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China plans to increase export tax rebates in response to slowing demand overseas, the first...

China plans to increase export tax rebates in response to slowing demand overseas, the first such move since 2009. "The situation is getting more severe, with a double-digit decline in export growth expected in Q1," says a deputy director in the Commerce Ministry.
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Comments (6)
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Maybe it's just me but no one seems to really be paying attention to the Chinese slowdown and its implications for the world economy. SA Market Currents the last few days were riddled with warning stories yet no one seems to notice - not a single new home purchased in Beijing.

     

    http://seekingalpha.co...
    "New data shows a sharp slowdown in China's property market, with prices generally flat or lower and one report showing no new homes were sold in Beijing during the recent weeklong Lunar New Year holiday. SocGen thinks the correction has further to run, while BofA/Merrill says the deterioration is supported by other data, including a slump in apartment sales. [View news story]
    "no new homes were sold in Beijing during the recent weeklong Lunar New Year holiday"

     

    Given the population of the city that either is a misprint or truly scary.

     

    "Beijing, formerly romanized as Peking is the capital of the People's Republic of China and one of the most populous cities in the world, with a population of 19,612,368 as of 2010."

     

    If they have a bubble popping in their real estate, I am not sure how they avoid the "hard-landing" that is considered "impossible" by most analysts - I think this might actually qualify as an unexpected shock to the markets. This could in part explain a lot of the recent weakness in the Asia/Pacific area (Singapore, Australia, Japan, South Korea) that was attributed to the Chinese New Year.

     

    Remember when "subprime was contained" ?

     

    We have had pretty much the same assurances coming from the Chinese authorities as well. Interesting to see if in the end they are telling the truth.

     

    China is a demand taker not driver so it reflects (to me) the strength of the world's economy in aggregate and Chinese New Year or not, the direction seems to be down not up.

     

    Maybe it turns around around with a turn in the US economy in the first quarter but with gas prices creeping up so fast, I do have my doubts.
    21 Feb 2012, 10:29 AM Reply Like
  • Tack
    , contributor
    Comments (14244) | Send Message
     
    CW:

     

    Often, the problem with 2008-like events is that those that lived through them apply the same scenario to every subsequent economic development, always expecting any and every event to be the new calamity, as if 2008 (subprime) has engendered a new norm. Well, it hasn't. 2008 was likely a once-in-a-lifetime kind of economic event, and to the extent that it distorts investors' normal investment analysis and practices, introducing a new sustained fears, productive investment behavior will suffer.
    21 Feb 2012, 11:42 AM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Tack,

     

    "2008 was likely a once-in-a-lifetime kind of economic event,"

     

    I very much doubt that. Its repercussions are still being felt and the aftershocks will be with us for quite a while. How else to explain ZIRP?

     

    Anyway, the point was the real estate bubble may be popping in China and if it does, this could create a serious headwind for the world economy. Hard to know with certainty given how opaque the Chinese government and its component parts are with respect to this issue but what has come out recently has not been positive, in fact, it has been very negative.

     

    I am focused on Chinese real estate and what happens if or when the bubble pops. Chinese officials have offered similar soothing words to our own Uncle Ben when he uttered those infamous words so the parallels are similar while the outcome will be undoubtedly different from a US based investor perspective. I still think its a relevant issue for an investor.

     

    If an irrelevant (from an economic viewpoint) tiny country like Greece can roil markets for years, just imagine what a Chinese hard-landing would do.

     

    If you disagree well I am not sure what else there is to discuss on the topic. Ignore the issue if you wish. That's your choice as a buy and holder.
    21 Feb 2012, 11:49 AM Reply Like
  • Tack
    , contributor
    Comments (14244) | Send Message
     
    CW:

     

    My point is that SA has been littered with comments from many, saying that the next calamity would be initiated by Greece, QE, oil, China, Iran, fill-in-the-blank, as if every new economic development in the world would immediately lead to a 50% market collapse. This reasoning has been used by many to stay out of the markets. This has been an unfortunate response for those that did.

     

    It reminds me of the 2004 hurricane season in Florida, where much damage and more fear was engendered. Subsequently, each and every year, for several more years, the "experts" forecasted more and worsening hurricanes. Since 2004, exactly one mediocre hurricane has struck mainland Florida.

     

    Earth-shaking developments are the exceptions, not the norms.
    21 Feb 2012, 12:48 PM Reply Like
  • tunaman4u2
    , contributor
    Comments (3197) | Send Message
     
    Exponentially more stimulus to fix them is the norm... but just as a coke addict knows, the hits just become too big

     

    Don't sell these events as coming full circle back to the same normal
    21 Feb 2012, 01:11 PM Reply Like
  • Conventional Wisdumb
    , contributor
    Comments (1802) | Send Message
     
    Tack,

     

    This chart of NatGas is in my opinion the most compelling reason to be very bullish on the US long term:

     

    http://bit.ly/yeFvbQ

     

    Shale gas just may be the solution to our energy needs once its more effectively integrated into our energy infrastructure.

     

    This alone makes me bullish for the US. I still expect short-term pain and a sell-off but long-term the future will be bright as energy costs go down for everyone, especially our manufacturers.
    21 Feb 2012, 01:17 PM Reply Like
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