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Non-Tech : Kirk's Market Thoughts -- Ignore unavailable to you. Want to Upgrade?

To: Kirk © who wrote (5990)	7/11/2018 10:25:57 AM
From: robert b furman	5 Recommendations Recommended By 3bar bull_dozer Fintas Jack Be Quick toccodolce Read Replies (1) \| Respond to of 27117

So when Tesla goes broke over in China - the big G (government) will bail them out and they'll be wholly owned by the Chinese government - which is the Chinese modus operandi anyhow. China would love a car maker of electric vehicles (that is selling cars below cost to its people with huge subsidies). This would also be a much faster fix in beginning to control the horrible pollution that has to have a huge medical cost not to mention people costs. Once again a free technology transfer - but sneaky with patience thrown into the equation. How can Tesla build a new plant in China when their cash drain at home is such they need to raise capital by yearend or early next year. There isn't a really good manufacturing trick to building a car and losing money. What Elon's biggest mistake with Tesla was he entered a low margin manufacturing business. ruh roh! Mid cycle refreshes are due the first Tesla models soon and their trying to build the S model in volume to the point they cash flow positive - that does not mean they are profitable. I also read an article about buyers not really HAPPY WITH THE S MODEL. THERE ARE A LOT TESLA BEARS OUT THERE - SO I'M LEERY ABOUT SUCH RUMORS. No position - but tired of seeing a loser automaker get graced by cult like owners - "It's different this time" usually ends up in bankruptcy. Other than that - I think it makes sense to build the product where you sell it. The long term effect of tariffs ,which are effective in curtailing the dumping of product below cost in other markets, is the product gets built locally at higher prices. That is what has happened with solar panels aluminum, and steel. What we do not see here (in a dump into market) is the resizing pains of the obvious excess capacity that exists back home in China. China will stay MUM about that. On a big global picture - the irrational alocation of capital has created excess manufacturing supply. The long run of that condition always creates bankruptcies and closures once the government gets tired of subsidies or their currency takes a collapse (think Asian Contagion). China is going to take it in the keesters with their bureaucrats huge and wasteful misallocation of capital. Does this sound a lot like South Korea and how they chased market share in memory for years. There's going to be a dump of assets out there some time - it will more than likely be global. I think the US must protect their semi equipment and chip companies. Surely they should not be sold to a private equity fund that represents the Chinese government thinly veiled. Let China build their own chip sector - my bet is they find out that no debt and an efficient business model is the key to survival. Big Government buying a new business and then chasing for market share has not worked out in the past. Just sayin. Bob