Tuesday, July 11, 2006

In the Air

China reports another Record-breaking Trade surplus, India shelves current round of sale of Public companies to Private Investors, and Republicans claim an increase of Tax revenues will reduce the Government Deficit. We also find an extended Article of Pentagon Cost Overruns which (Surprise?) is generating delays in weapons systems delivery along with reduced numbers of weapons. Another common Tuesday in mid-July.

None of these Problems are new, as a matter of fact, all of them have been building for years without any effective Counters from Anyone. Government leadership try to imply it is simply 'Business as Usual' on all fronts. India has the same complication as does the Pentagon--localized Politics; national politicians cowed by organized Special Interests defended by bought Politicians whose Votes are legislatively vital. China utilizes every leverage which can be hidden to slow the purchase of American Goods on Chinese markets. Bloggers prove that Tax revenues are increasingly volitile, and likely to decrease even before the end of the current Budget Year. Hint: The Government must get Tax Revenues equal to 20% of GDP, if it intends to spend 20% of total GDP inside a balanced Budget.

China has moved ahead of Japan to become the No. 1 holder of Foreign Currency Reserves, and has become the 4th largest Economy in the World ahead of Britain. Chinese-controlled Defense industries produce Weapons Systems of comparable capability to U.S. weapons systems (though more technologically Standard, and less grasping for Top-Gun status) for about 40% of the Cost of the U.S. defense industry. Also, when adjusting for Standard-of-Living differences, Chinese defense industry labor probably are better-Paid. Of course, China chose to Downsize Management, instead of Labor, and dismissed the real value of Stock ownership. lgl

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