TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.
.

When the Euro collapses China will follow. Europe is China's biggest customer.

On the plus side, Walmart should make out like a bandit.

rhino33:
all it takes for this house of cards to fall is China not wanting to buy our bonds.

You know, a lot of people really, REALLY overestimate China's importance to the US bond market. While they're the number one foreign buyer of US bonds, they're in a distant second to the US public. China only owns about 1 trillion of our of our $15 trillion debt. That's about two years of US bond sales, by the way - and we could cover that quite easily with some fairly straightforward cuts.

as soon as they decide they can't or won't buy our money, we start down the inflation road in order to pay our debts.

Except for that other, seldom-considered route: SPEND LESS MONEY. Even with the economy in its current state, we can easily make our current interest payments and still have the essential functions of government working. A lot of other expenditures will have to go, too - but the funny thing is, people would be fine with that.

Sure, the cowboy poets and other groups will have to suffer a bit, but it can be done.

This is impossible. According to the Fark Politics threads, communism/socialism is the best economic system in the world.

I'm surprised its taken as long as it has.

Don't cheer for their fall. And not just from the economic impact its going to have on the global economy, a communist government with an increasingly educated and capitalistic people will find themselves in the hot seat in a recession or depression, such a government is very likely to brew up a regional conflict to distract the populace. India or Russia is going to have a red problem before too long...

Wasn't there an article on Fark last week (or the week before) about a guy from Goldman Sachs saying it was time to invest big in China? I think the Fark headline was something like, "China's economy about to callapes".

Muta: Wasn't there an article on Fark last week (or the week before) about a guy from Goldman Sachs saying it was time to invest big in China? I think the Fark headline was something like, "China's economy about to callapes

Found it!

Time to sell your Chinese stocks (new window)

Here's the Fark thread (new window)

Just moved back into FXP, so this is good news for me.

Mumbler: TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.
.

Try entire cities. Square miles of apartments.

Daily Fail article (new window)

Mumbler
TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.

I read it was related to providence leaders penis waving, essentially monuments to show their ability to lead and be productive.

Muta: Muta: Wasn't there an article on Fark last week (or the week before) about a guy from Goldman Sachs saying it was time to invest big in China? I think the Fark headline was something like, "China's economy about to callapes

Found it!

Time to sell your Chinese stocks (new window)

Here's the Fark thread (new window)

when I read that thread a week ago I thought "haha thats a funny little joke"

/now it's even funnier

gah, what a horrific amalgamation of misleading stats. For example, month-to-month percent changes in imports and exports yet no accounting for expected seasonal variations? Do those not exist anymore?

Meanwhile, can anybody here explain this?

As I understand it, monetary base is roughly the sum of printed currency and accounts held with the Fed. It has tripled in the past 3 years. Base in some sense forms the foundation for fractional reserve banking, i.e. divide base by reserve ratio and you should get an idea of the amount of money available to be loaned out... Is fractional reserve banking inconsequentially small compared to market activity (CDS, etc) as a whole ? Or is it just a matter of time before the inflation effects spread out to the economy at large? Is so much investment/hedging tied up in specific dollar value returns that the amount of money in the world doesn't actually affect inflation anymore?

Since this is a prediction in Forbes, it carries very little weight to me. Reminds me of the real estate prognostications in 2007-08

lordaction: This is impossible. According to the Fark Politics threads, communism/socialism is the best economic system in the world.

No China is not communisty/socialistic enough so it is guaranteed to fail. Also if you want the removal of one govt service go move to Somalia.

rdyb: As I understand it, monetary base is roughly the sum of printed currency and accounts held with the Fed. It has tripled in the past 3 years. Base in some sense forms the foundation for fractional reserve banking, i.e. divide base by reserve ratio and you should get an idea of the amount of money available to be loaned out... Is fractional reserve banking inconsequentially small compared to market activity (CDS, etc) as a whole ? Or is it just a matter of time before the inflation effects spread out to the economy at large? Is so much investment/hedging tied up in specific dollar value returns that the amount of money in the world doesn't actually affect inflation anymore?

That money added to the monetary system is largely there to offset the deflation caused by the collapse of the housing market and associated economic downturn. Without that money being added to the monetary system, you would have actually seen a really nasty deflationary spiral that would have likely ended in a second Great Depression in the 2008-2011 time period. Inflation isn't really a huge concern when a huge speculative bubble pops like that.

Saiga410:
Also if you want the removal of one govt service go move to Somalia.

You're confusing "no government" with "tribal and religious-based government."

You're also forgetting that most of the real troubles in Somalia started when... you guessed it... they tried Socialist reforms.

Jacobin: Since this is a prediction in Forbes, it carries very little weight to me. Reminds me of the real estate prognostications in 2007-08

Housing always goes up!!

Just look at my rent. It has gone up every year!!!

Also, did you know that gold, very much like a home and human feces, has never been worth $0.00?

cirby: You're also forgetting that most of the real troubles in Somalia started when... you guessed it... they tried Socialist reforms.

I remember those ads.

Vote for Mgbagdowannboe and there will be a warlord in every pot, and a gun for every rapist. If you vote for Mgbagdowannboe's opponent you'll live in a society where warlords and rapists have to buy their own rifles. Do YOU want to live in that Somalia?

Saiga410: lordaction: This is impossible. According to the Fark Politics threads, communism/socialism is the best economic system in the world.

No China is not communisty/socialistic enough at all so it is guaranteed to fail. Also if you want the removal of one govt service go move to Somalia.

There's nothing the least bit communist about modern China, other than the name of the party in charge.

FrancoFile: Mumbler: TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.
.

Try entire cities. Square miles of apartments.

Daily Fail article (new window)

Holy crap.
64 MILLION empty homes, and still building.

Bubble, indeed.

Lord Dimwit: lordaction: This is impossible. According to the Fark Politics threads, communism/socialism is the best economic system in the world.

And if China were in any way Communist or Socialist, you'd have a point.

(It's not a "No True Scotsman" fallacy if the guy we're talking about is Irish.)

So China is not communist or socialist?

FrancoFile: Mumbler: TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.
.

Try entire cities. Square miles of apartments.

Daily Fail article (new window)

I've been to the one by Shanghai. The current plan is to build a high speed train to make it more attractive.
/so wanted to rent a motorcycle and race through the empty streets
it was interesting...buildings begin to deteriorate if not occupied

The stability of the Chinese government is critically linked with their economic growth. They absolutely need something along the lines of 6% growth annually to keep up with population growth.

The secondary factor lending public legitimacy to the Communist party is fierce and nearly irrational nationalism. Their education has been indoctrinating it for decades, and as long as the center can control it, nationalism serves them very well. The problem is when foreign policy issues come up with Taiwan, Japan, or the USA, the Chinese public wants a response based on the principles of nationalism and not the pragmatics needed to maintain economic stability.

It puts the ruling party in a tough spot; when a diplomatic incident occurs, the public screams for blood. If they can't diffuse the public reaction they get thrown out for being soft on foreign policy. If they give the public blood, they screw their economy and get thrown out for that. Also, if the economy collapses on it's own, the Communists will also get thrown out.

Problem is, take communism out of Chinese society and the second ranking principle is nationalism. Even if they get a democracy. Especially if they get a democracy. Whatever governs post-communism in China will be irrationally nationalist. They will invade Taiwan. Everyone should understand why this is a very bad outcome.

For quality of life on earth, we're probably best off if the PRC imposes a military dictatorship there. It'll be pretty much the same, and that is the one organization in China able to both run the country and resist nationalist public pressure.

The Stealth Hippopotamus: [img6.imageshack.us image 600x600]

Mumbler: FrancoFile: Mumbler: TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.
.

Try entire cities. Square miles of apartments.

Daily Fail article (new window)

Holy crap.
64 MILLION empty homes, and still building.

Bubble, indeed.

China has 23 people for every empty home home (mostly apartments) . The US has only 16 people for every empty house

Larofeticus: The stability of the Chinese government is critically linked with their economic growth. They absolutely need something along the lines of 6% growth annually to keep up with population growth.

The secondary factor lending public legitimacy to the Communist party is fierce and nearly irrational nationalism. Their education has been indoctrinating it for decades, and as long as the center can control it, nationalism serves them very well. The problem is when foreign policy issues come up with Taiwan, Japan, or the USA, the Chinese public wants a response based on the principles of nationalism and not the pragmatics needed to maintain economic stability.

It puts the ruling party in a tough spot; when a diplomatic incident occurs, the public screams for blood. If they can't diffuse the public reaction they get thrown out for being soft on foreign policy. If they give the public blood, they screw their economy and get thrown out for that. Also, if the economy collapses on it's own, the Communists will also get thrown out.

Problem is, take communism out of Chinese society and the second ranking principle is nationalism. Even if they get a democracy. Especially if they get a democracy. Whatever governs post-communism in China will be irrationally nationalist. They will invade Taiwan. Everyone should understand why this is a very bad outcome.

For quality of life on earth, we're probably best off if the PRC imposes a military dictatorship there. It'll be pretty much the same, and that is the one organization in China able to both run the country and resist nationalist public pressure.

I'm afraid you are probably right on the money. With our economic deterioration it will become very difficult to maintain naval superiority in the pacific in the next few decades. I think remember the last Asian naval super power in the pacific and what happened then.

The United States would take a huge blow, that would probably result in an even larger recession than in 2008. I sure as shiat wouldn't want to be South Korea, Taiwan, Japan or Russia.

HellRaisingHoosier: The United States would take a huge blow, that would probably result in an even larger recession than in 2008. I sure as shiat wouldn't want to be South Korea, Taiwan, Japan or Russia.

Why not? They can build all the stuff they design. Their economies wouldn't be that screwed.

The people you should really worry about are Taiwan, Cambodia, and Vietnam. If China has a bad a couple of years, they will look to expand.

cirby: rhino33:
all it takes for this house of cards to fall is China not wanting to buy our bonds.

You know, a lot of people really, REALLY overestimate China's importance to the US bond market. While they're the number one foreign buyer of US bonds, they're in a distant second to the US public. China only owns about 1 trillion of our of our $15 trillion debt. That's about two years of US bond sales, by the way - and we could cover that quite easily with some fairly straightforward cuts.

as soon as they decide they can't or won't buy our money, we start down the inflation road in order to pay our debts.

Except for that other, seldom-considered route: SPEND LESS MONEY. Even with the economy in its current state, we can easily make our current interest payments and still have the essential functions of government working. A lot of other expenditures will have to go, too - but the funny thing is, people would be fine with that.

Sure, the cowboy poets and other groups will have to suffer a bit, but it can be done.

Or, the obvious counterpoint: The market for US Treasuries is enormous, and China deciding it doesn't want our bonds means very little.

Why that's so hard for people to get, I don't know. People who think China dumping dollars would mean ZOMGINFLATION!! can't do math.

And this been said how many times over the past ten years

Mumbler: TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks cities (new window) were built, but no one moved in.
Sounded like Las Vegas.

FTFY

Looks like they took advice from the same morons who told us that spending equals prosperity.

Random Anonymous Blackmail: Mumbler
TIME recently had a pretty good cover on the China Bubble. i fell asleep reading it but I recall something about rampant growth in real estate prices. Entire city blocks were built, but no one moved in.
Sounded like Las Vegas.

I read it was related to providence leaders penis waving, essentially monuments to show their ability to lead and be productive.

Great leap forward part deux.

RickyWilliams'sBong: cirby: rhino33:
all it takes for this house of cards to fall is China not wanting to buy our bonds.

You know, a lot of people really, REALLY overestimate China's importance to the US bond market. While they're the number one foreign buyer of US bonds, they're in a distant second to the US public. China only owns about 1 trillion of our of our $15 trillion debt. That's about two years of US bond sales, by the way - and we could cover that quite easily with some fairly straightforward cuts.

as soon as they decide they can't or won't buy our money, we start down the inflation road in order to pay our debts.

Except for that other, seldom-considered route: SPEND LESS MONEY. Even with the economy in its current state, we can easily make our current interest payments and still have the essential functions of government working. A lot of other expenditures will have to go, too - but the funny thing is, people would be fine with that.

Sure, the cowboy poets and other groups will have to suffer a bit, but it can be done.

Or, the obvious counterpoint: The market for US Treasuries is enormous, and China deciding it doesn't want our bonds means very little.

Why that's so hard for people to get, I don't know. People who think China dumping dollars would mean ZOMGINFLATION!! can't do math.

Current T-Bill yields as of close of markets today:

3 months: .01%
6 mo: .04%
1 yr: .08%
2 yr: .23%
3 yr: .39%
5 yr: .90%
7 yr: 1.44%
10 yr: 2.05%
30 yr: 3.10%

Even during the height of the debt ceiling debate, T-bill rates never budged. If China doesn't buy our debt for the next couple of years, they'll just be making it marginally attractive for everyone else to buy again.

rdyb: gah, what a horrific amalgamation of misleading stats. For example, month-to-month percent changes in imports and exports yet no accounting for expected seasonal variations? Do those not exist anymore?

Meanwhile, can anybody here explain this?
[research.stlouisfed.org image 630x378]
As I understand it, monetary base is roughly the sum of printed currency and accounts held with the Fed. It has tripled in the past 3 years. Base in some sense forms the foundation for fractional reserve banking, i.e. divide base by reserve ratio and you should get an idea of the amount of money available to be loaned out... Is fractional reserve banking inconsequentially small compared to market activity (CDS, etc) as a whole ? Or is it just a matter of time before the inflation effects spread out to the economy at large? Is so much investment/hedging tied up in specific dollar value returns that the amount of money in the world doesn't actually affect inflation anymore?

Not while the people that the government gave it to hang on to it. When they start to spend it, it will show up.

Good! Maybe it will finally put an end to all of those bullsh*t "China is going to be the #1 Superpower and rule the world within 10 years, so your kids better take classes in Mandarin now" stories.

wtf. that article says "OMG inflation is falling, so...that means the economy must be slowing...exports are only up 15%...wait that's pretty goddamn good...but it's not as great as before, which is a failure.....though admittedly with less inflation the policy makers have room to make changes, and....OK THEIR DEMOGRAPHICS ARE GONNA KILL THEM EVENTUALLY I KNOWS IT!"

Yeah.. stopped reading the article after it began contradicting itself over and over.. none of it really made sense either, just poorly written all around. May or may not be true, but this article doesn't lend any confidence that the author knows what he's talking about.

Why not just lower prices on the houses and just accept a smaller profit.

Arkanaut: Saiga410: lordaction: This is impossible. According to the Fark Politics threads, communism/socialism is the best economic system in the world.

No China is not communisty/socialistic enough at all so it is guaranteed to fail. Also if you want the removal of one govt service go move to Somalia.

There's nothing the least bit communist about modern China, other than the name of the party in charge.

Melamine executions. Yep.

Youtube (new window)