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XI’AN, China â€" For years, many of China’s best and brightest left for the United States, where high-tech industry was more cutting-edge. But Mark R. Pinto is moving in the opposite direction.

Mr. Pinto is the first chief technology officer of a major American tech company to move to China. The company, Applied Materials, is one of Silicon Valley’s most prominent firms. It supplied equipment used to perfect the first computer chips. Today, it is the world’s biggest supplier of the equipment used to make semiconductors, solar panels and flat-panel displays.
These days, everyone and their grandmother is investing in China, not just US companies.

SOURCE
 

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China is investing in a nation wide effort to increase "green" technologies. Being that they are a commie country they don't have to go through all the bull crap that it would take in the US to make it happen. If they say it will be done, then it will be done. They already have solar power down to an affordable level so it is being utilized by a large portion of their population.

If the US does not do something quickly to follow China's lead, we will be in big trouble. These technologies will be based in China and that will make things more expensive and remove jobs from the US. For some reason (politicians are significantly funded by oil, maybe?) the US is not putting enough effort into making sustainable sources more prevalent and the standard in the US. That is going to be a big problem for us and in my opinion is the biggest reason our economy is doing so poorly. If we were to invest in these technologies on a wide scale, the economy would be positively effected and it would take affect rather quickly.
 

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Originally Posted by Greg121986
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China is investing in a nation wide effort to increase "green" technologies. Being that they are a commie country they don't have to go through all the bull crap that it would take in the US to make it happen. If they say it will be done, then it will be done. They already have solar power down to an affordable level so it is being utilized by a large portion of their population.

If the US does not do something quickly to follow China's lead, we will be in big trouble. These technologies will be based in China and that will make things more expensive and remove jobs from the US. For some reason (politicians are significantly funded by oil, maybe?) the US is not putting enough effort into making sustainable sources more prevalent and the standard in the US. That is going to be a big problem for us and in my opinion is the biggest reason our economy is doing so poorly. If we were to invest in these technologies on a wide scale, the economy would be positively effected and it would take affect rather quickly.

I really don't know how Obama or the next president is going to turn things around. Our corporations keep out sourcing jobs for the sake of maintaining profitability. Education funding is being squeezed and College tuition is being increased as if they don't want the underprivileged to have a formal education.

What's worse, foreign work visas have been relaxed to allow big corporations hire foreign skilled workers for much lower wage than domestic workers. It seems as if the whole US economy is being played by the powerful few.
 

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Originally Posted by AzO
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I really don't know how Obama or the next president is going to turn things around. Our corporations keep out sourcing jobs for the sake of maintaining profitability. Education funding is being squeezed and College tuition is being increased as if they don't want the underprivileged to have a formal education.

What's worse, foreign work visas have been relaxed to allow big corporations hire foreign skilled workers for much lower wage than domestic workers. It seems as if the whole US economy is being played by the powerful few.

But when has that been any different?

It does make me LoL though, because Corporations are greed incarnate and they need to be saved from themselves. They'll keep outsourcing until there arent any citizens around who can afford their product.

And business leaders think that the Govt should be run like a business....lol.

But then i serious'd cause I remember that I've been waiting 3 years to get into my local Registered Nursing programs.
 

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Originally Posted by AzO
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College tuition is being increased as if they don't want the underprivileged to have a formal education.

The only people making tuition expensive is the college or university itself. It's private.
 

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Originally Posted by BizzareRide View Post
Money hungry corporations are privately owned...
Well.. yea. Did I miss something?
 

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Some of the posters here seem as though they don't properly understand economics. Infrastructure upgrades strengthen the respective fields of the emergent technologies powering aforementioned upgrades. However, they almost always serve to weaken or cripple the current market for existing infrastructure. These changes are not all peaches-and-daisies as some of my fellow liberals have been lead to believe.

Note that I'm not suggesting that we should stagnate and avoid society-changing plans simply because economics dictates that someone-has-to-lose. Simply suggesting that not all is well and benevolent simply because we, as a people, start moving forward again. When you move forward, you inevitably leave something else behind.

Example: The refrigerator was a marvelous invention, except for ice harvesters, for whom it was the end of their careers and perhaps the whole market at large. Likewise, a room-temperature superconductor would be great for humanity, just not for companies providing alternate means of energy storage. Since our economy is typically based on existing markets, not future plans, major upgrades are almost always contested by the establishments which they would serve to hinder.
 

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Originally Posted by jcettison View Post
Some of the posters here seem as though they don't properly understand economics. Infrastructure upgrades strengthen the respective fields of the emergent technologies powering aforementioned upgrades. However, they almost always serve to weaken or cripple the current market for existing infrastructure. These changes are not all peaches-and-daisies as some of my fellow liberals have been lead to believe.

Note that I'm not suggesting that we should stagnate and avoid society-changing plans simply because economics dictates that someone-has-to-lose. Simply suggesting that not all is well and benevolent simply because we, as a people, start moving forward again. When you move forward, you inevitably leave something else behind.

Example: The refrigerator was a marvelous invention, except for ice harvesters, for whom it was the end of their careers and perhaps the whole market at large. Likewise, a room-temperature superconductor would be great for humanity, just not for companies providing alternate means of energy storage. Since our economy is typically based on existing markets, not future plans, major upgrades are almost always contested by the establishments which they would serve to hinder.
But as a capitalistic system, it is the company's job to grow and adapt to changes in the market. If they cannot stay relevant then they will be removed from the system. Prosperity and technology should not be discouraged from growing because some current workers or companies cannot keep up.
 

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Quote:

Originally Posted by jcettison View Post
Some of the posters here seem as though they don't properly understand economics. Infrastructure upgrades strengthen the respective fields of the emergent technologies powering aforementioned upgrades. However, they almost always serve to weaken or cripple the current market for existing infrastructure. These changes are not all peaches-and-daisies as some of my fellow liberals have been lead to believe.

Note that I'm not suggesting that we should stagnate and avoid society-changing plans simply because economics dictates that someone-has-to-lose. Simply suggesting that not all is well and benevolent simply because we, as a people, start moving forward again. When you move forward, you inevitably leave something else behind.

Example: The refrigerator was a marvelous invention, except for ice harvesters, for whom it was the end of their careers and perhaps the whole market at large. Likewise, a room-temperature superconductor would be great for humanity, just not for companies providing alternate means of energy storage. Since our economy is typically based on existing markets, not future plans, major upgrades are almost always contested by the establishments which they would serve to hinder.
And thats why we have frictional unemployment. People don't seem to realize or even bother learning any of this.

Also another thing to get through our heads for everybody, nothing last forever, not even the United States in terms of it being the worlds sole Super Power.
 

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Originally Posted by AzO
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It seems as if the whole US economy is being played by the powerful few.

Definitions of capitalism on the Web:

an economic system based on private ownership of capital
 

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a while back, the US was an agricultural giant. it had a huge surplus, and was exporting food. then things moved to manufacturing based. the US became a powerhouse, producing all of the state of the art products that the rest of the world desired (such as cars or tractors, which can farm more food). nowadays, things are very different. the government, unions, etc have screwed with these free markets so much that they aren't profitable anymore. all that labour moved from farming-production (which is fine if you're trading cars for food) and then the production firms went broke.

the fact that the US can't make money off of their production anymore has come about because of the fact that their (say car factories) are crap. after the war, whilst japan were innovating, copying european cars & trying to improve them, swiss watches and trying to improve them to the point where they could export and sell them to other countries, the US was doing um... well it had the international trade currency so it was just producing whatever it felt like and printing money to buy everything else. think about it. what on earth does the US actually export that is consumed by the rest of the world? very little. certainly not enough to be at a trade equilibrium (yeah yeah i know that doesn't technically exist) as they're running a MASSIVE trade deficit, financed almost entirely by the loans, credits & liabilities that the US citizen and government keeps stacking up by printing cash. hell you run a NEGATIVE savings rate. -3% or something ridiculous. yes that's right, not even factoring in inflation the average US citizen is 3% POORER than they were 12 months ago. this savings ratio is skewed with even harder as the appreciation of assets (like housing) was factored into this equation. equity is now a saving in the U.S apparently.

now, as for how china fits into this.

it's no secret that the states are printing money like crazy. they're throwing cash at these car factories etc that have gone broke (because they lost too much money) and are just giving them even more money to lose!

we also know that the US is accumulating debt. spending more than you are saving (bigtime) whereas china is saving money. this has actually come about because of the static exchange rate of the yuan.

China's high savings rate is the result of forced savings by the government. The Chinese government 'forced' savings on the Chinese people by accumulating massive US$2 trillion reserves (as foreign assets, notable US Treasury bonds) on behalf of their people through the currency peg. To understand how it all works, consider how the US dollars spent by American consumers typically ends up as US Treasury bonds in the US (China recently announced changes to the rules, which will affect the steps below):

1. Â An American consumer pays US$30 for an Oral-B electric toothbrush at Wal-Mart.
2. Most of the US$30, say US$27, stays in America to pay for the worker's wages, distributions costs, transport cots, Wal-Mart's profit, Oral-B's profits and so on. This US$27 is part of the 70% consumer spending portion of the US economy. That US$27 helps to 'stimulate' the US economy.
3. The remaining US$3 ends up in a factory in southern China. The deal between Oral-B and the Chinese manufacturer is denominated in US$ (i.e. the Chinese manufacturer is paid in US$). But US$ cannot be used in China because the RMB is the currency of China. So, what happens next?
4. The Chinese manufacturer will present the US$ to a local Chinese bank (say, the Shenzhen Development Bank). He has to show the receipts to the Shenzhen Development Bank (SDB) to prove that the US$ is earned by trade and not through speculation.
5. The Shenzhen Development Bank (SDB) will take the US$3 in exchange for RMB.
6. This is where China is different from the West. In Western countries, a bank in SDB's situation can do whatever it likes with the US$- e.g. trade them for euros or yen on the foreign-exchange market, invest them directly in America, issue dollar loans and whatever they think will bring the highest return. In China, the SDB has to surrender all of its US$ to the PBOC for RMB at whatever the official exchange rate (the RMB is ultimately created from thin air by the People's Bank of China (PBOC)- see Why is China printing so much money?).
7. Everyday, there are thousands of transactions between the local Chinese banks and the PBOC. The pile of US$ that keep piling up in the PBOC like crazy. Please note that trade with America is not the only thing that result in US$ streaming into China. Trade between China and other countries are also settled in US$, which means even more US$ are piled up in the PBOC.
8. The PBOC transfers the US$ to the State Administration for Foreign Investment (SAFE). SAFE must figure out what to do with the rising pile of US$ (which is currently over the US$2 trillion). Some will be parked in US stocks, bonds, euros and so on. But the great majority ends up as boring US Treasury bonds.
9. And so, the US$ makes a round trip back to America, hopefully to be used on Chinese goods again.

From this, you can see one thing: as long as US$ keeps streaming towards China, SAFE has to keep on investing them. Most of these US$ investments will end up as US Treasury bonds because it is the only market that is big and liquid (and politically sensitive) enough to absorb those never-ending stream of US$.

now the result of doing this has lead to the USD being artificially worth more than it should be in china. what's the result of that?

people are buying chinese assets indirectly with USD's (investing in china to an extent). after all why wouldn't you? when your currency exhchanges at say, twice what it should, assets instantly become 50% cheaper to buy in china.

what's this doing? sending the price of well, everything in china through the roof. what would cost 1 hours labour to the average US citizen in china with his USD's costs the average chinaman significantly more. he spends all his time/money on staying alive, whilst the government takes any of the surplus he should have made selling his product to the states and either saves it (the chinese are up to 2.4 trillion in USD reserves) or loans it back to the americans.

One of the culprits for this problem is the inflexible exchange rate of the Chinese currency (RMB, or yuan). The RMB is not a freely floating currency-its exchange rate is still controlled by the Chinese central bank albeit having some semblance of flexibility. At the current rate of exchange, the RMB is undervalued. Since it is undervalued, foreign capital will want to enter China in the form of foreigners buying up the RMB (which can in turn either buy other assets or sit static, as an investment that either stays at its current value or increases dramatically when the government float the exchange rate).

now, if the RMB is a freely floating currency, the demand for it by foreigners will bid up its price, which will reduce its demand as it becomes more expensive. Conversely, as its price rose, domestic sellers of RMB will sell down its price. Finally, a market equilibrium price will be reached where the quantity supplied will meet its quantity demanded. Since the RMB's undervalued exchange rate is still barred by the Chinese central bank from rising, foreign demand will exceed its domestic supply. So, the question is: where is the RMB going to come from? In the absence of a capitalism driven market, the only choice the Chinese central bank has is to print their money like crazy to sell to the foreigners. Now, with foreigners armed with freshly printed RMB, they bid up the prices of Chinese assets, including stocks and properties. As this newly printed money permeate its way into the rest of the Chinese economy from the wrong sources, the result is price inflation.

now for the really interesting stuff. once the chinese realise that they simply can't make the money back from the USD's they've saved by losing the value on their exports, they may do two things.

first, they can liquidate all their US assets. send all their properties into a frickin' firesale before stage 2 renders them worth nothing. (although the US housing market seems to have already beaten them to that punch, which i will explain in a moment).

what the chinese can do is stop using the USD as their trade currency. they've got 2.4 trillion dollars of it to spend. they take that $2.4 trillion, and throw it out in the market in exchange for yuan, commodities, oil reserves, whatever. once that $2.4 trillion hits the money markets all hell will break loose. it can firstly hit the direct money markets. lots of supply of USD's will of course (due to supply and demand) devalue the USD to the point of collapse. secondly, they'll use it to buy stuff. lots of stuff. yuan & precious metals along with masses of oil reserves. after these transactions, other countries that don't use the USD as their currency of choice (pretty much everyone) will need to exchange it into their own currency. sending even more USD's into circulation, and even less foreign currencies into circulation. after this happens, they float the yuan. so when they traded the USD's for yuans, they were getting far more than they should have. now once they've gotten rid of all the USD's, they float the yuan and let it appreciate to its perceived/equilibrium value.

in fact this is so bad that an 80% devaluation of the USD has been predicted. furthermore, once other countries see what the chinese are doing, they'll realise the hit it will have on their own reserves. their reserves of USD's that they use to buy oil, gold, etc won't be able to buy SFA anymore. so what do they do? reject it as well. hell the arabs will realise that if they keep accepting it it won't be worth the paper it's printed on, and so will ask for another form of currency for their oil. it was tipped to be the euro (and the EU was pushing hard for that) but with greece defaulting it's more likely to be gold. gold has several advantages, the biggest of which is that you can't just print gold or pull $10 trillion dollars worth of gold out of your a$$. it's pretty well static.

in fact, the world seems to be so confident of this that gold prices are at record high levels, and only increasing. hell the bank of india recently bought 200 tonnes of the stuff to keep as reserves. AND at record high prices to boot. they had $6.7 billion dollars worth of CASH reserves, and converted the entire lot into gold. that's how much gold is appreciating by. couple that with the fact that the USD is plummeting and it's not surprising nobody wants to hold any more than the bare minimum of USD's they need to buy some oil. the USD is plummeting. it only recently temporarily bumped back up because of the default of greece. people panicked and the money markets ran to the perceived safety of the USD. now when we compound all this with the fact that the chinese government is telling its citizens to buy up gold and silver, we can safely assume that it's planning on doing the same thing itself with some of the USD's it has in reserve. that demand will just FURTHER increase the price of gold that is already rocketing to the moon due to all the USD's that will be put into circulation.

now, having said this. the chinese don't actually have $2.4 trillion USD's to just chuck around. they have liabilities. big ones. "the size of the Government's debt is vastly understated. Not included in the public debt figures are the liabilities of the local governments, which the Ministry of Finance estimated at $680bn as of the end of 2008. In addition to that, a large part of the loans extended in 2009 (estimated at $350bn) went to finance public infrastructure projects guaranteed by local governments. Furthermore, when the Chinese government bailed out its banking system in 2003, it set up Asset Management Companies that issued bonds to the banks at par for the non-performing loans that were transferred to them. These bonds, worth about $260bn, are explicitly guaranteed by the Ministry of Finance and the Central Bank and sit on the balance sheets of the big four banks. The Chinese government also explicitly guarantees $400bn worth of debt of the three "policy banks". In total, these off-balance sheet liabilities are equal to $1.7tn, which would bring China's public debt to GDP ratio up to 62%, a level that is comparable to the Western European average."

these off-sheet liabilities are called contingent liabilities, a potential expense, one that may or may not eventuate, depending how events turn out, but which should be provided for in properly kept accounts or budgets.

so in reality, the chinese don't actually have $2.4 trillion USD to throw around. factoring in contingent liabilities, they have about $800 billion USD. still enough to cause the US serious problems. the thing is, as will demonstrate in a minute, is that contingent liabilities don't actually have to be accounted for in reserves (and private firms do this at their risk, making a calculation as to how likely an exchange they guaranteed is actually likely to go sour).

as for the US housing market, well that's pretty simple. you know how normally, you have some form of security on a house, say your relatives co-sign the loan agreement agreeing to pay the loan back if you default?

well the US gov't, in their infinite wisdom, decided to pass a law saying that the government itself would cosign poor peoples loans, and pay them back with tax dollars.

this lead to absolutely reckless lending by the banks, as they had an absolutely guaranteed return on their loans (even with a cosigning the banks need to be cautious). this inevitably lead to people getting money that they in no way could pay back. so they defaulted. in HUGE numbers. what did this mean? it meant there were stacks and stacks of US houses on the market. what does huge supply and demand that doesn't correlate mean? the prices of houses dropped, massively.

that lead to even more people defaulting on their loans. after all, why pay a $300k mortgage on a house worth $200k? especially when you could default & buy the same house back for 2/3rds of what you paid for it 12 months ago.

this of course contributed to the rest of the (car companies in the US) going broke. the even more astounding thing is that iirc, the US laws for bank loans over there are ONLY secured on what the loan is for. i.e the house. over here in aussieland, a bank can pretty much ruin your entire life if you default on your loan. even if the bank is reckless, at least that is incentive for the loan-ee's to be cautious.

unfortunately, the australian government is going the way of the US. in october, the australian government extended its AAA rating (basically, a guarantee that you won't lose your money, if the firm goes broke the tax reserves will compensate the account holders/investors) to include both bank deposits (and here's the scary part) wholesale bank debt. this is called a contingent liability - a potential expense, one that may or may not eventuate, depending how events turn out, but which should be provided for in properly kept accounts or budgets, which i mentioned earlier.

now for the record, the US has 60 trillion dollars worth of contingent liabilities. the aussie government has 1 trillion. but that's not the scary part. the scary part is that the biggest budget surplus we've ever had was 20 billion dollars. in other words, our cash assets were outnumbered 50:1. now we have no surplus. at all. all we need is for 2% of the government assured.. whatever to go bad, and we're in serious trouble. which, one could assume is unlikely if the government hasn't been reckless with its assurances right?

thing is this is what happened with the US government and the housing loans, more went bad than the government had cash to pay for. that in turn lead to the US government taking on all those bonds from china...

sources/additional info:

http://cij.inspiriting.com/?p=688
http://cij.inspiriting.com/?p=42
http://cij.inspiriting.com/?p=1059
http://cij.inspiriting.com/?p=339
http://cij.inspiriting.com/?p=642
http://www.lewrockwell.com/rozeff/rozeff319.html
http://in.reuters.com/article/busine...43642620091103
http://www.bloomberg.com/apps/news?p...d=aUm.roGyeOR0
http://www.anz.com/edna/dictionary.a...gent_liability

in short: you'd be mad to stay in the U.S right now.
 
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