Hello tooearly, <<China slowing growth>>
I think Message 19263962 , and I also believe China is trying to temper speculation given the recent surge in what was already a FDI money deluge.
Traditionally, speculation is considered destabilizing to society WHEN it inevitably spins out of control, because people are human, and out of control leads to no good.
Much of the China-bound FDI is actually offshore and domestic Chinese controlled money with no good prospects overseas given Greensputin's mistakes and BurnAndKaput's fantasy.
The rest of the China-bound FDI are one-off deals of relocated US/Japanese/Korea/European manufacturing capacities.
So, China, being now the largest FDI recipient in line with global investor electorate wishes and being the low-cost AND high quality producer must necessarily be a drag on US/Japan/Korea domestic manufacturing (as opposed to MNC) growth. For information, the foreign/off-shore/domestic Chinese owned factories have different output qualities serving varied clients. The domestic-Chinese invested factories are in the lower quality range of the spectrum, but improving quickly, whereas, for example, the GE-owned and GE contracting (non-GE-owned) factories in China are the best in their global system.
I believe China trying to not form and then burst a bubble is a good thing for the world, just as it would have been a good thing had the US not incubated, gave birth to and then popped a series of bubbles.
If and when China stops buying Snow's bonds, and the world continues refusing to put coins in the US begging cup and not shoulder some cost of the Mesopotamia occupation and not help the cause of the Israeli state, and if the proconsul Bremer's budget requirement continues to rise, even as the oil does not start to flow unimpeded to where it is needed – namely Asia, well then, why, it would be TeoTwawKi time for the financial markets.
The US, for great many reasons of varying grades of validity, has positioned itself as the lightening rod for Islam anger, but is in fact not in a good position to deal with the long-term, pervasive, and all-consuming crisis, being miserly on troops, lonely in allies, unresponsive to planet-wide concerns, short on financing, weak in political stamina to stay the course, poor in strategic leadership, and most likely, blinded by the media.
And to think, the same geniuses that maneuvered the US into such an Islamic strategic quagmire had wanted to restart the cold war with Confucius China, while naively believing that there are Russian Orthodox friends in the realm of geopolitics and that the Nippon Shinto pals still mattered. We had someone on this thread that allowed herself to, most unbecomingly, fall for the neo-con folly, even to the extent of boycotting Chinese goods made by the likes of General Electric and Ford.
If China stops buying Snow's bonds with the USD it is earning from supplying J6P's addiction habits, and instead starts to wolf down Canadian energy fields, Australian gas fields, and Venezuelan oil reserves, and build for rocket-for-rocket nuclear parity, how would that make the current US situation more advantageous?
So, you see, China and the US are joined on the one side, US and Japan are joined at the other side, and a separation operation would be fatal for the strategic position of one or all of them.
The simultaneous strategic equations are complicated, allow for few positive solutions, but holds plenty of negative possibilities.
This is why I believe Mr. Snow is not saying much other than mumbling about 'market forces', whereas China, in global trade deficit, is responding 'eventually' as regard to the Yuan:USD rate, and Japan is whispering nothing at all about the Yen while it enjoys a global trade surplus.
The above is my Grand Unification Theory of the Money Go-around, and I am sticking to it for the moment.
Interest rate will thus remain cheap in the US, courtesy primarily of Japan and secondarily of China, for a while longer, until the cataclysm of USD implosion triggered by private market forces, and then gold goes to USD 3,000/oz in rapid sprinting steps.
Now, the bad news. As China does not have an overall trade surplus vs the world ex-China, but only enjoys an enormous trade surplus with the US and Japan, the Chinese central bank buying of US T-bills and agency debt can stop at some point due to competing needs for monetary resources for Wang3Cups tea.
Should, in circularity of logic, the USD fall, and energy prices rise, then China/Japan may need to spend more of their USD for the energy, and thus less for Treasuries. If so, USD will weaken further. Should the oil price not rise in response to USD decline, then Saudi Arabia goes into People Power mode, and all hell breaks loose, causing oil price to zoom upward in all cases.
Exchange rate instability leads to more exchange rate instability. Snow may not know this, but Greensputin knows this better. Sadly, Greensputin is a spineless jellyfish of a politician-wannabe-adored, acting in no ones best interest but his own.
No one complained when China allowed its then over-valued currency to rise alongside the USD in 1998 in order to give SE Asia a breather during its moment of need, and now folks whine about a Chinese currency declining alongside its USD anchor. There is not symmetry, and less logic, and no good possibilities.
Chugs, Jay |
