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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (2205)	11/15/2003 8:25:20 PM
From: mishedlo	Respond to of 110194

Jay Please check in more often. Your insights are very much appreciated. thanks Mish

To: TobagoJack who wrote (2205)	11/15/2003 8:56:24 PM
From: russwinter	Read Replies (3) \| Respond to of 110194

Very thorough review. Just five things I'd add to illustrate my point that China is a horrific overhyped model headed for a fall/major bust. 1. There is very poor transparency on how much has been loaned and lost by state owned banks subsidizing export oriented production. Is this reported? I submit it's a shocker (effectively wipes out banking there), and will bite those pouring capital into the country. 2. You may call it low "legacy costs", but a key component of China's "comparative advantage" is the use of defacto slave labor, that establishes a false unsustainable cost structure. As wealthy as China is becoming, they should be doubling wages annually (or setting a minimum wage suitable for their situation). No excuse not too, if there's any sense of social justice in the country. 3. Hyperstimulated speculative economic and speculative bubble: mostly from excess dollar based liquidity. China is now severely infected by the American disease (runaway credit excess). 4. Artificial pegging of it's currency, unfair trade practices: this won't matter until the first three situations are strongly reformed. 5. Overheated economy relative to it's infrastructure. May be correctable in time, except for the baggage of points 1-4.

To: TobagoJack who wrote (2205)	11/15/2003 9:18:24 PM
From: Wyätt Gwyön	Read Replies (1) \| Respond to of 110194

Jay, why do you think China works so hard to keep the RMB at its current fix to the USD? it does not seem that even a substantial revaluation would endanger the export of jobs to China. all i can think is that China has so many more unemployed that they want to keep enlarging their share compared to the rest of rapidly developing Asia. however, the accumulation of huge amounts of US assets, a la Japan, has its costs, which may be a lot for a country at China's stage to afford. i am not at all clear on what currency controls they impose and how they impose them, to achieve their USD rate fix. but without sterilization (which has its own budgetary costs), it seems they will flood China with oodles of RMB under the current fix regime, which is very inflationary itself. also, i have read in several places (including Duncan's book, i believe) that unskilled factory workers cost $3-4 per day; is this true? also, do you have any thoughts on what this manufacturing job drain from the West means for the West? a recent Grantham interview in Barron's found him rather sanguine at the prospect of, say, another 6 million such jobs down the drain here. however, i am not sure that overall corporate margins can support the kind of lifestyles we like in the US on just service margins. not to mention that the cat is out of the bag w/r/t services as well; with jobs in this sector being exported to India, China, etc. even if your own job doesn't leave, somebody else's did, and that somebody else is more competition for your job. i am amazed at the wage depression in IT industries (e.g., programmer day rates) i have heard about. the WSJ recently had an article which stated that the going rate for a live-in maid was around $50 a month in Chinese metro areas.

To: TobagoJack who wrote (2205)	11/16/2003 9:06:40 AM
From: el_gaviero	Read Replies (1) \| Respond to of 110194

Jay, thanks for your always very interesting posts. One question and one question only: how does China deal with the problem of oil. Yearly oil consumption, per capita, in the USA is about 30 barrels. In China it’s about --- what? --- half a barrel? No way China gets anywhere near our level before we all go over the top and start downhill on Hubbert’s roller-coaster.

To: TobagoJack who wrote (2205)	11/16/2003 10:59:30 AM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 110194

Jay just wonder why you are so anti American. Came to that conclusion from you added adjectives about the US worker. More interesting you do not have same attitude toward the French or Germans or Italians or UK workers etc........ or workers in Egypt or Iran. Wonder if you ever visited a French factory or were in a French small town or for same reasoning in Egypt or Iran or Tunis or Turkey? Cheers Haim

To: TobagoJack who wrote (2205)	11/16/2003 11:27:38 AM
From: loantech	Read Replies (3) \| Respond to of 110194

Jay, <the gentle ladies that do the fine finishing of the moulds cost far less and is far more effective than that guy in Illinois with big hands and the impatient temper.> Jay??????? Maybe ladies are afraid to show any temper as if they act as an individual they will be fired or shot or their male spouses would beat them or leave them as macho rules in China on men vs. women?? Is than an incorrect perception from a big guy with big hands and an impatient temper.(Me) <ggg> Just curious. I have read that Chinese workers are treated much more rigidly than in the US and your society may still be much more rigid on expressing personal beliefs and religious beliefs etc. than ours. Maybe we need a few more machine gun toting Army types keeping our lazy loud mouthed men under control?? <g> Then our costs can be lowered and productivity can rise. Of course I want to be one of the gun toters when all this happens. Some of this is tongue in cheek but there may be an element of truth also. Best regards, Tom PS:Sounds like some of the Japanese bashing against Americans in the late Eighties right before their rather lengthy comeuppance.