Posted on 07/21/2010 4:11:19 PM PDT by TigerLikesRooster
Asia’s Dr. Gloom: China's Stocks Will Crash Soon
Wednesday, 21 Jul 2010 08:37 AM
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By: Dan Weil
Economist Jim Walker was dubbed Asia’s “Dr. Gloom” in 1996, and his views about China continue to fit that bill.
Chinese fiscal and monetary stimulus have given life to many corporations that are in trouble below the surface, says Walker, whose one-man firm Asianomics is based in Hong Kong.
"There are an awful lot of companies that don't make any money in China, and they need to go," he told Forbes Asia.
Major manufacturing cities are suffering labor shortages, thanks to the real estate bubble that has drawn away workers and will ultimately burst, says Walker, formerly chief economist at CLSA (Credit Lyonnais Securities Asia).
(Excerpt) Read more at moneynews.com ...
P!
China will probably go the way of Japan, and the United States, even if it’s hobbled by the current administration, will continue as the world’s economic superpower, at least for the foreseeable future.
I don’t know about that.. but, I do know... China has SLASHED exports of rare earth metals...
Things like, Cerium, Lanthanum, Praesidium.. etc.
Over that past 5 years, China successfully drove EVERY OTHER MINE IN THE WORLD out of business... with ultra-low prices.
Now.. they’ve CUT EVERYONE OFF.
These metals are needed for electronic manufacturing and catalyst production... we’re all screwed now, and scrambling.... You probably haven’t heard much about this yet.. But, you will.
You would be amazed at how quickly capitalists can move if there is a strong demand.
The mines that were closed will be re-opened pronto.
That's probably true... but, it will take MONTHS, at least. The metals we use are critical to our process... they will have to be tested and proven for use.
There is going to be a significant disruption in the market.
That's probably true... but, it will take MONTHS, at least. The metals we use are critical to our process... they will have to be tested and proven for use.
There is going to be a significant disruption in the market.
Fortunately, the US has perhaps the next two most valuable rare earth mines in the world after China. One is owned by Molycorp Minerals, in Mountain Pass, CA; and the other is at Barringer Hill, Texas, underneath Lake Buchanan.
Sounds okay by me...the Chinese need an attitude adjustment.
China appears to understand how to use trade as a strategic tool.
Do you know if the US has a strategic stockpile of rare earth metals, like we do with oil?
You're right - we're all going to be hearing more about it...
China's playing hardball, but they're also not skilled at being capitalists - so it might get really interesting.
Let's hope China's NOT paranoid - failure and paranoia don't mix well when there's millions of extra men and many nukes....
I'm not sure if the US does.... I know, my company did not... even though, several of us have been requesting this for the past 2 years...
There ARE other sources in the world... but, they're not producing much anymore.. They say, Afghanistan has a lot... but, the work environment there sucks!
The two things being masked by this belief are that:
The selling prices of the rare earths outside of China are being artificially depressed; they are too low, and
China is moving towards or preparing for the re-pricing of commodities, such as the rare earths, (in which it is world dominant in production and usage) out of US dollars or perhaps of revaluing the renminbi.
http://seekingalpha.com/article/178225-on-the-rare-earth-crisis-of-2009
Tantalus Announces Extension Of Supervisory Board
The mission of Tantalus Rare Earths AG is the identification and development of rare earth exploration and mining projects outside from China, mainly focusing on Africa. Administratively, Tantalus Rare Earths AG is located in Düsseldorf, Germany. Currently, the investment portfolio consists of 100 % of the Tantalus Rare Earths Project in Madagascar.
Ever spent time in China? You'll quickly disabuse yourself of that notion. The Chinese are probably some of the most cunning capitalists you'll find, and the 35 year dalliance with Communism was an aberration in a 3000 year history of capitalism.
For the last 15-20 years or so, China's been arguably MORE capitalist than the US, and continues to be so... In fact, by some objective measures the US is more Communist than China. China's built some muscles as it's regrown after the damage from Mao, and it's starting to flex them.
These metals are needed for electronic manufacturing and catalyst production... we’re all screwed now, and scrambling.... You probably haven’t heard much about this yet.. But, you will.
Well, that's not QUITE true... They have cut off export of RAW metals. But if you want finished parts or goods that include those metals there's no restriction at all.
You can no longer go to China and get your supply of neodymium or samarium to make your own magnets. But you're more than welcome to either set up your own 100% wholly owned factory for magnets in China, or patronize an existing Chinese supplier of those magnets you want!
Likewise with most of the rare earth metals. No raw ore or metal sales, but no restrictions on sales of products that incorporate those metals.
If China’s stock market is crashing how will they buy our debt?
Perceptive.
It has been my perception that the closed economy of Japan has no interest in profit as a society. Their real income is the hard money interest they receive from their U.S. Treasury and other hard currency sovereign debt holdings.
Communist China seems to operate a similar system. ChiComs must retain huge hard surrency sovereign debt income to enable foreign trade.
yitbos
If you are a manufacturer... as my company is.. of finished parts or goods that use such Rare Earths... you're screwed. And, our customers are about to be screwed.
Indeed.. the main reason China is doing this is.. they want to force companies like mine to move our production to China. It's ALL wins for them if we do. They get more jobs, higher value exports (ie more taxes) and it becomes MUCH easier for them to steal our manufacturing technology... so they can use it in their own companies to compete against us.
They are NOT stupid... unscrupulous, yes.. but, not stupid.
See, you can still get the product to ship, you just have to use it to manufacture inside China. It’s actually quite shrewd of them, and shows they understand the capitalist system a lot better than most in the US.
I’m not saying your company was wrong, it was most likely the lawyers and professional politicians in DC who did your company in, via regulation and taxation. Strangely, people who’ve never worked or run a business in the real world simply do not understand the implications of their actions.
So, your company will have to do one of 3 things:
1. Fold
2. Petition Congress (donations/bribes) to re-open a few of the mines here (need pretty deep pockets, though)
3. Move production of those rare-earth-based subcomponents to China, and do final integration work here
I’ve seen it happen in many industries; Asia’s learned all about capitalism, and is now playing for keeps!
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