Thread: The strongest economy in the world

Chinese agency Dagong cuts U.S. sovereign ratings to BBB+ from A-
JANUARY 16, 2018

BEIJING (Reuters) - China’s Dagong Global Credit Rating Co, one of the country’s most prominent ratings firms, on Tuesday cut the local and foreign currency sovereign ratings of the United States, citing an increasing reliance on debt in the world’s largest economy.

Dagong said in a statement that it cut the sovereign ratings to BBB+ from A- and also placed them on a negative outlook.

The growing reliance on the debt-driven mode of economic development will continue to erode the solvency of the U.S. federal government, the Beijing-based ratings agency said.

In December, U.S. President Donald Trump signed into law a package of tax cuts that will add $1.4 trillion over a decade to the $20 trillion national debt.

“Deficiencies in the current U.S. political ecology make it difficult for the efficient administration of the federal government, so the national economic development derails from the right track,” Dagong said.

“Massive tax cuts directly reduce the federal government’s sources of debt repayment, therefore further weakens the base of government’s debt repayment.”

The U.S. embassy in Beijing could not immediately comment.

International ratings agencies Fitch and Moody’s Investors Service both give the United States their top AAA ratings. S&P Global has put the U.S. on a slightly lower grade of AA+ since 2011.

In December, the U.S. government reported a $23 billion deficit, compared with a gap of $27 billion from the year-earlier month. That took the deficit for the fiscal year to date to $225 billion, versus a gap of $210 billion a year earlier.

https://www.reuters.com/article/us-u...KBN1F50OU?il=0

Originally Posted by OhOh

Trump Calls the United States a ‘Developing Nation’ at North Dakota Rally

Something folks in North Dakota can relate to.

^^ That was from when Storekeeper was still a Dubya Bush loving Republican.

Is this why ameristan stock indexes are at all time highs?

For The First Time In 10 Years, Companies Have Spent More On Buybacks Than CapEx


"One month ago, Goldman provoked gasps from Wall Street when its buyback desk increased its estimate of 2018 stock buyback authorizations to a record $1.0 trillion, a 46% rise from last year.

There are two reasons for this surge: the first is tax reform which allowed companies to repatriate offshore cash at staggering amounts, which was then used to repurchase corporate stock. Additionally, surging corporate profitability has also led been a key driver behind the jump in share repurchases. According to Goldman, S&P 500 revenues rose by 11% during 1H Y/Y. At the same time, EPS climbed by 25% during the first half as firms benefited from lower corporate tax rates. As a result, S&P 500 cash flow from operations (CFO) surged by 35% to $917 billion in 1H 2018.
And according to the latest Weekly Kickstart from Goldman's chief equity strategist, David Kostin, "this rise in CFO created a high-quality problem for managements: How should they spend all the cash?"

The answer Donald Trump (and Gary Cohn during his brief tenure in the White House) was hoping for, obviously, was spending on growth and CapEx, which would result in more hiring and generally even higher GDP growth. However, something else happened: according to Goldman, for the first time in 10 years, buybacks will be the biggest use of cash by S&P 500 firms.

This is notable because spending on CapEx has typically represented the largest single use of cash by corporations, "a position it has held for 19 of the past 20 years." But not in 2018, in which buybacks have increased by 48% to $384 billion during 1H 2018 vs. $259 billion in 1H 2017. Furthermore, 2018 share repurchase authorizations for all US companies have totaled $762 billion through mid-September, and is the reason why when annualizing the number, Goldman now comes up with over $1 trillion in total buybacks for the entire year."


More at:

https://www.zerohedge.com/news/2018-...buybacks-capex

Originally Posted by OhOh

However, something else happened

www.youtube.com/watch?v=k5VZjT0JE70

Originally Posted by OhOh

Is this why ameristan stock indexes are at all time highs?

Which one would imagine will be matched by Executive rewards.

Originally Posted by harrybarracuda

will be matched by Executive rewards.

Along with shareholders gains and dividends in green paper.

However Chinas internal consumption reaches 80% of it's GDP growth:

Consumption contributes to nearly 80% of China’s GDP growth



"Consumption has grown into China’s largest power for growth, making up nearly 80 percent of the country’s GDP growth, according to a special session of the 2018 China Development Forum held this Monday. China’s economy is now less dependent on capital input and foreign trade, the session said, predicting that the consumption market will further boost the country’s economic growth.

The role of consumption in China’s GDP growth has changed dramatically over the past seven to eight years, previously contributing less than 50 percent of China’s economic growth.

Mao Shengyong, spokesperson of China’s National Bureau of Statistics, once disclosed that internal demand was a decisive factor for China’s economic growth, and consumption played a major role in China’s internal demand.

In addition, the upgrading of China’s consumption market is also driving the country’s economic development.

Zong Qinghou, Chairman and CEO of the Hangzhou Wahaha Group, the leading beverage company in China, noted that between 300 to 400 million Chinese people are middle-class income earners who are relatively well-off. As such, this group are developing toward higher-level consumption, and in turn China’s consumption market has growing potential, Zong added."

Consumption contributes to nearly 80% of China?s GDP growth - People's Daily Online

Well there's a bubble waiting to burst.

Originally Posted by harrybarracuda

Well there's a bubble waiting to burst.

Oh I suspect the communist country will manage better than the "free world", when it comes to managing a "momentary" bubble.

The "free world" takes into account the "human rights" of it's citizens, don't forget.

Originally Posted by OhOh

Oh I suspect the communist country will manage better than the "free world", when it comes to managing a "momentary" bubble.

The "free world" takes into account the "human rights" of it's citizens, don't forget.

Trade War III

"

The trade war will not result in bringing more business back to American soil: Just 6% of our member companies say this current US-China trade dispute would make them consider relocating operations back home.

William Zarit, Chairman of The American Chamber of Commerce in China.

This is America’s third trade war on China: we held its head under water from 1949-1971 and from 1989-92. Inter alia, the US, the EU and the USSR embargoed all weapons technology to prevent China from independently developing the H-Bomb or launching satellites. She did both and kept her economy growing debt-free, twice as fast as ours. This time, embargoes will have even less effect, for several reasons:


I. LABOR


President Trump observed, “China’s leaders are much smarter than our leaders and we can’t sustain ourselves like that. It’s like, taking the New England Patriots and Tom Brady and having them play your high school football team”. Even Henry Kissinger agreed, “The Chinese are smarter than us so my approach was to tell the truth upfront because they’d figure it out anyway”. Trouble is, they’re smarter all the way down.



PISA tests show their high schoolers graduating three years ahead of ours in STEM subjects and add to that their five point IQ advantage and you get a labor force comfortable in the 21st century. A friend, a director-level employee with an engineering background who has worked with multiple multinational companies in various capacities, but has been primarily based in the US sees it this way (his emphasis):

Most people don’t realize that the Toyota factory churning out cars has only half of its staff on the manufacturing floor. The other half is engineers and supply chain guys, supervisors etc…. the engineers at these facilities are responsible for fixing daily technical issues and working with R & D. The vast majority of modern manufacturing is done by machines.


American manufacturing moved to China not because of dumb labor, but because you could hire high IQ people for dirt cheap. If your machine broke down, no problem; some Chinese guy (with basically a masters in EE) would pull out the circuit boards and using probes and other instrumentation determine what board needed replacing and he would work annually for a fraction of the salary of his equivalent in the US.


Manufacturing in the US is a nightmare: at our facility our only requirement for a assembler was a high school degree, US citizenship, passing a drug and criminal background check and then passing a simple assembly test: looking at an assembly engineering drawing and then putting the components together.


The vast majority of Americans were unable to complete the assembly test, while for our facility in China they completed it in half the time and 100% of the applicants passed. An assembler position in the US would average maybe 30 interviews a day and get 29 rejections, not to mention all the HR hassles of assemblers walking off shift, excessive lateness, stealing from work, slow work speed and poor attitudes.


The product line is highly specialized equipment, so it makes no sense to fully automate it, most of the components are assembled by hand and for certain steps we use custom engineered jigs. And for those saying that the position wasn’t paying enough, it paid $12 an hour starting in an area with an extremely low cost of living where property taxes for a 2000 square foot house would be $800-$1000 a year. Assemblers don’t make $150K. An assembler takes parts and puts them together. The position starts at $12 an hour in flyover country which is pretty reasonable compared to other jobs that only require a GED and no prior work experience. Offers medical, dental and annual raises with plenty of opportunity to move up in the company. The national average salary for a Production Assembler is $33,029 in United States, which is what you would be making if you stayed for 5+ years.


Finding a black or Hispanic capable of passing these simple requirements and passing the assembly test is merely impossible nevermind being competent, punctual and of good moral character (not stealing from company or starting conflicts with coworkers). And these are the main groups that apply for this position. The same exact product line has the same facility in China, and the same positions in China pays the same wages as other positions there with only a high school degree and no work experience. Yet the applicant quality is much higher, and this applies as well to the white collar professions that support the manufacturing: schedulers, quality inspectors, equipment testers and calibrators, engineers, supply chain managers, account managers, sales etc….their labor quality is simply higher. I suspect the blacks and Hispanics are probably too dumb to get affirmative action too dumb to go to college, so they probably average 75 IQ and their Chinese equivalents are probably 95 but the performance gap is massive.


The equivalent position, with the same requirements is present in all countries, with corresponding wages. There is no shortage of applicants in most countries, but in the US the younger candidates routinely fail the exam while in China they routinely pass. The US has a higher proportion of unfit workers than China. Statistically, people that don’t have college degrees apply to this job (and statistically blacks and Hispanics are less likely to have college degrees so the bulk of applicants are black and Hispanic). Likewise in China, the people who typically apply for these positions are high school grads who failed to score enough on the Gao Kao (China’s version of the SAT) and thus unable to gain acceptance into a university.


There’s a reason why all the tech CEO’s and high level management employees are convinced they can’t replace China and its not because they want to make more profits. At the end of the day, high-end and middling manufacturing is not moving to either the US or Mexico because the average person in flyover country and Mexico are dumb as rocks. And anyone praising Mexico is not upper management and there is a very good reason why Mexico’s economy stagnated until NAFTA which basically was nothing more than a scam to rebrand things manufactured in other countries ‘Made in Mexico’ and export them to the US to avoid tariffs. If Mexico was a competent country with quality workers the laws of economics would magically reroute supply chains without trade wars, tariffs or free trade agreements and likewise the same applies for every 3rd world sh1thole like India or Somalia.


Companies choose eastern Europe and China for high IQ, work ethic, competence combined with lower wages.

2. DEBT

........

3. CURRENT ACCOUNT SURPLUS

........
3. CURRENT ACCOUNT SURPLUS

........

4. TRADE DEPENDENCY

........

5. OPERATING ASSUMPTIONS


When we we deputized the Chinese to do our dirty manufacturing and recycle our trash decades ago our media hailed the move as inspired and, for a while, we felt like winners. Now that era is ending, we’re in denial and President Trump’s China man, Peter Navarro, reflects our media’s unwillingness to confront reality in his academic paper, The Economics of the ‘China Price’. He asks, “How has China been able to emerge as the world’s factory floor?” and answers, “ The answer lies in the eight major ‘economic drivers’ of the China price:

1. Low wages,
   
2. Counterfeiting and piracy,
   
3. Minimal worker health and safety regulations,
   
4. Lax environmental regulations and enforcement,
5. Export industry subsidies,
6. A highly efficient “industrial network clustering”,
7. The catalytic role of foreign direct investment (FDI),
8. An undervalued currency”.

Since his analysis informs the President’s policy, let’s look a little closer:

.........

More fully explored and validated reasoning here:

Trade War III, by Godfree Roberts - The Unz Review

Originally Posted by OhOh

passing a drug and criminal background check

I'd guess that's what does the majority of US applicants in...before they even get to the assembly test. As for maintaining a functioning society into the future, we are fucked.

So HoHo has found another whackjob website.

This time it's from a bloke who really hates the Joos.

Who'd a thunk it?

Originally Posted by harrybarracuda

This time it's from a bloke who really hates the Joos.

If you mean Unz, I guess he's a self-hater then...

^The article goes somewhat deeper than somebody's momentary faith in an idol. But as he doesn't read it he will never know.

Originally Posted by harrybarracuda

So HoHo has found another whackjob website.

Jeezus...



https://mediabiasfactcheck.com/the-unz-report/

Originally Posted by SKkin

If you mean Unz, I guess he's a self-hater then...

You still claim to be bipartisan? Once again you validate more extreme right wing views. You are siding with OhDuh a batshit crazy Putin worshiper. Do you not see the correlation between the ideology that enslaves you? You are being played as a useful idiot.

Originally Posted by SKkin

If you mean Unz, I guess he's a self-hater then...

So he's not allowed to hate Joos in your book then.

Originally Posted by bsnub

You still claim to be bipartisan?

No, I claim nonpartisan.

So where would you rate this article from Unz.com?

Trump's Tax Plan Helps Wall Street, Not Main Street

It should be called the Leona Helmsley tax plan, only the little people will pay taxes

Trump's Tax Plan Helps Wall Street, Not Main Street, by Michael Hudson - The Unz Review

Originally Posted by SKkin

No, I claim nonpartisan.

So where would you rate this article from Unz.com?

Trump's Tax Plan Helps Wall Street, Not Main Street


Trump's Tax Plan Helps Wall Street, Not Main Street, by Michael Hudson - The Unz Review

On a scale of stating the fucking obvious?

Originally Posted by bsnub

Jeezus...



https://mediabiasfactcheck.com/the-unz-report/

Originally Posted by SKkin

Good work there.

74% of people think it's fucking shite.

Again from last year...

Trumponomics and the Stock Market, by Michael Hudson - The Unz Review

Trump is Turning Against the White Working Class that Elected Him