Just say ‘no’ to Chinese investment.
That’s what Dr Philippa Malmgren a previous economic advisor to George W Bush has suggested that Australians do.
In fact, she believes that Australia could lose its ‘economic bargaining power’ should we allow China to become a direct investor in our resources.
She also went on to say that China is gobbling up all these resources via investments and this could eventually enable them to control the global supply chain.
Er, this is probably exactly what China wants to do.
But let’s be honest, you can’t expect that China was investing in Australia purely for our interests? I mean can you imagine Chinese government officials sitting around saying ‘I know, let’s go give money to the Aussie’s. I’m sure they could do with some help during the GFC’.
No. Any investment into Australian mining has been a very strategic move from China, and it’s all been about the end gain for their country. Any money flowing into Australia has been about resources can they secure, rather than them just liking the weather.
You can’t say that we have gotten the raw end of the deal. Because of this investment, we have a booming mining industry and smaller mining companies that have been given access to capital that our own banks would have denied them.
The trade off? China owns a few of our rocks…
Was the money coming from anywhere else? China had the money – freshly printed I’m sure – to invest somewhere and for a few years, we were the happy recipients.
However we aren’t the only ones with the commodities China needs. According to Malmgren, China has recently made deals with Greece and Spain, which is all about securing a ‘foothold across Europe’.
Of course, all this ‘foreign investment’ from China would’ve made the credit raters over at Moody’s and Standard & Poor’s secretly jump for joy. And the International Monetary Fund (IMF) might even expect the loans to be paid back.
Don’t forget about the past investments China has made into Russian gas fields and Brazilian oil rigs.
As I said earlier, Malmgren has warned that China is acquiring all these resources as a way of controlling the global supply chain.
Or is it simply less sinister, and just a case of China knows exactly what its own country needs for survival?
It’s the economy stupid
President Obama is planning a ‘full-scale attack’ to strengthen the US economy. And in a speech full of impact one liners, he’s assured the American people that there’s ‘…no silver bullet to fix the economy’.
Whew, I can stop looking.
But, this is an election year for the US, and of course he has a solution. The US Senate is currently on a break, but Obama believes that the secret to fixing the economy lies in one of the bills yet to be approved.
The proposed legislation would see tax cuts and boost lending to small businesses. Yep, this bill would see a USD$30 billion government fund be given to small community based banks that would – or might – lend it to small businesses.
Supposedly this would then enable business to leverage themselves up to USD$300 billion in loans.
More leverage. That is just what a financially crippled nation needs.
Oh, and there’s about USD$12 billion worth of tax cuts in there for small business as well.
The bill is yet to be approved, and the Republicans don’t want to pass it. This led Obama to say ‘Holding this bill hostage is directly detrimental to our economic growth.’
The President has tried to assure the other political parties that the passing of this bill won’t add to the ballooning deficit, as it will be offset by other measures.
And finally, just ’cause it’s Friday, here’s a video for when things quite down in the office.
Peter Schiff a financial market commentator, who is often used in TV interviews as the economy ‘naysayer’, while all the ‘other’ economists sit around and love at his ‘silly’ and ‘out of touch’ predictions.
The video takes a quick look back at the ‘out of touch’ predictions he made back in 2006 and 2007.
Who looks silly now?
Now let’s have a look what happened on the market’s yesterday…
The S&P/ASX 200 was up 37 points to 4,532.70. After two days of gains trading on the Aussie market is expected to be a little more subdued ahead of the jobs data and the long weekend coming for the US.
The Dow Jones Industrial Average climbed 50 points, ending at 10,320.10. The non-farm payroll data is already expected to disappoint the market tonight when it’s released. Economists are expecting a net gain over 30,000 private sector jobs and but loss of 105,000 as the last of the census employees no longer have work.
Overnight, the FTSE was only 4 points higher, to 5,371.04. The UK market was slightly nervous ahead of the non-farm payroll data coming out tonight our time.
The Nikkei closed at 9,062.84, higher by 135 points.
The price of spot gold in Australian dollars is trading at $1,374.19 while in US Dollars it is trading 1,250.29. The price of silver in Aussie dollars is $21.53 and in US Dollars it is $19.59.
The Aussie dollar versus the US dollar was USD$0.9099, and against the Japanese Yen JPY76.69.
Oil was up last night as Hurricane Earl threatens the American east coast refineries. Crude Oil closed at USD$74.92.
For the biggest movers on the market yesterday click here…
That’s all I have you this Friday, have a great weekend.
Shae.
