High inflation, huge housing bubble, widespread crop failure, widespread corruption. The situation there is starting to look grim. China sees the dangers and is trying to correct them, but it may already be too late. Thoughts?
High inflation, huge housing bubble, widespread crop failure, widespread corruption. The situation there is starting to look grim. China sees the dangers and is trying to correct them, but it may already be too late. Thoughts?
A depression over there is 10% GDP growth instead of 20%
No.... Idiot. Stop watching Glen Beck and go run.
China on the verge of a great depression?
Heavens, one hopes not.
Who else is willing to buy US debt?
It’d be like a dying heroin addict losing his drug dealer.
At least China has $2.85 trillion in foreign reserves to play with before she goes under - the USA has over a $14 trillion debt to pay off.
Frankly, I hope it doesn't happen either, nor do I know if it actually will, but I think it would be good for the US if it happened. People would dump their investments in China and other emerging markets and exchange them for US bonds and other securities in the developed world. Interest rates would probably not go up even if China stopped buying treasuries. I doubt it would be much different than what happened after the Japanese asset price bubble.
Mid term, China will correct. Long term, China has another problem...
http://en.wikipedia.org/wiki/File:Sex_ratio_below_15_per_country_smooth.png
TCB wrote:
...but I think it would be good for the US if it happened. People would dump their investments in China and other emerging markets and exchange them for US bonds and other securities in the developed world...
You have got to be kidding me. China lurching into a great depression (as the world's second largest economy and by far the largest source of world economic growth recently) at this time, while the rest of the world is in a VERY shaky recovery?!? This would be good thing? Do you have any freaking idea what you are talking about?
Well, I suppose that a GLOBAL depression could be considered a good thing...from a certain point of view.
Actually, the Functional Illiteracy rate of China is 50%, United States 30%, and United Kingdom 25%. China isn't that bad off in comparison.
Procrastinator wrote:
Mid term, China will correct. Long term, China has another problem...
http://en.wikipedia.org/wiki/File:Sex_ratio_below_15_per_country_smooth.png
Yup, this has the potential to be a hugely destabilizing influence. What do countries do w/ an excess of young adult males? They send them to war.
Historically, there is no China per se. I.E. the borders of China keeps changing depending on who the biggest warlord is. The Manchus, Mongols, Han, etc. The borders of China keep changing. The Current China's biggest threat is democracy and freedom, given it would likely cause internal division and split China into one dozen separate countries. The same is happening in the Mediterranean and Middle East as Semitics and Caucasians under Islamic rule are demanding freedom and democracy and new conunties. The borders of Turkey, Iraq, Iran, Syria, Palestine, Israel, Jordan are a heated issue now.
Functional Illiteracy wrote:
Historically, there is no China per se. I.E. the borders of China keeps changing depending on who the biggest warlord is. The Manchus, Mongols, Han, etc. The borders of China keep changing. The Current China's biggest threat is democracy and freedom, given it would likely cause internal division and split China into one dozen separate countries. The same is happening in the Mediterranean and Middle East as Semitics and Caucasians under Islamic rule are demanding freedom and democracy and new conunties. The borders of Turkey, Iraq, Iran, Syria, Palestine, Israel, Jordan are a heated issue now.
Although there is certainly potential for political unrest I disagree. China is a historically stable country, relative to the other countries you name. A large part of this stability is built on the foundation of a common ethnicity. Han represent about 92% of China's population. There are separate ethnicities, particularly in the western part, is somewhat substantial numbers which could potentially split off, e.g. Altaic Turks for example. This would be more of a whittling away at the borders. China is not going to splinter.
Internal unrest is certainly another consequence of a high male/female ratio. This is why countries usually send these young men off on foreign expeditioning, it prevents them from causing as much trouble at home.
I hope no one is suggesting that aborting female babies is a bad thing. Women should never be questioned about how they choose to exercise their human right not to bear children.
R U Nuts wrote:
You have got to be kidding me. China lurching into a great depression (as the world's second largest economy and by far the largest source of world economic growth recently) at this time, while the rest of the world is in a VERY shaky recovery?!?
That is a very silly thing for you to say. Twenty five years ago, people were saying all the same things about Japan as they are saying about China now. Japan had grown rapidly for many decades, it was buying up American properties and American debt in huge amounts, it was saving and investing tons of money and spending almost nothing. It had become the second largest economy in the world and people were expecting it would be 3-4 times larger than the US by now. Japan went through a decade long depression while the American economy experienced incredible growth during the tech boom. Just because China's economy has grown 10% per year for the past two decades doesn't mean it will keep doing that forever. In fact, a lot of investors are betting heavily that the Chinese miracle is just about over. A lot of publications have extensively written up the idea as well, so don't think I came up with this on my own from nothing.
TCB wrote:
High inflation, huge housing bubble, widespread crop failure, widespread corruption. The situation there is starting to look grim. China sees the dangers and is trying to correct them, but it may already be too late. Thoughts?
Quite the opposite, China is on the verge of an economic boom. Their current problems are caused by the yuan-dollar peg, which forces them to import inflation from the United States. But they have woken up. China is now preparing to release the dollar peg, and will do so in the next few years, shifting purchasing power from the US to China. The Chinese will start consuming the goods they currently export to the US, making them prohibitively expensive for Americans. So China will prosper while the US suffers a hyperinflationary depression and economic ruin.
TCB wrote:
People would dump their investments in China and other emerging markets and exchange them for US bonds and other securities in the developed world.
If you are dumb enough to buy US bonds, you deserve economic ruin.
Are you kidding me? The Chinese are doing great! Look around at all the Chinese restaurants. Every city in America is filled with Chinese joints. Those little gooks are kicking ass and taking our money to the bank!
What happened? Did their girlfriend breakup with them?
China is doomed because it is aborting the citizens it needs to succeed as a nation, just like Russia has already doomed itself. Abortion is immoral and demographic suicide.
I don't know about a depression but I can see a massive housing bubble burst coming. Chinese are not very individualistic and follow the herd in everything. When the collective consciousness decides that it's time to 'sell' (stocks, housing etc) the herd will follow and the deflationary spiral will be unlike anything seen in the West.
The larger threat is the possibility of a bank run. I don't know much about China's banking system, but I do know they are a lot less sophisticated than America's, which means that they may not have the necessary safeguards to prevent bank runs. The Chinese are also not that used to banking, which means that they will probably get spooked much easier and pull out all their money. A deflationary spiral would imply a depression.
China knows this could be on the horizon and has been increasing interest rates to prevent it, but I'm afraid what they have done is too little too late.
