Thursday, May 24, 2012

Obama-China Theme – Tony Newbill

China Yuan and U.S. Dollars
Emails 5/20/12 at 5/22/12

Here are some Newbill emails that have info and China markets and probable Barack Obama undermining of the America economy.

JRH 5/24/12

The GM bailout and relocation to China Is a Direct Assault on USA

Sent by Tony Newbill
Sent: 5/20/2012 9:38 AM

The GM bailout and relocation to China Is a Direct Assault on USA Independence as is described in this 1789 Tariff Trade act !!! Prepare to see the USA go Bankrupt Because we are not following this ACT!!!!!!!     .... we became Dependent when we should Be Independent at a balanced rate of domestic supply production .

The Hamilton Tariff (ch. 2, 1 Stat. 24, enacted July 4, 1789, also called the Tariff of 1789) was the second statute ever enacted by the new federal government of the United States by a vote of the first U.S. Congress. Most of the rates of the revenue tariff were between 5 and 10 percent, depending on the value of the item. Secretary of the Treasury Alexander Hamilton was anxious to establish the tariff as a regular source of government revenue and to encourage the growth of domestic manufacturing to lessen America's then-heavy dependence on foreign-made products. It also established the United States Customs Service.

The Hamilton Tariff and much of Hamilton's financial plan can be attributed as one of the causes of the schism in the Federalist Party. It facilitated the growth of Northern manufacturers by having the imported goods absorb the federal treasury's financial needs but harmed Southern farmers by making foreign-made products more expensive. This factor was one of the major causes of the Civil War.

General Motors is becoming China Motors. And while the USA is going broke over these trade Practices the vultures are sucking all the profits out of the dead Corpse of the USA.

Listen to this Video and see how Romney did just this!!!!! How the heck does he get around these issues while Obama just says, Hey at least I just saved your Jobs while Romney made profits????

Published on May 4, 2012 by vincewadeusa1

General Motors is becoming China Motors. Forget the spin. The evidence is clear and convincing. Did U.S. taxpayers save GM for China? Listen to the candid comments of GM's CEO.
China is heading for a well needed crash

Sent by Tony Newbill
Sent: 5/22/2012 9:39 PM

China is heading for a well needed crash , Is the False Flag even that will bring the economic crisis that opens the door to a New World Economic Order????

China is heading for a well needed crash

China is fading fast

Last week, China reported weak economic numbers, prompting the government to cut the reserve required ratio for banks resulting in looser monetary policy.

A lot of people are urging investors to invest in China. I think that would be a terrible mistake. China is in the midst of a very painful episode in its history. The economy has recently slowed to its slowest pace in two and a half years. And that is likely to continue.

China suffers from serious bottlenecks, including lofty property prices, rising wages and higher logistics costs due to manufacturing's move to the hinterland (the 'Go West Policy'). The results are higher inflation (3.4% at the latest count) and slowdown in foreign direct investments (which in fact peaked in August 2011).

Local investors are also less enthusiastic as the number of newly opened accounts in Shanghai has dropped to the lowest level since 2001. Instead investors have aggressively bought wealth management products, which are investment products that can avoid regulatory caps on deposit rates. Companies and people have moved their deposits to areas that can give higher returns.

This has three major implications:

• it puts strain on banks’ balance sheets and ability to lend, which may help to explain the disappointing loan growth;

• it forces entrepreneurs to pay high interest rates for loans: the percentage of loans charged above benchmark lending rates has increased from 30-40% to a record high of over 60%.;

• perhaps most worrisome, it makes it more difficult for the government to control the economy; the shadow banking system is estimated to account for one quarter of the total outstanding credit in China, up from 18% in 2009.

A survey shows that 60% of Chinese millionaires are thinking about emigrating to the U.S., Canada or another country, the Wall Street Journal reported. The main reasons cited in the survey were their children's education, fear of sudden changes in China's political situation and concern about worsening business conditions.

China as the best long-term way to invest in Asia is probably wrong. At least that is the experience from Europe, according to a recent study by Credit Suisse. While the biggest economies - Germany and France - offered a paltry 2.9% annual return over the last 112 years, the smaller peers yielded far higher: Sweden (6.1%), Finland (4.8%), Netherlands (4.8%) and Switzerland (4.1%). (Read Entirety)  

Bear in a China Shop 

It's not the booming economy that's about to burst -- it's bigger than that. Social discontent and, yes, income inequality could rip China apart at the seams.

MAY 22, 2012
Foreign Policy

Time and again, China has defied the skeptics who claimed its unique mixed model -- an ever-more market-driven economy dominated by an authoritarian Communist Party and behemoth state-owned enterprises -- could not possibly endure. Today, those voices are louder than ever. Michael Pettis, a professor at Peking University's Guanghua School of Management and one of the most persistent and well-regarded skeptics, predicted in March that China's economic growth rate "will average not much more than 3% annually over the rest of the decade." Barry Eichengreen, an economist at the University of California, Berkeley, warned last year that China is nearing a wall hit by many high-speed economies when growth slows or stops altogether -- the so-called "middle-income trap."

No question, China has many problems. Years of one-sided investment-driven growth have created obvious excesses and overcapacity. A weaker global economy since the 2008 financial crisis and rapidly rising labor cost at home have slowed China's vaunted export machine. Meanwhile, a massive housing bubble is slowly deflating, and the latest economic data is discouraging. Real growth in GDP slowed to an annualized rate of less than 7 percent in the first quarter of 2012, and April saw a sharp slowdown in industrial output, electricity production, bank lending, and property transactions. Is China's legendary economy in serious trouble?

Not just yet. The odds are that China will navigate these shoals and continue to grow at a fairly rapid pace of around 7 percent a year for the remainder of the decade, overtaking the United States to become the world's biggest economy around 2020. That's a lot slower than the historical average of 10 percent, but still solid. Considerably less certain, however, is whether China's secretive and corrupt Communist Party can make this growth equitable, inclusive, and fair. Rather than economic collapse, it's far more likely that a decade from now China will have a strong economy but a deeply flawed and unstable society.

China's economic model, for all its odd communist trappings, closely resembles the successful strategy for "catch-up growth" pioneered by Japan, South Korea, and Taiwan after World War II. The theory behind catch-up growth is that poor countries can achieve substantial convergence with rich-country income levels by simply copying and diffusing imported technology. In the 1950s and 1960s, for instance, Japan reverse-engineered products such as cars, watches, and cameras, enabling the emergence of global firms like Toyota, Nikon, and Sony. Achieving catch-up growth requires an export-focused industrial policy, intensive investment in enabling infrastructure and basic industry, and tight control over the financial system so that it supports infrastructure, basic industries, and exporters, instead of trying to maximize its own profits.

China's catch-up phase is far from over. It has mastered the production of basic industrial materials and consumer products, but its move into sophisticated machinery and high-tech products has only just begun. In 2010, China's per capita income was only 20 percent of the U.S. level. By most measures, China's economy today is comparable to Japan's in the late 1960s and South Korea's and Taiwan's around 1980. Each of those countries subsequently experienced another decade or two of rapid growth. Given the similarity of their economic systems, there is no obvious reason China should differ.

For catch-up countries, growth is mainly about resource mobilization, not resource efficiency, which is the name of the game for lower-growth rich countries. Historically, about two-thirds of China's annual real GDP growth has come from additions of capital and labor. Mainly this means moving workers out of traditional agriculture and into the modern labor force, and increasing the amount of capital inputs (like machinery and software) per worker. Less than a third of growth in China comes from greater efficiency in resource use.

In a rich country like the United States -- which already has abundant capital resources and employs all its workers in the modern sector -- the reverse is true. About two-thirds of growth comes from efficiency improvements and only one-third from additions to labor or capital. Conditioned by their own experience to believe that economic growth is mainly about efficiency, analysts from rich countries come to China, see widespread waste and inefficiency, and conclude that growth must be unsustainable. They miss the larger picture: The system's immense success in mobilizing capital and labor resources overwhelms marginal efficiency problems.

(SlantRight Editor: There is a Page 2 and Page 3. Good article – Read Entirety)   

The Game Is Up For The Commodity Super Cycle As The Yo-Yo Years Begin

If a blizzard of awful Chinese economic data is not enough to convince you that China is heading into a deflationary slump and the commodity "super-cycle" is coming to an end, then the deepening crisis in the eurozone should be. That's because not only will a massive reduction in foreign lending by European banks hurt investment in emerging markets, but supplier economies will be hit disproportionately, as they were post-Lehman.

In an increasingly interdependent global economy, it was always disingenuous to suggest that emerging markets could de-couple from the developed world, given their dependence on exports. But fund managers were all too willing to suspend their disbelief, as a liquidity-driven investment boom sent commodity prices soaring.

However, with fixed asset investment -- which accounts for 50% of GDP -- collapsing in China, global demand for non-food commodities will plummet, argues Michael Pettis of Peking University. After all, China's share of global demand for such commodities as iron, cement and copper is almost wholly a function of this high level of investment. Moreover, commodities are notorious for going through periods of scarcity and glut. Having increased production massively since 1999 -- crude oil output has risen by 16%, copper by 28% and aluminum by 94% -- it certainly feels like the end of the cycle. (Read Entirety)

Why a More Flexible Renminbi Still Matters

Sent by Tony Newbill
Sent: 5/22/2012 10:11 PM

[SlantRight Editor: Before going further if you might be as ignorant as I, you might be wondering: What the heck is a “renminbi?”

the currency of the People's Republic of China, the basic unit of which is the yuan.

renminbi (from Encyclopedia Britannica)

monetary unit of China. The yuan is divided into 100 fen and 10 jiao. The People's Bank of China has exclusive authority to issue currency. Banknotes are issued in denominations from 1 fen to 100 yuan. The obverse of some banknotes contains images of communist leaders, such as Mao Zedong, leader of China's communist revolution, whose likeness is pictured on several notes; lower denominations often contain images of people dressed in traditional attire. The reverse side of most coins, which range in denominations from 1 fen to 1 yuan, contains images of historic buildings and the country's diverse landscape. Renminbi, or people's money, became the official name of the currency in 1969.]

CAMBRIDGE – One of the most notable macroeconomic developments in recent years has been the sharp drop in China’s current-account surplus. The International Monetary Fund is now forecasting a 2012 surplus of just 2.3% of GDP, down from a pre-crisis peak of 10.1% of GDP in 2007, owing largely to a decline in China’s trade surplus – that is, the excess of the value of Chinese exports over that of its imports.

The drop has been a surprise to the many pundits and policy analysts who view China’s sustained massive trade surpluses as prima facie evidence that government intervention has been keeping the renminbi far below its unfettered “equilibrium” value. Does the dramatic fall in China’s surplus call that conventional wisdom into question? Should the United States, the IMF, and other players stop pressing China to move to a more flexible currency regime?

The short answer is “no.” China’s economy is still plagued by massive imbalances, and moving to a more flexible exchange-rate regime would serve as a safety valve and shock absorber.

That said, the exchange rate has received far too much focus as a lightning rod for concerns over China’s growing engagement in the global economy. The link between the exchange rate and China’s pricing advantages in world markets is wildly exaggerated. At the same time, the exchange rate is by no means the most pressing macroeconomic problem facing China today.

Rather, the biggest concern is China’s chronic over-reliance on investment as a driver of growth.

Investment constitutes almost half of GDP, more than twice the global average. At the same time, private consumption is under 40% of GDP, with 60% being a more normal figure for economies at similar levels of development. China’s investment appetite is unquestionably driven by huge intervention in the financial system: small savers receive only a paltry 1-2% on their deposits in an economy that until recently has been registering 10% annual growth.

The dramatic fall in China’s current-account surplus reflects four main factors. First, the cost of raw-material imports has risen sharply. At the same time, foreign demand for China’s exports is sufficiently sensitive that it cannot simply pass on the entire added cost.

A second important factor has been slow growth in the advanced economies, a byproduct of the financial crisis that is likely to persist for some time to come.

Third, China’s trade-weighted real exchange rate (the exchange rate adjusted for inflation differentials) has actually appreciated quite a bit in the past few years – by 14% since 2008, according to IMF estimates. China’s inflation has been higher than the average of its trading partners, and the renminbi has in fact strengthened gradually in nominal terms.

Finally, China engaged in massive investment stimulus as a response to the financial crisis. China’s investment is far more import-intensive than its consumption, which has continued to trend downwards. Countries like Germany and Switzerland have been huge beneficiaries of China’s seemingly insatiable appetite for high-tech capital equipment.

Setting aside all of these specific drivers, we should hardly be surprised that China’s current-account surplus collapsed in the wake of the global financial crisis. With China continuing to record spectacular growth while the advanced economies were experiencing a deep slump, China’s exports, relative to imports, had nowhere to go but down. Indeed, in retrospect, what is surprising is that China’s trade surplus did not shrink even more. (Read More)

Edited by John R. Houk

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