Carlos Lam

If China Is Recovering, How Will We Fare?

On Apr 17 08:17 PM User 357469 wrote:

> Unfortunately this is one of the reasons the USA is in the state
> that it is today. Some people are just not investing in America as
> much any more. If you loved your Country, you would invest in her,
> not elsewhere. Investing elsewhere will only help destroy her.<br/>

No, the USA is driving out investment because (a) its federal government is borrowing and spending too much, (b) its currency's value keeps dropping, and (c) its citizens prefer to buy consumer junk instead of saving. I love America (though I consider myself a Hoosier 1st, American 2d) and will willingly criticize the political and banking classes for burdening her economy. I will not, however, suffer the opportunity cost of not investing overseas because of the idiocy of the political and banking classes...until they slap capital controls on me for "patriotic" reasons, of course.

If China Is Recovering, How Will We Fare?

It's not Wen's "stimulus" plan that will get China growing more quickly than the United States. China is having a slowdown as a result of being so export-dependent; its greatest "customer" is too heavily-laden with debt to keep buying the trinkets that China produces. Chinese companies will have to re-tool or find new customers, presumably some of their own 1.1 billion people. Consider :

* Chinese consumers have VERY little household debt (even many HOUSES are paid for in cash)

* Chinese households save about 30% of their income

* The Chinese government does not have the unfunded liabilities of Social Security & Medicare (that total about $70 trillion)

* Chinese banks didn't foolishly invest money on instruments that they did not comprehend

In sum, the Chinese economy is much more free from debt and regulation than is America's. Of course it will grow more quickly.