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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (15073)	11/8/2004 12:12:46 AM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Bank of Canada's Dodge Comments on Global Imbalances, China Nov. 7 (Bloomberg) -- Bank of Canada Governor David Dodge comments on global economic imbalances and on the Chinese central bank's decision to raise interest rates for the first time in nine years. He spoke to reporters in Basel, Switzerland, before a meeting tomorrow of central bank governors from the Group of 10 countries. On the U.S. current account deficit: ``At some time, imbalances of that magnitude cannot continue forever.'' On the rate increase in China: ``Was I pleased to see the Chinese authorities finally act on interest rates'' rather than use administrative measures? ``Absolutely.'' ``It's fair to say that all of us in Europe and North America for sure have argued that the interest rate, the price mechanism, is a good thing.'' An interest rate move was ``preferable to using administrative mechanisms exclusively.'' On the Canadian dollar: ``We have no target for the dollar.'' On Canada's economy: ``Exports have strengthened and even though domestic demand was strong, net exports have made a major contribution to growth.'' ``We've seen major strengthening in commodity prices and reasonably good growth in our markets.'' On the global economy: ``I'm sure that 2004 turned out to be better for the global economy than we thought.'' To contact the reporter on this story: Christian Baumgaertel in Frankfurt at cbaumgaertel@bloomberg.net. To contact the editor of this story: Heather Harris at hharris@bloomberg.net. Chris Kirkham at ckirkham@bloomberg.net. Last Updated: November 7, 2004 15:44 EST bloomberg.com

To: RealMuLan who wrote (15073)	11/8/2004 12:16:10 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

I do not know. That was posted on the FOOL and I copied it over. I will guess sheep and beef. The latter for mcdonald hamburgers perhaps Mish

To: RealMuLan who wrote (15073)	11/8/2004 12:53:59 AM
From: S. maltophilia	Read Replies (1) \| Respond to of 116555

Mostly high end stuff, out of season produce, fish, etc. Just walk through a grocery store, especially in winter. Some of it is just shipped from Mexico, but the economics of cheap apples from New Zealand seems a bit strange to me. We export a lot of bulk commodities - wheat & soybeans. We import the high priced, value added goods. Sounds like a 3rd world/colonial model to me.

To: RealMuLan who wrote (15073)	11/8/2004 3:33:56 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 116555

what kind of agricultural products the US imported? Fruits and vegetables? This trend of food imports will turn into a tidal wave over the next ten years as the Free Trade Agreement with Australia Bush recently signed goes into effect. The cost of farm production in Australia is far below that of American farms. Australian farms typically measure miles on each side - the economies of scale are mind boggling. It's a nation the same size as America with 95% fewer people. The biggest value market is fresh food. The world now eats from an huge fleet of 747s which move fresh food around the globe. Everything is now in season. Few recall that prior to electric lights, eggs were not available in the Winter months as hens did not lay when days were short. From the Wall Street Journal article: U.S. agricultural exports have been stagnant for eight years in part because new farm powers are emerging around the world in places where land is cheaper and governments are pumping money into infrastructure such as roads and ports. Brazilian soybean farmers are winning customers away from the U.S., for example, and Russia has transformed itself from a huge customer of U.S. wheat into a wheat-exporting rival. India, which once depended on American aid to fight famine, is an emerging food exporter. China, long a big buyer of U.S. crops, is pushing for food self-sufficiency. Canada is a major exporter of hogs and beef to the U.S. The upshot: The U.S., which controlled half of the world's trade in wheat in the 1980s, now has just one-quarter of the world market. Many supermarket executives learned about importing during the 1990s, when they turned to Chile, Mexico and Argentina for grapes, tomatoes, asparagus and apples to keep their aisles stocked with fresh produce through the dead of the U.S. winter. Now retail executives are trying their hand at more exotic fare, such as Irish marmalade, Scottish cookies and Japanese horseradish powder. According to the USDA, 78% of the fish and shellfish consumed in the U.S. are imported, up 10 percentage points from 2000. Imported wine had 27% of the U.S. market last year compared with 21% in 2000. Everything from lamb and avocados to spices, beer, flowers and bell peppers increasingly is imported. "Shoppers want more and more choices," said Monte Wiese, president of the specialty-foods unit of Hy-Vee Inc., a Midwest supermarket chain. Hy-Vee is putting olive bars in its stores. As at a salad bar, shoppers can pick from 14 varieties of fresh olives from Greece, Italy and Turkey. Hy-Vee is also importing, among other things, canned coconut milk, cheese from Switzerland and canned artichoke hearts from Spain. Even U.S. farmers are getting into the act. Sunkist Growers Inc., a citrus cooperative owned by growers in California and Arizona, is making plans to import navel oranges from South Africa for sale under its brand when U.S. oranges are out of season. "We either provide consumers with what they want or we are out of the market," said Jeffrey Gargiulo, Sunkist chief executive. The growing immigrant population is creating demand for imported foods. General Mills Inc., for example, is beginning to import from India the frozen flat breads roti and nan. U.S. food companies are also using more foreign ingredients in their products. Much of the Pepsi-Cola sold in the U.S. is made with concentrate imported from places such as Ireland, where PepsiCo Inc. says manufacturing costs are cheaper than in the U.S. About 20% of the beef used by McDonald's Corp. restaurants in the U.S. now is from foreign cattle. A McDonald's spokeswoman said a shortage of lean beef in the U.S. is forcing the company's hamburger suppliers to turn to cattle from Australia and New Zealand. The import boom is causing a backlash among some U.S. agricultural groups, such as Florida produce farmers. These groups successfully lobbied Congress for a country-of-origin regulation requiring supermarkets to label the birthplace of produce and meat, among other commodities. Opposition from retailers, however, has stalled implementation of the labels.

To: RealMuLan who wrote (15073)	11/8/2004 8:46:20 AM
From: mishedlo	Respond to of 116555

US Trade Policy: Legacy of the Sorcerer's Apprentice yaleglobal.yale.edu

To: RealMuLan who wrote (15073)	11/8/2004 8:53:40 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

financial crisis coming? signonsandiego.com Paul Volcker, former chairman of the Federal Reserve Board and a Republican, says we face a 75 percent chance of a financial crisis within five years. Robert Rubin, former economic chief under President Clinton, says we are confronting "a day of serious reckoning"..But perhaps Peter Peterson, former chairman of the Federal Reserve Bank in New York, chairman of The Blackstone Group and a moderate Republican, put it most succinctly: "We are not paying our own way," he says. "As a nation, we are running on empty. If the ultimate test of a moral society is the heritage it leaves to its grandchildren, I would say we are failing that test." In short, these men – our best and brightest – are telling us that, while the nation is fixated on delusions of empire in the Near East and illusions of omnipotence, we are simply going broke.

To: RealMuLan who wrote (15073)	11/8/2004 8:55:23 AM
From: mishedlo	Respond to of 116555

Fuzzy outlook, deficits could trip Bush economic plans: analysts WASHINGTON, (AFP) - With the outlook fuzzy and the US economy saddled by big deficits, President George W. Bush (news - web sites) will face a tough road implementing his ambitious economic agenda in a second term, analysts say. Bush, fresh from his reelection victory, has reiterated plans to halve the record federal budget deficit of 413 billion dollars, while making his tax cuts permanent. He also is eyeing plans to "simplify" the federal tax code, and pressing for private retirement savings that some say would amount to a partial privatization of the social security system. Although the new Congress will have a strong Republican majority and may be open to many of the proposals, analysts say there are limits to how much a second Bush administration can accomplish in the current economic climate. Morgan Stanley economist Richard Berner said Bush's agenda may be too ambitious. "The president clearly wants his legacy to include a significant reshaping of the geopolitical and economic policy order, and he will try to use what he sees as 'political capital' won in the election to implement it," Berner said in a note to clients. "But the real obstacles to implementation will be the ambitious scope of his proposals, the practical problems in reconciling what I see as serious conflicts among the proposals, and the short timeframe he has to achieve them." On taxes, Bush has yet to outline what he means by simplification, and has asked a commission for recommendations. But some Republicans are pressing for a "flat tax" or a national sales tax to replace the current system. "The president believes he can simplify the tax code without losing revenue and still retain deductions for charities and home mortgage interest, and presumably keep the deduction for state and local taxes," says Berner. "The problem is that all those deductions will narrow the tax base. Moreover, tax simplification will raise taxes for some and lower them for others, creating winners and losers." Bush passed tax cuts worth 1.35 trillion dollars over 10 years in 2001 and another 350 billion dollars over 10 years in 2003. All of the tax cuts expire by the end of 2010, and some expire earlier. Last month, he signed a law doling out corporate tax breaks worth another 146 billion dollars over a decade. Economists say the Bush administration -- which argues that economic growth will cure the deficit problem -- has shown little penchant for tough choices like tax increases that could reduce deficits and the government's borrowing needs. And the record current account deficit -- a broad measure of trade and capital flows -- suggests US consumers, like the government, are living beyond their means. All this suggests a potential train wreck for the US dollar that could send ripples through the global economy, say some observers. "In a closely fought, negative campaign it was almost impossible for either candidate to honestly discuss the choices facing the US economy," said Ethan Harris at Lehman Brothers. "In his second term, President Bush (news - web sites) will probably continue to avoid some of the tougher issues. For example, medical costs are growing at an alarming pace, but the politics are so toxic that we believe major reform will be left to the next president. However, President Bush will not be able to avoid the tough issues raised by the huge twin deficits in trade and the budget." Harris said the imbalances in trade and budget are unlikely to be corrected without turmoil and pain. "The global economy has become unduly dependent on the US as an engine of growth, and the US has become too dependent on foreign capital to fuel that engine," he said. "What is needed is a major reduction in the US current account deficit, while avoiding serious damage to US and global growth and without shocking capital markets. That means an orderly decline in the dollar ... and avoidance of ugly protectionist actions." A sharp increase in economic growth could ease some of Bush's fiscal woes, but many experts see only modest growth ahead despite an increase to 3.7 percent expansion in the third quarter from 3.3 percent. Merrill Lynch economist said he sees the US economic expansion cooling to a three percent pace next year, adding, "History tells us that no matter who emerges victorious, the year following an election almost always sees the economy slow as the fiscal party turns into a fiscal hang-over." Against this backdrop, Bush will be hard pressed to fund all his initiatives, say analysts. "Even if he was blessed with budget surpluses to pay for these initiatives, and had blueprints for how to proceed, his agenda would be daunting," said Berner. "Absent other changes to reduce today's sizable deficits and with little time to articulate and sell the details of these proposals, they seem collectively unlikely to pass in President Bush's second term." story.news.yahoo.com

To: RealMuLan who wrote (15073)	11/8/2004 8:57:45 AM
From: mishedlo	Respond to of 116555

The Coming Collapse of the Dollar smartmoney.com The Fed recognizes they can't raise interest rates because of the mountain of debt that confronts us. The economy wouldn't be able to handle the additional constraints placed on it that would result from higher rates. The Fed is allowing the dollar to go lower and as a consequence we are seeing higher oil prices and other higher commodity prices. The Fed has made that determination and that probably doesn't bode well for the dollar because the only way you save the dollar is through higher rates. Otherwise, it's necessary to clamp down on the markets through capital controls. It's possible we might ultimately try that. I don't know what form the capital controls would take. There could be limits on how much foreign currency Americans can buy either in terms of investing abroad or buying foreign assets. There might be some kind of barriers imposed by the government to prevent free flow of capital both in and out of the U.S. As the federal budget finances worsen, there maybe some kind of imposition on tax-deferred plans in which X-percentage of assets must be invested in specially denominated long-term Treasury bonds to finance the growing federal deficit. The key is that capital controls are a realistic possibility and the way you protect yourself against that possibility is to diversify now. Get out of the dollar now while you can still get out of the dollar. Buy foreign assets now while you can still buy foreign assets. Take advantage of the fact the dollar is still overvalued even though it is down from its peak. It has a lot more purchasing power today than it will a year or two or three down the road.