back to article El Reg man: Too bad, China - I was RIGHT about hoarding rare earths

So this is where El Reg's rare earths spiv gets to do the victory dance. That would be me then, bopping around the dance floor as only a middle aged white man can. For I've been saying for years now that this "China will control all the rare earths" thing is nonsense and so it has turned out to be: nonsense. Not that it hasn't …

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  1. Anonymous Coward
    Anonymous Coward

    Uhm..

    "Failed for the reason we'd expect from communist state: its officials don't understand free market economics."

    I think you're missing some of the global picture here. If this were true then how come that China is one of the largest fund suppliers for the US? When looking at the US national debt you'll notice that China sits very high on that list, and quite frankly I don't believe that China has supplied those funds and bonds simply from the bottom of their hearts.

    Personally I think they understand all too well how Western economics works and are very carefully exploiting it to some extend. After all, money is power, that's the way it goes over here. And amazingly enough; it seems a lot of that is also sitting with the Chinese.

    I don't think this issue is as black and white as you portrait it.

    1. Steve Crook

      Re: Uhm..

      It is that black and white if you just consider the market for rare earths. Plainly they didn't understand it. In any event, the rare earth monopoly was merely a step on the way to the main event, the complete control of global manufacturing of the commodities that rely on rare earths.

      Thankfully, that's proved to be a bust. Long may it continue.

      1. garbo
        WTF?

        Re: Uhm..

        What didn't the Chinese understand? They're no longer a Communist economy (only a Communist state). They did the Capitalist thing - charged as much as the market would stand until supply increased elsewhere, then shut down their own excess supply until demand rises later on. A stupid Communist would still be demanding high prices, still mining the stuff and wondering what went wrong. The Chinese are not. QED

        1. Anonymous Coward
          Anonymous Coward

          Re: Uhm..

          It is very difficult to understand what China is in political terms until you start thinking of it as an Oligrachy that hides behinds Marxist/Maoist sloganeering. Economically, China is fascist in nature. Now, I am standing by to be accused of racism.

    2. Anonymous Coward
      Anonymous Coward

      It's just business Jim

      It's just business Jim, but not as we know it.

    3. Anonymous Coward
      Anonymous Coward

      Re: Uhm..

      The United States owes the following sums to the described entities below. Notice that China is the third largest holder of US debt., and that the US Social Security System is the single largest holder of US Debt.

      Starting at the bottom:

      Taiwan: 184.4 x 10^9

      Carribean Banks: 224.8 x 10^9

      Brazil: 237.4 x 10^9

      Insurance Co.'s: 253.7 x 10^9

      Oil Expoorters: 254.5 x 10^9

      Depsitory Institutions: 286.3 x 10^9

      US Medicare Trust Fund: 324.6 x 10^9

      State & Local Government: 444.6 x 10^9

      Mutual Funds: 797.9 x 10^9

      Pension Funds

      (Public and Private) 903.4 x 10^9

      Japan 1,083.0 x 10^9

      Savings Bonds 1,102.0 x 10^9

      China 1,169.0 x 10^9

      Federal Reserve

      (The Fed) 1,659.0 x 10^9

      US Social Security

      Trust Fund 2,670.0 x 10^9

      Total we owe to ourselves = 7,104 x 10^9

      Total we owe to China = 1,169 x 10^9

      The United States owes much more to itself than it does China, right at six times as much.

      All of these numbers came from CNBC's website:

      http://www.cnbc.com/id/29880401/page/1

      1. Nifty
        FAIL

        Re: Uhm..

        So the U.S. has a near monopoly as the place for China to park it's cash?

        Dangerous.

        Been going on a long while, to the detriment of the ruled in China.

    4. Don Jefe

      Re: Uhm..

      China is a major funds supplier because their money is cheap to borrow. As any business person will tell you, why use your money when you can use theirs?

  2. Anonymous Coward
    Anonymous Coward

    @Shell.user

    " If this were true then how come that China is one of the largest fund suppliers for the US? "

    Because the Yanks (like us, and a fair chunk of Europe) live beyond our means and import far more than we export, particularly with China. The only way the money-go-round keeps spinning such that we keep buying Chinese tat is if they indirectly lend us the money. If they bought more from us (and the balance of trade was balanced) then China wouldn't be sitting on a large pile of foregn denominated debt.

    Whilst the outlook from this persistent overspending is grim, it is grim all round. The only way out is inflation (stealthy or otherwise), so the Chinese are sitting on a big pile of US treasury bills whose value is slowly evaporating. That evaporation may get faster.

    1. Destroy All Monsters Silver badge
      Pint

      Re: @Shell.user

      Inflation also means that you won't get anything when you reach pensionable age. Checkmate.

      > If they bought more from us

      Alternatively, if "the West" didn't think that going into debt and spewing out paper money from teller machines was A-OK and the way to Superland. Thank you very much Keynesians, Leftists and Central Banksters.

      1. Anonymous Coward
        Anonymous Coward

        Re: @Shell.user

        "Thank you very much Keynesians, Leftists and Central Banksters."

        The author obviously doesn't realise the printing presses are controlled by private banks (e.g. the Fed is private, Gordon Brown ceded political control of the BoE to the banksters, how he was cheered for that). All the currency shenanigans that is going on is intended to do one thing only - to protect the private banks from the consequences of their own greed. The ordinary people are the ones paying the price.

        1. Anonymous Coward
          Anonymous Coward

          Re: @Shell.user

          Also, the austerity regime being imposed by the banksters is the very antithesis of Keynesianism. But, hey, why let facts get in the way of ideology.

          1. Anonymous Coward
            Anonymous Coward

            Re: @Shell.user@AC 12:47

            "Also, the austerity regime being imposed by the banksters is the very antithesis of Keynesianism. But, hey, why let facts get in the way of ideology."

            What fucking austerity? Public spending is still at such an epic level that out of every six quid the government spends one quid is borrowed. And that's now been going on for the better part of a decade.

            You try that at home - spend a sixth more than you earn each month, and see how long you can keep it up, and what the consequences are after a decade (if you get that far).

            1. dogged
              Thumb Down

              Re: @Shell.user@AC 12:47

              What fucking austerity? Public spending is still at such an epic level that out of every six quid the government spends one quid is borrowed. And that's now been going on for the better part of a decade.

              While this is certainly true...

              A large part of that is interest on acquired debt. Another large part is used to prop up industries with no feasible benefit except the enrichment of vested interests (wind power, anyone?) and one hell of a lot is spent pursuing private citizens and small businesses in order to squeeze tax out of them while ignoring, for example, Starbucks and Vodafone. And then there's the circle-jerk of employment and regulation which is used to ensure that government services operate as "businesses" and buy from each other - each thus requiring purchasing and accounts departments and HR and other services used only to maintain a fiction.

              Oh, and finally, there's the biggest circle-jerk of all, to wit - why do government employees pay tax at all? Would it not be sensible to simply pay them a tax-free salary at a lower level and stop incessantly running around in circles taxing money which is already tax? How many HMRC hours are spent calculating the taxes of HMRC? And then who audits those? It's madness.

              Meanwhile, what do we do? Kill investment, snatch money from working families who get benefits (this bit is great - working tax credit means by definition that you're not being paid enough to live on and yet this is viewed as a good thing?) and pretend everyone who isn't a billionaire tax-dodger is just lazy.

              Fantastic.

              1. Anonymous Coward
                Boffin

                Re: @dogged

                "A large part of that is interest on acquired debt."

                About £45 billion a year, out of total public spending of around £680 billion. So not actually that large, but certainly a problem, and half of the national debt is entirely down to that idiot Smiling Gordon Brown. The man should be tried as a traitor and then hung drawn and quartered.

                And it is a problem that will get worse because the current government won't stop spending more than they get in... never mind, our kids can pick up the tab for that. To nit pick, wind turbines are funded by a tax, but it's through mandated aspects of your electricity bill. So that isn't officially part of public spending or tax (although it is actually both), it doesn't appear in the governments books, and it isn't counted as part of the public spending deficit.

                Your comments about government administration are broadly speaking correct - but back office accounts for only about 5-6% of government spending. You could halve it if government were as efficient as a large well run company, but that still only gets you £20bn. Corporate tax avoidance is worth perhaps £5bn all told, although it's not clear government now have the freedom to plug the loopholes they created. That combined £25bn is worth having, but it doesn't make a difference in the grand scheme of things until you address the public spending deficit of around £120bn a year. And if you want to pay less interest, then you also need to start to pay down the existing national debt of over half a trillion quid - where's that money going to come from?

                To read the pathetic whining and hand wringing in the Graun, you'd think somebody had actually done something, but at the moment we remain firmly set on the disaster course charted by New Labour. Taxes need to rise considerably, or spending needs to be slashed. Given the poor standard of public "services" I'm firmly in favour of slashing spending, but for those who wish to differ, then if they want to undo the "cuts" made so far, and continue to have the "services" they are so enthusisastic about, then we need to raise aggregate taxes by of the order of 30% - and that won't be achieved by wringing out Starbucks, I'm afraid.

                1. dogged

                  @ledswinger

                  We could probably knock a lot of it on the head with a Public Select Comittee - ie, a group of actual citizens, not MPs - going through all laws passed since 1900 and just striking off the ones that don't make any sense or are just pissing away money for no reason.

                  "Wars on drugs" do massive amounts of financial harm in terms of lost revenue (we should tax that shit), police expenditure, prison expenditure, courts expenditure, lost taxes of otherwise law abiding working folk...

                  To follow on, if regional independence is such a top plan, let the Welsh Assembly, the Scottish Parliament and Stormont raise their own taxes so that England can stop paying for every bugger's free prescriptions. And they'd no longer get MPs which is also a nice saving on salaries, pensions and those mad, mad expenses.

                  After that a genuine cost-benefit analysis on what Britain gains from the EU. And NOT the usual divel about "80% of our trade" because that's inbound trade so it's a cost, not a benefit. At that point, we need to get out of damaging and expensive treaties like the CAP and refuse to pay for two European parliaments (because Strasbourg exists only to appease the French anyway).

                  Then we need to start stripping away the layers of active handicapping in small businesses. A builder I know who employs ten men spend 7/10ths of his time doing paperwork and HSE mandated nonsense rather than building anything and this is pretty representative.

                  Finally, I'd like to see VAT abolished and put on income tax. This would show people how much tax they actually pay and cause the revolution almost instantly.

                  1. Johan Bastiaansen
                    FAIL

                    Re: @ledswinger

                    I you were in charge, you would cause a revolution?

                    You haven't really thought this through, have you?

                2. Brewster's Angle Grinder Silver badge

                  Re: @Ledswinger

                  "...if government were as efficient as a large well run company..." (My emphasis.)

                  I'm not convinced that "well run" companies are the norm. Comparisons between the public and private sector always compare the public sector with the best the private sector has to offer. It's time to start comparing the public sector with average companies.

                  (And I work in the private sector.)

              2. Anonymous Coward
                Anonymous Coward

                Re: @Shell.user@AC 12:47

                Why Vodafone, the so-called 6 Billion tax avoided was nothing of the sort, just a meme for the useful idiots to repeat ad nauseam. That money was earned on sales in Germany, and was therefore taxed in Germany. It was not taxable income in the UK.

                Nothing like a large sum of money soundbite to get the lefty stealers salivating.

            2. Anonymous Coward
              Anonymous Coward

              Re: @Shell.user@AC 12:47

              You try that at home - spend a sixth more than you earn each month, and see how long you can keep it up, and what the consequences are after a decade

              actually, i've done just that for the last ten years. ended up with quite a lot of maxed out credit cards at the end of last summer, and couldn't get any more to keep the 0% balance transfers going.

              so i re-mortgages, wiped out all the credit cards, and i'm now paying less each month on the mortgage than i was previously on the mortgage + card repayments. woohoo!! so i can do it again now for the next decade :)

            3. Anonymous Coward
              Anonymous Coward

              Re: @Shell.user@AC 12:47

              Sigh.

              The difference between a nation state and a household is that the nation state can issue its own currency. Try that at home and see how far you get...

        2. Anonymous Coward
          Anonymous Coward

          Re: @Shell.user

          Please...

          Weren't it for state laws, CB's and private banks wouldn't exist, and the same goes for the fake paper money.

          1. Anonymous Coward
            Anonymous Coward

            Re: @Shell.user

            Wrong about state laws being needed. International trade prospered in various ways for a long time before there was any form of internationally enforceable law to support it, and private banks existed long before paper money and effective state laws on credit.

      2. koolholio
        WTF?

        Re: @Shell.user

        One would also assume they know your pension amount to begin with... if they hadnt suffered data or memory manipulation, a lock out from their own systems or that thing we call a 'mistake' ... human complacency a.k.a. procedural error

        When regulations get involved aswell, this is just asking for the tweedle dum and tweedle dee where nobody knows much!?

      3. Naughtyhorse

        Re: @Shell.user

        lol

        so the economy disappearing up its own arse is all down to Maynard Keynes?

        get a grip man!

        1. Anonymous Coward
          Thumb Down

          Re: @Shell.user

          "so the economy disappearing up its own arse is all down to Maynard Keynes?"

          Nobody suggested that, do try and keep up. And why "Maynard Keynes"? He didn't have a double barrelled surname.

          "lol"? Do you think this is Twitter?

          1. Anonymous Coward
            Anonymous Coward

            Re: @Shell.user

            It was John Maynard-Keynes and yes, he sat in two chairs at the same time having at least twice as much ass as anyone else.

    2. Anonymous Coward
      Anonymous Coward

      Re: @Shell.user

      Quote: "The only way the money-go-round keeps spinning such that we keep buying Chinese tat is if they indirectly lend us the money"

      Part of their ability to do so is a function of them not being a true market economy. In fact if you look really deep into that we all live thanks to a large chunk of the world economy being "communist" command and control system.

      If China becomes a true market economy we are all going to be in really deep sh*t. So from this very selfish perspective let the communist dictatorship there live long and prosper.

      1. Anonymous Coward
        Anonymous Coward

        Re: @Shell.user

        AC:12:36

        Up to a point that's true - but if they were a proper market economy, then the growing middle classes would be able to buy imported products, rather than having to settle for home grown products (some excellent, some ersatz rubbish). And in a proper market economy a floating exchange rate would cause the yuan to rise against the dollar (currently pegged), making their exports more expensive and their imports cheaper. That wouldn't be good for China's artificial growth rate, but it would be very healthy for the world economy. You and I would have to get used to paying more for our consumer goods, of course, offsetting which the Chinese might buy more British made stuff (yeah...).

        Interesting to note that two of main growth and prosperity stories in the world today (Germany and China) are both benefiting from artificially low exchange rates, leading to a high trade surplus and the build up of foreign reserves. In Europe, Spain, Greece and Portugal are paying the price for Germany's full employment. Globally we've yet to see that happens between the US and China, but somebody is going to lose out, I'm afraid. I rather think that in the long term it will be the Chinese, for a range of reasons, most important of which is demographics.

        1. Anonymous Coward
          Anonymous Coward

          Re: @Shell.user

          The "Yeah" is unnecessary. There are British firms which are regarded as prestigious in China - some of them in my own neck of the woods. They just make high value stuff in relatively small quantities, and Mulberry isn't going to flog 50 million bags at iPhone prices, nice as it would be. The problem for the Chinese government seems to be that they are as afflicted with short-termism as Western governments. They are kind of following Confucianism ("Deal with the problems of the people if you would sit calmly on your throne") but the expectations of growth rate seem to have become unrealistic.

        2. mhenriday
          FAIL

          Re: Ledswinger

          «And in a proper market economy a floating exchange rate ...» Interesting ! Are you telling us that prior to the US going off the gold standard in 1971 and the collapse of Bretton Woods a couple of years later, that none of the North American and European economies, between wihich exchange rates were fixed according to the decisions of governments, were «proper market econom[ies]» ? Or is that merely a term you swing around like a club to smash phenomena of which you don't approve (X is not a proper market economy !), without understanding what it means ? Do you consider Germany a «proper market economy» ? The United States, with its constant bullying of other countries to revalue their courrencies and its own history of frequent «quantative easing» ?...

          Henri

          1. Anonymous Coward
            Anonymous Coward

            Re: Ledswinger

            There were no proper market economies prior to 1971 and there are none now. All economies prior to 1971 were still recovering from WWII and prior to that, we were all recovering from WWI. War necessarily distorts economic conditions. It is difficult to carry on trade while people are intent on killing one another instead of trading with one another. The only country you could conceivably say was a "proper" market economy was the Republic of Venice. It lasted longer than the Roman Empire did. However, once the Venetians began to debase their currency, it was all downhill until Napolean came along and conquered them. Debased currencies = debased societies.

  3. Steve Crook
    Happy

    Malthus was right, sort of...

    Yup, spot on with the not so rare earths. The thing that I noticed was that the whole thing was being portrayed as 'peak rare earth' and as an example of the resource shortages we're bound to have over the next few decades if we don't mend our filthy capitalist ways.

    I used to be a closet Malthusian and was convinced that there were going to be fundamental problems in supporting the planets population at a European standard of living. In recent years I've been changing my mind and have gradually come to the conclusion that technology may yet save us all. Not in a dramatic fashion, but just by steady incremental change that lets us do more with less and re-use what was once 'rubbish' and process by-product.

    After all, in a sense, Malthus was right, we are resource constrained. But perhaps he didn't realise that actually, the most limiting resource is technology. With the right technology you can do an awful lot with very little, all you need then is the market to drive innovation.

    Oh God, I've turned into a neo liberal.....

    1. Raumkraut

      Re: Malthus was right, sort of...

      Yet, if nobody was concerned about future resource constraints, there would be no market nor motivation to develop those technologies which mitigate future resource constraints.

      1. Steve Crook

        Re: Malthus was right, sort of...

        I'm not saying that we shouldn't be concerned or that resources are infinite. The market ensures that if the price for something rises due to shortage, people will start to look around for ways to make consumption lower by efficiency, look for alternatives to the resource, exploit previously uneconomic reserves *and* use less, all because the price is too high. Then the price drops. The end result is that, generally, we're all still living the same lives, but that resource, whatever it is, is going further.

        It's actually a rather cool feedback mechanism, and one that seems to be horribly underestimated/misunderstood by many politicians.

    2. itzman
      Pirate

      Re: Malthus was right, sort of...

      'Malthusian being wrong' is the mantra of the Cornucopians.

      However it doesn't matter how often he is 'proved wrong' if there is a chance that one day he will be proved right.

      You can have all the ipads in the world..and no electricity to charge them with.

      There is a law which is essentially a restatement of 'a chain is only as strong as its weakest link';

      i.e. if you cant get just one component or element required no matter how much of the rest you have, production stops.

      Right now the critical component is fossil fuel. production is almost flat, and price is rising to the point where we are simply not using it and suffering economic problems as a result.

      Rare earths simply have been shown to not be on the critical path. It doesn't mean food or raw energy isn't though.

    3. Anonymous Coward
      Anonymous Coward

      Re: Malthus was right, sort of...

      I don't think that is neoLiberalism. We have simply reached the stage where we can do more with less, where a 155MPH BMW can carry 4 people at motorway speeds using half the fuel per mile of an old MG two seater, and where we can carry in one hand a device with four radios each more capable than one WW2 radio that required two people to carry. What we cannot do is to provide a wasteful US standard of consumption to the whole world. This means that the US risks becoming irrelevant as resource constraints require everybody else to depend on European and Asian technology. The American neoLiberals have ultimately doomed themselves.

      1. Steve Crook

        Re: Malthus was right, sort of...

        That bit about being a neo-liberal was actually tongue in cheek...

        The truth is, none of us knows what the resource limits are. Two years ago, we were being assured by all and sundry that we were at, or had passed, peak oil and the greenies were assuring us that we would be saved from heat death because even if we wanted to burn it, there simply wouldn't be enough oil and gas to go around. Now, they're having to resort to FUD because shale is being exploited.

        Given that these limits are still unknown, it would be wise to tread carefully and make the best use of what we know that we have. But I don't think we should fetter growth because of a fear of what we don't know, or at least can only guess at.

      2. Naughtyhorse
        Trollface

        Re: Malthus was right, sort of...

        neoliberals??

        what about the neocons

        think of the great merkin traditions regarding the second amendment and prayer in schools (I.E they know they are absolutely, undeniably wrongheaded but stick to their guns - like John fucking Wayne or something, and therefore make a virtue of ignorance and stupidity {take a bow mrs Palin}) this means merkin consumption will continue apace, and whatever the civilized world does wont make any difference. this wont make america irrelevant...

        it makes them the enemy.

      3. DougS Silver badge

        @ribesome

        What we cannot do is to provide a wasteful US standard of consumption to the whole world. This means that the US risks becoming irrelevant as resource constraints require everybody else to depend on European and Asian technology.

        ----

        Perhaps you missed the reports that the US is now emitting greenhouse gases at the same rate as they were in 1992. Despite not signing on to Kyoto, the US may become the first major country in the world that actually reaches the Kyoto goal of turning back the clock on emissions to 1990.

        The IEA is also now estimating that the US will be the world's largest oil producer, again, by 2020, and by 2030 will become a net exporter of oil by 2030 and self sufficient in energy by 2035.

        Market forces don't always work as quickly as we'd like, but they do work. We knew about the problems in the 90s when the world was awash in cheap oil, but as oil prices have surged in recent years it encouraged investment to both increase energy efficiency and look for oil/gas in places that we previously lacked the means of extracting it, or found it to be too expensive to extract. The US developed this technology first, and is using it first. Others are racing to catch up.

        So what were you saying again about resource constraints dooming the US to irrelevancy? If anything, being the world's biggest energy consumer gives the US more incentive than anyone to develop these types of technologies, which should allow the US to maintain its lead in this field for many years to come.

        The fact that the US doesn't heavily tax energy as most of Europe does was a disincentive to invest when oil was cheap, and the US became more wasteful than Europe as a result. But the impact of rising oil prices has been far greater on the US than it was in Europe for precisely that reason. For example, in Europe, gasoline prices have at most doubled over the late 90s low. In the US, they've nearly quadrupled (creating much of the drag on the US economy in the past decade in their wake) Because of this, and the fact that energy prices are likely to continue to increase as China and other countries move more of their population from a third world to a middle class lifestyle, the US will continue to see energy prices rise at a faster rate than European countries, continuing to drive these investments in technological improvements.

        1. Irony Deficient

          “major countries” reaching their Kyoto goals

          DougS, depending upon how one defines “major country”, Russia, the UK, and Germany should be considered among the short list of “major countries” that look likely to meet their Kyoto targets.

        2. Anonymous Coward
          Anonymous Coward

          Re: @ribesome

          RE:"The fact that the US doesn't heavily tax...investments in technological improvements."

          In other words, we Americans have been subsidizing, by default not by design, European and British energy taxes with effectively higher cost per gallon of fuel.

          1. DougS Silver badge

            Re: @ribesome

            In other words, we Americans have been subsidizing, by default not by design, European and British energy taxes with effectively higher cost per gallon of fuel.

            Well, yes and no.

            When oil prices were low, the Euro taxes on energy acted as a subsidy helping our economy because by reducing their own consumption they lowered overall world demand helping keep oil prices lower, for longer. This helped the US economy by allowing us to consume more energy (not that being wasteful is good, but cheap energy is good for a country's economic output) It made them weaker economic competitors than they otherwise would be by increasing the cost of exports that were resource intensive.

            Now that oil prices are high, because of the relatively much greater increase in prices we see compared to the high tax Euro countries, it is a much bigger drag on our economy. This is the primary reason the US has experienced such low growth post 9/11 - soon after which energy prices started to really rise. We aren't really subsidizing the Euro energy taxes, but by virtue of the US being weaker economically of late we're making it easier for Euro economies to compete with us. Whether the US being a weaker competitor economically actually helps their economies is another matter, as our weakness almost certainly hurts them far more due to reducing what we would otherwise import from them.

            As our economy resets to the point we're able to handle $80-$100/bbl oil prices, through greater efficiency and switching more energy use to far cheaper domestic natural gas, we'll be able to resume more normal growth. However, the difference in energy prices between the US and Euro countries will far less than before (unless they have a big increase in energy taxes such that taxes are a similar percentage of prices compared to what they were in the 90s) so the subsidy they were providing our economy will be quite small. In addition the major industrial power in Europe, Germany, has pushed a lot harder on renewable energy and efficiency than the US (and the rest of Europe/UK) so it will continue to punch above its weight export wise, so long as the Euro currency stays together.

      4. ian 22

        Re: Malthus was right, sort of...

        Quite right about the yank level of consumption, yet they are subject to the same economic laws as the rest of us, and efficiency is improving rapidly throughout the states.

        Examples: locomotives no longer burn coal (or wood), and the current Diesel engines are being supplemented with hybrid electrics. Automobile manufacturers are being dragged (kicking and screaming, but dragged nonetheless) into the 21st century. Potable water wastage is rapidly declining- in Los Angeles alone, per capita use has declined by one third. Etc. Etc.

  4. amanfromMars 1 Silver badge

    New Orderly Worlds in CHAOS

    With regard to any perceived monopoly that the likes of a Microsoft may think they might exercise in the desktop/office/business environment, is it now lost to those and/or that which controls command and commands controls with intelligence servers and smarter services to and in Clouds Hosting Advanced Operating Systems.

    And there is no defence against the change/paradigm shift which is naturally evolutionary in systems which develop intelligence and quite revolutionary and disruptive and destructive in systems which don't and which default to reliance on hierarchical legacy methodologies.

    Deny that by all means, but it does not alter the truth of the fact and the new reality which now runs the universal machine with enigmatic engines which will not be denied their rightful place in the great scheme of things noble and novel.

    1. Anonymous Coward
      Windows

      Re: New Orderly Worlds in CHAOS

      Errrrr? What?

    2. Irony Deficient

      a defence

      amanfromMars 1, there is at least one defence: abstention. (For example, the Amish rely upon neither CHAOS nor those hierarchical legacy methodologies.)

      1. The First Dave
        WTF?

        Re: a defence

        Why are you replying to a robot?

        1. Richard 120

          Re: a defence

          He's not a robot, he just soliloquises like one.

      2. amanfromMars 1 Silver badge

        Kicking the can down the road is no solution in defence of anything

        Is abstention the same as abdication? A ducking of responsibilities.

        1. Irony Deficient

          Refusal is a perfectly valid solution.

          amanfromMars 1, which cans are the Amish kicking down the road? Which responsibilities do you allege that they duck by abstaining from 20th century and 21st century information technology? (How can they abdicate from a position which they have never held?)

  5. Anonymous Coward
    Stop

    Tim, you assume perfect competition.

    However there are the little matter of patents (and patent abuse) which can stifle competition for up to a period of 20 years. This is certainly the case in the software industry where trivial patents are being lodged and passed even when there is plenty of evidence of prior art or obviousness for the sole purpose of hindering competition.

    20 year patents do have a place when the invention is innovative, novel and required huge amounts of R & D spend. I can sympathise with the pharmaceutical industry as regards patents where the investment is huge and late stage failures common. It costs about £1bn (and 10 years worth of testing) to bring a test tube invention to market giving about 10 years exclusivity, if you are lucky.. However a bit of code that can be cobbled together on a Friday afternoon by an intern that was probably lifted from someone else's work then given a 20 year patent beggars belief. As for rounded corners, fuck off Apple.

    1. Anonymous Coward
      Coat

      Re: Tim, you assume perfect competition.

      I have two words for you: Eminent domain.

      If something is important enough for national security, it will be f off, litigious corporation of choice. It is amusing that one place that did not happen was Nazi Germany - because, being Fascist, politicians were often in the pocket of the corporations.

      1. Irony Deficient

        eminent domain in Nazi Germany

        ribosome, I suggest that you look into the non-amusing results of the Verordnung zur Ausschaltung der Juden aus dem deutschen Wirtschaftsleben before stating that eminent domain was not used to expropriate corporations in Nazi Germany.

  6. Anonymous Coward
    Anonymous Coward

    Self vs Self

    Without quoting pendulum, depending upon your swing of musical taste or clock... We all have our personal preferences...

    I've never heard of a Government attacking its own "monopoly"? After all, they do legislate themselves in ways?

    Or heard of the Ministry of Justice taking itself on.... because that would be uneconomical regardless of whether it won or lost!?

    Imagine if the regulations were communist though? Would the UK be significantly different? Would law be any less etchy sketchy?

    Both of these powers mixed together (legislation and the 51% monopoly take-over) would be a recipe for long term despair for the entire population!!!

    1. Irony Deficient

      a government attacking its own “monopoly”

      The US Congress frequently takes on both the US Postal Service and Amtrak, two different “own ‘monopolies’” for which it legislates.

  7. Confused Vorlon

    regulation to increase contestibility

    one valuable thing a regulator can do is make it easier for the competition to keep the dominant player honest.

    e.g. number portability makes it easier to switch phone supplier, and helps to stop any player 'rooking' the consumer too much

    a similar approach might be taken for someone like facebook: mandate data-portability and some level of interoperability, and then let Facebook keep users by virtue of the deal they offer, rather than the fact that is is hard/impossible to switch.

  8. dr2chase

    "Free market" is not a guaranteed fix

    There are places where so-called network effects can help keep a monopolist entrenched indefinitely, or perhaps for a very long time. For example, Google can use information obtained from its large number of search users to improve its results, or to more nearly figure out their advertising preferences (their true customers). A new entry to the market will lack this information because they lack the huge installed base of users, and their search will be less good and they will be less efficient at placing ads. This is not unlike needing to buy a copy of Microsoft Office to interoperate with other Microsoft Office users, even though you would never use it yourself.

    MS Office is an interesting case; there's Open Office, but that took quite a long time, is still only mostly-compatible, and isn't exactly "making money". (Yes, I know it is more complex than that; I worked for Sun when it was their baby, and part of the goal was to use this as part of a strategy to swing customers in Brazil/Russia/India/China towards open and/or standard software and interfaces. Notice that Sun did not make money when they needed to.) The point is, one cannot just wave the "free market" wand at all problems and watch them disappear.

  9. pixl97
    Boffin

    Monopoly on cheap?

    The author didn't state something here...

    Reuters "Lanthanum, used in rechargeable batteries for hybrid autos and in night-vision goggles, rocketed 26-fold from $5.15 a kg in January 2010 to a peak of $140 in June 2011. Although it has slid to $20.50, the price is still well above earlier lows."

    Even though they don't have a monopoly on light rares, they managed to make 28x what they were for a while, and the market is still 4x over what it was. Assuming the base mining costs are the same, they have compressed many years of profits in to one. Also, it is very likely the mines from the Americas are going to produce a more expensive product simply because of environmental regulations. What may cause the bigger problem is all the new mines coming on line and crashing the prices, then going out of business, meanwhile the rare earth mines in China fund themselves off the heavy rares they produce.

    "Analyst Edward Otto at Cormark Securities forecasts the long-term price of cerium oxide to settle eventually at 50 cents a kg and lanthanum oxide at $1.00 per kg, down from $20.50/kg currently."

    1. DougS Silver badge

      Re: Monopoly on cheap?

      They compressed years of profit into one ONLY if you take for granted that the 2010 price was the correct one. Instead of asking why is the price now 4x higher than it was three years ago, ask why the price was so low three years ago?

      The answer is, because China's lack of regulation allowed extraction methods horrible for the environment, and the workers are paid very little (they probably make the guys assembling iPhones for Foxconn look like millionaires by comparison)

      So yes, China did compress many years of profit into one - i.e. it would have taken them many years to make that much profit at the rock bottom prices they used to be charging, and they were causing hell with the environment as a bonus. Perhaps when prices were 28x higher they considered it back pay for the years of too small profits, and the cost incurred on the environment by their mining practices.

      Perhaps the Chinese government didn't do this in an attempt to monopolize the market on rare earths, knowing that this was not possible because they are smarter than Mr. Worstall gives them credit for. Rather they knew that their rare earths industry had raced to the bottom, and the only way they could get the buyers of the rare earths to bear the costs of previous environmental damage and for reducing future environmental impact was to raise prices significantly.

      Enter a simple shock to the market that jolted prices upward, and even after falling were several times higher than they previously were. Now with the higher prices they can invest in less destructive methods to extract rare earths. Maybe that's why they closed the large mine, and when it reopens it will produce rare earths in a cleaner manner. Not as clean as Molycorp or other western mines to be sure, but greatly improved over the previous situation.

    2. Tim Worstal

      Re: Monopoly on cheap?

      Interesting numbers.

      ""Analyst Edward Otto at Cormark Securities forecasts the long-term price of cerium oxide to settle eventually at 50 cents a kg and lanthanum oxide at $1.00 per kg, down from $20.50/kg currently.""

      For they're below production cost. Even for the Chinese.

      Makes sense though, in a way. For in order to get the small amounts of the expensive REs in the original ore, you've got to extract the La and Ce from them. So if you want Nd for magnets then you've got to produce La and Ce as by product. You then hope to make money on the whole basket, even if you lose on some of the products.

  10. Marketing Hack Silver badge
    Facepalm

    Self-defeating and strategically unwise.....

    Besides the economic folly behind trying to control prices when you do not control supply, China also foolishly made itself appear unfriendly to boot. Lot's of countries with significant interests in renewable energy and consumer electronics now feel that the Chinese are borderline-hostile, and China's attempt to restrict and manipulate the rare earths markets is just one more proof point in that shift of opinion.

  11. Anonymous Coward
    Anonymous Coward

    Sorry, did we put you out of business?

    Did anyone notice news of rare earth mines re-opening to compete with China's higher prices? This price dip sounds very deliberate.

  12. DougS Silver badge

    Allowing the market to deal with power stations

    In the article, Tim writes:

    There's only one National Grid: regulate it. There are many power stations and if one tries to rook us then another will undercut it: allow the market to deal with that.

    ----

    What you say would be true in an ideal world with true competition, where power stations were all independently owned and operated. But in the real oligopolistic world, it was too easy for a big producer like PG&E to shut down plants simply to reduce supply, resulting in price increases that far outweighed the lost revenue from the plants that were shut down. California learned this to their detriment over a decade ago after they de-regulated electricity, but after the Enron shenanigans which resulted in much higher electricity prices along with the occasional brownout or blackout, they realized the error of their ways and re-regulated, and prices went down and the grid became more stable. So much for market forces.

    1. Mayhem
      FAIL

      Re: Allowing the market to deal with power stations

      That's because California only de-regulated *half* their electricity market.

      They made it open season on generation, but mandated a fixed price to the consumer.

      That combined with a finite generation market and the geographic situation of a limited number of major interconnects with other states, and the fact that the newly de-regulated generators frequently sold their power to out-of-state retailers. If memory holds, at several points while California had brownouts, the balance of power on the Captain Jack interconnect flowed north, not south, for that very reason.

      Which meant in mid-summer you had the ludicrous situation of power going for up to $2000 on the spot market being forced to be retailed at $0.09.

      Naturally enough, as each retailer mucked up their hedging contracts, they went bust. As did two of our software customers at the time.

      Off the top of my head the situation lasted a couple of years before a semblance of sanity prevailed.

      If they had de-regulated both generation *and* retail at the same time, the consumer price would have spiked, industrial demand would have dropped, and most likely the state would have stepped in much sooner due to public outcry. There could also have been true competition between the players.

      That being said, California has been bankrupt for how long now?

      1. Anonymous Coward
        Anonymous Coward

        Re: Allowing the market to deal with power stations

        Right in the middle of that crisis, California turned down the opportunity to build 17 co-generation plants that my employer had won the bids on. Why? The environment! They have not built a new refinery in California since before the seventies, yet California has more automobile owners than any other state. Now they are whining about gasoline prices after inisting on unique, one-of-a-kind blends for each area of California. Can you say silly? I can.

    2. Tim Worstal

      Re: Allowing the market to deal with power stations

      Californian deregulation was badly done, I agree. One of the UK rules about it is that no one company can own enough of the power plants to become powerful enough to dictate prices.

      Please note, I'm not saying there should never be any rules about these things. Only that what the rules should be depend on what sort of monopoly there is (or isn't).

  13. Timpatco
    Thumb Up

    CNXTim

    I have often said to anyone who will listen OR NOT, that China is NOT a very smart "country" and I hold that opinion because, unlike many other PC commentators, I have actually been there in person on many occasions purchasing Apple Juice Concentrate amongst other stuff like negotiating to install ultra secure wireless LAN's.

    Personally, I find their businessmen to be collectively quite stupid.

    Simply cheap and aggressive but disorganised and dumb overall.. Hence my "Great Wall of China" the dumbest ever civil engineering project and "Sun Tzu vs. Machiavelli" = No Contest syndromes ... anyhow, I enjoyed this article on Rare Earths, it made me chuckle nah - a big , hearty belly laugh actually..

    Tim the 100% NON PC guy..

    1. Long Fei

      Re: CNXTim & mining

      I've lived in China for more than ten years and as a general rule you're right - most of them *are* quite (or indeed very) stupid. However, the thing about China is that there are lots and lots and lots of people doing business, and there's always going to be a, perhaps small, percentage who either aren't stupid or are lucky or both. Thus, due to the sheer number of people involved, even with a small percentage, that means there's a lot of very good (or lucky or both) businessmen too. And after some time this will be subjected to Darwinism and we'll have more and more Chinese who actually know what they're doing.

      As for the rare earths thing, I thought it wasn't so much the mining, which is relatively easy, but the processing, which is relatively not/and or polluting. With the industrial base to process such, China's 'hold' came in this area rather than just digging the stuff out of the ground.

  14. C. P. Cosgrove

    Monopoly anyone ?

    Tim Worstall is correct in that as soon as any monopolist starts exercising monopoly power, it is up for a challenge. In the long run the only extra margin an existing monopolist can make is that margin created by the costs of entry into a market. These can of course be huge.

    A fair few years ago, I earned a degree in Economics ( I do not call myself an Economist ! ), and my final year tutor had a professional interest in Monopoly. Leaving aside the 'natural' monopolies - water, sewage, etc. - I remember him saying that he and his colleague in the field had only ever found one manufacturing monopoly. This was a tiny company somewhere that made that blue chalk that those of you with a mispent youth will recall is used for chalking snooker cues !

    Dogged's remark about paying paying public sector employees a lower but tax-free salary is, I regret, in error. Public sector employees' tax affairs vary as much as any other group's, and it is fairer to pay the 'market' rate for a job and deduct tax than to pay all of them a lower but identical salary.

    Chris Cosgrove

  15. JaitcH
    Happy

    Rare Earth monopolies breed competition

    I have the privilege of being able to roam freely over the beautiful (and not so beautiful) landscapes of VietNam, and Indochina generally, and I noticed that there are teams of white boiler-suited types scouring the land in VietNam who were definitely not Vietnamese in facial characteristics.

    I took a relaxing lunch-break near of of these teams and one of them men wandered across and he was able to speak passable English.

    He explained, voluntarily, what they were doing. In fact, he handed me an envelope of material that detailed their endeavours.

    They were a Japanese team searching the old mining tails (debris) of VietNam looking for rare earths. In fact they had found some, just south of Ha Noi, where they discovered sufficient quantities to financially justify opening a new mine.

    Elsewhere in the country the finds were only sufficient to process the tailings - with success.

    Unlike the Australians, the documents advised, they are moving the untreated soils, by ship, from VietNam, to Japan where they have a low-emissions refining plant.

    So, Thank You, China, for hogging the market, you are creating jobs and enterprises in other countries.

  16. John Smith 19 Gold badge
    Stop

    "bopping around the dance floor as only a middle aged white man can"

    <shudder> That's an image that's going to be branded on my frontal lobes for a while.

  17. Chubbymoth
    Unhappy

    And now you can add the title Being Banned in PRC China for being mildly critical!

    Yup,.. you're off-line in China now. I have to VPN to the reg now to get my daily dose of nerdisms. BTW,.. they're cracking down on that too. Currently they haven't gotten to block OpenWeb yet, but I wonder how much effort they'll put into that. Sigh,.. I guess I'll have to try and find myself some satellite to hook up to shortly.

    You know how it goes here.. big toes,.. small dicks...

  18. H 4

    Please stop saying rook

    Thanks!

    1. Nifty
      Meh

      Re: And now you can add the title Being Banned in PRC China for being mildly critical!

      When I was on China on holiday I was Googling around to solve some home connectivity issues at a relatives' place.

      A lot of tech articles were unaccountably blocked. And I could not used Google cache to access slow loading pages as that is blocked too.

      I though to myself: Wow this must make tech work in China inefficient.

  19. Anonymous Coward
    Anonymous Coward

    Times are a changin'!

    The state of Texas is churning out construction permits for new chemical plants hand over fist. Many here are predicting a construction boom similar to the one we had during the Ford-Carter years. Why? Because interest rates are at the lowest they have been since the 1930's. If the EPA refrains from getting involved in this boom, and it might well do so w/Obama at the helm, we are going to see an abrupt rise in wages and demand for both goods and labor. Know what that will result in? That's right, Carter Era inflation--probably worse. So far, the banks have not been lening money out because they do not see any quailified borrowers, but it is hard to say that about Big Oil and Big Chemical. In fact, they must already be lending it to those companies because the compaines are applying for construction permits.

    I am retired already, so none of this actually matters to me save that runaway inflation is in the offing. My proposed cure? Purchase copper pipe. The US government has shown a nasty inclination to confiscate precious metals. They can gobble up platinum, gold and probably sllver, but they will play hob gather up all the copper.

    1. Nifty
      Happy

      Re: Times are a changin'!

      Any attempt by the U.S. govt to interfere with commodity prices also also doomed to backfire.

      For a curious unintended-consequences take on this, have a look at:

      http://www.npr.org/blogs/money/2012/09/28/161962626/the-weird-story-of-why-helium-prices-are-going-through-the-roof

      1. Anonymous Coward
        Anonymous Coward

        Re: Times are a changin'!

        Tricky Dick (Richard Nixon) imposed wage and price controls for a while once inflation hit a scary four precent per annum. Guess what happened? No one could buy fertilizer any more. There were also other shortages and overages, but fertilizer is the one I am most familiar with because my grandad and I had just put in a new hay meadow and could not find fertilizer for it. We finally resorted to the black market paying almost twice the official price for the stuff.

        I don't think that our government has learned anything from its past mistakes. Otherwise, it would not be committed to a fiat currency as I sit here writing this.

        1. John Smith 19 Gold badge
          Happy

          Re: Times are a changin'!

          "once inflation hit a scary four precent per annum. "

          Hahahahahahahahahahahahahah.

          The other great gag of the early 70s was the insanely huge OPEC price hike to (gasp) fifteen whole dollars.

          BTW most people don't realise oil companies essentially operate on a cost plus basis. They don't really care how high the price goes, because their profit is on top.

          In fact when prices fall they have to re-jig their spending plans, cancel Xmas parties, cut back on expensive escort services etc.

  20. Ian Michael Gumby Silver badge
    FAIL

    The author missed the point as to what it means to be a monopoly...

    "Or Google and search engines: we've got two investigations going on right now about whether Google is abusing its market position - one in the US and another in the EU. But this isn't the correct question at all. Sure, they're market-dominant: but if they really try to rook their customers can someone come along and challenge them? I would argue yes they could: not that anyone's been successful particularly yet but there's no obvious legal or technical reason why someone couldn't. It would only need a change in consumer taste for a competitor to beat them."

    The trouble occurs when the company who holds the monopoly abuses that power within the market or uses its dominance in one market to take over another.

    This is what we saw w Microsoft, and now Google.

    You can build a better mouse trap and still fail against a monopoly.

  21. igottheflag
    Stop

    China

    It's interesting that while politicians rain hate down on China, both left and right, the companies that fund their campaigns seem to be infatuated with the country.

    Whether it's Apple using a company to produce shiny screens that's known for child labour abuse or Walmart selling nothing but Chinese made goods (and for that matter paying Chinese wages), US corporations just love the place. Certainly they couldn't care less if their homeland becomes a bankrupt cesspool, with record unemployment, no health insurance and record low wages that put even Chinese goods out of the reach of its inhabitants. That Walmart employees are on food stamps due to low wages seems to be bad simply because they're getting the food stamps, rather than being bad because they're paid a wage so fucking outrageous they cannot support their families without them.

    Then you have Apple cheerfully fighting the good fight by promissing to pay minimum wage to some guys and girls who will be assembling Chinese made products into Macs. Hoo-fucking-ray for them. How wonderful that they are following the HP model of being willing to pay fuck all to glorified lego builders.

    The bad part is that while we can all wish that these rich gits will end up being arse-fucked by the economy when there's no one left who can actually afford the crap they're selling, the unfortunate thing is they still won't care because they'll just move their wealth to China and take what they can get from there.

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