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Should China Label the U.S.a Currency Manipulator? Yes, of course. November 30, 2012

Posted by hslu in China, Economics, Euro, Global Affair, Obama, Politics.
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Obama administration has just decided not to label China a Currency Manipulator.

For good reasons.

Actually, the real question should be “Should China label the U.S.a currency manipulator? ” The answer is, of course, “yes!”

Just ask Bernanke! He’ll tell you that’s exactly what he intended to do and we have WSJ to prove this: “Bernanke wanted developing economies to let their currencies appreciate.”

http://online.wsj.com/article/SB10000872396390443749204578055600111447318.html

All that fiat money printed by Bernanke for QE3, $40 billion every month until who know when, is searching for higher yields and a lot of that has gone to the purchases of currencies of foreign countries.

America is not only manipulate the US dollar, it even wants to manipulate other weaker countries’ currencies.

It really give “currency Manipulator” a new meaning.

 

Whether Bernanke succeed or not is not the question answer

 

 

China is a friend of Canada November 23, 2012

Posted by hslu in China, Cold War, Congress, Economics, Energy, Global Affair, Obama, Oil.
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The United States, especially those in the White House (e.g., Obama) and many in the Congress, e.g., Charles Schumer, treats China like an enemy. As such, the U.S. has rejected previous bids by Chinese companies to merge with US-based companies citing national security among other concerns.

Well, not every western country is this stupid. I believe that Canada sees China as a friend and a business partner. A good trading relationship with China will generate much more opportunities in China for Canadian companies in the future.

We’ll know pretty soon whether my guess is right or not because, in case you haven’t heard, China’s CNOOC (NYSE: CEO) has offered to buy Canada’s Nexen Inc. (NYSE: NXY) for $27.5 per share, a 60% premium over Nexen’s market value in late July, 2012. CNOOC is China’s Offshore oil company.

中国海洋石油有限公司

I am actually very hopeful that the government of Canada will make the right decision to accept CNOOC’s bid even though the decision has been moved back one month to early December, 2012. The Canadian government may announce its decision in the first or second week of December, 2012.

The reasons I am hopeful is that Canada is less hostile to Chinese companies and Canada actually needs foreign capital injection to develop its vast oil sand resources in Alberta.

In additional, Justin Trudeau, son of Canada’s legendary Prime Minister, Pierre Trudeau and the leader of the the Liberal Party, wrote an Op-Ed piece saying that

CNOOC-Nexen deal is good for Canada,”

http://www.vancouversun.com/opinion/OpEd+CNOOC+Nexen+deal+good+Canada+says+Justin+Trudeau/7572765/story.html

According to Mr. Trudeau, the deal makes sense because:

  • Canada’s economic prospects have always been tied to trade. We are a small market that must export and attract investment to create jobs and growth, and import to keep costs down and provide choice for middle-class families.
  • For much of our history, the only trading relationship that mattered was with the United States. From Laurier to Mulroney, it defined our politics in watershed elections that bookended the last century, and inflamed passionate debates about national identity throughout. That was the 20th century. The 21st century is different. Trade remains a paramount objective, but we can no longer rely on the U.S. alone to drive our growth.
  • Our relationship with our southern neighbour remains our most important, but we cannot afford to miss vital opportunities elsewhere. By 2030, two-thirds of the planet’s middle class will be in Asia. How we define and manage our relationship with Asian economies to play a Canadian role in fuelling that growth will matter as much to the Canadian middle class in this century as our relationship with the U.S. did in the last.
  • Because Chinese and other foreign investors will create middle-class Canadian jobs. Foreign investment raises productivity, and hence the living standards of Canadian families.
  • We deceive ourselves by thinking that trade with Asia can be squeezed into the 20th-century mold.  China, for one, sets its own rules and will continue to do so because it can.
  • China has a game plan. There is nothing inherently sinister about that. 

Well said, Mr. Trudeau.

I guess that raising the living standard of American people has never crossed the minds of the likes such as Obama or Schumer when they rejected China’s bid for American companies in the past.

Oil sand business is a capital intensive business. Canada needs capital to create good paying jobs and China has the need to secure its long term energy supply. As such, I believe that Canada-China cooperation is a perfect match. Since Obama didn’t want Canadian oil (He killed the shovel-ready Keystone XL Pipeline,) Canada can sell its oil to China and other Asian countries.

Better yet, I bet you that China like to build a pipeline and send Alberta oil to the Pacific coast where it can be transported to satisfy the needs from the booming Asian economies. I bet, Japan wouldn’t mind buying Canadian oil either because it is closer and it comes from a country where, unlike many oil-producing countries in the Middle East, the government is much more stable.

I am hopeful because, no matter what Obama says, China is a friend of China.

By the way, if the deal goes through, you can make an easy 10% profit based on the current price of NXY. If you want to check out options, you might want to consider Jan 25 call which is at $1.80 now. March 25 calls is only $1.85

Nexen Inc. (yahoo.com)

 

 

 

马英九 is an “Ineffectual Bumbler?” But I says it is a “机会。“ November 19, 2012

Posted by hslu in China, Chinese, Global Affair, Politics, Taiwan.
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This was the term “The Economist” used to describe Taiwan’s president 马英九 in its most recent print issue.

http://www.economist.com/news/asia/21566657-former-heart-throb-loses-his-shine-ma-bumbler

Here are some of the terms used in the article when it described :

Before he took the office, The Economist says these about 马英九:

  • heart-throb
  • a clean technocrat
  • offered Taiwanese high hopes
  • promised ground-breaking agreements with China
  • rise above the cronyism and infighting of his party
  • welcome contrast to his pro-independence predecessor, Chen Shui-bian, now is in jail for corruption.

After five years since he took the office, these are what The Economist has to say about him:

  • popular satisfaction plummeted to a record low of 13%
  • an ineffectual bumbler
  • failed to paint a more hopeful future
  • frequently tweaks policies in response to opposition or media criticism
  • Cracks are starting to grow in the KMT (国民党)façad (note:马英九is the Chairman of 国民党)
  • clean image has been sullied by the indictment of the cabinet secretary-general for graft

It’s about time for a foreign publication to notice the obvious even though many people, me included, have stated a few times in the past about 马英九’s indecisiveness. His problem was and still is: “He acts like a “墙头草: qiang tou cao”  because he doesn’t know how to lead.”

Of course, I am a nobody and no one cares about what I had to say. But, I am hopeful that 马英九 can take this as a constructive criticism, learn from his mistakes, change his leadership and management style and comes out of this dark cloud hanging over his head as a new man.

He has less than four year to prove many people like me wrong.

The first thing he needs to to do is to get rid of “不統;不獨;不武“ policy for his current term because:

1.   不統;Unification with China in one form or the other is inevitable. He should get the political process started and use his second term to lay the necessary groundwork for a lasting peace (和平統一) between two sides. This will be his only legacy if he wants people forget his  ineffectual bumbler reputation. Under unyielding pressure from China, people in  Taiwan has been getting used to “Taiwan” instead of “The Republic of China” as culture, art, business, economy and currency integration pick up pace in recent years. The unification process can not be reversed whether Taiwanese people like it or not. It actually started in the early 90’s when Taiwanese businessmen and businesswomen gave up their Taiwan-based plants and operations for a chance to make big money in China. With the pending currency exchange, the point of no return has been crossed. Taiwan’s life line  is in the hands of China.

2.    不獨;This is a given as far as China is concern and people in Taiwan have more or less accepted this fact. Even 民进党,the pro-independent Democratic Progressive Party, realized the line in the sand drawn by China. I bet you a steak dinner that leaders of DPP will ask for a chance to visit China within a couple of years if they ever want to recapture the presidency.

3.     不武:When 马英九 first proposed this about five years ago, he, in my opinion, put himself and by extension Taiwan at a great disadvantage. In essence, 马英九 asked China not to invade Taiwan because he has promised that he will not seek independence or不獨 in his first term. He realized that Taiwan has no capital or ”本钱“ to wage military confrontation with China and America will not waste their own blood and lives to defend Taiwan because America “自顾不暇。” 不武 was basically superfluous. It was not needed.

One thing is very clear to me: China is building up its naval force to protect its territories and national interests including but not limited to a steady supply of petroleum products from Mid East and other foreign countries. In the process, Taiwan’s strategic position becomes marginalized and America knows this. In the mean time, Taiwan becomes deeply entangled with China socially and economically to the point that Taiwan’s life line is in the hands of China.

I believe that 马英九 and his underlings know this too. Unfortunately, the more he waits, the less time and bargaining chips there are to start a formal negotiation with Beijing. 马英九 should ask a reputable person from third country (any one except U.S. or Japan) to negotiate covertly on his behalf  with Beijing in order to devise a workable plan that’s agreeable to the majority of Taiwanese people.  After all, in spite of all the fighting in its legislature body on TV, Taiwan is very proud of its democracy.

if 马英九 doesn’t know where to start, allow me to recommend Helmut Kohl who, among others, was responsible for the unification of West and East Germany. If 马英九 can pull this off with any degree of success, the Nobel Peace Prize “非他莫属。”

 

US is the Worst Currency Manipulator Ever November 1, 2012

Posted by hslu in China, Cold War, Economics, Euro, Global Affair, Obama, Oil, Politics.
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The United States is the world’s most egregious currency manipulator.
Take Plaza Accord, for example, United States led the conspiracy to lower US dollar and gave Japanese people a misery life for 23 years and counting.

The Unites States gave Japanese people prosperity after WWII as a pay back for bombing Japan with 2 nuclear bombs. The United States then took the punch bowl away through currency manipulation, because American people and politicians, from the US president to Senators and Congressmen, had enough of low Japanese yen which took away American jobs.

American companies and their workers couldn’t compete with Japanese’s labor force and its management practice fairly in the market. The politicians did it with a meeting behind the closed doors of a New York hotel.

The history is repeating itself with China’s RMB.

Constant threats of retaliation from senators, such as Schumer, treasury secretary, secretary of state, Obama, Romney and the others fill the prime time TV news programs and Sunday political talk shows. But China doesn’t want any of this or shall we say that “中國不吃這一套.” China had Japan as its teacher in this department and China knew the course sucks.

China will continue to control its currency, RMB or 人民幣, for the benefits of Chinese people. China will continue to resist calls to appreciate its currency unless it is beneficial to China to do so. In the meantime, China will continue bilateral trades in RMB with many of its neighbors which will affect US dollar’s importance in the financial market. These countries agreed to trade with China in RMB because they are worried by Bernanke’s actions and the value of its US currency holdings.

When Europe comes out of the funk of its financial crisis, Euro will become a much stronger currency which will depress American dollar further. When the oil producing countries, especially members of OPEC not so friendly to the US, such as Iran, Venezuela, Libya, and possibly Iraq sometime later, decided to take other currencies for their oil, the demise of US dollar will accelerate and a new reserve currency, possibly a combination of a basket of currencies, will emerge.

That will be the final nail on the coffin of US economy and US dollar.

ExxonMobil stock split coming? November 1, 2012

Posted by hslu in Energy, Obama, Oil.
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Is a ExxonMobil stock split coming soon?

The company’s stock has hovered above $90 for almost 2 months now. Base on my recollection, Mobil, before it was bought out by Exxon in 2000, split its stock when it traded above $90 for an extended period of time. I remembered that one of the reasons given to employees for the stock split back them was that company wanted to encouraging stock ownership by individual investors. As such, a $100 stock price seemed like a mental block for many small investors.

Exxon seemed to have the same philosophy judging by stock chart on Yahoo.

ExxonMobil just announced a $5 B stock buy back program which is good for small investors.

I am guessing that the board may announce a 2 for 1 stock split and a ~10% hike of dividend at its next annual meeting, usually in May.

In the age of low interest rate to as far as eye can see, thanks to Bernanke, Operation Twist and Q3, stocks of a high quality oil company such as ExxonMobil, will continue to be bought by individual investors seeking yield and safety.

If Obama is fired next week, and I have no doubt that he will be fired, oil companies will breath a big sigh of relief from the likes of EPA, Dept. of Energy, Interior Dept. and tree huggers. Oil company stocks in general, and ExxonMobil of course, will likely see a jump to new highs.