Another Bank Bailout – MY COMMENT

by John Brian Shannon

MY COMMENT ON PROFESSOR PAUL KRUGMAN’S ARTICLE BEGINS…

The great sucking sound that everyone is hearing these days is the sound of capital leaving the Western economies by the billions – perhaps trillions of dollars – over the past few decades.

Money goes where the investments pay the best returns – and these days that means the BRIC countries (Brazil, Russia, India and China) and other rapidly developing economies. As uncountable billions leave the Western economies, the jobs attached to those mega-billions go with them. Is it any wonder then, that some of the weaker Western economies have been in free-fall for some time? No, it is not.

A great deal of lamenting has been gone on in recent months – but the geomacro-economy has been changing and will continue to change as it reflects the new and evolving reality, for one simple reason – “If we continue to do what we have been doing, we can continue to expect the same results.”

And what is that result, exactly?

I quote Professor Paul Krugman – arguably the leading economist alive today: “An old routine plays out in Spain, with the banks getting help while the unemployed continue to suffer.” Read Professor Krugman’s excellent article here…

Bought anything lately that ISN’T Made in China? Clothing labels or manufacturing stampings could also read Made in India, Indonesia, or any number of other fast-growing economies.

Our consumers demand lower-priced goods and services, so foreign nations have gratefully fulfilled those requirements – effectively transferring Western wealth to third-world nations in huge, glorious gobs of U.S. and European bank notes!

It is said in China these days that one must watch the sky carefully for all the Manna falling from Heaven – which is falling in the form of chunks of gold large enough to take out entire city blocks!

Lest you think this is a recent development, it all started in earnest about 1973 shortly before the Arab Oil Embargo, when oil prices suddenly shot up and Detroit’s thunderous, but thrilling V8’s became unaffordable for millions of workers in nations used to interstate highways serving distant suburbs, spirited driving on the autobahn, and long summer vacations involving hundreds of miles of travel.

Japan at the time and still to this day, exports huge numbers of cars to the West and enjoys a growing market share of (mostly) fuel-efficient vehicles – and the ones that can’t boast good fuel economy, can certainly brag about outstanding reliability and brand-loyalty.

Since the 1990’s, South Korea, China, Indonesia, India and others have also stepped up to fulfill the wants and needs of American and European consumers with everything from home appliances and personal electronics, to tools, clothing and just about anything else you might purchase. Lower labour rates and production costs in Japan, then Korea and now, China, India and Indonesia, allowed more R&D spending, better products and lower prices for consumers and business alike.

Of course, those are all great things. It has been a decades-long bonanza for consumers, businesses and even the governments of the Western world are able to lower their costs by purchasing cheaper and often, more reliable goods from Asia.

American and European corporations have gladly followed this trend and contributed mightily to those developing nations attempting to service the wants and needs of Western consumers. If you doubt me on this – just do a Google search on Apple Computer for just one of many examples of U.S. companies which have elected to have their goods manufactured in China or other rapidly growing nations, instead of the U.S. Check Apple’s stock price in 1990 (mostly U.S. production) vs 2011 (mostly Chinese production). Impressive by any standard but not unusual, in fact, this Western-inspired trend is well established and continues to this day.

One day soon, there will be no manufacturing capacity in the U.S., Canada or Europe. It is dramatically cheaper to have it all done inside the BRIC countries and export those products to the West. Costs are so low, that shipping millions of products thousands of miles across entire oceans, becomes a tiny factor of the final price paid at U.S. or European cash-registers.

The “real price” of that huge manufacturing shift continues to play out in the daily media – higher Western unemployment rates, longer welfare rolls, lower domestic production, real-estate bubbles, bank failures, bank bailouts and so far, about one decade of destroyed dreams for families and small businesses.

But, man, did I get a great deal at the mall today!

Follow John Brian Shannon on Twitter: https://twitter.com/#!/JBSCanada

Harper Should Lobby for Free Trade with China | MY COMMENT

Harper Should Lobby for Free Trade with China — The Huffington Post – Canada
by Yuen Pau Woo, President and CEO, Asia Pacific Foundation of Canada   January 13, 2012

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MY COMMENT — Free Trade agreements are becoming more common world-wide­. It is up to the countries involved to set their own particular free trade agreement rules and conditions­. Every bi-lateral agreement is different.

But it is a trade matter — it is not a venue to browbeat the other country over their human-righ­ts situation etc. it is simple matter of you sell us X and we will pay Y, on as many products or services as both sides decide to include in the accord.

One thing that we like about this scenario is that by engaging in trade with Western nations developing nations learn our ways. This helps them to progress in real time in all matters, including among other things, best practices for the business community, human rights, environmen­tal legislatio­n and the reasons for those standards.

Where there is better communicat­ion — better relationsh­ips result.

A FTA with China, Japan, India and other countries will facilitate better relationsh­ips with those countries AND improve Canada’s economy.

Will an FTA solve every problem? No, obviously not. There will never be one big agreement that will address every identified negative policy or procedure in a developing country. An FTA will however, play an integral part of that process going forward.

Terry Glavin: Canada sells the oilsands to China. Then complains about foreign interference! | MY COMMENT

Canada sells the oilsands to China. Then complains about foreign interference! — National Post
By:Terry Glavin  January 13, 2012

MY COMMENT — Must it always be about extreme positions? Why must it be only about eco-terrorists or big business? Can’t Canada, one of the most developed countries on Earth, extract this resource AND do it in the least harmful way to the environment? Of course we can!

We have world-class technology available now to reduce the impact on the environment, we have a majority government with the necessary expertise to enact legislation to promote more sustainable development and we have ever more billions of dollars being invested by the world’s most powerful countries.

It’s so simple. The government calls a meeting of all stakeholders, who decide upon the “best practices” available, enact legislation with teeth to that effect and invite anyone who doesn’t want to follow that legislation to leave Canada.

Transporting crude oil by pipeline and supertanker is the absolute worst-case scenario. There will be a spill on Canada’s pristine coastline and eventually in BC’s scenic interior.

A better plan from an environmental viewpoint, is to merely ship the raw tar sands product, in the same way that coal has been transported to Asia from BC and Alberta, for decades, with no problems.

Another way that will give Western Canada the opportunity for value-added product (more jobs) is to highly-refine the crude oil into a very clean, fully refined, low-toxicity product and ship it from near Vancouver — a much safer waterway than Kitimat.

In addition to this, tar sands can be highly-refined into ethane gas and sent to Kitimat by a clean gas pipeline and picked up by LNG tanker. LNG tankers are truly innocuous, compared to crude oil tankers. In case of leak, practically zero deaths of ocean life and little, if any destroyed land environment as would be the case with a crude oil spill, LNG merely evaporates into the air, unless ignited — so keep the gas pipeline 5 km back from any populated areas or highway/railway.

See, it’s simple. We merely need a better plan – than the one presently under consideration!

A highly significant visit | MY COMMENT

A highly significant visit — Arab News
January 14, 2012

MY COMMENT — There is no doubt at all that the new China is a powerful balancing force for this world in this 21st century. Under the leadership of President Hu Jintao and Prime Minister Wen Jiaboa China has grown exponentially and not just in the economic sphere.

Holding the Olympics in China, the establishment and enhancement of bi-lateral ties with many nations and the financing and partnership in mega-projects by China, such as the LHPP in Lesotho, would have been unthinkable prior to year 2000.

China has recognized the need to convert it’s electricity grid to renewable energy as this becomes more economically feasible. With over 1.35 billion citizens, many living in close proximity to industry, clean air is at a premium. I wish China’s leaders well and hope their affinity for clean electricity continues and that with lower renewable energy costs now apparent, more of that capacity will be built.

China may have more to gain from this than any other country – and that’s even before factoring in millions or even billions of yuan of value-added green energy products that China can export to other nations. It would rank as yet another transformation China the country, could add to it’s international CV.

I predict, especially as time progresses, that those nations, corporations and individuals which treat China with respect will fare very well, as China has just begun it’s growth to full potential.

David Suzuki: Screw the Environment! The Pipeline Will Hurt Our Economy | MY COMMENT

David Suzuki: Screw the Environment! The Pipeline Will Hurt Our Economy — The Huffington Post – Canada
By: Dr. David Suzuki  January 12, 2012

MY COMMENT — Dr. Suzuki easily destroys the house of cards arguments put up by some people and corporatio­ns supporting both the Enbridge Northern Gateway pipeline and the Keystone XL pipeline.

There are so many billions of dollars invested in the tar sands now and much of it has been invested by China, the U.S. and others, that there is no going back now. The tar-sands will be extracted every day for decades, unless the price of oil drops below the tar-sands extraction price.

My concern is a spill over pristine land or sea. For that reason, an oil pipeline with supertanke­rs is out of the question. If tar sands product is going to be exported to China (it will be, trust me on this) an oil pipeline and supertanke­rs are the absolute worst way to go. What makes way more sense is to highly upgrade the tar sand material to highly-ref­ined ethane and send it to Kitimat by high-press­ure gas pipeline. LNG tankers are innocuous compared to crude oil tankers! In case of accident, ethane evaporates (unless ignited) into the air instead of destroying thousands of miles of coastline and countless sea-life.

Even exporting the raw tar-sand itself — delivered by rail to the port and carried inside bulk carrier ships (the same way as coal is exported every day in BC) is light-year­s better than shipping crude oil!!

Exporting crude to China from Kitimat, really is the worst option of all the available choices.

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My second comment on this same article by Dr. Suzuki:

OPEC could care less about Canada’s tar sands oil, or any other oil, anywhere. Regular readers of Middle Eastern newspapers and Middle East oil industry periodical­s know that all the oil OPEC produces every day is already pre-sold — and a year-long waiting list is in place for any extra oil that may become available due to delivery cancellati­on or additions to supply from bulk oil stockpiles there.

Note­: Not all OPEC countries are based in the Middle East, but Saudi Arabia produces about half of OPEC’s total.

Middle Eastern oil costs less, requires much less refining and is of higher quality than any oil in the world — except West Texas sweet crude which is the creme-de-la-creme of petroleum. Saudi oil is rated at about the same ‘sweetness­’ as (North Sea) Brent intermedia­te crude oil which is tied with Saudi oil for 2nd place.

China buys 50% of all Saudi oil extracted and they would buy all of it — and a lot more if they could.

There is no competitio­n between Canada and Saudi or other OPEC countries. If a glut suddenly appears due to market conditions­, buyers always line up to purchase the ‘good’ crude as it is often cheaper especially when you factor in refining cost. ‘Sour’ crude sits until the market picks up again.

Here is a huge dump of informatio­n on the Saudi petrochemi­cal industry for you in PDF form;
http://www­.sabic.com­/corporate­/en/binari­es/SABICCo­rporateBro­chure_E_tc­m4-1610.pd­f