☆ Yσɠƚԋσʂ ☆

  • 7 Posts
  • 19 Comments
Joined 6 years ago
Cake day: January 18th, 2020
  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    1·
    19 minutes ago

    What I keep pointing out here is that individual countries that make up BRICS are doing well because of BRICS. That’s the system of trade they all participate in that’s centred on China which is at the core of BRICS industrial development.

    certainly there is no co-operation or consensus as to what to do.

    I’ve repeatedly explained that BRICS is not in a business of having ideological alignment, It’s a trade org, plain and simple. The only thing you mentioned that’s at all relevant is that BRICS still haven’t agreed on a common currency. This stuff takes time to do, and the fact that it hasn’t happened yet is certainly not an indication of BRICS not being functional.

    They would still rather cut each others’ throats than do a co-operative venture.

    Once again, you could’ve just googled the info yourself. But here are just a few examples for you.

    And the links regarding China all point to what I said - China is turning towards its domestic market, and is looking to export high value items while switching low-value production to its home market.

    You might be slightly misinterpreting the core concept behind the dual circulation strategy. It is definitely true that Beijing wants to boost domestic consumption and insulate their economy from geopolitical shocks but they are absolutely not doing that by sacrificing their global export engine. Dual circulation is basically designed to make the internal domestic market and the external international market reinforce each other rather than treating them as a zero sum game. The idea that Chinese manufacturing capacity cannot keep up with its own domestic demand and that exporting a toaster somehow takes a toaster away from a local family actually completely contradicts the current macroeconomic reality over there.

    Right now China is dealing with massive structural overcapacity and significant deflationary pressures precisely because their factories produce vastly more goods than their domestic middle class can afford to absorb. Their existing capacity is exactly why they are currently flooding global markets with everything from everyday consumer items to advanced electric vehicles and green energy tech. They are definitely trying to move up the value chain and they are offshoring some low end production to places like Vietnam but they still need global export markets to keep their industrial base running and prevent domestic employment problems. So rather than turning inward and leaving the global market behind they are actually trying to dominate both spheres simultaneously by using a strong domestic base to build bulletproof supply chains while aggressively expanding their export footprint.

    The timeline is 5 to 7 years from now.

    And the point you evidently missed is that Germany doesn’t have 5 to 7 years. It’s in a crisis right now with its industries collapsing. In 5-7 years Germany is going to be completely fucked. Also, it wasn’t Russia that cut off the flow of cheap gas. It was the EU making an idiotic decision not to buy Russian gas directly. A pretty big difference there.

    Actually, Canada doubled LNG sales out of BC in just one year.

    The second train online in Kitimat and hitting that 14 million tonnes per year mark might be a milestone for the Canadian economy but you really have to zoom out and look at the Middle East to understand the actual scale of the global gas trade. When you compare the BC setup to what Qatar was doing until Hormuz closed, the volume difference is staggering. LNG Canada is celebrating reaching its maximum current capacity of 14 million tonnes after years of complex development and billions in investment. Meanwhile Qatar is sitting on a baseline capacity of 77 million tonnes per annum and they were actively executing the massive North Field expansion project. That expansion alone was going to add several massive new trains that will push their total output to 126 million tonnes in the next couple of years and eventually to 142 million tonnes by the end of the decade. To put that into perspective the amount of brand new capacity Qatar was just bolting onto their existing infrastructure is essentially equivalent to building four or five entirely new LNG Canada facilities from scratch. Canada is like a boutique craft brewery operating in a market dominated by an industrial beverage conglomerate. It’s not replacing the LNG that’s off the market now, not even close.

    And your links to the European manufacturing situation are out of date. The recovery has already started.

    Most of the links I gave you are from this year. Again, I keep explaining this, and you keep ignoring it. But structural issues have not gone away. Europe lost access to cheap energy, and that problem has not been solved. Therefore, no meaningful recovery is possible. If you look at the actual numbers in your link it’s very clear there’s no real change happening:

    The HCOB PMI business activity index in the eurozone manufacturing sector rose to 50.8 points in February from 49.5 points in January, reaching a 44-month high. In Germany, where the trend is in line with the European average, the index rose to 50.9 points from 49.1 points a month earlier.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Carney government joined the Conservatives and the Bloc to defeat No More Loopholes Bill that would have stopped Canadian weapons sent to the U.S. from being used in the genocide in Gaza.
    1·
    41 minutes ago

    Bro really pulled the 30 years in manufacturing card just to confidently describe the sunk cost fallacy. If a company goes bankrupt because management financed a massive tooling upgrade on credit for a contract they did not actually secure yet, that is not some profound economic revelation lmfao.

    That’s just complete garbage management. You are acting like taking on unhedged debt based on pure hope is a universal law of physics that makes industrial pivots impossible. Your weird claim that government EV investments never materialized is genuinely hilarious and proves you have not looked at global auto manufacturing or supply chain data in the last decade. Legacy automakers are actively pouring billions into retooling their existing plants right now precisely because leveraging established vendor networks, trained labor pools, and permitted industrial real estate is infinitely cheaper than trying to build greenfield factories from the dirt up.

    Your entire thesis literally boils down to claiming that when a restaurant needs to update its menu it is more cost effective to bulldoze the building and start a new corporation than it is to just buy a different oven. Maybe stick to the shop floor and leave the capital allocation arguments to people who actually understand how depreciation and asset lifecycle management work.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Carney government joined the Conservatives and the Bloc to defeat No More Loopholes Bill that would have stopped Canadian weapons sent to the U.S. from being used in the genocide in Gaza.
    1·
    3 hours ago

    It’s truly adorable that you skimmed a Wikipedia summary of capitalism and decided to bless us with this masterpiece of financial illiteracy. You are crying about wasted factory equipment as if the sunk cost fallacy is not literally the first concept taught in basic microeconomics.

    Rational economic actors do not base future production on unrecoverable past investments because capital naturally depreciates and markets constantly undergo structural adjustments. And you evidently have no clue how international trade actually works. When a sovereign nation enacts export controls to legally ban the sale of a specific good, those terrifying breach of contract lawsuits you are hyperventilating about are entirely preempted by standard force majeure clauses and basic sovereign immunity.

    Furthermore, a government does not need a literal command economy to force an industrial pivot. The state does not have to seize factories or print money to dictate production. Even under capitalism there are plenty of historical examples of driving industrial policy by altering the regulatory environment and targeted fiscal subsidies. Maybe you should actually take an economics class before aggressively lecturing people on the internet about concepts you completely fail to grasp.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    1·
    9 hours ago

    It’s very much not exclusively in automotive sector. Chemical industry, steel production, and all other sectors are affected. The reality is that manufacturing require energy as input, and with higher energy costs manufacturing in EU becomes uncompetitive compared to China because China is getting cheap energy from Russia. Europe basically made itself entirely dependent on American energy now, and that’s only getting more expensive for them. The US is also actively trying to poach European industry to boost their own economy.

    China would be the natural trading partner for Europe, but Europe is still unable to break from the US and act in its own interest. Before the war in Ukraine started, Europe was becoming increasingly integrated with the east economically. They were getting cheap energy from Russia, and manufacturing from China. This allowed European economies to thrive. Now that relations with Russia are broken, and relations with China are now tense.

    And you continue to misunderstand the nature of BRICS. As I already explained above, their interests are economic. It has little to do with politics or America. Countries in BRICS see mutual win-win trade relations that boost their economies. That’s why India does a huge amount of trade with China while having little in common politically. As the US continues to decline, more and more countries will necessarily flock to BRICS because that’s where economic development is happening right now. And China is at the centre of it all because they’re the world’s factory building things everyone needs. They help countries build infrastructure like ports, high speed rail, and clean energy production. They supply cars, phones, and other electronics. And as the Global Majority develops, the demand for the things China produces will continue to grow. That’s the real glue that holds BRICS together.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    2·
    10 hours ago

    BRICS is more showmanship than substance.

    Yeah, that’s just completely false. The whole point of BRICS, and what actually makes it effective unlike G7, is that it’s not an ideological alliance. It’s a framework for countries to do trade. And trade within BRICS has been exploding.

    Meanwhile, the EU is very clearly dying at this point. Energy prices were already sending European industry into a terminal decline, and Iran war has put the whole thing into an overdrive. Not to mention the fertilizer crisis during the planting season which could easily result in food shortages by fall. GDP is a completely meaningless metric because the quality of development is what matters. European countries do not produce things their people need to live. And what’s actually happening in Europe right now is that nationalist parties like AfD, RN, and Reform are dominating their politics. All these parties are extremely nationalist, and they are openly hostile to the whole idea of EU. The liberal center in Europe is collapsing along with the standard of living.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    0·
    1 day ago

    We as in the working class in Canada. That’s who always pays the bill when there’s an economic crash.

    I generally agree with what you’re saying regarding the US and China. However, I’d note that the actual split is between G7 and BRICS, and BRICS have already surpassed G7 in terms of PPP measure. BRICS represents the Global South, and it happens to be where majority of human population is, where the resources are, and where most of the industry is. Majority of Global South economies economies are aligned with China now.

    What Carney appears to be focusing on are former vassal states that were under the tutelage of the US. Now that the hegemon is fading, the vassals are in trouble. What Carney seems to be trying to do is to rally Europe and Australia to form a bloc without the US, but one that’s not directly aligned with the Global South.

    And of course GDP alone is not useful measure of anything. The quality of development matters. Western economies are focused on stuff like software industry and service economy. They’re not producing things people actually need to live. China is where all the manufacturing happens. They’re the ones who build solar panels, EVs, and high speed rail that developing world needs. That’s what makes China such a key economy for the world.

    I also expect that the US is headed for collapse, and it’s likely going to be far worse than what happened to USSR. That said, it’s not at all clear that countries that hold US debt will be able to claw anything back once that happens. For one, the US is still full of nukes, so whatever states emerge out of it eventually will be nuclear powers.

    The problem for Canada is more immediate though. Our economy is heavily dependent on the US right now. And unless we diversify and become more self sufficient, then we will be dragged down along with the US. Unless Canada takes steps to insulate itself then it will become one of these failed states itself when the western order finally collapses.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    0·
    1 day ago

    Your focus on the current bond overlooks the market’s forward looking nature. Yields are stable because they reflect a consensus that the Fed will eventually cut rates to avoid a recession which is a precarious assumption. The moment inflation proves stickier than expected or the US debt trajectory worsens, we could see a violent repricing happening. It would lead to a bond vigilante reaction where yields spike suddenly and crater the value of existing holdings.

    The whole idea that interest payments cushion import costs only works if the Canadian dollar doesn’t weaken alongside or faster than the USD in a crisis, and that is not at all guaranteed. When a crisis hits, all assets correlated with the US including our bond portfolio would suffer together. Meanwhile, the only sector of the US economy that’s doing well are the tech stocks, and that’s just a handful of companies passing IOU notes around in a circle. The rest of the economy is showing deep imbalances with weak consumer savings, shrinking industrial output, and persistent inflation in services.

    The US is funding massive deficits in a high interest rate environment, and that can’t go on forever. The war on Iran could act as a catalyst for the whole house of cards to come crashing down because it’s driving the price of energy through the roof. The resulting economic crash in the US could be far worse than 2008, and at that point we’d be left holding the bag.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    0·
    2 days ago

    That completely misses the destructive power of inflation and currency devaluation. The interest payments are nominally coming back to Canada, but their real value is what actually matters. If the US dollar is losing purchasing power faster than the bond’s interest rate, then Canada is experiencing a negative real return. We are getting paid back in dollars that buy less which is the opposite of getting stronger. What we’re seeing here is a classic transfer of wealth from the creditor to the debtor with Canada subsidizing US fiscal policy by accepting a steady erosion of its investment’s true worth.

  • ☆ Yσɠƚԋσʂ ☆@lemmy.mlOPtoCanada@lemmy.ca•Canada increased holdings of U.S. debt by 27% last year
    1·
    2 days ago

    This logic is dangerously complacent and ignores the actual mechanics of how economies fail. You’re assuming a smooth devaluation of the USD that conveniently boosts other assets, but that is not a guaranteed or even likely outcome at this point. An economic crash can lead to a rapid devaluation triggering a severe loss of confidence in US debt, not just higher yields on new bonds.

    If inflation spirals then the Fed would be forced to hike interest rates aggressively to defend the currency, which would crush economic growth and likely trigger a recession. The idea that holding bonds to maturity makes losses irrelevant is a fundamental misunderstanding. Those losses represent destroyed capital and a massive opportunity cost. The government would be locking in negative real returns for decades while its debt servicing costs explode on new issuance. Canada buying more cheaper bonds in that scenario is like catching a falling knife. It’s not exactly a clever investment strategy. We’d be doubling down on a failing asset as the underlying economy and fiscal position deteriorate. It’s a recipe for a stagflationary crisis.