Why China (Still) Has A Big Financial Edge On The United States
A common theme you hear in financial and mainstream media is how China's economy is slowing down. I believe this theme is being promoted to make American investors feel better about our struggling economy.
That's why reality TV is popular nowadays. When you watch the adventures of Honey Boo-Boo, Mama June or other reality stars - and see how messed up their lives are - you don't feel so bad about your life, even if things aren't going well.
We hear that China is overbought, overbuilt and has lent too much money to commercial borrowers. Given certain media reports, these premises are probably true.
You may have seen the 60 Minutes report on China's "ghost cities," where large developments were built that didn't have any commercial or residential tenants. Obviously, these kind of projects were designed to provide jobs for workers and stimulate economic activity. Not to provide returns for investors.
Even with this and other internal challenges that China faces, it still has a big advantage over the United States in one key area: Debt. There's a Bible verse that says, "The borrower is servant to the lender." To refresh your memory, China is the lender and the United States is the borrower of about $1 trillion in Treasury debt (officially).
While China may have a lot of internal debt that companies and individuals owe lenders, it's the largest holder of external debt of any nation on earth. The U.S. owes the most external debt to foreign investors of any country in the world.
While the Federal Reserve used this borrowing to stimulate the US economy, and consumers bought a lot of Chinese-made electronic and other goods... the Chinese did something much wiser with their money: They bought assets - and a lot of them. All around the world, but especially in the US. And there seems to be no end in sight for these Chinese asset purchases.
In September of 2013 a Chinese company bought Smithfield Foods, the largest pork producer in the United States, for a reported $4.7 billion. The following month another Chinese company bought one of the best commercial buildings in New York City - One Chase Manhattan Plaza - for $725 million.
Chinese are also one of the biggest foreign buyers of real estate in Los Angeles, New York City, and even Detroit.
But the largest and most noticeable asset the Chinese have bought is physical gold. According to Jim Rickards' recent Twitter post, Russia is buying hundreds of tons of gold... the Chinese are buying thousands of tons of the barbarous relic.... while most Americans could care less. Rickards adds, "Someone's right, someone's wrong."
In case you haven't figured it out, boobus Americanus who buys high-priced real estate, big screen TVs and smart-phones isn't right. These manipulated, depressed prices for physical gold and silver won't last forever. Go to your local coin or metals dealer, Amagi Metals or Colorado Gold and get as much gold and silver bullion as you can reasonably afford.
We're starting to see a shift in demand from financial paper assets to the tangible variety. It's only going to accelerate in the months and years to come. Don't get left behind, position at least part of your finances wisely and take action today.
That's why reality TV is popular nowadays. When you watch the adventures of Honey Boo-Boo, Mama June or other reality stars - and see how messed up their lives are - you don't feel so bad about your life, even if things aren't going well.
We hear that China is overbought, overbuilt and has lent too much money to commercial borrowers. Given certain media reports, these premises are probably true.
You may have seen the 60 Minutes report on China's "ghost cities," where large developments were built that didn't have any commercial or residential tenants. Obviously, these kind of projects were designed to provide jobs for workers and stimulate economic activity. Not to provide returns for investors.
Even with this and other internal challenges that China faces, it still has a big advantage over the United States in one key area: Debt. There's a Bible verse that says, "The borrower is servant to the lender." To refresh your memory, China is the lender and the United States is the borrower of about $1 trillion in Treasury debt (officially).
While China may have a lot of internal debt that companies and individuals owe lenders, it's the largest holder of external debt of any nation on earth. The U.S. owes the most external debt to foreign investors of any country in the world.
While the Federal Reserve used this borrowing to stimulate the US economy, and consumers bought a lot of Chinese-made electronic and other goods... the Chinese did something much wiser with their money: They bought assets - and a lot of them. All around the world, but especially in the US. And there seems to be no end in sight for these Chinese asset purchases.
In September of 2013 a Chinese company bought Smithfield Foods, the largest pork producer in the United States, for a reported $4.7 billion. The following month another Chinese company bought one of the best commercial buildings in New York City - One Chase Manhattan Plaza - for $725 million.
Chinese are also one of the biggest foreign buyers of real estate in Los Angeles, New York City, and even Detroit.
But the largest and most noticeable asset the Chinese have bought is physical gold. According to Jim Rickards' recent Twitter post, Russia is buying hundreds of tons of gold... the Chinese are buying thousands of tons of the barbarous relic.... while most Americans could care less. Rickards adds, "Someone's right, someone's wrong."
In case you haven't figured it out, boobus Americanus who buys high-priced real estate, big screen TVs and smart-phones isn't right. These manipulated, depressed prices for physical gold and silver won't last forever. Go to your local coin or metals dealer, Amagi Metals or Colorado Gold and get as much gold and silver bullion as you can reasonably afford.
We're starting to see a shift in demand from financial paper assets to the tangible variety. It's only going to accelerate in the months and years to come. Don't get left behind, position at least part of your finances wisely and take action today.
Labels: amagi metals, china, china buying american assets, china buying gold, colorado gold, Federal Reserve, quantitative easing, russia, Treasury debt
posted by Brian Ochsner | 10:12 AM
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