Lorenzo Chandler

Are We Exacerbating China's Pollution?

We have been trained to price a product or a service based on its direct imput costs such as labor, capital and energy etc, we have been mis-pricing or under pricing all along. We have not factored in the less obvious social cost and environmental cost. For example, mining companies are reporting their earnings without factoring in the cost to the envirnment (such as toxic tailing ponds), which in most cases will be paid by the tax payers in ways of direct clean up costs or health bills.

This is exactly happening to the Chinese manufacturers. China is exporting "cheap goods" to the world, gaining a huge foreign currency reserves, but also importing all the ills of envirnormental degradations. It is not our fault that we demand products with the lowest cost. It is their mistakes of pricing them too low by ignoring the true costs to their country.

It is the same short-sighted policy as we have been practising for a long, long time.

The Chinese will suffer because of the higher rate of cancers and other diseases; because of droughts; and because of mis-allocation of resources. They will pay sooner or later, and probably be sooner.

I don't think we should look at this issue as a deliberate domination tactic. They do what they have to do to advance their country's living standard. In doing so, they are making the same mistakes as we have done. To return America to the top, we have to recongize our weakness (don't just drape the flag around our eyes and be blind of our mistakes), innovate and compete.

What's Our Real Economic Condition?

Diane,
Good work. Please update this info regularly.
A comment re: ISM survey, the line crossing the "50" mark during both recession and "non-recession periods. The crossings and in fact most of the data points indicate or predict nothig. One conclusion that may of any use, is that recessions consistently coincide with the Index being between 30 to 40.

Four Macro Market Signals

I find China is more sophisticated in playing the games than people appreciate. It has its own problems for sure, but we tend to overlook its tremendous progress over the past twenty years. "clumsy", "stupid", "bad at playing cards close to chest" may not be the fitting descriptions for China. It has built up new and advanced infrastructures and industrial base that we can only envy. As far as working to divest its US holdings, it is more aggressive than the Japanese ever did. (Not being beholden to US military protection gives you quite a bit of freedom.) It has longer term view and strategy. In playing the game Go, the winner will place stones in an unnoticeable fashion until the trap is set. Don't underestimate our competitor's skill, or we will be in the trap.