SubscribeChina Conspiracy Continues
August 15, 2007
Well, if you are still unconvinced about a convert and concerted effort by US manufacturers and/or our government against China, take a look at these few items that hit the news today..Do I sound paranoid?: (also see previous post on TDI)
COMMENT on this please on what you think….Look for Poll on this later
New York Times Slideshow of China Recalls
Meet Andrew
August 14, 2007
A new section has been added to the site. As the book launch is getting closer and closer, there will be opportunities to attend workshops and conferences that Andrew is attending.
We will add to the page as new events are confirmed. The first added is the WealthEXPO in New York this October.
The China Syndrome – Fact or Fiction?
August 14, 2007
The original movie, The China Syndrome, starring Jack Lemmon was a “fictional” story about one man’s mission to stop a nuclear catastrophe from occurring. The title refers to the taunt concept of an American nuclear plant meltdown that will dissolve everything in its path until it eventually reaches all the way to China.
One wonders if we are witnessing a political and financial firestorm that will help to create a modern-day economic China Syndrome. As manufacturers looked to save money, they found an amazing opportunity waiting in Asia and have now created an economic monster that may be looking to eat its creator.
“Dangerous products and demi-corruption, spreading eco-crisis…can China be fixed?”, are the opening comments from a recent Business Week “Cover Stories” Podcast. Tainted seafood, poison paint, fatal toys, crunchable cars, toxic toothpaste and even failing tires are the most recent headlines we are seeing in the news on a daily basis. Combine this with poor regulation and oversight within China due to political ladder-climbing which focuses on quantity over quality. There is also a high degree of nepotism at the local levels that has allowed for quality assurance to be a reduced priority.
The wealth that this has created by exporting and manufacturing to the consumer markets is amazing. These exports are largely the result of foreign investment by the world’s multinationals. Herein is the concern – will the companies which are providing the mechanism for growth by using cheap China labor and manufacturing look for other alternatives as they see growing fear over Chinese made products?
One wonders who is really at fault. Here is the question that needs to be answered: Is it the lack of a legitimate and honest regulatory environment within China or is it the push to reduce costs by the multinational companies that are pressing Chinese manufacturers and suppliers to cut corners in order to keep costs down. (and ultimately profits up)?
So, is an “economic” China Syndrome possible? As we see the continual headlines that are showing product deficiencies and even deadly ingredients, consumers will undoubtedly boycott anything that has Chinese labeling.
According to CIA World Factbook and the U.S. Census Bureau – Foreign Trade Statistics, the United States is the number one importer of Chinese goods. At the top of the list are computer accessories, household good and toys. The companies that produce and sell these products to US consumers will have to quickly reevaluate their desire to utilize Chinese components in the light of the recent discoveries. At this all important time of back-to-school and holiday shopping, there will surely be a major outcry and a knee-jerk reaction that creates a BUY-AMERICAN movement.
Now, far be it for us to look at any of this from a conspiracy angle. But for the fun of it, let’s speculate. Could this be a master-plan that utilizes a coordinated governmental attack on the Chinese manufacturers? The timing is curiously close to the heightened economic tensions between China and America. If this were the case, it would make sense that the reports of tainted products will reach a crescendo up until China caves in and agrees to Washington’s demands. Then, the reports will surely come out about the new and improved product oversight and the eventual sounding of the “all clear” signal.
Back in May, 2007, Chao Wang, an assistant government minister led a trade delegation to and discussed the trade imbalance issue with the USA. He said, “For the interest of both our countries, and the people, and for the benefit of every state in the U.S., cooperation must remain as the mainstream,” At that time, he also hinted that he was beginning to feel the effects of “trade protectionism.”
So, if there were dark forces at work, the argument for a covert operation to increase the worries of consumers who are continuing to ravenously purchasing goods manufactured in China would be a great idea. The effect could be easily regulated and timed to create an atmosphere ranging from concern to hysteria. The economic effect of this could cause a virtual shutdown of Chinese imports. This approach will not be viewed as a governmental move that begs for retaliation. Rather, it will be a slower process brought about by the consumer rotating away from Chinese products.
The end result would be a natural reduction of the trade deficit and the eventual need for the Chinese government to realize that they are not invulnerable. It will also require other companies to re-evaluate their decisions that allowed them to be exposed to risks associated with the lack of diversification. It also brings up another interesting point: who is the ultimate beneficiary?
If the trade deficit is reduced, does that mean that companies will look inward for domestic suppliers and manufacturers? Or, is it more probable that they will seek out other emerging countries that have the capability of providing inexpensive labor that will be more cooperative and attentive to US interests. (India, Mexico, Eastern European Block countries)
As conspiracies go, this one, if taken to the extreme would effectuate an economic China Syndrome. If we cause a meltdown of imports from China, they could see an economic disaster that would affect millions.
But, that is just a fictional account of the situation. Odd as it seems, I am sure there is a good explanation for the timing on all of the recent Chinese related recalls and warnings. It is probably the result of the fact that I am in the middle of reading, Confessions of an Economic Hitman….
TDI Podcast 22: Sinkhole Rescue and Portfolio First Aid
August 12, 2007
Sinkhole Rescue, Portfolio First Aid and Aaron Task of TheStreet.com interview. Important discussion about the markets and the short-sale uptick rule repeal.
We explore the potential for the next market surprise that will crush equities. Doom and gloom are setting in.
We start with a look back at how the specific recommendations of host Andrew Horowitz did throughout this market slide and provide SPECIFIC advice on how to manage the risk of the market. This is about the credit and financial markets, not the markets in general.
Markets are expelling a poison right now. We also question the idea of who is to be believed in the blog/newsworld and not to mention TV, radio and podcasts.
This episode is no-holds-barred/hold-on-tight venture into your money. We need to look ahead, not just back. No sitting on your hands anymore. This is the time to act and make some changes. Andrew rips the talking heads.
Listen for a breakdown of the top 14 issues facing the markets today. What to buy and what to sell. Disciplines of risk management are tested and necessarily, now more then ever. JAM PACKED with advice, help and even a slew of terms explained.
About Aaron Task - he has been at TheStreet since July 1998. Prior to TheStreet, he spent about 14 months as assistant markets editor of Microsoft Investor and markets reporter for MSNBC’s Internet site. Prior to that, he spent a year and a half as an on-air reporter for the Dow Jones Investor Network, covering a variety of industries, including semiconductors and energy.
Task also has worked as a reporter for The Bond Buyer and has done freelance work for the CyberTimes section of The New York Times’ Web site.
Task received a bachelor’s degree in journalism from Rutgers College.
Vote for Aaron Task’s Podcast, The Real Story at PodcastAwards (although voting may now be over)
Show Discussion Links:
Stocks and Other Securities Discussed: AAPL, CROX, NOK, ZUMZ, BSC, TOL, KBH, SCHW, LEH, AMTD, MER , SNDK, ZEUS, STLD, SFLY, ETF Listing
Naked Shorts – Darks Side of the Looking Glass Presentation
TDI Posts Mentioned: A Score of Reasons for Market Volatility, How to Survive the Market Sinkhole
Kindly subscribe and go to iTunes or your favorite podcast directory and post a review of the show - This is much appreciated!
Book PreOrders are being accepted - Click on BOOKSTORE…Coming to bookstores September 2007. All pre-orders will be signed by ME.
Podshow PDN {podshow-1f1cfe20d43eae567fa0d0b65faa2476}
A Score of Reasons for Continued Market Volatility
August 10, 2007
Friday’s Markets: “YEEESH! That was fun…”
In a nutshell, we are witnessing the corrective nature of the markets when it needs to expel a poison. Aggressive lending practices and a general disregard for risk has forced it to occur in a violent manner. It is a cleansing process that allows for the cream to rise and the crud to fall. More importantly though, it is a salient reminder to regularly look beyond what is happening today to what may happen in the future.
Here (in a somewhat prioritized order) are what seems to be the biggest issues facing the markets and why we should see continued volatility during the next several weeks:
- 1 ) Sub Prime Worries and illiquidity of the markets
2 ) Lack of significant advanced intervention by FED
3 ) Sloppy business practices by corporations looking to boost earnings at all cost
4 ) Record share Buyback programs artificially boosting earnings
5 ) Buy on the dip mentality – that kept pushing the markets regardless of poor fundamentals
6 ) Once again thinking that “this time it will be different”
7 ) Historically weak dollar that screams to increase, thereby forcing foreigners to cash out
8 ) Oil prices above $70 per barrel
9) Over-credited consumer with illiquidity due to irresponsibility
10 ) Allowing for 1929 to occur again -
a. 1929 – Lenders gave our money without regard to ability to pay as stock market would keep going up forever
b. 2007 – Lender save out money without regard to ability to repay as housing market would going up forever
c. BUT this time the stakes are much higher – More leverage in real $$$$
11) Hedge Funds which are highly leverage and therefore accentuate returns, forcing losses to multiply and intensifies selling pressure in down markets
12) Market Cheerleading and Badgering by Bloggers, Television and other writers
13) GREED AGAIN – What’s new?
14) Repeal of the short sell “uptick” rule (should this be #1?)
Reminder: Upcoming Podcast will discuss many of these issues with guest, Aaron Task Editor at Large of thestreet.com and host of the Podcast - The Real Story with Aaron Task
Links
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