profound, I respect your comments and contributions, from the perspective that I operate from (floor trader in the pits), for the most part, unless those insights influence or contribute to trades decision making in a way that I can leverage, benefit from or obtain an understanding or edge, then frankly, I don't have the time to be so concerned. arrogance, to the most part its actually ignorant bliss arrogance of the Americans, pales in comparison to the arrogance of the Europeans or other country's elite, but then again, that in itself is an arrogant statement to judge and assess others... it is a luxury and freedom that we Americans seems to enduldge in, that constantly seems the envy of the entire world of countries. Usually the elite of other countries, can enduldge themselves in these discussions, but not the common man, as in the Americas an understanding of the complexities of trade, manufacturing or trade policies, actually I have a better grasp than most, and capable of explaining those concepts too, in a manner that the audience can appreciate (PhD Computer Science, Masters in Finance)... btw, what were your credentials? oh, regarding savings rates...... well the discussion were to include the same things that Americans receive but do not directly own or control (social benefits, etc.) then the complete picture would show that our average savings rates (inclusive of household, auto, and other select assets) matches those of other wealthy nations....(albiet that topic remains hotly debated) hey, remember, the objective of Elitetrader is to enlighten through sharing mutual financial, economic and trading concerns. so, are you benefiting? or simply missing the point?
You start from here: http://www.youtube.com/my_subscriptions?pi=0&ps=20&sf=added&sa=0&sq=&dm=2&s=F-F7ndgR7Xs China is relatively insulated from the influence of the "Money Masters", therefore they fell least victim of them in recent history and including the most recent fanancial crisis. But a century ago, China was totally ruined by them -- as a result of silver demonetization in 1870, when China had 40% of world silver. By 1930, the silver price had dropped to 1% of its 1870 value; so did china lost almost all of its wealth accumulated in the last two dynasties. Confucius intoxicated and mindless Chinese elites offered all kinds of BS reasons on China's decline, they all missed the most important one. Chinese leaders are getting cozy now with the "money masters" now, one of the well-know representative of MM visited China 170 times, wining and dinning. MM among the first to establish bank branches in China. Like all other major powers in history, China may as well fell into it. It may take a few decades.
China has to do 10% YOY - for the next 20-25 YEARS - to eclipse America, economically. A few problems: Chinese inflation is under-reported - probably by 3-5%. GDP is therefore over-reported by same. China is heavily dependent on exports (15% of GDP). The protracted global slowdown has - and will - continue to hurt China. China has no considerable middle class to absorb excess domestic capacity. Over half of China is still rural, broke-ass-broke, working rice paddies. Yuan is artificially suppressed by mercantilistic policies. Either the Yuan revalues and exports drop. Or Yuan stays low and America continues to foist Trillions in shit debt - soon-to-be worth(Less). China's fate is still inexorably tied to Americas and that engine seems to be faltering.
Thank you for your input, but you must tell me how real estate DOUBLING in 6 months isn't debt fueled speculation but conservative economic development. Did that economy around that area double? And to think that most people use cash to buy houses, nonsense! One, if everyone uses cash, I can use debt and buy them at a cheap price and gain tremendous leverage. Two, banks don't make any money off of cash! They have every incentive to make mortgage loans. My personal opinion is that China has had a brutal fall from its drop in exports, but the stimulus is fanning domestic demand and the whole country is encouraged to spend. But which of these 2 forces wins out in the end? I don't know. Their prospect is somewhere in the middle of both extremes. And I don't hold any illusions that China is all perfect, they simply took advantage of the US's greed, China is a huge part of the problems we have today in the global economy. The Chinese leaders grew their economy TOO fast (because no one liked them anyway and they needed to provide jobs) and as a result the western countries were not able to adapt in time. It takes a long time to establish a knowledge economy. 10-20 years was not enough for american industry to shift, for politicians to adapt new growth strategies, so everyone said fuck it and speculated like crazy. A big part of the chinese "miracle" is nothing more than stealing american technology too. There are no illusions on my part.
ok i will give this a go..... You have to realize: 1) the amount of people in china 2) the sharp almost exponential rise of the upper-middle class population that demand home ownership There is no "debt fueled" speculation or zero down mortgages. See my next response. The specific area i am talking about is the massive development site for the world trade expo 2010. Think beijin olympic scale project. In other parts of shanghai the increase varies based on area from 10-30%. http://en.expo2010.cn this shows a fundamental lack of understanding of the culture and american way of thinking. The average person in china avoids the debt like the plague. Even the upper class native chinese. Put it this way, the average family saves close to 30% of their income, when they buy a condo whether to live in or invest, it's usually paid in full with cash. You find the condo, agree on the price, then literally take a bag of cash, sign the paperworks, and exchange for the deed. The whole process takes 1-3 days, very different than US. It's a very much barter system still. Mortgage is only becoming popular with the young white collars in recent years, and people usually put down 30-40%. And it's limited to real estate only. There is no concept of using a credit line to buy TVs, etc. People will think you are crazy if told you can take the tv home and not pay for it till later. Also there is no property tax/condo fees, well <$50 a month for a luxury high rise. The chinese do not like debt, period. cause and effect. I agree china took a huge hit from the export drop, many factories were closed/impacted. However the govt stepped in quickly and with actual money (not borrowed or fresh printed), in addition the chinese upper-middle class has been growing at a tremendous pace. This in turn softened the blow quite a bit, domestic demand for those luxury goods reserved for foreigners have grown. You are correct the govt is encouraging that, they are trying to increase domestic consumption and decrease reliance on export. My point is not to say china emerge untouched, far from it. But BY COMPARISON to almost every other major economic power, it fared far better. China is not perfect, a lot of social issues still but those are not the point of this discussion. I dont think there are a lot of speculation, i really believe the economic foundation for the country is solid, at least a lot safer than us/uk/japan by comparison The only major speculation i can think of is the leaders let some hotshot phd invest billions of the reserve for "higher return". The guy was considered a top expert in china, his team then got played badly due to lack of experience/understanding of the inner works of wall st. They invested in the us banks(ms been a major one) and other western companies, basically ended up losing most of that money lol. The govt shut it down after that, notice during the lehman days when morgan stanley was in deep shit, the chinese did not lift a finger, they were still pissed about being played like a child. yep, and it is a miracle how well they can mimic everything.
China is a giant bag holder of toxic shit right now (probably lost 80% of the value of foreign and much domestic holdings at the central bank), and they're doing everything in their power to talk up their economy to stave off their consumers retreating into their shells, as they can no longer count on Americans or Americans to buy their cheap exports. They're at Defcon 1 risk of an economic meltdown.
Thanks for the detailed response. Could you give a source on the above? Or suggest one for gauging rural and urban family income? Perhaps. Perhaps not. How much of Chinese real estate demand is domestic? And how much is foreign borrowed money, speculating much like ETF or warrants on the Heng Sang? Any figures for this?
With the lack of knowledge you display here you should really stop worrying about China. How about cleaning up the shit in front of your house? It looks pretty dirty and stinks...or are you one of those who need to bash others when it does not go so well for yourself? We all know now about your China stance. No need to re-iterate over and over again your opinions, NOT facts. Seriously, you guys got such a mess to clean up, you better devote all your attention to that rather than betting on a reversal of a society and people that come from having nothing to the ability to make their own life. You would be very ill advised to bet against that.
thats not including the compounding of growth plus excluding divergent GDP growth paths between the US and China. Depending on how the US choke on their highest debt level in historry it really may only take a little more than another decade. In any case its only a matter of time before China will have caught up with Japan, Europe, and then the US.