Posts Tagged ‘electronics’

In an addendum to previous posts regarding China switching currencies, it looks like it is going to happen sooner than later. Indeed, China has proposed using copper as their hard currency to dump from the dollar’s instability. Frightened by run away dollar debts, increasing trade deficits partially caused by Chinese devaluation and manipulation of its economy and currency, and the financial crisis occuring in the United States, is making the Chinese government think twice about accepting anymore dollars.

It looks terribly bad for the US dollar as the hegemon of the world financial system these days as five countries plan to ditch the dollar in favor of more stable choices. As we’ve all seen in the last few years, the US dollar has been more unstable than a Christian drunk on one too many alcoholic beverages. God commands Christians to avoid drunkenness (Ephesians 5:18). The Bible also condemns drunkenness and its effects (Proverbs 23:29-35).
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Christians are also commanded to not allow their bodies to be “mastered” by anything (1 Corinthians 6:12; 2 Peter 2:19). It is obvious the world has become addicted to cheap oil, and since we know the US dollar is traded in oil, such a relationship can not be sustained for such a long time with countries like Iraq, Iran, and China wanting to trade oil in other currencies from other superblocks like the Eurozone’s “Euro” currency released in 1999.

By Ambrose Evans-Pritchard
Last Updated: 2:41PM BST 16 Apr 2009

China’s State Reserves Bureau (SRB) has instead been buying copper and other industrial metals over recent months on a scale that appears to go beyond the usual rebuilding of stocks for commercial reasons.

Nobu Su, head of Taiwan’s TMT group, which ships commodities to China, said Beijing is trying to extricate itself from dollar dependency as fast as it can.

“China has woken up. The West is a black hole with all this money being printed. The Chinese are buying raw materials because it is a much better way to use their $1.9 trillion of reserves. They get ten times the impact, and can cover their infrastructure for 50 years.”

“The next industrial revolution is going to be led by hybrid cars, and that needs copper. You can see the subtle way that China is moving into 30 or 40 countries with resources,” he said.

The SRB has also been accumulating aluminium, zinc, nickel, and rarer metals such as titanium, indium (thin-film technology), rhodium (catalytic converters) and praseodymium (glass).

While it makes sense for China to take advantage of last year’s commodity crash to restock cheaply, there is clearly more behind the move. “They are definitely buying metals to diversify out of US Treasuries and dollar holdings,” said Jim Lennon, head of commodities at Macquarie Bank.
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John Reade, metals chief at UBS, said Beijing may have a made strategic decision to stockpile metal as an alternative to foreign bonds. “We’re very surprised by Chinese demand. They are buying much more copper than they will need this year. If this is strategic, there may be no effective limit on the purchases as China’s pockets are deep.”
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Zhou Xiaochuan, the central bank governor, piqued the interest of metal buffs last month by calling for a world currency modelled on the “Bancor”, floated by John Maynard Keynes at Bretton Woods in 1944.

The Bancor was to be anchored on 30 commodities – a broader base than the Gold Standard, which had caused so much grief in the 1930s. Mr Zhou said such a currency would prevent the sort of “credit-based” excess that has brought the global finance to its knees.

If his thoughts reflect Communist Party thinking, it would explain the bizarre moves in commodity markets over recent weeks. Copper prices have surged 49pc this year to $4,925 a tonne despite estimates by the CRU copper group that world demand will fall 15pc to 20pc this year as construction wilts.

Analysts say “short covering” by funds betting on price falls has played a role. But the jump is largely due to Chinese imports, which reached a record 329,000 tonnes in February, and a further 375,000 tonnes in March. Chinese industrial demand cannot explain this. China has been badly hit by global recession. Its exports – almost half GDP – fell 17pc in March.
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While Beijing’s fiscal stimulus package and credit expansion has helped lift demand, China faces a property downturn of its own. One government adviser warned this week that house prices could fall 50pc.

One thing is clear: Beijing suspects that the US Federal Reserve is engineering a covert default on America’s debt by printing money. Premier Wen Jiabao issued a blunt warning last month that China was tiring of US bonds. “We have lent a huge amount of money to the US, so of course we are concerned about the safety of our assets,” he said.

This is slightly disingenuous. China has the world’s largest reserves – $1.95 trillion, mostly in dollars – because it has been holding down the yuan to boost exports. This mercantilist strategy has reached its limits.

The beauty of recycling China’s surplus into metals instead of US bonds is that it kills so many birds with one stone: it stops the yuan rising, without provoking complaints of currency manipulation by Washington; metals are easily stored in warehouses, unlike oil; the holdings are likely to rise in value over time since the earth’s crust is gradually depleting its accessible ores. Above all, such a policy safeguards China’s industrial revolution, while the West may one day face a supply crisis.

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Beijing may yet buy gold as well, although it has not done so yet. The gold share of reserves has fallen to 1pc, far below the historic norm in Asia. But if a metal-based currency ever emerges to end the reign of fiat paper, it is just as likely to be a “Copper Standard” as a “Gold Standard”.

Brought to you by EconoChristian.com with help from Telegraph.

A personal account of the decline of manufacturing in the Western world is poignantly displayed in the following post. It seems that with the financial manipulation of countries like China, combined with their immense labor market, along with non-existent labor laws and environmental controls, will allow companies to displace middle class Americans and Canadians out of the manufacturing sector. The question is, what will happen when almost nothing is manufactured in America anymore?

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Economists and gullible financial analysts, not to mention mentally disabled laymen touting the end of manufacturing as good thing, miss some central points concerning losing manufacturing:

The key fact is that manufacturing is the back bone of an economy because this sector is the one which actually produces tangible items. Some might say that intangible items like financial services, computer programs, and the like are products, but the reality of the situation is that these activities can be done almost anywhere in the world by anyone. What will stop these industries from fleeing just as manufacturing did? Indeed, they would flee even faster due to their nebulous nature. We have seen are only in the infant stages of the off shoring phemonenon of industries such as financial services and computer programming by large multi national companies.

Some facts and figures:

The US global merchandise trade and current account deficits hit annual rates of $900 billion in the fourth quarter of 2005, which amounted to 7 percent of US GDP, twice the previous record of the mid-1980s (as a result of which the dollar declined by 50 percent over the three-year period 1985–87). The deficits could reach annual rates of $1 trillion within the next year or so.

China’s role in the global imbalances is even greater than these numbers might suggest. A substantial increase in the value of the Chinese currency, the renminbi, is essential to reduce the imbalances, but China has blocked any significant renminbi rise by intervening massively in the foreign exchange markets, buying $15 billion to $20 billion per month for several years to keep market pressures from pushing its currency up. China apparently sees its currency undervaluation policy as an off-budget export and job subsidy that, at least to date, has avoided effective international sanction (Peterson Institute, 2006)

Figure 2. Rising imports fuel trade deficit with China : Canada-China trade, customs basis

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Are the Chinese taking over the world?

I grew up in Lebanon, Pennsylvania. I was the son of a steelworker. As a small boy, I watched in disbelief as Americans bought foreign products. Now that all the decent working class jobs have fled the country, people are beginning to wonder why they’re all so poor. As I hear more and more people complaining that they can’t make ends meet, I gloat in their suffering. They know the pain that both my father and myself felt when our jobs went overseas because Americans bought foreign products.

All this bunk about high pay, benefits, and the like is what caused the jobs to leave is complete rubbish. Despite the pay, benefits, and the like, companies of the past still turned a profit. They simply couldn’t compete with the cheap foreign labor (caused by currency manipulation and little or non-existent labor/environmental laws) and America’s myopic lust for cheap foreign goods. Since all the jobs are now gone and all that we’re left with is low paying service jobs, those products are so cheap are they? Why must companies have such huge profit margins? Shirts that cost eight cents to manufacture are sold here for twenty plus dollars. A pair of sneakers that cost a dollar to manufacture are sold for as much as 100 – 200 dollars all so some CEO and a few stock holders can have several million dollar mansions, private jets, and the like…
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“Education is the key,” many cry. The only education that this country ever needed was the one I got from my steel-working father, “buy American!” Not everybody is capable of getting an education. What we need more than education are working class jobs that afford the average person the ability to buy a house and support a family. Until this happens, we’re destined to have a lot of people on the dole.

I’m a prime example of how this country failed. I used to have a very good working class job. For over ten years, I worked this job. I could afford a house, support a child, and a wife. After losing everything to a foreign market, I fell into a very bad depression. It’s now lasted some fourteen years, and for the past six, I’ve been on Social Security Disability.

At one point, I cost my state 10,000 – 12,000 dollars a month for nearly three years as I sat in a state run mental institution. Why should I work for five to seven dollars an hour when I can sit at home and collect 400 tax-free dollars each week? I’ve tried college, but the depression is too great; moreover, if I do finish college, I’ll be a Registered Nurse. Do you really want somebody who’s embittered at the society that bought him out of a job taking care of our nation’s sick? Education…

I can’t wait to see this country completely fail!

Signed,
The Acerbate American

Why is this happening?

5. To bring about the end to all industrialization and the production of nuclear generated electric power in what they call “the post-industrial zero-growth society”. Excepted are the computer- and service industries. US industries that remain will be exported to countries such as Mexico where abundant slave labor is available. As we saw in 1993, this has become a fact through the passage of the North American Free Trade Agreement, known as NAFTA. Unemployables in the US, in the wake of industrial destruction, will either become opium-heroin and/or cocaine addicts, or become statistics in the elimination of the “excess population” process we know of today as Global 2000 (Educate yourself, 2009)

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Written by EconoChristian.com with help from various sources.

Yes, you read that right: being an environmentalist makes monetary sense. Or does it? These days, with people like Al Gore winning Nobel prizes for their work on their so-called environmental causes, people are hopping on the money-making, carbon-trading bandwagon by investing in carbon trading systems like carbon sequestration, carbon trading, and carbon taxes.

Carbon sequestration is the storage of the carbon burned-off in the manufacture, recycling, or burning of products containing fossil fuels. Carbon trading is when individuals, nations, and organizations trade carbon credits, where those with the money can buy the most credits (or so the prevailing thought goes). We will stay away from carbon taxes for the time being. The whole carbon paradigm is one of the most popular ways people are making money, but does it really have merit?
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