Sunday, October 21, 2007

As the World Turns

The Chinese Communist Party Congress closed, and for Those involved in international politics, it is a sign of real Change coming to China. The ideological aims of Hu Jintao has finally defeated the corrupt faction of his predecessor Jiang Zemin, replacing the Defense Minister, the International Trade Minister, the Law Enforcement Minister, and the internal corruption watchdog Minister. The elected Congress and Central Discipline Committee will support Hu’s plans to develop the internal markets of China, instead of reliance on foreign trade to enrich the Party and their Dependents. Hu has a 5-Year mandate which will likely bring real change to the internal Chinese economy, bringing markets to the countryside.

I disagree with this article on expectation of higher prices for Energy, as I previously disagreed with the IMF assessment that the Dollar was still overvalued. The Price of Oil is going to decline as Hedge Funds come to realize there is not the same profitability in Oil Trading with the price at $90/barrel as was there when Oil was $60/barrel; it all being a question of buy-in Costs and Sale Costs when One is in a marginal Profit business. The second element to the Oil question is American driving practices; Retail Fuel outlets are recording a continuing slide in total Fuel Sales, even though the gap between Pump-Price and Oil Price has widened. Even the younger Generation is not taking the SUVs out as often, or driving that far, new Housing is more Energy conservative as the old Heating Oil Housing units are being torn down, and Manufacturing is shipping Oil-intensive Plant Overseas. Alternative Energy Sourcing has been slow in development and use, but reluctantly coming online. It is the basic reason why I feel that the Dollar will gain in value from this point, as Europe and Japan have already integrated their major Gains from Energy conservation, and the rest of the World will be massively impacted by any Energy Cost increases.

Here is a Post where I agree with the basic sentiment of the Viewpoints expressed. A major factor which must be factored into the Equation, is Consumer boredom with the new IT additions. The Kids are becoming bored with the new Toys, which are more Cosmetic than operational. Marketing has to push harder, and Spend more, to get the same Consumer response; the rising Cost of Product is definitely no help in the effort. Retailers are all listing a shift in Consumption to the Staples, an effect which will be far more pronounced in foreign Sales. The basic American advantage comes in the inability of the World to reduce American Exports drastically, as what the World buys from the U.S. remains necessary to their economies. The American disadvantage is that American Consumption Products find little market avenues for expansion; something deeply affected by higher Energy Pricing. lgl

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