I think it would be hard to distinguish between what is Government -Private -Corporations in China compared to Japan,every year various forecasters project stock market mortgage rates at the end of the following year ,the Chinese Government do it different,plus the USA market is just starting to trend again,so who knows..
China is likely to be the biggest risk to Aus property
- Thread starter FelixL
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I think it would be hard to distinguish between what is Government -Private -Corporations in China compared to Japan,every year various forecasters project stock market mortgage rates at the end of the following year ,the Chinese Government do it different,plus the USA market is just starting to trend again,so who knows..
China had all the problems Japan had back then: huge property bubble, severe aging population, currency under huge pressure to appreciate. But lacking the resilience and innovation of Japan's businesses.
Back then they have a saying that Tokyo's property added together enough to buy the whole America. Now there is almost exact same saying, replace Beijing with Tokyo
On a positive note, China is clearly aware of what happened to Japan and the central govt is working hard to stabilise things such as devaluing the currency, limit property buying
Back then they have a saying that Tokyo's property added together enough to buy the whole America. Now there is almost exact same saying, replace Beijing with Tokyo
On a positive note, China is clearly aware of what happened to Japan and the central govt is working hard to stabilise things such as devaluing the currency, limit property buying
China gives the impression of a tightly controlled economy but I'm not so sure about that.
When visiting last year I had a taste of the shadow lending scene. I was told that the quasi-totality of small and medium businesses never borrow from banks. They'd rather pay 20% interest to private lenders than go to banks that charge them 3 times less. Why? No question asked and no collateral required.
It's subprime revisited but on steroids: $3 trillions, almost half their GDP!
I found a lot of creative entrepreneurship albeit on the borderline of recklessness. One of my young, street-wise relatives tried his hand as a small time lender, borrowing money from a bank and re-lending it at several times the rate. He thought he had found the perfect get rich scheme but the wheels fell off and he lost it all.
Who knows how much of that is happening? A lot of these businesses can only stand up if the economy continues to see stellar growth and that's a bit of a worry.
Did you hear from him again? Or was he chopped up?
Ha ha... he's back on his feet, just started something new in JV with his cousins.
The amazing thing is he's still on friendly terms with the borrowers that defaulted on him. His dad says he's going to go far.
You might get away with it in Australia but the outcome over there would be very different but,,I agree it would be a statistically complex environment even for the street wise and the interlocking relationships between economic entities ..
btw what happened to your street smart money lender??..
v v v v v v v v v v
Ha ha... he's back on his feet, just started something new in JV with his cousins.
The amazing thing is he's still on friendly terms with the borrowers that defaulted on him. His dad says he's going to go far.
I think this BBC video is quite interesting...
http://www.macrobusiness.com.au/2014/02/how-china-fooled-the-world/
http://www.macrobusiness.com.au/2014/02/how-china-fooled-the-world/
The only difference between China and Japan is that China has the benefit of history.
Although the problems are too difficult for me to understand how to solve them.
Unfortunately the Chinese are a bit less arrogant than the Japanese, so they flee their capital to other countries. Such a big drain on the country's well being and rots it at its core.
Although the problems are too difficult for me to understand how to solve them.
Unfortunately the Chinese are a bit less arrogant than the Japanese, so they flee their capital to other countries. Such a big drain on the country's well being and rots it at its core.
First major mainland bond default rolled in a few weeks ago. Will be interesting to see how the balance of the year goes......the numbers game certainly is an interesting one.
With this kind of scheme you're more likely to be caught in Australia than in China.
Not only is China a big country to control but the bulk of the government's efforts is focused on the political side of things. Despite the lack of democracy the power structure is much more fractured than in Australia with huge stress lines running along family, clan, regional, ideological, interest, etc... affiliations, so you have more opportunity to get through the cracks so to speak.
In business you're generally given a lot of leeway if you aren't perceived as a threat to the powers in place. There's still a wild west feeling in many of these areas, with both good and bad. In some others the word "mafia" comes to mind.
I see a lot of people stocking on gold...
No panic yet but certainly a new sense of vulnerability.
Bump...
China's local government finances look more and more like a Ponzi, basically relying on new land sales to service existing debt. With property values dropping and land sales becoming problematic, a central government bail out could be needed at some stage.
http://www.businessspectator.com.au/article/2014/11/4/china/chinas-high-speed-debt-train-picks-pace
China's local government finances look more and more like a Ponzi, basically relying on new land sales to service existing debt. With property values dropping and land sales becoming problematic, a central government bail out could be needed at some stage.
http://www.businessspectator.com.au/article/2014/11/4/china/chinas-high-speed-debt-train-picks-pace
Don't forget China is a massive country, and like Australia, has markets within markets.
If I were to put my money, I would put it in Shanghai Jingan over Sydney Mosman any day.
But I wouldn't put my money in Shunde over Port Hedland.
If I were to put my money, I would put it in Shanghai Jingan over Sydney Mosman any day.
But I wouldn't put my money in Shunde over Port Hedland.
When I was in China a few weeks ago it was loudly announced that the central government will no longer come to the rescue of localities in trouble. This, I think, to stop the "moral hazard" of having local governments going on credit binges in the knowledge they're going to be bailed out if the proverbial hits the fan.
However there's not a single person I talked to who believed localities (or even companies) would be left to default. A professor of economics gave me the example of Chaori Solar, a company expected to be the first one to default but was quietly rescued when its creditors were bailed out by a little-known state-run "private" firm.
This is to illustrate how things in China should not be viewed with Western eyes. The government controls most economic entities in China in one way or another and has various ways to do things under everyone's radar. If a bailout happens it will likely be swift, with no warning or announcement. Heads will roll (especially if you belong to the wrong crowd) but the system will be kept perfect as it must be, on the surface at least.
One measure in particular was a bit comical. It was announced that localities can now raise funds on their own through municipal bonds. All good, until you ask yourself: who has the capacity to pay for such massive bonds? Only the government has, or entities that are state-run, state-owned, state-sponsored. A bailout under another name.
There were also rumours that a large private property group in Handan is going to be rescued from insolvency with funds from... their local government. Oh dear!
However there's not a single person I talked to who believed localities (or even companies) would be left to default. A professor of economics gave me the example of Chaori Solar, a company expected to be the first one to default but was quietly rescued when its creditors were bailed out by a little-known state-run "private" firm.
This is to illustrate how things in China should not be viewed with Western eyes. The government controls most economic entities in China in one way or another and has various ways to do things under everyone's radar. If a bailout happens it will likely be swift, with no warning or announcement. Heads will roll (especially if you belong to the wrong crowd) but the system will be kept perfect as it must be, on the surface at least.
One measure in particular was a bit comical. It was announced that localities can now raise funds on their own through municipal bonds. All good, until you ask yourself: who has the capacity to pay for such massive bonds? Only the government has, or entities that are state-run, state-owned, state-sponsored. A bailout under another name.
There were also rumours that a large private property group in Handan is going to be rescued from insolvency with funds from... their local government. Oh dear!
I think you meant to say the Chinese are a lot more corrupt than the Japanese.
Japan is also very corrupt from what I understand, except that people are much more patriotic. Every Chinese knows this.
Not keen to start a debate about this but I think you're just a bit biased.
On a nationalistic scale I guess both China and Japan would rate rather high. For both, a lot of pride and almost a sense of being exceptional among races.
Both have been imperial powers, but while Japan was imperialistic and expansionist for a short time China has been so for most of her history.
As for the risk they pose to their neighbours, Japan's risk has lapsed while China's is still very current and increasing.
Not a matter of arrogance or patriotism but expediency.
Yea you're probably right, I'm probably a bit biased.
But historically China has never caused problems. Japan attempted many invasions of China and its neighbours, not just in recent history.
Japan annexed Korea and invaded China in late 1500s. In 1800s they went to war with Russia and China. In 1910s, they annexed Taiwan and Korea. 1930s conquered half of China. 1940s attempted to conquer the world.
In my opinion, in this day and age no one wants to invade anyone (except maybe western powers wanting to invade Middle East and Putin claiming old lands). China doesn't want to invade the US. Nor does US want to invade China. Or Japan invading China or vice versa.
But none of these countries - or its people - trust each other, so they just keep building arms and weapons. Why would China want to start a war today when it's the fastest growing top 5 country and will eclipse the US in 10 years? They have so much going for it. A trip to Shanghai and you can see it's far eclipsed most western powers in terms of technology, quality of living, accessibility, mobility etc except NYC and Tokyo.
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