Three comments,
(a) Given that much is founded on Stratfor's supposed contrarian take on issues and events, and given that Stratfor has been consistently mainstream and wrong, there take on matters is just and only that, their take.
(b) If Stratfor's take on oil price decreasing depends on China importing less, I have news for them, China is already importing less, and waiting for market to settle, and so I haven't a clue who is buying oil at the spot. However, given that oil was at 15 only so long ago, and is at 65 now, what does it matter if spot goes to 55 or 45, it is a tax on global economy, and one that is living off of J6P housing 'wealth' extraction.
(c) As far as Stratfor's take on the Chinese economy, they have been wrong forever plus a day, and the points they make on source of foreign investment are irrelevant, because the fact of the matter is, regardless of origins, investments are made, structures built, income rising, and trade increasing.
Yes, China's economy is already taking a rest, and, as in but, only resting, so as to do the next leg up. The reform is in fact gathering pace, privatization happening at full throtle, and the next phase, after any possible deluge, will be even stronger, not weaker, because that is the TREND, one that Stratfor has failed and failed again to recognize.
Focusing on 1929 in USA would have been an error, and Stratfor is making that error, today, regarding China.
Stratfor could easily have noted back in 1991 (they probably did, had their foolishness extended that far back) that 90% of FDI in China is from Hong Kong, Taiwan, and Macao, and my comment would have been, yeah, and so what? Do they mean that the investments are not real, or they suppose that the investment will be pulled back out of the cement and machinery stock?
I read Stratfor for amusement and triangulation, I definitely fade much of what they have to say.
I got asked about the source of China's inward FDI recently, and I e-mailed response as below, QUOTE
Hi guys, I think Stratfor is blinded by its politics,
and is in fact not commercial savvy. Their geopolitical analyses is interesting as a view, to be considered, but not altogether correct as far as economics is concerned.
I think ...
The source of China FDI can all be traced to Maestro Greensputin's money printing, and Professor BurnAndKaput's Secret Weapon printing press. Whether the money goes to China via GoodYear or GM, or via Silverstone (Malaysian overseas Chinese outfit) or Mr. Wang from Vancouver is not entirely important, because the invested assets resulting in production capacity all serve customers all over.
The overseas Chinese money really only started entering China in large dollops and huge tranches after June 4 1989, as it is the first time in a longtime that overseas Chinese money can hope to make a dollar or yen or won in China, or on the stock exchanges in New York or London or Hong Kong or Singapore. The money all comes from one source, the US Fed Reserve, vi Fannie Mae and Freddie Mac, enabled by Joe6Pack refinancing his house for three times.
As the dollars built up, of course the domestic Chinese started getting some, and learning from their naughty cousins, started establishing offshore companies, bank accounts, trading companies, etc. And yet, still, the money can all be traced to the same gushing source, the US Fed.
The companies that invested in production in China, including some early-adopter US companies, all play the offshore company re-invoicing game (using controlled offshore companies to buy from their China invested and subcontracting companies at low ex-factory prices, and selling the same at marked up importing cost to controlled US companies). Whether
the operation in China is making large or small profit is not relevant. The profit is made somewhere along the chain, and it mostly is also not on-shore US. This fact can be easily discerned by checking general ex-factory price in China vs import. wholesale, and retail prices in USA.
So, bottom line, profit is made, not so much for the GMs and GEs, but for 90% of everybody else.
... and ...
(a) It is all about Humvees
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(b) Sin
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(c) In changing times
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(d) Where things can go
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(e) When we must dial 1.800.save.my.azz
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(f) Get money for coffee
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(g) Then select to go through Door #3
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