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

To: mishedlo who wrote (28642)	4/27/2005 1:53:21 PM
From: RealMuLan	Read Replies (1) \| Respond to of 116555

Japanese are afraid of trade retaliation, like what happened in early 80s

To: mishedlo who wrote (28642)	4/27/2005 1:59:55 PM
From: Tommaso	Read Replies (1) \| Respond to of 116555

>>>WTF is this?<<, Deflation? <G>

To: mishedlo who wrote (28642)	4/27/2005 2:03:28 PM
From: Crimson Ghost	Read Replies (2) \| Respond to of 116555

Bush's Gambling Debts Jeffrey D. Sachs April 26, 2005 Jeffrey Sachs is professor of economics and director of the Earth Institute at Columbia University. George W. Bush’s economic policies have been based on an extraordinarily reckless gamble that reflects a political coalition of two major forces: the super-rich and evangelical Christians. As those policies fail, global financial markets are reacting negatively, adding uncertainty to the world economy, and there is little relief in sight, because America is entering a period of prolonged political infighting and stalemate. The super-rich were motivated to join the Bush coalition by one overriding objective: tax cuts. Evangelicals were brought in because of Bush’s opposition to abortion and gay marriage, and promises of active government support for religious activities. Bush believed that tax cuts for the rich would one day be balanced by cuts in spending, but never explained this to the public. For four years, he pretended that budget deficits were of little concern. Only after re-election did he begin to explain that large budget deficits require cuts in Social Security, health care spending and other areas. The problem is that Bush’s reckless gamble has now built up considerable political momentum. As soon as he was re-elected, Bush started to propose cuts in popular government programs, but his own party is rejecting those cuts. With the Republican-controlled Congress seeking to make the tax cuts for the rich permanent, the world is beginning to realize that America’s budget deficits are now entrenched, with no end in sight. Because America’s economy is so large, and the dollar so central to global finance, chronic U.S. budget deficits mean huge global repercussions. The dollar is weakening, as financial markets understand that the United States will need to borrow huge sums from abroad for years to come. More ominously, the willingness of foreign central banks to lend to the United States also looks likely to end. After all, why should the central banks of China, Japan, South Korea and other Asian countries accumulate vast holdings of U.S. Treasury bills if the dollar is likely to lose value in the years ahead? In a bizarre but not unexpected way, America is lashing out at others for its problems. Huge tax cuts and rising military spending have fueled an enormous rise in imports, and therefore a yawning trade deficit now accompanies America’s weak fiscal position. But American politicians are blaming China and other countries for “unfair trade,” and even threatening them with sanctions. This response to homegrown problems plays well with voters, but it is ridiculous and ignorant, especially since the United States has been depending on China to help finance the fiscal deficits. In essence, the United States is lashing out at its own banker, even as it asks the banker for yet more loans! When Bush asked for spending cuts at the beginning of the year—including a Social Security reform that includes cuts in future benefits—world financiers expected that Bush would get his way, or most of it. Little did they appreciate that American voters, having never actually supported spending cuts, would resist. As that reality sinks in, economic prospects darken. Foreigners will become less enthusiastic about continued lending to the United States, weakening the dollar further, forcing up U.S. interest rates and threatening to undermine America’s stock market and consumer spending. But as the storm clouds gather in the coming year, the political coalition that put Bush in power will stifle progress in undoing the fiscal mess. Bush’s gamble was a loser from the start, generating costly results—mainly for the United States, but for the rest of the world, too—for years to come.

To: mishedlo who wrote (28642)	4/27/2005 2:18:15 PM
From: Roads End	Respond to of 116555

Yeh right, they raise their prices and the customer will just go to Honda or some other quality Asian producer not to GM or Ford. More than likely though the customer just pays more for the Toyota anyway and in the process Toyota grows its bottom line. LOL these guys are shrewd.

To: mishedlo who wrote (28642)	4/27/2005 2:37:39 PM
From: TH	Read Replies (3) \| Respond to of 116555

mish, Discussed this yesterday with some friends in the industry. Maybe Toyota wants to protect their bottom line and recognizes the cost increase pressure building in the supply pipeline. A thin effort at collusion maybe. And to the Toyota way of thinking (and Honda) any increase by the US automakers that is matched by the Japanese will still be "advantage Japanese". Did everyone see the story on Lear last weekend? I can dig it up if it was missed. Bottom line pain at one of the big dogs. More to come. One last note. A woman I know who works as a consultant to the auto industry posed a question of sorts at lunch last week. She asked, "how do I survive in Detroit over the next ten years?". One year ago she was convinced that things were great, and more growth was to come. Now, after helping move lots of business to China, she has reversed her position. Her latest project was a requote package to move production to China. She basically is working herself out of a job, and she is aware of this. GT TH P.S. Nice blog entry last week.

To: mishedlo who wrote (28642)	4/27/2005 5:29:09 PM
From: anachronist	Respond to of 116555

Toyota to GM: We're tired of kicking your @$$ We want to help you compete with us... WTF is this? How is this not restraint of trade????

To: mishedlo who wrote (28642)	5/2/2005 4:59:30 PM
From: microhoogle!	Read Replies (1) \| Respond to of 116555

Toyota help offer has US fuming Detroit, April 28: With friends like Toyota Motor Corp, the world's richest automaker, do struggling General Motors Corp and Ford Motor Co really need enemies? That question has been making the rounds among auto industry observers since Monday, when Toyota Chairman Hiroshi Okuda suggested Japanese automakers should raise their US car prices to help GM and Ford out of the deepening financial mess they're in. Higher prices would slow US sales for Toyota and other Japanese giants like Honda Motor Co Ltd, giving their older and weaker North American rivals a chance to stave off further erosion in their US market share. "We need to give some time for American companies to take a breath," Okuda was quoted as telling reporters in Japan. A day after he spoke, though, Toyota and Honda both said they had no intention of raising car prices to help their US competitors. And Okuda's comments have been dismissed by some as a "mind game" or bid to rub Detroit's nose in Toyota's seemingly unstoppable success. "It almost brings a tear to my eye," Edward Lapham, executive editor of Automotive News, said on Wednesday. "Is this the new, arrogant automotive equivalent of noblesse oblige?" asked Lapham, writing in an online opinion column for the weekly trade magazine. Toyota has already overtaken Ford as the world's second-largest automaker and industry analysts say it could soon zoom past GM, which has held the No. 1 spot since 1931. Toyota has been eating GM and Ford's lunch for years and "they're starting to work on dinner too," said Burnham Securities analyst David Healy. He said Toyota had many reasons to raise its US vehicle prices -- including the weak US dollar, overstretched production capacity and margin pressures -- but pitching price hikes as a way of bailing out GM made little sense. "I've been in this racket a long time but I've never seen anybody talk about raising prices to help a competitor," Healy told Reuters. "Maybe they shouldn't let the Americans lose face," he added. 'EVERYBODY WANTS PRICE INCREASE' "I think everybody wants a price increase," David Cole, head of the Ann Arbor, Michigan-based Center for Automotive Research, said when asked about Okuda's comments. Cole said he thought Toyota was legitimately concerned about the health of the US industry, however, and the ripple effect something like a bankruptcy at GM could have in the United States and elsewhere around the globe. Okuda himself alluded on Monday to the potential negative impact for Japan -- and political backlash and trade conflicts seen in the not-too-distant past -- if things continue to go wrong for US car makers while their Japanese counterparts grow stronger than ever. Maryann Keller, a veteran automotive industry consultant and analyst, said she too had no doubt Okuda was concerned about the health of his Detroit rivals and the crisis particularly at GM. She added that Toyota had no need to use GM -- which recently reported its worst quarterly loss since it skirted financial collapse 13 years ago -- as an excuse for some sort of "price increase in disguise." "Toyota right now is in the enviable position that General Motors used to be in 30 or 40 years ago, when they dictated pricing in the market," Keller said. GM and Ford did not return calls from Reuters on Wednesday seeking comment on Okuda's abortive offer. expressindia.com