China’s View of US SubPrime Issues

Don’t quite see the “racism” in the cartoon, though one can see whatever they wish in anything I suppose.

What is important is that we are now (and have been for quite some time) slaves to our masters; China for its money and imports and (in Europe at least) Russia for its oil. These facts should be openly discussed in America, but are not.

The irony is that by the time this recession is over, it will most likely be the Chinese who pull the rest of us drowning souls out of the water.

Things are NEVER what they appear.

All political truth is built from lies as the basis is always monetary gain.

Yes, sir ” . . . irony is that by the time this recession is over, it will most likely be the Chinese who pull the rest of us drowning souls out of the water.” I believe you’ve seen the future.

Um. US Economy? Last I looked recently, 45-50% of Chinese GDP was capital investment (think maybe: real estate and factories … throw in roads and oh yes one very large dam).

And 30% was consumption.

That’s about the most out-of-balance economy in the world.

If you read the news only half-attentively you’ll see that Chinese exporters are screaming (Chinese exporters and/or Western firms who own or buy from Chinese factories). And so the Chinese govt has put the brakes on the yuan’s upward float.

Oh and those massive Chinese (E Asian) dollar reserves. Repatriated profits. Yes, in part. But the larger part works as follows:

Here in the US (one assumes Europe as well) we think of central banks have one of two modes: inflation or growth.

Landscape changes completely in E Asia. Central bank functionaries run to work each morning and buy up dollars as fast as they can. They pay for these with yuan (yen, etc) that they’ve just printed.

This is how they (Japan going back to the 50s) maintain their undervalued currencies without which the E Asia Miracle might have been the E Asian Improvement.

Did anyone else watch the opening ceremonies and think “holy shiat, we are in trouble”?

There is nothing racist about recognizing that China is a nation of 1.3 billion motivated, disciplined and hungry (for success) individuals while we have bocme a nation of affluent slackers.

The Chinese Govt has worked the undervalued currency/export model to perfection and they were smart enough not to get suckered into the USA toxic-mortgage debt game.

While central control will not benefit their economy once it matures, it is very helpful at the moment. If exports slide and job creation is at risk, we will see aggressive interest rate cutting, reserve ratio declines, and domestic consumption incentives.

The USA cannot pull the global economy out this time because of our indebtedness and need to save.

It will be the healthy global economies that were not badly stung by USA toxic debt that will have to lead the way – whether they are aware of this today or not.

This business one hears about the world economy simply returning to the old order of things seems to overlook a few important details.

The older order of things included only Eurasia. The big new factor that missing is the Americas. Where there are now a billion people and 4 $1+ trillion economies (out of what: 13 all told?).

Not to mention a disproportionately very high endowment of fundamental natural resources. Say, fresh water.

I don’t see that there’s an old order to return to.

> healthy global economies that were
> not badly stung by USA toxic debt

Yes. But if global consumption (the US and Europe) implodes. Or even simply withers at the margins, I think your list of countries shrinks to zero.

I lived 6 yrs in Japan (and speak Japanese) – and worked in the finance industry. My wife is Chinese from Malaysia (and I learned some Mandarin).

I don’t see that the E Asia has, as yet, figured out how to transition from export driven economies to standalone. And clearly it’s a difficult issue – no one has every done it before. The Europe and Am economies bootstrapped themselves from tabula rasa (as it were). Oh yes – I’m sorry. They grew as they did by fcking the rest of the world. Except how does something like Newtonian dynamics figure into that equation (heh)? Well they both figure in, except none of that shows a way forward for either the E Asians or any of the other developing nations.

Again, Chinese consumption is 30% of GDP. This is more shocking on the downside than that US consumption is > 70%. Other countries (the usual suspects, such as the UK) are also over 70%. And every advanced, industrialized economy is over 60%. Look it up.

So who’s the outlier? And where’s the demand to come from that keep this list of zero chugging along?

mich, thanks I did notice that on another thread. You guys and gals are remarkable.

Careful not to go off-topic here, but did anyone else catch Ron Insana getting a job as MD at SAC? http://dealbook.blogs.nytimes.com/2008/08/13/from-cnbc-to-sac-with-bumps-along-the-way/

I left a comment criticizing (ridiculing?) Insana’s decoupling / deflation rubbish on CNBC, but I don’t know if the NYT mods will allow it.

Why does it stand out like a sore thumb? Keep in mind that for all its recent growth and advancement, China is still largely a third world country. Most third world countries have no social safety nets. The elderly must either save enough for retirement or live with their children.