Category Archives: Business/Economics

Business/Economics, International

What Economic Recovery? China bans local businesses from getting loans from foreign banks

In a move that’s officially meant to tighten money supply, to counter rising inflation, China has banned all domestic businesses from taking loans from foreign banks.

The specific type of loan is called RMB (RenMinBi, a type of international currency). The People’s Bank of China, told all other banks that it would stop accepting applications for direct offshore borrowing.

An unnamed source said one of the reasons China is banning RMB loans, is because they have no control over the interest rates of those loans.

China has already tightened lending by Chinese banks, again, to try and control inflation by restricting the amount of money in the consumer market.  The RMB loans are controlled by foreign banks, and have increased their lending in China since the beginning of the year.

An official with the People’s Bank of China said they are going to come up with a system in which they can influence the lending of foreign money in China.

 

Business/Economics, International, U.S.

What Economic Recovery? Japanese on welfare at record numbers, the last Japanese TV factory to shut down, Japan is the second largest foreign holder of U.S. debt

The number of households getting welfare in Japan hit a record number of 1.46 million.  That’s households, not individuals.

The Japanese Welfare Ministry say it’s a rising trend, no thanks to the never ending nuclear disaster.

To make matters worse, Japan’s only domestic television maker, Hitachi, announced they will close up shop and move their factory to Taiwan.  Of course this means more Japanese out of work.  Hitachi officials say they had to make the move in order to compete with South Korean companies.

Other big name Japanese electronics makers, like Panasonic, Sony and Toshiba, all reported big loses in the past quarter. And it can’t be blamed on the nuclear disaster.  The Japanese companies are having a hard time competing with other Asian nations.

This brings us to an important, and over looked fact: Japan is the second largest foreign holder of U.S. government debt (after China).  Japan’s main market is the United States, yet has been losing out to companies from China and South Korea.

If things get bad enough for Japan, they will be forced to off load their U.S. bonds in order to make some money for their struggling systems.  This could be why the U.S. has given Japan so much help battling the nuclear disaster at Fukushima Daiichi.

 

Business/Economics, International, U.S.

What Economic Recovery? China blames the United States for creating runaway inflation, the dollar will continue to lose value despite debt limit deal, China looking for other currencies to do business with

“If the unemployment rate continues to rise, it will further damage investor confidence and force them to move away from U.S. Treasury securities, leaving the U.S. government no choice but to print money and depreciate its currency.”-Lu Zhengwei, Industrial Bank Co Ltd

Chinese officials say the U.S. Debt Limit Deal is not enough, mainly because it will not stop job loses, and it doesn’t cut enough government spending.

Zhu Baoliang, chief economist at the State Information Center, says U.S. government debt is too large to be resolved through normal measures such as tax increases and deficit reductions.  Also, it is highly unlikely the U.S. government will significantly reduce entitlements like Social Security and Medicare, or significantly draw down troops overseas.  All that means is at the very least the U.S. dollar will continue to lose value.

The Chinese are blaming their runaway inflation on the falling U.S. dollar.  In June inflation hit 6.4% in China.  The increase in costs is causing a drop in factory orders, which hits China where it hurts.

Chen Kexin, chief analyst at the Distribution Productivity Promotion Center of China Commerce, says no matter what happens now, inflation will pick up speed.  He predicts oil prices will go back up to more than $100.00 per barrel, and copper could hit $10,000 per ton.

According to the U.S. Department of the Treasury, China is the largest foreign holder of U.S. government debt (the overall largest holder of U.S. debt is…the U.S. taxpayer via the U.S. Treasury).  Many analysts in the United States think China has no choice but to keep buying U.S. debt, creating a false sense of security among U.S. leaders.  But one analysts admits China is cutting back: “Beijing is probably not buying Treasuries as intensely as it did last year.”-Derek Scissors, The Heritage Foundation

Chinese analysts are pushing for their government to diversify their U.S. debt holdings, because the debt limit deal won’t help: “The debt crisis may have a negative impact on the fiscal spending of the U.S. government, which may drag down the U.S. economy for the rest of the year.”-Hou Zhenhai, Investment bank China International Capital Corp

It’s not just U.S. government bonds China has, but something called foreign exchange reserves.  These bonds can come from corporations, like Fannie Mae and Freddie Mac.  The problem for China is most of its foreign exchange reserves are in U.S. dollars.  Chinese analysts are warning of the “all your eggs in one basket” scenario; they think China will be dragged down when the United States finally sinks.

In fact, one analysts thinks the situation is so bad that China should stop investing into all foreign operations: “Because of the lack of mature overseas investment projects, the scale of China’s overseas investment is not big enough to absorb massive foreign exchange reserves in the short term. Therefore, to invest overseas is not realistic.”-Zhang Yi, Institute of Foreign Economy, the National Development and Reform Commission

 

Business/Economics, International, U.S.

What Economic Recovery? & Government Incompetence: U.S. to cut trillions in government spending, except for the billions going to Israel

The U.S. House of Representatives passed a debt limit bill that would see more than $2 trillion cut from government spending over ten years.  But those cuts won’t affect the billions of U.S. taxpayer dollars Israel gets.

U.S. politicians said hands off U.S. taxpayer money going to Israel.  Hypocritically, the United States is cutting aid to Palestinians.

It’s being reported that when the Republican party took control of the House of Representatives, they told AIPAC (formerly known as Jewish Defense League) that financial aid to Israeli would not be affected by spending cuts.

Israel gets tens of billions every year from the United States.  That includes money for Israeli companies, the Israeli military, money that’s not officially reported, and interest on some of the money.

Can you believe that, Israel actually gets interest payments on the free money from U.S. taxpayers!  The way that works is that some of the money is held back, and interest is accrued on the funds that have yet to be paid.   One report said that between 2006 and 2008, $2.089 billion in interest was paid to Israel.

Isn’t obvious who really controls the United States government?

 

Business/Economics, International, U.S.

Mazda North America responds to demands for their 70 mpg Demio (Japanese Mazda 2)

I recently inquired with Mazda North America about the possibility of the 70 mpg, 1.3 liter gas engined Mazda 2 (aka Demio in Japan) being sold here in the United States.  They basically said no way.

They gave no reason, but did imply that the more people inquire the more they will consider it: “Currently we have no plans to release the Demio in the U.S….Certainly, we want to offer exciting vehicles, and comments such as yours help us to achieve that goal.”-Christina Cruz, Customer Assistance Specialist

Do you want to save money on gas?  Don’t want to drive a scooter to work?  Don’t want to replace those expensive batteries in those hybrid cars?  Let Mazda North America know that you want a 70 mpg car!  Go to www.mazdausa.com, click on “contact us”.

Business/Economics, International, U.S.

What Economic Recovery? Russia says the United States is to blame, Putin calls the U.S. a parasite, the world should stop using the U.S. dollar

“The country is living in debt. It is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite.”-Vladimir Putin, Russian Prime Minister

Russia says the United States is dragging the world down with it, because of its control over the world finance system, and because most of the world uses the U.S. dollar as a reserve currency.

If the U.S. dollar continues to lose value then it can bring down international trade.  Russia, and other countries like China, are pushing for a new form of reserve currency.


Business/Economics, International, U.S.

What Economic Recovery? PMI data around the world down, huge drop in the United States

PMI (purchase managers’ indexes) data from countries around the world continue to fall.  The data is an indication of domestic economic strength based on domestic manufacturing purchases/production.

A rating above 50 is considered a good sign, below 50 is bad.  Many countries are stagnating around 50 right now.

Russia reports a PMI of 49.8, the worst since December 2009.  It’s the second decrease for Russia in three months.

Economists were surprised by the big drop for the United States.  In June the U.S. PMI was 55.3.  Economists expected a drop to 54.6 in July, but the July PMI actually dropped to 50.9.  The huge 5 point drop for the U.S. is being blamed on lack of consumer demand.

Hungary’s PMI dropped from 55.1 in June, to 52.2 July.  The Czech PMI fell to 53.4 in July.

In the United Kingdom it dropped from 51.4 in June to 49.1 in July: “The manufacturing PMI data was a really unpleasant surprise and suggests that the economic weakness in the U.K. is here to stay.”-Valentin Marinov, Citigroup

In the economic powerhouse of Europe, Germany saw a decrease in PMI from 54.6 in June, to 52 in July.  Surprisingly Poland is reporting a small increase, to 52.9.

The main reasons for the lackluster global PMI numbers is inflation in prices,  and reduced consumer demand.  Decreased consumer demand is being exacerbated by increased unemployment around the world.

Business/Economics, Opinion, U.S.

U.S. government debt limit increase will NOT save economy, will only provide corporations will cheap loans, perpetuate downward spiral

Claims by the main stream media, and politicians at the Federal level, that raising the government debt limit is necessary to save the economy, is a lie.

We’re being told that people will lose jobs.  People ARE losing jobs.  Since the beginning of the year dozens of companies have announced job layoffs.  The latest is British company HSBC, which says it will layoff 25,000 employees around the world, by 2013.  Raising the U.S. government debt limit will not stop that.

By raising the debt limit, the U.S. Treasury can issue more bonds (which means taking on more loans/debt).  The Treasury can then loan that money at ridiculously cheap rates to U.S. corporations.  Those corporations are not using that money to hire more people, they’re using it to pay their own debts!

We’re also being told that without a debt limit increase interest rates on our loans will go up.  So what!  Many of us little people lost our credit back in 2007/2008!  Many of us little people that still have credit saw our rates skyrocket already!  What our leaders really mean is that U.S. corporations, and the government, will finally have to pay higher rates on their loans!

The latest reports are that the debt limit increase will come with the slashing of $2.1 trillion in government spending.  That can only happen with thousands of government employee layoffs!  So how does raising the debt limit prevent job layoffs?

A debt limit increase will not stop cuts to government programs!  We’ve already seen huge cuts to social programs, and we’re going to see more cuts to government services, because you can’t cut $2.1 trillion in spending without drastically cutting funding for programs!

And don’t think you’re not going to be paying more taxes.  It’s the only way the government can pay down its increasing debt.  But our leaders are ignorant of the fact that as more people lose their jobs, that’s less people that can pay the higher taxes!

The bottom line is that a debt increase will not save the economy.  We are seeing people continue to lose jobs, and it’s clear that people will continue to lose jobs even with a debt limit increase.  There can be no economic recovery with such huge and continuing job loses!   We’re just picking up speed in our economic downward spiral.

 

 

Business/Economics, International

What Economic Recovery? China economic data down for 4th straight month, inflation to blame, again

August 1, the China Federation of Logistics and Purchasing says purchases of manufactured products is down for the 4th month in a row.

The main reason is the continuing inflation in prices of basic resources, which is causing prices for manufactured goods to go up.   Despite efforts by the Chinese government to control inflation, the inflation rate is exceeding their expectations.

Currently the purchase of manufactured goods (PMI) is stagnating at 50.7.  Anything below 50 is bad.  In previous years China’s PMI was well above 50, but this year it’s been falling.


Business/Economics, International, Technology

Museum Incompetence: 1,000 year old porcelain broken, covered up

A Chinese blogger revealed that officials with the Beijing Museum (aka Forbidden City), covered up a potentially million dollar disaster.

A researcher smashed a 1,000 year old plate from the Song Dynasty.  The researcher was using a device that’s intended to protect porcelains during inspection, but instead the plate was smashed due to operator error.

Officials with the museum decided not to report the incident.  The last time a Song Dynasty plate sold at auction in New York City, it sold for $1.54 million.