China to spend $586 billion on its infrastructure
The United States recently decided to give $700 billion in Treasuries to various banks, in return for apparently worthless securities. That might be an oversimplification, but it’s the gist of the deal. The program will be overseen by a Wall Street executive who is used to eight-digit salaries, and has been stripped of any promises made by its proponents regarding elimination of golden parachutes, massive bank salaries and bonuses, and the like; indeed, our $700 billion is now expected not to increase liquidity, but to help bigger banks buy out smaller ones.
Ouch.
Bob Cringely suggested that the government simply revoke the licenses of the banks that made the least loans each year. An interesting approach to liquidity… but that’s his column, not mine.
I sometimes travel by rail, on decrepit trains that were new when I was new. Rail doesn’t go many places any more; it was essentially replaced by the fuel-inefficient but sometimes time-efficient airplanes. For short hops, though, trains are faster if you factor in the inevitable flight delays and cancellations, security checkpoints, arriving an hour early, traveling to out of the way airports, etc., etc. I’d like to go by train more often, but the train network has been clubbed pretty badly.
Many other parts of our infrastructure are sagging. Federal, state, and city buildings have been neglected; energy efficiency is often at 1950s levels. Our electrical infrastructure could use some help; the FAA has proven itself more than incompetent at upgrading the nation’s air control system. I could go on for a while, but I won’t.
I could also point to our nation’s private industry, which has, more and more, been relying on China for the production of everything from camshafts to entire computers. If you think China can’t make a good car, look at the computer you’re using and ask yourself where it was made. My laptop is very well made indeed – as is my desktop – and both were made in China (or assembled here from Chinese parts). It’s not like there’s a real choice.
Meanwhile, China’s government, instead of funneling money to the rich and dumping it “no questions asked” into banks, said it would spend $586 billion by 2010 on national infrastructure and social welfare projects, building new railways, subways, airportsm and rebuilding communities devastated by an earthquake. This will cost around 7% of the GNP for the next two years.
China’s GNP is $3.5 trillion or so, this year. The United States’ GNP is around $14 trillion. Chinese President Hu spoke with Barack Obama yesterday about the financial crisis and cooperation between the United States and China; but his approach is expected to be focused directly at China.
China itself has had some pain from its near total nonregulation of industry, which is in strong and not unexpected contrast to its lack of political liberties. Companies pollute without restriction, poisoning the water and ground for generations to come, and racking up massive bills for the future. When commerce with the West fell, factories were closed instantly, with the owners simply disappearing, leaving people unpaid. And, of course, companies that do business in China can find that their blueprints have been “borrowed” to make clone factories, which the government ignores.
The investment China is making is forward-thinking; it is fairly clear that China intends to be the next world economic superpower, and is building a path to be modern and new when others are falling apart from deferred maintenance. They have a long, long, long way to go, not surprising given the size of the country, but I hope Barack Obama and his advisors are keeping a sharp eye on China and have plans to keep America competitive – better plans than the past “trade deficits and crumbling infrastructure won’t hurt us if we close our eyes” system.
This is my opinion alone and does not represent Allpar as a whole.
DaveAdmin, excellent presentation. Investment in the nation’s infrastructure is certainly needed and it will not be cheap. As a long time passenger railroad employee I certainly know of what you are saying!
I am cautiously optimistic that things will improve under the management of the Obama team. Mr. Obama does seem to have a better awareness of the importance of the American automotive industry and its suppliers than his predecessor.
Investing in America is always a good thing, even for foreign companies. A “stimulus” package designed to revamp, reshape, re engineer our very aged infrastructure can not be a bad thing, even if it doesn’t make everyone rich. It has always been on my mind why the US railroads have been left out to dry, with little or no help. If it had not been for those shiny steel parallel ribbons of steel across this nation, it would have not grown in the manner or the speed at which it did. Setting aside the onus of the “robber” barons that really did practice unbridled capitalism that forever tainted railroading with the smear of crooked deals, railroads deserve another look. I love trains. BUT, I won’t ride them. Even watch one come down the tracks? They spend as much time bouncing, and squirming side to side as they do going straight, and unfortunately, far from level. Watch the connecting joints between the rails as the carriage wheels pass over them. Thousands of tons of weight bouncing them up and down hundreds of times as a train goes by. After having ridden a lot on European rail systems, I wonder why the USA isn’t the envy of the world.
Our nations interstate highway system needs expansion, improvement, re-engineering. There is a real desperate need in fact.
Those are but two areas that need attention. There are other projects, which IF politics does not interfere or intervene to change the “stimulus” to “pork” might have a huge impact on how America looks at itself, and how people may start to escape the fear of spending money, being reassured that there is more coming their way for a long time.
Speaking of bail outs, how does everyone feel about the AIG coming back to the public trough for more billions? I never agreed with the concept to begin with, but, this flies in the face of convention. It needs to be turned away. Unfortunately, we, the taxpayers, have absolutely NO say. Politically speaking, the last election returned the same people who voted for this reprehensible legislation, right back into their same positions, for the most part anyway. The country could do well to spend it on shoring up already in place Social Programs, Medicare, Medicaid, Social Security, for starters, rather than allowing a private entity to suck more money onto itself to use it for projects that only enhance….. itself!
At some point, even rugged individualists, like Teddy Roosevelt, credited largely for reining in the aforementioned “robber” barons, HAS to realize that while capitalism has a place, REGULATION of it, is a MUST. Reasoned parameters set down, and DEDICATED watch persons, who need to be tasked to be non-partisan, and wholly DEVOTED to maintenance to those parameters is another MUST have. As well, unbridled PUBLIC spending, ala PORK also has to be reined in. EARMARKS need to be made totally illegal. EVERY BIT of public spending needs to be publicly vetted, even if it means LINE by LINE! The President NEEDS to have a LINE by LINE item VETO to keep Congressional “pet” projects in control. Perhaps we might see this soon. I would hope so.
In the interim, we continue to muddle along. So far, I haven’t felt, seen, or heard of one thin dime coming to the “middle” class, whatever level of definition you subscribe to what that is. I still maintain, that Congress is full of elites, who practice their belief that their election amounts to an anointment, with any amount of abuse given a pass, that individuals are to be viewed with suspicion, that the well of wealth is never ending, that taxation is discriminatingly applied, (ABUSED) that there is no real plan except to maintain the perception that one party is better than the other while secretly ascribing to keeping those same parties in power duping the people with periodic “opposition” public outbursts.