TPA's Comments

Two More Myths About Business in China

Sun, 15 Nov 2009 21:47:33 -0500

Shaun, I think that your sampling of citizens for your survey is skewed toward the upper class of Chinese society and/or you need to choose better examples for your articles. Most of the skepticism with this articles seem to stem from your conclusions generated by this Anna person.

Next time you're in a taxi, ask the driver how much she's able to save on a monthly basis and whether she spends every dime at Zara and on travel overseas. In fact, you can also ask her whether she's happy with her leadership or whether China's economic growth has helped her and her family or even whether the health care system is as broken as some would suggest. The good common folk at their income bracket probably represent a much, much larger swath of the Chinese population than Anna. Anna's 月光族 generation (or "moonlight tribe" in English) is a growing, but still very small, portion of the society.

But yes... I agree it is a good time for retailers to be entering China if they have not yet.

How Long Will China Put Up with Our Money Printing?

Wed, 09 Sep 2009 03:40:45 -0400

I think that you are reading too much Sun Tzu.

I currently live in China and work as the only English speaker in a local company. From my experience, trust and honesty are the only traits that the Chinese believe in when it comes to business. That is the whole basis of the Eastern guanxi culture where business is done on relationships and connections.

Also understand that this is a BIG nation... perhaps the largest (in terms of resources, population, and potential) that the US has ever competed against. It definitely has its flaws both politically and culturally (I am of American-Chinese, by the way), but It would make sense for both Americans and Chinese to better understand each other's cultures before making remarks about who stands the moral high ground.

On Sep 08 08:17 AM Michael Clark wrote:

> The Chinese are almost always disingenuous. It's that inscrutability
> factor. Honesty is less a value in the East than is getting an advantage
> by misleading a potential or real adversary.
>
> Those who take the Chinese at face-value are not really understanding
> Chinese culture. Face/positive appearance is the positive value.
> Honesty is almost never a consideration.

Faux Demand for Foreclosed Homes

Wed, 27 May 2009 01:41:24 -0400

IMHO, as a property investor with some experience, the appreciation (or depreciation) of the property has the largest impact on your overall return in SFHs. A modest drop of 5% in the price of the property can easily wipe out a year's worth of rental income.

Therefore, I would think that the real question (if you are buying to invest and make money) is not whether you're cash flow positive or not, but rather if there is room for modest appreciation. Asking whether you would buy the same property if you had to pay cash for the property is the right attitude. This is a lesson that many of the would-be investors have yet to learn based on what I'm reading of Pheonix, Las Vegas and other foreclosure towns. They may be able to cover their 80% mortgage payments with cash flow from a temporary 8-10% rental yield, but in the end, it's still dead money.

On May 26 09:39 PM henarl wrote:

> joof: How much did you pay for that house that you are renting out
> for $1900-2500/month? If you have a big mortgage on that house, how
> much are your mortgage payments? If you paid cash for it, what else
> could you have done with that money that would probably give you
> a better return? The cost of money is the largest consideration when
> investing in residential income property and the payoff is not in
> monthly positive cash flow but in selling the house for much more
> than you paid for it. That worked for a long time but don't count
> on it happening any more in the foreseeable future. "How you lose
> money" is when the house goes down in value, instead of up, while
> you are holding it. Duh!

Federal Budget Deficit: Is Anyone in Washington Interested in Fiscal Responsibility?

Wed, 18 Feb 2009 00:13:44 -0500

Herbert Hoover, Crisis or not... Please give me a good reason why my son or grandson should pay for the excesses of the current generation of consumers who bought McMansions and Hummers. I think that that is the basis of the article here as well as the wellspring of criticism toward Obama and the stimulus package.

Try, yes... but don't beggar the nation's future to save a bunch of fools from their own irresponsibility.

On Feb 17 08:03 AM Herbert Hoover wrote:

> In case you haven't heard, there's an economic crisis. Hoover balanced
> the federal budget in 1930 and 1931. Fat lot of good it did everyone.
> It's an emergency folks. If you don't try to fix the crisis or you
> won't have to worry about anything else. If your house is on fire,
> do you really care how much the cost of a gallon of water is?

>
> Get real.

Is China Pulling an Alan Greenspan?

Tue, 17 Feb 2009 23:10:53 -0500

Agreed... Growing at 5-6% is a hell of a lot better than what's going on in the West right now. I think it a moot point to argue whether the Chinese government knows what it's doing. They've succeeded over the past 2 decades by NOT listening to the West.

On Feb 17 01:51 PM The Mad Hedge Fund Trader wrote:

> One of the few mustard seeds out there continues to be the Shanghai
> stock market, up 32% YTD, and the best performing stock market in
> the world. Pundits with short memories are rehabilitating the “decoupling”
> theory again, which so far has only “decoupled” investors from their
> money. While the Middle Kingdom’s growth rate has backed off from
> a torrid 13% to probably 5%, it is the only major economy that is
> actually growing. The bet is that their stimulus package, which has
> a much higher component of infrastructure as opposed to social spending
> and tax cuts, will work better than ours. Betting against China has
> been a loser for 30 years now.

Goldman Sachs Should Hit It Big in 2009

Tue, 17 Feb 2009 21:13:38 -0500

Archman, Stop picking on the kid... No matter what his background, he's got a right to express his views on this site just as everyone else. If you don't agree with his logic, then be more selective and don't read his articles. That's what this website is about, isn't it?

On Feb 16 12:47 PM archman82011 wrote:

> <> attacks.
>
> Seems to me your accusation of "pump monkey" indicates you are a
> "dump monkey." >>
>
>
> Yes, isn't that always the solution. When someone recites the truth
> about something, keep labeling them as "short" so it gives you some
> comfort. I just have to sit back and laugh watching those who are
> in complete denial about our market and system here in the US, as
> they label me because it helps them sleep at night.
>
> For the record: i called the author a pump monkey for his analysis
> was based on hope and the kindness of strangers with regard to GS.
> Also, if you review the author's previous articles, save for one
> or two of them, all his articles are about trying to sell someone
> the story on the stock he is recommending. And yes, the author indicates
> either he or the mutual fund he works for is "long" the stock at
> the time of publication.
>
> No matter how you slice it, it you are long a stock you are writing
> positively about, you are talking up your own book. Period.
>
> There is nothing wrong with that, but lets call it what it is: pump
> monkeying. Same goes for someone who is short and bashing a stock
> in print at the same time.
>
> I have not talked positively nor negatively about GS.
>
> If it makes you feel better labeling me "short" the stock, hey, whatever
> helps you get thru the day pal.

Does China Truly Offer an Alternate Economic Model?

Thu, 25 Dec 2008 22:19:53 -0500

For Christ sake... We had the Governor of Illinois trying to sell the President-elect's Senate seat less than two months after the election!

The West needs to step down from the moral high ground and stop deceiving ourselves. "We the People" is great, but there are also many problems within our borders. There are good and bad apples everywhere, in every country, and in every culture; and people in power will always have the option of misusing it.

The answer to the author's question of which economy is better... "neither". The free market economy has its excesses (very apparent during economic busts), but also its advantages (very apparent during booms). A good example is America's free-thinking ability to innovate at the drop of a dime.

Advances in a centrally controlled economy can make the nation look like an economic miracle because of the shear speed at which decisions can be made (8+ subway lines being constructed in Shanghai over the past 4-5 years); but a mistake can also cause disaster (eg Mao's Cultural Revolution, the Great Leap Forward, etc). Singapore (definitely a success story) is also a centrally controlled economy (at least single party government) as was Taiwan in the 80/90's; but the sheer scale of China places it in the forefront of most discussions.

In the case of China during this worldwide downturn, the nation's government has simply had the foresight to be more finanically conservative and more patient than say Eastern Europe. I'd opine that the government was exceptionally smart (though self serving) over the past 10 years.

On Dec 24 10:18 AM sorno wrote:

> Have you seen any corruption news in china? The amount of money is
> far more than US. The money raised from the campaign is used for
> the campaign, not much for personal use, that's a difference. In
> US, people corrupted to get more money for themselves, in china,
> people corrupted to get money for themselves and for their whole
> family of successors, that's another difference. Base on your opinion,
> which country has the best system now?

China's Manufacturing Crisis Deepens

Wed, 03 Dec 2008 04:39:46 -0500

Your analysis of Chinese gloom and doom contrast with other views...

Concerning exports, "While the growth of exports in light manufacturing-includin... toys and textiles-has declined sharply, exports of (high value added) machinery and equipment have continued to grow at a high pace..." - World Bank China December 2008 Quarterly Update

Concerning jobs... you said, "About 39% of China’s GDP is capital spending. That means a huge portion of China’s economy is building new factories, steel mills, mines, etc." - This migrant population can also easily be converted to constructing roads, bridges, etc. hence the government's $600b package.

I live in China and things are definitely slowing significantly with folks racheting down the spending hatches and retail sales probably down ~15-20% across the board here in Shanghai (anecdotal evidence). But then again your typical Chinese also has a ton of savings (~25% of disp incomes is saved according to the IMF) that can hopefully be tapped; personal debt is practically non-existent (with exception of home mortgage); and the govt has shown a willingness to spend their forex (to the tune of 20% of GDP). I have hope that the government will be successful in buying a 7-8% growth rate next year.

Lies, Damn Lies, and Median House Prices

Thu, 19 Jun 2008 05:34:20 -0400

Transaction volume is a better indicator in this market... A good comparison would be how many single family homes have been sold in different price ranges over the past quarter compared with last year. This would give a better indication of the "true" demand in each area. My guess is that the folks in Berkeley may have more income on hand to pay their monthly mortgage payments (and thus less likely to foreclose), but that doesn't mean that their houses are moving of the selling block.

The Yuan That I Want

Thu, 25 Oct 2007 22:50:07 -0400

I also live in China and agree with Josh that regulations concerning the inflow of foreign capital by individuals (what the Chinese call "hot money") have greatly increased over the past couple of years. For example, the max amount that an individuals can exchange is now limited to only USD50k/yr. In addition, once your USD are in the country, there are several new restrictions on when, where and how you transfer USD now.

So pure rmb play may be tough for individuals.

With that being said, I have been approached by a couple of the big intl banks (eg Standard Chartered, HSBC, Citi) about different yuan denominated products that they sell to locals carrying USD. I don't remember the details but apparently these FX products can easily convert between USD and RMB and the returns were higher than yuan based CDs. That may be an avenue of investigation.