Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: mishedlo who wrote (16567)	11/22/2004 4:13:07 PM
From: Knighty Tin	Read Replies (1) \| Respond to of 116555

"All My Children" "Children of The Corn" "No Child Taken With Us"

To: mishedlo who wrote (16567)	11/22/2004 5:15:09 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Thanks, Mish. this is the best article of the late from Andy Xie. >> I think the renminbi peg is the pillar that would prevent dollar weakness from turning into a dollar crash. << Yeah, that massive hedge fund industry is what China worries about in case he repegs/float RMB. >> I think it is essentially an attempt to redistribute economic growth from Europe, Japan and emerging markets to the United States. << I would assume these emerging markets exclude China? Because it would be awfully difficult to take growth away from China when China pegs RMB to US$<g> >> The key signal that China has agreed to play, of course, would be a big revaluation of the renminbi, just as the Japanese yen was revalued in the 1980s. When the market talks about 3% or 5% revaluation, it is just baiting China. When China moves a little, everyone will jump on China and ask for more.<< Hallelujah! That is exactly why China has to stick to his gun, and not to budge<g> >> I do not think China will play the game, destroying itself to sustain indulgence elsewhere. China is too poor to become another Japan. Instead, the renminbi peg to the dollar could become the anchor for global stability when American politicians play with fire, in my view.<< This is the smartest comment I read from Andy Xie in a long while<g>. Although the fact is also obvious that China has tried his best to contain the runaway growth rate, and hope to obtain a sustainable growth rate over the next couple of decades. So generally speaking, China is a more responsible player than the US<g> >> I think the renminbi peg is the pillar that would prevent dollar weakness from turning into a dollar crash. << That is some complement!<g> Although I think J6P are too ignorant to appreciate the fact<g>. And they will keep bashing China for manipulating RMB and take the job away from Americans...

To: mishedlo who wrote (16567)	11/22/2004 5:23:33 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

[Want to argue with this guy? He is defending Walmart<g> And I thought it was partially due to the cheap labor from China's sweatshop that the US inflation rate becomes lower, how come it becomes Walmart's good deeds?<g>] PBS’s Anti-Wal-Mart Propaganda Everyone involved should be embarrassed. LLast Tuesday, the Public Broadcasting Service ran a scathing attack on Wal-Mart, the world’s largest retailer, on its Frontline series. The title of the program was, “Is Wal-Mart Good for America?” Although never stated explicitly, it is clear from the overwhelmingly negative portrayal of the company that the answer clearly is “no.” I watched this program with special interest. In fact, it was the first PBS program I’d seen in some time. I’d stopped watching shows like Frontline long ago because of their heavy liberal bias. But I thought perhaps this one would be different because I had been extensively interviewed for it. Over several hours at my house, I patiently explained to Hedrick Smith, the chief correspondent and producer of the program, that the main beneficiaries of Wal-Mart’s low-price policy are the poor, who could now afford products that would be out of their reach but not for Wal-Mart, improving their lives and raising their standard of living. I was trying to make the same point that the great economist Joseph Schumpeter made about the Industrial Revolution. In his book, Capitalism, Socialism, and Democracy, he said, “The capitalist achievement does not typically consist in providing more silk stockings for queens, but in bringing them within the reach of factory girls in return for steadily decreasing amounts of effort.” I also pointed out to Smith that Wal-Mart, all by itself, was responsible for a significant amount of the productivity miracle we have seen in this country over the last decade. In a 2001 report, the McKinsey Global Institute, a respected think tank, concluded that Wal-Mart’s managerial innovations had increased overall productivity by more than all the investments in computers and information technology of recent years. Wal-Mart’s innovations include large-scale (big-box) stores, economies of scale in warehouse logistics and purchasing, electronic data interchange, and wireless barcode scanning. These gave Wal-Mart a 48 percent productivity advantage over its competitors, forcing them to innovate as well, thus pushing up their productivity. The McKinsey study found that productivity improvements in wholesale and retail trade alone accounted over half of the increase in national productivity between 1995 and 1999. A new study from the prestigious National Bureau of Economic Research found that Wal-Mart has a substantial effect on reducing the rate of inflation. For example, it typically sells food for 15 percent to 25 percent less than competing supermarkets. Interestingly, this effect is not captured in official government data. Fully accounting for it would reduce the published inflation rate by as much as 0.42 percentage points or 15 percent per year. Ignoring these beneficial macroeconomic effects, Frontline focused almost exclusively on the loss of jobs allegedly caused by Wal-Mart. Acting as what economists call a monopsony, it supposedly forced countless American manufacturers to close their domestic operations and move to Asia in order to get their costs low enough for Wal-Mart to sell their products. It is also said to have caused innumerable local retailers to go out of business, further adding to the job loss. In fact, academic research by economist Emek Basker of the University of Missouri contradicts this last point, finding that Wal-Mart permanently raises local employment. Even restricting oneself to the material presented in the Frontline episode, it is hard to justify its sweeping indictment of Wal-Mart. For example, it accuses Wal-Mart of buying $15 billion to $20 billion worth of goods from China each year, implying that this is largely responsible for our trade deficit. But since our trade deficit with China is about $150 billion, Wal-Mart can be responsible for at most 13 percent of that. But even looking at the issue that way is stupid. If Wal-Mart didn’t buy from China, its competitors would. And if Wal-Mart had to depend only on high-cost American suppliers, it never would have grown the way it has and its sales would be far less than they are. Yet Frontline always implies that somehow Wal-Mart could have done things differently, kept more production and jobs in America, without paying a cost. No alternative scenario was presented. Finally, Frontline relied heavily on biased sources, such as testimony from openly protectionist organizations like the U.S. Business and Industry Council and a union representative who admits to being a disgruntled former employee of Wal-Mart. In other cases, the report relies on hearsay evidence that no responsible newspaper would publish in order to make its case. Supporters of Wal-Mart and free trade were limited to a few short minutes of camera time (I got about 3 seconds), mostly by a totally ineffectual company spokesman. In short, Frontline presented a one-sided hit piece disguised as objective news reporting. Everyone responsible should be embarrassed for this grotesquely unfair case of taxpayer-financed liberal propaganda. I will know better the next time they call me for an interview. nationalreview.com

To: mishedlo who wrote (16567)	11/22/2004 6:01:39 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Here is some counter argument<g>--"The problem is China, not the dollar" The end of Bretton Woods II is near Commentary: The problem is China, not the dollar By John Brimelow Editor's note: John Brimelow follows gold and international equities for Aegis Capital Corporation in New York. He is the brother of Peter Brimelow, a CBS MarketWatch columnist. cbs.marketwatch.com [BTW, this guy should get his number right. China changed its exchange rate from 5.8 Yuan to 8.446 Yuan to $1 in 1994. So his statement of "In 1993, China fixed its currency, the yuan, at $1 = Y8.28. " is dead wrong!] intl.econ.cuhk.edu.hk