posted
Yeah, yeah. I know. I know that china anything ends up such a problematic topic for hatrack, okay? But I'm still curious.
Anyone else think that china is getting ready to pop?
China has been defying gravity for years, avoiding inflation by stacking up dollars they don't use, but the string seems to be running out and the flooding of the Australian coal fields looks like it will be the push that tips them over. The price they pay for coal is going to spike, and they either print yuan and feed inflation, or they start spending those dollars and screw their biggest trading partner, which crashes demand for their exports.
They've got entire cities that are completely unoccupied, factories that ship their products directly to the recycler, and enough empty office space to give every man, woman, and child their own 5x5 cubicle.
Is anyone else watching this and have some guess as to what's going to happen?
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Blayne Bradley
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posted
quote: Yeah, yeah. I know. I know that china anything ends up such a problematic topic for hatrack, okay? But I'm still curious
This line was actually completely unnecessary as we all pretty sure know what you mean, you could have avoided saying this, and almost certainly would avoid any problems.
So far we don't actually know if they have unoccupied cities or if they're 'Closed Cities', cities designed for national security reasons and military-industrial planes and R&D, one article relying on google earth is not exactly convincing.
Also China is self sufficient in coal production and is a net exporter of coal which I think reduces the credibility of the assertion that a price hike would hurt very much in the short term, what would matter is "is this short term or long term?" If they know its only short term you can grit your teeth and endure it.
And then, ha ha, hilariously we need to put this in perspective, the 60% share of Oz's coal exports to China Only amount to 150 tonnes
Wwwwwwwwwwwwwwww~ scary!
The problems of a country the size of China modernizing are well documented and in fact many of its difficulties predicted 30 years ago in 1986 in Paul Kennedy's rise and fall of the great power ut he also points out that these problems are the same that every developing nation has to go through and for as long as the status quo of peace and internal stability continues he had no difficulty seeing them "eventually "surpass Britain and Italian GNP totals well before 2000 and be vastly in excess of any European power by 2020." assuming it maintained an 8% growth rate which the Economist at the time calculated as feasible.
I reccomend reading "China: Fragile Superpower" by Susan L Shirk who was a leading China analyst during the Clinton years if you truly want a proper non tabloidy analysis of China's impending political and domestic fragiliy, serious it gives some mind boggling numbers.
Like for example did you know of 2009 China has over 70,000 protests a year? No? Neither did I! Defined as any gathering of over 150 people protesting something or other and they're getting smarter with no clear leaders for the gov'ts "Arrest the leaders and concede to their demands" strategy so now its only "concede to their demands".
posted
Out of curiosity, what is the national average among all nations of protests (as defined above)? The US average? First world average?
70K sounds like a lot, but without any sort of scale, I have no idea if it's really that big a number. And I wonder, without a breakdown, how valuable it is. Are thousands of tiny marches each given individual equivalence with one million man march?
I'd be fascinated by a larger report on protests around the world that breaks the information down more, and compares it to other national numbers.
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posted
Honestly Blayne, I did, a little. Instead you post that, and to be honest I will probably read that book, it sounds fascinating. Thanks for bringing it up.
Off to work now, have a good one!
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Blayne Bradley
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posted
So far the leadership in China is viewing the protests the same way the US looks at newspapers, as a sorta indicator system to act as a form of oversight, "hmm, a protest, seems we may have been a little hasty." Since they generally have very credible and valid concerns they're usually fairly quick to listen to those protests.
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posted
I think I would put it this way. I'm sure that the corruption, inequality, and distorted policies in China will sooner or later cause an economic crash and political instability. But I have little confidence in whether the same three issues will cause a crash in China *before* they cause one in the United States and/or whether one of the two crashing will bring down the other anyways.
I remember when starting investing in 2007 that the conventional wisdom was that one should pull-out of Chinese banks because of the impending bubble and invest in safer US banks. Then the financial meltdown imploded the American banks while leaving the Chinese banks unscathed or even better off on the whole. Europe not exactly a safe haven either.
So I'll just echo a common saying I've heard around, "Markets can remain irrational a lot longer than you and I can remain solvent."
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posted
I would say that China's problems will definitely be compounded by the widening men:women ratio. Or else China is about to go through some sort of gay renaissance. If that happens, just remember I predicted it first.
I don't think we can really predict how bad any sort of economic/political collapse will be. At best you can get lucky, and then in hindsight talk about how things you couldn't possibly know for sure are obvious now, and many writers will take credit for them.
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Which is kind of the problem in relying on something as specific as it or floods in Australia as an accurate barometer of impeding doom.
Of course the flipside of the previous saying is "If you predict a crash enough times, eventually you will be correct."
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Blayne Bradley
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quote:Originally posted by BlackBlade: I would say that China's problems will definitely be compounded by the widening men:women ratio. Or else China is about to go through some sort of gay renaissance. If that happens, just remember I predicted it first.
I don't think we can really predict how bad any sort of economic/political collapse will be. At best you can get lucky, and then in hindsight talk about how things you couldn't possibly know for sure are obvious now, and many writers will take credit for them.
Aren't they loosening the One Child Policy?
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quote:Originally posted by BlackBlade: I would say that China's problems will definitely be compounded by the widening men:women ratio. Or else China is about to go through some sort of gay renaissance. If that happens, just remember I predicted it first.
I don't think we can really predict how bad any sort of economic/political collapse will be. At best you can get lucky, and then in hindsight talk about how things you couldn't possibly know for sure are obvious now, and many writers will take credit for them.
Aren't they loosening the One Child Policy?
Err...sorta. If both spouses are only children then I believe they can have more than one child.
But they still have not removed the forced abortions if a woman gets pregnant with a second child. The policy of refusing to divulge the sex of the child to expectant parents is mixed in its effectiveness IMHO. Many parents go to illegal centers where they will screen for you, for very cheap. Sure some parents find out they have a girl on birth day and think, "Welp, that's how it is." Others though simply dump them off in orphanages (especially in rural areas), abandon them somewhere, or even kill their girls. In any case the ratio is still widening, and this has given rise to serious human trafficking issues, where men from rural areas pay gangs to kidnap women from cities or other parts of China and haul them back to their villages to be their wives. Villages are often complicit in keeping the women there.
South Korea had a similar problem a few years ago with serious ratio imbalances. Their response was to crack down on gender selection practices, and that seems to have worked for now. China, I fear will have to find a way to do the same thing, though it is a truly enormous undertaking. If they don't though, there are already 30+ million men in China who won't be getting married, even if they want to. Assuming of course they don't purchase a foreign wife, or convince somebody to move to China and marry them.
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quote:Then the financial meltdown imploded the American banks while leaving the Chinese banks unscathed or even better off on the whole.
...
So I'll just echo a common saying I've heard around, "Markets can remain irrational a lot longer than you and I can remain solvent."
You might want to take another look at the performance of US banks to date
Someone investing broadly in the banking sector (whatever floats your boat) for the long term (as anyone except the largest investors should) would see the most recent downturn as a particularly annoying blip, but nothing devastating.
Funnily, I think it should have been more devastating. The US was too protective of banking investors and counterparties.
Regarding the major question of the thread, I don't know if China will have a catastrophic crash. I am absolutely certain their economic growth will not continue forever (or even that many more years) without a serious readjustment, but that does not always take the form of a crash. Of course, I'm not convinced Chinese economic growth is continuing now as it was at times in the past decade: China's numbers have never been reliable (I've seen several accounts of low level Chinese officials openly stating they essentially made up numbers for their part of the calculations, though I'll have to go searching to find them again).
Returning to the banking sector, I suspect that will be one of the worst off sectors in China when that readjustment comes. China's national government has been using banks as back door project financing, via the local governments, and a heck of a lot of that debt isn't just mildly nonperformant, it's dead in the water. That debt constitutes a substantial part of the national banking assets of China.
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So starting in 2007 as I said, if I had invested in Citigroup, Bank of America, or JP Morgan, I would be down anywhere from 7% to 90%. On the other hand, investing in their counterparts Bank of China, China Construction Bank, and ICBC would have given me from a 3% to 49% gain.
Mind you, I would be pricing these gains in Canadian dollars which have also gained 16% since then making the American loss even more devastating, but granted, that affects both equally.
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posted
I'm not saying there isn't a performance difference, just that any balanced investment in US banks would have pretty much regained value and be back rising. A negative, certainly, but not a devastating setback in long term growth.
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posted
A more balanced ETF like Vanguard's Financial Index is still down roughly 50% in the same timeframe, pretty much in the middle of that 7% to 90% loss range.
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posted
I know this makes me a grammar nazi, but I'm finding the lower-case Chinese in the subject title to be quite a distraction.
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quote: Yeah, yeah. I know. I know that china anything ends up such a problematic topic for hatrack, okay? But I'm still curious
This line was actually completely unnecessary as we all pretty sure know what you mean,
I kinda think you don't! It's a disclaimer on my part to say 'for serious I am not trying to stir up crap' because by appearances making a thread on this topic here right now would almost certainly seem like it.
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