Is China the Next Great Bubble? 84 comments
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One more bubble, please.
After the bubbles in technology, housing, and commodities, we saw the mother of all bubbles: the one in global liquidity. The world economy seemed to require bubbles for its continued functioning.
I get the distinct feeling that investors’ prayers are now being answered: There's a new bubble now - or an old one is being re-inflated, depending on your perspective even as I type this. I’d like to call it the Troubled China Revival Program (TCRP).
Why start reserving bubble-naming rights? Well, I recently received an email from a friend that had the following subject line: “China … Record Loan Addition, Record Money Supply, Record Auto Sales, Record Imports of Copper, Iron Ore, and Coal, Strong Property Sales”
I checked every figure (the hyperlinks above are mine), and every single one checked out. I couldn't quite believe what I was reading. I had thought China was in a spiraling-down recession. But even the decline in electricity consumption -- a true gauge of economic growth -- decelerated from 3.7% in January and February to a mere 0.7% in March. (Take a look at the FXI for more.)
So is China really the first nation to rebound? Is this the first sign of a rebounding global economy?
I'm sorry to say that the answer to both questions is no.
China's fortunes over the past decade remind me of Lucent Technologies in the 1990s. Lucent (now Alcatel-Lucent (ALU)) was selling equipment to dot-coms. At first, its growth was natural, the result of selling telecom equipment to traditional, cash-generating companies. Thereafter, it was only semi-natural: Dot-coms were able to buy Lucent's equipment only by raising money through private equity and equity markets, since their business models didn't factor in the necessity of cash-flow generation.
Funds to buy Lucent’s equipment therefore quickly dried up, and the company's growth should have decelerated or declined. Instead, Lucent offered its own financing to dot-coms by borrowing and lending money on the cheap to finance the purchase of its own equipment. This worked well enough - until the time came to pay back the loans.
The US, of course, isn't a dot-com. But a great portion of our growth came from borrowing Chinese money to buy Chinese goods - which means that Chinese growth was dependent on that very same borrowing.
Now the US (and the rest of the world) is retrenching, corporations are slashing their spending, consumers are having moments of sickening recognition - and the consumption of Chinese goods is on the decline. This is where my dot-com analogy breaks down. Unlike Lucent, China has nuclear weapons. It can print money at will, and can simply order its banks to lend; this is a communist-command economy, after all. Lucent is now a $2 stock - but China won't go down that easily.
Let me explain: The Chinese central bank has a significant advantage over ours. Mr. Bernanke and company may print a lot of money (and they did), but there's almost nothing they can do to speed the velocity of money: They simply cannot force banks to lend without nationalizing them (and only the GSEs have been nationalized). They also cannot force corporations and consumers to spend. Since China isn't a democracy, it doesn’t suffer the problems of one.
China's communist government owns a large part of the money-creation and money-spending apparatus: Money supply therefore shot up 25.5% in March. Since it controls the banks, it can force them to lend (which it has also done.)
Finally, they can force government-owned corporate entities to borrow and spend. And the government itself can spend quickly - which is important when trying to build infrastructure. This isn't some slow, touchy-feely democracy: If the Chinese government decides to build a highway, it simply draws a straight line on the map. Any obstacle -- like a hospital, a school, or a politburo member's house -- can become a casualty of the greater good. (Okay - maybe not the politburo member's house).
Though China can't control consumer spending, the consumer is a comparatively small part of its economy: Currency control diminishes the consumer's buying power. All of this makes TARP 1 and 2 look like child’s play. If China wants to stimulate the economy, it does so - and fast.
That's why we're seeing such robust economic numbers.
China doesn’t have the kind of social safety net one sees in the developed world, so it needs to keep its economy going at any cost. Millions of people have migrated to its cities, and now they're hungry and unemployed. People without food or work tend to riot; to keep that from happening, the government is more than willing to artificially stimulate the economy, in the hopes of buying time until the global system restabilizes.
It's literally forcing banks to lend - which will create a huge pile of horrible loans on top of the ones they’ve originated over the last decade (though of course we can't see them). Don’t confuse fast growth with sustainable growth. As I've discussed in the past, China is suffering from Late Stage Growth Obesity. A not-inconsequential part of the tremendous growth it's seen over the last 10 years came from lending to the US. Additionally, the quality of late-period growth was, in all likelihood, very poor, and the country now suffers from real overcapacity.
As a US taxpayer, I'm delighted to see the Chinese economy coming back to life. A new bubble in China means the US government will have to spend fewer taxpayer dollars on the bailout (or will at least borrow less money from the Chinese). Furthermore, the Chinese are an extraordinary potential market for American goods.
Identifying bubbles is a lot easier than timing their collapse. But as we've recently learned, you can defy the laws of financial gravity for only so long. Put simply, mean reversion is a bitch. And the longer inflated prices persist, the harder they fall when financial gravity brings them back to earth.
Another casualty of what's taking place in China are US interest rates. China is the largest holder of US Treasuries. China sold us goods; instead of driving the US dollar down and the renminbi up -- as would be the natural order of things -- China parked its money in the US dollar via Treasuries. This artificially propped up the dollar vis-a-vis the renminbi.
Now China needs to stimulate its economy. It's facing a very delicate situation indeed - which is a nice way of saying that China's screwed. China needs the money internally to finance its continued growth. However, if it were to sell dollar-denominated treasuries, several bad things would happen. Two come immediately to mind:
- Its currency would skyrocket - not good for China, because it would lose its (relatively) competitive low-cost producer edge.
- U.S. interest rates would go up dramatically - not good for the US (its biggest customer), and therefore, not good for China.
This is why China is desperately trying to figure out how to withdraw its funds from the US dollar without driving the dollar down. Good luck with that.
And the US government isn't helping: It's printing money and/or issuing Treasuries at a fast clip, and needs somebody to keep buying them. If China reduces or halts its buying, we may be looking at high interest rates, with or without inflation.
The latter scenario worries me the most.
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This article has 84 comments:
as you said...the bigest problem on bubbles is timing.
China stock could be a bubble but I woudn't short it now, actually I would go long on China.
Cash is king these days and China has it..a lot
If there are people who can tell the younger generation of the hardships wrought by the "Great Leap Forward," they are hardly going to complain about simply being out of work.
Long term, lots of things concern me - environment and natural resources strains, lack of a service sector to mop up underemployment as manufacturing becomes more mechanized and rampant greed and corruption (which is the more likely cause of social unrest) but for now, they have sufficient reserves to continue with development and there is still optimism among the migrant workers.
Citing the drop in electricity consumption is misleading - this may be a factor of more efficiency in the grid network, leading to less energy dissipation.
The Lucent example is interesting and there is some truth in what you say, but for the analogy to hold true, what you need first is the collapse of the USA (the equivalent of the dotcom companies). Lucent was an already vastly overvalued company when the canceling of the Winstar line of credit began the collapse. The shares it held from other customers, were illiquid equities. Its clients were the biggest bubble who were getting lines of credit from banks, pledged on their own stocks. The assumption was they could recall the assets even if the clients collapsed, but as I well remember, it turned out that Lucent products declined in value by 94% as soon as they left the factory gates.
The Chinese hold cash and Treasuries, commodities are cheap and emerging market countries are looking to deleverage.
Yes, if the US defaults, China will feel a great deal of pain, but in the meantime, they can keep propping up the Treasury market while calmly switching holdings via building up reserves and providing loans repaid in natural resources.
So frankly, to claim China is a bubble would require assets to be trading at levels that bear little relation to their value - I see no evidence of this.
However, it is 75% state owned via a chain of subsidiaries, with some inter company loans. Anything could happen and there's little you could do about it, which is no reflection on the quality of the underlying business.
Foreign investors are great because they bring in foreign capital, but what if they don't need or want foreign capital?
On Apr 24 09:27 AM Albert Meyer wrote:
> Nobby 74: "It is very hard to know if the businesses are truly as
> profitable as they state. However , I think it's a lot healthier
> than some would like to think." Reconcile the cash flow numbers
> with earnings. If they match you can believe the numbers. (In the
> US, unrealisitc accruals, allowances, charges and every accounting
> trick in the book distort cash flow and earnings. If so, just walk
> away.) Look at China Mobile's cash flow and growth... and $25 billion
> in cash, roughly $6 per ARD share. If you can find a US company with
> similar fundamentals, buy it... and, by the way, let me know!
Yes, China did overly rely heavily on exporting to rich countries, namely the US. But China is a diverse country which can change the focus of their economy. They are already beginning to do this by making up for lost global demand in their own country. They are securing resources at an alarming rate, and making key investments abroad for the coming decades (like their loans to Petrobras or Rosneft, and their takeover of the Kazakh state gas company).
We all seem to understand the dangers of the state economy, but the Chinese are arguably the smartest practitioners of this type of economy in history. Their bank lending program is not like Krushchev planting corn!
Finally, if you listen to CCP elites like commerce minister Chen Denming have to say, one of their biggest focuses in the coming years is to improve the healthcare system and widen the social safety net.
China obviously has problems, namely that it is a single party state, but think of where it was twenty years ago. In another twenty years I wouldn't be surprised if it had surpassed the US in economic strength. The Chinese will come out of this crisis far stronger, and the US far weaker.
Amen to that, brother. Deflation's a real bummer.
Well, exports are down globally for most everyone. It's a global recession.
Moreover, there's no guarantee that consumers will return to the old free-spending ways of the past.
And if consumers are consuming less, then exports won't return to their former glory.
Export nations are then stuck with a flawed business model that does not bode well for investors.
China is an export dependent economy. And turning that into domestically driven economy is a very hard task: look at Japan.
And when people start saying things like "X is smarter than Khruschev" and "X is smarter than the U.S.," that's the time to short X!. Yes, Khruschev and the U.S. were dumb, but as Thomas Hobbes ("life is nasty, brutish and short") pointed out in Leviathan, all people have similar (not enough) shares of common sense. The French said it well: "The more things change, the more it's the same thing."
The value addition from exports accounts for a very small portion of the country's. It does affect a lot of people, because the export industry employed millions of workers. But their unemployment will not affect the domestic consumption too much. Rural migrant workers lags urban residents more than ten years in terms of spending (this worries many people in good times, but not in bad times)
Chinese government did set up huge infrastructure projects and encouraged banks to starting lending. But if you thinks the huge increase in China's bank loans is irresponsible, you are terribly wrong. The Chinese banks are annoyingly risk averse. I personally have 2 millions USD worth of home equity. I tried four months to secure a loan of 200k USD for my small business, but I failed. In China, you cannot borrow money against your house to buy cars, stocks, big screen TV, to take a vacation, to start up companies. All Chinese loan insurance companies will ask for collateral to help you get a loan.
Chinese did introduce some incentive programs to boost consumption and these programs started to deliver some results. But up till now, all the incentive programs are designed for low income people. In 1997, Shanghai successfully launched an incentive program which dragged the city out of a deep housing market slump caused by Asian financial crisis.
Unlike Americans, most Chinese live on surplus month by month. If they want to, it will not create any financial problems to them to increase their consumptions by ten or twenty percent.
The car prices in China are 50% to 200% more expensive than those in U.S. So are the insurance and gas. All those are either controlled and can be substantially imfluenced by the goverment. If the government can convince people that there is a bargain, then people will spend.
So don't worry about China. Worry about U.S. China is trapped by U.S. in treasury bills. China believes the ultimate devaluation of dollar and thus hyperinflation are inevitable. You can notice that China is gradually withdrawing from U.S. T bonds and buying commodities, both domestically and abroad. Buying domestically will help to smooth out the process of reducing overcapacity. Buying abroad will tranfer dollar devaluation risks to other countries and moreover help them to recover. In the future when hyperinflation comes, China will be able to protect itself and maybe make some fortune.
1. Largest Urbanization process in human history is not about to stop.
2. Develpoment of service industry are still in early stage, especially in heathcare sector.
3. Inland/Rural area development lagged far behind and has much room to grow.
4. Even export manufacturing sector can grow by moving up the value chain from final assembly into product design, development, component and subassembly manufacturing, even brand management.
The Lucent analogy doesn't go very far. The Dotcom companies were much more important for Cisco than for Lucent, whose main customer and technology base were the TELECOM industry (There is a very big difference). Lucent's failure is as much of the burst of vendor-financed dotcom/telecom bubble as poor management, slow adaptation to change and the macro environment changes due to technology revolutions away from legacy techonologies.
A Bubble has reference to the top end of an economic growth spurt, in which speculators are hurt in the end by buying up the top of true economic growth. For example, Oil, in July of 08 was a Bubble. Speculators may have bought it up, but in the end, all of the longs were punished by true economic factors. Thus, the bubble collapsed.
Real economic growth, with true wealth * * * * creation * * * * is not a bubble. It's true economic growth and wealth creation.
It never ceases to amaze me the number of people who wish to discuss economics, and are ignorant to the most basic concepts.
That being said, China has many fundamentals that are positive:
* Chinese households have little debt
* Chinese households have a lot of savings
* China has great industrial capacity
* China is moving toward more economic freedom; the west is moving toward a lessening of economic freedom (note that it's the trajectory that's important for investment expectations, not necessarily the current "level" of economic freedom)
* China has areas of vast natural resources that its government is allowing to be tapped, whether it be coal or hydroelectric resources
* China has an increasingly educated and well-trained workforce
* China has 1.1 billion people, many of whom are or soon will be entering the middle class
* China's central government does not have the huge unfunded liabilities that many western countries do (i.e. Medicare's trustees estimate that the unfunded liability for that program is $74 TRILLION)
Respectfully, I disagree with the China "bubble" theory. The fundamentals exist for excellent growth in China. While China certainly has its problems, it has excellent fundamentals, particularly when compared to the overtaxed, overregulated, and overleveraged west.
Looking from another perspective. Those who expect a big fast blowing up of the "China Bubble" should be reminded that China is a very different town then the US. In the town that is China, the cops are enpowered to break a wild party at an early stage. On the other hand, until last year, Town USA believe in the religion of 'self-regulation' of wild parties and the cops here not only are deprived of the power to bust wild parties, they are probably intoxicated party goers themselves.
In other words, Chinese market regulators are likely to be more willing to prick any bubble because they put a higher emphasis on 'scoial stability' than 'investor rights'. As China's real economic growth trend remains intact, there will be lots of latent youthful energy for 'wild parties'. This could result in big corrections even market crashes from time to time.
The US on the other hand, may have to nurse our gigantic hangover for a long time to come. Any 'party here' will likely to be a rather subdued event even without the cops looking over.
You forget that pesky physical limitation called "peak oil." Even poor countries run on relatively cheap petrol. Make that expensive enough (and over 30 years, it will become *much* more expensive), and you will see everyone's living standards fall like a rock, including China's.
all of their technology to China and India for the low labor
rates.....
What happens when the Chinese and Indian people/governments
decide to make these products on their own? .... The US
companies that gave them the technology to build the products cheaply are screwed.......
j.
the U.S. debt it now holds? This, it seems, is a key question.
China is becoming a bubble for exactly the reasons you mentioned.
The sequence is this:
1. Real economic growth.
2. Real wealth creation.
3. Speculators "ape" real investors.
4. Speculators overdo it.
5. Speculators hurt themselves and others.
The last three stages constitute a bubble. As Warren Buffett put it, "What wise people do in the beginning, fools do at the end."
Two more of life's truisms:
1. A rose has thorns.
2. You can't eat steak without (someone) killing a cow.
On Apr 24 12:22 PM wavelength wrote:
> China has embraced capitalism and the US has embraced Marxism. The
> US is in recession and the Chinese economy is still growing. (There
> is much argument about to what to degree, both inside and outside
> China. Wherever the true figure is on the 2%-8% continuum, being
> debated it is enviable.) China has huge reserves, a budget surplus,
> and a positive balance of payments. Their stimulus program is focused
> on genuine infrastructure - not pork and welfare. Perhaps it is a
> bubble, but it looks pretty good compared to the sinkhole the US
> has turned itself into. Don't rush to judgment, or dismiss their
> "single party state". The stranglehold of the left on the US Congress
> media, education, and public discourse is not so different. Yesterday
> the American news focused on how we should be prosecutung ourselves
> for our "war crimes" against the jihadists, and on how most Americans
> are stilll infatuated with the new President and actually believe
> America to finally be on the right track. The latest atrocious housing
> and employment figures were a footnote, described by the mainstream
> media as "surprising". Underestimating China, and believeing that
> we still hold some cards because China cannot call us to account
> without damaging its own economy is hopelessly naive. Kool aid drinkers
> may go ahead and give me all the thumbs down they want for my implied
> criticism of President Obama - this article is thin, misleading,
> and irresponsible in the way it panders to popular misunderstandings
> about China. Their domestic economy is huge, and engaged with with
> many other nations apart from the US. The suggestion that it is China
> that bears the brunt of problems such as toxic loans, lack of government
> accountability, a one-dimensional economy, and a terminal US dollar
> is almost funny. Does anyone on here seriously think it is China
> that is screwed?
Only fools and government officials believe that China is our friend.
We funded their massive expansion. They are sitting on the following, all were paid for with the blood of the slaughtered American, good-paying jobs for the masses.
China has:
Our plans
Our expertise
Our equipment-most bought at auctions for dimes on the dollar
Our patent information- and China has proved itself in the past to have zero regard for US and International Patent Law.
Control on the flow of many necessities we depend on. Majority production of many drugs, foodstuffs, first aid supplies and the like.
Now they are rushing in and buying our businesses and our real property at the bankruptcy/foreclosure options.
Keep on thinking that this time is like all the other times, it is not.
Once China revalues their undervalued currency, and kicks all foreigners out from its borders, we will be totally screwed.
Bubble or not, I think we are screwed.
Here in Africa Chinese engineers, businessmen and technicians are ubiqitous. In tiny out of the way and impoverished countries like the Comoros the Chinese are building roads and developing partnerships that benefit the Chinese comercially, but are essential for these poor nations continued development. In Chad, Kenya and the Congo you see Chinese engineers and diplomats wherever development is taking place.
Africa is a huge continent, rich in under and un-developed natural resources and China is positioning herself to fuel her industries through commercial partnerships obtained with some of the world's most impoverished nations on the African continent.
If China's economy is a bubble that will soon collapse, the ramifications are significant in Africa where China's investments are funding the development of infrastructure (roads, bridges, irrigation projects, airports etc). Any fall in investment will be catostrophic for the poor nations that are depending on these projects to improve living standards and reduce morbidity and mortality rates.
A fall in China's investment in Africa will inevitably lead to food deficits causing more frequent episodes of starvation, epidemics, lower living standards and more pressure on already weak national governments. Let us pray to God in heaven that China's economy remains strong and its ability to assist the poor in Africa remains undeminished.
China, the US and Europe are all that stands between starvation for many millions of people on the African continent. Take away the ability of these regional powers to contribute to Africa's survival and the ensuing suffering and chaos will become acute leading to a cry of despair that humanity has never before wittnessed.
Here in Africa Chinese engineers, businessmen and technicians are ubiqitous. In tiny out of the way and impoverished countries like the Comoros the Chinese are building roads and developing partnerships that benefit the Chinese comercially, but are essential for these poor nations continued development. In Chad, Kenya and the Congo you see Chinese engineers and diplomats wherever development is taking place.
Africa is a huge continent, rich in under and un-developed natural resources and China is positioning herself to fuel her industries through commercial partnerships obtained with some of the world's most impoverished nations on the African continent.
If China's economy is a bubble that will soon collapse, the ramifications are significant in Africa where China's investments are funding the development of infrastructure (roads, bridges, irrigation projects, airports etc). Any fall in investment will be catostrophic for the poor nations that are depending on these projects to improve living standards and reduce morbidity and mortality rates.
A fall in China's investment in Africa will inevitably lead to food deficits causing more frequent episodes of starvation, epidemics, lower living standards and more pressure on already weak national governments. Let us pray to God in heaven that China's economy remains strong and its ability to assist the poor in Africa remains undeminished.
China, the US and Europe are all that stands between starvation for many millions of people on the African continent. Take away the ability of these regional powers to contribute to Africa's survival and the ensuing suffering and chaos will become acute leading to a cry of despair that humanity has never before wittnessed.
Here in Africa Chinese engineers, businessmen and technicians are ubiqitous. In tiny out of the way and impoverished countries like the Comoros the Chinese are building roads and developing partnerships that benefit the Chinese comercially, but are essential for these poor nations continued development. In Chad, Kenya and the Congo you see Chinese engineers and diplomats wherever development is taking place.
Africa is a huge continent, rich in under and un-developed natural resources and China is positioning herself to fuel her industries through commercial partnerships obtained with some of the world's most impoverished nations on the African continent.
If China's economy is a bubble that will soon collapse, the ramifications are significant in Africa where China's investments are funding the development of infrastructure (roads, bridges, irrigation projects, airports etc). Any fall in investment will be catostrophic for the poor nations that are depending on these projects to improve living standards and reduce morbidity and mortality rates.
A fall in China's investment in Africa will inevitably lead to food deficits causing more frequent episodes of starvation, epidemics, lower living standards and more pressure on already weak national governments. Let us pray to God in heaven that China's economy remains strong and its ability to assist the poor in Africa remains undeminished.
China, the US and Europe are all that stands between starvation for many millions of people on the African continent. Take away the ability of these regional powers to contribute to Africa's survival and the ensuing suffering and chaos will become acute leading to a cry of despair that humanity has never before wittnessed.
On Apr 24 12:13 PM Cetin Hakimoglu wrote:
> That is true, which is why they can't provoke a trade war by dumping
> dollars or inflating their currency. US consumers, will however,
> return to their old spending ways. Being the third wisest human in
> the world I am certain of that.
Maybe the US can learn something by watching!
However, your assertion about Obama's statement about "clinging to guns and religion" and the general reaction to the economic crisis and its relationship to Marxism is correct. I will admit that I did not think about that aspect of Marx when I read your original post.
Marxism conjures up some very strong connotations (be it right or wrong), and it was those images in conjunction with the many statements on Seeking Alpha I have read recently that the US has become communistic that dictated the tone of my response.
On Apr 24 01:27 PM wavelength wrote:
> Dustinian, I see you are still in school. This means I read Das Capital
> before you were born. By all means let us argue in the realm of ideas,
> but please do not insult or patronise me. Thank you for your kind
> words in relation to my assessment of China. I likewise saw wisdom
> in your earlier post. On the subject of Marxism, the central tenets
> of classical Marxism concern class warfare and the notion that capitalism
> is inherently exploitative because employers realize profit based
> on the labor of other. An agenda of "spreading the wealth", punishing
> business through confiscatory taxation, and demonizing free markets
> and private enterprise is most assuredly Marxist. So too was the
> President's statement about people facing economic dislocation "clinging
> to their guns and religion" as it reflects classical Marxian notions
> of religion as "superstructure", and indeed that most Marxian notion
> of all - that individuals all act primarily in response to economic
> and political forces, rather than being inherently different, unpredictable
> and subjects rather than objects. The social engineering, ruinous
> central planning, market distortion, and punitive taxation of the
> lunatic cap and trade plan is merely neo-Marxist and I will try to
> be more precise in future postings.
As for some of the others, success does not require excessive profit; success is measureable many ways. That's where Madison Avenue, Harvard, Wall Street, Main Street and Philadelphia Ave has gotten us in trouble, and led to greed gone amok, instead of focusing on pure success (which is also beyond next quarters performance and securing the lifetime pension in one term).
The achievement, performance, drive, productivity, personal responsibility, decisions and actions have consequences awareness, and general mindset of the Chinese people is cause enough for a successful Chinese outcome vis-a-vis the US welfare, free-lunch, handout, instant success-top of the ladder, "what's the bottom?" juvenile up-start mentality, greedy, whatever sells, whatever works, whatever the market will stand, selfish prevelence.
And yes, I'm an American. Conservative, and American.
Doubtless I am a simpleton, but aren't the Chinese simply attempting to juice their domestic economy through lending? Did we not just learn that lesson ourselves? It seems the same mental disorder that compels us to hide systemic problems (imbalances) behind the veil of debt growth is alive and well in China too. I guess there is a chance it might work, but at this point I am pretty skeptical. It just seems. . .Risky.
It took decades to set the stage for currently unfolding events, I don't see how the effects of systemic imbalances in trade and investment can be deferred indefinitely. If over-capacity is indeed the problem, will increased debt in China (likely to be state mandated) be able to preserve the value of productive assets there? It seems like an awful risk. If Chinese export markets do not come back in a big way, in time to unwind all the new debt, won't this make things worse? But that's just me, and I could be wrong. Thanks for the post.
I was very disappointed by the lackadaisical and simplistic template used to describe the 3rd largest economy in the world. As opposed to viewing hyper-links, take both a macro and micro economic view, while keeping in mind the fundamentals of the culture and social economics. Remember just like the US, China will have its trials and tribulations.
The ultimate resource in this world is the unfettered human mind. Consider what Japan was able to accomplish despite a lack of the fertile land and raw materials typically regarded as resources. If you seek to end poverty in Africa, persuade the benighted leaders of African nations to create an environment of freedom and to welcome profit-seeking investments by capitalists around the world.
Doug T.....The mutual fund guy
www.mutualfundwealth.com/
Easy, they buy commodity producers and `in USD in developing nations where the dollars don't come back to the US.
Where's my blog you ask?
You either love or hate them...
We're not going back to the days of 0% savings rates and home equity loans being used to buy Made In China furniture, toys, and 42" plasma screens. The US consumer savings rate is currently 4+% and rising towards its historic level of 10%. It might actually surpass 15% as baby boomers make one last effort to pay off debt and save for retirement. Younger workers face incomes that have been stagnant since 2000, with a declining amount of discretionary income due to the rising cost of healthcare. Plus, younger workers are starting to save more due to chronic job instability.
Where will the first of these spending cuts come from? Rent? Utilities? Food? More likely, Chinese-made merchandise, most of which is discretionary (e.g. plastic garden gnomes, toys, electronic gadgets, fashion).
As China's revenues slow or decline, and as internal spending demands increase, Chinese demand for US treasuries will decrease even as supply increases. This will push down prices on treasuries, increasing their yields. That's just one reason I bought TBT, shorting long-term US treasuries.
Peak oil will devastate the US because we will refuse to adapt our lifestyle to this reality. The Chinese, on the other hand, are planning for the future and can see what's coming. They have a proactive attitude towards the challenge, while we have a defensive attitude and in some cases a denial attitude. We cannot accept the notion that we will be living like the Chinese one day out of economic necessity.
On Apr 24 12:17 PM ThatGuyInTheBack wrote:
> >Chinese population's rising standard of living can go on for the
> next thirty years.
>
> You forget that pesky physical limitation called "peak oil." Even
> poor countries run on relatively cheap petrol. Make that expensive
> enough (and over 30 years, it will become *much* more expensive),
> and you will see everyone's living standards fall like a rock, including
> China's.
>
ie. back then the entire NATO block expected the Communist party to fall within 2 years back in 1989 (Tiananmen protest). Its been almost 20 yrs and the party hasnt lost strength, it gained - internally and internationally.
these so called peak oil, credit crunch etc are just minor obstacles. the Communist party went through WWII, Civil War, Korean War, Great Leap Forward, Cultural Revolution, Tiananmen, Asian Financial Crisis, SARS, etc. Sure, there has been times when 30+ million of Chinese ppl died or the economy contracted 10%+, but in hindsight, knowing what China is in 2009, did any of those events "matter". For the Party, its just business as usual.
Even if there is a bubble, theres nothing to worry about if you are investing for the long term. But if you are leveraged, you did so at your own risk.
Also, maybe the concern of peak oil has led China to try to develop its own Coal-To-Oil projects.
Never heard of SASOL? They have been doing this coal to oil conversion thing for Decades now.
Don't tell me China wouldn't/couldn't convert their own coal into oil if they needed to.
On Apr 24 12:17 PM ThatGuyInTheBack wrote:
> >Chinese population's rising standard of living can go on for the
> next thirty years.
>
> You forget that pesky physical limitation called "peak oil." Even
> poor countries run on relatively cheap petrol. Make that expensive
> enough (and over 30 years, it will become *much* more expensive),
> and you will see everyone's living standards fall like a rock, including
> China's.
>
It will ocuur in the leisure spending area: the "stretched" folks and also the Corporate support (via marketing expense for stadium seats, club memberships, jaunts of many complexities, etc.; ski resorts and beach resorts and conventions) will stop spending in the arena's that have had no limits or controls.
Plus Hollywood Actors/Actresses/Produ... et.al down the line, Las Vegas and Casinos et.al,; the whole entertainment community; book authors/producers; TV; all the athletes/owners/"busin... associated; and finally all the greedy CEO's on down the line pleasures including whores are going to get clipped; so also say goodby to all business expense resturants and food industry including caterers, be they home or office or airport and seaside, as well.
Family goods will sell.
And, of course, if all the above does not occur, we will not have solved our American problem.
On Apr 24 10:51 AM TWOfold wrote:
> People are acting as though China has an internalized economy when
> the opposite is true: China depends on exports.
You are right that China depends on exports Two, but standards of living in China have been rising and they are showing signs of developing a stronger consumer sector that has the potential to become significantly less reliant on sales to US and European vendors.
Actually American business people are going to hate having a stronger Chinese economy as the cost of manufacturing in China starts to rise and retail orders for US businesses-as well as the fuel needed to ship those orders becomes more costly. Working class Americans are going to love a stronger China. The above article is absolutely right about China being a market for US goods. China may have cornered the market on low-cost consumer goods, but the US is still relatively strong in manufacturing equipment-the machines that go in those factories that make the consumer goods. Medical imaging equipment is another strong suit for the US-a growing Chinese middle class is going to want PET and MRI scanners and surgical robots.
The Communist Party of China feels they have to be ruthless in maintaining control because they are sitting on a powder keg and they know it. With millions of new people coming online into the labor force every year, much of their growth is just running to stand still, trying to make sure there are enough jobs to keep the masses from revolting.
That being said, if they successfully pull this off and bootstrap themselves into the 21st century, they will probably be the dominant power on the planet. And they know it.
If they don't, their government will fall and they may have a civil war that could cost hundreds of millions of lives. If they seem to take the game seriously, it's because they do. To them it is deadly serious.
For this living earth, we China does less comparing to UK, Germany, USA, etc. I can be here, should thanks to millions of inventions created by western countries, since UK industrial revoluation 300 hundred years ago. If no electrity invention, no plastic material, no different machinery, no computer, no optical cable, how can I be here to communicate with you. So in my mind, Newton, Einstein, Darwin, etc., is so helpful for the mankind.
China people is kind, kind to former enemy even. There is no Red government reality.
30 years ago, we're so poor, we are so starve. Huge numbers of baby, youths and olds die due to food shortage. It's no need to say shortage of clothes, toys, milk, fruits, etc.
But with the help of all overseas friends especially overseas inventions, then today we live much better than before. No people worry for hungry, and most family have places to live. Television, clothes washer, air conditioner, come into every family here. Cars also come into 1/3 our city families, and it's dare not to imagine even 30 or 20 years ago. Can you imagine one 6 years old child crying deeply (lying down) for 6 chinese cents, to begging for his grandmother and grandfather, in order to purchase one homework cahier? That's me, in 1983.
What I'm glad, is that China step by step make their own inventions and creations for this earth. What I expect is, China not only the net technology importer, but the technology outlet.
Yes, our government has her system problem, and it's very serious. Some bad parts obstruct China further progress. China communist party is not fool, and he will seek the way to change herself, at the same time, more youths will question them. What we're expecting is free air China, peace China, strong China, constructive China for the earth. Most important, all China people with high life standard, no matter chairman, or plant worker, or remote village countryman.
Faulse electricity data, faulse GDP rate, we are all known. Export supports China GDP. But I ask, why should we need this GDP, but let our workers as work hard as slaves.
Export down a little, good! GDP, down a little, good! That means, workers not same slavery as before, and they have Sat & Sun free day, same as you everyone here. At the same time, China government and every Chinese will find the solution to go further. China government will think deeply themselves, GDP is not final, only minority people wealthy is not target, but better education systems, high living standard, beautiful environment, fair and justice same for everyone is more important.
(by the way, if living standard will go down for some not short period, we can endure, as we understand everything is not straight forward, sometimes like DOW graph.)
On Apr 24 12:45 PM TeresaE wrote:
> My worry about China, is not "is it in a bubble," but is it going
> to show its true Red colors.
>
> Only fools and government officials believe that China is our friend.
>
>
> We funded their massive expansion. They are sitting on the following,
> all were paid for with the blood of the slaughtered American, good-paying
> jobs for the masses.
>
> China has:
> Our plans
> Our expertise
> Our equipment-most bought at auctions for dimes on the dollar
> Our patent information- and China has proved itself in the past to
> have zero regard for US and International Patent Law.
> Control on the flow of many necessities we depend on. Majority production
> of many drugs, foodstuffs, first aid supplies and the like.
>
> Now they are rushing in and buying our businesses and our real property
> at the bankruptcy/foreclosure options.
>
> Keep on thinking that this time is like all the other times, it is
> not.
>
> Once China revalues their undervalued currency, and kicks all foreigners
> out from its borders, we will be totally screwed.
>
> Bubble or not, I think we are screwed.
Look at the history of the US economy through Dow Jones.
Dow Jones made a massive rally from the $50 area into $470 from 1922 to 1929. Almost tenfold increase in less than 10 years. Then it went down from 470 to 42 from 1929 to 1932 for a 91% haircut. The US economy in 1929 was basically bankcrupt at that time hence the 91% haircut for the stock market.
Then it went up from 42 in 1932 to 11,750 in year 2000. A massive 28,000% price appreciation over 68 years. Basically an average of $170 profit every year over 68 years for an investment of $42. Got it? But then you will have to hold the investment over that time period for compounding to work it's magic.
The Shanghai and Szensen indeces mimicked/copied the progress of Dow Jones of the early 1900's. China is basically an emerging market much younger than the US of the early 20th century. If they have to find models for their growth, it will be the US's and Europe's of the early 1900's.
I think they will find the going in the future less tough than that of the US and Europe of the early 1900's who were basically beating new paths of progress during those times and are now being faced with many new challenges never faced before. They also need not create new technologies or inventions but simply buy or pirate those which the West have already developed and then apply to their industries. There are many ways around the western copywright laws they must have already developed themselves if not perfected. A sad affair but in-escapable throughtout history. First Japan and Hongkong doing the copying, then Japan, Taiwan, Korea and now China and India - the big players.
They need not create new and untested industries in order to reap the benefits of science. Likewise, they are not going to reap the massive benefits that new inventions are able to provide for those who are first to develop the products nobody can copy or produce for several years or decades. So far, they are not laggers since the US decided to abandon the Tech Sector when it suffered it's young life's first major stumble of 2000 to 2002. It remains to be seen whether the US will retain it's technological supremacy or China, Taiwan and Japan will be able to surpass that of the US.
So far the "bubble" rally of Shanghai and Szensen indeces from 2005 to 2007 mimics that of Dow Jones from 1922 to 1929. For the Szensen index (which my eSignal has more data than that of Shanghai), Szensen went up from 243 to 1,668 in less than 3 years or almost 600%. A lot more impressive than what Dow Jones was able to achieve during it's rally from 1922 to 1929 and at a much shorter time. Then it went down to 478 for in less than a year for a haircut of almost 72%. We can say that the Chinese economy was not bankcrupt in 2007. Proportionately, they are basically 3:1 rally vs. sell-off timeframe. The percentages are not bad either.
It is just a predictable human reaction to excessive rallies that they go down in punitive fashion rather than corrective fashion. Look at other charts that went into excessive rallies; the ensuing sell-offs were more punitive rather than corrective. Most recent examples are the Nasdaq of 2000 to 2002 which suffered 78% haircut, the oil boom to $147 and bust to $33 for a 77.5% haircut.
But basically, the rally structure and the ensuing sell-offs are almost identical if you analyze the chart patterns. The reasons for those rallies and sell-offs may or may not be the same and many differences will be found but the human action/reaction to life's challenges remain basically the same with varying degree of severity throughout mankind's history - hence their performance throughtout the years and decades are reflected into the price and time charts of the underlying stocks and stock markets where the commulative aspirations, wisdom, mistakes, and stupidity of all market participants are faithfully recorded in history.
Historical progression and regression are being accomplished at a faster rate these days than that of the early 20th century. Thus, the shorter time frames by which comparable price appreciation and destruction happen.
We say that history repeats itself or at least rhymes with the past.
This is particularly true with stocks and stock markets data charts where the performance of a nation's market participants and the economy they support are faithfully recorded over time.
We can say with higher probability that the Chinese people and their economy will keep following the road by which the US and Europe have already traveled with some degrees of variations. And hence their stock markets too.
Using that as a template:
We can say that the Shanghai and Szensen indeces are going to follow the path by which Dow Jones have travelled from 1932 to the year 2000. That is - from $42 to $11,750. Most likely not in 68 years but rather in a much shorter period of time.
Also, we may call this the "economic crisis of the 21st century" in the US. But it might as well be the "investment opportunity of the 21st century" comparable to that of 1932 to 2000. The second chance or the second life for the US economy.
US experience throught the last century may prove "again" to be better than that of the inexperienced China and India who are simply copying or mimicking the past performance of the US and Europe.
Best wishes to all.
At least the 'six chickens for a pig' barter economy in which over half of China's population lives isn't going collapse. That is, it's not going to collapse until the fruit of the forced abortion 'one child' policy ripens in ten years. Even then, it will only be the aging who have absolutely no hope of a pension who will die in misery.
If you're comfortable turning a buck by investing in slavery, then China provides a great opportunity. You might want to consider the lack of protection of property though. Getting "justice" in a commie court system is only a sure thing for commissars.
Could the US stand 8% of the current Chinese holdings being dumped ? I doubt it. OK, its not going to happen overnight, lets be clear, but its happening already.
As for slavery ... Nike with children working in sweatshops in SE Asia ... come on !!
On Apr 24 11:00 AM van Schayk wrote:
> China has over a 1000 T of gold, it continuous to benefit from FDI,
> albeit at a much lower rate; it does not need to cash in its dollar
> denominated assets at a rate that would substantially impact the
> market. It has the money and no shortage of infrastructure investment
> opportunity to prepare for the next cycle as well as the political
> imperative to spend on social services. Unemployment will be contained.
> Also, bear in mind that much of the downturn was not due to collapse
> of world economy, but result of earlier tightening. Look for GDP
> growth closer to 8% than 6%.
For a technical look at the charts (and the potential for a breakout):
www.marketoracle.co.uk...
Deng Xiaoping four mederization was to advance Zhou Enlai technology by working cheap in his special economical zone but what wasn't working out was any military upgrade as number 4 in moderization China out from all that leaping forward. Presidnet Hu Jintao wanted the technocracy to rule the world. Problem-solution mind set will be the social equality for our GDP growth but innovating the better cruise missle was not building up the wealth to employ all of their out from all that outsourcing.
I believe they are now turning to what may end up being a brilliant strategy: using their US dollars to buy commodities on the cheap.
First, they get the benefit of picking up commodities at prices not likely to be seen again soon. Worst case, they can simply sell it for a handsome gain at some future point. (Of course, when that happens, the currency conundrum is raised again, but at least it gets postponed in a profitable way.)
Second, the money moves out of the States, but not directly into Chinese currency.
Third, they obtain raw materials for their businesses at great prices, making their products more competitive, even if they raise pay a little.
Fourth, they establish themselves in strategically critical businesses (Chinalco buying into Australian mining companies, for example).
This is all speculation, of course, but there are several dots that connect in a way that fits this picture.
Which makes me wonder: could it be possible that the stock market's stubborn refusal to go down again could be because some Chinese money is moving from Treasuries into the stock market? Again, I have no facts on which to base that, but the surprising hardiness of the rally makes me look to all possible reasons...
On Apr 24 10:51 AM User 401409 wrote:
> the comparison with LU is confusing; try to check how much money
> China puts into health care, education and to Si Chuan, the earth
> quake province before you comment blindly based on a few pieces of
> news. try to live there for a while before you call it a bubble,
> try to understand the domestic spending power on the road, take the
> auto figure for example.
>
Chinese consumers in China or anywhere else in the world prefers to save as much as they can rather than to spend it on what they don't have, in good times or bad times. Manufacturing spending may be down....Is it a bubble as an economy that it will pop? Don't think so.
their only hope is that paper $$ retains some measure of buying power as the value of hard assets vs diluted currencies becomes prevalent
Imagine expanding into the teeth of the worst global downturn since the 30's. Only the Chinese are doing it and in the process they will start dumping their cheap goods onto the global market and start a trade war. The first shot was their dumping of steel onto Europe. The Euro zone is already complaining. You can't expand into a massive contraction. Free markets wouldn't do it, but the China command economy is different. But does that make it right. They can control supply, but what about demand.
I think the best analogy is one that everyone here would understand. Could the US have avoided a depression after the 29' crash by forcing banks to loan and companies to expand and not layoff. Ben Bernanke believes the 30's could have been avoided by that exact thing. I am in the camp that the Fed mistakes were made in the 20's, not the 30's. Which camp are you in.
China thinks they can avoid this downturn by expanding supply. I am sorry, but that is as dumb as thinking the US can avoid this downturn by more consumption. Both are pathetic.
According to the team, the forecast was revised higher as
1) Chinese policy stimulus has been more aggressive
2) Domestic demand response has been stronger and has occurred earlier than originally forecast. They expect above-trend growth in 2010 to be largely driven by stronger investment growth, especially from private investment.
3) GS expect stabilization in domestic unemployment and external demand.
www.investmentpostcard...
4) China is building gold reserves, last time China disclosed this information was 2003 when had 600 tonnes, so this move to 1,054 is large in magnitude but spread over 6 years since the last update .
China boosted its gold reserves by 76 percent since 2003 and has the world’s fifth-biggest holding by country.
By purchasing from domestic producers, China demonstrated that it has the ability to acquire substantial amounts of gold in a way that is difficult for the international market to track and therefore not disruptive to prices reserves
Bootom line:
IMF is selling gold and Asian central banks are buying (diversifying into gold) Asian central banks, in times of dollar uncertainty and the global volatility in the forex market gold is a safe warbor.
So China doesent the money internally to finance its continued growth.
I'm pleased you pointed out these problems. Environmental issues are something that the market, especially when run by a profit-at-all-costs Chinese dictatorship, overlooks. There was a study done recently in the Journal of Chinese Political Science called "Environmental Stressors and Food Security in China" which is a telling report of how bad their environmental problems are. Here are some findings of the report:
- 16 of the world’s 20 most polluted rivers are in China. More than 70% of China's rivers, lakes and streams are heavily polluted.
- Chinese cities dominate the global rankings in air pollution.
Air and water pollution combined with widespread use of food additives and pesticides have made cancer the leading cause of death in China. The World Health Organization estimates that air pollution kills 656,000 Chinese each year.
- 90% of the groundwater of China’s cities is polluted to some extent. About one-third billion rural Chinese use unsafe drinking water. Nearly one-third of all Chinese lacks access to potable water, with a per-capita supply about one-quarter the global average.
- About 12.3 million ha—more than 10% of China’s arable land by current government estimates—is contaminated by pollution, and the situation is worsening. Every year, nearly 6000 square miles of
grasslands and forests are lost to desertification. Desert sands claim an area equivalent to New Jersey every five years.
- In 1996, arable land stood (officially) at slightly over 130 million hectares. In 2007, arable land slipped below 122 million hectares, approaching the central government's long-held 120 million hectare "critical mark" for food security, and the loss is accelerating.
- In 2005, one third of China’s land mass was affected by acid rain; in some regions of the nation, all rainfall was acidic. With 26 million tons of sulfur dioxide discharged in 2005—27% greater than in 2000—China became the world’s largest sulfur dioxide polluter. Acid rain is so pervasive and severe that crop yields have declined in about 30% of the country, and buildings are being seriously damaged in every urban area.
- At least 50% of the coral reefs off China’s coasts have disappeared in the past 20 years. Loss of coral reefs in turn increases the risk of typhoon damage to China’s coasts. China uses more than 360 kg of fertilizer per ha, much higher than developed nations’ usage rates, and fertilizer is used inefficiently. Fertilizer runoff after rains causes contamination of water and water life. Most of the 280 million tons of sewage generated each year is untreated and directly discharged into rivers. Some 9 billion tons of sewage water is discharged every year.
All of these environmental degradations have a cost. If they are not dealt with and brought under control, then the cost continues to escalate and compound over time. To the detriment of the people of China, the Communist Party has bred and nurtured a raw, capitalist instinct for short-term profit over environmental concerns. Under this mode of thought, the environment will lose every time. China's multi-decadal double-digit expansion has been achieved at a very high cost of unprecedented levels of pollution, irreversible damage to ecosystem functions, and depletion of critical non-renewable natural resources.
On Apr 25 03:56 PM mr clark wrote:
> China is in much worse shape than the US... their environmental troubles
> are massive in scale, desertification, polluted and depleted water,
> low or negligent regulations, etc... they are increasingly reliant
> on massive imports of fuel, fertilizer, materials, etc just to provide
> for the basic necessities of a population of 1.3 billion...and is
> now faced with a major shift in global consumption patterns, as millions
> and millions of jobs in the nations of their main customers vanish
> ...
>
> their only hope is that paper $$ retains some measure of buying power
> as the value of hard assets vs diluted currencies becomes prevalent
Lots of good info tossed in there and there.
But when it comes down to it, this article is the equivalent of saying, Markets go up and markets go down. The problem is figuring out when.
Sorry, didn't get much out of this one, except that China's market may continue to rise until it crashes.
This they have stopped. There is potential in China as no other place, in my opinion.
One slight negative: a regime change that would turn away from the government's current pro-business stance. But that's a very slim negative at this time.
On Apr 24 11:00 AM van Schayk wrote:
> China has over a 1000 T of gold, it continuous to benefit from FDI,
> albeit at a much lower rate; it does not need to cash in its dollar
> denominated assets at a rate that would substantially impact the
> market. It has the money and no shortage of infrastructure investment
> opportunity to prepare for the next cycle as well as the political
> imperative to spend on social services. Unemployment will be contained.
> Also, bear in mind that much of the downturn was not due to collapse
> of world economy, but result of earlier tightening. Look for GDP
> growth closer to 8% than 6%.
I am slowly turning to the thoughts of making some sort of political police force. Where if a politician is found with his hand in the cookie jar, [not just making a mistake in judgement, or simply doing a lousy job] that we take him out and hang him like they did to the
Spanish Mint Master of Potosi' when he was caught stealing silver and platinum while minting coins. So bad was his act, he caused serious doubts of the value of the currency, so they made a new currency to prop up the people's faith in the Spanish currency.
Are our leaders making mistakes, stealing, allowing indiscretions [putting that mildly], or any other acts that can destroy our economy and way of life?
Some gov't factions want us OUT of the middle east. Well, then fine. So who will keep the nukes from being manufactured? Who will keep the Saddam's of the world taking over again.
Hey pilgrim, wake up, it is 340,000,000 Americans against about 8 BBBBillion people who want to come here, and make us like them.
If we get out of the middle east, man what a game plan..
Well, I will say this no matter what China does, they can build skyrockets to reach Denver, and so can Iran with Russia's help and Arabian knights who need money and on and on.
You better go back and study Thomas Jefferson. He had it figured out. Then go look at a few failed plans, and you will find out SOCIALISM does not work. (not even gonna comment on comunism) A free market with a limited number of white collar criminals and bad politicians will allow a nice solid recovery.
But, we need a police force that cares and is paid well, and not afraid to go after ANY criminal in the world foreign or domestic, and put them out of business. In the long run, it will be a lot cheaper.
Hell, I dunno, what a mess,
Buy gold and hope for the best
Capt Brian, [feels like he is in the middle of a terrible storm]
Many - Goldman Sachs - do not.
The market will be in for some turbulence when it decides which camp is correct. Should China be overpriced, the global recession could deepen.
First, China has built huge manufacturing capacities that are way way in excess of its own internal consumption demands. And that often have little to do with the consumption preferences of its own people - western style toys, for instance. With external demand collapsing, these factories are sitting idle, but they still burn real cash for maintenance, interest payments etc.
Second, China can effectively not do much with the 2 trillion$. It seems you haven't read the article at all. because the author rightly observes that in order to use these trillions for stimulating the Chinese economy you have to convert these dollars to renminbi(=yuan). Read the last paragraphs of the article and you understand the delicate situation the Chinese find themselves in in this regard.
But of course, you could also go on and comment on articles of which you obviously read only the headline
On Apr 24 08:34 AM Freya wrote:
> Lets see, China's stockmarket went from around 1,000 to 6,000 and
> the Chinese Bubble collapsed going down much further than ours did,
> all told, I believe it was down about 70%. The Big difference is
> that their Bubble was not accompanied by a massive recession, it
> was more like the 1987 crash which was not a recession either.<br/>
>
> They are coming out of a collapse.
>
> The only currency China is down against is the Yen.
>
> It is trying to decouple itself from the USD. It can do so by driving
> the USD UP, Ditto Japan which doesn't want a strong Yen.
>
> Both countries have a lot to gain from a stronger dollar for the
> Short term. They have ample USD reserves with which they can buy
> dollar denominated commodities to reignite their economies.
>
> China's foreign currency reserves are in the $2 Trillion range, they
> do not need anything or anyone to finance their internal growth.
>
>
>
>
>
>
so it seems, that Vitaliy's view is obviously very much contrarian - which makes it interesting to exploit as the crowd usually is dead wrong
Anyone that has traveled outside of the major cities in China - which only constitute around 20% of the population - knows that the majority of the population live a very simple life. The vast majority of spending is of the 'non-disposable' variety: food, shelter, transportation, clothing, etc. Looking to these people to prop up an economy dependent on producing Bed Bath and Beyond type products for suburban American is - I think - a very bad idea.
Here is the dilemma, Doctors can frequently warn people about how eating habits, a lack of exercise and drug abuse can contribute to ill health. The Doctors are frequently able to diagnose and illness and prescribe a treatment, but getting the patient to accept the medication and the more unpleasant parts of the therapeutic intervention is quite another matter.
On Apr 24 03:00 PM Alphameister wrote:
> Jamaican in Africa
>
> The ultimate resource in this world is the unfettered human mind.
> Consider what Japan was able to accomplish despite a lack of the
> fertile land and raw materials typically regarded as resources. If
> you seek to end poverty in Africa, persuade the benighted leaders
> of African nations to create an environment of freedom and to welcome
> profit-seeking investments by capitalists around the world.
Their plants sit Idle, so what. Our Plants sit idle too.
China Bears are called Pandas.
Rogerknights provided a link to the Bloomberg article on it. Whats the point?
Pretty simple, there is no rush. They are very methodical both in planning and execution. They are slowly putting together the materials they expect to need for their internal expansion.
Meanwhile, the USA will come in to find that everything costs more.
Maybe we can add another runway at the John Murtha airport so the the Pelosi plane can refuel.
They are coming out of a collapse.
The only currency China is down against is the Yen.
It is trying to decouple itself from the USD. It can do so by driving the USD UP, Ditto Japan which doesn't want a strong Yen.
Both countries have a lot to gain from a stronger dollar for the Short term. They have ample USD reserves with which they can buy dollar denominated commodities to reignite their economies.
China's foreign currency reserves are in the $2 Trillion range, they do not need anything or anyone to finance their internal growth.