It could be GE, it could be Nike, or it could be something else. But keep your eyes and ears open folks. We are going to witness the great U.S. giveaway.
We keep hoping to sell our wares in China and we do. But only at a pace that is structurally managed by the Chinese to grossly favor them and continue to create huge trade imbalances here. These imbalances are financed by their accepting our Treasury notes in return. As they amass fantastic sums of capital at modest but stable rates of return on their investment, they allow us to keep buying their goods and stimulate still further imbalances. The interest payments compound and compound the problem too. They are truly giving us enough rope to hang ourselves.
In addition to our trade imbalances, we are expanding our Federal spending and increasing our national debt without hesitation -- as if we could just print money without any pain.
The Federal Reserve, meanwhile, believes it must continue to raise interest rates or watch the dollar sink in value due to the deficits and trade imbalances. It is not inflation that they are worried about per se, but the weakness (even collapse) of the dollar. This is very serious!
Now if you're the Chinese holding billions and trillions of U.S. dollars you are going to have to diversify your portfolio some day soon. Add to this the fact that holding dollar assets will depreciate in value and you have some powerful incentives to move from debt instruments to equities. Even Warren Buffett has been hedging against the dollar. This mean buying hard assets like real estate, gold, and most importantly U. S. companies which to them appear on sale.
I used Nike in the header because most of its products are produced outside of the United States (mainly in Asia), and the Chinese might as well control the whole operation. I used GE because it is working with the Chinese in areas like power generation and water projects. If GE makes any significant dent in the balance of trade the Chinese will insist on owning a piece of the company. Why not buy all of it? They could even overpay by our measuring stick and still come out ahead.
The Chinese chased Unocal and Maytag unsuccessfully, acquired the IBM Think-pad (Levano) and most certainly this trend will continue with them making many more acquisitions in the near future. It only makes good business sense for them. Our maps may indicate that our borders have not changed. However, a financial map, if there was such a thing, would indicate that we have shrunk in size considerably.
Many of our greatest financial minds have been banging this drum for a long time pointing to this shrinking financial map for years. But our political leaders are acting as if they are running for office on a daily basis and can not deal with any long range issues -- like giving the Country away and mortgaging our future at the same time.
As investors we have little chance of redirecting Washington, so all we can do is direct ourselves. Do for yourself what the Feds will not do -- reduce personal debt, save more and if you get a chance, send your representatives a letter of encouragement!











Reader Comments (Page 1 of 1)
6-26-2006 @ 12:52PM
Jim Lawrence said...
Why are Corporations in the US allowed to buy other US Corporations when they (the buyer) does not have enough stock to cover the outstanding shareholders stock of the takeover Corporation. i.e. Lincoln National Corporation takeover of Jefferson Pilot Corporation. Many many shareholders of Jefferson Pilot was hurt by Lincoln National. Your Comments. Thanks.
6-26-2006 @ 1:31PM
Mark Hathaway said...
I am happy someone is ringing the bell. I have been saying exactly this for twenty years. I have been telling my daughter that is 24 now for the last 22 years that she needs to know how to use chop-sticks or she will go hungry. I sent this to Target CEO a month ago.
-----------------------------------------------------
To: Target
Chairman and Chief Executive Officer
Bob Ulrich
PRESIDENT
Gregg Steinhafel
I have been saying to everyone I know for twenty years that China will clean our clock one day. All my friends are starting to believe. The American public does not see that by buying cheap Chinese goods we are giving them power to build their nation for consumption of products and natural resources, not just them but a large number of other second and third world countries are jumping onboard and we are consuming their products and natural resources making them wealthy and we only have cheap products and no respect at the end of the day. The USA will not be supplying these countries with products and natural resources, these countries will be manufacturing themselves and at the same time providing better and more jobs for their people that will work hard and cheap. The price of oil will go through the roof if we do not encourage America to take care of America first and find different natural resources. Read this..... http://news.bbc.co.uk/2/hi/business/4946708.stm
Not to ramble on like some nut, so let me get down to what I feel can be a bold financial investment for Target.
Open one test store that is a "USA First Stores" only USA product’s, promoting the store with an ad campaign that will explain that the only way to return a strong Middle Class in the USA is for Americans to pay the price to be American and shop at Target Family of stores when possible. Find a Midwest state that will agree (Indiana would be a good one) to do away with sales and property tax at all "USA First Stores" and build every inch of it with American products, materials and companies only. (Not one thing in that store will have been manufactured out side the USA) Pay the staff so they can live nice and a great health care package, with profit sharing. Set up from the start an employee committee that designs and makes the store work better and reward heavily for hard work (maybe an Ethanol car). Sale only Ethanol fuel at the "USA First Stores” service station with real service (attendants pump fuel and check fluids).
Sale Ethanol cars at $500 over cost ($500 going to a USA only charity, look at this one, http://www.victoryjunction.org ). Build your own Ethanol plant out back next to the corn field that your American Farmer harvested your American corn from for your American Ethanol plant. You will supply the store with E85 for the American vehicles you sale and power the store with Ethanol being total self sufficient, give tours of the future "USA First Stores" Ethanol plant hourly, (promoting all the time buy only from the Target Family). Make your E85 with only USA pumped crude verified, “USA only”. You will be leading Americans trying to make different out come, (Not that slave labor supporting, USA job stealing, mom and pops store killer, profit only important, Wal-Mart) a little harsh but true. You can have a national green campaign. 90% of all Americans regardless of what they say believe in saving this planet and this country. If you want to be number one in your industry get in the mud and start rebuilding your foundation. You have to make the mountain slippery to knock the king (Wal-Mart) of the top. It will be the store I go to and I have to believe there are a lot of Americans that are sick of Wal-Mart and China. (Make them one and the same in your ads, but gently not pointing directly at them, (America will know who they are).
I can see your National ad campaign saying that when you support any of the “Target Family” by only buying products from the “Target Family” when possible regardless where they came from right now “today” that the American citizen will be helping to rebuild our counties foundation, middle class and are helping Target corporation convert there chain over to "USA First Stores" making American products number one again in order that we retake our economy and make us need no other country for our products and natural resources ever again. That this will be a long and hard process taking decades to change and reverse. If America shows that they support “Targets Family of stores vision” our future will be "USA First Stores" and target will lead America to being self sufficient and depend of no other nation. That is Targets promise and commitment to our great country and fellow Americans. Slowly change your other stores over with a number bored in front of the store that passer buyers can see showing the percentage of the goods in the store that are American made and promoting purchasing more products out of that store so you can afford to increase the percentage of American goods. Let America see the change in motion.
Less they buy at other stores more you can afford to lead a change to independents of international trade. Educate that trade with other countries has to be made on our terms the majority of the time and that is not the case now.
Then Target has to push all in. You might just take it all. (Wal-Marts market share). Boeing when they built the 747 bet the farm. It was one of America’s great gambles that only can be done by great Americans http://www.boeing.com/history/boeing/747.html this would have to be that kind of commitment. If not you will be swallowed up in the next twenty years by China and Wal-Mart. It cost a lot to be great. America needs someone that really cares and can tap into America’s raw nerve. We are consumers and we need a consumer lead. It is plain and simple Wal-Mart does not care about America except for profit. Can Target give America a vision in order to get more?
Check out what Brazil is doing with Ethanol. They will be 100% self sufficient next year, not having to depend on anyone outside of their country for power. Our country is in a real fight to survive the next 100 years. Target could be the turning point in history for the USA and the world by promoting national unity and self sufficiency. This is a real cold war being engaged with natural resources and consumer goods. We as a nation are not going to be the winner in 100 years if we do not get it together. We need "USA First Stores". We need to take care of our own first. This is what consumer America believes and they are correct. They need someone to lead them and I believe a 1962 Target mentality is needed.
Read this…..
http://www.cleanairwisconsin.org/publications/ethanol.pdf#search='Ethanol%20cars%20chevy"
Big and bold but just a thought.
I just hope someone, some day, does something. I am only 48 and America is not what she used to be and it makes me sad there are no real leaders that care truly about this country. In this country leaders come from our economy sector not from our government. We are consumers and it will take a consumer CEO and/or President to change us. They will really have to care to make 100 years from now different then what it is going to be at this direction.
History holds all answers…………………………..
6-28-2006 @ 7:48AM
Peter said...
Oh dear. As a Brit working for GE and having lived in China I can't help but believe that we are all doomed. We certainly will be if we (the West) try to solve global economic problems by shrinking in on ourselves and believing that we can shut the rest of the world out economically and culturally. China is huge, it will change everything, it is changing everything, it has changed everything. History is littered with the failures of empires economic and cultural. Like Greece, Rome, France, Spain, Portugal, Persia, Austria, Germany, Great Britain, Turkey, and Japan , to name but a few, the US's economic empire will fall and it will be China who will pick up the pieces and benefit. History repeats itself as it was the US that benefitted from the fall of the British Empire and the British benefitted from the fall of diverse empires before that. How the US plans for this and manages will define its future and how hard and far it falls. As with the failure of most empires it's greed that is the cause. However today its not just the greed of the few but the greed of the many. Our Western society is based on the greed of consumerism. So far China has exploited with great aplomb our seemingly insatiable ability to consume. To prevent or cushion the fall of the West one solution is to ween ourselves away from consumerism. Attempts to tame it by trying to structure an economy that purchases only locally manufactured products will fail as its a halfway house measure that requires a level of individual economic and personal control that is contrary to everything that our society has stood for over the past 100 years. It flies in the face of the individual freedom that we value so highly and indeed have fought for and continue to fight for. I do however thoroughly applaud the pursuit of energy self sustainability. Bio-Ethanol or other sustainable fuels must be a part of our future if we are to have one.
So whats to be done? We do need to curb our consumerism but not to avoid China's economic dominance its too late for that. We do need to be more self sustaining but it's not to curb China its to give us a future. We can't beat China's ability to produce cheap products, we have to specialise. The UK economy over the recent years has to a certain extent bucked the trends in Europe. We have taken a gamble and lost our manufacturing base. Yes its a risk and yes it hurts both economically and from a pride point of view but we have tried to focus on areas of expertise that cannot be matched so easily by low cost China. Vodaphone for example though not without its problem is the biggest mobile phone service provider in the world. While I'm not suggesting that this strategy is 100% successful its the only game that has a future. Certainly the European alternatives such as France that protects its industry and pays its farmers to throw away unsellable wine are unsustainable and ultimately doomed. If the US attempts to protect its way into the future then it will fall into obscurity. Lets not forget that China is a market place thats growing. It has a rapidly growing insatiable appetite for our Western culture, our brands, our ideas, our skills, maybe even our politics (they could certainly have all of our politicians). We, the West, have to cannily play to our skills and mine those opportunities. Our culture has created the global economy, we can't now opt out or attempt to ignore it because its not going our way. Well we can but again obscurity beckons. If China Inc buys GE its because they can afford it and they want it. GE knows that and is doing everything it can to be too expensive!
7-07-2006 @ 9:56AM
kellydav said...
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7-07-2006 @ 9:59AM
kellydav said...
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POTECNA LIMITED,based in the UK, registered in UK,with registration
number..05590635,COMMUNICATION 1 LIMITED with registration number
04509597,just to terget the populated
market.our web is www.communications001ltd.8m.com
.
we us credit facilities to bulid our net work, all over the world.Our
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and considerate working perfectly , meet up with any standdered in the
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communications001litd@yahoo.co.uk ), prudency@outgun.com
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Marketing Manager
7-08-2006 @ 12:11PM
Peter Dati said...
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NEXTEL, MOTOROLAS, LG,cameras,ACATEL,laptop,ipod, tom tom go 700,nokia n
gage,O2 3G Datacard,Panasonic,xboxs,
POTECNA LIMITED,based in the UK, registered in UK,with registration
number..05590635,COMMUNICATION 1 LIMITED with registration number
04509597,just to terget the populated
market.our web is www.communications001ltd.8m.com
.
we us credit facilities to bulid our net work, all over the world.Our
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and considerate working perfectly , meet up with any standdered in the
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communications001litd@yahoo.co.uk ), prudency@outgun.com
,kellydavphoneworld@yahoo.co.uk)
We also deliver goods to you door steps, Our means of shiping is ver
save and faster ,FEDEX , EMS, UPS.
We are the leading mobile phones dealers in african and one of the best
in the world today.
Waiting to hear from you
Regard
Marketing Manager
7-08-2006 @ 12:15PM
Peter Dati said...
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NEXTEL, MOTOROLAS, LG,cameras,ACATEL,laptop,ipod, tom tom go 700,nokia n
gage,O2 3G Datacard,Panasonic,xboxs,
POTECNA LIMITED,based in the UK, registered in UK,with registration
number..05590635,COMMUNICATION 1 LIMITED with registration number
04509597,just to terget the populated
market.our web is www.communications001ltd.8m.com
.
we us credit facilities to bulid our net work, all over the world.Our
price are very affordable,cheaper compeard to other mobile phones dealer
and considerate working perfectly , meet up with any standdered in the
world.they work anywhere.#447024052714
You can contact us via e-mails (prudency@myway.com ),(
communications001litd@yahoo.co.uk ), prudency@outgun.com
,kellydavphoneworld@yahoo.co.uk)
We also deliver goods to you door steps, Our means of shiping is ver
save and faster ,FEDEX , EMS, UPS.
We are the leading mobile phones dealers in african and one of the best
in the world today.
Waiting to hear from you
Regard
Marketing Manager