China $$$ Coming This Way ?

[JPatrick]

China is trying to let some air out of their 50 PE market and it appears they have decided on a solution. The article below provides some insight to their plan to allow millions, nay, trillions of dollars to leave their shores. This is already interesting and it could get downright exciting.
http://tinyurl.com/2q2e4c

[Mwsinron]

Works for me. I keep regretting not having anything invested in China. However I'm satisfied how Europe and the Us has been doing.

[dmpi]

Remember Chinese currency has been kept low compared to the dollar. So when it comes time to buy US stocks, they are going to have to convert to American dollars. They won't like the deal they getting, which may limit their buying.

[JPatrick]

Originally Posted by Mwsinron

Works for me. I keep regretting not having anything invested in China. However I'm satisfied how Europe and the Us has been doing.

Europe still looks good and who knows, the Chinese may like it as well.

[Islandboy]

I read somewhere that the US market and others have held up partly due to the billions of petrodollars from the middle east and Russia who are being invested in hedge funds and real estate, etc..Now with China coming to buy US assets, soon middle class americans will be left with their overpriced houses and debts

[Mwsinron]

Originally Posted by Islandboy

I read somewhere that the US market and others have held up partly due to the billions of petrodollars from the middle east and Russia who are being invested in hedge funds and real estate, etc..Now with China coming to buy US assets, soon middle class americans will be left with their overpriced houses and debts

If you remember where you read that let me know. Id like to see who wrote it.

[MasterBlaster]

Originally Posted by dmpi

Remember Chinese currency has been kept low compared to the dollar. So when it comes time to buy US stocks, they are going to have to convert to American dollars. They won't like the deal they getting, which may limit their buying.

They don't need to buy any dollars, they already have trillions just sitting around. Ultimately those dollars are only good here in the US, so yes it just may power the markets higher.

[teejayevans]

Originally Posted by Masterblaster

They don't need to buy any dollars, they already have trillions just sitting around. Ultimately those dollars are only good here in the US, so yes it just may power the markets higher.

Which brings up the question, China has been buying our treasuries, so what happens
to the dollar if the treasury can't find anybody to buy them??
If interest rates go up to attract buyers, then I assume the dollar goes up as well, yes?
It be interesting to know how much of US dollars are own by US citizens.
TJ

[MasterBlaster]

Originally Posted by teejayevans

Which brings up the question, China has been buying our treasuries, so what happens
to the dollar if the treasury can't find anybody to buy them??

This is the crisis that may or may not come. Someday it just may be that foreigners may not want our debt. Or they may not want it at an interest rate that we are willing to pay.

At that point a crisis occurs and very tough and very unfavorable choices will be thrust upon us.

[al_bundy]

Originally Posted by Masterblaster

This is the crisis that may or may not come. Someday it just may be that foreigners may not want our debt. Or they may not want it at an interest rate that we are willing to pay.

At that point a crisis occurs and very tough and very unfavorable choices will be thrust upon us.

it's going to be worldwide since all the protected export economies will have to open up or face recession as well. not like the US will be the losers and everyone else will keep living it up.

personally i think the trade deficit is more hype than anything else since economic conditions have changed since that statistic was created

[brewer12345]

Originally Posted by al_bundy

it's going to be worldwide since all the protected export economies will have to open up or face recession as well. not like the US will be the losers and everyone else will keep living it up.

I think that's about what will happen. At least with the way things are now, China cannot afford to stop taking USD. They will keep buying our paper even if they do not want to because they are not going to go over the waterfall to see what happens next. They know it just as we know it. That's why the smarter people in power (Merkin, Chinese and others) want to see the situation defused gradually. So the Yuan creeps up against the USD and the Treasury no longer pounds the table over a strong dollar policy.

If we are really lucky, they will back the world away from the precipice in time to prevent more than a few members of teh crowd from pitching over the edge.

[al_bundy]

i hope they change the way the trade figures are calculated since i don't think they properly account for US companies doing business overseas. and stupid US tax law doesn't help either.

in the old days a nation's companies made almost everything in that country and sold some things to other countries. a trade balance was a real figure especially when the currency was backed by gold

in the days of central bank controlled currency we have a US company design stuff in the US, manufacture overseas from components made all over the world and sell worldwide or ship the product to another country for final assembly into yet another product to be sold worldwide.

the PC supply chain goes something like this. chips are made worldwide and shipped to malaysia for assembly. in malaysia they are then put into PC's from components made in other countries and then Dell and HP sell these worldwide. Nvidia designs stuff in california and then sends it to IBM or a Taiwaneese company for manufacture in China and then sells the products all over the world.

how do you calculate the balance of trade in these situations?

[greg]

Originally Posted by brewer12345

I think that's about what will happen. At least with the way things are now, China cannot afford to stop taking USD. They will keep buying our paper even if they do not want to because they are not going to go over the waterfall to see what happens next. They know it just as we know it. That's why the smarter people in power (Merkin, Chinese and others) want to see the situation defused gradually. So the Yuan creeps up against the USD and the Treasury no longer pounds the table over a strong dollar policy.

If we are really lucky, they will back the world away from the precipice in time to prevent more than a few members of the crowd from pitching over the edge.

I see something similar: A beginning virtuous circle where China takes some of its savings and starts to buy clean water and energy technologies and infrastructure buildout from us and Europe. That's my bet anyway.

[al_bundy]

GE is already doing huge business in China selling clean technology

[greg]

Originally Posted by al_bundy

GE is already doing huge business in China selling clean technology

Yup. And Immelt is steadily buying smallish clean energy/environment companies. I like that part of his plan. I think GE will be doing much better over the next year. And long term.

As I see it now China is not as yet very sophisticated. I know they own the IBM pc brand now and such. But I don't as yet think they are capable of of building integrated systems, integrated vertically and/or horizontally. I know that Lenovo (sp?) is currently stumbling right now. I think they still need the west to integrate their current power systems/plants with wind power for example. The same with large water purification plants. I suspect that building a large purification plant that could clean a great deal of water at a low price--and efficiently--would still require hired skills. Just speculation.

[al_bundy]

i think it's the israelis that have the good water purification plant expertise

Imelt and other CEO's are pretty smart. They are funding the global warming alarmists to use as a cover for companies to invest in energy efficiency

[chinaco]

Originally Posted by Greg

Yup. And Immelt is steadily buying smallish clean energy/environment companies. I like that part of his plan. I think GE will be doing much better over the next year. And long term.

Yes. But they have been going sideways for a while. The picture certainly looks much different than the 1995 - 2000 time frame. The company is sound (good company)... But that curve looks a little like regression to the mean.

[brewer12345]

Originally Posted by al_bundy

i think it's the israelis that have the good water purification plant expertise

CWCO - consolidated water- does too.

[greg]

Shoulda, coulda, woulda: I almost bought this stock at $1.20 (HYFXF on the pinksheets) a few months back . It's a Singapore company that has rights to a membrane technology for purifying water. They build and install these systems. GE owns a company that uses a similar system: You dump the gunky water in one end and out comes drinkable stuff from the other; I believe you can speed the process with extra pressure. I'd still buy it, but I'm over my quota in speculative stocks (non-dividend payers).

CWCO uses that same membrane system in their systems on the islands, making sea water potable.

I read Russell's newsletter last nite. A very good explanation of why and how he misread the market, seeing the fall of the NAS in 2000-2002 as an important indicator of the overall stock market and our economy. He says the DOW is a much better marker of the American economy. But to his credit, he has been telling folks to buy utilities dividend payers since 2002 and they're (DOW utilities) up over 200% over the past five years. I still like him more than any other adviser.