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Race to buy expensive oil, why America will lose.

Discussions about the economic and financial ramifications of PEAK OIL
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Unread postby MagnoliaFan » Fri 05 Aug 2005, 15:12:49

$this->bbcode_second_pass_quote('DantesPeak', 'A')s long as all those new dollars are accepted, and old dollars held, the the US can outbid the rest of the world for energy.


Great quote, it explains in an almost-perfect way the current economic situation of the US.

If the US tries to devalue its dollar, it will also reduce it's ability to buy oil on the world market.
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Unread postby MrBean » Fri 05 Aug 2005, 17:51:11

$this->bbcode_second_pass_quote('MagnoliaFan', '
')Don't underestimate the Europeans--especially the French when it comes to throwing a monkey wrench into the NWO/globalist agenda from time to time (witness the French "no" victory on the EU constitution)

[/quote]

I don't underestimate Europeans, I'm Euro myself. I just despise social democratic parties, finding myself among the revolutionary left nowadays (not least because of PO btw). In France it was revolutionary left's united opposition together with majority of social democratic voters (against their party leadership) against the neoliberal agenda of the Constitutional Treaty that was decisive. This is what I mean by suicide of social democratic parties, after joining the neoliberal camp they have lost their purpose of existance, exept trying to keep population pacified.

If in France the left can stay united (big if, granted), it is possible that they can beat right wing, including social democrats, in the Presidential elections. Socialist states of Europe, howsabout that!? ;)


$this->bbcode_second_pass_quote('', '
')If China were to lose their trade deficit with the US--Europe would have to agree to lower its import quotas significantly to make up the difference, and THAT would be political suicide.


Sorry, I can't make any sense of that. Care to try again?

$this->bbcode_second_pass_quote('', '
')We're told that the EU has a greater GDP than the US over and over again, then why isn't their trade deficit as great as the US?


Why, because (unlike US) EU has competitive export industry and exports much more to China than US.

$this->bbcode_second_pass_quote('', 'T')he $100 million deficit that EU has with China is probably the maximum that the Europeans will tolerate politically.


I don't see any grounds for that assesment. Currently there are no political forces in Europe strong and resolute enough to not to tolerate. And what matters in this context is overall trade balance, which for EU is AFAIK still more positive than for China (not to mention US).
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Unread postby smiley » Fri 05 Aug 2005, 19:31:18

$this->bbcode_second_pass_quote('mrbean', 'I')n 2004 China's trade surplus with EU was about € 80 billion (from €175 billion trade), and is rapidly widening (2000: -48.610; 2001: -51.065; 2002: -54.737; 2003: -64.228; 2004 -78.698) .


MRBean. I agree with most of what you're saying. But to say that the EU's trade deficit is 'ballooning', goes a bit to far.

I've recalculated your numbers to Euro's and it looks to me like the deficit is well under control. It is the declining dollar which makes the trade deficit look bigger.

Trade deficit with China in Euro's
2000 54.110
2001 56.784
2002 53.603
2003 52.330
2004 58.630
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Unread postby MrBean » Fri 05 Aug 2005, 20:27:07

$this->bbcode_second_pass_quote('smiley', '')$this->bbcode_second_pass_quote('mrbean', 'I')n 2004 China's trade surplus with EU was about € 80 billion (from €175 billion trade), and is rapidly widening (2000: -48.610; 2001: -51.065; 2002: -54.737; 2003: -64.228; 2004 -78.698) .


MRBean. I agree with most of what you're saying. But to say that the EU's trade deficit is 'ballooning', goes a bit to far.

I've recalculated your numbers to Euro's and it looks to me like the deficit is well under control. It is the declining dollar which makes the trade deficit look bigger.

Trade deficit with China in Euro's
2000 54.110
2001 56.784
2002 53.603
2003 52.330
2004 58.630


Those numbers were already in euros (€). If you want to recalculate, do it into dollars (as I did above "recalculating" very generally 2004 c. 80 bln euros -> c. 100 bln dollars)
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Unread postby smiley » Fri 05 Aug 2005, 21:11:05

$this->bbcode_second_pass_quote('', 'T')hose numbers were already in euros (€). If you want to recalculate, do it into dollars (as I did above "recalculating" very generally 2004 c. 80 bln euros -> c. 100 bln dollars)


My mistake I thought the numbers were to big and assumed they were in dollars. When I looked through historical files the numbers also seemed a lot smaller.

But I forgot that 10 new member states entered which apparently have a sizeable and growing deficit with China.
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Unread postby MagnoliaFan » Sat 06 Aug 2005, 19:13:47

$this->bbcode_second_pass_quote('MrBean', '
')I don't underestimate Europeans, I'm Euro myself. I just despise social democratic parties, finding myself among the revolutionary left nowadays (not least because of PO btw). In France it was revolutionary left's united opposition together with majority of social democratic voters (against their party leadership) against the neoliberal agenda of the Constitutional Treaty that was decisive. This is what I mean by suicide of social democratic parties, after joining the neoliberal camp they have lost their purpose of existance, exept trying to keep population pacified.


Didn't Le Pen also support the "no" side as well? It was not only a simple Left vs Right issue.

$this->bbcode_second_pass_quote('', '')$this->bbcode_second_pass_quote('', '
')If China were to lose their trade deficit with the US--Europe would have to agree to lower its import quotas significantly to make up the difference, and THAT would be political suicide.


Sorry, I can't make any sense of that. Care to try again?


The US trade deficit with China is 160 billion -- EU's is 100 billion. Let's assume that for whatever reasons--economic (depression) or political (right-wing nationalist gets elected President of the US) that the US decides to impose strict quotas on Chinese imports. Where will China make up for the loss of $160 billion flowing in? Will Europe simply allow more Chinese imports and increase it's trade deficit from $100 billion to $260 billion?

My knowledge of EU politics is not as good as yours, but I have a few friends from France who have told me that France has very strict import quotas. Wal-Mart could open stores in France--provided that a certain percentage of the products sold at these stores are French-made. Therefore, Wal-Mart refuses to open any stores in France.

$this->bbcode_second_pass_quote('', '')$this->bbcode_second_pass_quote('', '
')We're told that the EU has a greater GDP than the US over and over again, then why isn't their trade deficit as great as the US?


Why, because (unlike US) EU has competitive export industry and exports much more to China than US.

The EU is far more protectionist than the US, this is a fact that cannot be disputed. If the US were to suddenly impose stricter import quotas, the Chinese would be the first ones to bitch, because the gravy train of the US market would be suddenly cut off.
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Unread postby DantesPeak » Sat 06 Aug 2005, 19:29:40

In case this was not clear from my earlier post, the US economy is finished without the support of China. Any attempt by the US to cut off Chinese imports would be economic suicide. The Chinese would not only then stop buying $150 to $300 billion US per year (to offset the trade imbalance and peg the yuan), but could also dump $500 billion it already has onto the financial markets.

While China would lose 25% of its exports, the US would no longer have access to some goods and higher prices on the rest. Plus the hosuing bubble would end overnight, as interest rates would rise 1 to 3 % in a day to any sudden end to China's support of the US dollar.
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Unread postby MrBean » Sun 07 Aug 2005, 01:11:15

$this->bbcode_second_pass_quote('MagnoliaFan', '
')Didn't Le Pen also support the "no" side as well? It was not only a simple Left vs Right issue.


Yes, I said decisive, it was Left that actually started discussing the actual contents of the sorry CT.

$this->bbcode_second_pass_quote('', '
')The US trade deficit with China is 160 billion -- EU's is 100 billion. Let's assume that for whatever reasons--economic (depression) or political (right-wing nationalist gets elected President of the US) that the US decides to impose strict quotas on Chinese imports. Where will China make up for the loss of $160 billion flowing in? Will Europe simply allow more Chinese imports and increase it's trade deficit from $100 billion to $260 billion?


I don't understand this talk about quotas. We're all members of WTO, and to my understanding under WTO-rules quotas can be negotiated only as temporary protective measure, like now in textiles.

[/quote]
My knowledge of EU politics is not as good as yours, but I have a few friends from France who have told me that France has very strict import quotas. Wal-Mart could open stores in France--provided that a certain percentage of the products sold at these stores are French-made. Therefore, Wal-Mart refuses to open any stores in France.
[/quote]

There's no Wal-Mart in EU (to my knowledge) because retail is allready heavily competed and Wal-Mart don't have the know-how and/or interest to compete in the European retail market. What your friends say about France sounds baloney, EU's (=single market) trade policies and rules are decided in Brussels, not in Paris.

$this->bbcode_second_pass_quote('', '
')The EU is far more protectionist than the US, this is a fact that cannot be disputed. If the US were to suddenly impose stricter import quotas, the Chinese would be the first ones to bitch, because the gravy train of the US market would be suddenly cut off.


Oh but I do dispute that "fact", which you don't even try to prove. EU's trade volumes with rest of the world are larger than NAFTA's, which should tell us something. And again, both are members in the bloody WTO, and any attempts to unilaterally impose quotas will get your ass sued in WTO.
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Unread postby MagnoliaFan » Mon 08 Aug 2005, 03:35:03

$this->bbcode_second_pass_quote('MrBean', 'O')h but I do dispute that "fact", which you don't even try to prove. EU's trade volumes with rest of the world are larger than NAFTA's, which should tell us something.


You talk about facts I don't try to prove, yet you just made a claim which I can easily refute:

USA - exports $795 billion, imports $1476 billion, GDP $11.75 trillion

European Union - exports $1109 billion imports $1124 billion, GDP $12.5 trillion

Source: CIA factbook (2004)

USA trade deficit = $681 billion
EU trade deficit = $115 billion

But if you add both exports and imports together, the US generates more trade than all of EU combined by $38 billion. So your claim that EU generates more trade than the US is not factual.

$this->bbcode_second_pass_quote('', 'I') don't understand this talk about quotas. We're all members of WTO, and to my understanding under WTO-rules quotas can be negotiated only as temporary protective measure, like now in textiles.


That's precisely my point. Why are temporary protective measures necessary? Why are they implemented in the EU but not the USA?

http://www.eubusiness.com/Trade/050611072138.nl326jf4

China said Saturday it will limit growth in exports of 10 textile and clothing products to the European Union to eight-12.5 per cent a year in a bid to defuse a trade row straining ties between them.

Why is the EU demanding that China limit its textile exports?

The reason is politics.

You never hear of these "temporary protective measures" ever implemented in the US, it only goes as far as a few politicians providing token opposition to unfettered free trade. That's why the EU is more protectionist than the US.
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Unread postby MrBean » Mon 08 Aug 2005, 08:30:39

$this->bbcode_second_pass_quote('MagnoliaFan', '')$this->bbcode_second_pass_quote('MrBean', 'O')h but I do dispute that "fact", which you don't even try to prove. EU's trade volumes with rest of the world are larger than NAFTA's, which should tell us something.


You talk about facts I don't try to prove, yet you just made a claim which I can easily refute:

USA - exports $795 billion, imports $1476 billion, GDP $11.75 trillion

European Union - exports $1109 billion imports $1124 billion, GDP $12.5 trillion

Source: CIA factbook (2004)

USA trade deficit = $681 billion
EU trade deficit = $115 billion

But if you add both exports and imports together, the US generates more trade than all of EU combined by $38 billion. So your claim that EU generates more trade than the US is not factual.


Pay attention, I said NAFTA, not US (large part of US foreign trade is in fact intra-FTA trade with Mexico and Canada). For meaningfull comparisons, EU should be compared with NAFTA or US with Eurozone.


$this->bbcode_second_pass_quote('', '
')That's precisely my point. Why are temporary protective measures necessary? Why are they implemented in the EU but not the USA?

http://www.eubusiness.com/Trade/050611072138.nl326jf4

China said Saturday it will limit growth in exports of 10 textile and clothing products to the European Union to eight-12.5 per cent a year in a bid to defuse a trade row straining ties between them.

Why is the EU demanding that China limit its textile exports?

The reason is politics.


Yes, politics. There was an international quota system in textiles that expired beginning of this year, and textile industries (what little is left of them) of US and Europe are in big trouble against Chinese competition.
link


$this->bbcode_second_pass_quote('', '
')You never hear of these "temporary protective measures" ever implemented in the US, it only goes as far as a few politicians providing token opposition to unfettered free trade. That's why the EU is more protectionist than the US.


LOL. From the link I gave above:

$this->bbcode_second_pass_quote('', '
')The US has already unilaterally imposed a cap of 7.5% on the growth of Chinese textile imports.


In fact more protective growth limit to textile imports than what was agreed between EU and China (8-12%). And do I need to mention Bush' protectionist measures against steel imports, or political ban against selling US an oil company to Chinese, etc?
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Unread postby MagnoliaFan » Mon 08 Aug 2005, 12:52:59

$this->bbcode_second_pass_quote('MrBean', 'P')ay attention, I said NAFTA, not US (large part of US foreign trade is in fact intra-FTA trade with Mexico and Canada). For meaningfull comparisons, EU should be compared with NAFTA or US with Eurozone.


I haven't found any meaningful NAFTA numbers that excludes intra-trade, and besides, comparing NAFTA to EU is like comparing apples and oranges since NAFTA does not have a single currency and does not aspire to become a single government--the rabid anti-Americanism of Canadians virtually guarantees that this will never happen

$this->bbcode_second_pass_quote('', 'Y')es, politics. There was an international quota system in textiles that expired beginning of this year, and textile industries (what little is left of them) of US and Europe are in big trouble against Chinese competition.
link


Ah but earlier you were arguing that EU is far more competitive than those boorish incompetent Americans and does not need protection ;)

$this->bbcode_second_pass_quote('', '')$this->bbcode_second_pass_quote('', '
')The US has already unilaterally imposed a cap of 7.5% on the growth of Chinese textile imports.


In fact more protective growth limit to textile imports than what was agreed between EU and China (8-12%). And do I need to mention Bush' protectionist measures against steel imports, or political ban against selling US an oil company to Chinese, etc?


Still does not change the fact that the US still imports a lot more from China than does the EU. When EU imports as much as the US does from China, we'll see how competitive European industry is compared to USA.
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Unread postby The_Libertarian » Mon 08 Aug 2005, 13:19:03

If I'm not mistaken, oil is no longer exclusively traded in US dollars. I base this on Heinberg's Museletter about US currency (I think it's #149)
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Unread postby MrBean » Mon 08 Aug 2005, 19:30:47

$this->bbcode_second_pass_quote('MagnoliaFan', '
')comparing NAFTA to EU is like comparing apples and oranges since NAFTA does not have a single currency


If single currency is what makes difference, then compare US with Eurozone, not the whole EU. But granted, all comparisons are more or less between apples and oranges, because EU is a strange beast.

$this->bbcode_second_pass_quote('', '
')Ah but earlier you were arguing that EU is far more competitive

Yes, as shown by the numbers.

$this->bbcode_second_pass_quote('', '
')than those boorish incompetent Americans


Your words, not mine. But if that's your opinion of Americans, so be it.

$this->bbcode_second_pass_quote('', '
')and does not need protection ;)


Never said so. I'm not a "Free Trade" fundamentalist.


$this->bbcode_second_pass_quote('', '
')Still does not change the fact that the US still imports a lot more from China than does the EU. When EU imports as much as the US does from China, we'll see how competitive European industry is compared to USA.

Yes, Chinese exports to the USA were US$124.947 billion; to the EU, US$107.163 billion. But relative competitivy is sure as hell not decided by that fact.

This discussion is getting too much like a stupid pissing contest, which does not interest me, and too far of topic, so perhaps it's time to wrap it up.
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Unread postby PhebaAndThePilgrim » Mon 08 Aug 2005, 22:04:43

Good evening:
I am not very good at economics. I only go by what I see.
But, I did read the following information. Please tell me how this ties into our current situation.
Every single working business day China purchases 50 million dollars of Fannie Mae stock. Every single working busines day China purchases 50 million dollars of Freddie Mac stock.
Every single working business day China purchases uncounted millions of dollars of stock from the stock market.
Is this entire economy based on air?
Does China own the U.S.?
I have read on this board that the housing market is artifical and inflated. I believe I also read the same information in books by Kunstler and others. If this is true, and the above information is also true. Then doesn't that mean that China owns the U.S.?
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Unread postby emersonbiggins » Mon 08 Aug 2005, 22:08:08

$this->bbcode_second_pass_quote('Phebagirl', '
')I have read on this board that the housing market is artifical and inflated.


Thanks to offshoring, 'housing' is the only thing that America produces anymore. So, yeah, there is cause for worry. 8O
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Unread postby Kingcoal » Mon 08 Aug 2005, 23:56:55

Why don't we get back to topic here. The US is making oil more expensive for itself.
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crucial difference

Unread postby lee » Tue 09 Aug 2005, 00:21:44

The US consumes massive amounts of oil, per capita, and we have limited exports to show for it. That is, we can't pass the cost on.

Countries that leverage oil for production, rather than consumption, will do better, as they will be able to pass the cost on through their products.

Production per barrel of oil will determine who wins and who loses. Efficiency.

Driving cars produces nothing, but consumes a lot. Not a good formula for success in the future.
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