China's Emergence As A Global Superpower

[sweet Pentax]

can any country just stop to buy their crap? i don´t believe it´s possible. if for example whole america would refuse, then the chinese also wouldn´t buy something from america. the message is ... if you try hurt the chinese this way, you hurt yourself even more.
to be honest - i for my part try to buy nothing that is made in china. i have no problem with fair competition between europe, us and japan, but the chinese annoy me too much. i just can´t imagine whole countries doing that.

 

[Billy T]

{post 967}... Also why are Russia, Brazil and California signing MOUs with China for high-speed trains technology? ... why has China been selected to build the new high speed trains in Turkey and Venezuela, instead of a German company like Semans or a US company like GE?

{post 968}... as moderator in B&E, you should know the reason. Of course it´s the price. if you don´t have to pay a R&D-department, you can save a lot.

Your reply here is partially correct about price being important and wrong about absence of R&D expense for China. Yes China, like everyone else, improves prior existing technology. That is why China now has 940 high speed train patents and the fastest train technology in the world.

To quote from your own railwaygazette reference in post 973:

“…Tangshan Railway Vehicles, Chanchun Railway Vehicles and the China Academy of Railway Sciences have signed a joint venture agreement with Siemens for technical assistance and the supply of electrical equipment and bogies for the new trains; valued at around €750m. Tangshan is currently assembling 300km/h CHR3 Velaro trainsets under a technology transfer agreement with Siemens. …”

I.e. China imported the 300km/h Sieman’s technology and then improved it to 400km/h. Continuing to quote your reference:

“…The {Chinese improved} trains are expected to be tested at up to 400km/h before entering service. According to Zhang Shuguang, Director of the ministry’s Transport division, the trains will be built using domestic technology developed by CNR without outside assistance. The intention is that 70 sets would be built at Tangshan and the remaining 30 at Changchun. …”

Billy T:
China is expanding its high speed rail service so rapidly (Soon to have more than rest of the world total!) that it cannot produce all the needed rolling stock as fast as needed and must buy some, made to its design specifications. For example Canada’s Bombader will supply some cars as well as Siemans, but most will be made in China by Tangshan Railway Vehicles and Chanchun Railway Vehicles. Even in the new faster Chinese design, Siemans will supply some parts: Quoting your reference: “electrical equipment and bogies for the new trains; valued at around €750m.” (I don’t know what “bogies” are, do you?), but that is not much money compared to the cost of 100 trains, each 400 meters long.

-------------------------
By chance The Folio de Sao Paulo newspaper today (19/3/10) devotes the full first page of the business section to The bidding rules for Brazil’s planned “bullet train” between Rio and Sao Paulo: 511km with average speed of 280Km/hr (even with four station stops between terminal cities) and an estimated cost of R$34 billion, but probably 34billion dollars will be closer to final cost. What I found most interesting is that 70% of the evaluation of bids is based on how much the bidders will finance. (Brazil only wants to finance at most 10% and prefers not to pay anything.) 30% of the bid evaluation will be on how low a fair they will charge. (Brazil wants it to be close to half a Real / km.) Earlier papers had discussed that Brazil could give a guarantee of X passengers each year (or pay for the tickets that did not sell)

Thus if deals with Venezuela and Turkey were similar, you are totally wrong to suggest that China won those contract because of low cost bid. China is likely to win the contract in Brazil too because it has the capital to do the job, whatever it costs. Basically, the bullet train is an investment and the investor (probably China) will set the fair to make a profit. China may be able to build a faster train and as you pointed out they have already paid the R&D cost so probably will be able to set the lowest profit making fair and win the contract.

In post 968, you were falsely assuming that the governments are buying the trains and thus lowest price would win contract. That is not the case. Train builder (probably China in Brazil's case also) is making an investment, which they expect to profit from. They are not selling a "turn key" train to the government allowing them to operate it.

In some ironic way, China is winning these contracts because the US has sent them 2.4 trillion dollars and they want to spend it because they fear dollar collapse so are very happy to invest (build trains) all over the world for various government and collect non-dollar fairs for profitable returns on their investments.

BTW Only qualified builders are allowed to bid on Brazil's bullet train. The US has none. The qualified bidders are:
Japan (Mitsui,Toshiba, Hitachi, Mitsubishi with Japan Railways)
South Korea (Samsung & Hyundai)
China Railways (a state corporation)
France (Alston)
Germany (Siemans)
Spain (Caf & Talgo)

The companies in parenthesis are permitted to bid separately or in joint proposals.

Note all other qualified bidders are at another dis advantage to China as they would need to either license the higher speed technology China has developed OR spend more on R&D to develop their own and avoid infringing China's 940 patents when doing so. The US is so far behind that it can never catch up and be competitive with China as the US would have to pay license fees for so much imported technology.

 

[X-Man2]

Look folks the truth is China,and maybe a few others are moving way past the US in every category except probably our Military.It is the US and the US only whom is to blame for their fall from power,dominance etc.I as an American don't like it anymore than you do however unlike some of you(you know who you are) I will not pretend the US is still on top.The US most likely is finished as a world leader for good,especially since we waited to long to get off our dead asses.Were past that point of being able to regain our dominance.The proof is everywhere you look,should you care not to ignore it.Get over it!

 

[Billy T]

Look folks the truth is China,and maybe a few others are moving way past the US in every category except probably our Military.It is the US and the US only whom is to blame for their fall from power,dominance etc.I as an American don't like it anymore than you do however unlike some of you(you know who you are) I will not pretend the US is still on top.The US most likely is finished as a world leader for good,especially since we waited to long to get off our dead asses.Were past that point of being able to regain our dominance.The proof is everywhere you look,should you care not to ignore it.Get over it!

I agree. I concluded my high speed train post, 982, with:
"The US is so far behind that it can never catch up and be competitive with China as the US would have to pay license fees for so much imported technology."

As far as US military superiority, I am reminided of what a little runt of a man in the old west said about his 44: He called it his great "equalizer." This is the nuclear age. It matters little if one country like China can destroy the US only 20 times over and the US can destroy China 500 times over.

 

[sweet Pentax]

China imported the 300km/h Sieman’s technology and then improved it to 400km/h.

In July 2006 a SiemEns Velaro train-set (AVE S-103) reached 403.7 km/h (250.8 mph). This is a world record for railed and unmodified commercial service trainsets. The version the chinese will get is from 2007.
(http://en.wikipedia.org/wiki/Siemens_Velaro)

Great Improvement, if it´s already built in.

China is expanding its high speed rail service so rapidly (Soon to have more than rest of the world total!) that it cannot produce all the needed rolling stock as fast as needed and must buy some, made to its design specifications.

So china can build the biggest railway-network, but not the needed number of trains .... but well, it´s easier to build railways than the trains. The railways don´t need educated engineers. Come on, they are so many people, they are so bright - it has a reason, that they buy something that wasn´t produced in their own country. They need those 100 trains to let their engineers do some training, so they can reproduce unlimited numbers.

For example Canada’s Bombader will supply some cars as well as Siemans, but most will be made in China by Tangshan Railway Vehicles and Chanchun Railway Vehicles. Even in the new faster Chinese design, Siemans will supply some parts: Quoting your reference: “electrical equipment and bogies for the new trains; valued at around €750m.” (I don’t know what “bogies” are, do you?), but that is not much money compared to the cost of 100 trains, each 400 meters long.

Of course most of the work will be done in china. As i said, they need to have the trains "in their hands", to reproduce it. Siemens will supply some parts (bogies are ... have no idea how to say it in english ... the parts where the wheels are mounted), but most important - and that´s what i´m the whole time talking about - the technology. The chinese pay only for some parts and the blueprints, that´s why it looks so "cheap".

By chance The Folio de Sao Paulo newspaper today (19/3/10) devotes the full first page of the business section to The bidding rules for Brazil’s planned “bullet train” between Rio and Sao Paulo: 511km with average speed of 280Km/hr (even with four station stops between terminal cities) and an estimated cost of R$34 billion, but probably 34billion dollars will be closer to final cost. What I found most interesting is that 70% of the evaluation of bids is based on how much the bidders will finance. (Brazil only wants to finance at most 10% and prefers not to pay anything.) 30% of the bid evaluation will be on how low a fair they will charge. (Brazil wants it to be close to half a Real / km.) Earlier papers had discussed that Brazil could give a guarantee of X passengers each year (or pay for the tickets that did not sell)Thus if deals with Venezuela and Turkey were similar, you are totally wrong to suggest that China won those contract because of low cost bid. China is likely to win the contract in Brazil too because it has the capital to do the job, whatever it costs. Basically, the bullet train is an investment and the investor (probably China) will set the fair to make a profit. China may be able to build a faster train and as you pointed out they have already paid the R&D cost so probably will be able to set the lowest profit making fair and win the contract.In post 968, you were falsely assuming that the governments are buying the trains and thus lowest price would win contract. That is not the case. Train builder (probably China in Brazil's case also) is making an investment, which they expect to profit from. They are not selling a "turn key" train to the government allowing them to operate it.

sorry, english isn´t my native language, so i´m not sure if i got you right ... are you really saying that brazil wants somebody who they don´t have to pay (maybe through sale of tickets, but until this pays out, a lot of water is running down the amazonas)? being cheaper by taking less money is still being cheaper. They have enough money, and want to establish a train-industry in their country, subsidized by the goverment. Seems china found out, that they can make more money this way than to produce sneakers.
quality was no factor in the decision for china. 940 patents you say? that doesn´t mean anything to me, maybe 1 of 940 is for seats, that spread parfum when you sit down. The number doesn´t mean any improvement or technological advance. you still have to show me "Chinas mature and advanced technology" (that was your quote). Until you do so, i´ll stick to my opinion that china can´t invent something useful and groundbreaking.

In some ironic way, China is winning these contracts because the US has sent them 2.4 trillion dollars and they want to spend it because they fear dollar collapse so are very happy to invest (build trains) all over the world for various government and collect non-dollar fairs for profitable returns on their investments.

possible, but i also blame western companies in general for selling state-of-the-art-technology. Having access to the chinese market seems to be tempting. But as soon as they absorb new stuff, they don´t need those companies anymore.

 

[Billy T]

... sorry, english isn´t my native language, so i´m not sure if i got you right ... are you really saying that brazil wants somebody who they don´t have to pay (maybe through sale of tickets, but until this pays out, a lot of water is running down the amazonas)? being cheaper by taking less money is still being cheaper. They have enough money, and want to establish a train-industry in their country, subsidized by the government. Seems china found out, that they can make more money this way than to produce sneakers.
quality was no factor in the decision for china. 940 patents you say? that doesn´t mean anything to me, maybe 1 of 940 is for seats, that spread parfum when you sit down. The number doesn't mean any improvement or technological advance. you still have to show me "Chinas mature and advanced technology" (that was your quote). Until you do so, i´ll stick to my opinion that china can´t invent something useful and groundbreaking. ...

Thanks for the very informative link. It does support your POV. My information has mainly come from the Chinese People's Daily (which I read most days) and it appears they have claimed more than they should in this case.

Yes you basically understood. Brazil would like to not pay anything for the bullet train.* Brazil will grant a long term right to operate the train and collect fairs. This is common with major highways in Brazil, but in that case operator of the toll road, pays Brazil for the right to operate it and collect the fairs. The actual agreements get quite complex and detailed as the fairs much periodically change, and the road surface must be maintained to certain standards, etc. and the operator's profits are taxed. Taxi and bus companies also pay for the privilege of operating in Sao Paulo, at least.

This was/ is called "privatization" as many years ago, the Brazilian government owned and operated everything. - Experiencing that would make anyone understand how bad government ownership is. For example, the Road between Rio and Sao Paulo was privatized about 7 years ago and is no longer with dangerous holes. There were "axle breaker" holes when the government owned it. In Brazil most roads are still government owned and in poor condition. During the months just before elections many unskilled workers are hired to patch the holes (job creation to get their votes) but within a year the holes have returned as the simple patches do not last. It would be a disaster if the government were to buy and operate the bullet train. That is why a long term concession will be granted to an owner operator, probably China.

Mainly China is spending dollars for long term energy and raw material supplies, (averaging about 1 billion dollars each month now)** but China is also investing in foreign lands in profit making concern. For example, Vale and A Chinese partner will build a steel plant. (Currently Brazil is China's largest supplier of iron ore so it makes sense to ship to China less weight of the finished iron than the iron ore need to make it.) Brazil likes the jobs it will create and China is anxious to spend dollars (while they still have value) and convert to more of a domestic economy, less dependent upon exports. They are closing older factories, coal mines, etc. investing in railroads, new inland cities, health care facilities, better schools, oil and gas pipelines, etc. to improve the life of the people (and keep the masses as strong supporters of the CCP leadership)

Wages in China are rapidly rising (about 15%/ year in purchasing power,*** and more if the Yuan is revalued upwards) so I doubt China still makes low tech soft goods like your tennis shoes as they once did when China had cheap labor. I don't shop much (and none in the USA) but bet the tennis shoes in stores there now come from Indonesia, Vietnam etc. more than from China now.

----------------
* That is why I said you were "partially correct" about the price being a determining factor, but understand it is really the willingness of the builder to finance as Brazil is not buying the train.

**China still has large dollar trade surplus, so is still buying US Treasury paper, but for the last three months has managed to spend more dollars than it is earning and using to buy US bonds. I.e. China is cashing in or letting mature without rolling more Treasury paper than it is buying. Also China is a modest buyer of gold, and for three years now the world's largest producer. If China remains a net seller of US Treasury paper during 2010, the run on the dollar I forecast about 6 years ago when GWB was still POTUS (to happen before Halloween 2014) will come much sooner.

*** Just to back up this here is a quote from Email I received today:
"...a labor shortage in China is becoming severe. Not only is this shortfall in traditionally labor-intensive export areas such as the Pearl River delta in the south and the Yangtze River delta in the east, but also in the country's western and northern regions. Managers from several export-oriented industrial companies with factories in Guangdong told me that despite 15% to 20% wage hikes for factory workers, firms are still experiencing difficulty recruiting workers.

One of the main reasons behind the labor shortage is that there are increasingly more job opportunities inland. Factories in the coastal regions rely heavily on migrant workers coming from the country’s mostly rural inland areas. As these areas become more prosperous, migrant workers who might have previously relocated in search of work are staying closer to home. In addition, it is also becoming harder to find young Chinese who want to work in factories as China's younger generation is generally more optimistic about their career options.

After years of being the world’s low-cost producer, China no longer seems to have a cheap labor pool as its heartland catches up with its more modern coastal regions. Better living standards throughout the country will surely lift China’s domestic consumption over the long term. However, for the time being, factories that rely on cheap labor should likely see their already thinning profit margins come under further pressure. This will likely force them to either exit the industry or try to move up the value chain and increase productivity. ..."
Richard Gao, Portfolio Manager, Matthews International Capital Management, LLC

 

[sweet Pentax]

This will likely force them to either exit the industry or try to move up the value chain and increase productivity. ..."

yes, it´s unbelieveable ridiculous how inefficient they work. 1.4 millards of them and they already lack workers
on the other side, this is good news ... they are already now such hardcore ultra-nationalists, image how chinese would be if they would really have something to be proud of. :bugeye:

 

[Billy T]

... image how chinese would be if they would really have something to be proud of. :bugeye:

I think they do and that they are proud of it. I.e. the most functional economic system yet invented by mankind. Specifically a centrally directed program of infrastructure development with approximate a 50 year time horizon / planning and generally developed by rational consideration of mainly trained engineers. (Most of the CCP leadership has this background). Combined with a invisible hand of Adam Smith consumer market place, less constrained than the US "free market" place.

Contrast this with the US system and its limited time horizon (not much beyond the next election) and legislation written by lobbyists for eventually horse trading compromises by congressmen (typically lawyers by training) with how the modification will affect their re-election as the main consideration.

It is little wonder that the Chinese GDP growth is 2 to 4 times higher than the US's GDP on average for 30 years! Also note that a much higher percent of what enters into the calculation of the Chinese GDP has lasting value and increases productivity. (Railroads, Dams, power plants, smart grids, new hospitals and rural schools, etc.)

In the US's GDP there is a huge percentage of "investment" expenditures which have no lasting value and contribute nothing to productivity. Things like NFL football games, vacations to Disneyland, the latest fashions in clothes, rock concerts, various other forms of "conspicuous consumption," elaborate weddings (>$20,000), movies and Broadway type shows. For example, what value is there now to the millions counted in the US's GDP a few years ago for the making of the movie Titanic? Etc. for most of what was counted in the GDP that year.

yes, it´s unbelieveable ridiculous how inefficient they work. ...

Which system is more efficient depends a lot on how you measure it. Probably the US can dig a big hole and fill it in later with less energy consumed than the Chinese. Both the digging and the later filling would contribute to the US's computed GDP. I think efficiency should only count the activities that increase in a reasonable permanent way, the nations productive potential. Digging and then filling holes (or the supper bowl of 2005, etc.) do nothing for the nation's lasting productive capacity and should not be counted in the nation's GDP.

SUMMARY: By the standard of producing lasting benefits / productive capacity increases / the Chinese spend their money much more efficiently than the US does. Hell we do not even keep much of the infrastructure we already have in repair!

 

[Billy T]

Brazilian company, Itaminas, owns a high grade iron ore deposit estimated to be 1.3 billion tons near Sarzedo in the state of Belo Horizonte. It is currently producing 3 million tons annually, but could quickly be expanded to 25 million tons per year.

The Chinese state company, ECE, just bought 100% of Itamamis for 1.2 billion dollars. ECE already has operations in Mexico, Australia, Indonesia, Iran, Indonesia, Cambodia, and Namibia. Last month another Chinese company, Wisco group, bought 21% of MMX, iron ore producer, which is mainly owned by Brazil's wealthiest man (and number 8 on Forbes' list) price not disclosed.

I.e. while US stagnates China is spending it surplus dollars (at current rate of more than a billion per month, and accelerating*) to lock up future supplies of energy and raw materials. As noted in last post, 988, the US system does not have the ability to plan and pay for supplies it will need 30 to 50 years into the future.

------------------
*Here is link to last week's 3.2 billion dollar African deal and a recent 5 billion dollar Canadian deal:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aH6bA7LdREMM&pos=3

 

[Billy T]

“… China posted its first trade deficit in six years in March even as the yuan stayed pegged to the dollar … $7.24 billion shortfall … While China reported deficits in trade with nations such as Japan and South Korea, today’s figures showed a $9.9 billion surplus with the U.S. …”

From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aQJzlrQLnWLc&pos=2

Billy T comment:
While the average Chinese income is up more than 15% YoY in real purchasing power, some are much more equal than others. There are plane loads of rich Chinese going to Japan and Korea every day (and a few to Taiwan too now). In Japan, the average daily expenditures buying luxury and other goods were well north of $1000 dollars – I forget the sum as this was reported more than a year ago. Above link mentions that imported cars (mainly from these two countries) is up four fold YoY.

In addition to this buying the average cost of the commodities and raw materials China imports is up 17%. It is looking very likely that in 2010, the cost of iron ore will be about 90% higher for China YoY.
Unless the US recovers in terms of jobs, China’s sales to US may continue to decline. In that case, China will run chronic trade deficits for some years. (The article speculates the opposite as assumes US will soon prosper again.) I think China may want to run trade deficits – i.e. spend dollars it has for real goods while dollar still has value. That is why they may let the Yuan appreciate. – Buy more imported goods spend more dollars, get more imports, but for the same Yuan cost.

 

[iceaura]

“electrical equipment and bogies for the new trains; valued at around €750m.” (I don’t know what “bogies” are, do you?)

The undercarriage or "truck" (not the box or cargo container) - frame and wheel mounts, hitch braces and so forth - a significant feature of a high speed train.

I think they do and that they are proud of it. I.e. the most functional economic system yet invented by mankind. Specifically a centrally directed program of infrastructure development with approximate a 50 year time horizon / planning and generally developed by rational consideration of mainly trained engineers.

This is too uncritical. Recall Japan supposedly had something like that situation, described IIRC in very similar language, with some familiar key features such as collusion in the finance and the persistent inability of engineers to allow for ecological and cultural factors, on top of the engineer's natural bias toward a certain naive view of the likely effects of engineered or mechanical top down solutions to large and complex problems.

Engineers tend to think the legal and accounting departments are largely superfluous, the sales staff is a bunch of flakes skilled at buying drinks for people, finance is just something you obtain once in a while, and the ecological or community or "human resources" relations stuff is a dead loss to be minimized.

It's like they think Murphy's Law only applies to simple mechanical devices being designed and tested by engineers.

China is still in the honeymoon phase of this new system, and there is no sense in assuming it isn't going to bite them in the ass - especially since some of its features (secrecy, collusion, conflicts of interest, centralization of power, top down control) are well known sources of serious trouble that can go undetected for a long time.

Example: the engineers at a local machine shop designed a production system that was to reduce scrap, and instituted reporting procedures for scrap to monitor its reduction. The machinists were then assigned the task of reporting their scrap, under the expectation that it would be reduced. Lo and behold, the reported scrap shows successful reduction - so successful that at the last management meeting new goals were set for still further reduction in scrap, and my wife who is a machinist there tells me they are certain to be easily met.

A visit to the scrap barrels out back, and a comparison of their contents with the total reported scrap, might cast a certain odd light on the whole situation, but engineers don't always recognize the importance of such inefficient and redundant procedures. And China is being run by engineers.

 

[Billy T]

Danish made world’s largest container ship (15,000 full size containers) on its way back to China from California:

Note it is floating high as the containers return empty.*

The containers will be full of toys and other junk Americans buy when it returns to CA in less than a month. (Crosses Pacific at 31 knots ~50% faster than most container ships). It helped China to have > $9 billion dollar trade surplus with US in 2009. Here it is reloading in China for next trip:

and

The 11 high capacity cranes operate simultaneously for fast turnaround. Note the tiny looking container moving under the left most crane to understand how big these cranes are. China has the largest and most productive ports in the world.
This ship is 207 feet wide and longer than any US aircraft carrier. Total crew is only 13!

Silicone painted bottom reduces water resistance, increases speed and saves 317,000 gallons of diesel fuel per year.
----------------
*I am not sure, but think the 14 deck structures seen in top photo are for lowering the empty container into the ship's hull for the return trip.

 

[Billy T]

China continues to convert dollar reserves (Treasury's paper promises) into real assets it will need in the future:

" China Petroleum & Chemical Corp. agreed to pay ConocoPhillips $4.65 billion for its stake in Syncrude Canada Ltd., a higher price than analysts expected as Asia’s biggest refiner seeks access to overseas petroleum reserves. ..."

From: http://www.bloomberg.com/apps/news?pid=20601087&sid=aGxjOkNVFVQ8&pos=1 (13 april 2010 - Already that day in China where this news comes from.)

 

[Billy T]

"... China is experiencing two things that occurred in the U.S. in early 2003 and ultimately led to the start of a four-year U.S. property market boom:

1. Chinese banks flooded the real estate market with money last year {2009} at dirt-cheap interest rates;
2. Crowds have literally lined up to buy properties since interest rates were lowered.

This is why real estate prices not only rose sharply in 2009 but also almost doubled in the cities like Shenzhen. But unlike the U.S. market that collapsed under the subprime sell-off, the China real estate market faces no such risk.

Here’s why:
1. China doesn’t allow reckless consumer lending
2. People with bad credit can’t get loans
3. In fact, you can’t buy a home with no money down. You have to put 30% down giving the country the strongest lending practices on the planet!
4. What’s more, for second homes, you have to put 50% down—no matter what your net worth, AND—most important
5. China loans aren’t spiced up and repackaged as securities. The people who loan the money have to keep the loans—so they’re extremely picky. ..."

From R. Hsu's Email to me today. He has newsletter, frequently visits China with groups of rich investors for factory tours and meetings with CEOs etc. He seems to be well connected to China's leaders -Probably in part as he has strong pro China biases and writes stuff like the above, but he does get facts early and as far as I can tell does not fabricate facts.

More Billy T comments:
I agree point 5 is the most important, but their is a problem with trying to apply in USA. If the mortgage of loan No. 1 stays with the bank, the bank lacks money for loan No. 2. So in US there must be a secondary market, like Fanny May etc. for banks to sell the mortgages they write to. I think the solution is something along the lines of when the bank does sell the mortgage, it give a guarantee that 90% of it will be paid. That would make the bank more careful about who it lends money to.

China does not need a secondary market as the government set a total of loans allowed each year (It was high in 2009 to stimulate recovery.) and supplies the money.

In the US real estate boom, the banks could keep lending without limit. As loan demands from the likely to pay borrowers were satisfied, they lent to the sub-prime borrowers. When they were all satisfied to, the bank's recruiters went into the streets and and rounded up the homeless and winos to lend to - A slight exaggeration, but not any risk* in this for the banks as those loans would be packaged in with others and sold to investors with a AAA rating. (They are called "toxic trash" now.)

------------
* In fact some banks, like Goldman Sucks, even profited from the collapse of the US economy they were making by have off book subsidiary "go short" (profit if price fell) against the paper that GS itself was promoting as AAA investments.

 

[soullust]

I think it will. Democracy is not the way forward for capitalism. China can now become rich and still keep the people down. The downfall of any economic system is people’s rights and expectation increase with wealth in a Democracy. China can still stop you reading web pages they don't like or kill you for any reason they see fit. We are looking at the first major Dictatorship, Capitalist Superpower. This will change the world and who can stop them? No one!

the west can stop them all we need to do is stop buying there 99 cent garbage..

and what ruined capitalism was not the people, it was that baboon your ex president Nixon, who removed the gold standard from the American currency, and of course, all of us in the west followed.

He did have little choice thanks to France draining all there gold reserves, out of the USA, driving up huge inflation.


with out the gold standard, inflation could then be used to pay debt and peoples salaries could continue to rise as prices of goods raised.

it was a good idea and helped at the time, but it was a ticking time bomb for the future. esp now that were shifting to a globally economy, high 30 year inflated prices and salaries are great, if your dealing with countries that used the same policy for 30-40 years. but everyone didn't now them countries that sell and make the same goods for a fraction of the cost have a huge advantage, how many jobs went to china because of there cheap under valued currency?

 

[Billy T]

“… Chinaoil- the state-owned China National Petroleum Corp's (CNPC) trading unit- shipped two cargoes totaling 600,000 barrels of gasoline to Iran in exchange for $55 million, according to Reuters. The cargoes were Chinaoil's first direct sales to Iran since at least January 2009, according to Reuters data.

Additionally, Unipec- the trading arm of the China Petroleum & Chemical Corp. (Sinopec) - agreed to sell 250,000 barrels of gasoline to Iran. …”

From: Moneymorning Email of 20April10

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Also: “…{China} will lend Venezuela $20 billion and form a venture to pump crude from the Orinoco Belt, President Hugo Chavez said, vowing to meet the Asian country’s energy needs. The financing from China is separate from a $12 billion bilateral investment fund, Chavez said, and will pay for Venezuelan development projects. Venezuela currently sends China 460,000 barrels a day of crude oil.
State oil company Petroleos de Venezuela SA and China National Petroleum Corp. signed a joint-venture agreement in Caracas April 17 that will require a $16.3 billion investment to pump and refine heavy crude oil at the Junin 4 block of the Orinoco Belt. …”
From: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=avGo.43exWvM

Billy T Comment:
US get a significant part of its needed oil from Venezuela, but not for much longer – it will be going to China despite the greater shipping cost. Politics is more important than that cost.

 

[soullust]

of course with the new deal Russia signed with china to sell them oil at 20 dollars a barrel hurts.

http://arturoafc54.wordpress.com/20...for-cash-sells-oil-to-china-in-very-bad-deal/

 

[soullust]

Billy T Comment:
US get a significant part of its needed oil from Venezuela, but not for much longer – it will be going to China despite the greater shipping cost. Politics is more important than that cost.

Maybe, the Chinese are major consumers now as well, what might happen is a huge drop in our favor as well, i mean with china buying there demand from Russia, the middle east will be way more dependent on the west to sell theres.

you have to think how we can turn this into, our advantage. I mean personally, if i was the USA, id come north to Canada, open this place up give us a mess load of good paying jobs up here, and you guys cheap material, fuck we have enough of it, Canada's resources could supply NA for 300 plus years easy, and still not peak if we open the place up, i mean damn most Canadians won't care, were practically the same country any way. it would be a win all around, and we would finally do what i said to do for years, turn our backs on the rest of the world, and live like kings, instead of dieing over there damn foolishness...

 

[Billy T]

of course with the new deal Russia signed with china to sell them oil at 20 dollars a barrel hurts....

Despite being nominal "Communists" The CCP is driving a lot of hard bargains, which even JD Rockafellow would have admired. For, example by advancing Brazil 10 billion dollars (a loan to be repaid with fixed amount of oil during 20 years) less than two years ago, they got that oil at about $35/ barrel, as I recall. (I calculated its price about a year ago but not sure of details now.)

That deal is not as bad as it sounds when one considers the time value of money. (Brazil gets funds now; on average China gets oil with 10
year delay.) China mainly, IMHO, want to spend reserve dollars for real assets instead of hold paper promises issued by the US treasury.

PS Sounds like you are Canadian and want to help Canada grow. If that is the case, you should be selling bread to China at cost for a few years - get the Chinese to use wheat more than rice for their carbs. Selling them boat loads of your winter wheat is an in-exhaustible income source for Canada and a lot less polluting than shale oil recovery.

 

[soullust]

Despite being nominal "Communists" The CCP is driving a lot of hard bargains, which even JD Rockfall would have admired. For, example by advancing Brazil 10 Billion (a loan to be repaid with oil fixed amount of during 20 years) they got that oil at about $35/ barrel, as I recall (I calculated its price about a year ago but not sue now of details)

That deal is not as bad as it sounds when one considers the time value of money. (Brazil gets funds now; on average China gets oil with 10 year delay.) China mainly, IMHO, want to spend reserve dollars for real assets instead of hold paper promises issued by the US treasury.

fuck yeah it is an awsome deal for china.

As for the paper assets, it still boggles my mind how thoughtless Nixon was about the future when he helped ditch the gold standard. if for say we ever do adopt a common currency, the Amero, I hope they base it on the gold standard.