Headline 9th May, 2012 / THE AUTUMN OF TRUTHS

Part-2

THE AUTUMN OF TRUTHS

Respectful dedication to the great people of India and China

So as I wrote the China - India effect pulls both-ways. On the one hand, it means that the prices the western world pays are lower because of the cheap imports from China of T-shirts and even sophisticated electronic products. Therefore, the average price of goods that you buy, say in Europe, is no higher than it was 10 years ago.

India has a similar but smaller effect, mainly thru the cost of services - all those call centres "Offshored" to the sub-continent. But they are also a force for higher prices of oil and commodities; China's growing demand for oil is a factor in the rise in oil prices to record levels. In a regular past it used to be straight forward. The big multinationals were Americans. Europeans and Japanese and they invested in countries like  China and India. Business power was firmly concentrated in the hands of leading industrial countries and their national Champions.

Then, some years ago, Chinese computer firm Lenovo stunned the world by buying IBM's personal computer division, thrusting itself into the league of the world's top computer firms. It was followed by the China National Offshore Corporation, which was only prevented from taking over the American Oil Company Unocal by a political blacklash in the US. In Europe, Rover, once in the hands of BMW, turned to China in its last desperate attempts to stay afloat. All in all, China is a big player.

In the last many years we saw international mergers and acquisitions hit record levels, partly as a result of Chinese takeover of  foreign firms.

Most world and emerging economies are short of foreign currency; not so China. The country's International reserves stand at more than a thousand billion dollars, a function of a healthy trade surplus and large scale purchases of dollars to stop China's own currency, the Renminbi, from rising. But in today's world of inflation, imperiled currencies, downgraded countries, and anemic economic growth, even the most optimistic pundits seem to have settled on the 'idee fixe' that things can only get worse!!

With thanks to !WOW!

Good Night & God Bless!

SAM Daily Times - The Voice Of The Voiceless

Part-1