Chinese superbubble

[Potemkin]

All depressed about China kicking the US around like the wimp on the economic beach?

Don't worry, it looks like China's superbubble is going to burst.

http://www.csmonitor.com/Commentary/Opinion/2010/0316/China-the-coming-costs-of-a-superbubble

[Sonny]

BS Pote,
your article applies Americanistic attributes to individuals with in the Chinese economic society that excludes at least a Billion Chinese pesents Who desperately want to get in. But each and every one of them knows they are all expendable.

Do you think we could underbid them in any endeavor?

[Sysiphus]

Do you think we could underbid them in any endeavor?

I don't think that's really the issue. The issue is whether China can bootstrap its own economy. Because, at the rate things are going, no other country is going to have any money left to buy things from them. This is precisely how they have gotten through the current crisis - by artificially boosting domestic demand via construction spending, loans and so forth. But, if there is no demand for Chinese products, then those factories and office buildings will stay empty, no matter how cheaply someone is willing to work the companies that own them. The RMB's value against the dollar and euro is pretty much a red herring for the reason you cite, Sonny.

[DReynolds]

I agree with Sysiphus. China seems to have artificially boosted domestic GDP through measures which are inherently unsustainable (buying $, lending, etc.).

[Fiddlerdave]

I don't think that's really the issue. The issue is whether China can bootstrap its own economy. Because, at the rate things are going, no other country is going to have any money left to buy things from them. This is precisely how they have gotten through the current crisis - by artificially boosting domestic demand via construction spending, loans and so forth. But, if there is no demand for Chinese products, then those factories and office buildings will stay empty, no matter how cheaply someone is willing to work the companies that own them. The RMB's value against the dollar and euro is pretty much a red herring for the reason you cite, Sonny.If China and its citizens were to spend money to "bootstrap" itself, they would need to spend something like 26 trillion dollars before they would reach the identical level of personal and public debt the USA is at RIGHT NOW.

To be in a "bubble", much less a "superbubble", I argue a country would have to have some amount, ANY amount of public and private debt. China has NONE, public or private.

China would need to spend 80 trillion (actually, maybe twice that much) to reach the per capita public and private debt the USA is at right now. (And they have more than 3 times the people).

That is one HELL of a lot of bootstrapping money to spend before they get to a "bubble" the size the USA has NOW, after our crash (or rather, the first stage of our crash)!!

I agree with Sysiphus. China seems to have artificially boosted domestic GDP through measures which are inherently unsustainable (buying $, lending, etc.).This fantasy that China is in some kind of "superbubble" are the same kind of fantasy that so many of our financial "experts" had that let them think the USA's superbubble was NOT a massive bubble and would go on forever!

We manufacture VERY LITTLE, and buy a trillion a year of imports, and export a fraction of that. This is called MANUFACTURING DEBT!

China manufactures A LOT, and exports it and gets huge amounts of money from others for what they MAKE from materials of little cost. This is called MANUFACTURING WEALTH, at one time a strong traditional value in the USA which made us wealthy.

We have been riding on our reserves of WEALTH accumulated by our forbearers, but that wealth is dwindling FAST, and there is NOTHING non-violent we are doing or can do in the next two decades that will even STOP the DECLINE of our squandering of our wealth, much less making any up.

These absurd "feelgood" articles are nothing more than an aspirin for our hangover - they might make us feel a little less bad, but they won't erase the DUI, restore our crashed car, pay off the multitude of creditors or get our job back.

And for the idea that we, or anyone else will stop buying from China, we can cut back some optional items and geegaws, but we could not maintain our civilization without the products we MUST buy from China. We will spend our last dime, if need be, to import their critical goods.

[Sysiphus]

FD - You can manufacture all day, but as I said if no one has the money to buy your products you are screwed. That does not mean what the U.S. is doing is right, either (as you are always so quick to enthusiastically point out), but it does mean that China is living on borrowed time. You cannot create wealth from manufacturing unless there are people who can buy what you make. The U.S. went through a bitter recession right after WWII for this very reason, and China will most likely go through one as well. That alone would be bad enough, but it will be aggravated (as ours is) by the massive debt and capacity overhang that has built up in their economy over the past 10 years. For the record, I do not want to see the Chinese people suffer, and hope this will not happen. But, I think it will. I was in HK in 1997 when the bubble burst in Asia for similar reasons, and can attest from personal observation as to the great deal of suffering that one caused.

[Fiddlerdave]

FD - You can manufacture all day, but as I said if no one has the money to buy your products you are screwed. This is true. But the USA will not go entirely bust - it will have some money and will be able to get credit from China by hocking/selling those items we have here of value to them - minerals, land, vacation homes, what special tech we have. There are no so many things we do not and cannot (without investment, time, and learning the technology) make any more.

The USA will indeed buy some less, but China is not resting on the laurels - they are spending huge sums building infrastructure and equipment on all continents so they will have trading partners all over the world with supplies, minerals, resources China needs to make those countries fine finished goodies (like high tech electronics, solar panels, package nuclear plants, so much else) they are developing at breakneck speed, while we cut budgets everywhere. We are not even having a race because we aren't running! We sit around while China buys, builds, develops, manufactures.

That does not mean what the U.S. is doing is right, either (as you are always so quick to enthusiastically point out), but it does mean that China is living on borrowed time. You cannot create wealth from manufacturing unless there are people who can buy what you make.It appears their #1 priority is creating markets inside and outside of China. But think! How long did the USA live very well with its primary consumer market being domestic? The U.S. went through a bitter recession right after WWII for this very reason, and China will most likely go through one as well. They already have. It just might be ending. Export sales going up 46% over last year is one big "green shoot"!That alone would be bad enough, but it will be aggravated (as ours is) by the massive debt and capacity overhang that has built up in their economy over the past 10 years. They have no debt, and actually have massive foreign currency reserves. That is WHY none of your fears are true - for China! For the record, I do not want to see the Chinese people suffer, and hope this will not happen. But, I think it will. I was in HK in 1997 when the bubble burst in Asia for similar reasons, and can attest from personal observation as to the great deal of suffering that one caused. The world's government's and businesses have invested trillions in China in the last 15 years to ensure China will do quite well while the rest of us suffer.

Watch their world shopping trip get rolling here as so many assets in the world go on firesale for a few pennies on the dollar. CASH talks, credit walks. It will be unbelievable, and most Americans will be unable to even admit it to themselves.

[Fiddlerdave]

The Commerce Department estimates that 95 percent of the nearly $23 billion worth of toys sold in America in 2007 were imported, mostly from China, according to the latest industry report available. That's up from 85 percent just four years earlier.Much of the talk about China and a "superbubble" seems to me to ignore the difference between a "slump" after a boom, and a crash after a "superbubble"!

The USA went into a debt frenzy based on 0% interest, feeding a ferocious frenzy of unregulated and completely out of control financial institutions leveraging mammoth debt (made up of guaranteed to fail loans) into ever more mammoth "investment instruments". Existing homes and other assets quickly and miraculously appreciated in value , which people borrowed and spent on imported goodies and invested in what would become worthless investments (both the overvalued homes and the worthless debt instruments paying insane interest). When 8% of the underlying mortgages fail, an entire debt instrument worth 100 times that value is worthless.

When that vicious superbubble of insanity collapsed in the USA, not only do we not have our (fictitious) income and wealth anymore, that income and wealth was transformed into debt (or losses). It is similar to losing your really good job paying you $10,000/month ( a "slump") and losing your job AND all your assets AND suddenly having $100,000/month in medical bills coming in (a "crash"!).

China lost some business (exports to the USA and elsewhere) but did not lose its banking system, oes not have trillions in worthless banking inveestment paper ("toxic assets"), had not printed 4 trillion dollars worth of Yuan to finance 0% interest for its banks to rip off, it had accumulated untold trillions in investment and sales, and has a few trillion in OTHER counties' cash laying around to spend when other countries are truly desperate (the REAL desperation which is yet to come).

BTW, note the business downturn closed many of the companies that had substantial foreign investment, which means China NOW has the business and factory, and no longer has the foriegn owner and does not need to pay back the foreign investment! Clever way to have no debt after foreigners build up your infrastructure, yes?

Now, China's business is coming back pretty nicely, and they have tons of cash to INVEST around the world to make more business. The USA has debt, NEEDS to spend trillions to bring back even basic operations, but can't do any of it because it has to borrow every investment penny, and has few ways to MAKE money, other than print it.


The situation is worse than most people ever imagine.

[Ought Six]

S has it right. It is not 'manufacture or die' for the Chinese economy. It is 'export or die'. They were able to hold out using their reserves to get past the worst part of the recession. Things are improving for the moment. But with the fundamentals of the world economy the way they are, another even worse dip seems inevitable. Few people believe that the Chinese economy is robust enough and has enough depth to survive the next wave. I guess that we will find out soon enough.

[Sonny]

I can not believe that I can see what you all can not.
I refuse to buy that and I will not.

For example let us say we will have a contest, a war game, each team will start with the same amount of resources $200,000 usd. ok there are Three teams. Team 1 the Americans, Team two the Chinese, Team three the North Koreans,
Each team gets $200,000.

Team one, the Americans takes their $200,000 and contracts with Black Water for one American truck driver who's paid $150,000 /year and BW keeps the other $50,000 as overhead and profit.

Team two, the Chinese, uses their $200,000 and hires 100 Infantry, a company, And thats A good salary considering Chinese auto workers make less than 1 dollar/hour .

Team three the N Koreans takes their $200,000 and hires a Regiment
And hey they think they're rich,,

Do you see where I'm going?
Do you see what we are up against? Where we are going to end up?
I hope so.

!

[leistb]

More perspective; first part (http://www.zerohedge.com/article/chinas-fragile-economy-its-housing-bubble-and-what-it-means-us-part-i).

Even more; second part (http://www.zerohedge.com/article/chinas-fragile-economy-its-housing-bubble-and-what-it-means-us-part-ii).

[Ought Six]

People applied the exact same sort of thinking to Japan in the 1970s. By the end of that decade, the widely accepted conventional wisdom was that Japan would be the new superpower and American would be a second-rate nation by the turn of the century. People were also saying this same thing about the Europeans in the 1960s. I expect that once China goes down the tubes, India and perhaps Brazil will be deemed the new replacement superpowers for America. It could well happen, but it is neither obvious nor inevitable. Things are a hell of a lot more complex and unpredictable than that.

[leistb]

People applied the exact same sort of thinking to Japan in the 1970s. By the end of that decade, the widely accepted conventional wisdom was that Japan would be the new superpower and American would be a second-rate nation by the turn of the century. People were also saying this same thing about the Europeans in the 1960s. I expect that once China goes down the tubes, India and perhaps Brazil will be deemed the new replacement superpowers for America. It could well happen, but it is neither obvious nor inevitable. Things are a hell of a lot more complex and unpredictable than that.

I've seen this very thing mentioned in a couple of articles I've read lately.

As much as people would like to see China supplant the U.S., it just isn't guaranteed quite yet.

[Fiddlerdave]

More perspective; first part (http://www.zerohedge.com/article/chinas-fragile-economy-its-housing-bubble-and-what-it-means-us-part-i). Third, much of their "growth" is fake. Money sent to districts and municipalities to spend is not organic economic growth. Much of current GDP growth is a myth since most of it comes from government stimulus. Building roads and bridges is good because China needs to build its infrastructure, but it is very wasteful and inefficient. Whatever it is, it is not real organic economic growth: governments only spends money, they do not make money (actually they do in a perverse sense when they print it). "Econophile" is an idiot if he/she thinks this kind of spending is "fake" and "wasteful" and "inefficient". Frankly, this very kind of investment is WHY the USA expanded and other countries remain 3rd world.

The USA has sunk to counting burger flippers as "manufacturing jobs: an burger joints as "manufacturing plants". Indeed, someone is being fraudulent but is it China? :re:

And WHO is "printing money"??? China is MAKING money in the finest American tradition, improved tremendously by the fact much of the capital came from other countries and the products are purchased by other countries. China spends little and gets the cream!

Even more; second part (http://www.zerohedge.com/article/chinas-fragile-economy-its-housing-bubble-and-what-it-means-us-part-ii).Sez: What to do? This is a serious problem because real estate activity was one of the main drivers of China's economy last year when exports dropped off a cliff. But any tightening runs a serious risk, in their eyes, that the economy will crash.Oh, yes, gee, PRIOR to a crash, China is taking serious steps to head off the superbubble BEFORE the crash! What a strange and revolutionary idea for American politicians and bankers!! :tin:

Further, as China does this, their exports are recovering at a fantastic rate to replace the lost speculation and building as they throttle RE market growth all the way DOWN to 10% annually, which means houses and commercial building will CONTINUE at a robust level in most markets!

But poor China remains in immense danger despite massive money reserves, no debt, and robust economic growth! What is going to help China's exports? I don't mean this to be an obvious question, but if, contrary to what many economists predict (but not me), the U.S. and European economies don't recover in H2 2010, then the Chinese are in trouble. Already they have massive unemployment and admittedly poor internal demand for goods. If the housing market is on a bubble, and they are trying to talk it off of the ledge to avoid a crash by tightening money and credit, they are in trouble.Why, despite the [measly] 500 billion China used to soften the low point of their economic slump (actually a slowdown), let's say China decided they were going to COMPLETELY replace the USA demand for their exports? China could do that for 3 or 4 YEARS without borrowing or going in debt ONE CENT! What if China persuaded 200 million of their citizens to spend instead of save 1/4 to 1/2 their income? This would pretty much replace the USA exports.

Most importantly because THIS is the reality: What if the USA continues to buy LOTS of Chinese exports because the USA can't survive without many of these products and technology, and at low prices, too? We jsut don't make alot of this stuff any more, and quite a bit of time and huge capital investment would be needed to reacquire the ability to do so. Until themn China's cash registers continue to ring.

S has it right. It is not 'manufacture or die' for the Chinese economy. It is 'export or die'. They were able to hold out using their reserves to get past the worst part of the recession. Things are improving for the moment. But with the fundamentals of the world economy the way they are, another even worse dip seems inevitable. Few people believe that the Chinese economy is robust enough and has enough depth to survive the next wave. I guess that we will find out soon enough.If this were true, how did the USA survive and grow when its primary market was its own people? China needed the money to build infrastructure-power, roads, trains, ports - to become a manufacturing giant - the West invested paid for it for them. Now they can grow from their own markets too, but their habit of cornering manufacturing markets and literally making new customers means they will have their own people's growing wealth spending AND very good export sales for a long time.

And we are to take comfort from the fact that the tiny island of Japan could not supplant the USA? Japan has NO resources of its own, no room, and little investment. The every opposite of China.

[Ought Six]

http://apac2020.the-diplomat.com/feature/china’s-not-a-superpower/

An interesting article on China's attempt to achieve superpower status.

[Sysiphus]

If this were true, how did the USA survive and grow when its primary market was its own people?

It wasn't, and that is the problem. After WWII, much of Europe and Asia lay in ruins, and there was only one large, developed economy left standing: the U.S. Our manufacturing sector made up for the destroyed manufacturing sectors in those countries for many years. German, for example, still had rationing through the late 1950s. As a result, we were somewhere north of 50% of manufacturing capacity worldwide for quite a number of years. We peaked in the 1960s, and it has been all downhill from there. Japan and Germany supplanted us for a while in the 1970s and 1980s, then China came along in the 1990s and 2000s. But the long term trend and fundamental economics remain the same: growth in demand is not infinite and cannot continue forever, no matter how cheaply you can make things. As interest rates rise in the U.S. and Europe, people will not be able to afford to buy much, particularly high-end items. And, China's manufacturing sector will decline. A manufacturing based economy has to export to survive, and as exports fall so goes the economy.

[Fiddlerdave]

But the long term trend and fundamental economics remain the same: growth in demand is not infinite and cannot continue forever, no matter how cheaply you can make things. Oh, I am certain growth cannot go on forever, as so many in the USA seem to think.

BUT we are talking a tortoise vs a mayfly here going forward as far as when countries will be hitting the wall. China is working hard to be the suppler to the world and doing a good job of it. It will be a very long time before their OWN untapped markets AND the successfully developing world markets reach saturation. In the meantime they will be accumulating wealth, REAL wealth they have earned and can invest for their own growth.

In the meantime, the USA has been IMPORTING and massively increasing debt to do it, yet as our economies fail, to simply survive we NEED to import from China because we simply abandoned the technologies in many areas to them. We have NO ability to STOP spending a bigger and bigger proportion of our smaller income on them, and that is true of many other countries.

How long can we keep sending dollars overseas to them? Not lone, some argue it is measured in months before our own cries require us to roll over and become their dog, but as their warehouses fill with USA money, it gets closer every day at breakneck speed.

I wonder if people realize the USA is one of their smaller export markets? Further, the USA EXPORT figures contain a significant amount of USA imports from China and other countries (like Japan, which could easily contain further imports from China since Japan is a bigger export market for Japan than the USA is!). "MADE IN USA" usually means "Final assembly in USA", most of the parts came from China.

And if anyone thinks I LIKE what is happening, I try to point out this disaster-in-the-making because while people continue to act we don't have a problem, that "things will be OK", that recovery will occur, but in reality it is spelling the end of the country that birthed me and I love, warts and all.

[Sysiphus]

I try to point out this disaster-in-the-making because while people continue to act we don't have a problem, that "things will be OK", that recovery will occur, but in reality it is spelling the end of the country that birthed me and I love, warts and all.

But, that is where we fundamentally disagree. Based on most of what I see on this board, nearly everyone on this board in fact thinks the U.S. has major problems in a variety of area. It's a virtual doomfest on here every day. The difference, however, is that you seem to have rose-colored glasses insofar as China goes. Historically, there is nothing that is different about China than other rapid-growth economies that have flamed out. In general, the faster an economy grows, the faster it falls. That simple fact has been borne out again and again. You, on the other hand, seem to thing that China's centralized, authoritarian government gives them some special sauce that distinguishes China from other countries. However, one thing that centralized, bureaucratic planning is particularly good is misallocating resources to produce gross, often tragic, inefficiencies. The penchant in China for doing so is abundantly clear from empty office building projects, roads to nowhere, and so forth. There is in fact no magic sauce, and the more government sticks its nose in things, the harder the fall will be as a result. This is made worse by the fact that, unlike in democracies which have freedom of speech and other freedoms, no one in China will dare to pull the government off the rocket sled before it is too late. At least we have some hope of that in the U.S., however unlikely it may be. This is just a fundamental difference in how we see the world, so there is no point in arguing further with you about it.

[Sonny]

""Historically, there is nothing that is different about China than other rapid-growth economies that have flamed out. In general, the faster an economy grows, the faster it falls.""

well no, there are many significant differences but you seem to have chosen to assign each of them a value of zero, to all of them.

[Ought Six]

China has exploited its cheap labor very wisely. The problem is, as S points out, their basic system is the worst of all worlds; a centrally-planned bureaucratically-controlled economy rife with among the worst corruption on the planet. No quality control. Cronyism everywhere. A far worse divide between rich and poor than we have in America. Social and political unrest, fueled by heavy-handed government repression. Institutional racism throughout the society and government favoring the Han Chinese and grossly discriminating against other minorities. A growing gender imbalance leading to a shortage of women and a surplus of angry, unemployed young men with no prospects of marriage at all. And so on....

[Fiddlerdave]

A strong centrally planned government is no weakness if they make reasonably good decisions, waste and mistakes occur in China AND the USA. Terrible management from China's government may some day lead to its downfall without the check and balance of democracy, but for the time being any rational comparison of the economic circumstances of the two countries makes it plain who is going to emerge from difficult times on top, even assuming China DOESN'T have ambitions to kick our ass for world economic dominance.

It has been observed China is playing Chess while the USA is playing Tiddlywinks. They are cornering entire world industries and technologies ensuring our utter dependence on them for our needs. With our massive debt to them and our ongoing and ever faster transfer of technology and manufacture of EVERY needed product for our survival into their control, we have delivered ourselves INTO their hands. We must buy from them with our last Dollar.

If 06 is completely correct and China is the most corrupt country on the planet, we have GUARANTEED our economic collapse and their ultimate control of our country,and they are doing it so artfully, we will probably say "please".

[dharma]

A strong centrally planned government is no weakness if they make reasonably good decisions
Cancer is no weakness if it makes you immortal, either. There has never been a cancer that does so, though, just as there has never been a successful centrally planned economy.

China's strength is one billion workers willing to work hard for low wages, willing to save a huge percentage of those wages, and burning with a desire for a better life. That's a pretty big strength, but the success it's engendered is in spite of central planning, not because of it.

Put another way: China was a miserable failure as an economy and as a society under Mao's totalitarian rule. They have had success as they have become a more free market economy, and to the extent they have become a more free market economy. If they ever gain true freedom, their economic transformation will become an explosion.

[Ought Six]

*That* would be the path to superpower status for China; depose the Communist ruling elite, establish democracy, and then voluntarily reunite with Taiwan. I think if there was true democracy on the mainland, Taiwan would be amenable to that. The big challenges then would be cleaning up the environmental disaster they have created for themselves, and corruption, but they would be in a position to address these things.

[Fiddlerdave]

Interesting - Dharma espouses a "free market" as to why China will win. 06 calls for a "true democracy", which are entirely different things. And Iraq's new "true democracy" seems only to be vastly increasing corruption, not reducing it! Mexico is a democracy too, how is their corruption levels! :lol:

As presented, these are both simply dogmatic religious arguments without showing any current (the next two or three decades) reasons why China will do worse and the USA would do better. 06 in particular seems to be fascinated by the corruption in China, but we currently have just received the information that Lehman, before its collapse, was hiding 50 billion, 100 billion or more failed assets from stockholders and the public with the full cooperation of auditors and the SEC. That is one company in one year. Add all the big banks, AIG, numerous small banks, many large corporations (Big Pharma high on that list), TRILLIONS in ALL these areas engaged in regular fraud, government manipulation, lies, ripoffs, and the case that China is any more riddled with high (or low) level corruption than the USA is pretty shaky - you maybe could argue China is a bit more balant about their corruption, but the executives at our financial houses are pretty damm shameless.

In terms of economic success, Dharma has more accuracy, and pinpoints the crucial fact that China indeed has a more than a billion people willing to work hard for low wages. save huge percentage of those wages, and burn with a desire for a better life. He neglects to mention the absence of debt, which is something he and so many others on the Right swear is going to destroy America if not stopped NOW! On that basis alone, China will be the winner with no debt and trillions in cash on hand (of course, we could argue the US Treasury notes they hold are toxic assets worth nothing, but in fact they could get some very nice concessions and resources for those notes, I am sure - offshore oil rightas alone would pay some back!)

The supposition that a centrally controlled economy is BAD is based on the idea that the central controllers will insist on attempting to control everything. If the choice of the central controllers is at least temporarily to allow free enterprise in many areas, the advantages are the same as for free enterprise, except that the central controllers can also immediately impose central planning where that is most advantageous. The USA does the same with military defense, interstate highways, and various transportation and commerce issues, along with civil liberties (federal drug laws, etc.)

Now, ultimately, a centrally-planned (or centrally unplanned- free enterprise allowed) economy will probably get someone in charge who will destroy it, whereas a democracy MAY be able to head off absolute self destruction (the USA almost failed at that last year), but until the central planners pull too many boneheaded moves, that economy has some powerful advantages, including the ability to have plenty of free enterprise and capitalism, the ability to rapidly corner industries and markets with price manipulations and subsidies, and strong ability to enforce their rules.

Hopefully, China's bonehead moves that would be adequate to the task of destroying the economy there, will occur before the USA's free enterprise boneheaded moves (too big too fail enterprises failing is our nearest term danger!) finishes destroying its own. But it is looking grim for the USA in this regard.

[Sysiphus]

Hopefully, China's bonehead moves that would be adequate to the task of destroying the economy there, will occur before the USA's free enterprise boneheaded moves (too big too fail enterprises failing is our nearest term danger!) finishes destroying its own. But it is looking grim for the USA in this regard.

Hopefully not. While I do not like the Chinese government, I have no ill will towards the Chinese people, and hope that their prosperity will be ours and vice versa. I agree with what someone posted above to the effect that China is prospering in spite of its government not because of its government. In that sense, they share much with we Americans. Or at least with us, like, 20 years ago.

[Fiddlerdave]

Hopefully not. While I do not like the Chinese government, I have no ill will towards the Chinese people, and hope that their prosperity will be ours and vice versa. I agree with what someone posted above to the effect that China is prospering in spite of its government not because of its government. In that sense, they share much with we Americans. Or at least with us, like, 20 years ago.I have no ill will towards the Chinese people, and in fact have throughly admired and enjoyed working with them when I have gone there to install a system. It is so exciting teaching people who desperately want to learn!

And indeed, I have no desire to be ruled at home, even indirectly, by the Chinese government. Which is why I warn people about this, but no one even considers the reality, and I have become convinced it is certain they will be running our businesses.

I guess I should start learning Mandarin so I can impress the coming bosses.

[Ought Six]

Fd:"06 calls for a "true democracy", which are entirely different things. And Iraq's new "true democracy" seems only to be vastly increasing corruption, not reducing it! Mexico is a democracy too, how is their corruption levels!"It does not surprise me in the least to see Dave trying to trash democracy. Democracy is a damn messy thing, and it takes time to adapt to. Our first attempt, under the Articles of Confederation, led to institutional religious discrimination in some states, division, economic disaster and a weak, ineffectual, broke fedgov. Do we even need to go into what happened with the French when they first tried it? Should both America and France then abandoned democracy as a 'failure'?

To criticize the Iraqis when they have only been at it for a couple years because it was not an instant success is hypocritical in the extreme, and not exactly any sort of valid or meaningful argument.
----------"As presented, these are both simply dogmatic religious arguments...."As presented, your statement here is utter drivel.
-----------"The supposition that a centrally controlled economy is BAD is based on the idea that the central controllers will insist on attempting to control everything."Dave's favorite tactic; inventing phony arguments for others, telling them 'what they believe', then attacking that fraudulent strawman he has erected. There is no absolute central planning, any more than there is absolute democracy, or absolute communism, or absolute anything else. This is obvious to anyone with a tiny clue about political science. Please do not waste our time with such transparent, silly rhetorical ploys. Instead, take what was actually said and argue *that*, if you can. :re:
-----------".... but until the central planners pull too many boneheaded moves, that economy has some powerful advantages, including the ability to have plenty of free enterprise and capitalism, the ability to rapidly corner industries and markets with price manipulations and subsidies, and strong ability to enforce their rules."Yes, thousands of idle factories, an inability to even keep the power on, and millions of angry laid-off seasonal workers is the fruit of their brilliant planning. There is no question they are good at sleazy tactics like product dumping and selling below cost to destroy competitors. However, the industrialized world is quite tired of this, and if you were paying attention to the news you would realize that there is a strong anti-China protectionist movement afoot that Obama and the Euros are fully on board with. And enforcing their rules.... You are joking, right? They sell us poisoned, dangerous, killer products because there is no meaningful enforcement. It is the freakin' wild west in the Chinese manufacturing sector. They are still killing their own children with melamine-laced milk, because they simply cannot even stop that. Enforcement! That would be a knee-slapper if so many had not been killed by its absence.
----------"Hopefully, China's bonehead moves that would be adequate to the task of destroying the economy there, will occur before the USA's free enterprise boneheaded moves (too big too fail enterprises failing is our nearest term danger!) finishes destroying its own. But it is looking grim for the USA in this regard."Anyone who thinks that any nation is going to be in any real way immune from what is coming is clueless.

[Fiddlerdave]

Yes, thousands of idle factories, an inability to even keep the power on, and millions of angry laid-off seasonal workers is the fruit of their brilliant planning. :lol: Hmmm, so thousands of no longer existent factories, millions of angry laid-off permanent workers (we don;t even bother with tracking the seasonal workers), and people without homes, much less power, is the fruit of our "democracy" and "free enterprise". Your point is....?
There is no question they are good at sleazy tactics like product dumping and selling below cost to destroy competitors. However, the industrialized world is quite tired of this, and if you were paying attention to the news you would realize that there is a strong anti-China protectionist movement afoot that Obama and the Euros are fully on board with. :lol: There is no question the USA is good at selling sleazy worthless financial instruments that , even though stamped with "Grade AAA PRIME Good as Cash approval by our raters and gov agencies, are utterly worthless to rip off our own workers, as well as the banks, governments, pension funds and savers of other countries! Gee sounds alot like melmine, but what do WE say? Let the Buyer Beware?? Oddly tough, the poor suckers in Chn=ina had a real problem because fo their "lack of freedom"! The evil awful centrally-planned government of China banned the banks of China from buying the toxic slime, so their banking system is unaffected and not having to hide trillions in worthless paper! :eek: What a disadvantage! )

And enforcing their rules.... You are joking, right? They sell us poisoned, dangerous, killer products because there is no meaningful enforcement. It is the freakin' wild west in the Chinese manufacturing sector. They are still killing their own children with melamine-laced milk, because they simply cannot even stop that. Enforcement! That would be a knee-slapper if so many had not been killed by its absence.Hmmm, thousands sickened and killed by bad hamburger, bad spinach, bad peppers, bad peanut butter, and the USDA only has the regs allowed by the meat industry so no packers can be blamed?

In any event, it is the Wild West in ANY manufacturing sector, including the USA's, IF THE CUSTOMER BUSINESS DOES NOT CHECK THE PRODUCTS! A company's job is to check and ensure the safety of their products. In China, and the USA, anyone can find an unscrupulous manufacturer to make bad and dangerous products. We won't even discuss places like Ford, who sold knowingly dangerous products on purpose!

Foodborn illnesses from a period BEFORE massive importation from China!
http://en.wikipedia.org/wiki/Foodborne_illness
In the United States, using FoodNet data from 1996-1998, the CDCP estimated there were 76 million foodborne illnesses (26,000 cases for 100,000 inhabitants):[37]
325,000 were hospitalized (111 per 100,000 inhabitants);
5,000 people died (1.7 per 100,000 inhabitants.).
Major pathogens from foodborne illness in the United States cost upwards of US $35 billion in medical costs and lost productivity (1997)

[Torange]

Do a google search on "is china bankrupt." The Chinese seem to be real good at hiding debt. Some people think that their debt is equal to their GDP.

[Sysiphus]

Do a google search on "is china bankrupt." The Chinese seem to be real good at hiding debt. Some people think that their debt is equal to their GDP.

You mean like ours? ;)

[Ought Six]

Fd:"Hmmm, so thousands of no longer existent factories, millions of angry laid-off permanent workers (we don;t even bother with tracking the seasonal workers), and people without homes, much less power, is the fruit of our "democracy" and "free enterprise". Your point is....?"The point is that their central planning is going to very likely lead to a bloody revolution that will lay waste to a lot of the nation. You might study a little Chinese history, and you will then see what I mean.
----------"There is no question the USA is good at selling sleazy worthless financial instruments that , even though stamped with "Grade AAA PRIME Good as Cash approval by our raters and gov agencies, are utterly worthless to rip off our own workers, as well as the banks, governments, pension funds and savers of other countries! Gee sounds alot like melmine, but what do WE say? Let the Buyer Beware?? Oddly tough, the poor suckers in Chn=ina had a real problem because fo their "lack of freedom"! The evil awful centrally-planned government of China banned the banks of China from buying the toxic slime, so their banking system is unaffected and not having to hide trillions in worthless paper! What a disadvantage! )"The Chinese banking system is rotten to the core, and quite ripe for collapse. There are some good articles on this on the other China thread; articles you have studiously ignored, as they tend to not conform to your 'China strong!' myth.
----------"Hmmm, thousands sickened and killed by bad hamburger, bad spinach, bad peppers, bad peanut butter, and the USDA only has the regs allowed by the meat industry so no packers can be blamed?"Seriously, Dave? You are actually going to compare American food and product issues to Chinese ones, and try and pass off the ludicrous idea they are in any way 'the same'? :rofl:
----------"In any event, it is the Wild West in ANY manufacturing sector, including the USA's, IF THE CUSTOMER BUSINESS DOES NOT CHECK THE PRODUCTS!"Yes, when the Chinese, due to their astounding level of corruption, manage to poison our pets and children, it is all our fault. :ohmygod:
----------"Foodborn illnesses from a period BEFORE massive importation from China!'You are not stupid, Dave. You know that food-borne illnesses and poisoned products are entirely different situations, leading to the inescapable conclusion that instead of an actual argument, this is merely another attempt at misdirection; a failed one. :mkay:

[Sysiphus]

Oddly tough, the poor suckers in Chn=ina had a real problem because fo their "lack of freedom"! The evil awful centrally-planned government of China banned the banks of China from buying the toxic slime, so their banking system is unaffected and not having to hide trillions in worthless paper! What a disadvantage! )

Not true FD. A number of Chinese banks are balls deep in the MBSs and CMBSs just like everyone else. There was never a ban or at least it was never enforced. During 2006 and 2007, it seemed they could not by into the debt hedge funds quickly enough.

[dharma]

Dharma espouses a "free market" ... these are both simply dogmatic religious arguments without showing any current (the next two or three decades) reasons why China will do worse
I refer you to a period of time we like to call the 20th century, a period of time which conclusively demonstrated the total and abject failure of central planning. Denying that obvious fact shows that there is indeed religion operating here, and it is as obviously intellectually bankrupt a religion as any a medieval fan of Ptolemaic astronomy ever espoused.

Dharma has more accuracy, and pinpoints the crucial fact that China ... save huge percentage of those wages ... He neglects to mention the absence of debt
Savings = assets - liabilities. High saving implies low debt. This would not seem to me to require mentioning.

The supposition that a centrally controlled economy is BAD is based on the idea that the central controllers will insist on attempting to control everything.
How silly, and how totally wrong. I'll repeat myself: "They have had success as they have become a more free market economy, and to the extent they have become a more free market economy." The more central control, the less efficient the economy; it's not an all or nothing proposition. Dave would like us to believe that it is, because he thinks that he knows precisely how much government meddling is just enough.

This goes along with Dave's endless wailing about how much more dynamic the Chinese economy is than that of the US, even as he espouses a host of things that will weigh the US down even further, from Cap and Trade to socialized health care.

the central controllers can also immediately impose central planning where that is most advantageous.
With the exception of national defense (and perhaps even then), I can think of nothing where central planning by government is advantageous.

that economy has some powerful advantages, including the ability to have plenty of free enterprise and capitalism, the ability to rapidly corner industries and markets with price manipulations and subsidies, and strong ability to enforce their rules.
"Free enterprise and capitalism" are not compatible with "price manipulations and subsidies" and externally imposed "rules", with the exception of laws against fraud, etc.

[Ought Six]

http://online.wsj.com/article/SB10001424052748703580904575131033264294448.html?m od=WSJ_Markets_section_Heard

This is a good article on China's real debt.

[Fiddlerdave]

http://online.wsj.com/article/SB10001424052748703580904575131033264294448.html?m od=WSJ_Markets_section_Heard

This is a good article on China's real debt.I will sign up when I get a chance, but I think the intro tells us what we need to know: The issue is rooted in last year's massive expansion of bank lending. Much of this went to local government-backed investment vehicles, which then funded infrastructure projects across China
Government investment in infrastructure projects will tend to ALWAYS pay off sooner or later, compared to loaning billionaire bankers trillions of dollars to prevent our "free enterprise system from collapsing". Oh, yeah, and ensure their billions or trillions in bonuses and personal profits. Yeah, no "corruption in the USA", oh no, not a bit! :re:

======================================

With the exception of national defense (and perhaps even then), I can think of nothing where central planning by government is advantageous.I find it fascination that our centraol government, wihc according to Dharma can improve NOTHING :re:, had to bail out our biggest and most powerful central financial institutions, barely HOURS before we had a total economic meltdown.

Now MAYBE unmitigated, regulation-free enterprise is the greatest thing since sliced bread, but if it is going to melt down and require trillions in support and it wipes out half our people's meager savings in supposed AAA "Good as Cash" investments when it is heading towards the ground, some would argue it may not be quite perfect and could use some tweaks and a bit of monitoring.

Savings = assets - liabilities. High saving implies low debt. This would not seem to me to require mentioning.I suppose so. :re:

I just thought that those who mention that China can't do any good on its own internal markets yet its citizenry has a vast amount of cash and potential credit which, oddly enough, the USA financial professionals thought credit was a WONDERFUL way for the USA to grow and grow FOREVER! And probably it was a useful tool, within sane limits. We are being insane financially borrowing money, the Chinese are ultimately conservative, and could wantonly blow trillions before they get to where we were decades ago.

Yet, THEY are going to collapse and the USA is recovering to new heights of wealth because our people are FREE and our Free enterprise has worked sooo perfectly. I am so glad! :re:

[Ought Six]

Fd:"I will sign up when I get a chance...."Oops! Sorry, it came up in full for me when I first looked at it, and I am not a subscriber.
----------"Government investment in infrastructure projects will tend to ALWAYS pay off sooner or later...."LOL! So lots of unused airports in the middle of nowhere, empty multilane highways, totally unrented commercial buildings and totally vacant apartment buildings that stand unmaintained and rotting are a great deal for China, or will be at some unspecified future time. This is an interesting flip-flop in position for you, Dave. So may we now assume that you are all in favor of the 'bridge to nowhere' in Alaska as well? Your new standard says it is a great idea after all! So surely you apply your standards equally, fairly and honestly, and thus you now support the Alaska 'bridge to nowhere' white elephant; right, Dave? :D