Shifting of our economic centre to Asia

[Aaron Sice]

China's communist leadership is ultimately interfering with more efficient market economics. Their loose credit policy for the last 15 months caused massive inefficient capital expenditure, much of which drove GDP growth and created asset bubbles.

i'm sorry? they're interfering with their OWN capital market - which they can do, because they're a COMMUNIST regime.

the US owe them money, so a communist govt is now a creditor of the US.

it will be interesting to see just how much the uS can de-value their dollar before China step in with a heavy hand and reposses....i dunno, Coney Island? Central Park?

"...and 2 million oriental soldiers will descend on the shores of the states united..." - Nostradamus.

 

[WinstonWolfe]

i'm sorry? they're interfering with their OWN capital market - which they can do, because they're a COMMUNIST regime.

would an efficient market economy build excess supply capacity and 25% excessive commercial real estate supply? What's that do to the cap rate of commercial property? Communist leadership, just like socialist leadership in the US and Australia has used public debt and stored revenue inefficiently.

the US owe them money, so a communist govt is now a creditor of the US.

The US was happy to outsource production to an exploited workforce living a poorer std of living (same as us). Ruling Chinese Communists were happy to oblige.

The US might have prospered from doing so if they used time, energy, and debt productively enough to increase production and GDP above the level of outsourcing. Unfortunately for them, they didn't.

Listen to Jim Chanos explain the beefy bits.

 

[Aaron Sice]

see red - fitting, really...

would an efficient market economy build excess supply capacity and 25% excessive commercial real estate supply? What's that do to the cap rate of commercial property?

it doesn't matter - because you won't find a document released out of china that point to issues - it's all speculation - good and bad. it's like arguing that oranges have all sold out, but the retailer says it's business as usual - where's your proof? you can't get around the back to see if they're sold out and there's delivery trucks driving around a fair bit as well....

Communist leadership, just like socialist leadership in the US and Australia has used public debt and stored revenue inefficiently.
The US was happy to outsource production to an exploited workforce living a poorer std of living (same as us). Ruling Chinese Communists were happy to oblige. The US might have prospered from doing so if they used time, energy, and debt productively enough to increase production and GDP above the level of outsourcing. Unfortunately for them, they didn't.

couldn't agree more - you reap what you sow, and the US sowed nothing.

Listen to Jim Chanos explain the beefy bits.

got link? wouldn't mind that.

cheers.

 

[WinstonWolfe]

see red - fitting, really...

see my second last post.......click on "good job"
oh heck, just click here

I don't agree that the vacant commercial property estimates are improbable.
see Chanos again. he has more credibility than moi.
and check the 2010 dated references here

 

[Graemsay]

I'm not convinced that China is guaranteed to dominate the world in the coming decades. There was a similar expectation about Japan in the late Eighties, and that didn't end well for them.

My guess is that at some point China will stumble, and that growth (and our expectations) will shrink.

And, hopefully, they'll move to being a more open society.

 

[Ausprop]

"...and 2 million oriental soldiers will descend on the shores of the states united..." - Nostradamus.

BC you keep forgetting the rest....

"....oh thy mushroom cloud appearing thrice times on the land of the man with pointy eye and fame and pestilence envelope the world for a millenia... What time is it I need another mulled wine?" - Nostradamus

 

[Aaron Sice]

woooooooo good one.

 

[Marko Legija]

I'm not convinced that China is guaranteed to dominate the world in the coming decades. There was a similar expectation about Japan in the late Eighties, and that didn't end well for them.

My guess is that at some point China will stumble, and that growth (and our expectations) will shrink.

And, hopefully, they'll move to being a more open society.

I was just going to say this, I had people saying to me as a kid (the early 90's) that I should learn japanese because "in 10 years time knowing japanese will be a major advantage in business, they're going to rule the world", yeah right, we saw how that turned out.

The anglo-saxon world isn't going to give up their power just like that, I find it impossible to believe that anglo-saxon nations are going to sit down and answer to someone else, is it just me that thinks this? It's all about EGO.

 

[Ausprop]

I was just going to say this, I had people saying to me as a kid (the early 90's) that I should learn japanese because "in 10 years time knowing japanese will be a major advantage in business, they're going to rule the world", yeah right, we saw how that turned out.

The anglo-saxon world isn't going to give up their power just like that, I find it impossible to believe that anglo-saxon nations are going to sit down and answer to someone else, is it just me that thinks this? It's all about EGO.

hard to say...just because someone cries wolf all the time doesn't mean a wolf will never appear

 

[Ausprop]

there are natural processes that limit all these endless projections. Currency revaluation would be the most obvious thing and this issue appears to be rapidly hotting up.

 

[Aaron Sice]

I was just going to say this, I had people saying to me as a kid (the early 90's) that I should learn japanese because "in 10 years time knowing japanese will be a major advantage in business, they're going to rule the world", yeah right, we saw how that turned out.

The anglo-saxon world isn't going to give up their power just like that, I find it impossible to believe that anglo-saxon nations are going to sit down and answer to someone else, is it just me that thinks this? It's all about EGO.

we won't have a choice because our creditors are asian.

japan crumbled because it was protecting itself, which ended up killing itself.

they can't be that bad off though, they did make a 500mil loan to the IMF...

 

[josko]

It's hard to find common sense in any market manipulation attempts by central government imho. I'm also totally confused at what the markets will do. I'm inherently suspicious and conservative, so the 'faint noise' of the GFC heard here in Australia and the total return to business as usual and overful credit cards makes me very contrarian at the moment. Meaning sell everything and hit the bunkers BUT with US dollar apparently improving, perhaps we'll be OK overall but I stlll have an uneasy feeling about things for the next few years.

The thing is the speed at which things occur - witness the last AUD plunge and the impact on RE after barely a month of news from Wall Street. I'm not sure if I've the nerves for gambling on economies at this stage of the cycle.

Prices are 'back' to 2007 levels, the ever onward upward march to wealth and abundance only had a tiny misstep and so we can expect another 10 years of economic bliss OR we hit doubly hard times next crisis and the next crisis could arrive within 6 months or a year, or two, or three.

Impossible to call so I'm just betting small and hedging those bets as well.

I'm with you Julie,

I am finding that the more I know about Chinese Investment in Aus, US decline into deeper debts with bottomless pits, the more conservative I am getting.

There is such a thing as information overload and I fear I may be suffering a little from this.

I do feel "edgy" about the level of interest China has in Aus.

Coincidentally I was asked to participate in a poll during the week. It was a random T-call for Share holders.

One question was along the lines of:

"What percentage or stake do you think China should hold in Australian Companies?"

I told them I could not make a truely educated answer, so I answered: "Not sure."

I did find the whole poll interesting and it will change my perspective on these things in the future. I wonder how many of those polled would just throw a "25%" answer out there.

How do we develop our resources without selling them off? It does concern me that if you have enough of it, money can buy anything.

Regards JO

 

[House_Keeper]

I'm not convinced that China is guaranteed to dominate the world in the coming decades. There was a similar expectation about Japan in the late Eighties, and that didn't end well for them.

My guess is that at some point China will stumble, and that growth (and our expectations) will shrink.

And, hopefully, they'll move to being a more open society.

There's a huge difference between the two countries. China is 10 times bigger (in terms of population).

China is only half way through its industrialisation process. Still has a long way to go. That's why it is going all around the world, trying to secure as much natural resources as it can.

For many centuries (until 1850), China was the largest and wealthiest country in the world. Nothing out of place if it regained that position.

My feeling is that many westerners underestimate the Chinese. Just my impression.

 

[Graemsay]

I don't think that the problem is underestimating the Chinese, but rather that people are overestimating them.

My guess is that the country will continue to become richer, and that living standards will push their way up that of the West. Economic activity will move up the value chain, and there'll be more of a focus on R&D than on sweatshop production. A consequence of that is that China will become increasingly influential in global politics.

But I don't think that China's going to continually grow at 8% to 10% per annum for the foreseeable future.

That said, it's worth bearing in mind that China's total economy is slightly larger (10% - 20%) than Germany's, whilst it's exports are at a similar level.

 

[House_Keeper]

I don't think that the problem is underestimating the Chinese, but rather that people are overestimating them.

You're right. People can overshoot in either direction.

The classical way to overshoot is to take a current trend & assume it will last forever. It rarely happens. The trend often hits natural limitations. That will inevitably happen for Chinese economic growth, although I believe it has many strong years to come yet.

What I was referring was to was the comments about the Chinese economy from some US economists. Many were predicting a sharp slowdown of the Chinese economy because of its dependence on exports to the US. It didn't happen.

Many of the US commentators writing about the Chinese economy are semi-blind. They have so little, tangible, reliable data to work from that it is extremely difficult to know what is really going on. Many of theses commentators tend to assume that the Chinese economy works almost like the US economy. That's why I believe they underestimate it.

 

[Aaron Sice]

I don't think that the problem is underestimating the Chinese, but rather that people are overestimating them.

i think people are used to the UNDERESTIMATION game in times of dread, so anything more than pessimistic is viwed as being OVERESTIMATION, when in fact it's just reading the play at hand.

 

[HiEquity]

Where did this idea come about that China is financing the US? I find the real numbers help put things in perspective. From here the numbers are:

Total US government debt at Sep 2009: $12.3 trillion
Total US government debt owed to foreign governments: $3.428 trillion
Total US government debt owed to China: $0.789 trillion

Hardly worth the moniker that the US is indebted to China for its existence!

 

[Kenster]

Debt makes sense when considered against its Purpose ("Good debt or Bad debt?") and its relative Size to the whole asset base ("LVR") --- Both of which an average Joe would have no clue about, let alone trying to judge about someone else's financial position.

Trying to judge US debt is like trying to predict how soon Michael Jackson is going to run out money.

Reality is, despite of MJ's excessive spending habit, his asset grew faster than he could spend. He had many growth assets *and* he could create money out of thin air.

So why would he have to worry about money?