Viewpoint: Are we being outmaneuvered by the Chinese govt.?

Question: what is the connection between building skyscrapers and economic depression? New York’s Empire State Building recently marked its 75th anniversary. Asia Times says it is a great irony, but every time a record high skyscraper has been built, it has been linked to financial collapse.

The Empire State was begun in the 1920s and finished in the Great Depression of the 1930s.

Today, the Burj Dubai is being built in the Persian Gulf city-state of that name. Parallel to that is the sharp plunge in the Dubai stock market since December. The Dubai market has slid down 53 percent in four months, a collapse a major Wall Street firm’s analyst called “an adjustment phase.”

He told a newspaper: “We believe that Dubai is the Shanghai and Hong Kong of the Middle East.” That is not a great prediction. The Shanghai Stock Index is down 42 percent from its bull-market high point almost five years ago. Hong Kong’s Hang Seng Index is down 13 percent from its peak in March 2000.

Three buildings remain on the New York skyline as reminders of the exuberant Jazz Age. They are the Chrysler Building, the Empire State Building and the Manhattan Company Building on Wall Street.

Today, there also are three contenders for tallest building in the world—one in Malaysia, one in Taiwan and the one in Dubai. The first two held the title of tallest for only a few months.

Edward R. Dewey, who studied this ironic link in the 1940s, said the “world’s tallest” sell signal for stocks comes when a tower is conceived as it takes some time to complete. A new highest skyscraper always is occupied in the wake of a bull market that prompted the building’s creation. The Malaysian project topped out in 1994 and 1997 before the Petronas Towers were finished. Taiwan peaked in 2000, just ahead of the completion of the Taipei 101 building in 2004.

Like these earlier buildings, Dubai’s Burj Dubai is being built amid a crashing stock index. Like the others, its height is being kept secret but is believed to be about 800 meters, about twice the height of the Empire State Building.

In Chicago, the proposed 2,000-foot Fordam Spire will top the Sears Tower by 8 feet, and “The Donald” is working on his new Trump Tower.

In New York City, the Freedom Tower, planned to stand where the ill-fated World Trade Center once stood, has been delayed again and again, victim of a lack of will and bureaucratic obstruction. Evidence, says Asia Times, that the U.S. is beginning to lose its world dominance.

Many say the empire is beginning to crack at the edges, and so is the world economy. Equity markets around the globe were plunging last week, raising concerns that the global economy is headed for big trouble. An entire year’s gains have been wiped out in less than a week.

A week ago, the London market had its biggest single-day percentage slump in three years. Germany’s DAX index was down 3.4 percent; France’s CA lost 3.2 percent; the Dow dropped 1.8 percent; Nasdaq Composite was down 1.5 percent. Prices for U.S. Treasuries nosedived right along with stocks. The yield on the 10-year note hit 5.15 percent.

Fears exist that the world’s central banks—the Fed, the Bank of Japan and the European Central Bank—have been watching interest rates and money growth, but have been ignoring or unconcerned about the derivative bubble’s rapid growth and the upward momentum of gold and other commodities like oil and copper.

Dr. Jim Walker, a Hong Kong-based economist for CLSA Asia-Pacific Markets, said: “We are possibly in the most dangerous period for global financial markets in my working life.”

The UK’s Telegraph reported that the recent leap in copper prices has cost a group of banks and investors on the London Metal Exchange some very hefty losses, boosting worries about the stability of the commodities market.

A market source commented: “The dramatic differential we have seen over the past six weeks has cost them a huge amount of money. The bigger players can absorb the losses, but smaller operators have nowhere to hide.”

Copper, last week, hit a record $8,875 a ton, but futures prices for April 2011 are only $3,778 per ton. Speaking of copper, what is happening with this metal in Europe is a largely unrecognized sign of pending economic collapse.

In France, according to the Telegraph, thieves are ripping up and taking the 5-millimeter copper wire from the overhead wires and buried cables that power the high-speed trains. The heavily guarded track between Rheims in northern France and Metz in the east has been a target some dozen times. Seven tons of the metal are gone from that stretch of line.

In Le Havre, bold thieves hijacked two trucks loaded with 50 tons of nickel. The metal is worth $22,200 a ton, up $500 a ton last week. In Belgium, 40 raids took place on the copper wire in signal systems on rail lines between Brussels and Charleroi.

“Fabricators have started to impose a security surcharge,” said Simon Paynton, head of the International Wrought Copper Council. “Of course, we have thieves every time there’s a price spike, but we’ve never had a spike like this before.”

Copper, nickel, zinc and aluminum all have soared to record highs, pushed by industrial revolutions in China and India. A study by the U.S. National Academy of Scientists warns we have used up 26 percent of all the copper we are ever likely to find in the earth’s crust. Tightening supplies of many commodities promise to spawn more and more thefts of increasingly valuable resources.

Speaking of resources, gasoline supplies are very much on the administration’s mind. Will there be enough to keep prices down this summer?

To that end, Vice President Dick Cheney was dispatched to the Mideast and Central Asia to line up adequate amounts.

Cheney discovered he was a day late and a dollar short. Or, as an administration spokesman said, “We’re in a race with China, and so far we’re losing.” In late April, according to Insight magazine, Chinese President Hu Jintao, during his visit to Washington, flatly rejected President George W. Bush’s proposal to cooperate on energy resources to ensure global market stability. Hu later visited Nigeria, which furnishes about 17 percent of U.S. oil imports.

Everywhere Cheney went, he found the Chinese had been there first and had signed contracts with each oil-rich nation to furnish certain amounts of oil and gas to China. U.S. intelligence sources have told the White House that Mideast oil supplies will be very tight after 2008.

In Central Asia, Cheney found the leaders there did not trust the U.S. and had already signed contracts with China to supply 30 billion cubic meters of natural gas each year from 2009 to 2039.

One of Cheney’s prime targets was Kazakhstan, the purportedly richest oil and gas state in the region. “Obviously,” said Cheney, “Kazakhstan is important given their considerable resources. It’s one of the few places where we’re going to see an increase in oil production from a non-OPEC state over the next few years.”

The Bush administration has been urging Kazakhstan to send its oil through the Baku-Tbilisi-Ceyhan pipeline, thereby bypassing Russia and furnishing Europe and the U.S. with plentiful oil and gas. An agreement may be signed next month.

Not only the White House but the Congress has been increasingly worried about rising gasoline prices as the mid-term congressional elections loom in November. The Senate Commerce Committee recently accused the administration of failing to use technology intended to boost auto fuel economy.

Transportation Secretary Norman Mineta told the committee: “The president and I are committed to improving fuel economy across the board through an open regulatory process built upon sound science and economics, but we will not accept an arbitrary statutory increase under the current passenger car system.”

While the Bush White House stumbles around trying to solve this dilemma, Cuba has given the Chinese permission to drill for oil in its offshore waters. At the same time, a rising tide of anti-A

merican rhetoric flows around the globe. Hang on to your hats, folks, it’s going to be a hot, rough summer.

From the May 24-30, 2006, issue

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