Tuesday, August 25, 2015

Members currently to the TPP is Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, and Vietnam.

The countries in red italics are also members of the Trans-Pacific Parternship (TPP) and Asian Infrastructure Infrastructure Bank. The losses these countries experience from their investment into the AIIB will impact the USA economy. That is also true for the countries in the TIIP and AIIB such as Great Britain. 

The impact of China on the global economy is not clearly defined. It would be a gross error to embark on trading partnerships that are unkowns to their future growth or failure including the countries of NATO. The USA needs to avoid expose to burgeoning bank failures. The global economy needs stability not further speculations.

The TPP and AIIB are not good treaties, especially now. The treaties are built out of faux expectations. 

China's approach to it's economics based in regional dynamics is wrong. China is creating an infrastructure based in duplicity or worse. Rather than creating a cohesive and strong infrastructure it is creating competitive states/provinces with their own identical infrastructure. It is too much investment in infrastructure. It isn't needed.

Infrastructure should be build out of NEED and not simply because it seems like a good idea. Infrastructure is the last investment to an economic outcome. The MARKET is built first. That means China has to have people with good paying jobs and a strong economy. Just building infrastructure doesn't create a market for goods. The economy has to exist first and then infrastructure is built to accommodate growth.  

A growth economy is built from a central place outward. Let's say Beijing has a strong economy for baby formula. That means profits are easy to come by quarter after quarter. When there is enough profits in the Baby Formula Company's treasury it can develop a plan to expand into the neighboring province. 

The Baby Formula Company approaches the Beijing Bank and obtains a loan that can be serviced out of current revenues. The Baby Formula Company then builds a satellite in a neighboring province. That satellite begins marketing of it's product within the neighboring province and finds a strong market for that product. 

The satellite investment then begins to add profits to the main company and stock prices go up. The Baby Formula Company then has a strong reputation for it's product. 

The expansion beyond the primary Baby Formula Company plant and it's satellite can then take place because the product is a good product, parents are happy because market research proves that. Then new satellites can be built and services to the good people throughout China can prove growth in jobs and profits. At that point if the Chinese Baby Formula Company has a superior product compared with those on the global market place, the banks of China may finance a global approach to supply this Chinese product on a worldwide basis. 

Economies grow because there is DEMAND of a good product.