Stock Market Down. How is This a Good Thing?

a reply to: TheRedneck

Yeah, I know what Quantitative Easing is... what confused me was that it has nothing to do with what I said in the OP.

Precisely my point. It has everything to do with the stock market, and your scenario relies on a change of policies away from this mindset of "too big to fail". What did I miss?

My point is that the lower stock market is in anticipation of shortages in Chinese goods, so the result might well be the removal of businesses from China to western countries, including the US. That would place the market on a stronger footing for growth once it recovers from the present dip.

Except that IWF and FED are prepared to throw in a few Corona Extra's already:

“The fundamentals of the U.S. economy remain strong. However, the coronavirus poses evolving risks to economic activity,” Powell said. “The Federal Reserve is closely monitoring developments and their implications for the economic outlook. We will use our tools and act as appropriate to support the economy.”

Fed Rate Cut Due To Coronavirus Matter Of When, Not If

Blame those socialists from China?
The splinter in your eye is not the splinter in your eye.

originally posted by: TheRedneck
That may be our saving grace, although the US doesn't have known reserves enough to last long.

Define 'last long'? The amounts of rare earths used in manufacturing are often measured in micrograms. World demand is roughly 136,000 tones per year, even using conservative estimates there's 2-4 million tons of usable rare earths at Mountain Pass Mine, more than enough for the United States personal consumption.

a reply to: TheRedneck

Those are known reserves, there's plenty of areas that show promise in the UK alone for rare earth minerals.

As I said in my post get rid of the throwaway culture the world has and move towards better recycling technology and cleaner extraction techniques. As AM mentioned these are not elements that are needed in high bulk.

Raw resources are the easiest to calculate. Cost of extraction Vs trade price. Saying the likes of China and Russia could own the rare earth minerals market is akin to saying that South American nations run the gambit on silver production. Maybe not the best comparison since silver is widely recycled and mined silver is only topping up the market yet it's a false statement to say the likes of Mexico are the only places with reserves of note.

The issue is the world's demand of silver necessitates mining in places where silver is abundant. Look at history and the Romans in regards to silver mining. They exploited everywhere and produced more silver than we do today.

There's no shortage of rare earth minerals there's currently a lack of will refining them.

originally posted by: Edumakated
a reply to: TheRedneck

QE stands for Quantitative Easing. Basically, fancy talk for govt buying bonds to drive down interest rates. This is suppose to increase liquidity, lower cost of capital, and encourage investment.

Fascinating how virtually no left-wing commentators or politicians or members here had any problem with QE while it was propping up Obama's anemic "recovery." Only now under Trump do we need to end the practice!

This is a great OP about a much broader topic. I wholeheartedly agree we need to bring more manufacturing back here, for our own economic and strategic security. International trade is never going back in the bottle. I'm not saying we need to go totally isolationist and do EVERYTHING here. But we don't need to be this reliant on other countries' manufacturing.

Services account for 2/3rds of our economy in the US, and almost all of those services are dependent on some form of manufacturing, much of which is overseas. The remaining major sectors are also reliant on overseas manufacturing. That's a recipe for disaster no matter how you spin it.

a reply to: PublicOpinion

You do realize that even if the market hadn't been artificially inflated by those measures (most of which happened during the Obama administration by the way), this virus would still have dropped the market because of everything the OP is talking about?

a reply to: PublicOpinion

Precisely my point. It has everything to do with the stock market, and your scenario relies on a change of policies away from this mindset of "too big to fail". What did I miss?

Actually, no, I don't see it that way. What I am trying to focus on is the probability that a lower market due to lack of supply of needed commodities can cause diversification away from less reliable but cheaper countries.

There's no doubt that quantitative policies affect the market, but no policies can cause a failing market to suddenly spring to life in the face of poor expected profits. Wall Street runs on profit; that's the bottom line. It's the last and purest bastion of capitalism... dog eat dog, no mercy, no compassion, produce or die. Monetary policies only serve to fine-tune the market and are only used to make small adjustments to ease expected swings.

During the Obama years, the Feds literally cut the Prime Rate to zero... free money! Zero interest rate! And still, it was the slowest economic recovery in history, simply because investors didn't expect profits to continue. If monetary policy was all that was needed to recover a struggling market, it would have been the fastest recovery in memory.

Point being, expectations right now are doubtful, and the market is showing that. Investors have concerns about the spread of this new virus in a country which is quite literally the main source for many necessary materials and components. I believe this will cause businesses to relocate to other countries where the raw materials may not be as plentiful, but where sufficient amounts exist to be profitable. I also say this is a good thing, as it takes economic power from China and brings it to more countries around the world. Brazil and India, IMO, appear to be best poised to take advantage of this need, although I hope the US winds up producing at least some of the needed materials. Rare earths are a vital part of our National Security.

TheRedneck

originally posted by: TheRedneck
a reply to: PublicOpinion

Precisely my point. It has everything to do with the stock market, and your scenario relies on a change of policies away from this mindset of "too big to fail". What did I miss?

Wall Street runs on profit; that's the bottom line. It's the last and purest bastion of capitalism... dog eat dog, no mercy, no compassion, produce or die.

Unless you're Tesla being propped up by subsidies without being able to produce a profit on your own.

a reply to: AugustusMasonicus

You're still missing a couple of things.

First is cost, the primary reason companies started in and migrated to China in the first place. Technology requires the use of specific rare earths regardless of cost; one cannot substitute, nor can one simply use a different amount. It doesn't work like that. So the cost factor will directly impact the cost of all technology products. Present policy has allowed for some refinement to begin in the US, but this is primarily used for research; the price is prohibitive for manufacturing. If we wish to develop raw material support here, many of the environmental regulations will have to be removed.

Second is the fact that rare earths are not substitutable. If the application calls for thorium, one cannot simply substitute lanathium. I'm not going to bore everyone with the various uses of the 17 elements referred to as rare earths, but suffice it to say they are not equally distributed. Even China is lacking in some which are found in abundance in other areas. The advantage China has is that more of these elements are located there than anywhere else, and thus the advantage of using one ion implantation device to dope many different types of semiconductors.

Thirdly, I believe you are overlooking the potential for growth in the general industry. New methods of using these elements are being discovered every day. I actually know one professor who is presently trying to develop the next generation of MOSFETs: lower heat dissipation, faster, and able to handle higher currents. Several others are working on higher-efficiency solar cells. Still others are looking into using rare earth compounds to develop lasers and LEDs of differing spectral characteristics. Every one of these developments opens up a new market.

The amounts may be measured in micrograms, but that is misleading. A single chip, say, a microprocessor for a desktop or mobile phone, may use less than that, measured in micromoles or even atoms. But combine that need with millions of processors, and the amount goes up from micrograms to pounds. You are speaking of research, not manufacturing.

TheRedneck

a reply to: RAY1990

Those are known reserves, there's plenty of areas that show promise in the UK alone for rare earth minerals.

Yes, as a matter of fact I could dig up my yard and run it through the chemical processes, and wind up with rare earth elements. The problem is I would sacrifice a massive amount of soil and rock for a tiny, infinitesimal amount of rare earths.

Rare earths are called "rare" because they do not exist in "veins" like many of the minerals we mine. One can find a vein of coal and extract a lot of high-quality coal from coal-rich rock quickly. One can find a vein of silver ore and get a pretty decent amount of silver from a small area pretty quickly. But there are no veins of rare earths; they exist as oxides in tiny amounts around the globe. Some areas have higher concentrations than others (like China), but even these require a lot of area to be processed for little result. Most of China's rare earths come from mines primarily used for other ores; they simply re-process the waste after the main ore is extracted to also retrieve the rare earths. They have enough concentration to make that profitable.

I do not discount the fact that there may well be other, undiscovered areas that harbor reasonable concentrations... there may be some in the UK as you claim. But one does not normally open a mine just for rare earths... one opens a mine for iron or copper or coal or silver, and then uses the remainder to obtain the rare earths.

TheRedneck

a reply to: face23785

Unless you're Tesla being propped up by subsidies without being able to produce a profit on your own.

That's a good example. It doesn't matter where those profits are coming from; all that matters to Wall Street is that bottom line. If the government subsidies make a bottom line good, who cares?

TheRedneck

originally posted by: TheRedneck
You're still missing a couple of things.

First is cost, the primary reason companies started in and migrated to China in the first place.

It's going to be subsidized due to defense industry requirements.

You are speaking of research, not manufacturing.

I gave you world consumption and United States reserves, there's nothing to worry about with China. It's overblown rhetoric.

originally posted by: TheRedneck
a reply to: face23785

Unless you're Tesla being propped up by subsidies without being able to produce a profit on your own.

That's a good example. It doesn't matter where those profits are coming from; all that matters to Wall Street is that bottom line. If the government subsidies make a bottom line good, who cares?

TheRedneck

True enough.

a reply to: TheRedneck

Exactly. That was why I brought silver into the conversation. There's actually not that many places where you can just mine native silver and make a profit. Silver is often the byproduct of mining other minerals. Globally it has a very steady supply, yes some nations hold the most and best reserves but it genuinely doesn't negate the rest of the world's contribution to the overall production.

It's highly recycled too.

Most modern mining techniques are done on a crazy industrial scale. I'm well aware of open pit mining, the environmental risks and often the small amounts in percentage in metals these companies get in terms of tonnes mined. The point with most mining these days is availability not quality.

I say dig deeper. It's cleaner and with automation we can most definitely make it safer. We understand the geology well... South African diamonds weren't found at miles under ground by luck.

What's easier? Playing fetch the asteroid or having machines survey and operate mines for us at depth. Because one is often considered a viable option in the future and the other I've never seen talked about personally. Earth has everything we need in abundance pretty much everywhere. Just like the UK wasn't the only source of tin back in the day it was just the easy one and honestly modern mining is and should be simple geology. It's all about cost and that's why we ship millions of tonnes of resources around the world.

Most nations can actually be somewhat self reliant and tackle global carbon emissions in a big way by producing their own resources at home, ain't that a win win for both parties arguing in the world right now?

Except them dirty globalists of course 😂
Maybe I'm being too optimistic? Non of what I say is in the realms of impossibility though... There's also deep sea automated mining too that shows huge potential but that's for another thread.

a reply to: TheRedneck

It's the last and purest bastion of capitalism... dog eat dog, no mercy, no compassion, produce or die

And I thought we were talking about the stock market? The one place that produces nothing but QE?



Newsflash:

[...]
The yield on a 10-Year U.S. Treasury bond plunged to 1.14% on Friday, a new record low to cap off a week of record lows, as investors continued to flee risky assets.
[...]
Despite this week’s blockbuster losses, the S&P 500 is still holding on to some long-term gains: it’s up 5% from where it was on this day last year.

How hard was it? Sooo haaard!

Dog eat dic... err... dog world... wait!
What did I read? LONG term gains?!?

Oh, the panic!

our National Security.

About time you take your National Security Patriot Acts, and put em where the sun doesn't shine: to the rare earths for example. Just a thought, ya know...

a reply to: TheRedneck

All great points, as my understanding tectonics and age of the rocks can play a big factor. Geopolitics be damned the west is smart enough to figure solutions. If that's how you want to see things.

The only possible benefit is it might convince foreign firms to stop manufacturing in China. Hopefully, it’ll result in a manufacturing boom for the West and the end of China’s imperial ambitions.

I pray it won’t result in the worst depression since the Great Depression, which lasted 10 freakin’ years. I’m too old to deal with something like that; I like being retired.

originally posted by: RAY1990
a reply to: TheRedneck

As I understand it the biggest problem with mining rare earth minerals environmental problems and cost. We can always do it safer and cleaner. China has adopted the throwaway culture, it loves it. Having just checked China's imports I noticed machines and raw materials it mainly imports.

Ya know? I always figured the real nations in charge have well defined construction and manufacturing capabilities. Raw resources can always be got but turning them into buildings, components and items is the real specialist part... This most definitely applies to military application too. Point being China is a producer and it's the rest of the world that enabled it to be the workshop of the world. It relies on us more when it comes to it though. It's why I agree with Trump on fighting intellectual property theft because the Chinese government are far from stupid.

One can have hope for the future but nobody wants to live near contaminated mines, nor work in them usually but I reckon we can tackle that with automation and heavy research into extraction technology. The world can do fine without China, it needs it. I wholeheartedly agree with people who say enough is enough with desecrating the planet. But it's the throwaway culture that needs tackling within industry and society that's an issue.

China having no environmental laws and the ability to ignore those laws is a big factor in their market dominance

a reply to: korath

You wouldn't happen to be thinking George Soros has his fingers in this?

originally posted by: TheRedneck

So what is now preventing companies in the West from getting into semiconductor production?

Only one thing so far as I can see: rare earth minerals.

The other key point is that they dont have unions, minimum wage, benefits, workers comps, worker rights, child labor laws, lawsuit , liability, or any worker s rights.

What i find interesting with all these globalist trying to make the world a better cleaner place is that they completely overlook the slave labor.

Its primarily about the cheap labor and lack of labor rights. We could have all the resources here and we still couldn't compete. Like the auto manufacturing industry. we had the plants ,equipment, knowledge, and workers. In the end we shipped the manufacturing industry to china because the cheap labor and lack of worker rights.

This china issue should wake people up to the dangers of being dependent on foreign countries for manufacturing , but it won't matter.

The cost savings and profit are more important for corporate america who have the impossible task of infinite growth. Even if it screws them and all of us in the long term. Thats after all how we got here despite what ross perot and anyone with common sense saw when it first started.

a reply to: Itiswhatitis1979

Yes. We should boycott China anyways until they sort out their human rights abuses. Ethically sourced goods/resources should be a fundamental western value if you ask me.

I know I'm dreaming on that issue though.