Ford Q3 Results Surprise Wall Street Analysts

[ShockFX]

Then is this your Thesis?

 

"Actually it would in the long run. It would force all the automakers into bankruptcy, in which the US government would get the honor of eating all the bad debt Ford and GM have, finally giving the companies a government sponsored break. They would reemerge from bankruptcy rather fast, (Ford would anyway, GM notsomuch) and be much more competitive. It's not like I'm looking forward to it, but the best way to cut the fat is to starve. "

 

No, it's more of a one off sarcastic comment on what would likely happen. The US automakers have some of the worst cost structures of any globally competitive company. Recession leads to bankrupty, bankruptcy leads to US government getting the pension plans and other debt. Ford would emerge faster than GM as it's half the size.

 

I didn't get a Master's in econ, I just continued studying with electives.

[matthewq4b]

Two things, Matt:

 

For 2006, U.S. gross domestic purchases were 14 trillion current U.S. dollars. Of that amount, 9.2 trillion dollars were spent by U.S. consumers.

 

The PURCHASES of U.S. consumers in 2006 were roughly EQUAL to the GDP of China, Germany, and Japan.

 

That is to say, U.S. consumers alone bought products and services in 2006 that offset the net GDP of the next three largest countries on the list.

 

While it is certainly true that the U.S. will not continue to indefinitely hold such a disproportionate amount of consumption, it is just as true that the U.S. consumer still remains, en bloc, the largest 'entity' in the global economy.

 

 

Hey I do not dispute that one bit. But China is gaining ground at an incredible rate. where were they 5 years ago ? 10 years ago ? Where will they be 5 years from now? And they can not stop the tide now they are not going to revert back to pre Tiananmen Square Standard of living.

 

Wehave discussed it befor it is only a matter of time befor China becomes the economic power house on the planet. They have the manufactruing base (thanks to the U.S's desire for ever cheapr goods) and the population to do it.

 

I mean the U.S it not going to up and fold in on it's self over night. But it not going to take 50 years to happen either.

 

---

Regarding currency valuation, the dollar's weakness should not be taken as an indication that the Euro is likely to supercede it as the global reserve currency, and that for two reasons:

 

1) The EU continues to have a far more fractious economy and budgetary system than the U.S., making the idea of a central euro monetary policy more theoretical than real. With any given Euro government feeling free to inflate currency in circulation through deficit spending, the Euro is still subject to the whims of local politics and local electioneering. The euro is hostage to any number of prime ministers, MPs, and local and national election campaigns, as well as local economic (esp. unemployment) policies.

 

2) The cost of shifting to Euros as the global reserve currency would be mammoth, and because it could not be accomplished instantaneously, would flood the market with dollars, causing a collapse not only to a number of economies, but also to reserve holdings that are still dollar denominated. Therefore, out of concern for their own dollar denominated deposits, there will be no run started by anyone in a position to move the market.

 

I never said any thing about moving to the Euro nor is it feaseable.

 

A more likly scenario is the if the U.S dollar continues to fall and the slide can not be stopped by the U.S Government. I could see them going back to a Gold standard (backing the dollar with gold) to stop the slide. Not sure how that would work with current the global economies or if it is even possible.

 

But it would stabilze the U.S dollar and still allow it to be used as global reseve currancy. We have already seen some nations abondon the U.S dollar as thier resevre currancy. Not to much of a stretch for other natons to do the same or even possibly move to gold. Or a possible Gold /econmic value, a portion of the currancy backed with gold with the remaining value based on economic factors.

 

 

Ultimately as with the price of oil, the dollar is on a bubble that will, eventually, burst. There are no significant differences, on a macroeconomic to justify the dollar's valuation now, as opposed to its valuation 3-4 years ago.

 

 

Not sure who's dollar your talking about. The U.S dollar has been over valued for a long time. Just as the Canadian Dollar was under valued for years and years. The U.S can not continue to run up massive debts continously, eventually there will be huge consequenses.

 

Oil is not going to do any thing for a while. The days of $20 barrel crude are over, mostlikly never to been seen again.

 

The other factor is the escalation rate of global crude consumtion is not going to be being matched by production increases. Neither in raw material (crude) or refined product. We have more than enough raw material avalible.

But we have just about tapped all the easy acsess crude on the planet. The Bulk of what is left is heavy crude that requires much longer lead times to ramp up production. No more puch a hole and start pumpiing 6 week later. Now it is start construction and start producing 6 years later.

 

We have to be anticipating requrements 10 years from now, And base the current decisions in regards to the construction of production faciliy's on that .

 

This is why I was so adament a couple-few years back about the U.S and U.S big oil getting their shit in gear and start putting in the massive dollars needed to insure we did not end up in a short term production shortage issue. It looks like it may be inevitable now. Their is new tech that may advert this but it will be by the skin of our teeth if we do.

 

Crude pricing will stabilize but no one knows at what price point it will occur, will it be $70 or $125 a barrel.

 

No one can predict what the Chineese economy is going to do. Their Gov't has to rein in the growth to slow it down, if it stays at the current leval of growth and we do not get Oil production capacity ramped up here pretty quick is going to get pretty ugly in regards to Crude Oil in the next 5 to 7 years.

 

And $100 barrel crude is going to look cheap.

 

Matthew

[mettech]

No, it's more of a one off sarcastic comment on what would likely happen. The US automakers have some of the worst cost structures of any globally competitive company. Recession leads to bankrupty, bankruptcy leads to US government getting the pension plans and other debt. Ford would emerge faster than GM as it's half the size.

 

I didn't get a Master's in econ, I just continued studying with electives.

 

O.K. I understand now. However, I wouldn't expect a bailout for the Big 3 by Uncle Sam. They are no longer the big dog for our economy as they were before 1985.

 

Food for thought: Can you imagine what the world would look like if the U.S. economy would collapse to the level you're suggesting?

[ShockFX]

O.K. I understand now. However, I wouldn't expect a bailout for the Big 3 by Uncle Sam. They are no longer the big dog for our economy as they were before 1985.

 

Food for thought: Can you imagine what the world would look like if the U.S. economy would collapse to the level you're suggesting?

 

Bankruptcy somewhat forces a bailout, the US government wouldn't want to, but they'd probably tie higher CAFE standards to it or something and call it a win.

 

Yes, and I hate the thought. But you can't spend 30+ years spending vastly more than you earn and not expect a hard fall anymore than the government can.

[mettech]

Hey I do not dispute that one bit. But China is gaining ground at an incredible rate. where were they 5 years ago ? 10 years ago ? Where will they be 5 years from now? And they can not stop the tide now they are not going to revert back to pre Tiananmen Square Standard of living.

 

Wehave discussed it befor it is only a matter of time befor China becomes the economic power house on the planet. They have the manufactruing base (thanks to the U.S's desire for ever cheapr goods) and the population to do it.

 

I mean the U.S it not going to up and fold in on it's self over night. But it not going to take 50 years to happen either.

 

---

I never said any thing about moving to the Euro nor is it feaseable.

 

A more likly scenario is the if the U.S dollar continues to fall and the slide can not be stopped by the U.S Government. I could see them going back to a Gold standard (backing the dollar with gold) to stop the slide. Not sure how that would work with current the global economies or if it is even possible.

 

But it would stabilze the U.S dollar and still allow it to be used as global reseve currancy. We have already seen some nations abondon the U.S dollar as thier resevre currancy. Not to much of a stretch for other natons to do the same or even possibly move to gold. Or a possible Gold /econmic value, a portion of the currancy backed with gold with the remaining value based on economic factors.

Not sure who's dollar your talking about. The U.S dollar has been over valued for a long time. Just as the Canadian Dollar was under valued for years and years. The U.S can not continue to run up massive debts continously, eventually there will be huge consequenses.

 

Oil is not going to do any thing for a while. The days of $20 barrel crude are over, mostlikly never to been seen again.

 

The other factor is the escalation rate of global crude consumtion is not going to be being matched by production increases. Neither in raw material (crude) or refined product. We have more than enough raw material avalible.

But we have just about tapped all the easy acsess crude on the planet. The Bulk of what is left is heavy crude that requires much longer lead times to ramp up production. No more puch a hole and start pumpiing 6 week later. Now it is start construction and start producing 6 years later.

 

We have to be anticipating requrements 10 years from now, And base the current decisions in regards to the construction of production faciliy's on that .

 

This is why I was so adament a couple-few years back about the U.S and U.S big oil getting their shit in gear and start putting in the massive dollars needed to insure we did not end up in a short term production shortage issue. It looks like it may be inevitable now. Their is new tech that may advert this but it will be by the skin of our teeth if we do.

 

Crude pricing will stabilize but no one knows at what price point it will occur, will it be $70 or $125 a barrel.

 

No one can predict what the Chineese economy is going to do. Their Gov't has to rein in the growth to slow it down, if it stays at the current leval of growth and we do not get Oil production capacity ramped up here pretty quick is going to get pretty ugly in regards to Crude Oil in the next 5 to 7 years.

 

And $100 barrel crude is going to look cheap.

 

Matthew

 

A few years ago if someone was to say that oil was going to be $100/barrel, they would tell you that the world would come to an end.

 

The first country that develops and implements the technology and fuel that will replace oil will have the rest of the world by the ...... The more that oil cost, the tighter that grip could be.

 

Any guess on what country will get there first? Any guess on why we are reluctant to build new refiners?

1ZVFT82H065156065.pdf

1ZVFT82H365160689.pdf

1ZVFT85H865152230.pdf

1zvht85h665155880.pdf

[matthewq4b]

 

 

Similar notations and a pile of comments were made when I said the Canadian dollar's value would eclipse the U.S's before the decade was out.

 

Matthew

Edited November 8, 2007 by matthewq4b

[matthewq4b]

A few years ago if someone was to say that oil was going to be $100/barrel, they would tell you that the world would come to an end.

 

The first country that develops and implements the technology and fuel that will replace oil will have the rest of the world by the ...... The more that oil cost, the tighter that grip could be.

 

Any guess on what country will get there first? Any guess on why we are reluctant to build new refiners?

 

 

It is going to be decades or longer before we replace crude on a large scale.

We are going to be facing severe production shortages in less than 10 years. It will not happen before that happens.

 

On a global scale we are already short refining capacity. In NA we are just covering our requrements now. But the facility's to cover the expected increases are already in planning or under construction.

 

Matthew

[RichardJensen]

Hey I do not dispute that one bit. But China is gaining ground at an incredible rate. where were they 5 years ago ? 10 years ago ? Where will they be 5 years from now? And they can not stop the tide now they are not going to revert back to pre Tiananmen Square Standard of living.

 

Wehave discussed it befor it is only a matter of time befor China becomes the economic power house on the planet. They have the manufactruing base (thanks to the U.S's desire for ever cheapr goods) and the population to do it.

 

I mean the U.S it not going to up and fold in on it's self over night. But it not going to take 50 years to happen either.

 

---

I never said any thing about moving to the Euro nor is it feaseable.

 

A more likly scenario is the if the U.S dollar continues to fall and the slide can not be stopped by the U.S Government. I could see them going back to a Gold standard (backing the dollar with gold) to stop the slide. Not sure how that would work with current the global economies or if it is even possible.

 

But it would stabilze the U.S dollar and still allow it to be used as global reseve currancy. We have already seen some nations abondon the U.S dollar as thier resevre currancy. Not to much of a stretch for other natons to do the same or even possibly move to gold. Or a possible Gold /econmic value, a portion of the currancy backed with gold with the remaining value based on economic factors.

Not sure who's dollar your talking about. The U.S dollar has been over valued for a long time. Just as the Canadian Dollar was under valued for years and years. The U.S can not continue to run up massive debts continously, eventually there will be huge consequenses.

 

Oil is not going to do any thing for a while. The days of $20 barrel crude are over, mostlikly never to been seen again.

 

The other factor is the escalation rate of global crude consumtion is not going to be being matched by production increases. Neither in raw material (crude) or refined product. We have more than enough raw material avalible.

But we have just about tapped all the easy acsess crude on the planet. The Bulk of what is left is heavy crude that requires much longer lead times to ramp up production. No more puch a hole and start pumpiing 6 week later. Now it is start construction and start producing 6 years later.

 

We have to be anticipating requrements 10 years from now, And base the current decisions in regards to the construction of production faciliy's on that .

 

This is why I was so adament a couple-few years back about the U.S and U.S big oil getting their shit in gear and start putting in the massive dollars needed to insure we did not end up in a short term production shortage issue. It looks like it may be inevitable now. Their is new tech that may advert this but it will be by the skin of our teeth if we do.

 

Crude pricing will stabilize but no one knows at what price point it will occur, will it be $70 or $125 a barrel.

 

No one can predict what the Chineese economy is going to do. Their Gov't has to rein in the growth to slow it down, if it stays at the current leval of growth and we do not get Oil production capacity ramped up here pretty quick is going to get pretty ugly in regards to Crude Oil in the next 5 to 7 years.

 

And $100 barrel crude is going to look cheap.

 

Matthew

The idea that China will be able to sustain its growth without massive and painful changes in government and accountability is laughable. China's government is less transparent, their legislation and their regulatory agencies are sketchy tools of a disconnected and untrustworthy central government bent on growth at any cost. Consider that Japan is only now emerging from a 15 year long recession that was the product of absolutely irresponsible growth-targeted laws, regulations, and policies--and China makes Japan look fantastic by any measure you care to use. Remember when we were all scared of Japan? Turns out that if your regulatory environment assumes perpetual growth, things are fine. Until your economy stops growing.

 

We will see a collapse of the Chinese economy, and perhaps a change in government long before they eclipse the U.S.

 

Fundamentally, the Chinese economy and government is on a self-destruct cycle.

 

---

 

The most likely scenario, as mentioned before, is that the dollar is in a reverse bubble, that will break at some point in time, most likely if a recession hits other economies harder than it hits the U.S. over the next year or so. The dollar may have been overvalued in the immediate aftermath of the 1998 'Asian contagion' and the 2001 terrorist attacks/recession. However, it is if anything, already undervalued.

 

The gold standard is dead and gone, it is absolutely completely history. It is never ever ever coming back. metals backed currencies stifle growth, or rather, they pin growth to a growth in supply of the underlying metal; furthermore, there is absolutely not enough gold to back U.S. currency in circulation. GDP in the U.S. was $14 trillion last year--not to mention the trillion or so in eurodollar deposits. That is simply NOT going to be backed by gold. Not now, not ever.

 

Every central banker in the world would recoil in horror at the suggestion of a return to the gold standard. Metals backed currency is about as antique as the Model T. It is an idea that, rightfully, has been abandoned.

 

Furthermore, the U.S. treasury and Fed have been content to see the dollar slide. The utter silence of U.S. fiscal and monetary policy makers on the dollar's fall have added to it. In fact a weak dollar is not entirely bad. It bolsters overseas profits for U.S. companies, and it cheapens U.S. exports.

 

In the world of fiat currencies, the silence or the actions of governments carry a lot of weight when it comes to their currencies.

 

---

 

Oil prices will collapse, at the latest, when the Chinese economy collapses. Likely they will deflate sooner than that.

 

I travel a fair bit for work--an average of about 300 miles a week just for business, and the increase in the cost of gas has added about $10-15 per week in expenses over what gas cost 5 years ago.

 

I can easily afford that. I don't like it, but I can certainly afford it.

 

What is driving up the price of oil is not consumption, but perception of consumption.

 

Speculators now outnumber hedgers on the NYMEX by 2:1, 7 years ago the ratio was the opposite. There has been over a 4 fold increase in oil speculators on the NYMEX, and that without doubt has contributed to the rise in oil prices.

 

Furthermore, the weakness of the dollar has exacerbated increased oil costs as oil prices are priced overwhelmingly in dollars.

Edited November 8, 2007 by RichardJensen

[jpd80]

As with most cycles, the market feeds on its own fears or confidence.

To think the US Dollar is going to stay permanently depressed is folly, just as thinking

Chinese expansion of infrastructure will continue unabated forever.

 

The best thing the US can do is take advantage of the weaker Dollar and build up more exports.

China will have its day of reconing and as the communist bosses have never experienced recession,

they will no doubt go into a tail spin when it happens. On that day, the West will have its balance restored.

[matthewq4b]

The idea that China will be able to sustain its growth without massive and painful changes in government and accountability is laughable. China's government is less transparent, their legislation and their regulatory agencies are sketchy tools of a disconnected and untrustworthy central government bent on growth at any cost. Consider that Japan is only now emerging from a 15 year long recession that was the product of absolutely irresponsible growth-targeted laws, regulations, and policies--and China makes Japan look fantastic by any measure you care to use. Remember when we were all scared of Japan? Turns out that if your regulatory environment assumes perpetual growth, things are fine. Until your economy stops growing.

 

We will see a collapse of the Chinese economy, and perhaps a change in government long before they eclipse the U.S.

 

Fundamentally, the Chinese economy and government is on a self-destruct cycle.

 

 

Thing is all the experts said the Chineese economy would have done this by now. China unlike Japn also has much more direct control over the private sector. The Companies over thier do not take a dump with out getting permmsion to do. Right now the biggest limiting factor to their growth is lack of resources.

 

 

And to think the Chinese economy is not going to eclipse the U.S's is just plain silly. It is only a matter of time.

---

 

The most likely scenario, as mentioned before, is that the dollar is in a reverse bubble, that will break at some point in time, most likely if a recession hits other economies harder than it hits the U.S. over the next year or so. The dollar may have been overvalued in the immediate aftermath of the 1998 'Asian contagion' and the 2001 terrorist attacks/recession. However, it is if anything, already undervalued.

 

Not sure how figure it is under valued, The U.S is carrying one of the largest debt ratio's on the planet with absolutly no care or plan to curb spending any thime soon. You can not really belive that is going to continue with out consequences. As it stands now it would take decades for the for U.S to pay down or off the debt

And that is pretty big if ,Your counting on other economies to cool to help recover the value of the dollar. By all prospects it looks like exactly the opposit is happening and most countries economies are ramping up.

Hell ours is in overdrive and still gaining with absolutly no signs of slowing any time. The only thing holding it back is a shortage of equipemnt and personal. We physically can not grow any faster.

 

The gold standard is dead and gone, it is absolutely completely history. It is never ever ever coming back. metals backed currencies stifle growth, or rather, they pin growth to a growth in supply of the underlying metal; furthermore, there is absolutely not enough gold to back U.S. currency in circulation. GDP in the U.S. was $14 trillion last year--not to mention the trillion or so in eurodollar deposits. That is simply NOT going to be backed by gold. Not now, not ever.

 

Every central banker in the world would recoil in horror at the suggestion of a return to the gold standard. Metals backed currency is about as antique as the Model T. It is an idea that, rightfully, has been abandoned.

 

 

Stranger things have happend though. Who would have thought we would have seen Country's Abandoning the U.S dollar as their reserve or own currancy's backing.

 

 

Furthermore, the U.S. treasury and Fed have been content to see the dollar slide. The utter silence of U.S. fiscal and monetary policy makers on the dollar's fall have added to it. In fact a weak dollar is not entirely bad. It bolsters overseas profits for U.S. companies, and it cheapens U.S. exports.

 

In the world of fiat currencies, the silence or the actions of governments carry a lot of weight when it comes to their currencies.

 

Agreed a lower dollar is not all bad and is good for Manufactring exports. And this works great if you are a net exporter. What do you think was the catalyst that got Canada's economy started on the up swing But the U.S is a net importer. It is going to lead to higher prices for almost all goods and that will not help drive things in a positive manner.

 

 

Oil prices will collapse, at the latest, when the Chinese economy collapses. Likely they will deflate sooner than that.

 

I travel a fair bit for work--an average of about 300 miles a week just for business, and the increase in the cost of gas has added about $10-15 per week in expenses over what gas cost 5 years ago.

 

I can easily afford that. I don't like it, but I can certainly afford it.

 

What is driving up the price of oil is not consumption, but perception of consumption.

 

Speculators now outnumber hedgers on the NYMEX by 2:1, 7 years ago the ratio was the opposite. There has been over a 4 fold increase in oil speculators on the NYMEX, and that without doubt has contributed to the rise in oil prices.

 

Furthermore, the weakness of the dollar has exacerbated increased oil costs as oil prices are priced overwhelmingly in dollars.

 

 

 

Do not bet on that. You said the same thing last year when I said Oil was no where near done escalating and will more than likly top $90 a barrel.

 

A lot of it is driven by speculators no question. But they are being spurred on by the fact that we are nearing productin shortages. This is a quantifiable fact. The Chinnese economy the U.S economy and that of nearly industrilized nation is going to have to tank to avoid these shortages. Will they affect our day to day ife in NA proboy not to any degree but they are going to feel it over seas. We are running the ragged edge of refining capacity now In fact we actually are not meeting actual demand on a gobal scale. If just one of the refinery's here had an accident that resulted the facilty being shut down their would be fuel shortages all over the Mid Western and the North Western USA Most of the places here are already opreating at over 100% capacity. Husky here in Lloyd actually cut back on the production of asphalt bases this summer to meet the demand for crude.

 

There is no shortage of Crude Oil but there is a shortage of facility's getting the stuff outta the ground and refining it. Once CNRL gets online it s going to help alot as that is an addtional 1 Mill BPD added capacity. But the refinery's to prosses that extra volume will not be completed till a year or 2 later.

 

Fortunelty it looks like we may be blessed with a warmer than normal Winter and that should take some of the heat off crude pricing and consumption volume.

 

Is the pricing of crude being driven by speculators yes, but not with out good reason.

 

 

Matthew

Edited November 8, 2007 by matthewq4b

[old_fairmont_wagon]

Personally, from my limited understanding of global economies, I welcome a mid-term reduction in the value of the dollar. Why?

 

1) It will punish countries that are artificially keeping their currency depressed to maintain a favorable value ratio to maintain profits for their large industries. Japan stands to hurt a lot from this as they have intentionally kept the yen low to help their auto industry. If they continue to aim for the same ratio, and the dollar looses, lets be conservative here, 25% of its value, their imports from anywhere but the US will cost them 33% more. That's going to have a big impact on their economy, especially since they have to import almost all of their raw materials, fuel, and most of their food. China also does this to some extent and they are already feeling the effect of the increased oil prices as a result of that policy. It has been recently been reported that the central gov't there is trying to take steps to curb demand for it, though, I don't know what that is.

 

2) US exports will become more attractive to foreign purchasers. This will be incentive for the US manufacturing base to grow. Many believe that an economy that has a strong production base is the key to prosperity. A service economy is not sustainable. As our manufacturing base grows, there will be more jobs there for US workers. As long as our gov't doesn't sell out to special interests and allow non-US citizens to take those jobs to any great degree, we should be fine.

 

3) Foreign imports become more expensive. Especially in automobiles, this will drive up the cost of vehicles made outside of the US faster than it will for domestic production. Yes, domestic prices will rise with their increased raw materials costs (much of their steel is imported now) as well as to handle the increased demand for their products, but, they will still be at a cost advantage to foreign imports. Foreign makes that have an established domestic manufacturing base will be most insulated from this, but, remember, most of them still import a high percentage of the materials and subassemblies for those vehicles, so they will still be somewhat hurt by it.

 

4) And, this is not something that my pocketbook likes, but, reasonably speaking, there is a tipping point for gas prices where people really start to change their driving habits for non-essential driving and their buying habits for their vehicles. It will impact the overall economy first, but, people will began to look for more fuel efficient vehicles and take less optional trips. This will serve to reduce the rate at which consumption of refined fuels in the US grows. If the overall economy does enter a light to moderate recession, I can see overall consumption actually dropping year on year as fewer goods are shipped, fewer are manufactured, fewer are purchased and people begin to economize.

 

While my sense of national pride may be bruised by a falling dollar, I can see the longterm benifits to a slight downward correction.

[RichardJensen]

Thing is all the experts said the Chineese economy would have done this by now. China unlike Japn also has much more direct control over the private sector. The Companies over thier do not take a dump with out getting permmsion to do. Right now the biggest limiting factor to their growth is lack of resources.

And to think the Chinese economy is not going to eclipse the U.S's is just plain silly. It is only a matter of time.

---

Not sure how figure it is under valued, The U.S is carrying one of the largest debt ratio's on the planet with absolutly no care or plan to curb spending any thime soon. You can not really belive that is going to continue with out consequences. As it stands now it would take decades for the for U.S to pay down or off the debt

And that is pretty big if ,Your counting on other economies to cool to help recover the value of the dollar. By all prospects it looks like exactly the opposit is happening and most countries economies are ramping up.

Hell ours is in overdrive and still gaining with absolutly no signs of slowing any time. The only thing holding it back is a shortage of equipemnt and personal. We physically can not grow any faster.

Stranger things have happend though. Who would have thought we would have seen Country's Abandoning the U.S dollar as their reserve or own currancy's backing.

Agreed a lower dollar is not all bad and is good for Manufactring exports. And this works great if you are a net exporter. What do you think was the catalyst that got Canada's economy started on the up swing But the U.S is a net importer. It is going to lead to higher prices for almost all goods and that will not help drive things in a positive manner.

Do not bet on that. You said the same thing last year when I said Oil was no where near done escalating and will more than likly top $90 a barrel.

 

A lot of it is driven by speculators no question. But they are being spurred on by the fact that we are nearing productin shortages. This is a quantifiable fact. The Chinnese economy the U.S economy and that of nearly industrilized nation is going to have to tank to avoid these shortages. Will they affect our day to day ife in NA proboy not to any degree but they are going to feel it over seas. We are running the ragged edge of refining capacity now In fact we actually are not meeting actual demand on a gobal scale. If just one of the refinery's here had an accident that resulted the facilty being shut down their would be fuel shortages all over the Mid Western and the North Western USA Most of the places here are already opreating at over 100% capacity. Husky here in Lloyd actually cut back on the production of asphalt bases this summer to meet the demand for crude.

 

There is no shortage of Crude Oil but there is a shortage of facility's getting the stuff outta the ground and refining it. Once CNRL gets online it s going to help alot as that is an addtional 1 Mill BPD added capacity. But the refinery's to prosses that extra volume will not be completed till a year or 2 later.

 

Fortunelty it looks like we may be blessed with a warmer than normal Winter and that should take some of the heat off crude pricing and consumption volume.

 

Is the pricing of crude being driven by speculators yes, but not with out good reason.

Matthew

1) Re: Chinese government control over private sector.

 

Immaterial. The USSR had even more control over industry than China. What is material is the ability of the economy to manage a shock. That involves the -proper- scrutiny of banks and investors. There is absolutely none of that in China. Furthermore, no stable economy can be built under a totalitarian regime. There is absolutely no historical precedent for long term stability from a centralized and irresponsible government. Growth is one thing. You can certainly drive growth with a totalitarian regime (in fact it's much easier than it is with a democratic one: viz. German recovery after WWI vs. British/French recovery after WWII). But you cannot provide stability. Stability by its very nature requires the checks and balances that are absent in authoritarian systems.

 

China has none of the infrastructure required to sustain a stable economy. Ergo collapse is a question of -when- not -if-. I am not going to claim I have the answer as to -when- it will occur. I will simply state that it -will- occur.

 

2) Debt ratios are only one piece of the currency puzzle. The perceived risk in the dollar, which has been hyped by speculators and the general market psychology, begins and ends with Iraq. An open-ended conflict in Iraq which is sapping the treasure of the U.S. is not the primary driver of the dollar's weakness. But it is likely what started the ball rolling.

 

Right now we are seeing the dollar's perceived weakness drive the dollar's price. It's perceived weakness is undoubtedly due to Iraq (and there is a certain rational basis there) however (and we'll get back to this), market psychology is driving the dollar now, not underlying and more objective measures.

 

Take Iraq out of the mix, and the dollar rebounds rapidly. Leave Iraq in the mix and it's a question of when the market turns.

 

(NB I am not making any argument for or against Iraq, merely explaining its affect on the U.S. dollar.)

 

3) Trust me, we are never going to see a return to metals backed currency. As far as reduction in dollar currency reserves, anyone could've seen that coming as far back as the late 70s/early 80s when western Europe finally got its legs under it.

 

4) As far as oil pricing goes, as with #2, the underlying rational driver of price increase (increased demand) is taking a back seat to market psychology; which is pushing the price of oil higher on the 'greater fool' theory. Eventually this too will change.

 

However, the U.S. government on this matter too is taking a decidedly laissez faire approach, and I can see the practical reasons for this.

 

China is having to pay for oil with U.S. dollars, which are declining in value; furthermore, China's receipt of U.S. dollars is based on the prices China can obtain for its goods, with price pressure in the U.S. that puts China in a vice where they are having to pay higher and higher prices for oil even as U.S. consumers are applying downward pressure on their manufactured goods.

 

The U.S. government is not above putting the squeeze on its own citizens in order to maintain its hegemony (viz: Cold War defense spending). To the extent that the U.S. can afford $100/bbl oil and China can't, that keeps the U.S. in the driver's seat of the global economy.

 

Which brings us around to the assertion that a recession affecting $9T in purchasing power would not affect the rest of the world's economies......

 

Consider that the Canadian currency is frequently called a commodity currency. Why? Because Canada is an exporter primarily of commodity materials (oil, lumber, minerals, metal).

 

What is driving up prices for commodities? Demand from the U.S. and China.

 

What is driving demand in China?

 

Overwhelmingly demand from the U.S.

 

It is not only the purchasing power of the U.S. consumer that has driven the global economy, it is the U.S.' support of globalization itself that has driven the global economy.

 

By insulating itself from other economies moreso than the U.S., the EU has limited its ability to impact the global economy.

 

The position of the U.S. as the greatest single destination market for the rest of the world's goods as a necessity magnifies the effect any recession in the U.S. has in many other nations worldwide.

 

I will not say that this is healthy, I will not say it's unhealthy. I will say only that this is the way it is. Each U.S. consumer, by doing nothing more than buying the cheapest goods that meet his/her standards, exerts a dramatic impact on the lives of 19 other people world wide.

[bolita]

Going back on the financials....

 

I find it amazing the South America is shining as the source of profit for the quarter. Its a smaller operation than the other regions and product mix is concentrated on smaller cars.

 

I posted earlier that the financials would be better than what everyone expected, but I didn't expect them to be as good as they are, especially considering that Ford still maintains that sustainable profit will come in 2009.

[jon_the_limey]

Ford of Europe making a profit in Q3 is a big one, they haven't done that for years! Most of Europe goes on holiday in August so it always far harder to make a profit in Q3. The only Q3 respite comes from the UK registration change in September.

[RichardJensen]

Going back on the financials....

 

I find it amazing the South America is shining as the source of profit for the quarter. Its a smaller operation than the other regions and product mix is concentrated on smaller cars.

 

I posted earlier that the financials would be better than what everyone expected, but I didn't expect them to be as good as they are, especially considering that Ford still maintains that sustainable profit will come in 2009.

SA numbers made me do a double take as well.

[RichardJensen]

While my sense of national pride may be bruised by a falling dollar, I can see the longterm benifits to a slight downward correction.

Don't forget #5, it bolsters the overseas profits of U.S. based multinationals.

[matthewq4b]

1) Re: Chinese government control over private sector.

 

Immaterial. The USSR had even more control over industry than China. What is material is the ability of the economy to manage a shock. That involves the -proper- scrutiny of banks and investors. There is absolutely none of that in China. Furthermore, no stable economy can be built under a totalitarian regime. There is absolutely no historical precedent for long term stability from a centralized and irresponsible government. Growth is one thing. You can certainly drive growth with a totalitarian regime (in fact it's much easier than it is with a democratic one: viz. German recovery after WWI vs. British/French recovery after WWII). But you cannot provide stability. Stability by its very nature requires the checks and balances that are absent in authoritarian systems.

 

China has none of the infrastructure required to sustain a stable economy. Ergo collapse is a question of -when- not -if-. I am not going to claim I have the answer as to -when- it will occur. I will simply state that it -will- occur.

 

2) Debt ratios are only one piece of the currency puzzle. The perceived risk in the dollar, which has been hyped by speculators and the general market psychology, begins and ends with Iraq. An open-ended conflict in Iraq which is sapping the treasure of the U.S. is not the primary driver of the dollar's weakness. But it is likely what started the ball rolling.

 

Right now we are seeing the dollar's perceived weakness drive the dollar's price. It's perceived weakness is undoubtedly due to Iraq (and there is a certain rational basis there) however (and we'll get back to this), market psychology is driving the dollar now, not underlying and more objective measures.

 

Take Iraq out of the mix, and the dollar rebounds rapidly. Leave Iraq in the mix and it's a question of when the market turns.

 

(NB I am not making any argument for or against Iraq, merely explaining its affect on the U.S. dollar.)

 

3) Trust me, we are never going to see a return to metals backed currency. As far as reduction in dollar currency reserves, anyone could've seen that coming as far back as the late 70s/early 80s when western Europe finally got its legs under it.

 

4) As far as oil pricing goes, as with #2, the underlying rational driver of price increase (increased demand) is taking a back seat to market psychology; which is pushing the price of oil higher on the 'greater fool' theory. Eventually this too will change.

 

However, the U.S. government on this matter too is taking a decidedly laissez faire approach, and I can see the practical reasons for this.

 

China is having to pay for oil with U.S. dollars, which are declining in value; furthermore, China's receipt of U.S. dollars is based on the prices China can obtain for its goods, with price pressure in the U.S. that puts China in a vice where they are having to pay higher and higher prices for oil even as U.S. consumers are applying downward pressure on their manufactured goods.

 

The U.S. government is not above putting the squeeze on its own citizens in order to maintain its hegemony (viz: Cold War defense spending). To the extent that the U.S. can afford $100/bbl oil and China can't, that keeps the U.S. in the driver's seat of the global economy.

 

Which brings us around to the assertion that a recession affecting $9T in purchasing power would not affect the rest of the world's economies......

 

Consider that the Canadian currency is frequently called a commodity currency. Why? Because Canada is an exporter primarily of commodity materials (oil, lumber, minerals, metal).

 

What is driving up prices for commodities? Demand from the U.S. and China.

 

What is driving demand in China?

 

Overwhelmingly demand from the U.S.

 

It is not only the purchasing power of the U.S. consumer that has driven the global economy, it is the U.S.' support of globalization itself that has driven the global economy.

 

By insulating itself from other economies moreso than the U.S., the EU has limited its ability to impact the global economy.

 

The position of the U.S. as the greatest single destination market for the rest of the world's goods as a necessity magnifies the effect any recession in the U.S. has in many other nations worldwide.

 

I will not say that this is healthy, I will not say it's unhealthy. I will say only that this is the way it is. Each U.S. consumer, by doing nothing more than buying the cheapest goods that meet his/her standards, exerts a dramatic impact on the lives of 19 other people world wide.

 

 

 

I'm not going to touch on all of this but some of your thinking is flawed.

 

 

The ontly thing I,m going to touch on is the Oil issue China doe not have to pay for Oil in US dollars.

China has a State owned Oil company that by all rights is now the largest Oil Company on the planet.

They have secured massive amounts of resevres and are buying up all they can .

 

Being a state owned company China does not have to buy Oil on the open market from private companes to supply the nations needs.

 

Fuel is way under priced in China partly due to this. In fact it is price controlled to keep ocsts down so they can afford to keep building cheap goods for the U.S. What they did fail to take in to account is the speed at which the economy has grown and failed to keep up with Refining capacity. This has now lead to fuel shortages. The U.S has almost fallen prey to the same issue with an open market.

 

High Oil prices are actualy a benift to China in the long run. The higher the price the lower the volume they need to sell on the open market to cover costs or turn a profit. Unlike the U.S China has secured Oil resouces and set in place a system that will insure the nation will have supplies of cheap crude no matter how high it goes on the open market. It is also going to allow them to have a certain amount of control over the price of crude oil just due to the volumes they are going to be dealing with.

 

The biggest thing I find is tha most Americans belive that ther system of Government or economic policies are the the only ones that will work. Pretty arrogent really. Well I think most are going to find out that is not the case.

 

As I said befor the U.S is in the twilight of holding the position it does on the global stage. China is setting in place the ground work to take over that role. Is it going to happen over night no. Is it going to happen in your life time, most definetly.

 

 

Matthew

[RichardJensen]

buying up all they can

 

The biggest thing I find is tha most Americans belive that ther system of Government or economic policies are the the only ones that will work. Pretty arrogent really. Well I think most are going to find out that is not the case.

1) What is China using to buy these oil reserves? Yuan that is pegged to the dollar? Or just outright dollars.

 

2) Capitalism is hardly an American innovation, and a responsible government with checks and balances is similarly NOT an American invention.

 

There have been no shortage of dictatorships over the last century, and NONE of them has provided lasting prosperity of any sort.

 

You -want- China to provide some gigantic exception to this obvious rule, for reasons I can't possibly imagine--if you feel free to accuse Americans of bias, I may as well accuse you of similar failings. You fail to acknowledge that democracy and free market systems are (to quote Churchill), "the worst form of government, except for all the others."

 

Read Edward Gibbon's Decline and Fall of the Roman Empire, it (written on the very cusp of American Independence) provides a very cogent analysis of the fall of the Roman Empire, one applicable even today to irresponsible governments: A disconnected ruling elite, a body politic with stifled initiative, and the lack of rewards for basic problem solving.

 

Consider the rampant environmental damage being wrought in China, the lack of labor regulations, the uncontrolled and uncontrollable flood of defective products, the disrespect for intellectual property.

 

This is not the foundation of a sound society.

 

Granted, one may argue that this looks a lot like the 'gilded age' in the U.S.

 

EXCEPT

 

The U.S. government was responsible to the public at large, something that the Chinese government absolutely is not, and this situation shows no sign of changing any time soon.

 

---

 

Once again, my argument that the Chinese government is incapable of providing a stable economy is based on the fundamental basics of human nature--not some starry eyed jingoism.

 

You are free to disagree, but you cannot muster a single counter example, a single dictatorship that provided a stable prosperity to its citizenry.

Edited November 9, 2007 by RichardJensen

[matthewq4b]

1) What is China using to buy these oil reserves? Yuan that is pegged to the dollar? Or just outright dollars.

 

2) Capitalism is hardly an American innovation, and a responsible government with checks and balances is similarly NOT an American invention.

 

There have been no shortage of dictatorships over the last century, and NONE of them has provided lasting prosperity of any sort.

 

You -want- China to provide some gigantic exception to this obvious rule, for reasons I can't possibly imagine--if you feel free to accuse Americans of bias, I may as well accuse you of similar failings. You fail to acknowledge that democracy and free market systems are (to quote Churchill), "the worst form of government government, except for all the others."

 

Read Edward Gibbon's Decline and Fall of the Roman Empire, it (written on the very cusp of American Independence) provides a very cogent analysis of the fall of the Roman Empire, one applicable even today to irresponsible governments: A disconnected ruling elite, a body politic with stifled initiative, and the lack of rewards for basic problem solving.

 

Consider the rampant environmental damage being wrought in China, the lack of labor regulations, the uncontrolled and uncontrollable flood of defective products, the disrespect for intellectual property.

 

This is not the foundation of a sound society.

 

Granted, one may argue that this looks a lot like the 'gilded age' in the U.S.

 

EXCEPT

 

The U.S. government was responsible to the public at large, something that the Chinese government absolutely is not, and this situation shows no sign of changing any time soon.

 

---

 

 

 

Once again, the idea that my argument that the Chinese government is incapable of providing a stable economy is based on the fundamental basics of human nature--not some starry eyed jingoism.

 

You are free to disagree, but you cannot muster a single counter example, a single dictatorship that provided a stable prosperity to its citizenry.

 

 

One hell their have been piles of them. And define long term. The Roman and Byntine empire hung around for almost a a thousand years if that is not long term what the hell is ?. China was united under a dictatorship and stablized dozens of waring econmiccally bankrupt regions and did so for centuries.

 

All of the advanced civiliations in our history were created under dictaorships some of them lasting thousands of years.

 

The idea of democracy has not been around long enought to prove or disprove that it will work in the long haul.

 

The U.S has barly been a properous country of any degree for barely over a century.

 

Every thing that China is doing now is exaclty what the U.S did during it's rise to power. The U.S coporations poisened the enviroment , copied or riped of tech to further advance the nation. As for human rights you seem to have convently forgot about slavery that was legal until the mid 1800's or the sweat shops and tenments in the U.S at the turn of the century. Come on Richard that is like the kettle calling the pot black.

 

China is following the same practices that the U.S did during it's early years as a rise to a super power.

China has only been activly trying to advance for less than 25 years.

 

It is just the fact that it is happening in modern times and offends your current views and idelology makes it wrong and doomed to fail. Pretty Narrow minded. Considering the U.S and all of Europe walked the same road at some point and time.

 

And the fact that Govt deos not have to awnswer people on thesame scale that the U.S did does not nessesarly mean the system is doomed to fail.

Does the Chinese Gobv't awnswer ot the people no. But the do not completly ignore them either. As in the old USSR. Their are fundamental differances.

Also most almost all dictatorships in recent history have been secular and did not interact with other nations. China is the first to do this on a large scale no one can predict what the out come will be as this has never been done before in modern times.

 

 

And any system is only as good as the pople running it. Once coruption sets in, it is game over weather it is democracy or a dictatorship. Both sytems have fallen due to this in this century.

 

The U.S democratic system could be said to be just as flawed. Does the U.S governmet do what is best for it's citizens or what is best for corporate America. Who actually contols the government in the U.S is it the people of the nation or the individuals and corporations backing their candidiate.

And what is best for corporations is not always what is best for the people.

Coruption has rooted it's self in the U.S democracy. The stuff the Current Govt' pulls would have not been tolerated just 50 years ago.

 

To say that the Chineese are going to fail is narrow sighted and narrow minded especially since no one has done what they are doing in modern history. The anceint Ddctatorships that had trade with surrounding nations were the most sucsessfull ad longest lasting civilizations in our history.

 

 

Matthew

[RichardJensen]

One hell their have been piles of them. And define long term. The Roman and Byntine empire hung around for almost a a thousand years if that is not long term what the hell is ?

Did you read what I said?

 

I didn't say anything about the stability of the -government-, I mentioned prosperity:

 

you cannot muster a single counter example, a single dictatorship that provided a stable prosperity to its citizenry.

 

I guess if you decide that all the slaves and other disenfranchised individuals (women, for instance) don't count, that's your lookout, not mine.

 

In fact the Roman Empire provided stability and prosperity for an exceptionally narrow segment of the overall population which was essentially confined to a class system that doomed an overwhelming majority of the population to perpetual servitude, bare subsistence and poverty.

 

Prosperity and mobility were -slightly- more widespread in republican Rome and democratic Athens than under either the Roman Empire or any of the preceding Hellenistic Empires. However, where the franchise (and upward mobility) gradually spread throughout Britain beginning at Runnymede, Rome and Greece took decided steps toward authoritarianism, and the resultant empires may have nominally been in existence for hundreds of years, but only at the expense of the populace as a whole, and the intrigues of the powerful.

 

And the fact that Govt deos not have to awnswer people on thesame scale that the U.S did does not nessesarly mean the system is doomed to fail

 

It certainly does. Look: every government fails eventually; it is the nature of things. Governments that are detached from reality will fail faster. No government that can insulate itself from its constituency, and which can in turn insulate its constituency from the larger world, will last in this day and age. The genie is out of the bottle.

 

Also most almost all dictatorships in recent history have been secular and did not interact with other nations. China is the first to do this on a large scale no one can predict what the out come will be as this has never been done before in modern times.

 

China may interact with other nations, but it employs absolutely draconian filters on internet traffic in an effort to keep its citizens only slightly less disconnected from the outside world than the poor starved citizens of the PRK.

 

Furthermore, as to whether this has been done in modern times, to what extent did you sleep through the Soviet era? The USSR had ----extensive---- dealings with the rest of the world, if not the U.S.; it is you now that has a limited and parochial view of the world at large. Heck, the Soviets practically INVENTED eurodollar deposits, as they had to pay for goods with dollars, and did not want to put them in U.S. banks. The AK-47 is a Russian gun. The "K" stands for Kalashnikov. The Soviets did a brisk business in arms, commodities, and among a wide range of allies, manufactured goods.

 

And what of Nazi Germany? They had -plenty- of dealings with the outside world. Who financed Hitler's reconstruction? Hint: It wasn't Germans.

 

The outcome for China will be the same as it has been with -every other modern totalitarian regime- (with the pending exception of Cuba). Collapse.

 

The stuff the Current Govt' pulls would have not been tolerated just 50 years ago.

 

No. But just over 60 years ago the government interred Japanese citizens and confiscated their property.

 

All human government is doomed to failure and corruption.

 

The question is how soon and at what cost?

 

Oppressive regimes, in this post-enlightenment age, have either collapsed with the death of a charismatic leader, or they have been forcibly overthrown only to leave behind all too often a power vacuum soon filled with bloody civil war only to see another dictatorship arise.

 

You could look at France, where the Bourbons were overthrown only to be replaced by Napoleon; you could look at the bloody civil wars in China itself that raged over the first 50 years of the 20th century, some estimate that 25,000,000 Chinese died between the collapse of the last empire and the rise of Mao. Germany, Russia, Yugoslavia, Cuba, Iran, Iraq, Algeria, Egypt, Pakistan .... stop me when you can think of a dictatorship in the last 150 years that wasn't overthrown. And try and come up with a dictatorship that was replaced by a stable democracy. There have been a few, but not many.

 

China has a very difficult future.

Edited November 9, 2007 by RichardJensen

[RichardJensen]

And frankly, Britain, NOT the United States, provides the best example of a long lived, responsive, and stable government that has (as a general rule) increased the prosperity of all its citizens.

 

Of course the caveat with Britain involves their colonial holdings; however, Britain did at least manage them with a greater degree of evenhandedness than the continental governments (i.e. France, Spain, and Germany).

 

As to slavery in the U.S.; that's the reason why Britain should be taken as the more instructive example of a -generally- responsive government providing a -generally- increased prosperity for most of its citizens.

 

Had slavery never existed in the U.S., the U.S. would provide a better example of responsive government ensuring a generally stable prosperity for the overwhelming majority of its citizens, but the U.S. had slavery and therefore it doesn't provide a long-term example.

 

----

 

In the U.S. the Food and Drug Act was passed in no small part due to popular disgust and outrage at practices documented in Upton Sinclair's The Jungle. Who in China is writing -their- version of The Jungle?

Edited November 9, 2007 by RichardJensen

[RichardJensen]

Oh, and one more thing: the two oldest government charters on earth are the Act of Union (1801) and the U.S. Constitution (1787). Responsive republican governments work.

 

They don't work well. But they work better than the others.

[Ford Jellymoulds]

Crikey how has Ford Q3 results thread turned into all this shit Richard, Fords doing great and is better placed to weather a recession that looks like it is coming to the US and the rest of the world next year. Hopefully we will see Ford return to profit sooner rather than later now.

[mettech]

Crikey how has Ford Q3 results thread turned into all this shit Richard, Fords doing great and is better placed to weather a recession that looks like it is coming to the US and the rest of the world next year. Hopefully we will see Ford return to profit sooner rather than later now.

 

Recession???

[Ford Jellymoulds]

Recession???

Then analysts in the title of this thread seem to think so

http://online.wsj.com/article/SB1189216229...days_us_opinion

So do others

http://www.businessweek.com/ap/financialnews/D8SLK1780.htm