BRIC+ News & comments

“… CHINA is set to swoop on one of northern Australia's most important - and biggest - land and water resources. And the raid is being directed by a former Australian prime minister.

A Chinese company is bidding to buy 30,000ha of new irrigation land to be watered by Australia's largest man-made storage. … The Chinese bid would see it secure two-thirds of the region's irrigated land and a yet-to-be determined amount of permanent water in the region.

The minimum figure it would obtain should it grow sugar would be 510,000 megalitres - a quarter of the Ord's currently allocated water. Shanghai Zhongfu has offered to develop irrigation infrastructure, a sugar mill and an abattoir. …” From: http://www.weeklytimesnow.com.au/article/2012/05/16/483241_politics-news.html

Billy T comment: Reminds me of when Chinese company tried to buy UnionCal (Southern Cal? – I forget correct name) oil company with large in-ground proven reserves. US said “no” but now they seem to have Australian Government support.

 

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http://www.biofuelsdigest.com/bdigest/2012/05/18/whats-up-in-brazilian-biofuels-the-10-minute-guide/
has more information than anyone needs on Sugar Cane in Brazil, the M&A activity, the new 2nd generation ETOH and algae based efforts (mainly for bioDiesel), the production of aviation fuel, imports & export volumes*, production of three different monomers for plastics, the weather´s effects on production, Brazil´s decision to hold at 20% ETOH additive to gasoline, and financial support for the cane to products industries, by whom (and how large) new facilities are planned, etc.

As I said almost anything you might want to know about Brazil related to sugar cane is found at above link.

I was not surprised to learn that Brazil is importing ETOH from USA as the tax payers are making it cheaper than Brazil´s because I already knew that, but I was surprised to learn that at the same time California was importing Brazilian ETOH because, "it burns cleaner!" - How can that be? Must be that the corn based alcohol fuel is less pure ETOH, with more harmful pollutants.

 

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I don't see where anything on that source said that anything "burns cleaner." What they said was that Brazilian ethanol has superior "carbon performance." The situation is as follows: there is no chemical difference between American and Brazilian ethanol. The preference for Brazilian ethanol is because both Federal and California State laws account for the entire life cycle carbon footprint of fuel sources. So because Brazilian ethanol is grown from sugar cane in the tropics, it has a superior total-lifecycle carbon footprint.

The whole thing just becomes a shell-game, though. CA buys Brazil's ethanol to reduce its carbon footprint, and then Brazil buys ethanol from the midwest to make up the shortage from exporting to CA. At the end of the day, it's the same amount of ethanol being produced from the different sources and burned by the end-users, but this arrangement allows CA to pay a premium to Brazil in order to claim a lower carbon footprint. Basically it's all an accounting trick.

 

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To quadraphonics

thanks for your comments. I suspect you are correct. I did not recognize "carbon performance" as code for "less life cycle carbon release" so guessed that the corn based alcohol might have some other organics with similar boiling points to that of ETOH that Brazil´s cane based alcohol did not.

In part I was mislead by my experience in one summer job for Lion Oil company. First day I mixed 55 gallons of benzene and 55 gallons of toluene into the "pot" of a distillation still and spent the summer try get them well separated by a distillation column filled with a new (and expensive) curved tiny perforated (but no mass removed while surface area was increased) metal chips as the "packing material."

Lion oil wanted me to check what the manufacture was claiming for their new packing material*. Thus I knew that if two liquids with nearly same boiling point are distilled the product is not of high purity even with a still of high number of "theoretical plates."

* At end of summer I wrote my report and headed back to Cornell, but never learned if Lion Oil repacked its main distillation towers with the chips.

 

As I explained in post 577, Brazil had self tied its hands in the "currency war" the US started - I.e. the interest rated could not go below 9% or all funds would flow into the popular, un taxed "poupança" destroying the rest of the purchased financed economy.

I made post 577 to note that the poupança rules had changed the day before I posted. Now, I note that as I expected, the basic interest rate in Brazil was cut yesterday to 8.5% (and it is going lower probably to 7% this year.) Finally Brazil has decided to fight back against the near zero US rates that destroyed high labor cost industries in Brazil. A lot of "hot money" borrowed for very little in the US is now leaving Brazil so stock market is down. As this money was converted into Real for the investments, it is now being converted back into dollars to leave. People wanting to buy dollars exceed in numbers those with dollars wanting to sell. This has made the investor taking the funds out pay higher prices (in the Real they have in Brazil) to buy the dollars they now want. I.e. they must pay two Real to buy a dollar now. Half a year ago they could buy a dollar for only 1.6 Real.

All this is good for me - I (with wife) will bring $20,000 dollars back to Brazil from my annual visit with kids and grandkids in the US. (Returning in mid July and perhaps more if exchange is significantly greater than 2.0R$ / $, but then there is paper work to do.) I hope the hot money sellers drive Brazilian stocks down even more. - In a few years they will regret they sold out.

 

It's so cute how Brazil likes to imagine that American monetary policy is all about them. As if America even thinks about Brazil when making such decisions.

One wonders what it will take for Brazil to develop the self-assurance to take responsibility for its own policy choices, and not play the tired old "big bad America made me do it!" card all the time.

Is that the kind of thing they say in the news in Brazil? Well, I suppose I'd be looking for a big foreign bad-guy to blame as well, if I were faced with having to slash interest rates to prop up growth, in a country with a hysterical fear of inflation stemming from experiences in the not-so-distant past.

Although it's strange that they wouldn't blame China for that - it's not like any of those Brazilian industries relocated to the USA... But, then, I suppose the Brazilian politicians are too busy inking sweetheart deals with the Chinese for that gambit to work for them, and the only important thing is that Brazilians don't blame them.

 

That is precisely the problem and not just for Brazil - all the responsible governments which are not intentionally destroying the value of their currency are (like Brazil) complaining about the US´s "currency war" and its "exporting of inflation."

Brazil has twice the GDP growth of USA, very sound banks, now more than 350 billion in reserves, a basically balanced budget and trade balance, has improved the living standards of about 20% of its population, has relatively little unemployment, is rapidly raising the purchasing power of the masses. etc. etc. - All the things the US should be doing, but is not. But this progresses is made more difficult, like like it is for dozens of other countries, by US near zero interest rates and growing debts.

But don´t take my word for this:

"... One of Brazil's most favorable characteristics is a strong banking system that didn't fall prey to the so-called "innovation” known as loan securitization and derivatives. This extravaganza nearly destroyed developed economies but is largely absent in emerging markets such as Brazil. ... The Brazilian economy has been run in a characteristically sober fashion for the past 10 years, especially when compared to its Latin American peers. Brazil was a no-show at the credit-expansion and easy-money party of the past decade.*

Brazil's net public debt as a percentage to gross domestic product (GDP) peaked at about 63 percent in 2003, and reached a low of about 35 percent in 2008. Currently the figure stands at about 37 percent of GDP and should continue to fall to 2008 levels this year.

Brazil took advantage of the recent commodity boom to accumulate vast amounts of foreign reserves. Brazil now holds about USD352 billion in foreign reserves in its coffers, funds that can be used to support the economy amid periods of high capital outflows. These foreign reserves can also be deployed as needed to pay down debt.

Brazil doesn't face an imminent deflationary cycle as the country boasts strong employment and credit growth. Although inflation is manageable, it remains a red flag.

Unemployment of 6 percent is close to historical lows and represents a sharp reduction from the unemployment rate of 13 percent in 2003. Meanwhile, the country's minimum wage for workers and retirees was recently boosted by 14 percent to USD350 per month. By contrast, the country's official poverty line is demarcated at a monthly wage of about USD40.** ..."

Quote from 4/26/2012 Email: "Bullish on Brazil" by Yiannis G. Mostrous of Investing Daily

* That may take the prize as most understated claim this year. Brazil still has a basic interest rate of 9%, down several percent from 13% of a few years ago to stimulate economy as European (and even Asian demand has fallen). Nothing like the FED controlled US near zero rates. Fortunately, Brazil´s economy is what China wants - mainly domestic consumption. Exports make up about 12% of GDP (11% last time I saw the data).

** This plus the the very successful, nearly 10 years old, "bolsa familia" (monthly transfer of wealth to the poor IF they keep their kids in school until age 18 and they get all of their needed free vaccinations ) has moved millions into the cash economy and nearly paid for itself via the taxes on the multiplier effect as they now buy in stores, etc. Brazil´s lowest economic class (E, A being the highest) may soon be almost empty. The middle & near middle classes C & D are growing. Classes are define by complex index that includes things owed (car or not, etc.) as well as income.

Too bad for Americans that they do not have a responsible government (instead of one so dysfunctional it can not even pass a budget) like Brazil delivering much better lives for the coming generations than their parents had. with essentially no debt burden place on the young either.

 

If "the problem" is that the USA doesn't consider other countries when setting its own monetary policies, then "the problem" cannot be honestly described as a "war." A "war" is defined by a motivation to cause some other polity to do (or, not do) something. If America isn't even thinking about Brazil, or any other country, in setting monetary policy, then that monetary policy cannot be a "war."

? Brazil intentionally runs a considerable level of inflation. More than twice that in the USA, in fact - so in what sense are they not "intentionally destroying the value of their currency" while the USA is? Especially considering that they are currently slashing interest rates, which will bring on even more inflation?

Brazil is unequivocal that they view themselves as being in a "currency war" state - that is an direct, explicit admission that they are intentionally working to debase their own currency. The fact that they claim the big, bad USA forced them to do so doesn't change that.

I can't find a single contemporary reference to a "currency war" involving the US dollar coming from anywhere other than Brazil. Indeed, the Financial Times refers to this stuff as "Brazil's currency war," and is pretty explicit in assigning agency in it to Brazilian policymakers:

http://blogs.ft.com/beyond-brics/2012/05/09/brazils-pyrrhic-victory-in-currency-war/#axzz1wU2kj9hd

But only a quarter the GDP per capita (in PPP terms). Which is why pretty much nobody in the USA is in any hurry to switch places with anyone in Brazil. Brazil will have to continue to outgrow the USA for a long, long time to hope to reach the standard of living already extant in the USA.

That said:

... what does any of this stuff have to do with anything I've said?

Indeed, this reflexive listing of accomplishments - which excludes measures of quality of life like life expectancy, infant mortality, adult literacy, etc., note - looks exactly like defensiveness stemming from insecurity.

Why? Because they can't export as much to the USA as they'd like? Because they don't like the carry trade? How is it America's responsibility to ensure that they provide Brazil with as much benefit as possible?

You're comparing a nominal interest rate to a real interest rate there. Since Brazil has considerable inflation, that is misleading. The real interest rate in Brazil is around 4%. If Brazil continues the current policy (which they are expected to do), they will slash the interest rates further throughout this year, which will kick up inflation, and the result will be a near-zero real interest rate there as well.

Exports are also about 10% of US GDP. So what? Why are you looking at that figure, in isolation? Balance of trade would be way more informative, probably.

And too bad Brazil doesn't have a bunch of money like America, which will have to continue outgrowing the USA for many more generations to stand a chance of reaching the standard of living that Americans have already been enjoying for generations. I'll take a similar (very high) quality of life to my parents, over a crap quality of life that happens to be better than the even crappier quality of life "enjoyed" by my parents, thanks.

 

Most of the migration into Brazil, or China for that matter, is due to fact US unemployment is high (near 20% if all who have stopped looking for job in US or are very under employed part timers etc. are considered) and these countries have labor shortages if you have either good education or a commercial skill.
I dont´t have data on China, but migration into Brazil from US has doubled in the last three years.

Wealth, at least the sense of it, is very relative. For example, wife´s working daughter with only two children has three maids, one a live in. She is "upper middle class" almost everyone in the middle class has a maid.

I don´t know how PPP is calculated - does it, for example claim Brazilians own less cars because they tend to be smaller and with less luxury features (for example if you want a radio, you add it - not standard, but most do have one.) Homes do not have heating in Sao Paulo - no fuel expenses. (After sunset, perhaps 15 times a year, I put a sweater on.)

It is a different life style in Brazil, more relaxed (could say more humane) - at least twice as many holidays as in the US, essentially free medical care, etc. I would guess the average Brazilian, middle class, spends at least four weekends and one week at the beach annually. Does PPP take these factors into consideration. Money is not everything and the only thing that makes for a good life.

I will turn the question around: When will the US adequately regulate the financial system, (banks & stock market) instead of have huge loses to the investing public via out right fraud or millions in funds that no one knows where they went or about 100 banks each year failing, including big ones like Lehman Brothers that shake the world into recession?

In last five or more years, one small bank in Brazil came close to going under, but was privately taken over / merged into/ a big one - no one lost money, not even the investors in the smaller bank. Financial wrong doing is very rare in Brazil - as that is an almost certain ticket to long years in a not very nice jails. (Brazil´s major crooks are mainly in elected offices and there is certainly no shortage of them there.) We don´t have Madoffs, Coubins, etc that screw their investors out of 100s of millions of dollars. Nor Morgan Standly`s "whale" speculator that cost their stock holders 5 billion dollars! We don´t even have the strange "financial derivatives" he used to do that with. We have well regulated stock market and banks. Someday, I hope, the US will too.

Certainly it is not US´s responsibility to provide Brazil with as much benefit as possible; howvever, US should recognize that by setting interest rates so low many other countires are hurt - forced to take measures to protect them selves, which in the not too distant "long run" will (and is in process of doing) will destroy the dollar´special status. For example, China & Japan (#2 & #3 global economies) no longer will use the dollar for mutual trading. India & China agree to that last year. All the Brics (S. Africa included) have dropped the dollar for their mutual trade. China and about 18 Asian Nations it trades with, no longer use the dollar. China is now the dominate trader with Africa and the RMB is increasing used there.

As they say (and it applies to the US´s currency war, even if US depressed interest rates were for self stimulation, and not intentional war): "What goes around, comes around"

When the dollar is no longer of much significance for settling global trade, then US will understand it should not have ignored the external effects of its extremely low interest rate policy - I think the 10 year bond only pays 1.52% now - a more than 60 year low - hit that back when US was forcing rates low to handle the WWII debt.

 

That's great and all, but Brazil and China remain countries that people move out of, while the USA remains a country that people move in to. Last year, over 60,000 Chinese gained permanent residence status in the USA, as did over 12,000 Brazilians. How many Americans moved to those countries last year?

That's one of the upshots in living in a country with lots of destitute people who will work for peanuts.

There are downsides, though. Like how one in ten adults in Brazil is illiterate. Or how your average American lives to be ten percent older than your average Brazilian. Or how a baby born in Brazil is 4 times as likely to die before reaching age one than a baby born in the USA. Or how your average Brazilian is five times as likely to be the victim of a murder than is your average American.

And yet here you sit, charged with the duty to moderate a forum on business and economics. You should probably learn. We've been having discussions about PPP for, literally, many years now. And you frequently invoke PPP yourself when you want to advertize the size of China's economy. Here's a hint: it's based around comparing the cost of a generic "basket of goods."

There are different methodologies for PPP, some of which attempt to take into account differences in the quality of the goods purchased. None of them are nearly big enough effects to close the giant gap between the per-capita GDP in the USA and that in Brazil. The fact that Brazilians expect a much lower level of amenities in their cars is a salient demonstration of the fact that the overall quality of life there is lower than the USA, BTW.

Also, plenty of places in the USA don't need any heating (I never use it, myself), and plenty more never need air conditioning (unlike Brazil).

And for all that free medical care, Brazil has much worse infant mortality, life expectancy, etc.

PPP is a measure of purchasing power, not quality of life.

Okay, then, how about you address all of the various other measures of quality of life that I provided, which show that the USA is clearly way ahead and that you made a point of ignoring in your response here?

That's not "turning the question around." That's "changing the subject entirely."

If you "turned the question around," you'd be asking why the US blames others for the financial crisis and recession, and I'd be responding that we don't.

That's great that Brazil has a stable financial system. I still prefer to live in the USA, all things considered.

"Hurt" here means that they don't get to export as much to the USA, and may attract carry trade flows if they have high interest rate regimes?

Does the ability to import more stuff from the US for the same cost also somehow count as "hurt?" Or is there, perhaps, some offsetting advantages to other countries as well?

I don't see anyone in the USA expecting that any other country won't respond as is appropriate to their situation, nor complaining that Brazil has decided to lower its (very high) interest rates to prop up growth there. The complaints all come from the Brazilian side, and they are drummed up populism that the Brazilian elite uses to deflect criticism of policy moves that they want to undertake for reasons of their own.

Which is fine and all, everybody needs a good bogey-man. But ostensibly informed commentators who claim a bilateral perspective ought to do better than to get caught up in that. This stuff is for internal consumption, so you aren't actually doing Brazil any favors by trying to advertize it to Americans and stir up conflict on that basis.

The dollar's special status is based on the stability and size of the US economy, and not particularly on the real yields available on US Treasury Securities in any given year.

So what? Dollar holdings for settling of trade are a minor sideshow. The dollar's 'special status' is its status as a reserve currency. That countries buy a few extra dollars because it makes a convenient standard for denominating trade is just that.

Again, this is Brazil's currency war, and nobody outside of Brazil thinks it's otherwise. And of course the USA is looking for internal demand stimulation - we've been a consumption-led economy for a long time now, and our internal demand is a much larger piece of the pie than export demand. You really think the USA is pursuing some China-style mercantilist approach or something?

What will "come around" is an eventual uptick in inflation. Since inflation is currently low, and unemployment is high, that is the right move for us. Brazil can handle its own affairs, or not; it isn't going to make or break the USA either way.

The question of dollar-denominated trade is, again, a sideshow, and anyway is not particularly influenced by returns on Treasury Securities. You seem to have this confused with dollar reserve holdings.

Regardless, though - those interest rates are actually set in free-market auctions. The USA can only get away with issuing debt at that low rate because there is adequate demand for those dollars in the global market. If people/countries/institutions were systematically ditching their holdings, demand for dollars would be down and interest rates would be exploding as a consequence. This is manifestly not occurring. Whatever weaknesses the US dollar has, it still seems to be a safer bet than most of the alternatives, and so the demand is there.

 

That may be true for Chinese, I don´t know, but not for Brazilian migration, which is now at least two leaving the US for everyone entering the US. That is what hard times in US with ~20% total un and under employment and more than 60,000 unfilled moderate-skill jobs in Brazil waiting for workers will do:

“…According to the Brazilian Labour Ministry, 7,550 American citizens were granted a work visa in Brazil in 2010, up from 5,590 the previous year and more than double the number in 2006. … ” from: http://www.bbc.co.uk/news/world-latin-america-12745667
Note:
(1) That is only the US citizens and does not include the > 6,000 Brazilians who have annually decided to leave the US and return home.
(2) Nor the many thousands more US citizens, who like me just retired to Brazil with no need to get a work visa.
(3) That is from 2010 and rapidly increasing – no doubt the current work visa demand alone is more than your 12,000 Brazilian who left Brazil to go to the US. (Most of whom are students - I know one who enters Harvard this US fall.)

I will not bother to find the post I made a few years ago, Where I quoted the report form local paper that the US/ Brazil migration flux had turned with more coming to Brazil than going to USA. I think it is about 3 to 1 now as very hard to get a job in US and as more baby boomers retire to Brazil (instead of Florida. Etc. for better weather (very few storms and NEVER any hurricanes) and lower cost of living, (twice the year round variety of fruits at less than half the cost, etc.) but they tend to avoid the bigger cities where living expenses can exceed those in the USA. In many places you can buy beach view home or condo for about $80,000 with dollar now buying 2 Real and have no heating expenses.

“…The American economy may be crawling along, but Brazil’s grew at its fastest clip in more than two decades last year and unemployment is at historic lows, part of the nation’s transformation from inflationary basket case into one of Washington’s top creditors.* …

With compensation rivaling that on Wall Street, so many foreign bankers, hedge fund managers, oil executives, lawyers and engineers have moved here that prices for prime office space surpassed those in New York this year, making Rio the costliest city in the Americas to lease it, according to the real estate company Cushman & Wakefield. A gold rush mind-set is in full swing, with foreign work permits surging 144 percent in the past five years and Americans leading the pack of educated professionals putting down stakes. …

Foreigners take jobs at Brazilian companies thriving from a boom partly created by Brazil’s trade with China. ´Our salaries here in Brazil are at least 50 percent more than salaries in the U.S. for strategic positions´ said Jacques Sarfatti, country manager for Russell Reynolds, a company that recruits business executives. …”

Quote, less than 10 months old, from: http://www.nytimes.com/2011/08/13/world/americas/13brazil.html?pagewanted=all

* Brazil is now Third largest holder of US treasury bonds with 237.4 billion in Treasury paper – UK which was tied with Brazil only a couple of years ago has dropped to 10th place with only 112.0 billion – data from: http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt With China decreasing its holdings, it is now only #2, with Japan as largest holder.

 

I don't see where you've provided any data that supports that assertion. The citations you gave only indicate that more Americans are moving to Brazil than before - it doesn't compare with the numbers of Brazilians moving to the USA. And, indeed, every number provided for American migration to Brazil is less than the number of Brazilians migrating to the USA every year. Generally, Brazil is a country that sends more emigrants abroad than it takes in, so it would be strange if Brazil were taking in more immigrants from the USA than it was sending.

Do you have any actual data that shows the number of Americans moving to Brazil, and specifically that it is greater than the number of Brazilians moving to America? I've googled for it, to no avail, so unless you can provide some clear data I doubt that your assertions are accurate.

Right, and we know for a fact that over 12,000 Brazilians got permanent residence (not just "work visas") in that same year. In addition, another 9000 got US citizenship in 2010 - that's over 20k Brazilians who became Americans (not came here to work or study) in 2010. The number of Brazilians who came to the US to study was about 38,000, and the number who came on temporary work visas just shy of 31,000.

So the situation is the opposite of what you assert. There are about 5 times as many Brazilians getting temporary work visas in the USA as there are Americans getting temporary work visas in Brazil.

Citation?

But even if you include that figure, that's far less than the 9000 Brazilians getting US citizenship every year, or the 12000 getting Green Cards each year.

Of course, if you want to include those numbers, you should be fair and include American ex-pats who return to the USA.

By all means, provide some data on those numbers. I doubt very much that they'll exceed the numbers on Brazilian migration to the USA that I've already given you.

The data I provided is also from 2010 - and also shows a rapidly increasing trend in Brazilians coming to the USA.

No, that's 12,000 Brazilians who got Green Cards. There's another 9000 who got citizenship. The number of Brazilian students going to the US each year is 38,000, and the number coming to work is 31,000 (all 2010, of course).

Well, I will not be crediting assertions that you cannot bother to support. I've asked for direct citations, and will not be accepting anything less.

I call bulllshit on this number. I contend that the migration flow is still out of Brazil, and into the USA, and demand that you either produce concrete proof of this assertion or forswear it entirely.

It's not hard to get a job in the US at all, if you have marketable skills. I just got a new one myself, as did my wife.

People with high school diplomas and nothing else are kinda screwed though.

Likewise, you avoid noting the substantial barriers that the overwhelming majority of Americans face in working in Brazil: knowledge of Portuguese.

I doubt that this is a particularly huge number. By all means, though: provide actual data.

If you aren't going to provide any actual data, then do us the favor of refraining from arguing from supposition and hand-waving.

Plenty of cooling expenses, though. Have I mentions already that I already live in a place where I don't spend any money on heating? Internal US migration has been strongly into the Sun Belt for many years now - there are plenty of cheap houses in Texas and Arizona that don't require heating, and where everybody speaks English. Lots of cheap Mexican laborers if you want housekeeping or whatever, as well.

You should have found a newer quote. Brazil's growth fell way off last year, and is struggling this year. That's why they're slashing rates. The putative "currency war" has nothing to do with it - that's just a ploy to distract voters, who don't like to hear things like "growth is slowing, so we need to risk more inflation to prop it up." Much easier to go with "I hate inflation as much as you do, but that big meanie Uncle Sam forced our hand!"

Meanwhile, I note that you declined to address any of my points about quality of life, the irrelevancy of trade dollars to reserve status, or high global demand for dollars. As such, I consider you to have conceded all of those points.

 

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Body language tells who is holding all the good cards.
“…Peterson Institute and the University of Pennsylvania say China is ALREADY the world’s #1 economic power and they proved it {Based on local PP data, but IMF projects China is world´s largest economy only in 2016. (but US basically controls the IMF)}:

"... The U.S. economy produced goods and services valued at $14.6 trillion in 2010 but China’s Gross Domestic Product soared to $14.8 trillion. I.e. China’s economy is already larger than America’s, which is falling farther behind every day. (with lower growth, rapidly growing debt and weaker economy, as shown graphically below.)

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Third at left is total 2011 changes. (As Big Mac jobs replace higher paid ones.)

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"... China enjoys the largest foreign capital inflows of any nation on Earth, surpassing the United States as the world's favorite place to invest and China is now the world’s #1 mine operator ... its #1 car maker ... its #1 manufacturer ... its #1 exporter. In the size of its economy and economic growth ... in science ... in technology ... in the scholarship of its students ... in the growth of its military ... in every conceivable area, China is ALREADY the world’s most dominant nation.
{Billy T notes that China´s military is far weaker and "technology" mainly refers to the ability to produce things like 5th generation flat screen displays (US cannot produce with acceptable yield even 2nd generation and imports most of its electronic devices from China.)}

"... There’s another reason why China is now in a position to dictate economic policy to the United States of America: Nearly 50% of every dollar Washington spends today is borrowed money — much of it borrowed from China. Without the billions Beijing loans Washington, the entire U.S. government would go bust. Washington would become a virtual ghost town. Millions of Americans who count on government checks would be financially destroyed. So you see, the entire world — including the United States — must bow to China’s superior economic power — the greatest the world has ever seen. …”

From: http://finance.moneyandmarkets.com/...ampaigncode&em=x@x.com&sc=WALL&ec=4887103&p=2

Billy T comment: I think the last part is over stated, at least until the dollar collapses, which China can make happen any time it desires; however, before China kills the dollar, it still wants to both further reduce the dollars in its reserves, and still needs to sell less to US & EU, but its sales to others (in Asia and suppliers of items China imports) are annually growing by double digits. For example, Brazil imports more Chinese made cars now than it imports from the USA and this trade used currency swaps, not dollars.

China has replaced the US as the main trading partner for S. Korea, Japan, Brazil, Australia, Russia, India (I think, or soon will when their agreement, made last year, to have $100 billion balanced mutual trade, without use of any dollars, is fully in effect) and dozens of lesser countries. Dozens of countries no longer use the dollar in their mutual trade with China and each other. Japan joined that group in Dec 2011 as far as trade with China is concerned. Many large western companies (MacDonald and Caterpillar were the first) now borrow RMBs with Dim Sum bonds for their investments in Asia as the appreciating RMB is more desired than dollars there now.

 

That implies that having a PPP GDP greater than some other nation entitles a country to dictate economic policy to said nation. Which is silly.

PPP is not particularly relevant to questions of international influence. Exchange-rate GDP is far more relevant to that. The fact that it takes about as much work to feed China's huge population as it does to feed America's smaller population is just that. The fact that America can afford to purchase China's entire output 3 times over, on the other hand, has a lot of consequences for international influence.

This also misstates how debt relationships do (or do not) translate into an ability to dictate terms to borrowers. I've posted entire articles from Foreign Affairs explaining these dynamics before, so I'll just reiterate the old chestnut: if you owe the bank $100,000, you have a problem. If you owe the bank $100,000,000, the bank has a problem.

That's highly overstated. What would actually happen is that borrowing costs would increase marginally.

Another thing that would happen is that the yuan would appreciate in value rapidly, China's gdp growth would drop, etc.

China holds only about 10% of US debt. I do not see how that is nearly enough to trigger a fatal run on the dollar. All they can accomplish with it is a one-time 10% hit to demand. That might throw a wrench in the US works for a quarter or two - or it might not, if other buyers decided to take advantage of the sudden discount available on US debt.

Contradictory: the more China reduces its dollar reserves, the less influence it has over the dollar. If they can't kill the dollar today, then they certainly can't kill the dollar with reduced holdings.

That said, China is growing its dollar reserves, not reducing them. They are diversifying - dollars are declining as a percentage of total Chinese reserves - but the absolute number of dollars they hold continues to grow.

Double-digit growth from a tiny baseline is still a tiny market.

Who cares? You're constantly trumpetting these statistics about dollar-denominated trade, but never seem to be able to explain why anyone should care. I don't think you have any real answer for that - you're just siezing onto anything that sounds like it fits into you "China eats USA" narrative.

 

You don´t read very well do you. Having same, or more PPP was NOT suggested as why China could dictate to others, US included. Here is what was given as that reason:

"... There’s another reason why China is now in a position to dictate economic policy to the United States of America: Nearly 50% of every dollar Washington spends today is borrowed money — much of it borrowed from China. Without the billions Beijing loans Washington, the entire U.S. government would go bust. ..."

Citation, please as as I doubt that is the long term trend. Here is part of why:

By simply not rolling its short term paper, China can force the US to borrow even more to pay off China´s maturing bonds. There is a more recent set of data posted in another thread also showing a decline in absolute value of China´s holding of Treasury paper. If I get time, I will try to find it.



I try to get to rest of your post soon.

 

Go fuck yourself, shitbird. You're the one with the comprehension problems, and long have been.

Yes, it was. You'll notice that your quote, there:

... starts with the word "another." This is an explicit statement that there are (at least) two reasons for the putative Chinese economic dictatorship: the debt issue that follows, and the antecedent information about China's PPP GDP rendering it the "dominant" economy.

Unless, I suppose, you edited out some antedent text there that the "another" referred to. In which case, the problem is your sloppy editing resulted in a misleading quote. Either way, my reading of the material you quoted is exactly correct, the material in question is bullshit, and you are in the wrong for claiming otherwise. The only question is exactly how much of the bullshit was from the original source material, and how much you introduced via sloppy editing.

If you're just going to respond with the same arrogant puffery and hollow evasions, then do everyone a favor and don't bother.

 

Yes the preceding text does state China is the dominate economy in several listed areas. I.e. it states:

"... China enjoys the largest foreign capital inflows of any nation on Earth, surpassing the United States as the world's favorite place to invest and China is now the world’s #1 mine operator ... its #1 car maker ... its #1 manufacturer ... its #1 exporter. In the size of its economy and economic growth ... in science ... in technology ... in the scholarship of its students ... in the growth of its military ... in every conceivable area, China is ALREADY the world’s most dominant nation. ..."

However, just being dominate, is not the power to destroy another country´s economy - that is a false idea you seem to have invented instead of quote the reason the text actually gives as to why China can, if it chooses, destroy the US economy. The text gives ONLY ONE reason why China could destroy the US economy. Calling me a "shitbird" does not change this fact.

 

So, you agree that the word "another" in the quoted material refers to the material you then quote above?

Because that's exactly what I complained was in error, and exactly what you were in the middle of denying.

And the word is "dominant," BTW. "Dominate" is a verb.

Funny: I can conceive of several areas in which China lags, offhand. This would include several of the areas listed right there, actually, if one compares actual size instead of growth. You yourself agree that China stands no chance against the US military, regardless of how fast its military has been growing lately. Oh, and several of them are just wrong: science, technology and scholarship are all areas where China lags behind the USA. And that's without getting into per-capita GDP, human rights, etc. that your source made a point of omitting, in order to sex up his incorrect assertion about Chinese influence and dominance. Your source is not just ragingly hyperbolic, but outright dishonest and materially incorrect to boot.

The quoted text doesn't say anything about "destroying the US economy." You are now, apparently, confusing your own assertions with those from your quote. This is unsurprising, given your long and illustrious history of poor differentiation between quotations and your own commentary, elision of various facts and figures, and general inability to remain on-topic. Although, it may be that a pointed inability to keep track of what you are saying just a couple posts up-thread, in the course of a single day, when the subject is exactly what your quotes did and did not say, is a new high in senility for you. At this rate, you'll probably be entirely lost to the world, before long.

The article you quoted said that China's "dominance" and their financing of US debt mean that they can "dictate economic policy" to the USA. It said this explicitly. That is, in fact, obviously why you quoted it. You are now engaged in your typical reactionary evasion tactics, which you resort to when I point out that something you've posted is bullshit.

The fact that you are entirely incorrect in your assertions - and apparently unable to successfully parse standard English sentences - does, however, change this "fact."

Calling you a shitbird is just my way of letting you know that I don't take kindly to insults, especially when they take the form of someone who can't even keep track of his own posts telling me I can't read well. A shitbird, you see, is a completely useless individual who is, furthermore, oblivious to his own uselessness. I find this a salient description of someone who would post something that is incorrect on its face, and then respond to corrections with insults about how the corrector can't read.

If you don't like that, well, all you have to do is refrain from insulting me. Alternatively, you could just stop posting inane things.

 

No, not yet, but I´m keeping my eyes open and found this by accident:

“…Looking for a job? Try moving to Brazil. Just ten years ago, Brazilian professionals were fleeing the country in search of better jobs and higher pay elsewhere. But these days, white-collar workers from around the globe are pouring into Brazil to find work. In 2011, the number of legal foreign workers jumped 57% to 1.51 million, according to the Justice Ministry. …

Brazil's bullish economy has also sparked a kind of reverse migration. Many Brazilians who left the country in search of a better life are coming home, from Portugal, Japan and the United States. …”

From: http://money.cnn.com/2012/05/30/news/economy/brazil-jobs/index.htm?cnn=yes&hpt=ila_t4 An article entitled: “Brazil, where the jobs are” Article also states: “Unemployment in Brazil is at historic lows, hovering around 6%, and qualified labor is often hard to come by.” & I have read that there are 60,000 jobs waiting for qualified workers.*

Still this is not firm data on the net US migration to Brazil, but 57% increase to 1.51 million in 2011 alone is 0.55 million people moving to Brazil mainly from just three countries in 2011. I strongly doubt that even 0.05 million Brazilians moved to the USA in 2011, if you do not count those buying a second home in Florida. (Because the Real was so strong in 2011 and Florida´s condos were so depressed in price, Brazilians did bump Canadian buyers down to 2nd place in the number of the foreign buyers in 2011. - It was cheaper to buy vacation home in Florida than near beach near Sao Paulo or Rio, even if annual air fare is included.)

* Public elementary level education in Brazil is still very poor and 30+ years ago essentially useless. Thus most in their 40s or older can barely read or even do simple division problems. Neither of President Lula´s parents could read. So in some cases, "qualified" just means educated as well as a US high school student.

 

If so, you've probably noticed that Brazil is, for some reason, really bad about keeping and publicizing actual hard data on these questions.

That's a lot of undefined descriptions. It doesn't actually come out and assert that in-migration of professionals has exceeded out-migration by the same, note.

In the first place, that figure implies that the flow of foreign workers to Brazil is highly volatile. So, you should not be reading any long-term trends out of a handful of data points, when it comes to this stuff.

In the second place, if we're still comparing to the USA, that's chump-change.

Again, no actual numbers, nor any comparison with flows from Brazil to the USA or Portugal or Japan. The quote says "a kind of reverse migration," but does not actually come out and assert that more Brazilians are moving home from those countries, than are moving to those countries from home.

Note that that figure is not much lower than the rate in the USA. And, historically, would be a fairly high rate for the USA.

That's also true in the USA. It isn't the "qualified" people who are unemployed. Well, except for some of the huge glut of lawyers who graduated into the recession.

That's chump change - the USA imports many times that number of qualified workers, every year.

BTW, I think that figure is wrong, or somehow misstated. According to BusinessWeek, Brazil only issued 70k work visas last year - and that was apparently a huge year for work visas:

http://www.businessweek.com/news/2012-05-30/foreign-workers-flooding-brazil-as-salaries-rise-jobs

Probably the correct statistic is something like "visa issuance jumped 55%, and the total number of foreign workers is now at 1.5 million" or something. I haven't been able to find any actual info on this besides the exact CNN quote in question - again, Brazil is not good about publicizing this kind of data. Maybe someone whose Portuguese is better than mine can peruse the Justice Ministry website and try to turn something up.