Posted on 09/23/2004 12:11:49 PM PDT by Willie Green
Does anybody know the actual value of the Chinese currency? And why would anybody invest in China since they defaulted on the bond investments.
I guarantee you that the amount of money invested in the US vastly exceeds that invested in China. What we're talking about here is just foreign investment. So what? American money invested in America is not considered foreign investment. American money invested in China is considered foreign investment.
And yet that decline is precisely what would make the U.S. competitive in terms of exporting manufactured products to other nations.
In other words, you can't have it both ways. We can have a strong dollar and attract lots of foreign investment, or we can have a weak dollar and a strong export-based economy. Anyone who thinks we can do both at the same time is utterly delusional.
I would tend to think that some new, ground-floor businesses would be attractive for growth potential...
In his book "Imperialism" Lenin was obsessed with finance capital and, using his skillful aesopian language, implored the Communists to sieze not only the means of production, but also to seize finance capital. During the 20th century, the Communists went about this rather crudely and typically just destroyed the finance capital institutions of their own countries. Now in the 21st century, they have become a lot more clever about it. Now, they simply dupe the finance capital institutions into forgoing the West and investing in the Communists. They have also infiltrated the institutions themselves. Firstly, they have H1Bs not to mention recruited Western agents, infiltrated into these firms operations within Western countries. Meanwhile, in the Communist countries, they directly control them and manipulate them using various means. On this latter point, it would be highly naive to assume that, for example, a Citicorp operation in a communist or reputed recovering communist country would not have within it's upper management ranks a number of government operatives from the host country!
Imports have been increasing more rapidly than exports, that's one of the reasons the Trade Deficit keeps hitting record highs.
We can have a strong dollar and attract lots of foreign investment, or we can have a weak dollar and a strong export-based economy.
Why should we want to be an "export-based" economy when we've been blessed with natural resources and are the largest consumer market in the world?
We can easily make America more attractive to business investment by eliminating the corporate income tax and implementing tort reform. This needn't weaken the dollar through deficit spending, either. Treasury revenues "lost" by the corporate income tax reduction can be offset by levying a relatively low, flat-rate revenue tariff on imported goods. Other measures to reduce federal deficit spending and balance the budget would also strengthen the dollar.
|
1994 |
1995 |
1996 |
1997 |
1998 |
1999 |
2000 |
2001 |
2002 |
2003 |
Foreign Direct Investment in the U.S. |
45,095 |
58,772 |
103,398 |
103,398 |
174,434 |
283,376 |
314,007 |
159,461 |
62,870 |
29,772 |
U.S. Direct Investment Abroad |
73,252 |
92,074 |
84,426 |
95,769 |
131,004 |
209,392 |
142,627 |
124,873 |
115,340 |
151,884 |
Comments?
I haven't had much time to look at the numbers but it does seem like foreign investors were caught up in the U.S. stock bubble, just like U.S. investors. In looking for some related numbers, I did run across a story on the BEA site that at http://www.bea.gov/bea/newsrelarchive/2004/intinv03_fax.pdf which states:
In regard to transactions, foreign acquisitions of assets in the United States were $829.2 billion in 2003, up from $768.2 billion in 2002, and the second largest on record after $1,046.9 billion in 2000.
U.S. acquisitions of assets abroad were $283.4 billion in 2003, up from $198.0 billion in 2002, and down from a record $569.8 billion in 2000.
I assume that means that the dollars generated by our exploding trade deficit were used to purchase assets other than by investments in our stock market.
Also, typically investors (or in many case speculators) are taking large risks in China in their equities market and not their debt markets. It is estimated that the Yuan is undervalued by around 40% if it was allowed to float freely (not be pegged to the dollar any longer). Since China is becoming more market friendly - though still communist country - and their currency is estimated to be undervalued, many people see China as a place to take a risk so as to get a high payoff if China continues to liberalize their policies - heck, just a free floating currency would be a potential boon for speculators.
I hope that helped.
Once and for all, which way is it with you, Willie? Remember it cannot be both during the same transaction!!!
To bad we don't make stuff here any more.
Neither a borrower nor a lender be;
For loan oft loses both itself and friend,
And borrowing dulls the edge of husbandry.
This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.~ William Shakespeare, "Hamlet", Act 1 scene 3
"And I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale."-- Thomas Jefferson to John Taylor, May 28, 1816
Yes, "foreign direct investment" usually means more than simply purchasing stocks on the NYSE. It includes acquisition of real estate, timber, mining and water rights and purchase of assets from other businesses, (hotels, factories, office buildings, warehouses, strip malls, etc. etc.) Foreign direct investment is usually good, if they actually operate these businesses. Sometimes it's not-so-good, if the acquisition is merely intended to reduce competition and consolidate the market.
But that's drifting off-point a little...
The other way that the dollars we squander with our Trade Deficit is when foreign nations purchase the debt issued by our Treasury to finance the federal budget deficit. This is NOT good because it commits paying an increasing proporation of our tax dollars directly to foreign governments (as interest payments on the debt) before we can spend anything to pay for the operation of our own government. Foreigners own half US debt, tipping point unclear
Yes, it does.
Thanks!
I was reading about legislation last year concerning China investors getting screwed, and Congress requesting they make good on the bond.
With their rapid, growth and their recent transportation changes, I wouldn't be investing in China so much as the corporations that excel at providing the goods and services of growth.
IMHO, China isn't going to liberalize their policies any more than they absolutely have to to keep the rest of the world quiet.
We still make some stuff but now the labor resources tend to service the machines that make the goods rather then make the goods directly. If you're so concerned about this, why don't you take some risk and employ some people to work for you in some industry that makes handmade goods? If you can find sufficient demand for the good to cover your costs, I'll be one of you first investors if you give me the opportunity.
Let me offer this disclaimer: I do not want to read something from you that suggests that you want perfectly balanced trade - it doesn't happen in the real world. I'd like for you to be psychologically balanced too but that's not going to happen either. You may ping all your fellow protectionists or, more discreetly, send them private messages to come to your aid on this thread but I do request the you provide an answer.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.