They are going to make Japan's 90's bubble burst look like an economic hiccup.
Printable View
They are going to make Japan's 90's bubble burst look like an economic hiccup.
http://www.businessinsider.com/china...ard-way-2010-4Quote:
Originally Posted by RandomGuy
You go with your bad self, and the honesty is quite refreshing. :tuQuote:
Originally Posted by DarrinS
Are you sure you are the real DarrinS?
At this point, I'm not even sure I want to bother explaining to you why your posts not only do not refute or debunk Keynesian economics, they rather strongly support it.
You are so bad at critical thinking and reading comprehension, it would be like trying to explain fluid dynamics equations to a 3rd grader.
If you can give me a good reason to bother, I would love to hear it.
(edit)
In other words:
http://spurstalk.com/forums/picture....pictureid=1625
What specifically did the Chinese Keynesian spending target?
oops, the anti-Keynsian writer exposes his bias and straw man:
"they are quickly learning the failings of the Keynesian belief that government can solve all problems via spending."
no, govt counter-cyclical spending (capitalism being unstable, and capitalists want the instabililty since they can bet on it) is meant to lessen the depth/length of capitalisms' troughs, NOT "solve all problems".
Quote:
Originally Posted by Fareed Zakaria
China's hidden debt problemQuote:
Originally Posted by spursncowboys
July 27, 2009Quote:
Thanks to successive years of fast economic growth and even faster government revenue growth, the official debt-to-GDP ratio was 17.7% at the end of last year, far lower than almost any other major economy.
The trouble is that excludes local government borrowing, the current surge in loans backstopped by Beijing and bad assets cleared from the banking system but still floating about.
When all are thrown into the pot, analysts estimate that China's debt may be closer to 60% of GDP, putting it in virtually the same league as the United States, which was at 70% at the end of 2008 before it launched its massive economic stimulus program.
To be sure, Washington is now set on a path of exploding debt that Beijing will largely avoid. The United States budgeted for a federal deficit of 12.9% of GDP this year, whereas China is aiming for just 2.9%.
But China's finances are deteriorating more quickly than the government expected, fueling a rise in the stock of both explicit and disguised debt that will constrict its wriggle room.
http://money.cnn.com/2009/07/27/news...reut/index.htm
Beijing Lawmaker: China Has $1.5 Trillion 'Hidden' Debt
14 Jan 2011Quote:
Billions of dollars of debt racked up by local Chinese governments during their investment sprees are likely to sour as the projects they finance near completion, Yin Zhongqing, a prominent Chinese lawmaker, said this week.
In an interview with Reuters Insider, Yin said local governments had incurred at least 10 trillion yuan ($1.5 trillion) of "hidden" debt, which they have concealed by creating thousands of investment vehicles that serve as borrowers.
Yin said it is not yet clear which loans will sour because they do not have to be repaid until the projects are completed.
"The large amount of debt that local governments took on since the end of 2008 to battle the impact of the global financial crisis will become a heavy burden for our development going forward," said Yin, who is a member of the finance and economic affairs committee in China's parliament.
He highlighted the high risk of default in the low-level county governments, which Yin said have little financial resources.
http://www.moneynews.com/StreetTalk/...1/14/id/382841
Those two previous articles were indicators that there is stuff going on behind the curtain. Here is the first evidence of the cracks in the dam, so to speak.
Boom In Shadow Financing Exacts High Toll In China
October 25, 2011Quote:
In recent weeks, at least 80 business owners have fled Wenzhou in eastern China and gone into hiding because they can't pay crushing debts to the city's empire of underground lending firms and loan sharks.
Chinese Premier Wen Jiabao became so concerned that he flew to Wenzhou earlier in October to try to keep the problem from spreading.
The city's credit crisis highlights some of the flaws — and potential risks — of the banking system in the world's second-largest economy....
The premier called for state banks to lend more to small firms and accept higher debt levels. He also called for a crackdown on high-interest loans.
Need To Break State Banking Monopoly
China's state media says the problem has been contained, but some worry that credit crises could emerge elsewhere.
Ye Tan, an economist based in Shanghai, notes that underground banking isn't unique to Wenzhou.
"It exists in many other parts of China, including Inner Mongolia and Guangdong province. This is definitely not just a Wenzhou phenomenon," she says.
[Private firms] know underground lending is very risky because of the high interest rates, but they have no choice.- Gary Liu, China-Europe International Business School
The monopoly on China's banking system should be broken, says Gary Liu, who runs the financial research center at the China-Europe International Business School campus in Shanghai.
He says the problem is that China's banks are state-run and prefer to lend to state companies.
Consequently, many private firms — which produce most of the jobs in China — must hunt for loans elsewhere.
"They know underground lending is very risky because of the high interest rates, but they have no choice," he says.
Underground lending isn't just risky for borrowers. Liu says much of the money actually comes from state banks.
"For instance, you are bank staff, you have a friend. The friend can use his house to borrow a bank loan. And then you can lend money to underground borrowers," he explains.
And then they can lend the money to someone else. So, it can be hard for banks to keep track of where the money actually goes.
The rest of funding for underground lending comes from ordinary families, which can put entire communities at risk.
Underground Lending Out Of Control
Liu says despite these problems, the Chinese government has refused to reform the system.
"Many top leaders don't really understand the market economy. And actually, they don't want to give up their power. When there is a problem, the first thing that comes into their mind is to control," he says.
In China, shadow financing has grown dramatically in recent years. This summer, it stood at $2.6 trillion — nearly one-third of all lending in China, according to GaveKal, a global financial research firm based in Hong Kong.
Underground lending solves a huge problem for private companies. But no one knows exactly where all that credit is really going — and nobody seems able to control it.
http://www.npr.org/2011/10/25/141552...-toll-in-china
Yikes.
(edit)
Always good to get more information:
http://www.ft.com/cms/s/0/31180230-f...#ixzz1bqal46MQ
(follow link to see full article, suggests that the NPR piece may just be a local blip and not the "crack in the dam")
Quote:
Still, most analysts agree that shadow financing is not big enough to pose a risk to the economy. Lu Ting, an economist with Bank of America Merrill Lynch, wrote after a recent visit to the city that Wenzhou’s grey lending market could prove to be “a storm in a teacup for China as a whole.”
China Puts Light on Shadow Loans .
With the new government crackdown on underground lending, analysts say there is now a risk that this source of credit could dry up, bringing down even thriving companies, with ripple effects on the formal banking system.
Shadow finance in China has been around for years, but the recent surge in such lending is unprecedented, analysts say. The lightly regulated underground lenders pool money from property developers, coal miners or other cash-rich individuals hunting for higher returns.
A significant portion of shadow lenders' funds comes from the banks themselves. Shadow lending has become sizable enough to challenge the government's tight control of credit and interest rates, two critical tools for steering the world's No. 2 economy.
...
The woes of the private sector also raise fresh doubts about China's ability to use bank lending to pump up the economy, as it did during the global financial crisis two years ago. "We think the bigger risks are credit withdrawal in both the formal and informal lending market and contagion," Wang Tao, China economist at UBS, said in a recent note.
As a result of the increase in shadow lending, China has an "unusually high level" of gross debt compared with other developing economies, according to a recent International Monetary Fund report on global financial stability. The IMF calculates that the stock of domestic loans, including those both on and off banks' books, reached 173% of China's gross domestic product as of the end of June.
In an indication of how much lending isn't reflected on banks' books, credit extended through banks, but moved off their balance sheets, stands at roughly 12 trillion yuan ($1.9 trillion), UBS economists say. Total loans outstanding , both on and off banks' balances sheets, stood at 55.7 trillion yuan as of August.
Dragonomics, a Beijing-based research and advisory firm, estimates that shadow finance accounted for more than 40% of new loans issued in the first half of this year. Much of this kind of informal lending actually is conducted by, or through, the major state banks.
According to analysts and banking executives, it has been a common practice among Chinese banks to move parts of their loan portfolios off their books by repackaging those loans into so-called wealth-management products that often promise rates of return higher than buyers can get from savings deposits.
...
http://online.wsj.com/article/SB1000...813821726.html
Any thoughts, scott?
http://news.yahoo.com/china-alarms-o...212057366.html
..I'm concerned with what's possibly a massive bubble in China.
The real estate market is signaling alarms and may eventually fall into a worse situation than we had in the U.S. Hedge fund manager Jim Chanos, popular for being all over the Enron scandal, has been pushing his China real estate bear case to anyone willing to listen. And while there hasn't been a collapse (Chanos started his crusade in 2009), the real estate market has been slowly, but surely, getting worse.
Chanos points out that construction represents nearly 70% of China's economy. And with China on pace to build nearly 25 million new homes in 2011, the value of real estate to GDP is approaching levels witnessed during crisis situations in Japan in 1989 and Ireland in 2007. Consumers can't afford or keep up with the rampant oversupply, as speculation and corruption have overtaken the market.
You may have seen pictures of the so-called ghost cities in China. This video from SBS Dateline provides an overview of some of the concerns in the market.
Related Articles
•Doug Kass: The China Syndrome
•Cramer: Finding the Santa Claus Rally
•Cramer: 8 Stocks for Your Buy List
I highly respect Chanos and, after reading that he was short McGraw-Hill (MHP) -- a Dividend Stars Portfolio holding -- I took notice. His argument is that S&P (which affirmed its long-term rating on China's sovereign debt at AA-minus) is missing the boat. I tend to agree. Based on what I've read from Chanos and other experts, it seems that some sort of economic disruption, fueled by a collapse in the real estate market, is almost inevitable. In fact, the renminbi has slumped to the bottom of its official trading band for six straight days through Dec. 7 against the dollar.
I still like the prospects of McGraw-Hill but am looking to hedge the portfolio with some short China exposure. If they get the call on China completely wrong, the result could be an even worse blow to their already damaged reputation. The hedge will also help alleviate some other China-related concerns in the portfolio. While Norfolk Southern (NSC) (another Dividend Stars holding) is still a high-conviction pick, I'm concerned with what might happen to its coal exports to China if construction in the region starts to tail off.
Today I'm adding the ProShares FTSE China 25 Ultrashort ETF (FXP) to the portfolio. While the Dividend Stars portfolio is meant to provide investors with a blue-chip dividend yielding portfolio, a hedge on China will help reduce overall risk. Unfortunately, this will cut the yield too. The FXP is supposed to mimic (200%) the inverse of the daily performance of the FTSE China 25 Index. I don't love inverse ETFs, but this seems to be the easiest way to get short exposure in a somewhat liquid instrument. (The ETF averages 640,000 shares a day.)
--Chris Stuart, director of research at TheStreet Ratings
At the time of publication, the author was long FXP.
.
USA would go down before China
70% of the Chinese economy is related to construction, it would seem from the article I just posted.Quote:
Originally Posted by DarkReign
That means when the real estate bubble pops, the price of steel will fall through the floor.
I heard recently that someone was, for the first time in a LOONG time, building a new steel mill in the US. Ouch.
"the price of steel will fall through the floor"
and US steel makers will be asking for taxpayers bailouts, or go bankrupt. They absolutely love the high prices constricted supply gives them.
China orders banks to roll over $1.7trillion in debt that otherwise would mature this year:
http://www.ft.com/cms/s/0/dc7035dc-5...#ixzz1mH1Tqflj
china aint using a single yuan to buy shit, all of that purchasing power comes from you yanks payin stupid interest on ur foreign debt which they owe most of...
plus whatever report comes out of china is untrustworthy....lol disclosure of financial reports...they dont believe in that shit
"foreign debt which they owe most of"
China owns less that 50% of US debt. The biggest holders are Americans.
Fed Passes China as Top Owner of U.S. Debt
http://cnsnews.com/news/article/fed-...-owner-us-debt
FED owning US debt dont mean shit, all its doing is printing more phony money and can afford to write it down bad debts with no affect on its books, just like how the IMF/ECB is doing with Greece writing down 50% of debt a few months ago.....its just numbers with no significant value cause that shit aint circulating in the marketQuote:
Originally Posted by boutons_deux
Perhaps, but it's still different than China holding it.Quote:
Originally Posted by TDMVPDPOY
China's holding in US Treasuries isn't circulating in the market either.Quote:
Originally Posted by TDMVPDPOY
When steel prices fall, the steel suppliers make a shit ton of profit. Most contracts are awarded on a set price for the duration of the project (at least in construction), and when the price goes down, profit goes up...... a lot.Quote:
Originally Posted by RandomGuy
In 2008, price for rebar for instance shot up to .75 cents per pound.....two months later, it was at 30 cents.........go look at record profitability numbers for the major steel companies in the United States........they all say 2008-2009.....big time money.
SInce then however, all of the companies have struggled. Steel has went up, it's went down, it's went up, it's went down.....and the entire time, manufactures just kept stockpiling because they were worried about the next "boom".
If the China bubble pops, it will be nothing but profit for American steel companies.
Ultimately I'll trust a European & Asian business over American
$100Bs, $Ts?, of US bonds are held by wealthy Americans and US investmen funds. US monetary mgmt doesn't want to upset those bond holders.
Well....... Good thing that you're just a pissed off 16 year old with an Internet connection......or it seems that way anyway....lolQuote:
Originally Posted by NewcastleKEG