China Unocal and the U.S Treasury Department

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  • #1
edward
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I was reading an article in this mornings paper about the China-Unocal purchase. It at first appeared that a little known Government department known as the: Committee on Foreign Investment in The united States, would nix the deal. But as I read on I was dismayed to see the paragraph below.

"The Treasury Department is responsible for funding the U.S. budget deficit, and it relies on China to purchase billions of dollars in U.S. debt each year. This makes it reluctant to risk alienating China by blocking a government-backed takeover bid, these critics contend."

http://www.chicagotribune.com/services/site/premium/access-registered.intercept [Broken]

Has it really come to this. "Say it isn't so Joe" :frown:
 
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Answers and Replies

  • #2
From what I've read the major push to allow the deal to go through is coming from the US energy leaders who fear retaliation with China blocking US investment in Chinese industries.

By the end of the week, however, energy sector analysts like Fadel Gheit of Oppenheimer & Co. were putting better than 50-50 odds on the success of the CNOOC bid -- in part because energy sector leaders were coming out strongly against interference in the deal from Washington, D.C.

"I am beginning to see a lot of industry officials, led by Exxon Mobil (XOM, news, msgs) Chairman and Chief Executive Lee Raymond, criticizing any government effort to block this deal," says Gheit. He says Amerada Hess (AHC, news, msgs) chief John Hess has also expressed similar views to him privately.

The biggest fear: If the United States makes it hard for China to invest in a U.S. energy company, U.S. companies may start to see similar resistance if they try to make investments abroad. But if energy sector leaders convince Washington to tread lightly on the CNOOC offer, that could speed up the time line and increase the chances that a CNOOC-Unocal deal gets done.
http://moneycentral.msn.com/content/P121749.asp[URL]
 
  • #3
Pengwuino
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Hey! I actually watched that hearing on C-SPAN!

I feel hella informed
 
  • #4
edward
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I am more concerned about the fact that China is Carrying billions of dollars of our debt than I am about the Unocal deal. This is going to leave us with an untenable position as far as Chinese expansion into the global market place.

First it was the Saudi's carrying a large portion of our debt and we have had to kiss up to them for last twenty years.

Now we are funding the war in Iraq with the Chinese carrying the debt at the same time we are worried about the Chinese military.
We had tax cuts for the wealthy then sold the debt to China. My God they own us.

I see this as a solid sign that the American economy will collapse upon itself in a few years. It is Enron on a much grander scale.
 
  • #5
edward
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Art said:
From what I've read the major push to allow the deal to go through is coming from the US energy leaders who fear retaliation with China blocking US investment in Chinese industry.

There is nothing to stop them from blocking the U.S. from investing in China anyway. They have us by the tail either way.
 
  • #6
SOS2008
Gold Member
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edward said:
I am more concerned about the fact that China is Carrying billions of dollars of our debt than I am about the Unocal deal. This is going to leave us with an untenable position as far as Chinese expansion into the global market place.

First it was the Saudi's carrying a large portion of our debt and we have had to kiss up to them for last twenty years.

Now we are funding the war in Iraq with the Chinese carrying the debt at the same time we are worried about the Chinese military.
We had tax cuts for the wealthy then sold the debt to China. My God they own us.

I see this as a solid sign that the American economy will collapse upon itself in a few years. It is Enron on a much grander scale.
You have summarized it well. The U.S. was going into recession the summer prior to 9-11. Then with 9-11 the economy tanked even further. Unemployment and bankruptcy soared to record levels, thanks in part to out-sourcing, various trade agreements, etc. Add to that Bush's tax breaks and the wars, particularly the war in Iraq. Who in their right mind would pursue such things during an economic downturn?

We've debated the economic health of the U.S., and conservatives insist that all is well. Aside from increasing cost of homes, and now fuel, anyone who disregards the record deficits (and oh I know, we are ahead of schedule to reduce it :rolleyes: ) can hardly claim our economy is stable and healthy. But per the OP, the biggest concern is national security. Our dependence on other nations in such ways should never be supported, but this administration will do what ever big business wants it to do.
 
  • #7
edward said:
There is nothing to stop them from blocking the U.S. from investing in China anyway. They have us by the tail either way.
Yes that is true and especially so as there is a move by oil producing countries to change their oil denomination currency to the euro. This article is an excellent appraisal of the ramifications. http://www.feasta.org/documents/review2/nunan.htm In summary if the trend was to become widespread it would be devastating for the US.
The first country to actually make the switch was a very important oil exporter indeed: Iraq, in November 2000. Before the war in Iraq began, some observers, myself included, argued that this might well be a major reason for the US desire to invade and the strong Franco-German opposition to the invasion
 
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  • #8
Pengwuino
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Yah, record employment rates and record GDP's really hurt my pockets.
 
  • #9
selfAdjoint
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Pengwuino said:
Yah, record employment rates and record GDP's really hurt my pockets.


Squint your eyes and it sure looks good. Look a little closer, at manufacturing or the social results of soaring productivity, and maybe those broad scale statistics don't capture everything that needs to be considered.
 
  • #11
SOS2008
Gold Member
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Let's stay on topic, specifically economic indicators of deficits, with China holding the majority of that debt, and the rising cost of fuel and our dependence on the Middle East, and how that all plays in the Unocal purchase and national security.
 
  • #12
Hmmm now let me see if I have this straight.

We send our industrial base to China. Then we borrow money from China to fight a war. Then we decide we can pay China back with the money saved by giving the wealthy a tax cut so that they can invest the extra cash in China, providing even more jobs in China.

Meanwhile back at home many of the jobs left invovle service sector jobs in high tech, which we are being rapidly out sourced to India.

We can't manage to produce 1,000 armored Humvees in a year and a half, but in the first year of WWII we cranked out 9,000 Sherman tanks. ? Of course this is all because we have to try to balance a budget with the president we have not the president wish we had.
 
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  • #13
edward
119
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Solutions

You left out the interest on the debt which is currently $322 billion per year. We borrow half of that amount from the Saudi's so that we can pay China. Then we Borrow the other half from China so that we can pay the Saudi's. Then we deduct the interest that American's pay on their credit cards and add what we might have had if we hadn't started a phoney war.

The budget will be balance in no time.

China will get Unocal, then we can buy oil from them on credit and ship it to Iraq because there is little oil production there currently.
 
  • #14
edward
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The U.S.-China Dependancy Act

I can't believe that so few people are interested in the fact that the holder of $200 billion of U.S. debt is a communist country! On the other hand, the facts are the facts, and the truth leaves little room for debate.


http://www.iht.com/articles/2005/03/17/opinion/edfried.html

Excerpts form the link

The excessive tax cuts for the rich, combined with a total lack of discipline on spending, have helped China become the second-largest holder of U.S. debt, with a little under $200 billion. No, I don't think China will start dumping its T-bills on a whim. But don't tell me that as China buys up more and more American debt - and that is the only way we can finance the tax holiday the Bush team wants to make permanent - it won't limit our room to maneuver with Beijing, should it take aggressive steps toward Taiwan.

Indeed, if the Bush policies were wrapped into a single legislative bill it could be called "The U.S.-China Dependency Act."

What China might do with all its U.S. T-bills in the event of a clash over Taiwan is a total wild card that we have put in Beijing's hands.

National security is about so much more than just military deployments. It is also about tax, energy and competitiveness policies. And if you look at all these areas, the Bush team has not only been steadily eroding America's leverage and room for maneuver vis-à-vis its biggest long-term competitor - China - but it has actually been making us more dependent than ever on Beijing. Indeed, if the Bush policies were wrapped into a single legislative bill it could be called "The U.S.-China Dependency Act."

Finally, on competition policy, the Bush team and Congress cut the budget of the National Science Foundation for this fiscal year by $105 million. I could not put it better than Congressman Vernon Ehlers of Michigan, one of the few dissenting Republicans, who said: "This decision shows dangerous disregard for our nation's future at a time when other nations continue to surpass our students in math and science and consistently increase their funding of basic research. We cannot hope to fight jobs lost to international competition without a well-trained and educated work force."

:confused:
 
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  • #15
Pengwuino
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Well they just announced that UNOCAL is being bought by Chevron instead so this thread goes down the toilet :P. Or well, doors arent closed for China to get it but UNOCAL said Chevron's deal is a positive move for its share holders.
 
  • #16
Pengwuino said:
Well they just announced that UNOCAL is being bought by Chevron instead so this thread goes down the toilet :P. Or well, doors arent closed for China to get it but UNOCAL said Chevron's deal is a positive move for its share holders.
There is nothing new in that, UNOCAL have being saying that all along. BTW generally the directors of companies being taken over recommend the deal that is best for them personally.
The US debt to China also remains whoever ends up getting UNOCAL.
 
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  • #17
stoned
82
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edward said:
Solutions

You left out the interest on the debt which is currently $322 billion per year. We borrow half of that amount from the Saudi's so that we can pay China. Then we Borrow the other half from China so that we can pay the Saudi's. Then we deduct the interest that American's pay on their credit cards and add what we might have had if we hadn't started a phoney war.

The budget will be balance in no time.

China will get Unocal, then we can buy oil from them on credit and ship it to Iraq because there is little oil production there currently.

solution ? another war.
 
  • #18
Pengwuino
Gold Member
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Art said:
There is nothing new in that, UNOCAL have being saying that all along. BTW generally the directors of companies being taken over recommend the deal that is best for them personally.
The US debt to China also remains whoever ends up getting UNOCAL.

Well i saw it on the news and saw this thread so i just threw it on. But whatever.
 
  • #19
stoned said:
solution ? another war.
To do that they'd have to borrow the money from China to finance it and if they went to war with China it would be a little like blowing up your own bank. :biggrin:
 
  • #20
edward
119
166
Pengwuino said:
Well they just announced that UNOCAL is being bought by Chevron instead so this thread goes down the toilet :P. Or well, doors arent closed for China to get it but UNOCAL said Chevron's deal is a positive move for its share holders.

The main thrust of this thread is about the fact that the USA is selling its debt to a China! Currently over $200 billion!
What part of that don't you understand?
 
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  • #21
INCREDIBLE but true

Over !00,000 young Americans died and another 300,000+ were wounded fighting communism.
Now the Chinese communists are buying our national debt and no one really cares.
 
  • #22
Smurf
396
3
1. "Communist China" is a joke these days.
2. Americans never fought 'communism'. Communism is an ideology, Americans fought foreign business competition.
3. Where'd you get that figure from?
 
  • #23
Smurf
396
3
edward said:
This main thrust of this thread is about the fact that the USA is selling its debt to a China!
What part of that don't you understand?

I
Pengwuino said:
Well i saw it on the news and saw this thread so i just threw it on. But whatever.
If you're going to be aggressive and insulting at least be smart about it. He's already answered that.
 
  • #24
edward
119
166
Smurf said:
If you're going to be aggressive and insulting at least be smart about it. He's already answered that.

Originally Posted by Pengwuino
"Well they just announced that UNOCAL is being bought by Chevron instead so this thread goes down the toilet :P. Or well, doors arent closed for China to get it but UNOCAL said Chevron's deal is a positive move for its share holders."

My reply was:

"The main thrust of this thread is about the fact that the USA is selling its debt to a China! Currently over $200 billion!
What part of that don't you understand?"

Does, "What part of that don't you understand?" = aggressive and insulting
here now? I have seen much worse than that. If it bothers anyone you have my apologies.

BTW: As to being smart about it: " Well I saw it on the news and saw this thread so i just threw it on. But whatever." This was Penguino's reply to Art not to me. :wink: :confused:
 
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  • #25
Smurf said:
1.
2. Americans never fought 'communism'. Communism is an ideology, Americans fought foreign business competition.

North Korea and Vietnam weren't giving us any "foreign business competion."

Perhaps you should go to a local chapter of a: DAV, VFW, Or VVA. And enlighten them.

Better yet go to a local Nam Jam (if you know what it is.) My buddies will enlighten you.

The causualities number comes from: Korean war+ Vietnam+ those lost in overflights of Russia+ those lost in covert missions you know nothing about.

As far as what will happen with China, it all depends on how we deal with them. When one doesn't learn from history it tends to repeat itself.

In 1990 China was the sleeping giant that the USA was in 1940. China is no longer sleeping. And China has a large surplus of U.S. Dollars.
 
  • #26
Smurf
396
3
solutions in a box said:
North Korea and Vietnam weren't giving us any "foreign business competion."
I don't know much 'bout Korea, but I would put Vietnam under the same category as Nicuragua, El Salvador, Guatamala, Iran/Iraq, Panama, and others. Namely, to prevent a government from developing independantly outside of American economic influence.

Perhaps you should go to a local chapter of a: DAV, VFW, Or VVA. And enlighten them.
I would do that, but unfortunately those are all American isntitutions. The closest thing we have here is the legion hall, and they would actually listen and probably agree with me.

Better yet go to a local Nam Jam (if you know what it is.) My buddies will enlighten you.
Again, not a lot of those in Canada, closest thing I've been to was a Sarge Litecum show, does that count?

The causualities number comes from: Korean war+ Vietnam+ those lost in overflights of Russia+ those lost in covert missions you know nothing about.
Ok, be honest now, did you actually work it out? Or did you just guess a number and jot it down? And if I were you I'd include a lot more than that in my own tally. Show me your math if you have any, I'd love to see it (would make the talling the rest a bit quicker)
 
  • #27
edward
119
166
Solutions:

Don't bother with the math let the Canadian youngster figure it out. He might actually learn something in the process.

Smurf: hint, google each military action separately, then just add. :wink:
 
  • #28
China revaluating its currency

This could be one of those "good news bad news" situations.

Good News:
The Bush administration has pushed for this for a long time. They are under the impression that the Chinese people will now be able to afford to buy products that are Made in America.

Bad news:
The Consumer products that the Chinese will want to buy, are already made in China, even Ford and GM products.

The Department of the Treasury may have to look for a new customer to buy "T bills". If China backs out of buyng our debt, which would be fine with me, we could go down the tubes in big way. China has a total of 650 million U.S. dollars tucked away. What they choose to do with those dollars could be a possible castastrophre.
 
  • #29
edward
119
166
With all of that kind of cash on hand, China is in a position to buy a lot of American assets. It is kind of ironic but it might be best if China continues buying T bills.

If they buy American Companies the factories will be closed here and reopened in China.

SHANGHAI (Reuters) - Haier Group, China's biggest home appliance maker, said Tuesday it is still interested in making an offer for larger U.S. rival Maytag, but has not yet decided on whether to make a formal bid.

http://money.cnn.com/2005/07/05/news/international/maytag_heier.reut/ [Broken]

It amazes me that so many people think that, all national security is about, is having a strong military and lots of oil. :frown:
 
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  • #30
solutions in a box said:
Hmmm now let me see if I have this straight.

We send our industrial base to China. Then we borrow money from China to fight a war. Then we decide we can pay China back with the money saved by giving the wealthy a tax cut so that they can invest the extra cash in China, providing even more jobs in China.

Meanwhile back at home many of the jobs left invovle service sector jobs in high tech, which we are being rapidly out sourced to India.

We can't manage to produce 1,000 armored Humvees in a year and a half, but in the first year of WWII we cranked out 9,000 Sherman tanks. ? Of course this is all because we have to try to balance a budget with the president we have not the president wish we had.
:rofl: Yep, precisely - you've summarised this really well, solutions! That's capitalism for you - someone's making big money out of all this, but it certainly isn't the ordinary American worker.
 
  • #31
The Smoking Man
47
0
edward said:
With all of that kind of cash on hand, China is in a position to buy a lot of American assets. It is kind of ironic but it might be best if China continues buying T bills.

If they buy American Companies the factories will be closed here and reopened in China.

SHANGHAI (Reuters) - Haier Group, China's biggest home appliance maker, said Tuesday it is still interested in making an offer for larger U.S. rival Maytag, but has not yet decided on whether to make a formal bid.

http://money.cnn.com/2005/07/05/news/international/maytag_heier.reut/ [Broken]

It amazes me that so many people think that, all national security is about, is having a strong military and lots of oil. :frown:
What a strange perspective.

Let's see if I have this straight ... American companies move their production to China and the US administration says it's okay to outsource.

German and American companies form partnerships to produce cars. Germany outright purchases British car companies. Both of these are seen as benefits to the brand?

Sony corporation purchases Columbia TriStar and it took them 8.5 years to release 'Return From the River Kwai' (only after a lawsuit) because the topicality included the genuine failure of the Japanese to identify prison ships.

Now Haier wants to purchase the Maytag company to take advantage of brand image built up in America and you're saying that this is somehow a 'communist plot' hatched by the 'Communist' Chinese?

Maybe you should look at why it is that Haier is hesitating over the purchase ... Take a look at the debt. Maytag is not long for this world anyway. If it is purchased by Haier, they will make good the company debt meaning they will give money to the American corporations who are the creditors of Maytag dollar for dollar thus saving American OEMs.

If they 'fail to purchase' Maytag goes under and the creditors get pennies on the dollar; all aspects of this business will be closed including marketing, distribution and repair networks.

But this is all a 'commie plot' right?

Is your tinfoil hat on too tight?
 
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  • #32
The Smoking Man
47
0
alexandra said:
:rofl: Yep, precisely - you've summarised this really well, solutions! That's capitalism for you - someone's making big money out of all this, but it certainly isn't the ordinary American worker.
Question ... Who do you think is the largest user of power in China?

Industry.

Help me here ... who are the largest investors in industry?

So when volkswagon, Ford, Phillips, Samsung, Lenovo, Dell, Motorola, Siemens, Nokia, Emmerson, et al start experiencing brownouts and blackouts due to lack of oil and income starts to fall going into American banks, do you think they just smack a factory into the jungle of a banana republic somewhere that has no skilled labour?

Tell me, do you seriously think that WalMart is going to move production to the USA or at least begin to purchase from injection molders there?

What you fail to realize is that all of America is used to cheap goods now. They are addicted. How many will begin to see spiraling costs as a 'communist plot' and how many will see it as the US administration failing to control inflation?

It's okay to outsource! --- Republican motto.

If the cost of transport goes too high. I suspect that the production will end up in Mexico.

You're right in most ways ... The American workers are not going to see any benefit any time soon.
 
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  • #33
edward
119
166
The Smoking Man said:
What a strange perspective.



Now Haier wants to purchase the Maytag company to take advantage of brand image built up in America and you're saying that this is somehow a 'communist plot' hatched by the 'Communist' Chinese?

Maybe you should look at why it is that Haier is hesitating over the purchase ... Take a look at the debt. Maytag is not long for this world anyway. If it is purchased by Haier, they will make good the company debt meaning they will give money to the American corporations who are the creditors of Maytag dollar for dollar thus saving American OEMs.

If they 'fail to purchase' Maytag goes under and the creditors get pennies on the dollar; all aspects of this business will be closed including marketing, distribution and repair networks.

But this is all a 'commie plot' right?

Is your tinfoil hat on too tight?

Strange or not it is my perspective :tongue2:
The last time I looked the CIA factbook indicated that China is a communist country.

No Plot whatsoever. China, encouraged by big business, has merely outsmarted the USA for the last ten years or so. And it was not at all hard to do, because big business runs the government here. That does not mean that I like it.

You are presuming that Maytag is going to tank. Either way if China gets Maytag thousands of American jobs go to China. The trade deficit with China will increase and the cycle will continue. It would be much better if Maytag moves to Mexico as planned.

Maytag was just one example, there are many more. I am sure that you are aware of that.

There is a big difference between outsourcing jobs and selling entire companies.
 
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  • #34
The Smoking Man
47
0
edward said:
No Plot whatsoever. China, encouraged by big business, has merely outsmarted the USA for the last ten years or so. And it was not at all hard to do, because big business runs the government here. That does not mean that I like it.

You are presuming that Maytag is going to tank. Either way if China gets Maytag thousands of American jobs go to China. The trade deficit with China will increase and the cycle will continue. It would be much better if Maytag moves to Mexico as planned.

Maytag was just one example, there are many more. I am sure that you are aware of that.

There is a big difference between outsourcing jobs and selling entire companies.
You said this was a national security issue though.

It amazes me that so many people think that, all national security is about, is having a strong military and lots of oil.

Wars are fought over national security issues. Using the term loosely to include capitalist take-overs and the like is a dangerous precedent when one realizes that legislation using those words is what allows the President to declare war independent of Congress (short term).

Are you saying that as a 'national security issue', if the president doesn't like the take-over of a company he can order a first strike? THAT's what happens when the Nation's security is threatened.

I suspect that you are a man in search of another term.
 
  • #35
The Smoking Man
47
0
edward said:
Strange or not it is my perspective :tongue2:
The last time I looked the CIA factbook indicated that China is a communist country.
Then a 10 yer old with a copy of the manifesto could disprove your resources.

I'd suggest a plane trip so that you can get the 'whole effect'.

It's actually a 'republic' the way the Neocons would like to see the USA. :biggrin:
 

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