As America sinks under the weight of trade deficits, budget deficits, and a war whose cost is rapidly reaching the point where we could have developed a new energy source instead of trying to steal oil, another country reaps the benefits of our stupidity. Seems like communism is really working out for somebody. Note the paragraph on "Fixed Asset Investment rising 21%". That translates to "your job going to China."
China sees sweltering 9.5% growth
GDP above estimates, no plans to ease cooling measures; wants more time before yuan adjustment.
January 25, 2005: 6:44 AM EST
BEIJING (Reuters) - China's economic growth sped up to 9.5 percent in the year through the fourth quarter, but a senior official dampened speculation Tuesday of any imminent currency revaluation or interest rate rise to curb the rampant economy.
The strong figure, exceeding expectations for an 8.6 percent expansion, led chief statistician Li Deshui to signal there would be no let-up in the campaign to restrain growth.
"We will strengthen and improve macro-economic controls and keep controls on credit and land," he said.
But any change to the currency policy would take time and he saw no immediate need to raise interest rates, he later told Reuters in an interview.
"Whether we need to raise interest rates will be based on the economic situation," he said in the interview. "But I can't see any need right now."
The growth figure compared with 9.1 percent in the year through the third quarter and indicated that China's economy was not heading for a sharp slowdown.
China has taken steps, including its first interest rate rise in nine years in October, to try to cool growth for fear heavy investment in key sectors could lead to overheating.
The country's growth rate has become a key issue for financial markets, which view the world's seventh-largest economy as a major driver of the global economy. Investors have worried that China, in slamming on the brakes, would curb demand for imported raw materials, machinery and components.
Gross domestic product for all of 2004 was 9.5 percent higher than a year earlier thanks in part to robust exports and agricultural production, the National Bureau of Statistics said.
That compared with growth of 9.1 percent in 2003 and was the strongest since 1996, when the economy grew 9.6 percent.
"What would economic growth have been like if we had not taken macro-economic control measures last year?" said Li, head of the bureau. "Maybe economic growth would have been much faster. Maybe we would have already seen serious inflation. Maybe we would have faced big ups and downs in the economy."
Currency, interest rates
Analysts said the numbers could put pressure on Beijing to raise interest rates again after its 0.27 percentage point increase last year.
"We think without further rate hikes, the growth is at some risk. The big worry is that real interest rates are still too low," said Ben Simpfendorfer, a JP Morgan economist in Hong Kong.
Adjusting for seasonal patterns, Simpfendorfer calculated the economy had grown at a 12.9 percent annualized rate between the third and fourth quarters, accelerating "markedly" from the 8.4 percent rate it recorded between the second and third quarters.
The United States and others have pressed Beijing to allow its currency, the yuan, to move more freely, saying the current level of 8.28 to the dollar makes Chinese exports unfairly cheap.
A stronger exchange rate would also help restrain growth.
But Li said: "China doesn't have conditions to adjust the renminbi (yuan) exchange rate at present."
Li's comments caused the premium for one-year non-deliverable yuan forwards to narrow about 6 percent to 3,750 points on Tuesday, implying an exchange rate of 7.9 per dollar in 12 months' time. Analysts also cited it as a factor in trading of the dollar, yen and euro.
Some analysts think China may adjust its exchange rate in the second half of 2005, especially if consumer price inflation rebounds. It fell to 2.4 percent in the year through December after hitting a seven-year high of 5.3 percent in the year to August.
Better balance
Widely watched fixed-asset investment was 21.3 percent higher in December than a year earlier, the government said. That was its slowest pace in seven months, but Li said China needed to be alert for any rebound, an assessment several analysts agreed with.
Lehman Brothers economist Rob Subbaraman saw evidence that the economy was becoming better balanced.
"It does look like investment has slowed down through 2004," he said. "Part of the strength reflects also the pick-up in consumption and also robust exports, and that's good. I don't think the take from this number should be 'oh no, the economy is roaring away again, overheating'."
However, economists are skeptical of the reliability of much Chinese economic data, including GDP. The government is trying to improve its statistics.
Growth of producer prices eased to 7.1 percent in the year through December from 8.0 percent in the year through November. Industrial output was up 14.4 percent, showing its slowest pace since the year through May 2003.
"The government will continue to use monetary tools as well as administrative measures to rein in investment," said Vincent Kwan, chief economist with Hang Seng Bank in Hong Kong. "We expect if the economy does not slow significantly, interest rates will go up in the first half."
Retail sales rose a higher-than-expected 14.5 percent in the year through December. Their recent strength has prompted optimism that consumption can take up some of the slack from falling investment growth.
WAR SPENDING:
Bush to Seek $80B for Iraq, Afghanistan
By ALAN FRAM
Associated Press
WASHINGTON - The Bush administration plans to announce Tuesday it will request about $80 billion more for this year's costs of fighting wars in Iraq and Afghanistan, congressional aides said Monday.
The request would push the total provided so far for those wars and for U.S. efforts against terrorism elsewhere in the world to more than $280 billion since the first money was provided shortly after the Sept. 11, 2001, airliner attacks on New York's World Trade Center and the Pentagon.
That would be nearly half the $613 billion the United States spent for World War I or the $623 billion it expended for the Vietnam War, when the costs of those conflicts are translated into 2005 dollars.
White House officials refused to comment on the war spending package, which will be presented as the United States confronts a new string of violence in Iraq as that country's Jan. 30 elections approach.
The forthcoming request underscored how the war spending has clearly exceeded initial White House estimates. Early on, then-presidential economic adviser Lawrence Lindsey placed Iraq costs of $100 billion to $200 billion, only to see his comments derided by administration colleagues.
House Minority Leader Nancy Pelosi, D-Calif., said Monday it was Congress' "highest responsibility" to provide the money that American troops need. But in a written statement, she said Democrats would ask questions about Bush's policies there.
"What are the goals in Iraq, and how much more money will it cost to achieve them? Why hasn't the president and the Pentagon provided members of Congress a full accounting of previous expenditures?," Pelosi added.
She also said she wanted to know why Iraqi troops aren't playing a larger role in security there.
The package will not formally be sent to Congress until after President Bush introduces his 2006 budget on Feb. 7, said the aides, who spoke on condition of anonmity. They said White House budget chief Joshua Bolten or other administration officials would describe the spending request publicly Tuesday.
Until now, the White House had not been expected to reveal details of the war package until after the budget's release.
The decision to do so earlier comes after congressional officials argued to the administration that withholding the war costs from Bush's budget would open the budget to criticism that it was an unrealistic document, one aide said. Last year, the spending plan omitted war expenditures and received just that critique.
Adding additional pressure, the Congressional Budget Office planned to release a semi-annual report on the budget Tuesday that was expected to include a projection of war costs. Last September, the nonpartisan budget office projected the 10-year costs of the wars at $1.4 trillion at current levels of operations, and $1 trillion if the wars were gradually phased down.
Aides said about three-fourths of the $80 billion was expected to be for the Army, which is bearing the brunt of the fighting in Iraq. It also was expected to include money for building a U.S. embassy in Baghdad, which has been estimated to cost $1.5 billion.
One aide said the request will also include funds to help the new Afghan government combat drug-trafficking. It might also have money to help two new leaders the U.S. hopes will be allies, Palestinian leader Mahmoud Abbas and Ukraine President Viktor Yushchenko.
The aides said the package Bush eventually submits to Congress will also include money to help Indian Ocean countries hit by the devastating December tsunami.
Not including the latest package, lawmakers have so far provided the Defense Department with $203 billion for the wars in Iraq, Afghanistan and against terrorists, according to the Congressional Research Service.
That includes $121 billion for the war in Iraq, $53 billion for Afghanistan and $29 billion for improved security and anti-terror efforts in the United States and abroad.
The research service is an arm of Congress that provides reports to lawmakers and aides.
In addition, Congress has provided nearly $21 billion for rebuilding Iraq and almost $4 billion for Afghan reconstruction. Large portions of that money has not been spent, especially in Iraq, where an armed insurgency and bureaucratic delays have slowed many projects.
January 25, 2005 -- NY Times
Budget Office Predicts $368 Billion Deficit This Year
By JOHN O'NEIL
The Congressional Budget Office predicted this morning that the federal government will run a deficit of $368 billion this year, a figure that does not include a request that administration officials plan to unveil later today for $80 billion more in funds for the wars in Iraq and Afghanistan.
The figure also does not include the cost or savings from any of the proposals President Bush is expected to make in the budget he will submit to Congress shortly.
The deficit for the 2004 budget year was $412 billion, representing 3. 6 percent of the nation's total economic activity. The deficit projection for this year, excluding growth in military spending and other budget changes, would represent 3 percent, the budget office said..
Last year's deficit was the largest ever in dollar terms, although the deficits run under President Reagan in the 1980's were larger as a percentage of the economy. President Bush pledged during last year's campaign to cut the deficit in half by 2009, and aides have said that his new budget will include a number of spending cuts.
Spending on military operations, however, seems likely to continue to grow.
The request for $80 billion would bring projected spending on the conflicts in Iraq and Afghanistan to $105 billion for the 2005 fiscal year - a figure that far exceeds the administration's pre-war estimates of overall costs.
The spending in 2005 would bring the total cost of the two conflicts to almost $300 billion. !!!!
The nonpartisan Congressional Budget Office also projected the 2006 budget deficit at $296 billion, and released a 10-year fiscal projection that estimated budget shortfalls over the next decade at $855 million, down from its projection last year of $2.3 trillion. But the new reported noted that the 10-year figure, like the projection for the coming year, would predict larger shortfalls if the full amount actually being spent on the conflicts were included.
Long-term budget estimates are notoriously unreliable, being based on assumptions both about economic activity and policy decisions yet to come. The budget agency stressed that the figures are not meant as a hard and fast prediction, but as a benchmark that policy makers can use to inform decisions about new proposals.
The estimates also exclude the cost of measures the president plans to introduce when he submits his budget to Congress next month. Those include the partial privatizing of Social Security, which would require up to $2 trillion over the next decade to make up for money being diverted into personal accounts; the extension of tax cuts passed in Mr. Bush's first term, which would cut revenues by an estimated $1.8 trillion over 10 years; ; and the $350 million pledged by President Bush for tsunami relief efforts. Many members of Congress also favor easing the impact of the alternative minimum tax on middle-class families, a change that the budget office estimates would cut revenues by almost $500 billion over the decade.
The budget agency said that its figures were based on a prediction of strong economic growth in the next two years, based on an assumption that the economy has been performing under its capacity in recent years. But for later in the decade it predicts a slowing of growth as more members of the Baby Boom generation leave the workforce and health care costs rise with the aging population. And as in other years, the figures exclude the effect of the surplus currently being run by Social Security, which uses the excess to buy government bonds that it plans to use to pay benefits later in the century. The actual difference between non-Social Security revenues and spending projected for 2005 is $541 billion, not including the expected costs for the war in Iraq and Afghanistan. The actual spending gap in 2004 was $567 billion.
Scott McClellan, the White House spokesman, said this morning that administration officials would lay out the details of the new request for military funding later today.
"We have talked about how we would be coming back for additional resources for our troops," Mr. McClellan said, according to The Associated Press.
Representative Nancy Pelosi of California, the House Democratic leader, said in a statement that Democrats "have pledged to give our armed forces the support the need."
But she said that the administration would face tough questions over the new request about its policies in Iraq, in particular over the failure to train and equip more Iraqi troops.
Democrats quickly seized on the new deficit figures as well. Representative John Spratt of South Carolina, the ranking Democrat on the House Budget Committee, issued a statement today deriding President Bush's assertion that he would cut the deficit in half.
"Republicans control the House, the Senate and the White House, but they can't control the budget, and they can't escape responsibility for its dismal condition," he said.
Noting that the budget office's projection when President Bush took office was for a 10-year surplus of $5.6 billion, he said, "Terrorism and recession have taken their toll, but oversized Republican tax cuts have brought on a major portion of this fiscal reversal."
The chairman of the Senate Budget Committee, Judd Gregg of New Hampshire, also called the figures worrisome, but saw in them more reason to begin making cuts this year.
"If we do nothing, our kids and grandkids will be overwhelmed by the costs of our inaction," said Senator Gregg, The A.P. reported.
Brian Riedl, a budget analyst with the conservative Heritage Foundation, said the figures showed
strong growth in tax revenues, but even sharper growth in the government's spending on health care. Starting in 2006, when the new Medicare prescription drug benefit goes into effect, the cost of Medicare and Medicaid will for the first time exceed the cost of Social Security, Mr. Riedl said.
The budget report projected that spending for Medicare will rise at a rate of 9 percent a year through 2015, and for Medicaid at 7.8 percent a year.
As mandatory costs for the health programs and Social Security go up, along with interest payments to finance the rising national debt, the percentage of the budget going to discretionary programs - that is, everything else - will shrink over the next decade, according to the new forecast.
No doubt that the worlds economies are getting turned on their ear.
I have read that the pollution in China is as bad as it gets. I have a friend who went over there on a tour group and he stated that in the cities he had to clean his camera lens about every hour or so because it was so bad. Maybe they need an OSHA and an EPA to help[;)].
I am sure things are Dickension there, as they were here when we first became industrialized. The actual point I was trying to make is that the money we are giving away to the Chinese in the form trade deficits and to our wasted effort in Iraq, is robbing this country of the same kind of economic growth. Imagine what our economy would be like if that money. most of it our money, was building factories here instead of there, or was available as investment capital here instead of being pissed away on the sands of Iraq. The mis-management of our economic future has been as catastrophic as our mis-management in Iraq.
I agree with you KV, however, we tried to get Shrub out and failed, what can we do now? Just wait it out?
The only option is to make your views known at every opportunity (even though you might find your patriotism, intelligence and humanity being questioned) unless anyone has any other bright ideas.
The only option is to make your views known at every opportunity (even though you might find your patriotism, intelligence and humanity being questioned) unless anyone has any other bright ideas.
Not to mention, your nationality, masculinity, and non-terrorist status as well.
Linear Mode
