I've seen overheating before, but then you have China. Plus does anybody trust a group of insulated corrupt communists to manage the fastest growing major global economy? I know I don't.
I think the perfect storm, and China crash, could come about with:
1) The US consumer strike lessens demand for China's (oops, I mean Wal-Mart's) crap
2) The US$ bonds China bought up with their surplus capital becomes more and more worthless
3) Congressional pressure gets China to revalue their currency (thus lessening demand for China's (oops, I mean Wal-Mart's) crap)
4) China's tightening policies (see link) cause speculation in Chinese assets to stall, and like Shanghai, property values to fall
5) Even cheaper labor is found elsewhere as Chinese demand wage hikes
6) Rebellion and political strife in China spooks markets and access to capital
7) China's state-sanctioned baby-murder policy (oops, I mean one-child policy) continues to create a demographic timebomb, with younger workers not being able to pay for a rapidly aging population's needs
That's my starter list, gotta be more. But sooner or later, China (oops, I mean Wal-Mart) will blow.
THE People's Bank of China raised the deposit reserve ratio of lenders 0.5 percentage points yesterday to rein in excessive lending. The hike brings the reserves most banks are required to deposit with the central bank to 8.5 percent. The central bank also raised the bank deposit reserve ratio 0.5 percentage points in June.
"The move aims to tighten up banks' liquidity, curb excessive growth of money and credit, as well as maintain the development of the economy," said the central bank in a statement posted on its Website. The move came as a surprise to many economists, who have been calling on the central bank to raise interest rates to reduce the money available for investment and prevent possible overheating of the economy.
August 18, 2006
Could China crash?
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27 comments:
It was taking a while for the opening of an account, hence anonymous.
However, I would like to bring to the attention of readers here that the escalation of real estate values in India too is mind-boggling, and that could be an understatement.
Given that population density in Indian cities is very high, in my opinion it is still extremely ridiculous valuations.
Some of the attributes of that.
1. People buying into RE based upon the boom in software exports mainly - those exports are to the US. When US slows down things here will more than slow down for two reasons. One - there isnt much of a demand for the same services in the domestic market. Two, capacities etc are being built looking at very long time horizons and ever expanding growth.
2. The buying of land which is hypothetically going to be part of the city - meaning the new suburbs five years or more down the line at astronomical prices.
3. Some of the investors in many of the cities here think their investments are being made in the Shanghai of the future.
4. Land and real estate never go down in value. You point out Japan to them and its the variant of "this time its different" - "here its different".
Check out the below link and see for yourself what the 'mood' is.
http://tinyurl.com/hdhhj
sidneyprice - nice to see you come down on the side of killing live babies and girls
yup, that's defensible and sensible
in regards to china competiting with the us - no problema with that my friend. I'm just pointing out that china in my estimation will crash. welcome to capitalism, comrade!
First off screw china, and their cheap goods, no quality mass produced crap.
I care nothing for them they are not only hiding their military purchases they are the No.1 in the world for environmental pollution.
I was watching a documentry on China a week or so ago, and they were showing this river where fisherman once fished for a living.
Upstream there was a leather factory built in 2002, the downstream river was a green green haze from all the pollutants flowing from said factory. They showed pictures of before and after, it would amaze you the build up of silt in just 4 years
What was once prestine waters is now a black tar like flow..
By no means am i an Enviormentalist..live and let live I say..but where the restrictions..?
Oh and lest us not just pick on Wal-mart..Home Depot is full od China throw away crap also..
shopping at walmart is as much doing a deal with the devil as buying crack cocaine from a dealer, or a hooker from a pimp. americans just don't either 1) get that or 2) admit that
OH! and China also had this to say to our great Leader & King
The United States should "shut up" with its concerns about China's growing military spending because the increase is no threat, a Chinese ambassador said Thursday.
Sha Zukang, China's ambassador to the United Nations in Geneva, told British Broadcasting Corp. radio that American concerns about his country's growing military might were misguided.
"It's better for the U.S. to shut up," Sha said. "Keep quiet. It's much, much better."
???Is that a Threat!!!
Apologies for the repeat post from yesterday's "General Comments," but this is where today's discussion seems to be.
In May I spent 10 days in China, in the city of Xiamen, on a business trip to launch the initial build of a new product. Now, granted, China is huge and not all cities are just like this one. Xiamen is a big manufacturing center, and the electronics factory that I was sent to employs 8,000 people!
If you imagine a dark, dreary factory full of beaten-down, oppressed people chained to their workbenches, then think again. This facility was clean and filled with busy, cheerful workers who seemed to take their tasks seriously. The automated machinery that installed components on circuit boards was state-of-the-art, and the technical people with whom I worked (engineers and test technicians) were every bit as knowledgeable and competent as my American colleagues.
During the build of our product, which was designed in the USA and rushed into production by management before it was ready (against the recommendations of us engineers), numerous design deficiencies came to light. These needed to be resolved right then and there, and the Chinese demonstrated their capabilities by offering solutions to the problems.
Due to the problems we didn’t finish the build in time; my two colleagues bailed and flew back to the states leaving me alone to stay into the next week to finish cleaning up the mess. So I got to spend the weekend there by myself, and did a bit of exploring. Out & about on the streets there are people everywhere, many with cell phones, digital cameras and other electronic toys. Most were well dressed and appeared to be reasonably prosperous; they did not look at all unhappy and oppressed. They all seemed to be enjoying their lives and having a good time.
In the markets and shops, it appeared to me that just about anything and everything was for sale there, and no government officials telling anybody what they could and couldn’t buy.
So let’s just bury this stereotype of China being full of miserably poor, exploited, browbeaten people subjugated by their government. This is the New China, and America had better understand whom we are dealing with.
Oh, and by the way before any of you flame me for being part of this disturbing trend of moving American jobs overseas, just keep in mind that I work for a company that used to build their product right here in the US, but ~4 years ago they shut down their manufacturing operations and moved it all overseas. If I wasn’t working here, somebody else would. So, what should I do - quit out of principle and have my house foreclosed?
Yes if I was truly principled I would quit and go find another job; then again if many of you were truly principled you wouldn’t have sold your $100,000 house for $450,000 and put this enormous burden on somebody else’s shoulders.
Since none of us like sending jobs to China, here is the simplest action that we can take:
DON’T BUY ANYTHING MADE IN CHINA!!!
Buy American-made, buy used, or do without.
Now that is truly sticking to your principles!
The sooner we realize that other countries wish to be respected like we wish to be respected, the sooner things will improve. The problem with the current admin. is that they wish to dictate outdated policy to the world. I got news for you , the world is about to pass us by.
Cheers! on the post anonymous enjoyed the read.
Hey Keith - why for you are are the leaders of Iran and China wack jobs and untrustworthy?
Let me guess - you really do believe the official 9-11 report.
Nevermind...
The economies of China and the U.S. are like two wheels on the same bicycle. If either one has a flat tire, both will face the same problem. People who have spent more than a week in China know there are two sides to the story. For every happy factory worker there are three or four unhappy farmers.
Teenage kids are flocking to the cities by the millions and the government is trying desperately to keep them employed. An economic downturn would put them back on the streets and there could be trouble and unrest that make our LA riots look like a Baptist picnic in comparison. Many of the businesses employ PLA troops as line workers, so don't think for a minute the army and the government don't have a hand in what is going on at the grass roots.
Can they make it work? Who knows? My guess is they will start looking outside their borders for land and resources. Let's all hope China succeeeds more than it fails because the consequences of economic failure would be bad for everyone on the planet.
If Amerika fell off the map - India, Taiwan, and Japan would create a kissing cousin to the Euro and not miss a beat.
Forgot our commie china (right Keith?)
Borkfatty, the only thing that garners "respect" in foreign relations is power, economic or military. Individuals from various nations can have meaningful friendships, but at the state level there is no place for emotion.
Our pussy-whipped American culture can't stomach that simple truth anymore, and that is why we are in so many messes around the world.
Ever wonder if this whole thing is some conspiracy that is bigger than we are giving it credit for? Remember how we bankruptedt he Russians during the cold war with our fake star wars crap? Could Greenspan be some genius secretly bankrupting China?
China will be exporting automobiles into the USA next year. What bugs me is I have heard that there is a 2% tariff on these cars. But when a Buick goes to Hong Kong it gets slapped with 20 % tariff. What is wrong with this picture?
"Remember how we bankruptedt he Russians during the cold war with our fake star wars crap?"
Really anon - here's how it really played out...
Amerika and Saudi bankrupt russia by flooding the market with cheap oil so that we could build pipelines in Afgan - hmmm...then 9-11 - hmmmmmmmmm...Ruskies leave Afgan - and we move in with capital to develop the "colored" states oil infrastructure.
Richard, put away the double bubble bong and try reading a book or two instead of watching Michael Moore movies for your history lessons.
Oil was cheap in the '80s and '90s because huge new fields came on line in Africa, the North Sea and Alaska, and we had a supply glut. Both the North Sea and Alaska are past their peak of production now and are in decline, and the African suppliers are in chaos. And if you want to see who was playing pipeline politics over there, look no further than your buddy George Soros.
http://www.321energy.com/
goto 9-11 pipelines
the only thing that garners "respect" in foreign relations is power, economic or military. Individuals from various nations can have meaningful friendships, but at the state level there is no place for emotion.
Our pussy-whipped American culture can't stomach that simple truth anymore, and that is why we are in so many messes around the world
Agreed!
You'll go broke waiting for American consumers to stop spending. Doesn't matter if they don't have any money. As long as the banks keep sending more credit card aps in the mail, consumer spending will hold up.
I've been waiting for $3 gas , doubled credit card minimum payments, tightened bk law provisions and a bunch of other stuff to slow spending...hasn't happened.
The typical American, and the Wal-Mart shopper type in particular, are so clueless they don't even have a grasp on what their financial situation is. As long as the credit card still clears at the check out lane, the spending will continue.
Our short attention spans and lack of wanting to keep ourselves abreast of the important issues is what is driving us up ****'s creek.
"goto 9-11 pipelines "
Richard, here is a book with a balanced, honest look at what is going on in the region: The New Great Game, by Lutz Kleveman.
Yes, Afghanistan is part of it, but only on the periphery. China, Russia, and the U.S. are playing a winner keeps all game that could determine their economic viability for many decades.
And kum-bay-yah, UN blue helmet, can't we all just get along?, play-nice rules are not in the book for this game.
http://www.newgreatgame.com/
Wage hikes in an emerging market?
That's a good sign for them not a bad sign.
In the mid-late 1800's the USA was also an emerging market with a rapidly growing economy. Back then, worker's wages were HIGHER in the USA than developed Europe.
Plus does anybody trust a group of insulated corrupt communists to manage the fastest growing major global economy? I know I don't.
Turn that around. Does anybody trust a bunch of imperialistic, corrupt corporate fascists to manage the world's largest military and economy? You think we're better than them for some reason? You hate China for all the wrong reasons. They are eco-terrorists and the US are overreaching capitalist-terrorists. The only difference I see is that we do it with a sense of superiority that can only be described as delusional. You better wake up and smell the $hit, before you become completely immersed in it.
Have you ever had one of those days? Here it is friday afternoon, i'm in my tank on my way home, and there's some guy standing in the crosswalk! SOB!
I think you already know the answer to that question.
BTW, Chinese banks have been IPOing their banks. And guess who has been buying large positions? BAC, C... Yes, the largest banks in the US do not know where to put there extra dollars. Do they know something we don't or is the Chinese government laughing all their way to the bank?
This means that if Chinese banks are forced to write off bad loans, America's largest banks will also take a hit!
IMO, it's a tug-of-war, and the winner is not obvious.
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