Only GM's C-series trucks rivals that in American auto. The days of cars as fashion or ego statements have disappeared with lease financing. Ford dumped Jaguar just in time. When Ford sells Volvo, having absorbed the value there, and continues delivering solid products like Fusion, Grand Marquis, F-Series, Ford will prosper as consumers seek Volvo-like value cars. A bold move into natural gas engines for the Crown Vic and Town Car commercial-municipal vehicle lines would be a plus. Chrysler is gone. Fiat or Peugeot could re-enter the US market with a fire-sale buy of Jeep and Chrysler's mini-vans, leaving the truck market to Ford, GM and Toyota. Let capitalism's "creative destruction" occur.

Is Robert Reich the New Dr. Doom?

That would be leftist. Granted they have wind, but their position is 'wing'. I think most agree that the 'rightists' have failed, even by their own lights.


On Feb 24 05:05 PM CLH wrote:

> Riech and Krugman are both left wind idiots. Is there any other kind
> of leftest?

Is Robert Reich the New Dr. Doom?

It's not much that Reich and Krugman are correct, that the last 25 years was an unconscionable transfer of resources/income from the poor and middle class to the rich (which it was), as that the conservative paradym of "trickle-down" was a failure. The rich used their tax-gift gains to create financial bubbles, from dot.com to mortgage-backed "securities" to derivatives, and yes, Ponzi-schemes and mega-yachts. They did not reinvest in genuine wealth creation such as R & D, renovation of factories and schools, alternative energy, or maintaining competitive advantage in manufacturing. They sold us out to China and Taiwan. The pendulum is swinging back.

Making Money in Troubled Times with Gold

What are your picks fo physical gold?


On Jan 21 02:05 PM Gold Barron wrote:

> Buy as much physical gold that you can get your hands on. The price
> of gold will soar with all of this money being printed.

Contemplating the Demise of Bank of America, Citi and JPMorgan

Defacto nationalization of Bank of America, Citi and JPMorgan can be viewed as a return to a "National Bank of the United States of America" -- that was the subject of one of the Federalist Papers, circa 1787?

Let's all ask for our shares. They have our SS numbers, right?

Help the Housing Market with a Buyback Program

It could be an intelligent plan if well-designed and executed to enable re-sales and lease-to-own deals for qualified renters. In the late '60's-early '70's, HUD had similar urban housing renovation programs that upgraded/rehabbed exisiting homes and apartments and made purchase & leases affordable. These HUD programs saved many a neighborhood from decay and the wreacers ball, and provided entry housing just as the US entered the 1975 recession, which may have been more severe without the HUD programs. It could be done again, and now might fit into Pres. Obama's jobs programs.

The Idearc Fiasco: Stock Worth a Second Look?

Imagine financial meltdown so severe that the Internet crashes and Google et al are inoperable. Imagine an IAR that lists CELLPHONE #'S. You may have to cqall your broker on the PHONE to place an order!

Scenario 2: President Obama accepts "Net Neutral" but no one else does and the free Net becomes a shadow of itself.