GLOBALIZATION - A case Study

This post is dedicated to illustrating the way large corporations go about globalization.

BOA - A Case Study

Here is the rundown, links to articles on the events interspersed.

First off, the wars in the middle east are very much about the local economies, and also their oil.

The investors know oil will be consumed more heavily every year in China, and that it is only a matter of time before China's consumption level will surpass that of America. Looks like we are finally reaching that point.

Greenspan says Iraq war all about oil... (specifically mentions the Straight of Hormuz)
www.guardian.co.uk...

US controls the Straight of Hormuz...
news.xinhuanet.com...

China buys more cars than the US...
www.scmp.com... =Companies&s=Business

The investors saw this coming. They decided to make a preemptive move on this market. We all should have seen this coming...

I did

Bank of America invests in China's infrastructure...
www.bloomberg.com...

So BOA dumps billions into China in the middle of the largest economic crisis in decades.

I wonder where the money came from???

Bank of America Receives TARP money... (also good look at the other banks)
www.jamaica-gleaner.com...

Someone else saw this storm brewing, they make the world go round. Or maybe just the people on it.

GM & Nissan build plants in Russia
www.jamaica-gleaner.com...

So this is how it goes down, and it's called globalization.

Everyone knows China is the worlds largest emerging economy, and as previously stated, China will be the largest consumer of automobiles and soon afterward petroleum products. In order to capitalize on this future opportunity investors must act early, getting in while the cost is cheap, or even better, driving the cost down to much lower levels.

The financial "crisis" accomplished exactly this, and provided the capital for the projects.

The oil companies see the opportunity and sic their bulldog on the job. (Taking over oil supplies in the Middle East).

The banks fail, paving the way (pun intended) for a government sponsored influx of American taxpayer money to the large banks (TARP).

The large bank (BOA) takes its share, and delves it into an investment in infrastructure in China. The value of said bank then begins to decline (shareholders selling, only way this happens). This allows new investors (or old investors that got out early, wink wink) to buy back in at a discounted price, in essence pocketing the difference in value of their positions (shorting).

Bank of America Shareholders...
moneycentral.msn.com...

Meanwhile, the car giants build manufacturing plants in Russia, China's next door neighbor. It's much easier to ship cars by train and truck from Russia to China than by ship from US to China. Much cheaper too

So as China begins to grow and consumption rises, there is more than enough supply of oil, cars, and the correct infrastructure to meet their demand. All provided by these crafty corporations seeing into the future, er, rather, creating the future.

We as the unsuspecting taxpayers paid for the infrastructure, the war, and the car manufacturing...

GM receives bailout money
www.businessweek.com...

The looming question...

We funded this project called China, will we profit from it?


I.L.

Anyone looking for further insight may reach me at [email protected]


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Why compete in an existing market when you can create a new one?

great post...

this is Reinhardt's philosophy in a great, concise, real world example.

thanks for this!

I think the USA helped China to the point that they would be the only Country that would survive a global financial collapse because of their gold reserves.

Your conclusion assumes we see sustainable growth in the Chinese domestic market. Not happening. Reference the anecdotal evidence of factories closing en masse and the utter destruction of global shipping (showing China's export model slowing down greatly) for substantiation.

These factors and many more do not bode well for a thesis based on an ever increasing, credit derived growth pattern emerging from SE Asia.

I think the USA helped China to the point that they would be the only Country that would survive a global financial collapse because of their gold reserves.

China has 600 tons of gold in reserve, that's around ~$14 billion dollars worth. The United States has 8,133.5 tons of gold in reserve. The Chinese also hold around $682 billion dollars of our debt instruments. That is paper we gave them for their goods. Now, would you rather have good or paper if push came to shove?

How does their gold reserve help them become the only country to survive a financial crisis? I'm genuinely curious as to what your reasoning is.

Great post! Seems to all fit together nicely

You also ignore the fact that while China is now a capitalist nation, it is still an authoritarian nation.

Should domestic demand for petroleum go too high, China has no problem with simply outlawing cars for ordinary people.

Other than that, good post.

Personally I would consider the US' government/ industrial complex to be more insidious. They realise that oil isn't going to last forever; and they have to make the transition to a low-carbon economy first to ensure first movers advantage. But what to do with all the existing infrastructure geared to oil hegemony?

I believe the US will slowly "sell off" its dominant position in the oil industry to China... and then immediately switch to a low carbon economy with cleantech (that it might have been harbouring). The Chinese are left with dominance in a bygone era, and the US will have dominance over the coming era.

www.bloomberg.com...

Looks like China's been doing just fine lately.

I agree there has been a bump in the road, but China is developing too rapidly for this mess to stop them for long, as we can see according to the folks at Bloomberg.

To Soulslayer:

If you think the US corporations will take controlling interest of a commodity that meets the demand of the worlds largest economy by consumer and give it to someone else, you are gravely mistaken.

The US may change to a new form of energy or fuel, but the companies that control the oil will never relinquish control, especially to China.

China is the enemy in their eyes, they have the power to become more powerful than anybody else can imagine, and the CFR and Tri-lats won't let that happen.

It upsets the balance of power...


[edit on 13-2-2009 by intelligent life]