Inflation hitting China big time

[Guest Tony n Terrific]

http://edition.cnn.com/video/#/video/world...ref=videosearch

[Guest Rob & Jin]

yep, and here too

[Shenzhen K-1]

http://edition.cnn.com/video/#/video/world...ref=videosearch

 

Yes the Mrs. has told me how far housing prices have dropped in Shenzhen!!

 

Here, wait until petrol hits $3.75 a gallon!!

[Guest Tony n Terrific]

http://edition.cnn.com/video/#/video/world...ref=videosearch

 

Yes the Mrs. has told me how far housing prices have dropped in Shenzhen!!

 

Here, wait until petrol hits $3.75 a gallon!!

Yes gasoline was 5.61 per L here or about $2.95 a gallon in Nanning.

If gas in the US hits $4 a gallon the party is going to be over for alot of people. And to think that some people want to be President of the USA. Boy Harry Truman was right when he called Presidency the hottest kitchen in the world and the Big White Dog House.

[Corbin]

http://edition.cnn.com/video/#/video/world...ref=videosearch

 

Yes the Mrs. has told me how far housing prices have dropped in Shenzhen!! B)

 

Here, wait until petrol hits $3.75 a gallon!!

Oh joy I can't wait since I drive a big old v8 Chevy Tahoe........ B)

[DMikeS4321]

http://edition.cnn.com/video/#/video/world...ref=videosearch

 

Something else at work here. With inflation we should see property values soaring. They aren't. We should see the value of the RMB dropping in value compared to other currencies. It's not. What we are seeing is a rapid rise in consumer prices without seeing a commensurate increase in wages; once again, not pure inflation as wages are flat.

 

I've been reading that one of the factors in the increasing cost of food, the entire food chain, is the acreage dedicated to subsidized feed-corn being used for ethanol production. This is driving up the cost of feed corn for livestock and making it less economical to grow corn for human consumption. My wife was telling me a couple of weeks ago that corn has become outrageously expensive in Nanning. She loves it but won't buy it anymore, not until the price comes down. (As an aside, I don't imagine we'll ever see rice grown as feedstock for ethanol production!)

 

I took econ in school and I don't have a clue what is going on. I do know this... we should all be worried.

Edited February 22, 2008 by DMikeS4321 (see edit history)

[Guest Tony n Terrific]

http://edition.cnn.com/video/#/video/world...ref=videosearch

 

Something else at work here. With inflation we should see property values soaring. They aren't. We should see the value of the RMB dropping in value compared to other currencies. It's not. What we are seeing is a rapid rise in consumer prices without seeing a commensurate increase in wages; once again, not pure inflation as wages are flat.

 

I've been reading that one of the factors in the increasing cost of food, the entire food chain, is the acreage dedicated to subsidized feed-corn being used for ethanol production. This is driving up the cost of feed corn for livestock and making it less economical to grow corn for human consumption. My wife was telling me a couple of weeks ago that corn has become outrageously expensive in Nanning. She loves it but won't buy it anymore, not until the price comes down. (As an aside, I don't imagine we'll ever see rice grown as feedstock for ethanol production!)

 

I took econ in school and I don't have a clue what is going on. I do know this... we should all be worried.

Mike salaries & wages in the US have basically been flat since 2000. Y2K did have an impact on Mom and Dad and bacon and eggs America. The cost of living has increased over 25% since then. Our economy did not feel this disparity because of Bushe's major tax cut and easy credit at low interest rates until now. It is payback time. WTF we are going to have a tax rebate soon to help spur the economy along? That is great. Any economics student knows that tax rebates or cuts should come from a tax surplus. Ours is coming from continuing to mortgage our future through the selling of Federal bonds to the world investors. Our kids and our grand kids are going to be paying for this over and over.

The security of the US is at stake here. Can you imagine if some tinhorn dictator decides to threaten our ecomomic interests with some puny blockade. Before we could act militarily we will have to call Bear Stearns, The Bank of Japan or China because they hold the paper to our 25 billion dollar Naval battle group. We would ask these money manipulators can we use it in this crisis?

[lostinblue]

Here is an article on food prices rising in china

http://www.energybulletin.net/34519.html

Published on 9 Sep 2007 by Energy Bulletin. Archived on 9 Sep 2007.

 

Low grain harvest, rising food prices and China's ethanol plan

by David DuByne

 

 

 

I want to stitch together some pieces of information, a set of events unfolding, that that I describe as a double Achilles Heel in ethanol production here in China. It's a case study in progress of rising food prices and natural disasters influencing bio-fuel production, especially ethanol, and new regulations for gasoline exports.

 

Last week, flipping through China Daily, an English-language daily here in China I noticed a story "Autumn Grain Harvest Under Severe Threat". In northern China, a drought has hit about 11.5 million hectares (27 million acres) of arable land, according to the Office of the State Flood Control and Drought Relief Headquarters. In the past, the country has satisfied nearly 100 per cent of its own grain demand. The autumn harvest accounts for 70% of the total annual production. In January this year Chinese corn consumption for 2006-2007 was forecast to reach 144.5 million tonnes, with country wide output reaching 144 tonnes.

 

 

 

Drying out after the deluge.

 

 

In southern China flood waters have submerged about 9.7 million hectares (21.5 million acres) putting the total submerged and parched dry land at one-sixth of the country's 120 million-hectares (288 million acres) of arable land. Add to this, the damage to half-a-million hectares (1.2 million acres) that have been devoured by rice-plant hoppers in Sichuan Province, and at this time it is not clear whether the drought, flood and insect pests would force Beijing to turn to imports. Drought-stricken areas are the country's key bases of grain production; flood-hit areas are the key to rice production. The 2006-2007 grain forecast is razor-thin, consumption versus production, and remember that China leads the world in consumption of rice and wheat. If China indeed turns to imports, how much additional grain will be required, and how much will it drive up grain prices on the world market?

 

The consumer Price Index (CPI) grew 5.6% in July 2007, the highest in ten years, with meat (especially pork rising 43% in one year), poultry, eggs and grains leading the index. The following month, in August, China declared a moratorium on the construction of most ethanol plants. Chinese officials recognized that producing corn-based ethanol was linked to rapidly rising food prices. Xu Dingming, an official of the National Energy Leading Group, told a recent seminar: "Food-based ethanol fuel will not be the direction for China. Unless ethanol can be produced using "non-staple crops," it won't be produced in China at all".

 

During the last week of August, the National Development and Reform Commission (NDRC) stated that China's major oil refiners should strictly control oil product exports. The NDRC is the government body in China that normally decides economic and pricing policies. Immediately following the order, the Petroleum & Chemical Corporation (Sinopec), Asia's largest refiner, now plans to export no more than what is called for from its fixed long-term contracts, and PetroChina, the other major oil refiner in the country, cut August gasoline exports to 160,000 tonnes - a decrease of 33% - the year's lowest figure so far, according to state-run China News Service. The report added that, apart from contracted supplies such as those to Hong Kong and Macau, Sinopec will reduce oil product exports in all regions to the lowest level of the year as well.

 

On September first the head of China's Energy Ministry, Ma Kai, in a live television speech stated "For the long-term development of our Chinese nation, saving energy and reducing pollution are so important, so urgent. If we don't change this situation... the economy will go badly and won't go far". It was the first televised large-scale appeal to consumers to change their lifestyles and conserve energy.

 

There is still ethanol production in China coming from China's largest ethanol producer China Agri Industries, which is the grain-processing unit of Cofco Ltd., China's largest grain trader is planning to open two more refineries this year, a 100,000 ton project in Hubei and a 300,000 ton project in Liaoning. These projects will use sweet potatoes as the feed stock. An additional 1 million tons of capacity also using sweet potatoes, awaiting permission, will be added by the end of 2008. China Agri has started using a different feedstock grain, sorghum, to produce ethanol. Sinopec and PetroChina have teamed up with China Agri in the downstream ethanol blending business. Other feedstock plants for China Agri ethanol plants include sugar cane and cassava. The shift of feedstock has caused a bump up in price of sorghum and sweet potatoes.

 

Obviously ethanol production is a very important part of China's energy strategy, but rising food costs and a billion and a half people watching their food prices double in the last two years, a lot of unhappy words have been spoken to the point that energy consumption has collided with food production in a time of natural disasters. It seems the Chinese course of action is to curb exports of gasoline, keep it in the country to offset lost ethanol production. China in general has bountiful natural gas, hydroelectric power and coal supplies. With Tajikistan connected by pipeline filling in the gaps, there is no lack of energy for factories and power plants.

 

This set of events only shows the true irreplaceable value of crude oil. Even in countries and regions rich in two out of three fossil fuels, there is no substitute for crude oil as the lifeblood of an economy. Chinese road transportation networks use a combination of compressed natural gas (CNG), electric vehicles, as well as ethanol-blended gasoline - far more diverse methods and on a much larger scale than North America - and this country still can't survive with outlarge amounts of crude oil. If what we see unraveling here as a litmus test for future reliance on substances other than crude oil to power our transportation networks, the effects of peak oil and depleting oil supplies worldwide will be far more damaging than most people expect. It seems there is no "magic bullet" for our world's energy problems; even a combination of "magic bullets" isn't enough. Right here, right now staring you in the face, the vulnerability of ethanol production is all too obvious.

 

David DuByne currently teaches Business English in Chongqing, China.

[DMikeS4321]

Good points about the U.S., but I was specifically commenting on China. I don't understand the mechanism by which a strong currency is inflating. Maybe the RMB's tie to the dollar is part of the problem. I wasn't claiming the article is wrong and I certainly don't understand what is happening.

 

Mike salaries & wages in the US have basically been flat since 2000. Y2K did have an impact on Mom and Dad and bacon and eggs America. The cost of living has increased over 25% since then. Our economy did not feel this disparity because of Bushe's major tax cut and easy credit at low interest rates until now.

 

Tax cuts are, for all practical purposes, an increase in income. As for a 25% increase in cost of living, that is true. It's also true that the size of government expenditure has increased 40% during that same time period. I don't know about you, but I haven't seen any extra Wheaties on MY breakfast table. Where IS all the money going??? (I don't think it's the military. I heard just yesterday that the military, even with our current 'involvements', accounts for just 3% of GDP). I think the Medicare bump and the new prescription program are supposed to constitute the largests new 'entitlement program' in the history of the planet.

 

It is payback time. WTF we are going to have a tax rebate soon to help spur the economy along? That is great. Any economics student knows that tax rebates or cuts should come from a tax surplus.

 

'Rebates' are no solution. Taxes are ALWAYS a problem, but government spending is always the BIGGEST problem. Cutting taxes is a proven way to increase total revenues (I think that is a proven fact, going all the way back to JFK). I used to work in the marine industry (sailboats and power yachts). You can't find a more clear example of government destroying an entire industry with tax policy than the marine industry in the 1970's. When cap gains taxes were reduced, the industry reappeared, like magic.

 

Ours is coming from continuing to mortgage our future through the selling of Federal bonds to the world investors. Our kids and our grand kids are going to be paying for this over and over.

 

Very true. I think the problem is primarily government spending, though. Government spending is up, WAY up, and the American people can no longer bear the burden of all our government programs. We never seem to get back what we put in.

 

Borrow and spend is more than a mantra for the American consumer. It permeates government as well. This includes state governments. California went from a surplus to a 15 to 20 billion dollar deficit between August, 2007 and today!! Our roads are in worse condition than ever and our public schools are a disgrace.

 

The security of the US is at stake here. Can you imagine if some tinhorn dictator decides to threaten our ecomomic interests with some puny blockade. Before we could act militarily we will have to call Bear Stearns, The Bank of Japan or China because they hold the paper to our 25 billion dollar Naval battle group. We would ask these money manipulators can we use it in this crisis?

 

This is very true, but the Fed could simply print more money. They are already doing that anyway.

 

I think this is all part of 'globalization' or 'evening the playing field'. We should probably get used to it as I doubt it will change.

 

Best Regards

Edited February 23, 2008 by DMikeS4321 (see edit history)

[Guest Tony n Terrific]

Good points about the U.S., but I was specifically commenting on China. I don't understand the mechanism by which a strong currency is inflating. Maybe the RMB's tie to the dollar is part of the problem. I wasn't claiming the article is wrong and I certainly don't understand what is happening.

 

Mike salaries & wages in the US have basically been flat since 2000. Y2K did have an impact on Mom and Dad and bacon and eggs America. The cost of living has increased over 25% since then. Our economy did not feel this disparity because of Bushe's major tax cut and easy credit at low interest rates until now.

 

Tax cuts are, for all practical purposes, an increase in income. As for a 25% increase in cost of living, that is true. It's also true that the size of government expenditure has increased 40% during that same time period. I don't know about you, but I haven't seen any extra Wheaties on MY breakfast table. Where IS all the money going??? (I don't think it's the military. I heard just yesterday that the military, even with our current 'involvements', accounts for just 3% of GDP). I think the Medicare bump and the new prescription program are supposed to constitute the largests new 'entitlement program' in the history of the planet.

 

It is payback time. WTF we are going to have a tax rebate soon to help spur the economy along? That is great. Any economics student knows that tax rebates or cuts should come from a tax surplus.

 

'Rebates' are no solution. Taxes are ALWAYS a problem, but government spending is always the BIGGEST problem. Cutting taxes is a proven way to increase total revenues (I think that is a proven fact, going all the way back to JFK). I used to work in the marine industry (sailboats and power yachts). You can't find a more clear example of government destroying an entire industry with tax policy than the marine industry in the 1970's. When cap gains taxes were reduced, the industry reappeared, like magic.

 

Ours is coming from continuing to mortgage our future through the selling of Federal bonds to the world investors. Our kids and our grand kids are going to be paying for this over and over.

 

Very true. I think the problem is primarily government spending, though. Government spending is up, WAY up, and the American people can no longer bear the burden of all our government programs. We never seem to get back what we put in.

 

Borrow and spend is more than a mantra for the American consumer. It permeates government as well. This includes state governments. California went from a surplus to a 15 to 20 billion dollar deficit between August, 2007 and today!! Our roads are in worse condition than ever and our public schools are a disgrace.

 

The security of the US is at stake here. Can you imagine if some tinhorn dictator decides to threaten our ecomomic interests with some puny blockade. Before we could act militarily we will have to call Bear Stearns, The Bank of Japan or China because they hold the paper to our 25 billion dollar Naval battle group. We would ask these money manipulators can we use it in this crisis?

 

This is very true, but the Fed could simply print more money. They are already doing that anyway.

 

I think this is all part of 'globalization' or 'evening the playing field'. We should probably get used to it as I doubt it will change.

 

Best Regards

Very good points Mr. Mike. I do agree with one of President Regan's quotes. The most dangerous words in the world today are. " Hello I am here from the Government and we are here to help"

[Corbin]

Good points about the U.S., but I was specifically commenting on China. I don't understand the mechanism by which a strong currency is inflating. Maybe the RMB's tie to the dollar is part of the problem. I wasn't claiming the article is wrong and I certainly don't understand what is happening.

 

Mike salaries & wages in the US have basically been flat since 2000. Y2K did have an impact on Mom and Dad and bacon and eggs America. The cost of living has increased over 25% since then. Our economy did not feel this disparity because of Bushe's major tax cut and easy credit at low interest rates until now.

 

Tax cuts are, for all practical purposes, an increase in income. As for a 25% increase in cost of living, that is true. It's also true that the size of government expenditure has increased 40% during that same time period. I don't know about you, but I haven't seen any extra Wheaties on MY breakfast table. Where IS all the money going??? (I don't think it's the military. I heard just yesterday that the military, even with our current 'involvements', accounts for just 3% of GDP). I think the Medicare bump and the new prescription program are supposed to constitute the largests new 'entitlement program' in the history of the planet.

 

It is payback time. WTF we are going to have a tax rebate soon to help spur the economy along? That is great. Any economics student knows that tax rebates or cuts should come from a tax surplus.

 

'Rebates' are no solution. Taxes are ALWAYS a problem, but government spending is always the BIGGEST problem. Cutting taxes is a proven way to increase total revenues (I think that is a proven fact, going all the way back to JFK). I used to work in the marine industry (sailboats and power yachts). You can't find a more clear example of government destroying an entire industry with tax policy than the marine industry in the 1970's. When cap gains taxes were reduced, the industry reappeared, like magic.

 

Ours is coming from continuing to mortgage our future through the selling of Federal bonds to the world investors. Our kids and our grand kids are going to be paying for this over and over.

 

Very true. I think the problem is primarily government spending, though. Government spending is up, WAY up, and the American people can no longer bear the burden of all our government programs. We never seem to get back what we put in.

 

Borrow and spend is more than a mantra for the American consumer. It permeates government as well. This includes state governments. California went from a surplus to a 15 to 20 billion dollar deficit between August, 2007 and today!! Our roads are in worse condition than ever and our public schools are a disgrace.

 

The security of the US is at stake here. Can you imagine if some tinhorn dictator decides to threaten our ecomomic interests with some puny blockade. Before we could act militarily we will have to call Bear Stearns, The Bank of Japan or China because they hold the paper to our 25 billion dollar Naval battle group. We would ask these money manipulators can we use it in this crisis?

 

This is very true, but the Fed could simply print more money. They are already doing that anyway. B)

 

I think this is all part of 'globalization' or 'evening the playing field'. We should probably get used to it as I doubt it will change.

 

Best Regards

Very good points Mr. Mike. I do agree with one of President Regan's quotes. The most dangerous words in the world today are. " Hello I am here from the Government and we are here to help"

Or "Hello I am from the US government and we come here in peace". With the marines standing behind them.

[Guest Mike and Lily]

http://edition.cnn.com/video/#/video/world...ref=videosearch

 

Something else at work here. With inflation we should see property values soaring. They aren't. We should see the value of the RMB dropping in value compared to other currencies. It's not. What we are seeing is a rapid rise in consumer prices without seeing a commensurate increase in wages; once again, not pure inflation as wages are flat.

 

I've been reading that one of the factors in the increasing cost of food, the entire food chain, is the acreage dedicated to subsidized feed-corn being used for ethanol production. This is driving up the cost of feed corn for livestock and making it less economical to grow corn for human consumption. My wife was telling me a couple of weeks ago that corn has become outrageously expensive in Nanning. She loves it but won't buy it anymore, not until the price comes down. (As an aside, I don't imagine we'll ever see rice grown as feedstock for ethanol production!)

 

I took econ in school and I don't have a clue what is going on. I do know this... we should all be worried.

 

Mostly, it's the de-leveraging of the economy so far. All that easy money that was lent over the last several years is coming back to haunt us. Now the economy is beginning to contract in order to absorb that excess leverage. Inflation? yes, but not severe yet. If the fed takes too active a role in stimulating the economy without regard to inflation, then we've got a much bigger problem. It will be Jimmy Carter all over again, and we'll need interest rates like we had in the early 80's to cool it off.

[Guest Tony n Terrific]

Good points about the U.S., but I was specifically commenting on China. I don't understand the mechanism by which a strong currency is inflating. Maybe the RMB's tie to the dollar is part of the problem. I wasn't claiming the article is wrong and I certainly don't understand what is happening.

 

Mike salaries & wages in the US have basically been flat since 2000. Y2K did have an impact on Mom and Dad and bacon and eggs America. The cost of living has increased over 25% since then. Our economy did not feel this disparity because of Bushe's major tax cut and easy credit at low interest rates until now.

 

Tax cuts are, for all practical purposes, an increase in income. As for a 25% increase in cost of living, that is true. It's also true that the size of government expenditure has increased 40% during that same time period. I don't know about you, but I haven't seen any extra Wheaties on MY breakfast table. Where IS all the money going??? (I don't think it's the military. I heard just yesterday that the military, even with our current 'involvements', accounts for just 3% of GDP). I think the Medicare bump and the new prescription program are supposed to constitute the largests new 'entitlement program' in the history of the planet.

 

It is payback time. WTF we are going to have a tax rebate soon to help spur the economy along? That is great. Any economics student knows that tax rebates or cuts should come from a tax surplus.

 

'Rebates' are no solution. Taxes are ALWAYS a problem, but government spending is always the BIGGEST problem. Cutting taxes is a proven way to increase total revenues (I think that is a proven fact, going all the way back to JFK). I used to work in the marine industry (sailboats and power yachts). You can't find a more clear example of government destroying an entire industry with tax policy than the marine industry in the 1970's. When cap gains taxes were reduced, the industry reappeared, like magic.

 

Ours is coming from continuing to mortgage our future through the selling of Federal bonds to the world investors. Our kids and our grand kids are going to be paying for this over and over.

 

Very true. I think the problem is primarily government spending, though. Government spending is up, WAY up, and the American people can no longer bear the burden of all our government programs. We never seem to get back what we put in.

 

Borrow and spend is more than a mantra for the American consumer. It permeates government as well. This includes state governments. California went from a surplus to a 15 to 20 billion dollar deficit between August, 2007 and today!! Our roads are in worse condition than ever and our public schools are a disgrace.

 

The security of the US is at stake here. Can you imagine if some tinhorn dictator decides to threaten our ecomomic interests with some puny blockade. Before we could act militarily we will have to call Bear Stearns, The Bank of Japan or China because they hold the paper to our 25 billion dollar Naval battle group. We would ask these money manipulators can we use it in this crisis?

 

This is very true, but the Fed could simply print more money. They are already doing that anyway.

 

I think this is all part of 'globalization' or 'evening the playing field'. We should probably get used to it as I doubt it will change.

 

Best Regards

Very good points Mr. Mike. I do agree with one of President Regan's quotes. The most dangerous words in the world today are. " Hello I am here from the Government and we are here to help"

Or "Hello I am from the US government and we come here in peace". With the marines standing behind them.

Not too much has changed in American Foriegn Policy since President Teddy Roosevelt said it best.

 

"Speak softly and a carry a big stick" B)

[Finer in China]

I hear that train a'comin... it's not Thomas the Train or the Peace Train either... more like the Boxcar and Caboose for the good old USA but we won't go down without a fight. Neither will China but their fight won't be with us.

Edited February 24, 2008 by oscar (see edit history)

[Corbin]

I hear that train a'comin... it's not Thomas the Train or the Peace Train either... more like the Boxcar and Caboose for the good old USA but we won't go down without a fight. Neither will China but their fight won't be with us.

Oscar you are behind the times..........

 

the caboose is past, no more and all of that replace by the End of Train Device.