Trade, The Dollar and BRIC

[IAN 2411]

I mentioned in another thread about something I heard Donald Trump say on UK TV. “The Chinese are stealing American Jobs,” and the reason for saying this he stated, “If a tax of 25% was put on all Chinese products then the Chinese would have to revalue their currency and bring it in line with the rest of the world.”

The UK we can only get limited trade from the Chinese because of the European Union, but it is a fact that all the time they bring cheap goods into the UK or the USA there will be jobs lost on both sides of the pond. In the UK we tax everything that is imported with an import duty unless it is from the EU. However our contribution is just a blip on the screen, whereas the Americans could make a difference worldwide. As the saying goes, if America sneezes the whole world gets a cold.

Snark quite rightly stated “That if the USA did that, the Chinese would most probably dump paper on the market. The end product being that the dollar would fall so far that that it would no longer be a global reference currency.” I think he was saying the dollar would be useless paper, and I understand that.

Well the other night I was watching another political and financial program, [Does this mean I am becoming my father?] mind boggling. It was reference to the BRIC org, and I had never realised how dangerously close they are to doing exactly what Stark talked about. These four countries are moving up in the world and their growth is staggering.

I would like to point out to all that the Chinese and BRIC might over the next few years be in a position to stop the US dollar being a world reference currency.

I will give you an example of Chinese trade and how they steal jobs both sides of the pond. I had to go to a party and my 17 year old Daughter wanted an evening gown for it, she found one on e bay. Made to measure £7.50....I believe that to be about $11. The catch...she had to wait 3 weeks while it was made, that was ok plenty of time. There were thirty measurements that had to be sent before they would start the dress, fine her sister took them. There was a £100 delivery charge because it was made in Shanghai; no problem I thought, cheap price for peace as I know it.

When it arrived it was hand stitched and was lined, it also fit her like a glove. She took it to a Wedding dress shop to have an invisible strap sewed on one shoulder, the woman in the shop asked her how many hundreds of pounds she had paid for it? When my daughter told her, the woman told her that the lining would cost more than the actual dress and if she had to make and sell the same dress it would cost a staggering £1000.

The point I am making is the fact that the west can never keep up with the Chinese in production. I picked up a souvenir from Worthing UK the other day and on the bottom it said made in China, [Is nothing sacred]? The Asian countries have been stealing jobs from the west for many years, and just a thought. The Chinese could dump paper tomorrow morning and still be where they are now, the Chinese have crept up on the west.

Who would have thought that two countries that have been warring for thousands of years like Russia and China would help form an alliance?

Be Well IAN 2411

[denuseri]

http://abcnews.go.com/WN/MadeInAmerica/

The above link had a special on american tv about how american prducts have been manuevered out of our markets over here by the globalization of the ecconomy (which imho is simply the corperations being dickweeds and making a bid to control the world) and to see if one can really by from their own country anymore suscceccfully in the west.

Will China end up ruleing the world?

[Snark]

Corporations are dickweeds? Please explain. Management has a responsibility to the shareholders. To make a profit. That is the purpose of a company. If they can make a profit AND compete - i.e. sell the products or services successfully, by producing their goods or services in this country for this country...they will. The aggravation and costs of purchasing out of country can be staggering (I know this; I used to do it.) But if the cost of doing it in country is greater, then it goes off shore. Contrary to some conspiracy theorists, no company (not even Microsoft) can "control the world". Yes, there are some high level managers who don't give a shit about anything except making money for themselves. But over 80% of all companies in the USA are small companies. Just trying to stay open, pay their overheads and make enough to survive. If you want to equalize the impact of size and influence, support the Fair Tax. This will eliminate most of the favorable company legislation that is a normal practice of larger companies (and has been for centuries.) If a company can compete legally and profitable, I don't care how big they get. Companies don't have the power of the law to forcibly extract possessions from citizens like government does. No one forces anyone to purchase from any particular company. It's a choice. We vote with our dollars. If you don't like imports, buy locally. If the products aren't available from a local manufacturer, support the Fair Tax. That will bring more jobs, products and economic success to this country faster than anything else imaginable. Here's a concept - everyone who thinks having a company is simple and easy - try it! Start a company. Make a payroll. Comply with the morass called "taxes and compliance". Then come back and tell me how easy it is to stay in business.

[denuseri]

Corporations are dickweeds? Please explain.

No problem, but it may take a whole seperate thread to go into the whole thing...they certiantly didnt start off being dickweeds, they just have managed to pull a lot of wool over a lot of eyes recently and really dont care how corupt they have become.

Management has a responsibility to the shareholders.

And as human beings they also have a responsibility to their fellow humans to not be explotative dick weeds, which should come first I wonder?

To make a profit.

If thats all they care about or its their number one sole priority, then they make the top five on my dickweed list for sure hon.

That is the purpose of a company.

Perhaps it shouldnt be their sole purpose then.

If they can make a profit AND compete - i.e. sell the products or services successfully, by producing their goods or services in this country for this country...they will.

Well if you watched the ABC report, it is pretty obvious they can, but are choosing not too becuase it doesnt maximize their profit margins.

The aggravation and costs of purchasing out of country can be staggering (I know this; I used to do it.) But if the cost of doing it in country is greater, then it goes off shore.

Humm, lets see, right now they are being paid by the tax payers, without having to be pay back anythng. Same way they swindled us during the bail out, only now, thanks to their having bought of the surpreme court, they can do it (outright buy off politicians) legally.

Contrary to some conspiracy theorists, no company (not even Microsoft) can "control the world".

No one corperation does, but collectively they most certiantly do exert far more influence than any one else can over government, short of the massess outright rebelling in the streets. So much for freedom , so much for democracy, or equality, thats all out the window when the allmighty dollar is involved. Who has the most money, like in a game of monopoly, apparently wins.

Yes, there are some high level managers who don't give a shit about anything except making money for themselves.

Yep the dickweeds.

But over 80% of all companies in the USA are small companies.

Small business is not the corperate dickweeds I am talking about. In fact they are exploited by the megacorperations allmost as much as the consumers and workers themselves, sometimes more so, since they hardely would like to see any of the little guys be able to succeed and get into a position to threaten their own profit margins. They even have their government cronnies doing a lot of the legislative dirty work of keeping them small...kinda like the old feudal lords used to oppress the tradesmen and serfs of the meddile ages, only under a thin veneer of law propaganda and orwellian new-speak.

Just trying to stay open, pay their overheads and make enough to survive.

Like I said, the corperate dickweeds are all about keeping the little man with the small business down.

If you want to equalize the impact of size and influence, support the Fair Tax.

How about instead we eliminate all the tax loopholes and governemnt kick backs to the super rich dickweeds who have been stealing from the system for so long instead. The so called "fair" tax isnt fair for anyone but the rich.

This will eliminate most of the favorable company legislation that is a normal practice of larger companies (and has been for centuries.)

If it does I would certiantly be surprised.

If a company can compete legally and profitable, I don't care how big they get.

To bad the big corperations dont play fair when they spend billions of dollars more to influence those making the laws so that they favor themselves and work against everyone else huh.

Companies don't have the power of the law to forcibly extract possessions from citizens like government does.

Which is why, if the governemnt was actually in charge we may see some of the wealth being redistributed instead of hoarded by the top 1% or the population. Instead its rather obvious the same top 1% are wealthy corperate dickweeds are the ones really calling the shots, especially in the military industrial complex side of the house and the oil and energy industires who support them.

No one forces anyone to purchase from any particular company. It's a choice. We vote with our dollars. If you don't like imports, buy locally. If the products aren't available from a local manufacturer, support the Fair Tax. That will bring more jobs, products and economic success to this country faster than anything else imaginable. Here's a concept - everyone who thinks having a company is simple and easy - try it! Start a company. Make a payroll. Comply with the morass called "taxes and compliance". Then come back and tell me how easy it is to stay in business.

The only problem with that little sugestion of yours is that to start a small business and compete fairly things have to actually be fair to begin with.

They clearly however are not.

Instead what we have is very onesided game of king of the hill where the elitist dickweeds are at the top holding a machine gun to keep the little guys from making it anywhere but maby a couple feet past the edge of the trench your in, and you dont even get to have a gun to use in opposition.

That or be one of the dickweeds yourself to begin with, but then your not in the trench at all anyways, your allready at the top.

[IAN 2411]

I don’t know where you’re both taking this argument but it is not in the direction I thought. The BRIC org has nothing to do with large companies and shareholders. And Large companies and Corporations are no different from the small companies and shops...all trying to squeeze that last $/£ out of our pocket so let’s get with the real world and the word from top to bottom is greed.

BRIC org has all to do with cheap labour and undervalued Chinese currency, if your country has neither of these assets or the raw resources to make and sell something cheaper than another country, then you tax that other country so that they cannot undercut you. That is down to the Fed Government not the big companies keeping your Kin and Kind in the black. The Fed Govt should be addressing the Chinese problem, as it only needs a little problem worldwide to bring a country to its knees, [As seen in the UK and Europe]. The Chinese might also be waiting for that blip themselves as they are now tightening the purses at home. If no one addresses the Chinese problem it will be as denu says, China ruling the world, or a large lump at least.

The USA has $14 Trillion in debt, and if 60% of that is Chinese paper then your country should be addressing that. The UK, are in £160 billion of debt now but we are addressing it, at the same time some of the European countries owe the UK personal debts of £90 billion +, so it not looking as bad as first seen, and those countries in Europe are also addressing their debt.

Be well IAN 2411

[Snark]

Ian: The problem with the US doing anything about is that the current regime is TRYING to take down the US. They don't care whether the Chinese take over the world as long as the US falls over. Case in point: The current Marxist In Chief's last speech pegs the solution to our problem as taxing the rich more and still spending as much. If they CONFISCATE all incomes over 250K and ALL profit from every company in the US, it would only be enough money to get through the middle of the fourth quarter. Then what? Apparently some people think that everyone is captive to doing what they have been doing. People can move. Companies can move. The higher the taxes, the smaller the tax base. Tax revenues will actually decrease. The only reason China has the advantage is the artificial value of their currency. So, how do you force a sovereign country to change that? Reducing our debt is the only solution for us. The current tax system needs revising. To state that the Fair Tax is fair only for the rich is a statement of ignorance. Wealth redistribution? Worked real well for Lenin. And Mao. And Pol Pot. Oh, see Fidel Castro. things are just lovely 90 miles south of Key West.

[denuseri]

It worked real well in england and europe and in the usa on those occasions when it was done, as well as all the other times before that in history, like with the greeks and romans, but as Ian is saying and as I suspected, its not the purpose of this thread, and shouldnt perhaps become a dominat sidebar.

The main problem with the current ecomomic system in use in the world today is too much greed and not enough ethics.

I predeict soon the good ole Tree of Liberty will be getting wattered again too if that doesnt change with the blood of the evil tyrants and poor patriots who will have to rise up to stop them.

To be honest Ian I think the reason the USA isnt doing anythuing is becuase its all part of their Government's Corperate directed plan and goes right back to Eisenhower's fears that the Military Industrial Complex would take over if allowed half a chance and wasn't well restricted and regulated.

As to the current american president wanting to only tax and rich and increase spending with no cuts...better do some actual fact checking if you wish to get through the demogogery and "spin"...which btw...is also Corpperatly directed interestingly enough.


As for the BRIC, I think they are as trapped by the same economic greed based system.

I also dont think they will surpass anyone if the the limited resources that are sustaining their growth run out as we expect them too in the middle of this century.


In which case, I wonder who will be coming out of this on the high side of things?


I bet it wont be the poor people.

[IAN 2411]

Here is a little bit of interesting news for those wondering how the Chinese can bring out cheap replicas so fast.

The man the Sky reporter meets is 21, he has no technical training and has moved to Beijing from a small town in southern China.
But within minutes of our meeting, he's shown me how he can hack into my email account.
A few more clicks of his mouse, and he's stolen my credit card details as I make an online purchase.
He says he's a "cyber security expert" - not a hacker - but we can't use his name and he refuses to show his face.
I ask him whether he could successfully hack into more carefully guarded computer systems: those of government officials and top companies in the West.

Billions of attacks are carried out each month"Even the strongest security systems have holes," he tells me. "Everyone knows that those people haven't realised that there are hackers who can attack them. They probably think they have the best security possible."

Last year, cyber attacks cost Britain £27bn. The global hub for targeted attacks is China. An estimated 1.6 billion attacks are launched from the country each month.The Chinese government says it is cracking down on hackers. Last year authorities reportedly made several hundred arrests and closed one online hacking school that was said to have 180,000 members.


The conference also highlighted the murky connections between hackers and the Chinese government.
One man who identified himself as a policeman said: "We're here to see if they have anything we can use. If there is, then we'll get in touch with them, and take the next step."

Cyber security expert Dave Clementey


Chinese hackers are accused of breaching the computer systems of the Pentagon in the US and the French and German governments, as well as several Whitehall departments.

In 2009, investigators discovered that Ghostnet, the largest ever network of cyber attacks, could be traced back to China.
The operation's command and control had gained real time control over 1,200 computers belonging to foreign embassies, international organisations, and media groups in more than 100 countries.
However, according to experts, the biggest threat posed by attacks traced to China is the loss of industrial secrets.
Last year several attacks targeted some of the world's biggest oil and gas companies - an area of enormous strategic importance to China's economy.It was also recently revealed that investment bank Morgan Stanley was hit by a six-month attack emanating from China.

Experts say Britain's high-tech industries are particularly vulnerable.

"Britain spends £25bn a year in these areas," says British cyber security expert Will Gilpin.
"It has a lot of specialist knowledge, abilities and plans available in its computers which are tremendously appealing to a country like China that wants to short circuit and leapfrog the Western countries in developing their economy."But the young "cyber security expert" says there may be an even bigger threat. If the West ever came into conflict with China, he says the country's hackers would be able to inflict untold damage.
"They may be able to shut down the electrical grid," he says. "Lots of things don't function without electricity. You could stop a whole area or the entire country from working."

And I wonder why the Chinese Dont give a shit about the west, or a need to revalue its currency. We invent and they build on our ideas, with that Cyber Force to work with no business stands a chance..

Be well IAN 2411

[IAN 2411]

Greek rescheduling could be 'fatal for euro' 8:58, Friday 17 June 2011
A rescheduling of Greek debt would solve nothing but could mark "the beginning of the end" of the euro zone, the head of the French AMF market regulating body Jean-Pierre Jouyet warned on Friday.

But a rescheduling could also mark the opening of a new phase of cooperation between EU governments, he said.

Jouyet, who is president of the French Authority for Financial Markets, referring to German pressure for a rescheduling, told RTL (Berlin: R8L.BE - news) radio: "That could be either the beginning of the end, or the beginning of a new (phase) of European integration."

He said: "What is at stake through Greece is the credibility of the euro zone and of the construction of Europe (Chicago Options: ^REURTRUSD - news).”

He said: "The Greek problem reveals that there is a very strong clash between a single currency ... and an economic and financial organisation for Europe which is not strong enough."

The Greek crisis also showed that some European countries "are living above their means."

He said that a rescheduling of Greek debt would not solve the problems confronting Greece, would undermine confidence in commitments by Europe, and would not permit the European Central Bank to continue helping Greece.

This was a reference to warnings by the ECB that a restructuring could pose such dangers of an outflow of funds from Greece and that the ECB could no longer provide continuous support to the Greek banking system.
Jouyet's use of the term "construction of Europe" refers to the founding principles of the European Union after World War II to ensure stability in Europe via a new architecture of common policymaking.

France, like the ECB, has expressed strong reservations about pressure from Germany for private lenders to Greece to accept to lose money as part of any new rescue.

French President Nicolas Sarkozy and German Chancellor Angela Merkel were meeting in Berlin on Friday precisely on this matter.

Asked about this disagreement, Jouyet said that it did not concern the fundamental issues but only the means of reaching a solution.

Objections to a restructuring of Greek debt involving losses for banks, insurance companies, savings and pension funds which have lent money to Greece are based on concern that such a route would radically reduce confidence in Greece.

That could cause an outflow of funds, ramp up pressure on other weak euro zone members, and may cause the ECB to enact its threat to cut off lifeline finance to the Greek economy via the banks.
.................................................. .......

I think this is related to the thread by the fact that China moves their goods into Europe through the back door. Now I know that it is nowhere near the amount of trade the USA do with them. I do think though that if the above takes place the UK will feel pain once more because there are Six countries in Europe that owe the UK billions, and Greece is one of them.

China has its own problems because it is trying to balance its books and might not be able to take the strain of some of its assets not being able to pay. Just a thought, that America trades through the back door with Europe also. Any ideas how this will affect the American economy and I can’t see there being a negative effect because the USA is also teetering on the edge.

Be well IAN 2411

[denuseri]

According to DEMETRIS NELLAS of the AP:

Greece is talking with international creditors about a second bailout package "roughly equal" to the first euro110 billion ($157 billion) rescue it accepted a year ago, the prime minister confirmed Sunday.
George Papandreou also blamed Greece's bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes with a fall referendum on the constitution that would make it easier to get rid of inept officials or workers.
His proposals were a populist response to widespread popular anger at politicians as austerity measures cut deeply into disposable incomes. Riots erupted on the streets of Athens last week against a new round of spending cuts and tax hikes being demanded by the European Union and the IMF.
"I ask for a vote of confidence because we are at a critical juncture ... the debt and deficits are national problems that have brought Greece into a state of dependence that may have protected us from bankruptcy, but which we need to get out of," Papandreou said, opening a three-day parliamentary debate that culminates Tuesday in a confidence vote.
He dismissed any calls to default on the country's massive debt, saying this would be "a catastrophe for households and banks alike" and made it clear he would not back off from efforts to reduce the debt.
Papandreou called for an autumn referendum on changes to the political system, including to the country's constitution. He said he will appoint an independent commission of up to 25 people to collect proposals from citizens and submit a report before the fall vote.
Papandreou said the constitutional revision will make it easier to prosecute delinquent government officials, now protected by a strict statute of limitations. He added other changes would include reducing the number of deputies, more transparent funding of political parties and candidates and a new electoral system, possibly even with term limits.
European donors and the International Monetary Fund are demanding that Greece pass new austerity measures before they release the next euro12 billion ($17 billion) loan from the first rescue package.
Many experts say Greece's debt load is too great and expect it to eventually default. The European Central Bank, however, has been adamant that a Greek default is unthinkable because it could set off an unpredictable chain reaction that would badly hurt European banks, roil markets and make it harder for other indebted countries to cope. The ECB also has significant exposure to Greek debt.
Spooked by financial markets' reaction to Greece's political turmoil, Germany on Friday dropped its demand that the private sector be forced to share in the pain of a second Greek bailout. Papandreou also reshuffled his Cabinet and named a new finance minister, Evangelos Venizelos, who was in Luxembourg on Sunday at a EU finance ministers meeting.
Papandreou said the original loan's assumption that Greece would be able to borrow from the markets in 2012 was no longer valid, but insisted his Socialist government had done all it was required to, passing painful austerity measures and reducing the deficit as a percentage of GDP by 5 percent in 2010.
Instead, he blamed ratings agencies, tax havens, "derivatives speculators" and the media for allegedly spreading panic and discouraging potential investors.
Papandreou said his government had tried from the start to negotiate lower interest rates and reschedule payments for the first bailout package, something he said his government finally achieved in March.
"This way, we will save, by 2015, euro48.5 billion ($69 billion) in debt repayments, including euro4 billion ($5.7 billion) on interest alone," he said.
Opposition leader Antonis Samaras, meanwhile, called for early elections and said Papandreou's referendum proposal was an evasive maneuver masking his inability to govern. He demanded that Papandreou be tougher in negotiating bailout terms with international creditors and repeated that raising taxes and cutting wages and pensions was the wrong way to go.
"We do not ask you to better apply the wrong recipe but to change it," Samaras said.
Samaras also proposed that Papandreou reactivate stalled highway projects to create jobs and seek faster EU funds for such projects.

With 155 deputies in the 300-seat parliament, Papandreou is expected to win the confidence vote. His next task is to pass the new austerity package by the end of the month, despite near-daily protest marches and sit-ins.
Protesters who flock each afternoon to Athens' central Syntagma square in front of parliament have been wearing stickers saying "We owe nothing, we'll sell nothing, we'll pay nothing" — rejecting creditors' demands to sell off state assets.
Keeping up the anti-austerity drumbeat, GENOP, the powerful union of state electric employees, was to begin rolling 48-hour strikes at midnight Sunday, threatening blackouts across the country. Unions are planning a 48-hour general strike on the date, yet to be determined, when parliament votes on the new austerity package.

[IAN 2411]

Kathleen Brooks, Director of Research UK, Forex.com, 15:11, Friday 24 June 2011
Is the Euro Dead
When the euro was being hashed out by Europe's leaders of yester-year they were creating a currency that would be the equivalent to the Hummer of the motor world.

The euro would rival the dollar as the world's most widely used currency and would become the icing on the cake of a united Europe.

But a mere 10 years since it came into circulation, is the euro is at risk of collapse?

One of the most interesting debates in the midst of Europe's sovereign crisis has been the outcome for the currency. Some have called for the end of the euro over the past year. However, it has shown remarkable resilience and it is still worth 40% more than a dollar.

But a year into the crisis and the harsh truth is finally coming out: Greece is insolvent. Ireland, Portugal and even Spain look increasingly vulnerable. If the Iberian nation falls then it can only be a matter of time when Italy follows suit, maybe even France would suffer.

That would leave Germany, the Netherlands, Austria and Finland as the only members in the currency bloc not in need of financial assistance.

This may be an extreme scenario, but if things were to get this bad, you can imagine that the euro would not be able to exist in its current form.

The trouble with Greece

Right now we don't know what will solve Greece's chronic fiscal problems. We can assume that Greece won't be allowed to go bankrupt next month when some large debt repayments
come due. Instead, the EU, led by Germany, the ECB and the IMF will come to the rescue and release funds.

If they don't then the alternative is carnage in the financial markets. If Greece misses a payment it will be labelled as having defaulted.

The fact that the various branches of the EU could let one member go to the wall would lead to questions of the strength of the union and the future of the currency.

In the immediate aftermath of the Lehman Brothers bankruptcy in 2008 the euro crashed 15% against the dollar; if the problem happened in its own backyard you could imagine the impact on the single currency would be even more severe.

So what next?

At this stage there are three outcomes for the euro.

The first outcome is that the single currency dies from a thousand cuts. Every time Greece looks like it is taking a step towards disorderly default then the euro gets hit. Eventually it weakens so much that it causes inflationary pressure and international investors no longer treat it like a world-class currency.

This makes Germany, a nation of savers, mad because it hates inflation and wants a strong currency for the prestige. So it dumps the euro on the weaker peripheral states and reverts to the Deutschmark, possibly taking Austria, the Netherlands et al with it.

The second scenario is far more brutal. Greece runs out of money, panic ensues, financial markets crash. The union breaks up leaving the currency null and void, as each country reverts to its former unit of value.

The final outcome is that the euro survives and the sovereign debt crisis goes down in history as a minor blip. For this to happen Greece cannot default.

Spain and Italy are much more fundamentally sound than Greece, Portugal and Ireland. If Greece can stave off default and the EU and ECB can make it look like the country's fiscal position is improving then this buys time for Spain and Italy to get their fiscal houses in order.

Light from the east

This scenario also depends on China. Essentially the single currency's stability in the past year is down to continued demand for euros and euro-based assets from China.

It is essentially the world's greatest piggy bank. It has been supplementing the US's debt binge for years to the tune of $1 trillion and wants to diversify its eggs out of one basket. The only market and currency deep enough to provide what China wants is Europe and the euro.

China's continued interest in the currency bloc throughout this crisis suggests that Beijing thinks it will pull through.

This support should stem the euro's decline, and may even solve the crisis: If China has faith in Europe's abilities to pay back its debts then other investors might follow. This might not save Greece, but it could protect Spain and Italy.

Traditionally the Chinese take a long-term view on their investments. They still have faith in Europe; perhaps the naysayers calling the euro's demise should instead follow the money.
...........................................

It seems that China have its sights on world Domination of the currency. Let’s face it at the moment China is a powerhouse and just about ready to take over the driving seat. They are a BRIC country and at the moment they seem to be doing everything right.

Be well IAN 2411