CDZ Cheap oil and China Collapse Which Will be More Important?

[william the wie]

Given the amount of capital added that creates a new job used to be known:

The proportion of used but usable capital equipment that was exported to the US from countries with Value Added Taxes was fairly steady from the 80s until a slight blip two years ago and now a big blip last year.

The reason for the blip is known. China keeps adding capital controls so more ingenuous ways of getting capital out of the country are devised to get around those controls. Those ways obviously include a lot of capital equipment being sold as junk on the manifest in China and being sold at higher actual value here.

That reduces US capital costs by a lot. But at some point the supply of abandoned factories and ghost cities that can be profitably looted will run out and that will hurt a whole bunch.

On the otherhand since pipelines reduce the breakeven point of drilling energy costs will go down in the US, Given the natural gas and kerosene that can be produced from coal fields and the drop in prices for coal that drop in energy prices could cause major economic stimulus.

So, which will predominate or if you prefer what is the sequence of these two trends?

 

[DarkFury]

Given the amount of capital added that creates a new job used to be known:

The proportion of used but usable capital equipment that was exported to the US from countries with Value Added Taxes was fairly steady from the 80s until a slight blip two years ago and now a big blip last year.

The reason for the blip is known. China keeps adding capital controls so more ingenuous ways of getting capital out of the country are devised to get around those controls. Those ways obviously include a lot of capital equipment being sold as junk on the manifest in China and being sold at higher actual value here.

That reduces US capital costs by a lot. But at some point the supply of abandoned factories and ghost cities that can be profitably looted will run out and that will hurt a whole bunch.

On the otherhand since pipelines reduce the breakeven point of drilling energy costs will go down in the US, Given the natural gas and kerosene that can be produced from coal fields and the drop in prices for coal that drop in energy prices could cause major economic stimulus.

So, which will predominate or if you prefer what is the sequence of these two trends?

As crazy as this sounds you need to look at China's "black" economy. They produce 90% plus of the worlds Heroin. And their fields are in Afghanistan.

China has been mixing both markets for years. I have long thought we went into Afghanistan to leverage a loan NOT fight a war because we did NOT destroy any poppy fields while we were there.

 

[william the wie]

Given the amount of capital added that creates a new job used to be known:

The proportion of used but usable capital equipment that was exported to the US from countries with Value Added Taxes was fairly steady from the 80s until a slight blip two years ago and now a big blip last year.

The reason for the blip is known. China keeps adding capital controls so more ingenuous ways of getting capital out of the country are devised to get around those controls. Those ways obviously include a lot of capital equipment being sold as junk on the manifest in China and being sold at higher actual value here.

That reduces US capital costs by a lot. But at some point the supply of abandoned factories and ghost cities that can be profitably looted will run out and that will hurt a whole bunch.

On the otherhand since pipelines reduce the breakeven point of drilling energy costs will go down in the US, Given the natural gas and kerosene that can be produced from coal fields and the drop in prices for coal that drop in energy prices could cause major economic stimulus.

So, which will predominate or if you prefer what is the sequence of these two trends?

As crazy as this sounds you need to look at China's "black" economy. They produce 90% plus of the worlds Heroin. And their fields are in Afghanistan.

China has been mixing both markets for years. I have long thought we went into Afghanistan to leverage a loan NOT fight a war because we did NOT destroy any poppy fields while we were there.

Given the amount of capital added that creates a new job used to be known:

The proportion of used but usable capital equipment that was exported to the US from countries with Value Added Taxes was fairly steady from the 80s until a slight blip two years ago and now a big blip last year.

The reason for the blip is known. China keeps adding capital controls so more ingenuous ways of getting capital out of the country are devised to get around those controls. Those ways obviously include a lot of capital equipment being sold as junk on the manifest in China and being sold at higher actual value here.

That reduces US capital costs by a lot. But at some point the supply of abandoned factories and ghost cities that can be profitably looted will run out and that will hurt a whole bunch.

On the otherhand since pipelines reduce the breakeven point of drilling energy costs will go down in the US, Given the natural gas and kerosene that can be produced from coal fields and the drop in prices for coal that drop in energy prices could cause major economic stimulus.

So, which will predominate or if you prefer what is the sequence of these two trends?

As crazy as this sounds you need to look at China's "black" economy. They produce 90% plus of the worlds Heroin. And their fields are in Afghanistan.

China has been mixing both markets for years. I have long thought we went into Afghanistan to leverage a loan NOT fight a war because we did NOT destroy any poppy fields while we were there.

You may well be right. China is the main source of synthetic drugs that can be sold at convenience stores. As to Afghanistan Bush, Clinton and now Obama have all been clueless about it. Butcher and bolt is the only tactic that has worked in the last three thousand years in that country.

 

[KokomoJojo]

As crazy as this sounds you need to look at China's "black" economy. They produce 90% plus of the worlds Heroin. And their fields are in Afghanistan.

China has been mixing both markets for years. I have long thought we went into Afghanistan to leverage a loan NOT fight a war because we did NOT destroy any poppy fields while we were there.

so thats why we sent our military in to protect the fields huh...

 

[DarkFury]

As crazy as this sounds you need to look at China's "black" economy. They produce 90% plus of the worlds Heroin. And their fields are in Afghanistan.

China has been mixing both markets for years. I have long thought we went into Afghanistan to leverage a loan NOT fight a war because we did NOT destroy any poppy fields while we were there.

so thats why we sent our military in to protect the fields huh...

I think we took those fields hostage to leverage a loan from China.

 

[jwoodie]

Isn't it interesting how the world-wide oil glut has completely discredited the formerly popular liberal mantra that we were about to run out of oil? Is Global Warming the next hoax of the "scientific community" to be exposed?

 

[DarkFury]

Isn't it interesting how the world-wide oil glut has completely discredited the formerly popular liberal mantra that we were about to run out of oil? Is Global Warming the next hoax of the "scientific community" to be exposed?

There never was a shortage of oil. What happen is democrats shut down the building of refinery's and explain the lack of gas at the pump as a shortage of oil.

 

[william the wie]

Chevron has announced a loss and the other majors are in big trouble too. Iran is expanding oil production in the run up to their collapsing oil prices to below their marginal costs as they reenter the global market.

 

[320 Years of History]

Given the amount of capital added that creates a new job used to be known:

The proportion of used but usable capital equipment that was exported to the US from countries with Value Added Taxes was fairly steady from the 80s until a slight blip two years ago and now a big blip last year.

The reason for the blip is known. China keeps adding capital controls so more ingenuous ways of getting capital out of the country are devised to get around those controls. Those ways obviously include a lot of capital equipment being sold as junk on the manifest in China and being sold at higher actual value here.

That reduces US capital costs by a lot. But at some point the supply of abandoned factories and ghost cities that can be profitably looted will run out and that will hurt a whole bunch.

On the otherhand since pipelines reduce the breakeven point of drilling energy costs will go down in the US, Given the natural gas and kerosene that can be produced from coal fields and the drop in prices for coal that drop in energy prices could cause major economic stimulus.

So, which will predominate or if you prefer what is the sequence of these two trends?

Are any of the following even givens?

• One is materially more important than the other.
• The order of occurrence for either event is predominantly sequential, rather than, say, predominantly parallel or predominantly circumstantial even if one temporally precedes the other.
• One, regardless of sequence, is causally linked to the other.

It seems to me that both have wide ranging implications, and thus great importance, for the whole world. (Far wider than can be effectively and comprehensively covered in the space people, even people like me, are willing to cover in this venue.) In light of that, it strikes me as each of the events you've identified and in the context you've presented them defines what is necessarily a choice of the lesser of two evils. The comparative rank of two evils (or two "goods") is a meaningful pursuit when one can and will act to make one or the other not happen, and/or when one can and will do something about it if the event does happen.

Of the two events you've identified, as a nation, the U.S. has, IMO, more ability to do something about oil prices; therefore it is the more important one, the one on which our national efforts should focus, that is if doing something has a reasonable potential for success. (Nevermind what "success" specifically means in this case, for it's not a sure thing in my mind that most folks agree on what "success" is re: oil prices or China's economy.) If our actions are to work, they must meet the following criteria IMO:

• Work for both the near and long term, or
• Work well enough for the near term to stem or mollify the event's impact while we also identify and implement a long term alternative that will be in place and functioning when the short term "stop gap" measure no longer works or is no longer needed, even if that need be obviated by only the readiness of the long term solution.

You know your countrymen. To which of the two basic solution approach criteria do you imagine they'll most likely cotton? My answer to that question is not the first one and only the first part of the second one.

 

[waltky]

Cheap oil is more important...

... not everyone can afford to invest in the stock market...

... but everyone needs gas to get around.

 

[william the wie]

Cheap oil is more important...

... not everyone can afford to invest in the stock market...

... but everyone needs gas to get around.

True but look at the OP again:

The Chinese are increasingly bypassing capital controls by exporting capital equipment the stuff needed to create jobs: like cash registers and store shelves.

So, the nearly 100% inflation of Chinese export invoices v. the imports from China recorded in other markets including Hong Kong is not what this thread is about. Besides it runs up real estate prices a lot more than liquid capital markets. If you own your own home and your own business in the US you get residency but not a green card and legal residence is what qualifies an immigrant for citizenship.

This thread is about how looting unused or underused durable goods and capital equipment in China and carrying invoices well below market value create jobs here in the US at a faster pace than can be explained by the real investment that shows up on National Income statement like GDP. China will eventually run out of ghost cities and factories to loot and US job growth will slow way down.

The reason that equipment is coming to the US preferentially is we do not have a VAT so the best prices in the world for officially used capital equipment is found here.

When we stop getting lathes and drill presses for $0.01/1$ the price of creating jobs will go way up. Eventually even China will run out of ghost cities and abandoned factories and given the rate of job creation per dollar of known investment that could be real soon.

 

[RandallFlagg]

Isn't it interesting how the world-wide oil glut has completely discredited the formerly popular liberal mantra that we were about to run out of oil? Is Global Warming the next hoax of the "scientific community" to be exposed?

Even more than that - we (the American people) are somehow responsible for this because oil prices are low. That one (literally) cracks me up. Shoot, I remember when oil was 10.00 per barrel and gasoline was .28 to .30 cents a gallon. At the present price of oil (per barrel) we should only be paying about .90 per gallon.

 

[william the wie]

Isn't it interesting how the world-wide oil glut has completely discredited the formerly popular liberal mantra that we were about to run out of oil? Is Global Warming the next hoax of the "scientific community" to be exposed?

Even more than that - we (the American people) are somehow responsible for this because oil prices are low. That one (literally) cracks me up. Shoot, I remember when oil was 10.00 per barrel and gasoline was .28 to .30 cents a gallon. At the present price of oil (per barrel) we should only be paying about .90 per gallon.

Adjusted for just about anything the current price is lower in real terms than what you remember. Now that China and Japan are devaluing and cutting interest rates to the bone or even more for Japan Hot money will rush here until there ain't no more.