China Triggers the Recession Alarm

[CHam]

Interesting perspective on the global market at the moment.

http://finance.ninemsn.com.au/blog.aspx?blogentryid=954093&showcomments=true

If China's economy falters surely this will have a significant flow on effect on Australia's last bastion of financial strength in mining and exports, not just the impact on apartment sales?

 

[Deltaberry]

If China falters, Australia falls. Simple.

 

[Intrinsic_Value]

If China falters, Australia falls. Simple.

actually not sure how it will all play out.
China falters: resources plummit, AU$ drops like a stone.
However what about the sectors that are doing it really tough because AU$ is too high. These sectors will bounce.

I think the east coast of australia is pretty much in recession because our economy is not structured correctly for a high AU$.

 

[Aaron Sice]

how many f___ing times do I have to say it?

1) China has no cartel-run Central Bank - therefore any "stimulus" the Govt prints is government controlled. Any stimulus passed around a communist regime means little because it's like owing money to your partner - it doesn't affect the ability to pay outside debt.

2) China is COMMUNIST.

3) China is COMMUNIST.

4) Do I need to say it again?

5) China haven't floated the Yuan therefore it's not open to capitalist market manipulation.

6) Happy to revise this if any of the above changes.

7) Why do you think Obama has his knickers in a knot over his recent "trade wars" comment? Because China won't devalue their Yuan - which means the USA with their devalued currency are essentially importing inflation now.....oops.

 

[sash]

Yep.....

People also forget that whilst China maybe down...we also import to Japan, Korea, India, etc.

The other thing which people don't factor in is that China's demand comes mostly from internal sources. Whilst there will be what of a drop look at it in perpsective:

Out of the 100% of exports of say Iron Ore....30% goes to China, 20% to Japan, 15% to Korea, 10% to India, and 25% to other nations. Lets say that the countries outside China drops 5% in demand. That means 3.75% and if China drops 20%...then that is 6%. The total drop in demand is more like 10%.

Still not bad in my view....sure it will affect prices, the $A....but that might not be a bad thing....miners wages will drop and less inflation.

Deltaberry...did you snooze through Economics 101 at Uni??

how many f___ing times do I have to say it?

1) China has no cartel-run Central Bank - therefore any "stimulus" the Govt prints is government controlled. Any stimulus passed around a communist regime means little because it's like owing money to your partner - it doesn't affect the ability to pay outside debt.

2) China is COMMUNIST.

3) China is COMMUNIST.

4) Do I need to say it again?

5) China haven't floated the Yuan therefore it's not open to capitalist market manipulation.

6) Happy to revise this if any of the above changes.

7) Why do you think Obama has his knickers in a knot over his recent "trade wars" comment? Because China won't devalue their Yuan - which means the USA with their devalued currency are essentially importing inflation now.....oops.

 

[Aaron Sice]

http://railroadbraintrain.wordpress.com/2011/10/31/china-through-the-looking-glass/

 

[willair]

If China falters, Australia falls. Simple.

I don't think so,just on the fact on simple numbers,very easy to feed the people in Australia,but China is a total different story try and feed those numbers on thin air and see what happens,..

 

[Aaron Sice]

Yep.....

People also forget that whilst China maybe down...we also import to Japan, Korea, India, etc.

/snip/

Still not bad in my view....sure it will affect prices, the $A....but that might not be a bad thing....miners wages will drop and less inflation.

you want to be in PMs if China falters because the USD will be sold down, but the AUD moreso.

money will move to gold, but may even move back into the Euro because the Eurozone are less exposed to China than JPY/USD/AUD.

if money exits the Euro, the USD, the AUD and the JPY - where does it go?

 

[hikeven]

Yep.....

Out of the 100% of exports of say Iron Ore....30% goes to China, 20% to Japan, 15% to Korea, 10% to India, and 25% to other nations. Lets say that the countries outside China drops 5% in demand. That means 3.75% and if China drops 20%...then that is 6%. Uni??

where did u get these figures? Only30% to china? China has factories for almost all products for the world. it is strange only 30% goes to them while Japan that tiny place needs 20%....guess what will happen if these factories shut down...as long as I know one supplier for Greeting cards for our company complained recently he has not got any orders from Europe for two full months. This is more serious than 5%..

 

[Deltaberry]

actually not sure how it will all play out.
China falters: resources plummit, AU$ drops like a stone.
However what about the sectors that are doing it really tough because AU$ is too high. These sectors will bounce.

I think the east coast of australia is pretty much in recession because our economy is not structured correctly for a high AU$.

If China falls, the US and Europe will fall deeper. Not sure who's spending on tourism/education/retail after that.

Time will tell. You'll get your China bubble temporarily popping/retracing possibly in the next few years soon. It's probably already starting to play out based on some of my sources.

 

[Deltaberry]

Yep.....

People also forget that whilst China maybe down...we also import to Japan, Korea, India, etc.

The other thing which people don't factor in is that China's demand comes mostly from internal sources. Whilst there will be what of a drop look at it in perpsective:

Out of the 100% of exports of say Iron Ore....30% goes to China, 20% to Japan, 15% to Korea, 10% to India, and 25% to other nations. Lets say that the countries outside China drops 5% in demand. That means 3.75% and if China drops 20%...then that is 6%. The total drop in demand is more like 10%.

Still not bad in my view....sure it will affect prices, the $A....but that might not be a bad thing....miners wages will drop and less inflation.

Deltaberry...did you snooze through Economics 101 at Uni??

Lol... A lot more than 30% of our iron ore goes to China. Try 50-60%. Feel free to check credible sources like ABARE, Woodmac, Brookhunt etc rather than Google or The Age.

Re numbers, at the end of the day we can cut numbers whatever way we want to make an argument. There's many other factors at play such as liquidity and cost of borrowings etc which will be two major things impacted. Though I'm not really sure why I bother saying these things as it probably doesn't mean anything to most people here.

You should just believe what you will though, who knows after all. To be honest, I have a lot more property exposure than you do in $ terms if not in quantity terms, so I actually really hope your optimistic view prevails. After all, why would I be hoping this place falls to a recession...? But sometimes I just feel the need to bring some practicality to these threads, obviously not to much avail.

 

[Deltaberry]

I don't think so,just on the fact on simple numbers,very easy to feed the people in Australia,but China is a total different story try and feed those numbers on thin air and see what happens,..

Haha it's not an issue of who's being fed.

 

[Deltaberry]

you want to be in PMs if China falters because the USD will be sold down, but the AUD moreso.

money will move to gold, but may even move back into the Euro because the Eurozone are less exposed to China than JPY/USD/AUD.

if money exits the Euro, the USD, the AUD and the JPY - where does it go?

Not sure - someone suggested Rupiah today.

 

[Aaron_C]

if money exits the Euro, the USD, the AUD and the JPY - where does it go?

Well currency is all relative to it just means that out of those 4 currencies, one will be higher than the others in a relative sense.

 

[Deltaberry]

Well currency is all relative to it just means that out of those 4 currencies, one will be higher than the others in a relative sense.

That's true. There's still a play ultimately.

 

[Mindmaster]

If China falters, Australia falls. Simple.

Nah, we just sell more uranium to India

 

[sash]

Yep...spot on....

There is a concerted effort by investors and fund managers in the world to reduce the risk of investing in China.

There is a view that money would be safer in countries like India, Indonesia, and Vietnam at this stage.

The other issue is China has a rapidly ageing population unlike the above countries...just this issue might also cause a reduction in demand.

The recent move by Juliar to export to India is an indication that diversification of markets is important.

Nah, we just sell more uranium to India

 

[Aaron Sice]

Well currency is all relative to it just means that out of those 4 currencies, one will be higher than the others in a relative sense.

you'd think but that's not what happened in '08 and that's why i was bleating about it being a structured event (the crash).

when the SP/DJI slips, money normally moves into PMs/oil - but it didn't, they both fell.

when hard commodities fall, most of the time soft commodities stabilise or even rise - but it didn't, they fell in unison.

as PMs and oil - when they rise it used to signal inflation so interest rates would rise - but lookie lookie! interest rates are now falling as PMs and oil are rising.

as the stock market falls, people look to housing - but nope - they all came off in '08.

every which way you looked to park your money you were essentially guaranteed of losing some or most - except for PMs which were reasonably rangebound for the whole of '08. admittedly gold jumped in late '07 but it was steady during and after the Lehmann collapse? that stinks of manipulation.

so again, the question is, if all the currencies fall - where does the money go?

 

[joe jo jo]

Hello,

not backing up this link - he has his own objectives of course but it is from the perspective of someone from the region in question.

http://www.yourinvestmentpropertyma...alian-residential-property-market-119866.aspx

The comments below relate to this topic a bit "If you happened to own a business that had the mandate to rebuild the entire Australian nation from scratch 20 times over within a couple of decades, and your business has been selected as the largest supplier of resources needed for the task, how do you think this business would do financially? Some people worried about the Chinese economy slowing down could hurt Australia, but really if they slows down by 10% (i.e. a serious recession), instead of building Australia 20 times over, they are now only doing it 18 times, what difference does it make? Australia still couldn't keep up with that demand anyway"

Thanks

 

[Deltaberry]

Aaron - if US$ 'falls' it's falling against something. So somethings going up. Otherwise it's not falling

Joe - prices are set at the margin thats the issue.