Guest Post: China And Brazil

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Mon, 06/29/2009 - 21:35 | 2909 Shaza (not verified)
Shaza's picture

"Those that continue to be negative on China's prospects due to the crash in exports, FAIL TO RECOGNISE THE FACT that China is sitting on more than $2 trillion of reserves that despite the economic crisis continues to grow by $400 billion per year.

Therefore the $600 billion stimulus whilst huge by western standards is NOT FINANCED by debt but by CASH-FLOW, which is the fatal mistake countries such as Britain are making, i.e. borrowing for consumption."

That quote was from "China Mega-trend Stocks Stealth Bull Market Update, SSEC Up 47%" .

This guy has called it spot on! I am invested heavily in Asia from Australia and follow Nadeem...he has an interesting perspective too and never let me down,

Mon, 06/29/2009 - 21:53 | 2917 Anonymous
Anonymous's picture

Only a idiot would belive information taken from a source called "China Mega-trend Stocks Stealth Bull Market Update, SSEC Up 47%"

Anyone actually in China knows how to dig through the propaganda bullshit knows that:

1. A large chunck of the package was old money, where the investment decision was made before the crash.
2. The central goverment only fronts 50% of the remaining money. In order for any invesment to be made the local regional goverments must front the remaining 50%. Problems is that local goverments in China have almost no money to invest.

It doesnt matter if the money comes from debt or cash flow, it might just as well come from martians because in its current form the package is just one huge media hype, it doenst really exist but on paper.

Mon, 06/29/2009 - 22:17 | 2924 Shaza (not verified)
Shaza's picture

Tell that to my Asian portfolio that is up over 200%. Only an idiot would have missed that rise.

I live in the you?

I don't think you are right in your summation about cash flow v debt.

By the way, my profits are not from Mars, they are real...perhaps you should board your little spaceship and head off to where you came from...

Mon, 06/29/2009 - 22:19 | 2928 Shaza (not verified)
Shaza's picture

Anon, only an idiot would judge a report by its title. Nuf said! I forgot to ask where in China are you as you imply?

Mon, 06/29/2009 - 23:38 | 2951 Anonymous
Anonymous's picture

sounds like that bs, Tim Seymour, of fast money fame is always spouting. emerging countries this and emerging countries that. sorry. I am not investing one penny of my hard earned money in some chinese stocks or whatever. not now , not ever.

Tue, 06/30/2009 - 00:42 | 2970 Shaza (not verified)
Shaza's picture

Anon, then you are not a professional investor or trader. So, stick to Treasuries and cash and moronic statements. The markets are no place for didactic or fearful wimps. Good luck.

Mon, 06/29/2009 - 23:41 | 2953 Anonymous
Anonymous's picture

enough of us here in the states, have been unfortunate to buy their chinese made junk wherever. the chinese are good at one thing. making junk. when you see their newly contructed buildings just fall over because of faulty construction techniques, it kind of throws a damper on the reasons why anyone with half a brain would want to invest any money in chinese slave ventures.

Tue, 06/30/2009 - 05:07 | 3008 Shaza (not verified)
Shaza's picture

Anon, you need to get out more. I wonder how much of your information comes off blogs rather than actually living, visiting or working in China .

Sure junk comes out of China but look at the junk coming out of USA and other Western economies.

You can not elevate one country above another. China fraudsters put melamine in milk, Madoff drove many honest people to ruination ( icluding charities) , The USA gave us toxic assets and those wonderful sub prime mortgage derrivatives that were sold around the world with resounding toxicity.

The world has been brought its knees by these American made financial products...they are as toxic as any junk out of China and probably as deadly to many people.

Here is a list of engineering failures, they are not the sole domain of China:

There are crooks and fraudsters in any country. Grow up and get out are racist and have poor arguments against investing in China...that same argument can be turned on any country.

Ask yourself why anyone with half a brain would want to invest in the USA right now...your same arguments could apply. You say junk from china has been sold to you look at what junk is exported from your country is innocent in this mess.

Yet there are plenty of ops in US just as in China or India or Australia or anywhere. Racism sucks and makes for very poor investing.

Mon, 06/29/2009 - 22:43 | 2923 Comrade de Chaos
Comrade de Chaos's picture

two words:

unsustainable growth

p.s. there are huge differences between S, America in 50 -90's and China. Chinese were pushing the export model of economic growth with relatively high savings rate while S. America was exercising populism, unfunded government expenditures and regulation. Chinese problem is of a different kind, they have to jump start higher average wages in order to grow any real home demand. So far they ether failed to do so or are unwilling to do so. Hence, the oversupply of resources into investment bubble is poised to blow and when it blows.....

all better duck and cover.

Mon, 06/29/2009 - 22:18 | 2925 tcopeland
tcopeland's picture

Note that Reid's "The Forgotten Continent" is on the Navy reading list in the Division Officer section.

Mon, 06/29/2009 - 22:32 | 2937 Anonymous
Anonymous's picture

It is impossible for China to export inflation. That because the U.S. has been exporting its deflation for the last two decades. The tail doesn't wag the dog.

Tue, 06/30/2009 - 00:00 | 2959 agrotera
agrotera's picture

China will be able to export inflation when laborers get pricing power on their wages because there are so few places in the world left to oursource cheaper labor....but, in my opinion, with the fact that the world has thwarted the cleansing that was needed to correct the excessed of decades, there is no telling when and how long all of this will take.

Mon, 06/29/2009 - 23:35 | 2947 cw10304
cw10304's picture

Was just reading this article on China thougt it was intresting. Personally I feel that China will not be the saviour of the global economy at least not how people seem to envision it.

Globalization and China: Neoliberal Capitalism's Last "Fix"

Tue, 06/30/2009 - 00:05 | 2962 Anonymous
Anonymous's picture

Which gets to an important point: most of China's productivity gains are based off the back of moving people out of subsistence labor to the cities where they work in the private and relatively efficient export sector...

yeh sure. don't forget the chinese slave labor market or the low wage pseudo slave labor market or the prison labor market. yeh those chinese have low production costs, because they have many, many hungry people who will do things for almost nothing because that is all they know how to do. needless to say, we made a big mistake giving those idiots most favored nation status in 1994, but what the hell, free trade is a good thing isn't it? yeh sure it is. when is the last time, you ever saw something made in america? i rest my case...

Tue, 06/30/2009 - 00:26 | 2966 My cognitive di...
My cognitive dissonance's picture

Nearly completed high-rise collapses in Shanghai.
Goggle it.
Nuff said.

Tue, 06/30/2009 - 05:12 | 3009 Shaza (not verified)
Shaza's picture

There are engineering disasters all over world including your own country.

Google building disasters and engineering failures in your country and you will find plenty of disasters, esp via Engineering University sites, enjoy the education...we have just sold our Construction Engineering Consulting Firm...over 40 years experience leads us to the conclusion that disasters are shared by the world.

Tue, 06/30/2009 - 09:27 | 3035 Anonymous
Anonymous's picture

oh so china is in the sharing business. well that is nice. I also appreciate the nice Chinese drywall they sent over here during the building boom.

Tue, 06/30/2009 - 22:27 | 3326 Shaza (not verified)
Shaza's picture

Your Macdonald's have caused a lot more harm than a few dry walls!

Fri, 07/03/2009 - 00:25 | 4347 My cognitive di...
My cognitive dissonance's picture

Made in China.

Tue, 06/30/2009 - 05:23 | 3013 Shaza (not verified)
Shaza's picture know the article I posted that you said was for idiots? Well Check out Tyler's reading overallotment for today...what do you know! He has that same article on his reading list:

China mega-trend stock stealth bull market (FSU)

I suggest you read it this time.

Tue, 06/30/2009 - 05:30 | 3014 Shaza (not verified)
Shaza's picture

Whilst we are in Asia, here is a refreshing admission:

"Japanese PM Aso says monetary policy not working well in deflationary state"

deflation has so much offer...

Tue, 06/30/2009 - 06:01 | 3019 zeropointfield (not verified)
zeropointfield's picture

Well, and the World Bank is happily financing this Chinese wonder.
Someone working very hard to prove the Chinese economic and social model superior?

Tue, 06/30/2009 - 06:12 | 3022 Shaza (not verified)
Shaza's picture

How did you hyperlink your links? Also, do you know how to make paragraphs?

Tue, 06/30/2009 - 06:02 | 3020 Anonymous
Anonymous's picture

Shaza, suggest you read this post in Naked Capitalism; Essentially, "Bank exposure to corporate debt has reached $4,200bn. It is rising at a 30pc rate, even as profits contract at a 35pc rate...Roll-over risk is rocketing. China's monetary stimulus since November is arguably more extreme than the post-Lehman printing of the US Federal Reserve, though less obvious to the untrained eye...." How sustainable is this? Cash out when you're ready. Chinas a lie and everyone knows it.

Tue, 06/30/2009 - 06:10 | 3021 Shaza (not verified)
Shaza's picture

Anon, I have read it, thank you. No one is saying that there are not structural problems with banking and PRC and PBC. But there were structural problems ofter the Depression in US and it zoomed ahead, China is in a similar historical context. I have been in and out of Asia for decades, it is very sustainable as a nation and has thousands of years as a civilization. Of course systemic problems exist both politically and financially...hmmm...sounds just like USA...

Economics is reverting to the mean. China will come up and the US will come down...economics has a long history of reverting to the mean. There are numerous articles on that describes this. Google will find it.

You might enjoy these sites:

Sorry, but I have made too much money in Asia over the years to take financial advice from you, but thanks anyway.

Tue, 06/30/2009 - 06:28 | 3023 Shaza (not verified)
Shaza's picture

ME: This is reported in the S China Morning Post, sounds like good advice to me, no matter which country you are in! Don't shoot me, I am just the messenger, who happens to own gold, btw.

"Buy gold to hedge dollar fall, urges party official
Reuters in Beijing
1:31pm, Jun 25, 2009

Mainland should buy more gold because the dollar is poised for a fall and the metal is needed to support the greater international role envisaged for the yuan, a senior researcher with the ruling Communist Party said on Thursday...."

Tue, 06/30/2009 - 07:37 | 3029 Shaza (not verified)
Shaza's picture

China avoids major social unrest

By Michael Bristow
BBC News, Beijing

Tue, 06/30/2009 - 12:40 | 3067 Anonymous
Anonymous's picture

"I have been in and out of Asia for decades, it is very sustainable as a nation and has thousands of years as a civilization. Of course systemic problems exist both politically and financially...hmmm...sounds just like USA... Economics is reverting to the mean."

No it doesn't sound like the USA. We have only been around 233 yrs. Getting to what I guess is your point how long has China been around? 4000+ years. What's taking so long. Nothing is more hyped in the media then China.

I have yet to see new construction collapse in the US. Maybe it happened in some low rise building as they stripped out toxic drywall made in China.

Tue, 06/30/2009 - 13:32 | 3086 Anonymous
Anonymous's picture

I do agree with the analysis put forth in this post, however there is the most dificult issue of geting the timming right, and on this I tend to argue that China is still in the middle of the process (i.e. Brazil in the 60's), so unfortunately there is still a lot of room for inefficient growth on the basis of "import substitution" (soft loans, SOEs, protected industries and informal trade barriers - not to mention the extremelly undervalued currency), one thing for sure is that the 700-800 MLN reserve army of rural labour is still plenty to go, and even though foreign capital is not so abundant it is still enough to sustain this policy, as there is a general lack of other investment opportunities in the world. I think there is a good decade long (Brazil in the 70's) or more, for China before it is forced to adjust (that after the US fiscal deficit and lose monetary policy is forced to adjust - very late 70's, early 80's).

Tue, 06/30/2009 - 16:42 | 3202 Shaza (not verified)
Shaza's picture

Anon, now we are talking, good summation!

Tue, 06/30/2009 - 19:25 | 3252 Anonymous
Anonymous's picture

You seem very defensive.There is no need to be. In the end, objectivity rules. China has been more economically successful over the past thirty years than the previous thousand because the heavy hand of bureaucracy has been slightly lifted, allowing the common man to share a little in his own productivity. That could change at the whim of the dictators.

As far as dollar falling vs RMB, this has been thoroughly analyzed, and will not happen until China de-couples from the US. As long as they sell their junk here, their currency will be pegged to the dollar. In spite of all the saber-rattling/posturing, Brad Setser has shown convincingly that the Chinese have actually increased their purchases of US debt this year. Chinese consumer demand continues to fall as a % of GDP. Thus, they now depend more than ever on BB's scheme to re-inflate the US economy.

A third, but not unimportant point for the average investor is the issue of corporate and government transparency in the BRIC economies. Say what you will, the US government publishes the most detailed and verifiable numbers on the economy of any other country. China's numbers are likely pulled out of a hat by some apparatchic.

Tue, 06/30/2009 - 22:30 | 3332 Shaza (not verified)
Shaza's picture

USA pulls numbers out of a hat too..I never look at Govt Stats, look at instead...John Williams will disagree with the US number accuracy.

There is no transparancey anywhere, not in US, China or anywhere. All governments are corrupt with their stats.

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