Wednesday, October 24, 2007

who's holding up who?

it's been commonly said the weak dollar is hurting the european economies by making chinese products even cheaper.

an interesting question I must ask is whether the yuan is propping up the US currency? given that every dollar can buy more yuan than it should, it adds value to the dollar. if you hold dollars, you're getting more yuan than you should. the next question is what happens to the dollar globally when china revalues. at some point it has to be coming. they need to raise their rates and are overheating terribly.

(one must wonder whether the yuan makes the dollar like buying EMC or CY to profit from VWM or SPWR. there is unlocked value...)

Monday, October 22, 2007

peddling the broklyn bridge in beijing?

china's citic bank bought 6% of Bear Stearns for $1bln. at first I thought it was another Blackstone, where the chinese paid top dollar for an over valued LBO firm.

in this case, however, I do wonder whether they might not be smarter. Former Lehman CFO Brad Hintz tells AP:

Brad Hintz, an analyst with Sanford C. Bernstein, said the pact is more important to Citic in the long run as it evolves into a more global competitor.
"Bear Stearns will get more profit out of their Asian operations," Hintz said. "But, more importantly, over the long term Bear Stearns will end up with a credible competitor who will have learned global finance from Bear Stearns themselves."


it will be facinating to see whether the chinese can replicate american financial capitalism. I think it will be a bumpy road after years of corrupt development at any cost in the absence of a functioning court system or any kind of institutional regularity. even though you couldn't accuse wall street bankers of being hugely moral or honest people, the rules treat people equally and more or less fairly. people need to follow the letter of the law millions of times financing a single transaction. lawyers spend hundreds of hours structuring companies and deals. the primary reason it all works is that people all know beyond question that courts will always enforce certain rules certain ways. in finance, dozens of layers of laws and rules breath life into entire entities. living, breathing, growing entities are built from intangible concepts and constructs. this requires a level of intellectual and ethical integrity.

one must ask whether china's past, including the 5 year plan, tianamin sq and the cultural revolution, has prepared the its people to respect all the layers of rights found in a simple ABS pool.

they will learn over time, and surely will have some success along the way. but I have read books like Mr China and know the stories of the bureaucratic insanity and unfairness. the thing they haven't learned from our country yet is that it's best to treat everyone fairly. China has been exploiting our companies and stealing their technology for years -- at least back into the 1990s. they deliberately and grossly devalue their currency. they spew vast amounts of coal smoke into the air and are ruining massive rivers. everyone knows they are unaccountable and dangerous. in constrast, we are the same country built on the greatness of washington and lincoln. they have grown opportunistically on capitalism from the pits of hell under mao. we know events like WWII and the civil rights movement, in which americans rallied for the betterment of humanity. China's leaders have been enemies of human life and liberty who embrace freedom only when expedient.

as Americans we should be ashamed for such a country to hold sway over us. all so we can have $3 toys at wal-mart, and vast amounts of junk to fill our lives? I am not saying we shouldn't trade with china. but their currency scheme is increasingly insane as the dollar falls. our imports from china are up something like 500% in the last 5-8 years. their growth is so fast and so reckless it will take years and cost trillions to clean up. why must we subsidize a kind of economic development we'd never tolerate in our own country?
(interestingly, europe bears the brunt of China's currency scheme it, but that's another issue... )

china's cheap currency allows its employees and companies to serve 2 markets at once -- their own and the world's. before, it was just the world's. but now as the chinese buy homes and cars, and fill them with appliances powered by government subsidized coal power plants, a second set of demand for their products is growing. since the currency can't appreciate, the products are still cheap internationally. that way they can run their economy on two sets of buyers. (and of course, have plenty of money to subsidize electricity rates because of their huge trade surplus and trillion+ of reserves.

the currency scheme has worked, but their continuation of it now is insane. their economy is already overheating. and, they are growing more confrontational with the rest of the world.

(as an aside: Americans are going to have a very rude surprise after the olympics next year when China tries to claim an EQUAL footing with us on the international stage and other countries listen to them -- and CHOSE them. soon they will have to revalue the yuan. (I imagine the best way to play that is with singapore$ or NZ$, etc. sadly, we are making all of it possible right now. that's one debatably good reason not to buy stuff made in china. )

anyway, my original point in writing this post was that a lot of money will be made in coming years as china spends its billions on US assets like Blackstone. I wonder if Bear will be the same. on one hand, yes. but after reading Hintz's point, it seems like China made a smart investment. if they really can buy the germs of an entire industry in the world's largest market for just $1bln, maybe they're smarter than we think. it will make money for them for a while before it blows up. but that will take a long time.

one way or the other, the era of american domination is starting to fade. we should enjoy it until next summer. the world will be different in coming months. the post WWII world order, in which the USA claimed leadership in terms of freedom and prosperity, is coming to an end.

Sunday, October 21, 2007

the best way to deal with china?

with all this intrangience coming from china this g-7 meeting, one has to ask what's really the best way to deal with them.

but just as out economy has a trade deficit, they have a green gap. the same way our capital account surplus allowed us to finance a trade deficit, china's green deficit allows them to finance a trade account surplus.

china is growing fast because they're holding their currency low AND destroying their environment. they grow without planning or regard for long-term environmental impact. it's time we stop allowing american retailers and people like jack welch to enable chinese companies to destroy the environment. their pollution and ecological damage have much longer-term costs that they're not including. there's not much we as americans can do about that, but we can control our own companies.

so, we should tax companies by their carbon consumption. we need companies to audit their supply chains as part of their normal tax process. and then they should pay a certain tax, of so many dollars per ton of carbon, etc. this way, even if they buy from other manufacturers it would be covered.

Saturday, October 20, 2007

make it so the fed govt pays states that reduce health care costs. also create commisson to oversee qual of care in each state to over ride paying them rewards for cutting costs if qual is bad.

this way, states can make choices and do things like recruit young people.
they get more money as rewards for being first to cut.

the most important thing in health care is rising care costs. those are set by local forces such as liability, insurance, etc. state govt's would have best way to drive down costs if they were rewarded for it.

Sunday, October 14, 2007

ambulatory facils 5.5mln
doc offices: 2.2mln
outpatient ctrs: 500k
home healthcare: 934k
hospitals: 4.6mln
nursing, resid care: 3mln
nursing care facil: 1.6mln
social assistance: 2.4mln
child day care services: 800k

there are about 33 million people over the age of 64, supported by about 3 million workers in nursing homes and almost a million in home health care.

there are now at least 50 million american children between the ages of 1-16, and about 80 million in the baby boom generation, now aged 42-62. currently, we have about 3 million workers in nursing homes and another million in home health care.

nursing home prices have been about consistent with overall price increases for healthcare costs overall, climbing about 34% since 2000. prices for everythign in the economy are up about 19% over the same period.
most important for healthcare costs overall, hospital-related costs have spiked higher:

Medical care ...........................................................................
33.74%
Medical care commodities
21.21%
Prescription drugs
28.24%
Nonprescription drugs and medical supplies 1 7
5.17%
Internal and respiratory over-the-counter drugs 1
6.12%
Nonprescription medical equipment and supplies 1
3.17%
Medical care services
37.84%
Professional services
26.09%
Physicians’ services 5
23.45%
Dental services 5
38.44%
Eyeglasses and eye care 1 7
13.71%
Services by other medical professionals 5 7
21.06%
Hospital and related services 5
54.79%
Hospital services 5 12
55.92%
Inpatient hospital services 2 5 12
54.64%
Outpatient hospital services 1 2 5 7
56.73%
Nursing homes and adult daycare 5 12
34.95%

the next question is how can we use the pool of child and teenage labor to alleviate some of this cost?

for info on individual jobs in the economy, like nurses, see http://www.bls.gov/oes/oes_dl.htm and ftp://ftp.bls.gov/pub/special.requests/oes/oesm06nat.zip

Wednesday, October 10, 2007

more on healthcare

some census data:

there are roughly 60mln americans now aged 7-22,
versus about 80mln people aged 42-62
and 40mln aged 7-16
there are probably another 12-15mln under the age of 7

next we need to find how many people in the USA work in healthcare:

there about 13mln people in healthcare:
ambulatory facils 5.5mln
doc offices: 2.2mln
outpatient ctrs: 500k
home healthcare: 934k
hospitals: 4.6mln
nursing, resid care: 3mln
nursing care facil: 1.6mln
social assistance: 2.4mln
child day care services: 800k

overall, it seems there is plenty of opportunity for young people to participate. one would imagine nursing homes and home care will have the largest growth in coming years.