Leapfrog China

Wouldn't it be cool if they could leap technologies too - picture a boom and cheapening in world wide sustainable agriculture and cheaper sources of energy with more efficient products to utilize it with.


from NY Times

Corporate executives from cities across China said in interviews last week at the Canton Fair in Guangzhou and the Global Sources consumer electronics show in Hong Kong that while layoffs were rising, joblessness did not yet appear to be a serious problem.

Many laid-off migrant workers in export-reliant regions like Guangdong province, next to Hong Kong, have returned to their home villages, because high food prices have made farming more remunerative. Others are finding jobs in inland cities that depend more on consumer demand within China.

Workers are not yet lining up outside factory gates in search of work, as they did a decade ago. But they are nonetheless becoming easier to find and hire, said Bill Chen, a sales manager at the Tinly Jieyang Electro-Acoustic Devices Company, which makes automotive stereo speakers in Shenzhen that recently halved its work force to 100 employees.

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With less to fear from rising prices, China’s central bank has already begun reducing regulated interest rates and loosening restrictions on bank lending, even though these steps could result in an expansion of the money supply and an increase in inflationary pressures. With the government running a large budget surplus, the finance ministry has begun lowering taxes on stock market transactions.

“We expect the Chinese government to continue to loosen policies on the back of fast-slowing activity growth and dissipating inflationary pressures,” said Hong Liang, an economist in the Beijing office of Goldman Sachs, in a research note late Monday morning.

Buy American by Warren Buffet

re-posted from NY Times

Op-Ed Contributor
Buy American. I Am.

By WARREN E. BUFFETT
Published: October 16, 2008

Omaha

THE financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So ... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 percent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful...

* * *

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 percent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced president. Yet the Dow rose from 66 to 11,497.

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Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: “I skate to where the puck is going to be, not to where it has been.”

I don’t like to opine on the stock market, and again I emphasize that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: “Put your mouth where your money was.” Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company.