Tuesday, June 28, 2005


World's biggest container ship built in South Korea and heading towards the USA.

As our native auto industry sinks in the ocean of oil woes, weighted down by high labor costs/poor gas mileage dinosaurs, just as I have predicted, China steps into the world auto market, delivering the final blow. The Japanese, despite their leader trying to poke China repeatedly in the eye, is heavily investing in automobile factories in China.

From the NYT:
A line of Chinese-made cars began rolling onto a ship here Friday, bound for Europe. The cars, made at a gleaming new Honda factory on the outskirts of this sprawling city near Hong Kong, signal the latest move by China to follow Japan and South Korea in building itself into a global competitor in one of the cornerstones of the industrial economy.

China's debut as an auto exporter, small as it may be for now, foretells a broader challenge to a half-century of American economic and political ascendance. The nation's manufacturing companies are building wealth at a remarkable rate, using some of that money to buy assets abroad. And China has been scouring the world to acquire energy resources, with the bid to buy an American oil company only the latest overture.

From the NYT article, note the white gloves the worker is wearing, and the impeccable factory floor.

Notice how, not only are the Japanese auto makers making cars in China, they are already shipping them out...to the USA. And the sticker price will be the exact same as the ones assembled here in America by nonunion, cheaper labor in the south, content with being underlings to Japanese businesses. This represents pure profit for the Japanese. They will probably even take a hit, financially, on their American factories which are pure sop thrown to us to keep us quiescent. Gradually, over time, more and more cars made in China will come here in pursuit of profits. They have to do this. The Americans won't object or the Japanese with threaten us, quietly, behind the scenes, with closing the factories built in GOP strongholds.

This is one boat our politicians won't rock.
The resulting bilateral corporate tango - in contrast to the confrontations reminiscent of the 1980's and early 1990's when Japanese capital poured into the United States - means that China has many American corporate comrades, who have a stake in helping generate its growth.

China, economists and Asia experts say, does not face some of the inherent limitations that ultimately stymied Japan and led to economic stagnation there over the last 14 years. With its giant population, China is developing a large and diverse economy, creating an almost Darwinian competition for a domestic market that has extremely low-cost companies ready to export inexpensive goods around the globe.
The Chinese found a way around the Japanese problem: provincialism. The Japanese consider themselves one big family which is why they don't allow much immigration or intermarriages. They used to protect each other which meant keeping all the jobs at home as much as possible while exporting like crazy.

Now they are letting go of this policy and the Japanese workers are in such deep despair, the suicide rate is skyrocketting and a deep depression has settled upon their land yet they run huge trade deficits with everyone...except China.

Caught in their own trap! They need the cheap Chinese labor which is much smarter and much cheaper than robots.
To be sure, China is still at an earlier stage of development than was Japan when its economic rise became a national obsession in the United States. In the 1980's and early 1990's, Japanese companies claimed a sizable chunk of the American car market and purchased Rockefeller Center and the Pebble Beach golf course.

The bid by the China National Offshore Oil Corporation for Unocal has raised worries among some politicians in Washington. That $18.5 billion bid comes as America's trade deficit with China is ratcheting ever higher and the dollar is getting support from rising inflows of Chinese capital, which also helps support low interest rates.
The Japanese went on a foolish tourist's buying binge because they found nothing to invest in when they wanted to buy American so they bought junk. Which depreciated badly.

The labor costs of Japan were way too high for them to exploit our dying factories by dismantling them and shipping them off. The Chinese concentrate on this because it pays off for them, labor is ridiculously cheap in China. Worse, the Japanese government assumes the Americans will be their mercenary soldiers doing their bidding in Asia forever whereas the Chinese oppose us on nearly every political front so they have no incentive to strengthen the American/military/industrial complex. They intend to destroy it.
More disconcerting to others in Washington is China's growing ability to finance any political and military ambitions. China has missiles with nuclear weapons that intelligence experts describe as already able to hit not just Hawaii but probably California. Beijing also remains chilly toward American entreaties to put more pressure on North Korea to abandon its nuclear weapons program.

In contrast, Japan's military dependence on the United States made it more willing to accept a steep appreciation in the yen in 1985 that hobbled Japanese exporters. So far, China has put off Bush administration demands to let its yuan appreciate.
This is so funny, actually. Japan is a province we occupy. They, in turn, control us in a million ways. They suck us dry even as we bully boy around Asia. When Bretton Woods II happened, the deal was, the Japanese would let their currency float and in return, they would get really rich, quick, off of cheap American dollars.

So they went shopping here! Buying our realestate was a cinch! This graph shows clearly how the Japanese exploited Bretton Woods II...only, having no plans, they bought very stupidly indeed.

Note how the spending shot up for three years after Bretton Woods II until the money was all used up from that windfall. Note also, the Japanese then started to buy American bonds to keep our deficits afloat, foreign purchases of our gov. bonds shot up from 1986 to today whereby foreign governments buy over 85% of these bonds!

The yen no longer floats against the dollar. When we were heroically trying to depress the dollar, the euro shot up but the yen stayed exactly pegged at the 105-110 range it has sat at for the last 15 years despite everything. We have now given up on trying to ditch the Chinese via depressing the dollar and are back at threatening them. Yet are silent about the Japanese.

Both Koizumi and Bush will try to whip up anti Chinese fervor when the cars for Japanese companies built in China flood into America. Another thing to note in this graph is what China is buying: companies that matter, cutting edge ones in energy and computers. Not impressionistic paintings.

Workers in white uniforms and gray caps complete the rest of the welds, working as quickly as workers in American factories - but earning roughly $1.50 an hour in wages and benefits, compared with $55 an hour for General Motors and Ford factories in the United States.
In the end, the Japanese find it much easier dealing with fellow Asians than with Americans. Pictures of Japanese factories in America shows workers dressed in whatever, no white gloves, most of the workers on the obese side of the scale. Even though the article in the NYT tries to flatter us, saying we are the same, we are not.

Slower moving due to greater fat levels and easily overheated thanks to the same, older and often in poorer health for many reasons especially dietary, the American worker is not seen as some great prize to win in Asia. This is why every American should understand, the automobile factories in America are charity! not due to us being a fabulous work force. The Japanese grit their teeth as they deal with us, gingerly. They won't say in our faces what they feel but if you watch Japanese TV like I do, trust me.

We are a joke to them.
"Our export activities are based on the synergy of China's competitive advantage and Honda's global network," said Atsuyoshi Hyogo, the chairman of the Honda subsidiary here.

As G.M. and Ford struggle with high health care costs for unionized work forces with an average age of nearly 50 in the United States, most of the Honda workers here appear to be in their 20's. They are unlikely to go to the doctor very often and when they do, doctors here charge less than $5 for an office visit and administering a few stitches.
Why doesn't our industrial owners, our rulers, want public health care? Not to mention, healthy food? Why? Industrial America has perfected some of the worst possible foods to eat and this is destroying the work force and they persist and even increase this destructive force. Why?

I, personally, view them as traitors. They want to destroy us because they want our country emptied out so it can be a theme park for them and their very spoiled youth. Otherwise, it is just sheer insanity.

The Japanese and Chinese know from experience that all the politicians and rich guys in America will outbid each other in a race to sell us all away to the highest bidder. But what we have to sell is less and less each year. Once all our cars are made in China, what will we do?

Even keeping those few Potemkin factories running in Trent Lott's state won't help anymore.

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