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How China fooled the world

Infinite Chaos

Infinite Chaos

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Peston reveals what has actually happened inside China since the economic collapse in the west in 2008. It is a story of spending and investment on a scale never seen before in human history - 30 new airports, 26,000 miles of motorways and a new skyscraper every five days have been built in China in the last five years. But, in a situation eerily reminiscent of what has happened in the west, the vast majority of it has been built on credit. This has now left the Chinese economy with huge debts and questions over whether much of the money can ever be paid back.
Link On BBC tonight..
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The credit crunch to beat all credit crunches may be around the corner for China. They have financed the same amount in $trillions for building and investment in 5 years that took US banks a century to build up.

You just have to think the checks on bad customers for that vast amount of money has not been carried out with all due regard.
 
Infinite Chaos said:
The credit crunch to beat all credit crunches may be around the corner for China. They have financed the same amount in $trillions for building and investment in 5 years that took US banks a century to build up.

You just have to think the checks on bad customers for that vast amount of money has not been carried out with all due regard.
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The Chinese have been managing the World's largest population base for thousands of years. Perhaps they learned something doing that. I also believe they took a good look at the Western World's "fiat currencies" before deciding to play the game. The Chinese suffer a huge surplus and hold trillions of dollars of foreign assets and I think they will leverage those assets to maximum financial advantage. It is the Western World, especially the USA, that is mired in nearly unmanageable debt.
 
The difference is China has something to show for its debt. The USA has rapidly eroding infrastructure it didn't even maintain nor now can afford to repair. The USA used to undertake huge infrastructure and development projects. Not anymore. Between the massive and multiple levels of government, military, social programs, social security, medicare/Medicaid and servicing the debt there is far less than zero left to advance anything. Rather, the only hope is to manage the decline to minimize suffering, while still telling ourselves we are king of the hill.
 
DaveFagan said:
The Chinese have been managing the World's largest population base for thousands of years. Perhaps they learned something doing that. I also believe they took a good look at the Western World's "fiat currencies" before deciding to play the game. The Chinese suffer a huge surplus and hold trillions of dollars of foreign assets and I think they will leverage those assets to maximum financial advantage. It is the Western World, especially the USA, that is mired in nearly unmanageable debt.
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Well observed and shared. They have been around a long time. As one Chinese engineer and friend of mine stated to me over some drinks recently here in Stockholm, and which I feel rings true..."the people here were living in caves when we had cities, we wrote on paper, and they on stone, and they hunted for their food, when we grew ours and sold them in markets 2000 years ago. Why would anyone truly believe we are going to make the mistakes they are making in the west now without having learned all to well what is happening to you.

We need to realize the Chinese just want what most people want, and that is to have a good life. They are not going to implode so easily as we would wish it, nor are they going to be the aggressor that we as Americans have proven all to often in the world to be since the founding of our country.

Everything is going to be just fine, if we wish for it to be.
 
DaveFagan said:
The Chinese have been managing the World's largest population base for thousands of years. Perhaps they learned something doing that. I also believe they took a good look at the Western World's "fiat currencies" before deciding to play the game. The Chinese suffer a huge surplus and hold trillions of dollars of foreign assets and I think they will leverage those assets to maximum financial advantage. It is the Western World, especially the USA, that is mired in nearly unmanageable debt.
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Even with an ancient culture and history - the sheer amount of credit debt they created since 2008 is astronomical. Nobody has tried to survive a crunch in that kind of credit-debt before.
 
Infinite Chaos said:
Even with an ancient culture and history - the sheer amount of credit debt they created since 2008 is astronomical. Nobody has tried to survive a crunch in that kind of credit-debt before.
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Worked for Japan. Also why to we insist on action as thought the debt and the credit crunch are directly related and not two distinct issues. It was private debt that caused the crisis
 
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joko104 said:
The difference is China has something to show for its debt.
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 The USA has rapidly eroding infrastructure it didn't even maintain nor now can afford to repair. The USA used to undertake huge infrastructure and development projects. Not anymore. Between the massive and multiple levels of government, military, social programs, social security, medicare/Medicaid and servicing the debt there is far less than zero left to advance anything. Rather, the only hope is to manage the decline to minimize suffering, while still telling ourselves we are king of the hill.
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And the USA has a huge military that is throwing away money that the USA doesn't have.
 
Red_Dave said:
Worked for Japan. Also why to we insist on action as thought the debt and the credit crunch are directly related and not two distinct issues. It was private debt that caused the crisis
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If you watched the programme it discussed China's debt which is now twice China's GDP, the debt is owned privately in China as they run a pretty closed financial system.

There are also a number of companies bringing production back from China as their wage rises have stopped them being as competitive as they once were. On top of this, the average Chinese citizen saves 1/3rd of their salary and does not like to spend so they are not going to spend their way out of the forthcoming crisis.
 
China has cooked the books anyway. Their currency adjustment process is one big black box. I don't think they really care what happens because at the end of the day they have physical assets and we have nothing. Their fiat has built up their entire country from a rural backwater to a modern nation in 20 years, while ours is being used merely to maintain a stagnating polity.

In a nutshell, China is still benefiting from the old growth model because for them it's new and they have a lot of ground to cover. The USA and to a large extent the west is tapping out the old model. We'll be onto whatever's next while China is still living in 1960's consumer capitalism, looking up to Audrey Hepburn and Elvis Presley. (Seriously, they are on billboards everywhere there.) On the other hand, it's no secret that it'll be impossible for those 1.4 billion people to all rise to the middle class.

To be fair though, we would still be experiencing good growth if the globalists hadn't sold out our economy to Asian sweatshops, which our government was all too willing to let them do.
 
Northern Light said:
China has cooked the books anyway. Their currency adjustment process is one big black box. I don't think they really care what happens because at the end of the day they have physical assets and we have nothing. Their fiat has built up their entire country from a rural backwater to a modern nation in 20 years, while ours is being used merely to maintain a stagnating polity.

In a nutshell, China is still benefiting from the old growth model because for them it's new and they have a lot of ground to cover. The USA and to a large extent the west is tapping out the old model. We'll be onto whatever's next while China is still living in 1960's consumer capitalism, looking up to Audrey Hepburn and Elvis Presley. (Seriously, they are on billboards everywhere there.) On the other hand, it's no secret that it'll be impossible for those 1.4 billion people to all rise to the middle class.

To be fair though, we would still be experiencing good growth if the globalists hadn't sold out our economy to Asian sweatshops, which our government was all too willing to let them do.
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The programme covered the opacity of the Chinese bookkeeping, but even that has been overtaken by "informal" intra-Chinese borrowing/lending which they know exists but can only guess at the vast amounts involved.
 
Infinite Chaos said:
China Property Collapse Has Begun - Forbes

With thanks to Demon of Light for the link - maybe this will return the thread to a discussion of China and not America or American debt. :roll:
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So China cannot pay off their debts, they hold debts for the US who also cannot pay off their own debts. Debts, built on debts, built on debts eventually collapses. I know, let's kick the can down the road some more and ignore the problem!
smiley4474.gif
 
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