War clouds over dark skies

By Chemrock

In a globally interconnected world, protectionism does nobody any good. When protectionism rears its ugly head in the countries amongst the top 10 biggest economies in the world, global economic downturn is a certainty. Make no mistake about it. We are all living under war clouds over dark skies. A trade war is going on.

US President Trump has raised tariffs on many products against Mexico, Canada, EU and China. Traditionally, a tariff war will see a tit-for-tat retaliation until one party blinks and they decide to sit down as gentlemen to talk. Another typical path is a re-alignment of trading partners and arrangements. Indeed, EU is initiating a free trade arrangement incorporating EU, China, ASEAN and Japan.

Nations talk of free trade, but in reality, every country has some form of trade restrictions to protect perceived national interests. My purpose here is not to talk of the good the bad and the ugly of protectionism nor of the impact of the US-China trade war.  I’ll share some of my observations on this hot topic but from an entirely different angle.

China plays dice with the Unholy Trinity to check US tariff moves

With China, Trump faces an antagonist that is not a traditionalist in a trade war. The Chinese have opened up a new front and it is in the financial markets. The foreign exchange rate is its weapon of choice for the moment. Beijing has simply devalued the Renmenbi to thwart the US threat. Let me explain the mathematics.

On 7 Feb 2018, the Renmenbi was probably at its historical high with USD/CNY rate at 6.2469. Let’s say there is a product X that China exports to the US. It cost 1,000,000 Yuan so the export price is (1,000,000/6.2649) $159,619. Trump imposes a 10% tariff so it should now cost the US importer (159,619 x 1.1) $175,580. China devalues the Renmenbi by 1% so the new rate = (6.2449 x 1.01) 6.3094. Product X now costs (1,000,000/6.3094) $158,493. Adding on the 10% tariff it will cost the US importer $174,343. Trump’s tariff is effectively killed by the Renmenbi devaluation.

Now if it’s so simple, why can’t every other country use the devaluation tool to give Trump the middle finger. The reason is economics. Every country is constrained by the laws of the Unholy Trinity (or Impossible Trinity or Trilemma), when it comes to international finance. There are 3 sovereign choices :

(a) Free capital mobility – no restrictions for cross national movement of capital. This is needed for investment and development of the country.

(b) Fixed exchange rate – movement in the rate affects price stability in the country, which means inflationary volatility, and which ultimately affects foreign exchange reserves of the government.

(c) Independent monetary policy – control over interest rates. It’s the tool to control inflation, or to stimulate economic growth.

A country cannot have all three types of free capital mobility, a fixed exchange rate, and independent monetary policy. Pick any 2, and you are locked out of the 3rd option. Eg. – Inflation rises, if the central bank decides to keep the exchange rate (fixed) and raise interest rate, then he needs capital control otherwise foreign capital will flow in to take advantage of higher interest. Result – increased liquidity adding to inflationary pressure, and foreign debt.

From 6.2469 in Feb 2018, the Renmenbi has fallen to 6.77 presently, a depreciation of 8.4%. This devaluation is coming at a time when inflation is already a big problem. This devaluation will raise inflation higher as cost of imports become more expensive. Their option to raise interest rates to combat inflation is constrained because China is sitting on a mountain of corporate debts waiting to burst at its seams. Bond defaults have been at extremely high levels in the past 2  years.   The Renmenbi benchmark interest rate has remained at 4.35% since 2016. China is tempting the Unholy Trinity with devaluation, fixed interest rate, and capital mobility. There is a powder keg in their financial market. It will not turn out well.

The Unholy Trinity is a concept that all monetary policymakers in the world bow to since the 1960s when the idea was first broached. So why is China any different? Coming from more than a hundred years of communism, a central planning mentality has been embedded in their thinking. China has a different perspective. The Central Bank of China boldly challenges this Unholy Trinity with what they termed “Scalene Unholy Trinity”, a sort of triangle with 3 unequal sides. Basically they are saying all 3 options are possible, it’s a matter of scaling — fine tuning the extent of the control of each side of the triangle. What will be the impact on their economy with this devaluation of the Renmenbi as a tool to counter US tariffs? Well the book is yet to be written.

Is the Renmenbi devaluation a ploy to nullify the US tariff or to tank the US equities market?

Is devaluation a knee jerk reaction to the US tariff or a calculated plan, one with a more devious intent? Could it be the Chinese is trying to bring down the US stock exchanges in retaliation? With devaluation, Chinese investors will exit the equities market to take the foreign exchange gains and move their funds elsewhere. Chinese investors are significant players in the US equities market. An exodus of Chinese money may trigger a bearish market to crash. Is this too-far fetched? The chart on the right clearly shows the Renmenbi devaluation tend to crash the US equities market.

If the cause and effect of the Renmenbi as reflected in the chart is loud and clear, there is a great anomaly in the latest round of devaluation from Feb to Jul 2018. Whilst CNY has depreciated by 8.4% to 6.77 against USD, the S&P 500 saw a sharp drop of 250 points in January, but has since been on a general uptrend and is now testing a 4 month high of 2,800.  Very obviously, something else is at play.  The equities market is being propped up by capital from elsewhere. I will try to unravel this, but first I need to digress to bonds (yet again), to provide a better understanding. This is why academic economics cannot explain much of the developments in the market place. An appreciation of market player motivations and sentiments, and pulling up all the relevant charts and indexes, as well as a keen view of current world affairs, may provide better insights.

Bonds trade on inflation. Bonds yield fixed interest income to investors. When inflation rises, fixed income earners suffer. So they dispose of bonds and move their money elsewhere. To sell, they price low. When bond prices drop, their yields go up. Bonds are debt instruments. When bond yields rise, it becomes more expensive to borrow. With less easy money flowing into the bond market, the equities market gets hit. Capital from the equities market moves to the bonds market where the yields are higher. That is why when the bond market crashes, the equities market follows.

Ten years of QE saw the Fed pumping money into the market in true Keynesian fashion. Theoretically, it’s to make money easily available to stimulate economic activity after the market crash of 2008. However, with the economy being flat, most of the liquidity went into equities, debt, and housing markets. This resulted in upward pressure on asset pricing that has pushed equities and housing indexes to record highs, and a bloated debt inventory of $70T in the bond market. If a fattened market has its money pulled out too much and too fast, then, just as a busted balloon, it obeys the law of nature and deflates.

With the economy improving, the Fed started to mop up the liquidity in the market and increase interest rates slowly. This is normal open market operation by central bankers to cool down inflation. However, many market players share the view that the Fed’s inflation figures were not reflective of real inflation. I wrote on this sometime back and suggested real inflation was somewhat higher. That was the reason bond yields began to rise due to higher inflation than officially indicated. In the past few months, the Fed has increased the rate of mopping up liquidity by $30-$40T per month which has significantly reduced capital in the market. This pushed bond yields to breach a 30 year downward trend line and it’s now the highest since 2011. If the Fed persists in tightening liquidity at the present rate, indeed it has mentioned that it intends to increase to $50B monthly, it means it is willing to crash the equities market to get capital to move into the bonds market. The equities market, meanwhile, stood at titillating levels, displaying signs in the chart of an expected fall. Yet the expected crash has still not arrived.

The Renmenbi devaluation, high rate of liquidity mopping up by the Fed, and high bond yields have not been able to tank the equities market this time round. By all accounts and historically, it should have happened. What gives? The answer lies most likely with Japan. More specifically, it lies with the Yen carry trade.

Japan is assisting the US in the trade war with China and the battle is being fought in the financial markets.

Ten years of extremely low interest rates and stability in the Yen made the currency pair of USD/Jpy the darling of the carry trade. The carry trade is basically an arbitrage strategy. Borrow a cheap currency (one with low interest cost) and convert it to a currency with higher interest rates, invest the converted currency, and profit from the interest rate differential. The deal may be covered with a forward exchange contract to reverse the currency exposure. For the past 10 years or so the Yen carry trade has seen huge volumes in transactions. It has tapered off somewhat in the last 2 years as interest rate differentials close out. In the past few months, the Yen carry trade has picked up substantially yet again.

It does seem the Yen carry trade is pumping capital to prop up the equities market.  The give away is in the S&P 500 and the USD/Jpy rate charts where the two are moving in uncanny tandem. That is why the expected crash of the equities market is not happening at this point.  And when the Central Bank of Japan is an active participant in the Yen carry trade, it points to some tacit agreement and arrangement at official levels. If this were true, then there is without a doubt, the US equities market is being rigged big time.

If there is doubt to the proposition, then what can possibly explain this? Trump has pummeled Mexico, Canada, EU and China on their unfair trade practices. Before assuming the presidency he may have made some disparaging remarks about Japan. But since then, Trump has done no bashing of the land of the rising sun. On the contrary, he has been singing praises of Japan. It does seem to indicate that there is something going on. As of now, Japan is assisting the US in the trade war with China and the battle is being fought in the financial markets.

This is simply an opinion. You are free to reason that it’s the USD appreciating due to a stronger economy and it’s the US that is trying to crash the Chinese financial market.


129 Responses to “War clouds over dark skies”
  1. Ron Z says:

    Devaluing the currency to offset tariffs, while it may maintain the price of tariffed goods, the value of the currebcy affects everything, and everything else becomes cheaper, so that the tariffed items are still relatively more expensive.

    • chemrock says:

      From the point of view of US consumers, when Renmenbi devalues, the local prices of imported Chinese products which are not tariffed become cheaper. The tariffed products become more expensive without devaluation, but if USD/CNY devalues, the impact diminishes to the extent of the rate of devaluation.

      From the point of view of Chinese consumers, all imports from anywhere in the world, if priced in USD, becomes more expensive.

  2. Francis says:

    An excellent article @Chemrock,

    I am queasy with Math—and as such am unfamiliar with much economics. And I have not been following this “trade war” as much as I ought to be.

    Yet—on the occasion when I do think about this whole “trade war” kerfuffle—I feel that Trump is like the broken clock which gets the right time twice a day…or an army of monkeys randomly mashing up Shakespeare on the typewriter. He is playing hardball with China…

    This is bluffing at the highest geopolitical levels—a game that might as well be a geopolitical staring contest. What Trump may not know (but has unconsciously realized, via his actions) is that China has a lot of defects and flaws in her economy. The “defiance” of the Unholy Trinity is one of them; unfortunately for Beijing—Big Data and AI haven’t (yet) advanced to the point of making a grand synthesis between market-driven capitalism and state-driven planned economics (though, I have come across at least one article outlining such a notion).

    And China has more than the “Unholy Trinity” to contend with; there’s those rapidly rising levels of debt, there’s strange smokes and mirrors (ala Enron) in some of her flagship companies, there’s that enormous (like—yuge) educational gap between the countryside and urban areas, that gender gap…

    America has gotten Trump sure—a dent in America’s short-term fortunes—but when it comes to the long-term, I’d still put my money on America more than China.

    And I doubt the Chinese elite are unaware of the fragile position of their state; if they weren’t aware or believed China to be truly the emerging superpower of our century, why the capital flight—why send your children (and money) abroad?

    If a recession does occur—it will be a game-changer. I think that it will be the new Great Depression of our times—not, I think in economic terms, but in cultural, social and political terms.

    (One could say that even now—the Great Depression’s legacies still echo in us.)

    The EU (and establishment liberalism) is barely holding on—as a right-ward (and potentially fascist) turn looms. America is rapidly lurching leftwards as the American Millenials grow frustrated with the prospect of ending up less well-off than their grandparents and parents. China is in the midst of a rising “cult of personality”—with limited freedoms being curtailed and regions with somewhat autonomous identities (Xinjiang, Hong Kong) recieving tighter and tighter leashes—as Xi desperately tries to avoid the fate of Gorbachev for himself and the Party; one wonders if this will turn out to become a self-fulfilling prophecy. The Philippines has—out of frustration with the immense political and economic inequality that persists, despite impressive economic growth—gotten a populist puppet into office, whose strings are held by cunning traditional politicians who manipulated lower middle class and middle class frustrations into a populist wave.

    The whole world stands on an inflection point.

    (Part of the reason why Europe and America are where they are now—establishment frayed—is because of the aftermath of the Great Recession…)

    • chemrock says:

      Francis, your Math and econs are on par with everyone here, which, with due respect all round, is’nt really that fantastic. But we are learning everyday. You obviously excel in humanities and current affairs.

      I am just thinking that the consequence of this trade war is unlikely to see a scenario like the 1929 Great Depression. But economies all over the world will be hurt, that’s for sure.

      I note you have more confidence in the US than in China for reasons you indicated. I share this feeling. The US has the indominatable free spirit and capabilities to wriggle out of great financial woes, demonstrated time and again. The Chinese meanwhile, has never experienced this kind of financial difficulties. China has only one advantage going for it. As an authocratic state, it is easier for them to implement tough regulations to problem solving.

  3. edgar lores says:

    1. More doom and gloom.

    2. This is becoming a blog of horror. As if the national crisis were not enough to cause trepidation, no, we must look for additional discomfort in the international arena.

    3. In the last century, the war clouds began as early as the 14th year as depicted in Barbara Tuchman’s “The Guns of August.” And before the first half of the century, the world was engulfed in two world wars.

    4. In this century, we are now in our 18th year. So far, so good. There have been no world wars. Major conflicts have been confined in the Middle East (Iran, Syria), South Asia (Afghanistan), and Eastern Europe (Chechnya and Ukraine). There have been drug wars just about everywhere. However, the War on Terrorism may be said to be of an international character.

    5. The just-ignited Trade War between the US and the rest of the world has been described as a Cold War, mainly between America and China.

    5.1. Some years hence, it will be called the Twitter War.

    6. I laugh… but truly I am scared.

    • chemrock says:

      I’m just grateful to belong to a generation that has experienced no war personally. Coming into the Autumn of my life when the heart no longer has the confidence of youth and recklessness, it’s easy to feel doom and gloom in so many places. When my life’s saving was in nickels and dimes of yesteryear’s valuation amidst today’s prices and big ticket items that now cost really big, it’s getting scarier by the day. And this trade war may just make it worse for everybody. I think I need to go Church more often.

      • edgar lores says:

        “I was conceived in war and born to peace.” — Edgar Lores’ unwritten autobiography

        I have also lived in peace.

        May I die… and rest in peace.

        • karlgarcia says:

          Don’t say that.

          • edgar lores says:

            Ahaha! Why not? The wish is for the world to be at peace when I am gone.

            Also, I am at ease with my mortality. At my age, if you are not, then you will not go gentle into the good night.

            • karlgarcia says:

              RIP has an instant creepy I dunno.
              If you are at peace Good for you.
              Now that I am no longer creeped out, I would also want to rest in peace, but not yet.But if I it is any time soon, what can I do except to live life to the full.

              • edgar lores says:

                Karl, sorry I creeped you out. You are young.

                I have meditated on death many times. It is something you do when you reach my age… and if you are a Boy Scout.

                I take the Buddhist stance on death meditation, which is not to avoid the elephant in the room. There is much wisdom to be gained in contemplating death, in particular in contemplating one’s own death. Various religions offer different consolations.

                But to go beyond consolation, to face death fully and squarely gives one courage. It makes one not fear death. And if one has no fear of the unknown, how much more courage do we gain by facing the knowns in our everyday life? Not only courage but an appreciation of the value of life and an immense gratitude that we are allowed.

              • karlgarcia says:

                You are about twenty years my senior and soon, I have to think about dying too.

                So far only one TSOH contributor, I know has passed, Rhiro was like an older version of Micha, but I think with his Indian roots, pardon me for stereotyping, but I think he found his peace as he went gently into the night(or day).

  4. karlgarcia says:

    China rushed to build roads and bridges, now local governments are in deep debt and the central bank wants to do a Detroit style bailout.

    A 2015 article warning about China’s local government debt mess

    China’s local governments get a new bailout

    By SCOTT CENDROWSKI March 10, 2015
    Expect to hear a lot more about China’s local government debt mess this year. The latest estimates put local government borrowing at more than $3 trillion—or a third of its entire economy. That’s unsustainable, and China’s central government is beginning to take steps to fix the problem before full-scale defaults.
    Over the weekend, China’s Ministry of Finance said $160 billion of high-interest local government debt could be refinanced via lower-cost municipal debt, advancing a plan announced last summer. The authorities said savings would reach at least $6.5 billion a year, allowing governments to turn around and keep spending to help the country reach its GDP growth target of 7% this year.
    The swap is being called a big deal in China, one that acknowledges how easily city and provincial governments got round previous rules aimed at keeping a lid on borrowing, and tries to put the whole problem on a footing that is both legally clearer and financially more solid.

    China’s counties and cities are saddled with costly debt after rushing to build roads, bridges and tunnels during the 2008-09 stimulus and over the past 20 years.
    Banned by law from issuing bonds, authorities set up ‘local government financing vehicles’, or LGFV, which raised money by issuing corporate-type debt, including high-interest loans sold to the country’s high-yielding trust accounts.
    That debt is coming due. The fear is that a wave of defaults could follow.
    In a February report from McKinsey entitled “Debt and (not much) deleveraging,” the authors explain “if local government financing vehicles are unable to repay their loans, the losses would
 be felt throughout the banking system.” The big four state-owned banks in China, along with city commercial banks and other financing companies, have $900 billion on the line, according to McKinsey.

    The local debt is costly. A government audit last year found that 20% of recent loans issued to local government’s special vehicles were used to pay down old debt. Forty percent of repayment funds were raised from local governments selling land.
    Local governments were well aware that land sales are themselves unsustainable, but they turned to them because there were few other ways of raising money. The hope was that they would be able to pay off the debts with future tax receipts.
    China’s premier Li Keqiang told the World Economic Forum in Davos earlier this year “there will not be a regional, systemic financial crisis” in the country. Credit agencies included Moody’s say his statement serves as evidence the central government won’t allow local government defaults. McKinsey concludes the central government has enough resources—after years of trade surpluses—to tackle the issue. Where it ends is the question investors are asking.

    Guo Shuqing, a provincial governor in coastal Shandong, told reporters over the weekend that cities in his province need to sell assets to pay off debt. Shandong province is the second-least indebted province of China’s thirty. His comments were alarming for what wasn’t being said by others.
    Allowing local government to refinance high-interest loans through the municipal bond market—the market they should have been accessing from the start—is one step toward delaying, even avoiding, the need for Beijing bailouts. It may even be a decisive moment in meeting China’s declared aim of letting market forces play a ‘decisive’ role in the economy in the medium term.
    But the risk is that the opposite may happen, as Beijing steps into the fray to rescue an unknown number of local debtors, leading to a greater centralization and politicization of economic decision-making. That might be just as worrisome for those concerned about China’s debts as an actual default.

    From an article written a few months ago: Debt problems remain


    China needs Detroit-style bankruptcy as debt problems remain: central bank official

    BEIJING (Reuters) – China needs to let local governments take responsibility for their finances, including allowing bankruptcies, as part of an effort to defuse their debt risks, a central bank official wrote on Monday.

    A Chinese flag flutters at Xinhuamen Gate of Zhongnanhai leadership compound in central Beijing, China December 15, 2017. REUTERS/Jason Lee

    Central government control of the scale of local government bonds should be eliminated, while responsibility to issue and repay bonds should be held by the city or county that will actually use the funds, Xu Zhong, head of the People’s Bank of China’s research bureau, wrote in a an editorial on the financial news website Yicai.

    “Eliminate central government control on the scale of local government bond issues, expand the scale of local government debt issues,” Xu wrote.

    “Whether (bonds) can be issued, and at what price, must be examined and screened by the financial markets. There does not need to be worry about local governments chaotically issuing debt.”

    China’s top leadership decided at a meeting this week to take concrete measures to strengthen the regulation of local government debt next year as policymakers look to rein in a massive debt pile and reduce financial risks facing the economy.

    The government needs to clarify responsibility as it explores a bankruptcy system for local governments, Xu wrote, as there is still an expectation that the central government will bail out those that run into fiscal problems.

    “China must have an example like the bankruptcy in Detroit. Only if we allow local state-owned firms and governments to go bankrupt will investors believe the central government will break the implicit guarantee,” Xu wrote, adding that social services should be maintained.

    The United States city of Detroit filed the largest-ever municipal bankruptcy in July 2013, with $18 billion of debt.

    Xu also said that China should dismantle the hukou system of internal migration control, as free movement of people promoted equal access to public services and helped resolve imbalances in finances.

    In a report published on Saturday, China’s National Audit Office said China should dispel the “illusion” that the central government will pick up the bill for local government debt.

    But China should also increase the limit for local government debt as general government debt is primarily used for poverty relief spending, while also controlling spending on new projects.

    “Financial institutions must not provide financing to projects without a source of stable operating cash flow or that do not have compliant collateral,” the office said.

    Reporting by Elias Glenn; Editing by Robert Birsel

  5. karlgarcia says:

    We should be very wary, this is not just about soy sauce and soy drinks, it is about almost eveything we eat except for vegetables.


    The Severe Implications of Soybean Tariffs

    The proposed 25% tariff on U.S. soybean imports to China has the potential to send shockwaves through the domestic and global soybean markets. If the tariff is approved and in place for several years, U.S. farmers could be driven to reduce soybean acres, while South American farmers expand.

    That’s according to a recent Rabobank article, “Implications of a Potential Additional 25% Duty on U.S. Soybean Imports into China – Winning and Losing Regions Beyond the U.S. and China,” written by Stefan Vogel, head of agri commodity markets and global strategies for grains and oilseeds, Rabobank, and Lief Chiang, analyst, Rabobank.

    “A 25% duty on U.S. soybeans is not yet a given, but the implications would be severe,” write Vogel and Chiang. “The current trade imbalance is considerably in China’s favor.”

    That’s because China’s exports to the U.S. are valued at $505 billion per year—nearly four times the $130 billion in U.S. exports to China. If all proposed duties took effect, 40% of the U.S. exports to China would be affected, but only 10% of China’s exports to the U.S., according to Rabobank research.

    Here’s a timeline, provided by Rabobank, on how we arrived at this critical crossroads:

    March 22: U.S. imposes duties on Chinese products, including 25% on steel.
    March 23: China threatens to impose up to 25% duty on 128 U.S. products, including pork.
    April 3: U.S. threatens to impose 25% duties on 1,300 Chinese products, worth about $50 billion in imports.
    April 4: China threatens to impose an additional 25% duty on 106 U.S. products that are worth $50 billon. This includes soybeans, cotton, sorghum, wheat, beef and corn. China said it seeks a truce but would retaliate if the U.S. followed through on its proposal and that the timing will depend on the U.S. decision, which is expected in six to eight weeks.
    China imports 90% of its soybean needs. Around 34% of China’s soybean imports come from the U.S., which represents a $14 billion market for U.S. farmers. However, the value of U.S. grain and oilseed exports to China have fallen about 15% since 2014, and last year’s soybean shipments to China were the second-lowest since 2012, Rabobank reports.

    “Yet, supplying China solely with soybeans from countries other than the U.S. won’t be easy,” Vogel and Chiang point out. “In 2018, Brazil has limited room to increase soybean exports significantly, while Argentina’s crop is drought-reduced and Argentina typically exports soy meal rather than soybeans.”

    China Imports of Global Soybeans

    China: An additional 25% duty on U.S. soybeans will increase China’s domestic soybean prices and thus also the prices of soy oil and soymeal, Rabobank reports. Chinese crushers cannot fully pass on the inflated costs downstream. As a result, higher soymeal prices will lift the production costs of livestock farming, further squeezing margins, which incentivizes changes to feed formulas to lower soymeal usage.

    U.S.: For the U.S., a 25% tariff will likely mean soybean prices will fall, to compensate for the extra cost to enter the world’s number one importer. Therefore, U.S. soybean acreage would decline in the coming years, while corn rises, Rabobank reports.

    South America: A tariff on U.S. soybean imports into China will mean South American soybean exports to China will rise considerably—boosting prices. South American pork and poultry margins will suffer from higher feed costs, but pork exports might benefit from Chinese duties on U.S. pork, Rabobank reports. As a result, South American famers will expand soybean acres.

    At the Farm Gate

    If this tariff goes through, it would result in a significant deterioration in cash flow for U.S. farmers, according to recent analysis from the University of Illinois and Ohio State University. (See the farmdoc daily piece, Impacts of Chinese Soybean Tariffs on Financial Position of Central Illinois Grain Farms,” written by Krista Swanson, Gary Schnitkey, Todd Hubbs, Jonathan Coppess, Nick Paulson and Carl Zulauf).

    The economists looked at the potential impacts of a 25% soybean tariff on an average central Illinois grain farm (1,700 acres, of which 11% is owned, 44% is share rented and 45% is cash rented). At the end of 2017, the farm has $3,780,000 in net worth, a 26.8% debt-to-asset ratio, a 1.79 current ratio, and a debt coverage ratio of 150.6%. They simulated this farm’s performance from 2018 through 2021.

    Three alternatives were applied in the simulation:

    Lower Prices. Soybean and corn prices likely would decline as a result of the imposition of a 25% soybean tariff.
    Lower Prices Plus Lower Costs. As a result of price decrease, non-land costs and cash rents likely will decrease. In addition, acreage in central Illinois and the Midwest, would switch from soybeans to corn.
    Farmland Price Declines. Lower commodity prices likely will lead to lower farmland returns and lower cash rents. As a result, farmland prices would decline.
    “The imposition of a 25% soybean tariff by China on U.S. soybean exports would result in a worsened financial and wealth position for the case farm examined,” the economists report. “Cash rent declines would need to occur to offset some of the price declines. The 25% tariff would have larger negative impacts on farms with higher debt levels and higher amounts of cash rent. The reverse is true as well.”

  6. karlgarcia says:

    In the 90s it is about Americanization of China, in the present, is it Chinazation of America?


    Forget politics.
U.S. culture has invaded the mainland
and the Chinese will never be the same

    AT LUNCHTIME WORKERs rush to a rather nondescript building on Nan Dan Dong Road. There, they enter a wild “stock” market. Buying is fierce; a rugby-style scrum ensues as customers press forward, waving wads of cash. Shanghainese have had a passion for trading since long before the city began experimenting with a bourse in 1986. Yet this frenzy emanates far from the formal stock exchange floor. Here, in southern Shanghai’s Sino Building, a bull run of a different sort rages. Eager buyers are chanting orders for the current hot play: Glister, Glister, Glister.
    Don’t bother looking in the business pages; Glister is neither trading company nor infrastructure play. It’s a toothpaste, and not even a name brand. Nonetheless, customers in Shanghai are investing whopping sums in Glister, at five times the price of Colgate, one of China’s best-selling imports.
    Buyers also snap up shampoo and dish soap at equally lofty sums, often 10 times more than comparable local brands. Why the premium? Packaging most likely. With the exception of the Sino Building’s name, everything here is wrapped in real or metaphorical red, white and blue. The color scheme is meant to convey the same message as the company name, Amway, short for the American Way.
    Some say the U.S. doesn’t sell in China. Don’t tell that to Amway. Since starting up on the mainland in earnest in 1995, this direct-sales firm has reported astounding gains, often triple-digit quarterly increases. And the figures are no fluke. Avon, the first direct-sales company in China, has 85,000 agents knocking on doors and yurts in every region except Tibet, racking up sales of $68 million in 1996. A year before, Mary Kay opened its first cosmetics plant outside the U.S. in Hangzhou. Demand has been so keen that the Texas-based firm has already broken ground on a new China factory, 15 times larger than the first one.
    Cosmetics are popular with China’s fashion-conscious crowd, but entrepreneurial opportunities are an even bigger draw. Amway, Avon and Mary Kay all sell products through agents, who gladly pay for the training and sales kits. Not everyone in China craves richer hair, but almost everyone wants to get rich. The big draw is the chance to acquire what is now an irresistible commodity: an American association.
    Few brushing with Glister expect anything more than white teeth. Yet some will soon be rolling in the pink. Mary Kay plans to award its first “career car” as a bonus to its top China sales agent. It won’t be a Cadillac, like those given to Mary Kay’s American beauty moguls, but a livid-pink mainland-made Volkswagen Santana. To those who say the American Dream is dead, Cecilia Yang, Mary Kay’s vice president for sales and marketing in China, points with a smile to single mom Gu Mei, 32, a Mary Kay “beauty consultant” who earns over $8,500 per month. But the attraction is even bigger than money, says James Watson, anthropology professor at Harvard University, who has been visiting China since the end of the Cultural Revolution. “The Chinese want the American lifestyle, a modern lifestyle, the way they think Americans live.”
    And why not? After a half century of isolation under the Communist Party, the Chinese are desperate to catch up. “Chinese, young and old, are tired of political movements,” says a Western correspondent in Beijing. The American Dream may be frayed at the edges, he adds, but Chinese still want the amenities associated with it: a car, a house filled with appliances, in short, the good life. “America represents an ideal in China,” says King Lai, CEO of Saatchi & Saatchi Advertising China. “For the Chinese, it’s the lifestyle that they aspire to, the spirit of America.”
    They certainly see enough of it. Mainland billboards, store fronts and television commercials all extol the American mystique, from the macho Marlboro cowboy to the slam dunking of Nike’s “Flyer Qiao Dan,” known elsewhere as basketball star Michael Jordan. His Airness actually outranked Mao in one recent mainland popularity survey.
    Beijing’s political bosses must be blistering, as this infatuation counters party directives still on the books designed to curb Western decadence. The tirades are hardly new; they have been part of the political ping-pong between the world’s superpowers since the days when China anxiously awaited each annual U.S. decision on Most-Favored-Nation trading status. Once the World Cup of Confrontation, America’s MFN debate raged again this year, although at a less-fevered pitch than after Tiananmen. But the real debate has shifted to the sidelines, where world opinion is constantly being molded in the tug of war between the superpowers.
    In one prominent case this year, the publication of The Coming Conflict with China, by Richard Bernstein and Ross Munro, set off a Sino-American kerfuffle. The two Western journalists, who worked in Beijing in the 1980s, depict China’s emergence in menacing tones that plays well to paranoid Western ears. The Chinese fought back with Behind the Demonization of China, a mainland blockbuster by Xinhua reporter Li Xiguang, who spent six months at The Washington Post. His book details an alleged campaign among American media to muddy China’s image.
    The mutual sniping is part of the growing pains in maturing U.S.-China relations. For Beijing, though, great face is at stake as it seeks to gain equal footing with the U.S. Perhaps that helps explain the vitriol of recent campaigns against consumerism, which, to Beijing’s chagrin, have had little impact on the masses. Beijing has had much greater success using politics as a wedge in negotiations over airliner purchases and auto plants, as Boeing and General Motors can attest. This is a remarkable gauge of how much the mainland has changed over the last decade: Beijing is more capable of bullying concessions from foreign firms than reining in consumerism sweeping its once-constrained and centrally controlled state.
    The irony must irk even more; it is Uncle Sam who is driving much of this consumerism. “Despite what Beijing says, the Chinese can’t get enough of Americana,” a U.S. businessman based in Shanghai says. “It’s created a real bizarre schism. The government may paint a picture of America as a devil country, but the average Chinese looks at America with total fascination.”
    To be sure, there remains a lot of anti-American resentment among older people, Communist Party stalwarts and some intellectuals, particularly because of the often patronizing U.S. rhetoric toward China. But even among the latter group, feelings are mixed. Intellectuals may despise America’s pop culture while appreciating its academic freedoms, legal traditions and constitution. And the negative or suspicious anti-U.S. currents are increasingly being engulfed by a rising tide of Americaphilia. This is particularly true among Chinese urban youth, hailed by advertising studies as “the Lucky Generation.” Growing up in a new era of openness, they have known no natural hardships or government campaigns of repression.
    This generation’s appetite for fashionable products is matched by its growing earning potential. You see members of the Lucky Generation parading the latest fashions nightly at lively discos like the “New York, New York” club in Shanghai. “I come here most nights,” says Willy, a 20-something trendoid dressed, like his fellow Chinese buddies, in designer black. “We like to dance and to party,” he says. “We mainly like the American style.”

    In the coastal city of Qingdao, spray-painted graffiti makes the Ocean Disco appear more like a New York subway station than a dance hall. At least, that’s the impression until you take a closer look. The walls are neatly marked with inane expressions like “toy,” “fish” and “pencil.” As I jot down the juvenilia, a giggling Chinese girl comes past and points. “I love it,” she says. “It’s cool.”
    Cool or not, and government directives aside, middle- and upper-class Chinese kids are tuned to the same MTV-style wavelength as the rest of the world. But the real concern to the party cadres is this certainty: the Lucky Generation isn’t alone, it is only a beat or two ahead of the rest of the nation.
    China’s main cities are already under siege. Kids munch Big Macs at over 130 McDonald’s, content in the gaze not of Mao but “Good Uncle,” a.k.a. Ronald McDonald. China’s yuppies do the same at three Hard Rock Cafes, inundated by memorabilia and the music of once-banned Western rock idols. They dine at TGIF and eat dessert at TCBY. The former is an acronym for what would once have been an aberration in the Communist Party, Thank God It’s Friday; the latter is a frozen yogurt franchise based in U.S. President Bill Clinton’s stomping ground of Little Rock, Arkansas. Soon residents of Boston and Beijing will have this in common: takeaway from Boston Chicken or Domino’s Pizza. Chinese urbanites can already buy anything from stereo systems to snack foods at U.S. mega-stores Wal-Mart and Pricesmart (known in the U.S. as Price Club).
    China’s American embrace is most fervent at the cathedral to Yankee culture, the cinema. Beijing still allows distribution of a handful of imported flicks each year, but the ration is no longer a forced diet of scratchy Hollywood flops. These days Chinese eschew the patriotic reels still churned out by government filmmakers for the latest Sylvester Stallone and Tom Cruise blockbusters, which laud Western excesses.
    Mainland TV, undergoing its own revolution, offers another shock to seasoned sinologists. Thanks partly to satellite TV, Chinese soaps and historical serials now compete against programs that would have seemed unimaginable only a few years ago: episodes of Baywatch and The X-Files. Soon, millions of mainland kids will be watching Da Niao, Big Bird’s Chinese cousin, in Zhima Jie, a Shanghai version of Sesame Street.
    This summer will see the debut of The Little Rascals, a 1950s U.S. comedy series. Dubbed in Mandarin, 54 episodes will blanket airwaves, twice daily on 250 cable and regional stations, according to Tom Bus, general manager of Sino Universal International in Shanghai. Quotas also restrict foreign content on TV, otherwise there would be no end to U.S. programming. “If there was no regulation, we could easily fill 1 million hours nationwide,” Bus says. Little Rascals comes from King World International, which also distributes such all-American fare as Wheel of Fortune, The Oprah Winfrey Show and The Geraldo Rivera Show. Bus has no compunction about peddling this type of candy-for-the-brain programming. “Game shows would be hits here,” he says. “The Chinese love gambling and games.”
    Some can’t get too much of a good thing, as is amply demonstrated at the American Dream Park, the ultimate celebration of Americana in China. Opened last fall on 28 hectares in the outskirts of Shanghai, the American-equipped amusement park replicates stereotypical U.S. attractions to such a degree that Disneyland seems international in comparison. Among the offerings: an American Heritage area, the ubiquitous Wild West town — complete with cowboys and Indians — and a contemporary section dubbed USA Today.
    “The American image is what people in China want,” says Robert Lamb, a U.S. amusement-park expert who oversaw the opening of the $120 million theme park; others are planned for Chengdu, Wuhan, Beijing and Guangzhou. “Just look at the kids in China. They see American films, have American haircuts, wear blue jeans,” Lamb adds. “America sells.”
    Of course, this is hardly new, or unique to China. Youth everywhere yearn for what is called American culture, but is really an amalgamation of global youth culture, taking root wherever media is sophisticated and free enough to spread its seeds. Levis, Madonna, Marlboro cigarettes, cool cars and loud rock music are components, but the culture itself is a global milkshake. Perhaps its consumption seems outrageous in China because of the past isolation or ongoing restrictions. But the truly remarkable thing is the speed of transformation, a breathtaking revolution in possibility, from hopelessness to choice, all in a matter of years. After all, it’s only been a decade since the first Kentucky Fried Chicken opened in Beijing.
    This is not what Deng Xiaoping had in mind when he spoke of socialism with Chinese characteristics. Retired U.S. general Colin Powell summed it up best when, commenting on the growth of home shopping on mainland TV, he issued this wry war cry: “There is no way communism can compete with a salad shooter for $9.95.” (Salad shooters are much-derided icons of Americana: plastic gadgets that cut up salad fixings.)
    No wonder the big cities of the Middle Kingdom increasingly resemble the Midwest. True, there is no Saturday wrestling — yet — but bowling is all the rage and basketball is represented by two professional leagues in cooperation with corporate sponsors like Nike, sports equipment maker Spalding and Budweiser.
    Though soccer is the most popular sport in China, basketball is the fastest-growing. Not surprisingly, sports-gear manufacturers are focusing on the 200 million who already play the game, while sports-shoe makers are lustily eyeing the hoopsters’ 400 million growing feet. Meanwhile, Shanghai officials have considered a ban on new bowling alleys. The city had six lanes in 1980; by the end of 1996 there were almost 1,500. China now accounts for 30%-40% of bowling manufacturer Brunswick’s trade, says the company’s Asia-Pacific marketing director Andrew Shipman. “The American connection is a big part of our business,” he says. “We promote that. We see it as a big advantage.”
    Not all American companies agree with the U.S.-is-best thesis. In fact, many shy away from highlighting any U.S. association. Both Nike and Coca-Cola present themselves as global, rather than U.S., brands. “Overt American advertising is a recipe for disaster,” warns Soames Hines, managing director of advertising agency J. Walter Thompson in Shanghai. “Being American carries baggage, particularly in places like Beijing. It’s much better to position yourself as an international brand.” Or is it? “American does stand out in some areas,” says Michael McCune, Shanghai partner of distribution specialists China Link, “particularly wherever the ad campaign has to do with attitude, the brash American style.”
    Whatever angle they play up, advertising is a Chinese boom industry. Between 1990 and 1994, ad spending doubled each year. By 2000, ad spending should top $22 billion — a tenfold increase over 1994 — according to American ad agency J. Walter Thompson. All firms advertise, of course, but few do so with the fervor of the Americans. Seven of China’s Top 10 advertisers belong to U.S. consumer-products giant Procter and Gamble. Such spending is typical, as many established U.S. firms see China not only as a vast market but as a place where they can recreate their bygone glory days. To Americans, Big Macs are just, well, Big Macs. But in China, a near identical double burger with cheese and “special sauce” is welcomed today as an innovation. Even better for McDonald’s, it and like-minded companies can inject new life into its old jingles and ad campaigns. Scores of American products are being reborn and repackaged for mass mainland consumption.

    To get a sense of the marketing mania, stroll up Shanghai’s Nanjing Lu, the major shopping street in China. Looking eastward, toward the Bund, the city’s financial hub, Mao would be bemused; the view is all red. Not the communist colors, but the corporate cachet of Coke. For block after block, streets, bus stands and overhead banners all pledge allegiance to America’s — and China’s — No. 1 cola. “From some angles,” chuckles a French trader, “it looks like Coke is sponsoring Shanghai.”
    Yet turn the corner and the view becomes more startling. You leave Coke street and step into a district swirling with white and green; ads for Salem cigarettes. Turn again, and waltz down an avenue enveloped by red, white and blue Pepsi ads. “Marketing has no sophistication, no innovation,” complains a Shanghai consultant. “It’s all muscle.”
    There is a precedent; America in the 1950s and 1960s, when manufacturers pushed brand names heavily through TV, and shaped store inventories with big promotions and aggressive control of regional distribution channels. This was the golden age for brand marketing in America. Many are expecting a repeat in modern China, which suffers from similarly underdeveloped distribution lines and a rapidly expanding consumer base. “Right now, American investment isn’t moving in spurts, it’s a flood,” says an analyst in Shanghai, where an American Chamber formed in 1991 with 110 members. It’s due to break the 1,000 level any day now. More than half of the top 100 U.S. companies have some presence in China.
    Many merely replicate their winning formulas on the mainland — to mixed results. One company that prides itself on ignoring cultural variations is Interwood Marketing, the TV sales firm with the goofy products, such as auto-massage beds, miracle stain removers and instant button-repair devices. Interwood, which is actually based in Toronto, uses the same commercials the world over: loud voice-overs shouting the attributes of the products while American actors wince and smile, followed by the price and the inevitable, ‘Operators are standing by.’ “Our commercials look exactly the same in China as in the West,” boasts Peter Lee, general manager of Interwood’s Hong Kong operation. “That’s the magic of marketing. You take a TV commercial that works, and just change the language, price and ordering information.” People are people, he adds. “Their skin might be different, but marketing is the same.”
    China’s exposure to Interwood is extracting a hefty toll. A glue-less fastener sells in China at twice the Hong Kong price, which is considerably higher than in the West. Interwood’s trademark stomach-muscle builder, the ab-shaper, is $120 in China — over a month’s average wage. But the fact that the ab-shaper is expensive and difficult to acquire may only increase its allure to China’s elite. A desire for such products will spur the spread of debt, things like lay-away plans and, of course, credit cards, already a booming business.
    Many Chinese see in this cycle of consumption a devious plot. “The American image has penetrated into China, especially with the young,” says Zhu Wenhui, a research associate at Hong Kong Polytechnic University’s China Business Center. The influence is not just from foreign films and mass media. “We often use American books in Chinese schools and many of our teachers are educated in the U.S.; the teachers who go to the U.S. to study teach what they have learned,” Lee says. “It’s both an accident and a plan, this exposure to the American Way. This is all part of selling the American Way in the larger picture. It’s like a weapon.”
    Harvard Professor Watson retorts: “Who’s to say it’s American culture? Why not Japanese culture or Chinese culture? Kids grow up in China and recognize Ronald McDonald as part of Chinese culture.” With the help of researchers in Tokyo, Beijing, Seoul and Taipei, Watson completed a study of the globalization of pop culture and consumerism. Using McDonald’s as a model, his conclusions are to be published as a book, Golden Arches East; McDonald’s in East Asia. “For families in China, McDonald’s is just part of the world experience, part of the internet and all the rest of the modern world,” he says. “It’s maybe not for the older generation, but there is a feeling that if their child can eat at McDonald’s then he can go out in the world and succeed.”
    That sense of connection can be seen in the Sino Building at lunchtime, where mobs push up to cashiers, desperate to invest not necessarily in whiter teeth, but a brighter future. Lured by the latest get-rich scheme, some get instead a costly dose of reality. “I’m resigning,” says Xie Lili, a part-time typist, pushing a box of unused Amway products across the counter. “I’ve tried to sell these things to my friends and colleagues, but they say they’re too expensive. I’ve tried for 11 months.” Xie returns her investment pack for a full refund of $86, shaking her head in amazement at another U.S. innovation, the money-back guarantee.
    For Zhu Weijin, selling Amway products has also been a struggle. But in flogging shampoo and toothpaste, he sees a chance to escape his dreary daytime job. “My goal is to do this full time,” he says, surrounded by red-white-and-blue boxes. At the Amway office, they suggest the American Dream, but Zhu finds nothing foreign in what he feels. “I want to be my own boss,” he says proudly. “This is my dream.”
    — Ron Gluckman is an Asiaweek contributor based in Hong Kong


    The Biggest American Companies Now Owned by the Chinese

    On Friday, Starwood Hotels agreed to be acquired by Anbang, a Chinese insurance company that is rapidly buying up U.S. hotels, for over $13 billion. Marriott, which had previously made a deal to buy Starwood, is reportedly considering a counter bid. But it’s unlikely that Marriott will be able win a bidding war with the Chinese insurer, which was originally bankrolled by state-owned enterprises and has a war chest of cash filled up by Chinese investors eager for returns.

    If it goes through, the Starwood (hot) deal would be the largest acquisition ever of a U.S. company by a Chinese firm. Recently, Chinese firms have been on a buying spree. This year, Chinese firms have spent $103 billion on acquisitions of foreign firms, not just in the U.S. That’s nearly as much in two and a half months as the $107 billion that Chinese firms spent on foreign purchases in all of last year, which itself was a record.

    Here are the biggest U.S. firms to be swallowed, or are soon to be swallowed, by a Chinese company, according to Dealogic.

    1) Starwood Hotels

    The silhouette of a palm tree is seen next to the W Hotel Hollywood in Hollywood, Calif.

    Photo by Bloomberg via Getty Images

    Deal size: $14.3 billion
    Acquirer: Anbang Insurance
    Date (announced): March 14, 2016

    It is the latest hotel acquisition by the Chinese insurer, which last year bought the company that owns New York’s Waldorf-Astoria. Also this week, Anbang announced its was buying a number of hotels owned by Blackstone. Starwood would add 1,300 hotels around the world to Anbang’s portfolio.

    2) Smithfield Foods

    Smithfield Foods

    Bloomberg Bloomberg via Getty Images

    Deal size: $7.1 billion
    Acquirer: Shuanghui International
    Date: May 29, 2013

    At the time of the deal, Minxin Pei, a professor of government at Claremont McKenna College, wrote, “Some people saw the move by Shuanghui, a private firm based in Henan, as a masterstroke to expand its ability to supply a fast-growing market with premium-brand pork at higher prices. Some view the purchase as a means to acquire valuable hog-farming and processing technology. Others worry that Shuanghui might use Smithfield as a channel to sell its products in the U.S.”

    3) Ingram Micro

    Warehouse workers pick up orders for games, software, hard drives and various other products from shelves at Ingram Micro in Fullerton, Calif.

    Photo by Kari Rene Hall — LA Times via Getty Images

    Deal size: $6.3 billion
    Acquirer: Tianjin Tianhai Investement Development Co.
    Date (announced): February 17, 2016

    No. 62 on the Fortune 500, Ingram Micro (im) agreed earlier this year to be bought by a Chinese firm that specializes in aviation and logistics.

    4) General Electric Appliance Business

    Under new ownership, at last. Photo by

    Visions of America/UIG—Getty

    Deal size: $5.4 billion
    Acquirer: Qingdao Haier Co.
    Date (announced): January 15, 2016

    General Electric had stumbled in its bid to sell off its appliance division after the U.S. government said it would try to block a deal for the division to be bought by Electrolux. Instead, GE backed out of that deal and struck a new one with China-based Qingdao Haier. Earlier this month, U.S. regulators said they had completed a review of the new deal with no comment.

    5) Terex Corp.

    Terex Corp. construction equipment, foreground, sits on display during the ConExpo-Con/Agg equipment trade show outside the Las Vegas Convention Center near the Hilton Hotel in Las Vegas, Nevada, U.S.

    Photo by Bloomberg via Getty Images

    Deal size: $5.4 billion
    Acquirer: Zoomlion Heavy Industry Science
    Date (announced): January 26, 2016

    The 83-year-old Connecticut-based company makes machinary for construction, agricultural, and industrial purposes.

    6) Legendary Entertainment Group

    Jessica Chastain, Tom Hiddleston, and Mia Wasikowska attend a celebration of Bergdorf Goodman Windows inspired by the Legendary Pictures and Universal Pictures film, Crimson Peak. Photo by

    Taylor Hill —FilmMagic

    Deal size: $3.5 billion
    Acquirer: Dalian Wanda
    Date (announced): January 12, 2016

    It is the largest China-Hollywood deal to date. Legendary has co-financed a number of major movies, like Jurassic Park and Straight Outta Compton. A number of the company’s movies, like Godzilla and Pacific Rim, have done well in China.

    7) Motorola Mobility

    Motorola Mobility/Lenovo acquisition day on Oct. 29, 2014, in Chicago.

    Photograph by Timothy Hiatt Getty Images for Motorola

    Deal size: $3.1 billion
    Acquirer: Lenovo
    Date: January 12, 2014

    Computer maker Lenovo consolidated its phone business with Motorola’s. The new handsets will go by the brand “Moto.” Lenovo has downsized Motorola’s old business and implemented layoffs. But some of the division’s lower priced phones have sold well.

    8) AMC Entertainment Holdings

    General view outside the AMC Empire 25 theater in New York City.

    Noam Galai — Getty Images

    Deal size: $2.6 billion
    Acquirer: Dalian Wanda
    Date: May 20, 2012

    When Dalian bought AMC, it was the U.S.’s second largest movie chain. But a $1.1 billion acquisition announced earlier this month of Carmike Cinemas has moved AMC into the No. 1 spot.

  7. karlgarcia says:

    If India and Japan are worried will China be the ulmate winner?
    This is zero zum and it is not a game.


    China has stocks of steel equivalent to thousands of Eiffel towers, if the trade war causes them to have ghost towns and white elephants because of low domestic demand for steel , then expect steel to be returned to sender and one if them is Japan and they and the rest will have a problem in exporting steel because of that.


    • chemrock says:

      China steel has a problem with quality. Dumping with low prices is no guarantee for high sales in a product where quality is critical. Their steel will end up in Afirca or South Africa I think. Probably also for Philippines build build build.

      • chemrock says:

        Oops .. Africa or South America.

        I’m having problems with faulty fingers and faulty keyboard.
        Sometimes, a big chunk of the text just suddenly get inserted somewhere else — the cursor jumps to another location when I was’nt looking.
        Also suffering from black screen outs and a CMOS battery that’s running flat.
        And now WordPress is not so friendly. When I click on comments, it does not always bring me to the comment, but to the top of the page.

      • karlgarcia says:

        Yes we will be the dumping ground and we will experience what happened to China, be in deep debt and deny it as if no one notices.

        • karlgarcia says:

          Unlike China, we do issue bonds, but the slowness of releasing funds maybe good afterall.
          When you rush things, haste makes waste.

          China’s counties and cities are saddled with costly debt after rushing to build roads, bridges and tunnels during the 2008-09 stimulus and over the past 20 years.
          Banned by law from issuing bonds, authorities set up ‘local government financing vehicles’, or LGFV, which raised money by issuing corporate-type debt, including high-interest loans sold to the country’s high-yielding trust accounts.

      • karlgarcia says:

        But an industry expert is worried.

        Koji Kakigi, chairman of the Japan Iron and Steel Federation, said he fears the escalating Sino-U.S. trade war could crimp development of the Chinese economy, potentially sapping local demand for steel and pushing more of the commodity into export markets.

        His comments come as China’s steel exports rose 2 percent in June from a year earlier, marking an 11-month high and their first year-on-year increase in 23 months, buoyed by strong international prices and a weaker yuan.

        “We need to closely observe the rising exports from China,” Kakigi told a news conference on Tuesday.

        • karlgarcia says:

          As for India’s concerns, if they can no longer depend on the US, they will go to Russia an old friend.


          Add India to the list of countries that are growing frustrated with the U.S. administration’s trade policy.

          On Thursday, a group of top executives and government officials from India met in Washington with U.S. trade representatives and others at the Annual Leadership Summit of the U.S.-India Strategic Partnership Forum (USISPF).

          Many expressed their concern about an ongoing trade dispute between the two countries.

          India did not receive an exemption from U.S. tariffs on aluminum and steel imports, prompting Prime Minister Narendra Modi’s government to respond with its own set of tariffs on roughly $240 million of U.S. goods, set to go into effect in August.

          Ajay Singh, the chairman and managing director of India’s discount airline SpiceJet, spoke about trade at the summit during a session moderated by CNBC, questioning the direction of the relationship between the two countries.

          “We need to talk about this a lot more,” he said. “Where do we see ourselves several years from now? Is this really a strategic relationship? Is it that we will trust each other enough? Will India trust the U.S. to be there when India needs them? And will the U.S. trust India with technology that’s obviously been developed with a great deal of effort?”

          Sen. Mark Warner, a Virginia Democrat and co-chair of the Senate India Caucus, highlighted the importance of the U.S.-India relationship but admitted there is room for progress.

          “I think there may be a good rapport between Modi and Trump but that hasn’t translated into enough solid action,” he said at the event.

          Not only is India an important growth market for U.S. corporations, but it serves as a strategic political ally for Washington in the region, often seen as an effective way to counterbalance China. Indian executives including Singh said they worry that if the trade dispute escalates, India will have to seek support from other nations.

          “On the defense side, a lot of Indian equipment is from Russia … and that country has had a history of standing by India in its times of need,” Singh said. “We need a similar assurance from the United States. We also need to find a way in which we marry President Trump’s ‘America First’ with Prime Minister Modi’s ‘Make in India.'”

          “Make in India” is a reference to Modi’s campaign to encourage companies to make products and invest in India.

          Meantime, Indian officials said they remain hopeful that the world’s two largest democracies will be able to come to an agreement on trade, though New Delhi is ready to retaliate if needed.

          “I hope that this is a resolution that can happen through negotiation rather than retaliation,” former Indian government official Dr. Arvind Panagariya said. “But at the end of the day, if one country retaliates, as a defensive measure, if India has to retaliate, unfortunate as it may be, I think it will have to do it. Because else, your markets become closed to me, my market remains open to you.”

          Despite fresh concerns around trade, corporate leaders from several U.S. firms at the summit, including Philip Morris, Caterpillar, Twenty-First Century Fox and General Electric, said they were optimistic about the growing number of economic opportunities between the two nations. A number of speakers cited Walmart’s decision to buy a 77 percent stake in Indian e-commerce company Flipkart for roughly $16 billion. The mega-deal, some executives said, has already inspired more American firms to take a serious look at India for opportunities.

          Mukesh Aghi, the president and chief executive of the USISPF, said more opportunities will emerge as foreign investors like Japan’s SoftBank continue to invest in India’s thriving start-up landscape.

          “The business opportunities for both Indian companies, American companies, large companies and small companies is dramatic,” said John Chambers, the chairman emeritus of Cisco Systems and chairman of the USISPF, to CNBC. “India will be the fastest-growing economy for the next decade. When I said that three years ago people said, ‘I’m not so sure.’ You can see that’s going to happen in the world. I think from a business perspective, the opportunity is very good.”

        • I read somewhere that there are several measures China is employing to prop its sagging growth figures and lessen the blow of the tariff war. Infrastructure development is one of them. Until China honed the ability to produce quality construction materials, rebuilding inferior local infrastructure may help float their economy. The other measures were: decreasing taxes, injection of billions for bank loans and currency manipulation as Chemrock already expounded on. Of course, the nuclear option of turning in their treasuries (bills, notes and bonds) to collect the more than trillion dollar US sovereign debt, had been hinted.

          IMHO, Trump is forceful and smug about his demands in the tariff war with China because at present, the US economy is stronger than China’s and he is banking on it being able to withstand any/all of China’s retaliation.

          • karlgarcia says:

            You mean Trump is right and the FED is wrong to ignore his tweet.

            Donald J. Trump
            Donald J. Trump
            China, the European Union and others have been manipulating their currencies and interest rates lower, while the U.S. is raising rates while the dollars gets stronger and stronger with each passing day – taking away our big competitive edge. As usual, not a level playing field…
            8:43 PM · Jul 20, 2018

            He is forceful by making rash tweets whispered to him by who knows who.

            The US business sector thought the reduction of taxes and other incentives are the best thing that could happen until this tarrif war. Now they are all on standby.(or stand still)

            • It isn’t a matter of right or wrong. The Fed adheres to its independence and Trump was in breech of protocol to issue a criticism. The ONLY response the Fed could make was that it was independent and would make its own decisions based on data and expert opinions.

      • Yes. It seems that construction products from China have built-in obsolescence of 2-5 years. American building contractors had been steering away from them because of numerous complaints and lawsuits from new construction consumers. To circumvent crumbling and toxic drywalls, sagging roofs, and cracked foundations, etc within the first five years of buying a new home, Americans are now seeking older homes to rehab/remodel, giving them control on where they will source their construction materials.

  8. karlgarcia says:

    Japan and the EU won’t take this sitting down.

    Trump is worse than Duterte in dumping allies.

    With Japan and EU out and with India soon to follow. Who will be left?

    Trump will soon have a very rude awakening, if he does not tear the virtual trade war document to pieces.(Many tarrif documents actually)


    The European Union and Japan just signed a new trade deal, and it shows how the rest of the world is fighting back against Trump’s attacks
    Bob Bryan

    • The European Union and Japan reached a major free trade deal on Tuesday.
    • European Council President Donald Tusk said the deal showed that the EU and Japan “stand together against protectionism.”
    • The move is another example of how many governments — from the EU to Canada to even China — have responded to US President Donald Trump’s recent trade protectionism.

    Leaders from the European Union and Japan formally signed a new free trade pact on Tuesday, the latest in a series of moves toward trade liberalization and a direct rebuke to US President Donald Trump’s recent trade protectionism.
    The deal, known as the EU-Japan Economic Partnership Agreement or EPA, would lower most bilateral tariffs including high Japanese duties on EU agricultural products and EU tariffs on Japanese cars. According the European Commission, the deal is projected to eliminate just under $1.2 billion worth of tariffs for EU exporters and double the amount for Japanese firms.
    In addition to creating a free-trade zone for countries that make up around 30% of the world’s GDP, the EPA is also the latest in a series of liberalizing agreements that have been initiated or formalized by major economic powers around the world.
    The deals come as Trump pushes the world’s largest economy into a more protectionist direction with various tariffs and trade restrictions. European Council President Donald Tusk appeared to use the EPA signing to rebuke the US president’s recent actions.
    “This is an act of enormous strategic importance for the rules-based international order, at a time when some are questioning this order,” Tusk said. “We are sending a clear message that we stand together against protectionism.”
    Japanese Prime Minister Shinzo Abe also offered a backhanded condemnation of Trump’s tariffs.
    “While protectionism is spreading in the world, Japan and the European Union will take the lead as flag bearers for free trade,” Abe said.
    A rash of major trade deals
    Other major economic powers have also lined up similar deals in recent months. While many have long been in the making, the movement gave officials the opportunity to express a commitment to free trade and the elimination of trade barriers.
    In addition its deal with Japan, the EU is nearing ratification of a landmark agreement with Canada, though some stumbling blocks remain. The European bloc is also pursuing deals with Mexico, Australia, and Mercosur, the South American trading bloc that includes Argentina, Brazil, Paraguay and Uruguay.
    Even China, Trump’s most recent tariff target, has gotten in on the action. The country recently lowered tariffs on products including vehicles and launched talks with the EU about building a stronger trade relationship.
    In a joint statement on Monday, Chinese and EU leaders reiterated their dedication to “resisting protectionism and unilateralism, and making globalization more open, balanced, inclusive, and beneficial to all.”
    China has also cozied up to other countries in the region, including Japan and South Korea, in an effort to solidify its economic strength in the region. During a meeting in May, Chinese Premier Li Keqiang expressed a desire for a trilateral free-trade deal between the three powers.
    “In the current circumstances, China, Japan and Korea should stand even more firmly together, uphold the rules-based multilateral trading system, and proudly oppose protectionism and unilateral actions,” Li said.
    The recent actions from nearly every major economy seem to be pointed to a more open trading system with fewer barriers, a stark contrast to Trump’s recent actions.
    Not only has the president rolled new tariffs on allies including Canada, Mexico, and the EU, but he has also turned away from major free-trade agreements like the Trans-Pacific Partnership and floated the idea of pulling the US out of the North American Free Trade Agreement, or NAFTA.

  9. karlgarcia says:

    I just hope talk is not cheap.


    How the Trump-Juncker meeting could lead to a trade-war truce
    Marie Kasperek

    President Donald J. Trump will meet European Commission President Jean-Claude Juncker and European Union Trade Commissioner Cecilia Malmström at the White House in Washington on Wednesday to discuss the future of transatlantic trade in light of the dramatic deterioration in the transatlantic relationship.
    The official EU line ahead of the White House talks: “There are no offers. This is a discussion, it is a dialogue and it is an opportunity to talk.” This is wise given that current economic as well as domestic political realities embolden Trump’s trade strategy and don’t incentivize him to offer the EU a mutually beneficial deal.
    The timing might be ripe, however, for a truce and a quick win in the near future, with the potential of a forward-looking agenda in transatlantic trade relations. Trump has increasingly received pushback from fellow Republicans, the private sector as well as the U.S. workforce for his plan to impose tariffs on cars and car parts. A solution that avoids a spillover of the trade war into the auto sector would not only be beneficial for U.S. relations with other countries, but also appease critical voices at the national level—a win-win for Trump.
    Just days before the meeting with the European delegation, Trump threatened to slap tariffs on all Chinese exports to the United States. By threatening to escalate trade relations with one of the United States’ two largest trading partners (the other one being the EU), Trump might be trying to intimidate European negotiators and may have given us some indication of what negotiations with the EU will look like.
    Trump’s “negotiation-by-threat-and-intimidation” style is underlined by his warning that he would impose tariffs on all imports of automobiles and auto parts into the United States on the grounds of national security concerns. Such a move would not only gravely impact the EU, it would also adversely affect global supply chains.
    Read: Tariffs are ‘the greatest,’ Trump says ahead of EU chief’s visit
    What conditions embolden Trump’s strategy?
    Internationally, Trump’s approach to trade does not seem to scare global investors too much. Financial markets have remained relatively unchanged despite the president’s constant threats of tariff increases and the potential of these tariffs to disrupt markets and global supply chains.
    On the European side, the very makeup of the EU as well as rising national tensions among key member states influence the United States’ negotiating position. EU member states have given the European Commission the mandate to negotiate trade deals on behalf of the bloc. While negotiating en bloc puts European member states on an equal footing with the United States, it also means the Commission has to represent the interests and national priorities of 28 member states, who would all be differently affected by potential tariffs.
    Any union is only strong if it speaks with one voice, but France and Germany don’t see eye to eye on what the European delegation should offer Trump on Wednesday. France has denounced Germany’s appeal for more flexibility in the negotiations and a potential deal with the United States.
    On the U.S. side, there are several domestic economic and political factors that strengthen the president’s hand. These include:
    • Retaliatory tariffs from China, the EU, and others are often gradually implemented and take time to bite;
    • A recent poll by the Pew Research Center shows that Republicans overwhelmingly agree (73%) with the president’s tariff strategy;
    • While Congress has started to push back on Trump’s trade strategy and there is suggested legislation to curb the president’s power on issuing tariffs based on national security considerations, Republicans will be wary to push for something that will leave their party divided ahead of the midterm elections in November;
    • The U.S. dollar EURUSD, -0.0342% not only continues to be strong, it also reached its highest index level DXY, +0.04% in a year last week;
    • Unemployment continues to be at record lows.
    Read: Trucker strikes and tariffs: Whirlpool lists the reasons for its earnings miss
    Potential for a truce?
    While the European delegation does not plan to make any concrete offers to Trump, the U.S. president’s tweet ahead of the meeting—“Tariffs are the greatest! Either a country which has treated the United States unfairly on Trade negotiates a fair deal, or it gets hit with Tariffs”—reads very differently from the official EU line.
    Trump’s tweet, coupled with the belief that “we are the ‘piggy bank’ that’s being robbed,” indicates that he goes into Wednesday’s meeting to “negotiate a deal.” While the EU has repeatedly stated that it is not willing to negotiate with a gun pointed to its head, there may be a way to merge both sides’ expectations.
    See MarketWatch’s trade-war tracker: Here are the new levies, imposed and threatened
    But how do we get there?
    A bilateral deal between the EU and the United States to cut industrial tariffs, or a plurilateral agreement to rid the world of car tariffs, are just two of the many ideas circulating among experts. Negotiations or any offer by the EU are only an option if the U.S. administration agrees to refrain from issuing car tariffs and abolishes (or at least pauses) its recently issued tariffs on European steel and aluminum. In return, the EU could offer to unilaterally eliminate tariffs on auto imports, which have been a sticking point for Trump. This scenario would calm the transatlantic relationship, allow Trump to declare a win, and pave the way for future dialogue to deepen transatlantic economic ties.
    This would not be a big concession for the EU. The three largest exporters of cars to the EU are Japan, Turkey, and South Korea—two of which (Japan and South Korea) the EU recently concluded trade agreements with that will ultimately lead to the elimination of car tariffs for both countries.
    A truce should be negotiated with the understanding that negotiations on more substantial negotiations, including extensive regulatory cooperation and the elimination of certain tariff and non-tariff barriers to trade, will start on a technical level in the upcoming weeks and months. This would potentially breathe fresh air into the Transatlantic Economic Council, a forum that was established in 2007 to help guide and deepen transatlantic economic cooperation.
    While expectations from Wednesday’s meeting are low, the stakes are high. No one wins in a trade war.

    • karlgarcia says:

      Unfortunately, temporary agricultural support programmes tend to become permanent. And lost markets may prove difficult to recapture. Disrupted trade relations can shock countries into the realisation that they rely too heavily on one market. After an American soyabean export embargo in 1973, spooked Japanese companies invested in Brazil, which then grew to become a colossal competitor to America. Like real conflicts, trade wars have unintended consequences.

  10. karlgarcia says:

    I won’t pretend that I understand the article, but can you please explain this to us life long learners.


    The fate of the stock market for 2018 could rest on the next 5 trading days
    Sue Chang

    Getty Images/iStockphoto
    The fate of the bull market could become clearer in the coming days.
    The fate of the stock market for this year may arguably hinge on how shares trade in the next few days.
    According to analysts at Bespoke Investment Group, if the market gains from April through July, stocks almost always finish out the year higher. It’s looking good for the S&P 500 so far.
    “Now, we realize that there’s still another week left to go in July, but barring an epic collapse in the last five trading days of the month, this will mark the fourth straight monthly gain for the S&P 500,” said Paul Hickey, cofounder of Bespoke, in a Tuesday note.
    The large-cap index rose 0.3% in April, 2.2% in May, 0.5% in June and is up nearly 4% in July so far on the back of a steady economic expansion, even as fears of an escalating trade war shadow the market. Still, strong earnings have gone a long way in bolstering investors’ confidence with second-quarter earnings jumping more than 20%. The mix of robust economic data and double-digit earnings growth suggest that the odds of the S&P 500 SPX, +0.48%  retaining month-to-date gains until the closing bell on July 31 are fairly high.
    Since 1928, there have been 12 years in which the market has risen from April to July and every time, stocks have finished higher at the end of the year, with average annual gains of 1.8%, according to Bespoke.

    Meanwhile, Ryan Detrick, senior market strategist at LPL Research, noted that the stock market tends to follow the path of the 10-year Treasury yield TMUBMUSD10Y, -0.35%
    “Two years ago this month, the 10-yr yield bottomed at 1.36%. It is near 3% now. In honor of that anniversary, remember that stocks tend to follow the 10-yr higher,” he tweeted.
    Since 1996, there have been 11 examples of varying stretches of time when the 10-year yield has been higher (see the chart below). During each of those periods, the S&P 500, too, has risen, he said.

    If the S&P 500 does perform up to expectations and end July in the green, it will not only set up the year for a strong finish but it will also put the S&P 500 ETF SPY, +0.50%   in position to post a new record for the longest streak to close above its 200-day moving average. The current record stands at 525 trading days between July 30, 1996 to Aug. 26, 1998, according to Charlie Bilello, director of research at Pension Partners LLC.

    Stocks mostly rose Tuesday, with the Dow Jones Industrial Average DJIA, +0.79%  rallying by triple digits as stellar earnings helped to boost sentiment. The S&P 500 climbed 0.5% to 2,820.40 and the Nasdaq COMP, -0.01%  fell fractionally to close at 7,840.77.

    • chemrock says:

      For stocks to move up you need to winds — 1) strong earning on the back of good economy and/or 2) cheap money to pour into the market.

      !0 years of QE poured trillions into the market, thus driving it up to the crazy heights that it is now, whilst the economy had been sluggish all these years. Economy has turned positive the last 2 years, but barely so.

      Quantitative tightening the last 2 years has seen the days of cheap money being history. With no cheap money, bond market is affected first, so yields have risen.

      With bond yields rising, stocks should fall, but it has’nt. Why it has fallen, that’st the gist of the article. That money is coming in from the yen carry trade.

      So there is capital going into the stock market, despite Fed quantitative tightening. That is the money supporting the market. But why is the market still positive of stocks? The article you posted say there are good numbers showing up in the corporate world. Many companies are making good profit numbers, due to improving economy. I seriously doubt this because where is the growth coming from? Which industry?

      The better bottom line figures, as many have suspected, comes from the tax reforms. That’s why there were many that suggested that the tax reform package was’nt a good idea, coming at a time of rising inflation.

      About the next days trading — that’s just chartist talk. Traditionally Q2 figures carry the chart through the year.

      The financial market is dynamic, and with so many things going on, anything can happen. That’s why sometimes we seem to flip flop in our views, because the dynamics change very fast.

      Take for example, this tweet from Trump on Friday last –

      It means Fed Chairman Powell’s of accelerated quantitative tightening is not aligned with White House’s objectives. The market took heed of this tweet. USD was immediately traded down on Friday.

  11. karlgarcia says:

    We could have more locators to our Export processing zones, if we really are excempted from the tarrif war.


    PHL braces for impact of US-China trade war
    July 9, 2018
    Malacañang on Monday said the Philippines is bracing for the possible impact of a full-blown US-China trade war, which started last Friday.
    Presidential Spokesman Harry L. Roque Jr. said that the government, through Department of Trade and Industry (DTI) and Department of Finance (DOF), is studying the conflict “very thoroughly,” particularly the identification of vulnerable areas, notably the country’s exports.
    Roque said the government is also assessing if some of the country’s biggest exports to both the US and China would be affected.
    “Take note that the tariff will be for goods originating from China and the United States. Now, there are some products we export to China, which in turn are further reexported [elsewhere],” he said.
    “So in that sense, there will be some effect on us. But we are of course studying and preparing for eventualities and we are hoping of course that the trade regime under the WTO [World Trade Organization] will be made to prevail. Because all these tariff war actually is subject to arbitration before the WTO dispute settlement procedure,” Roque said.
    The Palace issued the statement after the DTI said that a prolonged trade war can slow down global economies and eventually affect even small players like the Philippines.
    But Trade Secretary Ramon M. Lopez also said the products that were included in the tariff increases have little or no impact to the country, particularly washing machines, solar panels, steel and aluminum.
    Because there is no major impact on the Philippines, Lopez also said, the country may stand to benefit if other affected manufacturers in countries affected will shift their production base to the Philippines to avoid facing higher tariff rates.
    On Friday US imposed a 25-percent tariff on $34 billion of imports from China, while the Asian superpower imposed $34 billion in retaliatory tariffs on American soybeans, cars and other products.

  12. karlgarcia says:

    It is me again.

    We really should study how to mine our landfills and know what to do with the hidden treasure full of dirt, I mean hope.

    Rare earth metals from discarded cellphone bricks.
    Diesel from plastic.

    Of course we just cant have recycling contests of boats made from plastic and what not, we should manufacture them.( mass produce, not just boats, bags, shoes)

    Lots of materials from demolition debris.
    You can actually build cities from landfills.

    All we need are designers and builders.

    Before any clamour for zero waste, we must know what to do with our waste in landfills,in dumps, in our waters and on our shores. Then there will be almost no waste until we can no longer do anything with them.

  13. karlgarcia says:

    I know Peter Wallace crossed swords with Joe before because we learn from those we disagree with one way or the other so longas they are not named Tiglao, Uson, TP,etc

    Vertical integration: Do it all

    Peter Wallace
    The problem with too much of Philippine industry is that there’s too little local value added.

    In electronics, for instance, of the $23 billion exported last year some $14 billion was spent on imported components that could have been produced here but aren’t for a variety of reasons.

    Back in his time Marcos recognized this and introduced the 11 major industrial projects (MIPs), one of which was copper. At the time Atlas Consolidated was among the world’s largest copper mines (the largest in Asia), but its concentrate was being shipped directly offshore and much of the potential gain to the Philippine economy was lost. So he ordered that a copper smelter be built, and it was. And for some 30 years or so it has been operating successfully, but not currently sourcing its raw material (copper concentrate) from local mines. As the volumes are not there, it imports concentrate.

    The copper ingots produced are shipped to the London Metal Exchange warehouse, to be sold for processing into rods, bars, and ingots. Some of that is then shipped back to the Philippines for the manufacture of copper wire and cable. A link in the chain is missing; revenue is lost to others. So the Board of Investments commissioned the Wallace Business Forum to research the feasibility and viability of putting up a plant to produce copper wire rod, and look at the possibility of further downstream integration with the automotive, household, and other industries. This we have done, and now we are delving into the practical issues to make copper rod production a reality.

    If it works and the government recognizes that mining is good for a country, and encourages it again, then we may have an almost complete chain. The final link is to attract more (we have some, but not enough) end-use manufacturers, washing machines and refrigerators, motor cars and ships, and the many other products that use copper.

    A nice side benefit of the smelter is that it secretes sulfuric acid as a byproduct in the manufacture. So a fertilizer plant was put up next to the copper smelter of the Philippine Associated Smelting and Refining Corp. (Pasar), as fertilizer uses the acid as a raw material.

    It goes further. A smelter has about 60 percent of its cost in power. Electricity, as you well know, is expensive. So Pasar will put up its own plant, and as the most economical size is larger than Pasar’s need, it will supply the excess to the Visayas grid, addressing the current worry of shortages.

    And if the copper rod plant is put up there, an export zone can be created and users of rod can be enticed to locate there, too, providing jobs where they are needed in the countryside—a full community of copper freaks. It’s an ambitious concept, but ambition is what drives progress in the world. It can be done.

    The other MIPs conceived by Marcos were: an aluminum smelter; diesel engine manufacturing; cement industry expansion; coconut industry rationalization; an integrated pulp and paper mill and a petrochemical complex; heavy engineering industries and an integrated steel project; and alcogas.

    The only two that got anywhere are the cement and alcogas projects, and both successfully. The others got derailed for various reasons.

    The coconut industry was seized by Cojuangco, who used coconut levy funds to buy the United Coconut Planters Bank a controlling stake in San Miguel Corp. The Supreme Court has ruled that the stake is owned by coconut farmers. It will now be turned over to the National Treasury on behalf of the millions of coconut farmers and be used for projects in developing the coconut industry.

    A pulp and paper mill needs wood. Greedy, unscrupulous loggers in complicity with local governments have decimated the forests. There’s no wood left, so you can forget this one, and anyway the world is going soft, hard copies of anything are rapidly disappearing.

    An aluminum smelter needs aluminum. The only local source is in Samar. To meet needed volumes bauxite will have to come from Australia. The numbers no longer add up.

    Meanwhile, the petrochemical project is finally taking off after being derailed by a Supreme Court decision in the early 1990s. The vision is to have a fully integrated petrochemical industry, from oil refinery to naphtha cracker to well-diversified downstream production, in about a decade. Strong domestic demand and the opening up of the larger Asean market will create the opportunity for the petrochemical industry to move forward.

    Integrated industries still make sense and the Department of Trade and Industry is reviewing them with “Roadmaps,” some 50 of them. Not all cover the full line from start to finish; some are just those where potential advantage is seen that can be developed. And it’s a good idea. But what the Philippine government has never been short of is ideas; what it has been very short of is the ability to convert these ideas into working reality.

    I’m willing to withhold judgment this time, but with considerable skepticism. Already the DTI has said it can’t proceed with further studies because it has no funds. Here we are talking of concepts that could add billions of dollars to the Philippine economy, and we’re quibbling over spending a million or two.

    That doesn’t encourage confidence that now will be any different. You don’t make money without spending money.

    So will the DTI put full support behind these projects and support them all the way until fruition? You tell me.

    • karlgarcia says:

      One more use of land fill mining, those which can jot be recycled can be used in plasma gasification plants.

      I am sure there are plenty of copper in those appliances and gadgets in the land fills, if the mining companies think landfill mining is competition, why not let them do the landfill mining.
      They would no longer need to do open pit mining. of course they must bioremediate all empty landfills and put them to good use.

      We can fill in the blanks in our electronic exports through landfill mining with more value added from philippine components.

      All byproducts like fertilizers from copper manufacturing, syngas from plasma gasification.
      Who needs bauxite from Australia to manufacture aluminum from Samar, our landfills and shores are filled with aluminum cans from four decades of consuming soda.

      If you think this is a stretch, do not forget, Stretch Armstrong walked the moon together with Michael Jackson.

    • Actually, Peter Wallace can make sense, but not when he is using his vested interest, rather than an objective set of facts, as the reason to criticize a president, as he did with President Aquino. I remember my article. I ran his photo upside down, which amused me endlessly.

      • karlgarcia says:

        Yeah, now that you have reminded me, that was funny.

        Vested interest include those projects that got snubbed. He jabbed at the number of roadmaps and the need to spend money.

        He has mining interests too and maybe he lobbied agsinst Gina Lopez, but that is pure speculation.

  14. karlgarcia says:

    We are good at retrofitting why not retrofit the ruusting trains from China and use them, why do they want to bulldoze them like they do to sports cars they use as examples in rampant smugglings?


    DOST’s projects need support from leadership.
    Again we need not be afraid to start small and or simple to make us self reliant.

    So far there is potential to be partially self reliant in the transport sector, defense sector, electronics, and so much potential.
    Despite the doom and gloom, the sun will come ot tomorrow, better hang on till tomorrow, come what may.

    • Creative, but it would have to replace a lot of cars to make a single dedicated lane feasible.

      • karlgarcia says:

        Some one must help DOST.

        Another example.
        BRT was cancelled because roads are too narrow and road widening is a nightmare because of those damn telephone posts😉.

        Maybe the new set of roads maybe wide enough, but where in the Philippines can you build them.

        All I could think of is get rid of old cars, jeeps, buses and trains.

        Maybe the Train law will encourage people to use trains. Imagine that, a law to use trains, oops that is not what the TRAIN is all about, I mean they will be discouraged to buy the heavily taxed cars and soon some one will suggest to heavily tax old vehicles.

        Then we can all walk to the nearest train station.

  15. edgar lores says:

    Here’s a graphic of the tit-for-tat in the Tariff War.

    (Courtesy of the Australian Foreign Affairs Weekly)

    • karlgarcia says:

      Haier now owns the entity formerly known as GE appliances,
      EU can now source them from China.

      I thougt Bourbon is a European product, now I know that they are from Tennessee.

      They can sell all their bourbon to that Chinoy Taipan wines and spirits magnate, then all the Bourbons from Tennessee will be owned by a Chinese Filipino.

      They can export Appliances to us to do that, they must headquarrter Wallmart here since India is getting frustrated with Trump.

      We need made in USA, our stores have too many Chinese products.
      Without Wallmart no one will sell US appliances here, all are owned by Chinoy Taipans or the Taipans can sit down with Trump and play deal or no deal.

  16. Chemrock,

    I am reading “Asia’s Cauldron” by Stratfor’s geopolitical analyst, Robert Kaplan. Looks like the next Singapore could be Vietnam. I read about the Vietnam-Singapore partnership. There are four Vietnam-Singapore Industrial Parks housing manufacturing firms from around the globe run using the “Singapore model” in Vietnam when the book was published in 2014.

    Is there a chance that PH and Singapore can come together? I am asking you because you know about the nuances of doing business with the Singaporean government. A PH partnership with Singapore will bring jobs to PH and will aid in jumpstarting its ailing economy.

    • That is a great suggestion. Align with Singapore, not China.

    • karlgarcia says:

      We have been repairing ships for Keppel which is a Singaporean company for decades.
      We build ships for the largest shipping companies.

      Click to access The-Philippines-in-the-Shipbuilding-Global-Value-Chain.pdf

      • I don’t mean just inviting Singapore businesses in investing in PH. Their formal partnership with Vietnam involved imparting the “secrets” of how Singapore became a premier business destination for global industries. Singapore helped Vietnam build 4 Industrial Parks for over 240 various businesses around the globe.

        PH has Subic and Clark for possible Industrial Complexes. Learning the ropes from Singapore on how to attract and keep big name global brands will go a long way in solving PH’s unemployment problem.

        • karlgarcia says:

          Robert D. Kaplan not to be confused with the nanagement guru Robert S. Kaplan.
          We practice that too but we are asked to bite our tongue on the secrets.
          We officially have the 60 40 rule, but it does not apply to Manny Pangilinan and Tsipan Salim.
          Enrique Razon has ports all over the world and his rival here Dubai ports is biting the dust.
          We are talking worldwide here.

          The result of biting our tongue in terms of secrets is hosting manufacturing, and not manufacturing on our own.

          China did forced technology transfer.
          We coukd not force anything because we think we are beggars, and beggars can’t be choosers.

          Chenrick mentioned learning curve and absorptive capacity.
          If we can’t have that we could still practice teverse engineering.

          In the link above about the DOST train project, they lament that they have the best minds, but no government and private sector support.

          We know what is wrong, so we must do what is right.

      • karlgarcia says:

        The Philippines’ contribution on ship repair for keppel (Batangas and Subic)is on page 32 of the 2016 annual report report but if you scroll down it is says 35 of 88.


        I also have the 2012 annual report on keppel land philippines.

        Click to access Annual-Report-2012.pdf

    • chemrock says:

      My personal views — just enumerating off my brain

      1. Philippines is too proud a nation to bow to foreign assistance, especially a tiny island nation like Spore. (actually we can all just go around this easily. and call it a partnership, or business deals). Case in point. When FVR visited Spore in 1990s there happened a blackout in downtown Orchard Rd. FVR quipped “Oh such things can happen in Spore also?” The sarcasm was rich and obvious.
      2. Robert Ongpin was shown the door when he was Marcos’ emissary to try to obtain some few hundred million $ desperate loan. I think Phils has never forgiven Spore, nor ever want to show weakness again.
      3. The trust level of Phils govt in Spore is very low, probably the lowest in Asean. We fear the corruption, but more than that, we fear the impunitive nature of the society and the lawlessness.
      4. The first wave of Spore ventures overseas, especially into China, by both govt agencies and private enterprises, were rather disastrous. This was due mainly to Singaporean naivete. We came from a culture of laws and regulations and expected others to be so. Boy did they learn cultural differences. Chinese snooked us big time. Deng Xiao Ping was very keen to learn from Spore. It was the very first country he visited. We set up the very first collaborated venture with Suchow Industrial Park, modelled on Spore’s successful systems. It was a disaster that our govt to this day never admitted. I think we are also currently having some difficulties with some collaboration with India. I’m not quite sure how Vietnam will turn out to be. My guess is it will be positive because Vietnamese are a more disciplined lot. My personal view is any govt level collaboration with Phils will end in disaster. The Phils will have Spore for breakfast.
      5. At the private enterprise level, there are some successes of Spore corporates in Philippines. But there have been many failures due to difficulties in navigating the waters full of vultures. Singtel and Keppel Shipyard are the successful ones that I know. I know of one of our top banker has a persona non gratia. He left and swore never to return — some frustrations over some court procedures. As a business destination, Phils rank very low in the sight of most Spore businessmen.
      6. And yet, the tragedy. I feel Phils is well positioned for win-win collaborative efforts with Spore. Your Catholic background is a big plus and Filipinos tend to be less racist. Whilst Spore cooperates with Malaysia and Indonesia widely in business matters, racial and religious issues very often creeps in and cause much discomfort. Spore is often made a bogeyman by Malaysian and Indonesian politicians.

      • karlgarcia says:

        Many thanks.

      • Thank you. That is a very enlightening read.

        PH needs to go back to the drawing board and really ponder these questions: Who are we as a nation? What do we stand for? What is our ultimate goal as a nation? How will we get there? These are just few of the questions that need to be asked. The answers should provide us with direction to an agreed upon destination.

  17. Senator Kiko Pangilinan sponsored SB 1765, the Anti-Dynasty Bill in the Senate on 07/25/18.

    As of 3/23/18, 12 other senators pledged their support of the bill. They are: Sens. Loren Legarda, Sonny Angara, Risa Hontiveros, Grace Poe, Panfilo Lacson, Sherwin Gatchalian, Joseph Victor Ejercito, Nancy Binay, Paolo Benigno Aquino IV, Senate President Pro Tempore Ralph Recto,Minority Leader Franklin Drilon and Leila De Lima.

    It is interesting that Binay and Ejercito are willing to support the bill.



  18. karlgarcia says:

    Here is an AMCHAM position paper on the second tranche if TRAIN which says lower your corporate income taxes or else we move to Vietnam.

    Click to access TRAIN-2-AmCham-Position-Paper.pdf

    • Hopelessly mind-numbing statistics. AMCHAM of course supports the businessman’s viewpoint. I admire whoever put that document together, but I don’t think it will have much power unless it is reduced to simple language and bullet points we laypeople and voters can grasp. Otherwise, to me it is, okay, reduce the corporate income tax rate over 5 years, jiggle a few incentives, and watch the Philippines grow. Maybe as it is debated, the crack journalists of the Philippines, or better yet, Chemrock, can sort it out for us.

  19. karlgarcia says:

    Maybe if we just read the AMCHAM position paper we could have FDI as high as Vietnam.

    Click to access TRAIN-2-AmCham-Position-Paper.pdf

    They too increase their minimum wage, but that is not the only factor.


    • We won’t compete with Vietnam until Duterte is out of office and stability returns, unless of course, China simply elects to buy everything.

      • karlgarcia says:

        The solution to non compliance to endo is shutting them down?


        Another good to look at but not good at all.

        It worked for the BIR because of more better than none collections due to concessions.
        But I am sure after payment of not so correct taxes they have to deal with labor laws next so they will close down anyway.

        Better not to encourage SMEs and micrentrepreneurship if you will end up closing them.

        Hole in the dike plugging solutions.

        The solution for hole in the dike problems is to take a video using your cell phone with out helping.
        It becomes viral but after all the bashing nothing happens, the holes have become so many that the dike is already gone.

  20. Francis says:


    I’m no economist, but the gist I can understand from the AMCHAM report you posted is that TRAIN 2 is like pouring all your money into stocks: something a bit too ballsy—not as uncertain as outright gambling, but close to that.

    I don’t have to understand numbers to know that it’s…off…when businessmen don’t get along or are somewhat critical of economist technocrats; usually those guys are two peas in a pod—so any divergence is rather interesting to note. AMCHAM—while appreciating the spirit of TRAIN 2—is rather skeptical of some of the details.

    Personally, I am rather unsure about TRAIN 2 myself with the survey numbers in the AMCHAM report; only half (more or less) will actually be driven to invest more even with either of the 20% and 25% corporate tax options. That alone made me feel that this is quite a gamble that the DOF and co. are doing. Consider also that a substantial portion of companies surveyed noted the importance of tax incentives for their business activities; in response to the question “How important a factor were fiscal incentives in your company’s decision to invest in the Philippines?” it is worth noting that none said “no” and that all answers were either “somewhat important” (22%) or “important” at 78%.

    What corporate tax rate would companies be happy with—instead of the current scheme? 10% is the likeliest number according to the report—something which I think is unwise as we need fiscal space to implement both expansion in the infrastructure and social services.

    (AMCHAM also noted—if I interpreted the report correctly—that our agencies are overstating the amount lost in tax incentives and are therefore understating the benefits of PEZA, etc.)

    All that points to is that the status quo was a okay. “If ain’t broke, don’t fix it.”

    A metaphor that comes to mind is that our situation with TRAIN 2 seems to be like the guy who got a freak accident and has a rod struck through his head. Granted—the rod is hinderance to the guy’s daily life and DOF may be right in saying that we must remove the rod to make the guy’s daily life more efficient. BUT removing the rod will lead to massive bleeding.

    A pyrrhic victory?

    [As a social democrat—I’m always a tad suspicious of big business—but I think that it is more suspicious that two groups who are supposed to get along splendidly (foreign business sector and the economist technocrats) with their common love of the free market, are now…split.]

    If I may think aloud and wonder as to how this is the case:

    We already are familiar with the sentiments of the foreign business community (i.e. AMCHAM). If I were to step in their shoes—I suppose I would come to want two things: 1) things that increase my profits, 2) stability. I would want those two things, I suppose, in that order; profits, then stability—or my marginal gains in the short-term first, followed by my absolute gains in the long-run.

    The report—if my interpretation serves me correctly—expresses a lot of reservations on the basis that TRAIN 2 will cut a lot into 1) as 20-25% isn’t enough and will also cut into 2) as TRAIN 2 has to go through an unwilling Senate (further increasing instability) which will make the transition process more bloody (and sap more momentum from the good winds that the PH economy is riding on).

    What must DOF be thinking?

    I think that both AMCHAM and DOF, etc. love the free market—but DOF is more…hardline, more dedicated in its “love for the free market” so to speak. What I mean is that the economic technocrats have an extremely theoretical and extremely long-term view of things—and support TRAIN 2 in that it is extremely good theory and extremely good long-term policy (and overstates the importance of these).

    That implies that deficiencies in TRAIN 2 can possibly be seen in how it…understates certain practical considerations and certain short-term and medium-term policy implications.

    If I were a technocrat—the reason I would desperately want TRAIN 2 to be passed would because I had tried doing this for decades (other attempts to reform tax incentives have failed) and it seems inelegant and inefficient to be propping up a few export zone islands not thoroughly connected enough to local economy, rather than improving the attractiveness and efficiency of the national economy as a whole.

    That’s one potential reason: desperation. Sneak some veggies in the kid’s lunch, before he notices!

    Another reason is a certain logical calculus of sorts,

    From the eyes of the technocrats—we will feel pain, but this pain will be worth it. An example would be issues regarding infrastructure, one of the most pressing hurdles for business in the country—the increase in the attractiveness of the Philippine economy in the long term with the infrastructure from “Build, Build, Build” (sourced in part from increased revenues from TRAIN 2) will more than make-up (in the long run) the loss of incentives.

    Yet—the short-term and medium-term implications will be a slowing down (and a reduction in competitiveness) for our export industries. And given the amount of jobs tied to such—the ripples could be significant.

    This overstates the long-term benefits of TRAIN 2.

    (One might even ask—do you have faith in the PH bureacracy, as it currently stands, to implement the long-term benefits of “Build, Build, Build” in the most effective manner? If the PH Gov’t bungles “Build, Build, Build” that’s gonna delay or cut into the long-term benefits of the whole TRAIN project.)

    And on theory:

    TRAIN 2 simplifies the corporate tax regime. This is good theory. Markets are only as effective as the ease and amount of information flowing and accesible; better information means better markets and “easier to understand regulations” is one way of getting better information flows. Simple is better.

    However—that assumes that foreign companies would want to stay in the PH as a whole which is not exactly as true as them wanting to stay in special export zones under bodies like PEZA. Something that struck me while reading the AMCHAM report was that a large reason why foreign companies like PEZA, etc. is because PEZA, etc. are generally insulated from the BS that is our government and bureaucracy.

    You don’t just go to a special economic zone because of low taxes or fiscal incentives—but because you don’t want to deal with Mayor So-and-So and giving him his cut and all sorts of irrational extraneous costs. It is worth noting that, besides infrastructure—corruption is one of the top concerns of business in this country. Having a space where you can deal with less of that greasy BS must have some significant economic value in itself.

    A 20-25% CIT isn’t so attractive, if you have to deal with our wonderful government more often in exchange.

    What is good in theory may…not be as good when placed alongside “issues of practicality” like…our government’s competence or lack thereof.

    This…overstates the theoretical benefits of TRAIN 2.

    The common thread weaving all of this—and I have observed this with TRAINs 1 and 2—is that DOF, etc. are extremely, I mean extremely, bullish with regards to the competence and ability of the Philippine government.

    It is not that TRAINs 1 and 2 are not theoretically sound; they’re well-thought policies, to be fair to our technocrats—it’s just that, can you promise me that the PH government can actually give enough unconditional cash transfers effectively to cushion the impact of TRAIN 1, and can you promise me that the PH government can implement “Build, Build, Build” well enough to make up for the increase in prices felt by the common man and the loss of incentives felt by foreign business.

    They rely on the PH government being competent, which uh…yeah.

    Throw in FEDERALISM into the mix—and yeah, it’s all chopsuey to me.

    • karlgarcia says:

      You said you are not a math guy and I read calculus in your text. 😉
      For a non-economist, that is a more than enough very satifactory input, says another non-economist.

  21. Micha says:

    Understanding global economy from a financial parasite’s point of view won’t be helpful.

    Chempo wonders, for example, why the equities market hasn’t fallen when the bond yields rose.

    First on equities. American corporations are currently sitting on mountains of profits; thanks to increased productivity and continued exploitation of their workers. Instead of investing those money to expand operation or on new equipment, they use their record profits to buy back stocks. And then, when the going gets good, the good keeps on going. Trump just gifted corporations with a permanent trillion dollar tax cuts. And guess what, most of that tax windfall also went to buying back their stocks which drive share prices up.

    It’s not the Japanese conspiracy chemp.

    Second, on bond yields. Tying up yields to supposedly unreported higher inflation is woo-woo. Why employ a speculation when Occam’s razor will do? Bond yields rose because the Fed increased their lending rates. You don’t have to go through a lot of gibberish and junk to explain a perfectly explainable phenomenon.


    Also, Bernanke’s QE is not “true fashioned Keynesian economics”. It was a gift to bankers and corporations. Keynes would have given those money directly to home owners themselves.

    It saved the bankers, yes. But it did not saved the millions of households. The US has a recovery, yes. But it’s a recovery of the rich, not the recovery of millions who were directly affected by the crisis who today continue to struggle with financial worries and instability.

    • chemrock says:

      It’s always good to have different views.

      Whilst you are being very positive on a good economy that contributed to good profit numbers from listed companies, I’m just wondering what’s your take on the impact of the trade-war to these companies.

      • Micha says:

        In general, corporations are exploitative bastards. They will normally advocate laissez-faire market rules but will tend to favor protectionist policies just as well when it can fatten their bottom line. So it depends on what corporations we’re talking about. Those that has substantial operations overseas (outsourced labor and production) will frown on this tariff war whereas those who have largely maintained operations in the US will view it favorably.

        Overall, this Trumpian policy is just batshit-crazy. He is presiding what they charmingly call creative destruction of the world order and institutions so as to build a new one.

        He is either being handled still by his campaign strategist Steve Bannon who wanted to tear down America and make it white again or he is under the complete spell of KGB spy Vlad Putin who has provided substantial financial aid to private citizen Trump in rescuing his failed and bankrupt business enterprise.

        And because destroying things is the easy part, the folly of Trump will not be realized until we get to the part of rebuilding that which he has spectacularly destroyed.

  22. Micha says:

    The degradations of the American middle class.


    It wasn’t supposed to be like this.

    The children of America’s white-collar middle class viewed life from their green lawns and tidy urban flats as a field of opportunity. Blessed with quality schools, seaside vacations and sleepover camp, they just knew that the American dream was theirs for the taking if they hit the books, picked a thoughtful and fulfilling career, and just, well, showed up.

    Until it wasn’t.

    While they were playing Twister and imagining a bright future, someone apparently decided that they didn’t really matter. Clouds began to gather—a “dark shimmer of constantly shifting precariousness,” as journalist Alissa Quart describes in her timely new book “Squeezed: Why Our Families Can’t Afford America.”

    The things these kids considered their birthright—reputable colleges, secure careers, and attractive residences—were no longer waiting for them in adulthood.

    Today, with their incomes flat or falling, these Americans scramble to maintain a semblance of what their parents enjoyed. They are moving from being dominant to being dominated. From acting to acted upon. Trained to be educators, lawyers, librarians, and accountants, they do work they can’t stand to support families they rarely see. Petrified of being pushed aside by robots, they rankle to see financial titans and tech gurus flaunting their obscene wealth at every turn.

    Headlines gush of a humming economy, but it doesn’t feel like a party to them—and they’ve seen enough to know who will be holding the bag when the next bubble bursts.

    The “Middle Precariats,” as Quart terms them, are suffering death by a thousand degradations. Their new reality: You will not do as well as your parents. Life is a struggle to keep up. Even if you achieve something, you will live in fear of losing it. America is not your land: it belongs to the ultra-rich.


  23. distant observer says:

    Very interesting read chemrock. Keep it up! 🙂

    • edgar lores says:

      I’m shocked. But not really. More shocked that Americans voted him in.

      • Russia and scoundrels like Assange voted him in, really. Plus the FBI (whack nut Comey) which released Clinton E-mail info right before the election while holding Russian intrusions quiet. It was a highly irregular election. Now as to how Republicans can still hold him in esteem, I am flabbergasted and do not know. I think social media has driven people batshit crazy, emotionalized debate and made it shallow and personal.

    • sonny says:

      This is really off-off-track. Apologies to Micha and his thread where I’m attaching this link.

      We are currently at a geo-political low as a race as the powerful countries are foisting tariff wars to the rest of the world. A week ago was the 49th anniversary of the landing of Apollo 11 on the surface of the moon. For that brief shining 4 days of human unity some of us here in the TSH were witnesses to that event. I thought I’d link to the Popular Mechanics site that published a first-person timeline-account of that dramatic event to share with the youthful correspondents here at TSH and find cause for celebration and hope that the same unity will occur again.


      • sonny says:

        The sophistication of the computers of those days seems to pale compared to those that are in the hands of the everyday man of today in the street. Yet that technology sufficed when put in the right hands and spirit.

        • edgar lores says:

          I gather that some of the programmers of the mission were ladies. This is a tribute to the art of programming and to Margaret Hamilton:

          “* Hal Loden, lunar module control officer (CONTROL), Black Team, Mission Control:

          You don’t want to hit the moon, but when you do miss it, you want to miss it at the right altitude and inclination so that you’ll go into orbit.”

          • sonny says:

            Per Wiki, three African-American ladies (Dorothy Vaughan, Katherine Johnson, Mary Jackson) worked on flight trajectories for Project Mercury and Apollo 11. Does not say if they worked at Mission Control. Their lives as NASA mathematicians and programmers were featured in the movie HIDDEN FIGURES. l have not come across information on other women. (I did a double take on Margaret Hamilton since I recognize the name as the actress Margaret Hamilton who played the wicked witch in the WIZARD OF OZ 🙂 )

            • karlgarcia says:

              NASA is need of programmers, you and Edgar might want to unretire. The youngsters do not know their stuff.

              • sonny says:

                Ahh Little Grasshopper, I don’t know about Edgar – this ex-programmer has gotten too used to the pasture. Besides, I don’t know if they still use compilers for programs. 🙂

              • edgar lores says:

                I like the grass too. 🙂

              • karlgarcia says:

                Why NASA Needs a Programmer Fluent In 60-Year-Old Languages

                You might know anyone not into grass.(not cannabis)


              • sonny says:

                Fascinating situation, Karl and a juicy one at that:

                a) find at least two 50-something COBOL programmers; train him/her in Fortran & proprietary Assembler language

                b) do this in 6-12 months; familiarize him/her to the testing environment

                c) work the original flowchart from the original code using the original program documentation

                d) create the new program patches; test patches, matching objectives; document fixes

                e) employ programmers/assets for life of the probes 12 billion miles away 🙂

              • karlgarcia says:

                From Ireneo’s batch, maybe Irineo wants to go to the moon or Mars.

              • sonny says:

                Bingo,Karl! This is right down Irineo’s alley, piece o’cake. Paging Mr PiE! NASA calling!

                (JPL is operated by CalTech in Pasadena, Calif. Everybody knows where it is. 🙂 I do )

          • sonny says:

            Pahabol, edgar. 🙂 (further read on Apollo 11)

            On earth’s gravity, one combination for earth’s orbit for the size of the space capsule is a speed of 28,000 kph at a height of 260 km at earth’s atmosphere.

        • sonny says:

          Joe, those giddy times was my Pax Americana. Apollo 11 happened on my second month in the US. I was working for one of the big 7 of computer manufacturing, Sperry-Univac where making printed circuits and computers seemed to be no more than a cottage industry.and the moon-space juggernaut united anybody with the slightest can-do dream. The “sureness” of Neil Armstrong and company took in all comers.

          • Ah, yes. I was at the Smithsonian Sci and Tech Museu a number of years ago. Those first space capsules were small cramped junky cans with wires and aluminum foil taped together. My, the courage those men had, to ride on a controlled bomb up into space in a tin can. Jaw-dropping.

            • Francis says:

              Imagine if we had the same will with our technology now.

              Shame that my generation and these times are so filled with pessimism and cynicism—when people with far less tech were able to accomplish such great things, just because they believed they can.

    • karlgarcia says:

      I am sure this Wikipedia article will update in a few days.


      in the footnotes or endnotes it includes the Bicameral Report.

      about the military and Lumads

      Military claims some are rebels who infiltrated lumads and some other reasons which may include failure of intelligence,negligence,incompetence, and the usual catch all reason- collateral damage.

  24. karlgarcia says:

    Even if my name was not written for posting whole articles, I am guilty of that.
    The link is about Trumps attempt to play chicken with the FED by complaining about the Monetary policy.


  25. karlgarcia says:

    Even with Trump ameliorating the EU side of the tariff war, GM and the rest are lowering their revenue forecasts due to high raw materials costs.


  26. LG says:

    Thank you Chemrock for another bookmarkable and forwardable piece of yours. Being ‘dual’ has me ‘’listen’ more intently to this ‘visiting lecture’ on a complex matter of international impact. Maybe for ‘nonduals’, its ring is the same.

    With the rebirths of despotism, anarchy, and communism, continuing terrorism and planet earth burnning, I am so concerned for the generation who might be still unaware of the already gloom and doom in our midst (my grandkids are in such cohort). Much more, for those who are yet be born, should their would-be parents ever make it to create them.

    To date, what enduring and sustainable ‘progress’ and ‘change for the better’ are there in what scientists, inventors, entrepreneurs, and technologists strive for? Among them, include elected and appointed government officials, honest ones, that is, if there are any. In reflection, for me, other than the 3 Cs (contentment, comfort, and charitability, maybe), I can’t think of other important things that I and my siblings enjoy better than my parents (and theirs) might have in their lives.

    Amid all the struggles in the world, to stay optimistic and hopeful for the young and future generations is still not a bad choice.

    • chemrock says:

      Thanks LG. Amidst the dark clouds, somehow the sun will shine through, as it has for thousands of years. Optimism is a good refuge for fearful minds.

  27. LG says:

    Reading through the Ping Pong of informing ideas and opinions following the ‘lecture’ make my day!

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