China drives another nail into the coffin of the $ !

[coolhand]

Re: China drives another nail into the coffin of the $ !

thank you - i'm not an all caps kind of guy usually, but i was feeling a little worked up this morning about all kinds of stuff... At any rate, i think i've read that an effectively gold backed dollar assuming the reserves in Ft. Knox are all there, = $7,000-$36,000/oz, depending on what you want to use for money supply...and to your point on "show me the title" - assuming that the 8,000-odd tons of gold are all still in Ft. Knox may be optimistic, but who knows - it hasn't been audited in my lifetime. A long time gold market analyst/follower i respect handicapped it to me that maybe 1/3 of that gold has been lent out over the last 50 yrs, but who knows?

[Starving Steve]

Re: China drives another nail into the coffin of the $ !

thank you - i'm not an all caps kind of guy usually, but i was feeling a little worked up this morning about all kinds of stuff... At any rate, i think i've read that an effectively gold backed dollar assuming the reserves in Ft. Knox are all there, = $7,000-$36,000/oz, depending on what you want to use for money supply...and to your point on "show me the title" - assuming that the 8,000-odd tons of gold are all still in Ft. Knox may be optimistic, but who knows - it hasn't been audited in my lifetime. A long time gold market analyst/follower i respect handicapped it to me that maybe 1/3 of that gold has been lent out over the last 50 yrs, but who knows?

Exactly, we need audits in order to know where we stand, who owns what, and where we might go from here. This is the problem at the Fed, in the housing market, in the New York Stock Market, and in world trade. We need transparency, honesty, audits, and gold.

To me: trust, faith, "full-faith and credit", religion, paper-money, "the monetary-authority", "deeds-of-trust", divorce, derivatives, and credit ALL have become dirty-words and a joke.

[sishya]

Re: China drives another nail into the coffin of the $ !

I agree with what you say. But after reading articles by an anonymous poster - ANOTHER(posted 12 years ago), I think the EURO is providing a good example
of an ideal currency.

EURO serves as money with 2 aspects - exchange and store of wealth. BIS constantly revalues their Gold reserves and publishes the price of Gold in Euro.
Gold was only 10% of their reserves 10 years ago but now it is around 40% I guess. If there is a default in paper Gold market via COMEX or LBMA, BIS will
provide the bid/ask price to give an idea of the physical price of Gold.

So ideally I think the interest rate of a EURO bond should reflect the price rise of Gold in a year over the long term, which also will be tied to money printing.

[GRG55]

Re: China drives another nail into the coffin of the $ !

Mega...use your head, man.

Last year Chinese exports to the USA and EU combined totalled more than $600 Billion. Trade the other way totalled just over $200 Billion. The Chinese KNOW that not only can they not expand that trade gap, they won't even be able to keep it that large much longer. So if you are the so called "factory to the world", with waaaaaaay too much installed manufacturing capacity - and more being built every day - you're basically scrzwed unless you keep finding new markets in which to dump your crappy output. They are so damn desperate they are going after Greece and now Turkey. "Triple trade with Turkey over the next five years to $50 B"...what a joke. That outta be good for half of one toy factory, with a bit of melamine-laced milk powder thrown in for a bonus.

The knee-jerk anti-USA biased "analysis" that shows up on iTulip is making this place a waste of time for those that are trying to inject some thought into the dialogue.

Connect the dots Mega. If China wants to "drive another nail into the coffin of the $" then why did this show up on the same day as you started this thread? They're buying USTs because they're a one-trick pony economy with time running out...

By IB Times Staff Reporter | October 18, 2010 14:59 GMT

China is lapping up Treasuries again; remains top holder in August

China's holding of U.S. Treasuries rose by $21.7 billion to $868.4 billion in August, the Treasury Department said on Monday, blunting somewhat the argument that China is continuing to sell U.S. government debt as a counter-punch to U.S. pressure on the yuan...

Just a small addition to the above, I read this article in the print addition of the FT early this morning on the plane back from Aussieland to the Persian Gulf:

GE plans return to US-made products

By Jeremy Lemer in New York
Published: October 18 2010 20:27 | Last updated: October 18 2010 20:27

General Electric plans to invest $432m in four US centres that design and make refrigerators by 2014.

The move will add about 500 jobs and reverse a long-term trend of outsourcing its appliance manufacturing to places such as China.

GE argues that a combination of US production quality, the ability to market goods as US-made, and rising transport, currency and labour costs in formerly cheap manufacturing countries have made the moves practicable.

A series of local, state and federal tax breaks have also played a role. For setting up the design and manufacturing centres in the Midwest and South, GE negotiated about $78m in tax breaks.

Over the past year a number of US companies ranging from Caterpillar, the world’s biggest maker of earthmoving equipment, to Wham-O, the maker of the Frisbee and Hula-Hoop, have announced similar plans to expand US production facilities.

GE’s appliance units have now pledged to spend more than $1bn in the US over the next four years, supporting about 1,300 jobs.

“Twenty years ago we were in the process of moving every appliance manufacturing job to China or Mexico,” Jeff Immelt, chief executive, said earlier this year. “[But]...when I open up the safe under my desk I can’t find the pennies that we have saved ... So the next generation of products are going to be made in the US.”...

What goes around, comes around. Had breakfast with some old friends this morning. Their son was visiting from the eastern USA for the long weekend. Bright kid. Runs in the family...his older sister is a neurosurgeon. He's a Wharton graduate. Works for boutique private equity firm analyzing businesses. They took their hits through the financial crisis, but the firm retained every business they owned - didn't close or liquidate one - and he said every one of them have seen a minimum of a double in their volume of business and revenue in the past 24 months. All are located in the continental USA. They own an eclectic range of generally mundane sounding businessesm a mixture of manufacturing and services (reminds me of Berkshire's approach to privatizing businesses). What this helps confirm in my mind is that the USA enjoys one thing that none of these other nations in the chart below have...an enormous and relatively wealthy internal consumer market. Manufacturing in the USA is taking internal market share away from the others, slowly but surely.

The USA has LOTS of problems. Most everyone else has more...

[BadJuju]

Re: China drives another nail into the coffin of the $ !

Interesting stuff, Mr. GRG.

[GRG55]

Re: China drives another nail into the coffin of the $ !

Interesting stuff, Mr. GRG.

It's all too easy to get into the doom & gloom, bash America mindset. Not that some of it isn't well deserved looking at the antics of Wall Street and Washington.

But if we look beyond all the smoke and malodorous emissions from those sources, there's a lot of really interesting stuff happening in the steadily restructuring USA economy. Here is but one tiny little example...and what I found interesting is that the Siemens Mobility USA Rail Solutions website has the tagline "Made in America" is making its way back. Siemens, as I'm sure most here know, is a German company.


Amtrak Cities Sprinter (ACS-64) Locomotive, United States of America

Amtrak Cities Sprinter (ACS-64) is an advanced electric locomotive designed and built by Siemens for the US passenger rail operator Amtrak.

Amtrak awarded a contract worth $466m to Siemens in October 2010 to deliver 70 ACS-64 units. The order marked the beginning of Siemens' entry into the American locomotive market. The procurement was financed with a Federal Railroad Administration's (FRA) loan under Railroad Rehabilitation & Improvement Financing (RRIF) that will be repaid with NEC revenue.

The new locomotives will be operated in Amtrak's Northeast and Keystone Corridor lines as part of the company's fleet rejuvenation initiative under the $11bn modernisation programme. The new Cities Sprinters will replace the electromotive diesel locomotives that have been in operation since 1978 and 1988.

The first unit of Amtrak Cities Sprinter was unveiled in May 2013. The first three of the 70 new locomotives ordered are scheduled for comprehensive testing in 2013. Two of them will be tested at the US Department of Transportation facility in Pueblo, Colo, and one on the Northeast Corridor.

The 70 new locomotive units will be delivered in phases by 2016...

...The locomotives can be operated on 25kV, 12.5kV and 12kV power lines.

Amtrak Cities Sprinter offers a power output of up to 6.4MW capable of pulling 18 train cars at a maximum speed of 200km per hour...

...Amtrak Cities Sprinter is equipped with a regenerative braking system that feeds back 100% of the generated energy during braking into the power grid (Siemens states: "Within its first two decades of operation, the the ACS-64 will conserve more than three billion kilowatts of energy, translating to a cost savings of up to $300 million")....

...The Amtrak Cities Sprinter locomotives are being assembled in Siemens' Sacramento rail manufacturing plant in California...Various parts for the locomotives are being built at Siemens' plants in Norwood, Ohio...

...The Amtrak Cities Sprinter manufacturing involves 69 local suppliers representing 60 cities and 23 states in the USA...

[reggie]

Re: China drives another nail into the coffin of the $ !

Mega...use your head, man.

Last year Chinese exports to the USA and EU combined totalled more than $600 Billion. Trade the other way totalled just over $200 Billion. The Chinese KNOW that not only can they not expand that trade gap, they won't even be able to keep it that large much longer. So if you are the so called "factory to the world", with waaaaaaay too much installed manufacturing capacity - and more being built every day - you're basically scrzwed unless you keep finding new markets in which to dump your crappy output. They are so damn desperate they are going after Greece and now Turkey. "Triple trade with Turkey over the next five years to $50 B"...what a joke. That outta be good for half of one toy factory, with a bit of melamine-laced milk powder thrown in for a bonus.

The knee-jerk anti-USA biased "analysis" that shows up on iTulip is making this place a waste of time for those that are trying to inject some thought into the dialogue.

Connect the dots Mega. If China wants to "drive another nail into the coffin of the $" then why did this show up on the same day as you started this thread? They're buying USTs because they're a one-trick pony economy with time running out...

By IB Times Staff Reporter | October 18, 2010 14:59 GMT
China is lapping up Treasuries again; remains top holder in August

China's holding of U.S. Treasuries rose by $21.7 billion to $868.4 billion in August, the Treasury Department said on Monday, blunting somewhat the argument that China is continuing to sell U.S. government debt as a counter-punch to U.S. pressure on the yuan...

Nice.

Thanks, Mega, for provoking GR55 into his rant. (Good posts, GRG55.)

I wonder if what we are seeing is best understood as competition between major nations, with arguments to made for or against the US, Russia, China, India, Euro, ... gaining or losing ground, or is it better understood as the elite oligarchy of the world extending their grip, with the inter-national competition being part side show distraction and part jockeying for position.

Rather like when the Mafia crime families extended their grip on organized crime in many US cities (if such they did, I don't really know.) The impact for the rest of us didn't depend particularly on which family bested which family in a given city. Rather the impact on the rest of us depended on the total impact of the several families combined, all with similar modi operandi.

The essential conflict is not Big Corp versus Big Gov, nor this Big Gov versus that Big Gov. The essential conflict is Big Them versus the Rest of Us.

Great stuff. Thanks.

China (ie Chinese Elite) are being double-crossed... part of the Global Elite's long con... suck 'em in to knock 'em down (i.e. destroy all threats).

[Thailandnotes]

Re: China drives another nail into the coffin of the $ !

I'm confused about the reincarnation of this thread.

[GRG55]

Re: China drives another nail into the coffin of the $ !

I'm confused about the reincarnation of this thread.

What specifically are you finding confusing?

[Thailandnotes]

Re: China drives another nail into the coffin of the $ !

Thread started over three years ago. Last update until your recent comment was November, 2010.

Just curious as to how it came about.

[BadJuju]

Re: China drives another nail into the coffin of the $ !

Well, Mr. GRG, I can say that the local chemical plant is investing $1.6 billion into its headquarters here. And it is going to refit the coal-powered facilities to natural gas.

[Southernguy]

Re: China drives another nail into the coffin of the $ !

Sorry GRG55, but the information does not prove your point.
That is, unless further information is provided: what's the USA made parts as a total of locomotive manufacturing?
Where are the core parts of the locomotives produced?
As Far As I Know Chinese high speed trains are mostly (if not all) made there. But I repeat: AFAIK.
Would be interesting to have more complete information.

[sunpearl71]

Re: China drives another nail into the coffin of the $ !

Sorry GRG55, but the information does not prove your point.
That is, unless further information is provided: what's the USA made parts as a total of locomotive manufacturing?
Where are the core parts of the locomotives produced?
As Far As I Know Chinese high speed trains are mostly (if not all) made there. But I repeat: AFAIK.
Would be interesting to have more complete information.

http://www.treehugger.com/public-tra...ic-models.html

[GRG55]

Re: China drives another nail into the coffin of the $ !

Sorry GRG55, but the information does not prove your point.
That is, unless further information is provided: what's the USA made parts as a total of locomotive manufacturing?
Where are the core parts of the locomotives produced?
As Far As I Know Chinese high speed trains are mostly (if not all) made there. But I repeat: AFAIK.
Would be interesting to have more complete information.

I generally post stuff to provoke thinking...sometimes contrarian to the mainstream meme. That is what the two anecdotes and the chart in my two recent posts on this thread were intended to do. I am not a research technician for iTulip members...if my lack of absolute detail ("proof") causes you to disagree with the examples or the conclusions I draw from it, so be it. We'll just agree to disagree.

More than half the locomotive is made in the USA, including the final assembly (the USA government infrastructure loan funding requires that). Siemens, a German headquartered company which has been going through some very troubling times recently, alone employs more than 60,000 people in the USA.

I highlighted the fact that this locomotive has "69 local suppliers representing 60 cities and 23 states in the USA. Now it's entirely possible that all these suppliers are providing Siemens with nothing more important than paper clips and photocopy toner...but if I had to make a guess Siemens USA is getting those from China and the USA suppliers to the project are providing something with a bit more heft and substance.

[GRG55]

Re: China drives another nail into the coffin of the $ !

Thread started over three years ago. Last update until your recent comment was November, 2010.

Just curious as to how it came about.

A few of us on iTulip try to link current information with previous discussions on the same topic...instead of cluttering up the site with numerous new threads on the same topic. There's very little that hasn't been discussed more than once before over the years that iTulip has existed, and sometimes it's useful to go back and see how things have evolved over time.

I've been a skeptic about China for some time, and especially the nonsense about China "taking over the world" and permanently displacing the USA. That's how this thread started...a debate about China's rise at the USA's expense. Over the years I have pointed out a few times on other threads that the talk about mercantile China becoming the new global powerhouse was reminiscent of all the chatter about mercantile Japan "becoming the new global powerhouse" in the late 1980s. And we all know how that turned out. Today we may be in the early stages of another one of those "history rhyming" situations.


All I would ask iTulip members to do is "zoom out", shut off the mainstream bullhorn and kazoo for a moment, and examine two things: how the restructuring of the USA economy is advancing and what a mess that China is now in. In the case of China, huge misallocations of capital, enormous disparities of wealth, institutionalized corruption on a breathtaking scale, and a very serious erosion of its sole advantage - abundant & cheap labour - both from immediate cost and intermediate term demographics. The latest hit to China's cheap labour is the collapsing currencies of its EM neighbours, which is lowering their externally priced labour cost at China's expense.

China is going to have to engineer a remarkable improvement in its labour productivity (unlikely) or lower the exchange value of the yuan (which should finally shut-up the nitwits who have been yabbering that the yuan will be the next reserve currency). Until some combination of these two things happen, China will lose market share, especially in the largest consumer market in the world, the USA. Not surprisingly, the nation best positioned to take it away from them in the USA, is the USA.

USA companies did not stand still just because D.C. is politically paralyzed and Wall Street remains as corrupt as ever. They have used the Fed's low interest rates to issue long-term corporate bonds at interest rates never seen in our lifetimes (very cheap cost of money for them) and they are now pretty well positioned with fortress-like balance sheets in most instances to weather the next downturn, whenever that may come...much better than the last one.

It is the public sector that is now in trouble. In the USA, much of Europe, and large chunks of EM. China, which is entirely a public sector economy, is not exempt.

To lower the value of the yuan China will have to contemplate increasing its foreign exchange reserve balance (e.g. buy more Eurobonds and Treasuries). Who knows exactly how this is all going to play out...but the confident forecasts of the pundits and USA-bashers continue to look very suspect to this observer.

I started the first of my recent posts on this thread with that old saw "What goes around, comes around"...and I think that is exactly what is happening.