Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Max on October 31, 2005, 11:49:37 AM
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NEW YORK (Reuters) - Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, on Monday dismissed a bid by a little-known Chinese company called King Win Laurel Ltd. to acquire it for $450 billion in cash.
Hmmm...ya think we've sent just a little too much money to the Chi-Coms?
DmdMax
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Originally posted by DMax
NEW YORK (Reuters) - Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, on Monday dismissed a bid by a little-known Chinese company called King Win Laurel Ltd. to acquire it for $450 billion in cash.
Hmmm...ya think we've sent just a little too much money to the Chi-Coms?
DmdMax
IIRC, the US Government borrows $2 billion dollars a day to cover its deficit, and most of that money is borrowed from the Chinese and to a lesser extent the Japanese. Hope I'm mistaken, but I don't think I am.
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Originally posted by oboe
IIRC, the US Government borrows $2 billion dollars a day to cover its deficit, and most of that money is borrowed from the Chinese and to a lesser extent the Japanese. Hope I'm mistaken, but I don't think I am.
Ok, if that's true (or close to it), educate me. Why ?
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Originally posted by RedDg
Ok, if that's true (or close to it), educate me. Why ?
To remain solvent, and to keep US citizens at the standard of living they have become accustom to.
http://www.census.gov/foreign-trade/balance/c0004.html
Last year alone the US had a $650,929,000,000 trade deficit. That means the US got $650,929,000,000 in actual goods and services above and beyond what it exported. In exchange for these goods and services the US issued $650,929,000,000 in promisary notes or IOUs. These IOUs came in the form of the US dollar. As you can see by the data I linked to, this trade deficit has been growing incredibly for years and 2005 looks to be another record breaker.
With such a presistant and massive increase in the supply of US dollars you would expect the value of the US dollar to fall. And it has, but not nearly proportional to the amount of increase of supply. The reason for this is because the central reserve banks of the various nations which the US has a trade deficit buys them off that nations exporters.
For the purpose of the following example lets say that the US exports nothing to Canada (Canada has no demand for US goods and or services, or the US doesn't produce any goods or services that Canada wants).
A Canadian exporter sells some wood to a US importer. Because their is no demand for US stuff the Canadian exporter takes some US dollars in exchange. Now there is nothing he can do with those US dollars. He can only use them to buy US stuff and there is no demand for it. He can't pay his employees, creditors etc with them, he and his employees etc live in Canada and need to be paid in Canadian dollars. So he exchanges then at his bank. The Canadian Government, through its central reserve bank, buys them off the bank. In order to do that, it needs some Canadian dollers. So, it taxes the citizens to get the money. It buys the US dollers and sticks them in a vault never to be seen again.
In effect, the Canadian tax payers are paying for that wood. And the US is getting it for free.
This has been going on ever since the world went off the gold standard. There are now trillions of US dollars sitting in central reserve banks all around the world. Promisary notes in exchange for trillions of dollars of goods and services the US has already recieved.
This is usually where people have a few questions. First, "Why the hell are the governments of those nations continuing this insane practice?"
For one, politians are corrupt, ****ing retards who don't understand basic economics. The unions pull out some crappy socialist arguements about how people working is inherently good for the economy (pay one guy to dig a hole, and another to fill it in). Crappy economists say the same thing. And the US government (Bush at a recent G8 meeting said this), tell them that propping up the US dollar is good for them as well. And certainly the exporters tell them it's good.
Second, "Why the hell do the tax payers of those countries put up with it?".
They don't even know it's going on...for the most part.
At this point of the dicussion, well meaning Americans usually ask, "Well why don't those countries that the US has a trade deficit with buy more US goods and services." Firstly, if there was more of a demand for US products the situation wouldn't be what it is in the first place.
Secondly....well secondly this is what makes the article posted interesting. That's twice now that China has tried to buy a US good/service and was told to go **** themselves. Of course the damn Chinese company might not even exists. But the one that tried to by Unical certainly did.
Where does this lead?
Well, China can't buy what it wants from the US with the US dollars it has so those hundreds of billions of US dollars in it's central reserve bank is useless to them. But they can sell them for currencies from other countries that do want to trade (more equally) with them. The problem with that for the US (and other countries that hold on to their US dollars) is that supply of US dollars in circulation goods up quite a bit. Because their is a greater supply, value drops.
Now other countries realise that their hundreds of billions of US dollars sitting in central banks aren't worth what they were. And they also start unloading them to get some value from them. It escalates, hyperinflation hits the US dollar until they are worth thier inherent value...a piece of paper with the picture of a dead President on it. US standard of living falls, and all the typical societal issues that come with it arrises.
Some people might say that the US currency defaulting is a rediculous proposition. But it has happened twice already. Once in the 1930s, and the goverment's reaction was to steal everyone's gold. And once in the 1970s, and the government's reaction was to convince the world that it didn't matter and the money didn't need to be backed by gold and that it magically had an inherent value.
For further reading the socialist fallacies I brought up and many others. I recommend the brilliant and extremely accessible for the laymen (such as myself), "Econonics in One Lesson" by Henry Hazlitt.
http://www.amazon.com/exec/obidos/tg/detail/-/0517548232/002-6821247-0673656?v=glance
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Originally posted by RedDg
Ok, if that's true (or close to it), educate me. Why ?
dude, the chinese are cut throat capitalists... they'll eventually rid themselves of the yoke of communism, then watch out...
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Thrawn, the US economy and consumers are the backing for the dollar.
We are the golden goose. It's good to be king.
It is estimated that if China tripled it's GDP by 2025, it would then be about 1/3 of the US. That's the kind of scale we are dealing with.
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Now I'm a little confused. The $2 billion daily is the amount the US government spends on its programs, benefits, and entitlements over and above what it takes in as income (in the form of taxes, fees, and tarriffs) -- or so I thought - and it has nothing to do with our trade deficit, which is a another problem, as Thrawn pointed out.
I think this deficit is financed by selling US securities (T-Bills, etc) to China and Japan. As long as they keep buying them, things won't get any worse (apart from the ever deepening hole we're digging ourselves into). But should they start to show restraint in financing our national debt binge - we'll have to raise interest rates to get them to start buying them again.
Our government is really just a junkie, selling out our country's future just to make it through another day. Sooner or later that debt is going to catch up to us.
I hope I have it all wrong though.
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Originally posted by NUKE
Thrawn, the US economy and consumers are the backing for the dollar.
Okay, let's see it and them payback back several trillion dollars worth of promisary notes. It would take the entire production capacity of the the US economy several years to do so. And during this time the citizens of the US would have standard of living equal to a third world nation. Do you honestly think that the US could survive that?
As an aside, it's not consumers that increase the economic production capacity of a nation, but capital investors.
We are the golden goose. It's good to be king.
Intesting dichotomy. On one hand you think the US produces an abundance of valuable goods, and on the other taxes others for no appreciable benefit.
If the US produces so much goods that are in demand, then I imagine it wouldn't have such a mind-bogglingly huge trade deficit.
However, I do believe that the US is much like a king. In the sense that many other nations pay it a tithe (some huge) every year for no appreciable benefit. In fact it hurts the economies of these nations, because hit misallocates labour and other reasources where there is no return on investment. And it's good right now for the US. Americans get to have a higher standard of living. But with all things economic, there will be a correction and I don't imagine it will be pretty.
It is estimated that if China tripled it's GDP by 2025, it would then be about 1/3 of the US. That's the kind of scale we are dealing with.
I don't like to us GDP to measure economic production capacity because it is fallacious. It includes currency circulation (consumers buying stuff) as if people trading money for goods increases production. It doesn't, capital investment does. Not only that, but government expenditures increase GDP. As if governments going into debt to misallocate resources helps economic growth.
But even if it were a valid measurement you would be very wrong.
China
GDP (purchasing power parity): $7.262 trillion (2004 est.)
http://www.cia.gov/cia/publications/factbook/geos/ch.html
US
GDP (purchasing power parity): $11.75 trillion (2004 est.)
http://www.cia.gov/cia/publications/factbook/geos/us.html
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Originally posted by oboe
Now I'm a little confused. The $2 billion daily is the amount the US government spends on its programs, benefits, and entitlements over and above what it takes in as income (in the form of taxes, fees, and tarriffs) -- or so I thought - and it has nothing to do with our trade deficit, which is a another problem, as Thrawn pointed out.
I think this deficit is financed by selling US securities (T-Bills, etc) to China and Japan. As long as they keep buying them, things won't get any worse (apart from the ever deepening hole we're digging ourselves into). But should they start to show restraint in financing our national debt binge - we'll have to raise interest rates to get them to start buying them again.
They are more or less the same problem and inexerably tied. China and Japan exchange US dollars for US Treasury bonds, one promisary note for another.
PS: It does have the effect of keeping the US federal government solvent. But while that happens China continues to hollow out US production capacity by offering goods for "free", which US manufacturers can't compete with. If one where a conspiracy theorist, one might believe that China was doing this on purpose...
"Financial War: Now that Asians have experienced the financial crisis in Southeast Asia, no one could be more affected by "financial war" than they have been. No, they have not just been affected; they have simply been cut to the very quick! A surprise financial war attack that was deliberately planned and initiated by the owners of international mobile capital ultimately served to pin one nation after another to the ground--nations that not long ago were hailed as "little tigers" and "little dragons." Economic prosperity that once excited the constant admiration of the Western world changed to a depression, like the leaves of a tree that are blown away in a single night by the autumn wind. After just one round of fighting, the economies of a number of countries had fallen back ten years. What is more, such a defeat on the economic front precipitates a near collapse of the social and political order. The casualties resulting from the constant chaos are no less than those resulting from a regional war, and the injury done to the living social organism even exceeds the injury inflicted by a regional war. Non-state organizations, in this their first war without the use of military force, are using non-military means to engage sovereign nations. Thus, financial war is a form of non-military warfare which is just as terribly destructive as a bloody war, but in which no blood is actually shed. "
http://www.amazon.com/exec/obidos/tg/detail/-/0971680728/002-6821247-0673656?v=glance
The authors are both Colonels in the Chinese army.
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Originally posted by DMax
NEW YORK (Reuters) - Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, on Monday dismissed a bid by a little-known Chinese company called King Win Laurel Ltd. to acquire it for $450 billion in cash.
Hmmm...ya think we've sent just a little too much money to the Chi-Coms?
DmdMax
A mouse trying to eat an elephant
Just seen that story on the TV news. Apparently the guy who heads that company that put the bid in for exxon lives here in NZ. A reporter tracked him down to a average looking house in a average suburb.. but the guy has made himself scarce.
I didn't catch the details but I understand it's not the first time his so called company has tried this kind of take over.
Found a link
http://www.nzherald.co.nz/section/story.cfm?c_id=3&ObjectID=10353039
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Thrawn: The China GDP figure in the CIA 'Factbook' is, not too ironically, a misprint that has propagated throughout the internet. The GDP of China is about equal to the city budget of Tokyo, but not for long... ;-)
Not only is the government overspending being financed, but a large amount of corporate debt is also being financed by Japan and China, plus a few other lesser players.
Of course, all of this hinges on perpetual growth. While 'investment' in the US has become more of speculative profit without production or jobs, Asian priorities are more based on jobs, stability and growth - not windfalls and short-term gain. Stockholder profit is minimal and more profit is reinvested into higher efficiency manufacturing process and equipment.
An excellent example is the steel industry. The US has complained about 'dumping', but in reality, the US has simple become uncompetitive because they failed to modernize. They didn't want to reinvest into newer. more efficient steel mills, While the Asians did it and are now able to produce more efficiently.
As long as growth continues, debt isn't bad. There will be some higher risks as we get into the 3rd quarter next year (as I said on this board about 6 months ago...) because the US is starting to venture into uncharted debt waters. The danger is more psychological, since US investor reaction is more emotional to bumps and thresholds.
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Originally posted by Rolex
Of course, all of this hinges on perpetual growth. While 'investment' in the US has become more of speculative profit without production or jobs, Asian priorities are more based on jobs, stability and growth - not windfalls and short-term gain. Stockholder profit is minimal and more profit is reinvested into higher efficiency manufacturing process and equipment.
An excellent example is the steel industry. The US has complained about 'dumping', but in reality, the US has simple become uncompetitive because they failed to modernize. They didn't want to reinvest into newer. more efficient steel mills, While the Asians did it and are now able to produce more efficiently.
As long as growth continues, debt isn't bad. There will be some higher risks as we get into the 3rd quarter next year (as I said on this board about 6 months ago...) because the US is starting to venture into uncharted debt waters. The danger is more psychological, since US investor reaction is more emotional to bumps and thresholds.
To me, this seems like the number one problem in the U.S. - all the rest, like the looming SC judge battle - it just seems like energy spent rearranging the deck chairs on the Titanic.
Regarding the steel industry example - surely there are more factors than corporate's unwillingness to sacrifice short term profits to enhance long term effeciency? What about the higher pollution control and labor costs in the U.S.?
I tend to think persisent, ever-increasing debt represents a serious problem - economic growth is an assumption, but the debt once accrued, is a hard reality.
I buy gas on credit, and when gas exceeded $3/gal here, I briefly toyed with the idea of just paying the minimum balance each month, rather than payoff the balance as I had been doing. I planned to tell myself it was OK, because I was going to 'grow' myself out of the debt. Of course the plan is folly, and beofre long I would exceed my credit limit and have to find another source of credit.
But isn't that ridiculous course of action similiar to what the U.S. government is doing now?
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Actually, the labor costs are much higher, and the pollution controls as stringent, in Japan. Surprisingly, it really is simple unwillingness to invest in the long term.
The same is true in other industries. The telecom industry is unwilling to invest, so US cell phone infrastructure is a generation (or two) behind, television broadcast quality is no different than 3rd world because of unwillingness to invest, and broadband is behind for the same reason. Yet, the cost to US consumers is higher?
Terrestrial broadcast TV in Japan has been better quality than US cable quality for over a decade. Why? Why invest in the hardware if the population doesn't know that better technology even exists?
They are simply milking the old investment longer.
That's not to say that it is wrong. It is just a difference in priorities. And to be even more provocative: It is because the US is not the free market it likes to say it is. These markets above are not open and free, but tightly controlled by the top players in concert with their regulatory bodies. It is a political process stifling competition for the benefit of the companies - at the expense of the consumer.
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Originally posted by Rolex
Actually, the labor costs are much higher, and the pollution controls as stringent, in Japan. Surprisingly, it really is simple unwillingness to invest in the long term.
The same is true in other industries. The telecom industry is unwilling to invest, so US cell phone infrastructure is a generation (or two) behind, television broadcast quality is no different than 3rd world because of unwillingness to invest, and broadband is behind for the same reason. Yet, the cost to US consumers is higher?
Terrestrial broadcast TV in Japan has been better quality than US cable quality for over a decade. Why? Why invest in the hardware if the population doesn't know that better technology even exists?
They are simply milking the old investment longer.
That's not to say that it is wrong. It is just a difference in priorities. And to be even more provocative: It is because the US is not the free market it likes to say it is. These markets above are not open and free, but tightly controlled by the top players in concert with their regulatory bodies. It is a political process stifling competition for the benefit of the companies - at the expense of the consumer.
The US is not the free market it likes to say it is, and neither is it the democracy it claims to be. You don't have to look any further than the massive campaign contributions made by corporations to politicians to see that. I am sure the Founding Fathers would be rolling in their graves over it.
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Originally posted by Rolex
...These markets above are not open and free, but tightly controlled by the top players in concert with their regulatory bodies. It is a political process stifling competition for the benefit of the companies - at the expense of the consumer.
Would you say the recent approval of the telecom mergers between SBC and AT&T, and Verizon and MCI is an example of this? Its my impression that its been pretty clearly demonstrated recently that these large mergers do not enhance shareholder value and they do not benefit the consumer, as we are always lead to believe.
Just seems to me the FCC behaved purely as a lapdog in this case.
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Well, the FCC is supposed to be concerned about overall development of services to the public (who is paying their salaries).
The 1996 Telecom Act is getting ready to be rewritten. There are just a lot of cockroaches scurrying around before they have to hide in the dark if some of the proposals are written into it. Speaking of cockroaches, here is a good example:
This is bite from a Business Week interview (http://www.businessweek.com/@@n34h*IUQu7KtOwgA/magazine/content/05_45/b3958092.htm) with SBC CEO Edward Whitacre.
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Question: How concerned are you about Internet upstarts like Google (GOOG ), MSN, Vonage, and others?
Answer: "How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! (YHOO ) or Vonage or anybody to expect to use these pipes [for] free is nuts!"
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This guy is out of control. SBC customers are the ones paying for those pipes.
You could fill a library with books about the FCC - its charter, its purpose, its function in a supposedly de-regulated industry, its 'rules' vs. 'guidlines' vs. statements of 'principle.'
For my money, the FCC should exist to promote planned, stable development and growth (using a competitive environment as the engine to stimulate expanded services and reduced user cost) because the services under its umbrella of influence are now considered to be infrastructure of the society.
Yeah, the FCC is pretty pathetic. :)
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Rolex unfortunately you are wrong on that count. In the 70s' you were right. Yes....the world finally recovered from WW2 and europes and asias manufacturing facilities were at that time state of the art. We were still using steel making facilities that in some cases were dated to the early 1900's. Why? Because we were the only game in town. We sold our steel world wide without upgrading simply because we didn't have to. Basicaly we were the only major steel producers on the planet following WW2. However during the mid70s' the newer and more modern Steel facilities that we funded around the world following WW2 were in full operation. So the dated facilities we had were not cost effective at all.
During the early 80s' however new plants and facilities were being built in the US as the older and more labor intensive facilities were shut down costing many jobs....but that's progress. Today we are up to date and very modern. I know.......I've been in the steel business in the US for over 35 years. In the mid 70s' for instance it took 7 employees to ready a blast Furnace for cast every 4 hours. Now we use only 2 and cast in half an hour. And the two employees only sample and observe the cast. No labor needed to prep the furnace for it's next cast. Plus we have multiple taphole furnaces that cast 24/7 instead of the 6 times a day. Prodution has skyrocketed with the availability of new technology. Less Labor more efficiency = the US still makes steel per ton cheaper per man hour then any other steel producing country on the planet at this time. Plus we don't need to import Ore, Scrap or Coal we have our own. We are blessed in that regard. Some companies do import lesser grade ores for sintering but basically the pellets (iron ore) used in the US is from the US. We are in some cases in partnership with ore and coal mines with our Canadian neighbors (DeFacso etc.)
However......when Chinas' Steel Facilities come on line tons of steel/ man hour will be of no consequence to them. We invest huge sums of cash for environmental controls and monitoring in the US. The EPA is inspecting us frequently and we have limits on what we are allowed to do with water and air. China and many 3rd world countries will have no problems with that. They won't have to invest money in equipment that doesn't produce a pound of Steel. They can, and will polute at will, as many other emerging 3rd world countries will do who are entering the manufacturing arena.
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Originally posted by DMax
NEW YORK (Reuters) - Exxon Mobil Corp. (XOM), the world's largest publicly traded oil company, on Monday dismissed a bid by a little-known Chinese company called King Win Laurel Ltd. to acquire it for $450 billion in cash.
Hmmm...ya think we've sent just a little too much money to the Chi-Coms?
DmdMax
Actually I think you'll find thats a New Zealand registered company ;)
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Originally posted by Rolex
Well, the FCC is supposed to be concerned about overall development of services to the public (who is paying their salaries).
The 1996 Telecom Act is getting ready to be rewritten. There are just a lot of cockroaches scurrying around before they have to hide in the dark if some of the proposals are written into it. Speaking of cockroaches, here is a good example:
This is bite from a Business Week interview (http://www.businessweek.com/@@n34h*IUQu7KtOwgA/magazine/content/05_45/b3958092.htm) with SBC CEO Edward Whitacre.
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Question: How concerned are you about Internet upstarts like Google (GOOG ), MSN, Vonage, and others?
Answer: "How do you think they're going to get to customers? Through a broadband pipe. Cable companies have them. We have them. Now what they would like to do is use my pipes free, but I ain't going to let them do that because we have spent this capital and we have to have a return on it. So there's going to have to be some mechanism for these people who use these pipes to pay for the portion they're using. Why should they be allowed to use my pipes?
The Internet can't be free in that sense, because we and the cable companies have made an investment and for a Google or Yahoo! (YHOO ) or Vonage or anybody to expect to use these pipes [for] free is nuts!"
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This guy is out of control. SBC customers are the ones paying for those pipes.
I know this is a tad off topic, but I saw some discussion regarding this statement on dslreports: http://www.dslreports.com/shownews/69175 (towards the bottom). It implied the broadband carriers, like SBC, want to convert the internet to something called IMS where they inspect each packet for content and then charge, per packet, the content providers or block or delay those packets if they don't pay. Wouldn't that mean that AH UDP packets could be flagged as "special value service" and HTC be charged by various ISPs for delivery to its customers (above and beyond what HTC gets charged for internet connectivity by it's ISP/server owners)? And wouldn't that mean HTC would have to pass the extra charges to its customers? After all, AH packets are "special" in the sense that they are useless unless they are delivered with minimal latency and minimal loss (much like VoIP packets).
I gather that in the recent merger of SBC and ATT a rider was added saying that for 2 years they can't block anyone elses legal content on their internet service, implying that beyond 2 years they can block (or demand payment for) anything they want.
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http://www.infranet.org