What might that be?

This statement, along with the one regarding the “world’s remaining 5 or 6 trillion barrels,” leads me to believe that this is a man who doesn’t have a firm grasp on reality.

Peter Schiff (article in Asia Times linked to by Annonymous at 3:22 AM) seems to have a little bit better connection to the real world. The prospects of rescuing the dollar are not good, and he goes on to enumerate the reasons why.

So even though Evans-Prichard acknowledges “Beijing’s mercantilist policy of holding down the yuan to boost exports share has now hit the buffers,” he fails to mention that Saudi Arabia has been doing the same thing. Schiff doesn’t delude himself in this way.

Evans-Prichard’s schadenfreude over oil’s imagined demise blinkers his vision. Emotion trumps good judgment. For while he acknowledges that the implosion of the dollar would certainly devastate China’s economy, he fails to realize that its effect on the dollar-denominated price of oil is all but uncertin. Evans-Prichard seems to be incapable of envisioning a world where those who own oil refuse to exchange it for worthless little pieces of green paper with president’s pictures painted on them.

And of course the effects of an imploding dollar on the people of the United States seems to be all but lost on him.

He appears to me to be a man who would cut off his nose to spite his face.

P.S. Annonymous’ at 3:22AM link to the Asia Times story didn’t work. I’m going to try again, hopefuly with better results….

http://www.atimes.com/atimes/Global_Economy/JG02Dj04.html

Beijing – Hebei Taihang Cement has been on a roll lately. Its three Beijing plants have been running around the clock, churning out thousands of tons of cement needed to build venues such as the “Bird’s Nest” stadium, where opening ceremonies for the Beijing Olympic Games will be held on Aug. 8.

But the good times may be about to end. The government has ordered Taihang to shut down its Beijing operations for two months starting on July 20, until both the Olympics and the Paralympics (for handicapped athletes), slated to run from Sept. 6-17, are over. Its 400-plus employees will busy themselves with training courses and equipment repairs, and Taihang will see its cement output fall this year by 500,000 tons, or 9% of its annual capacity. If neighboring Hebei Province also orders cutbacks, as many expect, the damage could be even worse for Taihang—its headquarters and another big plant are located there.

Taihang isn’t alone. In an effort to clear Beijing’s murky skies for the 10,000 athletes and half-million foreign visitors expected for the Olympics, China is ordering broad restrictions on much of the capital’s industry. Another measure will impose strict limits on the number of cars on the roads during the Games. And the industrial shutdown is likely to extend to a broad swath of northern China and other Olympics venues such as the industrial city of Shenyang, where some soccer matches will be played, and the port of Qingdao, home to sailing events.

While many companies say the extent of the restrictions isn’t yet clear, others have been given explicit instructions to shut down or curtail output. In April the Beijing city government announced it would ban all construction and limit production at large polluting enterprises during the Games. The city also warned it will take further “stringent steps” in the runup to the Olympics if air quality doesn’t improve quickly enough. Hardest hit will be cement, steel, iron ore, and coal-fired power plants in a broad area surrounding Beijing.

Full article:
http://www.businessweek.com/magazine/content/08_28/b4092030853536.htm

Intervention will not stop dollar’s slide
By Peter Schiff
http://www.atimes.com/atimes/Glo…y/ JG02Dj04.html

In fact, the United States holds just about 1% of the world’s $7.6 trillion of foreign currency reserves, and our total position amounts to just 2.5% of the total daily volume of foreign exchange trading.

Hot Money Headache
http://online.wsj.com/article/ SB…=googlenews_wsj

The starting point is the fact that since last October interest rate differentials between dollars and yuan have reversed. The U.S. Federal Reserve aggressively lowered rates just as the Chinese central bank, the People’s Bank of China, was pushing up domestic rates to fight inflation. Currently, rates on the Chinese central bank’s one-year bills are about 170 basis points higher than comparable U.S. Treasuries.

This has created an arbitrage opportunity that local firms are exploiting on a massive scale, borrowing cheap dollars to substitute for more expensive borrowings in yuan and for local investments. A second factor driving this arbitrage is the wide-spread expectation that the government will either speed up the rise in the yuan’s crawling peg or implement a one-off revaluation.

Comment #2 misses important reasons for off shoring. First the tax credits companies get to do so, second, that these subsidiaries can then wash their profits through low or no tax countries. It is no accident that there are 14,000 corporations whose mailing adddress is an average sized building in the Caymans. Third and fourth, corporations can offshore pollution and worker disability costs.

“Oil price shock means China is at risk of seizing up” like an engine running out of lubricant.

And yes, globalization was for the largest part driven by ideology, not by any real cost advantages.

I’m seeing it right now in my corp where, over the past 10 years, pre-series manufacturing (high-tech electronics) has moved around from the US east coast to South Asia then to China, following grand globalizing strategeries edicted by the great deciderers above.

But the plan is that next stop is going to be … in freakin’ California and not just in California but in the freakin’ Bay Area, a 20 minutes drive away from the design office.

The realization finally came upon accountants that shipping prototype parts and engineers half across the planet and 10 to 14 time zones was a gross waste of time and money and that wage differentials between here and anywhere else in the world could not compensate those costs at any extant… The funny thing is that it has always been true. Rising oil prices are just a marginal factor in the decision. And the engineers have been screaming that since … well since ever. But no, it wasn’t globalizely correct.