From: Blunderov (squooker@mweb.co.za)
Date: Thu Oct 30 2003 - 10:41:12 MST
[Blunderov]
Bad omen for the minimum wage? See also
http://auto.howstuffworks.com/hydrogen-economy.htm
Best Regards
http://www.mips1.net/mgp03.nsf/0/80256CE100291EEB42256CE6006F2609?OpenDo
cument
<q>
TORONTO - Canada's most successful stock promoter and present chairman
of Ivanhoe Mines, Robert Friedland, is investing heavily in China,
Australia and South Africa on a hunch that those countries will benefit
most from a "deflation boom".
A deflation boom, says Friedland, is akin to previous periods of unusual
prosperity underwritten by tremendous productivity gains - real wealth
growth despite punishing price declines. Such events were seen in
Australia from 1860-90; the United States from 1870-1913 and Japan from
1950-73.
China is Friedland's next candidate for a deflation boom, already at the
right staging point with sustained, strong GDP growth and a stable, but
proportionately more massive population than in countries that
previously experienced deflationary booms.
"The combined population of the US and Britain is less than China's
under-eighteens, none of whom remember Chairman Mao," said an enthused
Friedland, who also noted that English is now a universal subject at
Chinese schools.
"The West's production capacity is moving to China and there is nothing
it can do about it. Germany is prolapsing; the Europeans haven't got the
foggiest idea. The average German worker wants a 4-day week, a 9-week
holiday and still make 40 bucks an hour; but Volkswagen makes the bulk
of its money in Shanghai."
Friedland is running his macro view on a double entry commodity ledger.
On the "left hand side" are things China does not need like lead,
magnesium, molybdenum, tin, zinc and steam coal. On the "right-hand
side" are sea borne iron ore, platinum, alumina, copper, nickel,
metallurgical coal, and gold.
Guess which commodities Friedland is up to his eyeballs in? Ever the
promoter.
That said, Friedland is hardly alone in pushing China to the top of the
miners' totem pole. Chicago investment manager Donald Coxe says: "China
is becoming a price setter on a huge range of finished goods. At the
same time it is a price taker for a wide range of commodities." There's
that double entry reference again.
Friedland is looking forward to a "majestic, long-term rollover for the
US dollar."
"The US dollar is toast because China is going to export awesome
deflation. It is going to depress real wage rates in the West in a very
serious way; will hurt unions and take down urban real estate in the
United States and there's nothing that can be done about it." As an
example, he cited the cost of structural steel which is ten times more
expensive in the West - something has to give and he thinks it's the
minimum union wage.
In contrast, Canada's magnate thinks gold as a proxy for Chinese
liquidity is a good investment along with Chinese urban real estate if
you have a speculative bent. He also believes agriculture plays are
important since China imports vast quantities of foodstuffs such as
sugar, vegetable oils and coffee, whilst it is also a net consumer of
natural resources like natural gas, lumber and pulp.
"We are now in a period where we can divide the world into winners and
losers. Commodities are the only rational haven," asserts Friedland.
"Australia, South Africa, Canada, Mongolia and China are the winners.
The challenged countries are the labour movements and US real estate."
"Clearly Australia is a winner - the seaborne iron-ore trade is an
incredible proxy on Chinese economic growth; they're using about 350
pounds of steel per person per year, whereas South Korea is about 900
pounds per person. If you adjust for South Korea then the delta is about
600 million tonnes," said Friedland who calls Rio Tinto, Anglo American
and BHP Billiton big beneficiaries of the projected boom.
Unsurprisingly, Friedland is especially fond of Mongolia - where his big
copper-gold bet is located - which he patronizes as "China's Canada."
He's also particularly boosterish on South Africa because of its
precious metals, especially the concentration of platinum group metals
that will feature so prominently in the hydrogen economy.
Before Friedland can reap his full reward from South Africa he must
first address several problems with his bushveld property, including a
somewhat rancorous dispute with Australian headquartered Pan Palladium.
Even so, for most investors those are minor issues relative to
Friedland's successes. There is a legion content to take his lead; how
else could one interpret the constant references to the man's private
jet.
</q>
--- To unsubscribe from the Virus list go to <http://www.lucifer.com/cgi-bin/virus-l>
This archive was generated by hypermail 2.1.5 : Thu Oct 30 2003 - 10:41:44 MST