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Guest Post: China: Continued Boom Or Bursting Bubble?

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Wed, 10/12/2011 - 16:02 | 1766942 GeneMarchbanks
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Beating this topic to death are we? It never gets old, yet people in the West who think China is a bigger concern than an insolvent banking system on two continents are continually sucked in by China affairs that will not cause any real crises. The story is still the collapse of the West where, lets not forget, the real problems originated.

Wed, 10/12/2011 - 16:07 | 1766985 prains
prains's picture

Beating this topic to death are we?

 

don't be mislead, although not the message in this article, if you listen carefully that beating is the drums of war way off in the distance. Once the flow charts come out at the UN security council, it's game on.

Wed, 10/12/2011 - 19:37 | 1767768 AldousHuxley
AldousHuxley's picture
  • housing bubble
  • bad debt hidden by banks
  • unaffordable healthcare
  • demographic time-bomb
  • rampant corruption
  • income disparity

 

Sounds like China copied US right down to the economic collapse.

Wed, 10/12/2011 - 16:10 | 1766991 SheepDog-One
SheepDog-One's picture

Yep Gene, for the moment we have the luxury of looking down our noses at whats up with China...whats up with Europe...when we're sitting on the worst mess of all by far right here!

Wed, 10/12/2011 - 16:44 | 1767093 LawsofPhysics
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Might as well replace "China" with "the world".  Lots of card houses out there.

Wed, 10/12/2011 - 19:26 | 1767730 AldousHuxley
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well china pegged their RMB to dollars, so US banking system is Chinese banking system. Wall st. screwed Americans as well as the Chinese.

US is like a fake sugar daddy and China is like a gold digger. Chinese gold digger had a fun ride but now realize that American sugar daddy is really broke and actually the party was on gold digger's credit card.

 

Wed, 10/12/2011 - 23:33 | 1768325 covert
covert's picture

china is doing both.

http://expose2.wordpress.com

 

Wed, 10/12/2011 - 15:57 | 1766949 long-shorty
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China is the Lenny Dykstra economy. Just because you once had a lot of assets doesn't mean you won't be broke went you spend the assets poorly, and simultanously borrow against your assets and spend that money poorly too.

Wed, 10/12/2011 - 15:58 | 1766953 long-shorty
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forgot to mention, very short CLF via options.

 

Wed, 10/12/2011 - 16:04 | 1766964 SheepDog-One
SheepDog-One's picture

'Chinas House of Cards'...the title could easily replace China with US and it would be no different.

What does it matter what China does, its all lies anyway. Until the day of complete melt down, all will be well so whatever. Drink heavily.

Wed, 10/12/2011 - 16:03 | 1766970 halflink123
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I would say the opposite-most of the Wall Street shills have been saying china IS in a bubble. If chanos aint a wall street shill i don't know who is.  Even more so, he's US centric and buys the US crock and bull.

Fact: China has more reserves than national debt.

 

Fact: China makes everything for the whole planet.

 

Fact: US cant compete w China and is running $T trade deficits w the country.

US is bankrupt, China is not. 

 

 

Wed, 10/12/2011 - 16:08 | 1766977 SheepDog-One
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Fact: China doesnt care if 1 billion of its people have to die to keep its 'economy' going.

Wed, 10/12/2011 - 16:09 | 1766988 imapopulistnow
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Talks like a progresive...

Wed, 10/12/2011 - 16:14 | 1766996 SheepDog-One
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And you talk like an asshole. 'Progressive' LOL what did you do start listening to Glenn Beck last month?  No I dont talk like a 'progressive' fuknut I talk like a realist and point out that its irrelevant to talk about 'Chinas economic state' without pointing out they really dont give a shit...and unfortunately we're so stupid we're heavily in debt to them. 

Wed, 10/12/2011 - 16:49 | 1767111 imapopulistnow
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China is rapidly tranforming their nation from one of adject poverty to developed nation status.  Wages and working conditions are relative.  Much better than in China in the past but obviously not to western standards yet.  But they will be.  The important matter is they are continuously improving.  Wages annually increase more than inflation, workers can buy more every year than the year before and they are willing to work hard and educate their young knowing that the future is theirs to hold.  China's leadership cares very much about the welfare of their people, both from the paternalism embedded in their culture and pragmatically from the concern that they must keep their people reasonably happy in order to retain power.  Will their bubble crash like ours did in 2008?  Perhaps, but what they have going for them is $1.5 trillion in foreign reserves and 6 to 1 bank reserve requirements.  We entered our bubble with 30 to 1 bank reserves (excluding the many off balance sheet mechanisms).  China is building millions of low cost housing units to offset the construction declines from thier speculative real estate bubble.  They are further taking measures to encourage domestic spending to offset the obvious decline in exports to bankrupt developed nations.  They just capitalized their banks as a preventive measure rather than wait for a Lehman to collapse first.  They cautiously observe our mistakes in economic mismanagement and adjust accordingly.  You will likely be working for one of them in the future when the Yuan become the world's reserve currency and they buy our assets for pennies on the dollar.   (I suggest you replace the Che Guevara poster in your cubicle with one of Chairman Mao before they arrive).

Wed, 10/12/2011 - 16:53 | 1767128 imapopulistnow
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adject = abject, progresive = progressive

Wed, 10/12/2011 - 18:15 | 1767472 mjk0259
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Yes and US economy crashed every twenty five years or so during it's ascent to global domination. Even if China does crash, it will keep rising at least to approximately Japan level which is close to, if not better, then rapidly declining US level. Not that I look forward to this.

 

Wed, 10/12/2011 - 16:53 | 1767132 rosiescenario
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"...and unfortunately we're so stupid we're heavily in debt to them. "

 

....and they were dumb enough to buy our paper........inflation always favors the debtor....Ben will print us out of our problem.....we hope.

Wed, 10/12/2011 - 16:10 | 1766992 halflink123
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Fact: China doesnt care if 1 billion of its people have to die to keep its 'economy' going

remember US has been in wars for a decade? how many americans died? you think US cares if its people die? or any politicians?

 

Its not right, its sick but China isnt unique in this

Wed, 10/12/2011 - 16:19 | 1766998 SheepDog-One
SheepDog-One's picture

Yea of course, what are you trying to argue with me for I agreed, only backed up the facts a bit more. Just further pointed out its a ridiculous discussion to begin with, China will starve out a billion people to make its 'economy' work, if need be.

Wed, 10/12/2011 - 19:19 | 1767714 malek
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So does this make the previous 3 facts go away, or irrelevant in comparison?? Whistling past the graveyard, are you?

Wed, 10/12/2011 - 16:11 | 1766993 moskov
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So Americans care about Chinese people for how to  keep their economy going? Pretty pretty impressive coming out of THE PARASITE OF GLOBAL ECONOMY

Wed, 10/12/2011 - 16:18 | 1767007 SheepDog-One
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Yea exactly, this is only a momentary luxury seeing as how we sit on the biggest mess of all by far!

Wed, 10/12/2011 - 16:15 | 1767001 SMG
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Fact: China's reserves are backed by absolutely nothing.

Fact: In return for making everything for the planet, China has recieved trillions of pieces of toliet paper.

Fact:  US is ahead of China in miltary power and food production. Also China cannot feed itself on it's own.

US wins this one, but I think they will be very unhappy once they find out what has happened.  If there's any Chinese reading this, please remember the US is controlled by the Illuminati Oligarchy an they are the ones who did this to you.   I would hate to see WWIII caused by this costing billions of lives.   

 

Wed, 10/12/2011 - 16:23 | 1767022 moskov
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Fact: China's reserve is backed millions of skilled workers and world's largest manufacturing base.

 

Fact: US military power in real term is useless since China and Russia has enough nuclear heads to destroy the enire planet more than 20 times. the urban myth of China cannot feed themselves is just another delusional bullshit backs by nothing. 

 

If US is controled by Illuminati, then China would make sure Illuminati also disapear once for all. Chinese secret society is everywhere. Peace

Wed, 10/12/2011 - 16:35 | 1767055 SMG
SMG's picture

China has accomplished alot in the last few decades and should be proud of that.  I'm just saying that I hope all this gets resolved without WWIII.  Nobody wants to see that but the Oligarchy.

Wed, 10/12/2011 - 23:33 | 1768326 reader2010
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Thank for very much for your ignorance.

Wed, 10/12/2011 - 22:14 | 1768131 long-shorty
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Your "fact" is crap. Debt implicitly guaranteed by the Chinese federal government is somewhere in the neighborhood of 2.5x their foreign currency reserves.

 

Wed, 10/12/2011 - 16:04 | 1766971 TheSilverJournal
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China is fine. They have huge down payments so hardly anyone will lose their house to the bank. Any money the Chinese spend on infrastructure or building empty buildings is better than getting absolutely nothing out of it by investing it in soon to be worthless US Treasuries. And when the USD goes into hyperinflation, the Chinese will be much better off because they will no longer be able to sell their goods to the US in exchange for USDs that Bernanke just runs off the printing press and instead they'll consume those goods themselves.

Wed, 10/12/2011 - 16:38 | 1767063 Mugatu
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Chinese bubbles
Running out of time?
Make me happy
Make me feel fine

Chinese bubbles
Please don't get worried
Loads of bad debt
Will you get buried?

I am the inventor of the Piano Key Necktie!

 

Wed, 10/12/2011 - 22:45 | 1768226 chindit13
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They have huge downpayments gained from Mom and Pop borrowing against the family company in the shadow banking system at rates of 25-180% per year.  The connected plutocrats and cronies might have the cash to put down large downpayments, but the masses---who are buying---do not.  They have a population where 99% earn 50,000 yuan or less a year, the equivalent of $8000.  From this pittance, how many years does it take to "save" that 40% downpayment, after subtracing for rent, food, commuting, school fees, etc.?

Empty cities and homes decay naturally unless regular maintainance is carried out.  They decay even faster if there is substantial pollution, and faster still if the quality of construction was abyssmal.  China might have gotten the GDP boost---via debt---but they will get very little use out of these empty structures.

Potemkin economy.

Wed, 10/12/2011 - 16:05 | 1766975 broke433
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You forgot the gold bubble.

Wed, 10/12/2011 - 16:05 | 1766976 gwar5
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China = Bust.... and they know it.  The West is too broke to buy their stuff and their own domestic consumption is not accelerating fast enough to take up the slack despite the Chi-Coms' big efforts. 

 

/OT anybody catch this already?  Madoff whistle blower, Harry Markopolos, catches Bank of New York Mellon and State Street Bank stealing billions from pensions.

Business insider October 7, 2011. 

 

And Now We Know Why Nobody Took Madoff Whistleblower Harry Markopolos Seriously... - Business Insider

 

 

Wed, 10/12/2011 - 16:18 | 1767008 TheSilverJournal
TheSilverJournal's picture

Why is it good for the Chinese to ship their goods to the West at all? All the Chinese get for shipping their goods to us is pieces of paper. So they make a good and ship it to us and we make pieces of paper and ship it to them and you think that is bad for the Chinese if that process isn't sped up? The Chinese might not know it yet, but they don't want the paper, what they really want is goods. That's the whole point of trade, to trade these goods for those goods. WHEN THE CHINESE REALIZE THAT THEY ARE TRADING THEIR GOODS FOR WORTHLESS PIECES OF PAPER, THEY WILL STOP THAT TRADE, WHICH WILL BE A GOOD THING FOR THE CHINESE. Because now they will be able to actually benefit from the trade and will trade their goods for other goods. So to sum it up, when fiat hyperinflates away, the Chinese will be able to consume what they produce.

Wed, 10/12/2011 - 17:03 | 1767169 imapopulistnow
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They are trading their low cost labor for state of the art technology and some of the most modern factories in the world.  Japan successfully did they same thing - until they literally ran out of people and domestic demand due to a low birth rate.

Wed, 10/12/2011 - 19:52 | 1767801 TheSilverJournal
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Japan didn't run out of demand. Demand is infinite. People always want stuff. In fact, demand comes from supply because the only reason to supply something is to trade it for something else. So the thing to look at is really production. You only produce in order to consume and you can only consume what has been produced.

Japan had a bubble created from easy money and it never let that bubble implode which is kind of like the US except the US is now in much worse shape than Japan was because the US makes relatively little. 70% of the US economy is service sector. The main export of the US is the USD which is now just run off a printing press at a forever increasing rate.

Wed, 10/12/2011 - 16:06 | 1766979 i root for that...
i root for that fat jersey governor's picture

the problem is such discussion would not help your invesment decision in near-, mid-, or even long-term. The reality is the corrupt political power in Chins, for their own power, will do anything and everything to postpone that crash, to their wish, forever or at least a long time (at least long enough to make sure the current regime won't see it, or to be punished for it). Since there is no democracy there like the U.S. or EU, those bastards might be able to pull it off.

So when it comes to betting on the fall of China or the collapse of world economy due to China's fall, you really can not predict anything in a meaningful term to help my investing strategy - talking is getting old here.

Wed, 10/12/2011 - 16:07 | 1766982 moskov
moskov's picture

Wow. Is the VooDoo China Doll very popular in the US these days?

Where's the debt ceiling drama again? I need some of that to add to the enormous house of dollars cards.

Wed, 10/12/2011 - 16:28 | 1767034 buzzsaw99
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i like japs better than chinks. nothing personal.

Wed, 10/12/2011 - 18:16 | 1767478 moskov
moskov's picture

I like Japs too, but Americans, too pathetic to compare with Japs

Thu, 10/13/2011 - 01:22 | 1768525 Mayor McCheese
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????

Wed, 10/12/2011 - 16:07 | 1766984 kito
kito's picture

"Millions of Chinese were employed in creating properties for which there was no demand"

 

chinas five years plan is to urbanize some 300 million people in the rural areas. no demand--ha!!! chanos and other china bears will be waiting a long time for something that will not happen. as jim rogers points out, their real estate exposure is limited in relation to the entire nation's economy. china will keep on rolling....buy yuan.

Wed, 10/12/2011 - 17:00 | 1767162 imapopulistnow
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Over 1.3 billion Chinese of which only 150 million have achieved western living standards.  Sure looks like a source of future demand to me.

Wed, 10/12/2011 - 17:54 | 1767382 kito
kito's picture

exactlyyyyyyyyyyyyyy......

Wed, 10/12/2011 - 23:38 | 1768333 reader2010
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150 million have achieved western living standards.

 

Based on what? oil consumption? 

Wed, 10/12/2011 - 16:08 | 1766986 Archimedes
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I have read this script before..about 5 years ago! China is still here. And being early does make you wrong! I learned a while ago; Just because you know how the game ends you can still lose by placing bets too early. The world moves much slower than your mind. Patience and ride the ups and downs, try not to get frustrated and emotional. Eventually it will collapse but no one really knows when. So make money on the ups and downs....

Wed, 10/12/2011 - 16:17 | 1767006 moskov
moskov's picture

Even after the Cultural Revolution and Tiananmen Square. PRC is still here and continuing lending their money to the US aka the rest of the world. I have no idea why are the China Doom Story  keep chasing around those professinal's attention while their mess back home is 10 times greater. When China was building the Great Wall, I beg Americans was still out of this planet yet. For Americans: Don't be too childlike, grow up and be honest to your problem first

Wed, 10/12/2011 - 16:34 | 1767051 buzzsaw99
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China lends the usa trillions of dollars that China slaved for and which we print for free and you think **we** have a problem? LMFAO!!

Wed, 10/12/2011 - 18:10 | 1767450 moskov
moskov's picture

Yes.When China stops lending it, Print as much as you want. You would be rich

Wed, 10/12/2011 - 22:49 | 1768236 reader2010
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When China stops sending money our way,  our bombs will be dropped all over China. 

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