Hello KyrosL, <<Chinese companies are losing billions and are able to stay in business through abundant state subsidies disguised as loans ... This is not going to end well>>
Do not worry too much. A few points and counter-points:
(a) the proportion of state vs non-state to the aggregate economy has been steadily dropping, and is now well within parameters that can only be described as "more robust" than before, and all of before;
(b) whatever Chinese state subsidies (towards securing employment for Wang3Cups) disguised as business loans, in substance, in some sense, can be compared to the subsidies in the US by the Fed and the Fiscal authorities and GSEs to J6P, disguised as refinancings;
In either case, should the end be the end, the bagholders are still W3C and J6P. A detail, of course, is that J6P is also subsidizing W3C and W3C is also helping out J6P.
It is a good thing, according to Maurice, that the Chinese had invented paper money, and America gave birth to Greensputin.
The convolutions between the US and China is of a completely different nature than that between the US and the USSR of old.
In some sense, S2B (Sake2Bottles) is financing W3C and J6P.
How it will all end up, we can guess, and I have a vivid imagination. The various D words come easily to mind: Default, Dissipation, Dissolution, Deflation, Depression.
Also other words, such as Inflation, Confiscation, Redistribution, Stagflation, etc.
All straight ahead.
For the case of China, the end, at least by the looks of now, is that the standard of living in China is mathmatically improving, and a lot of infrastructure is becoming IS, and hopefully they can switch to becoming their own customers before their traditional customers go BK and defaults.
For the case of the US, a lot of folks are able to afford the Lexus SUV and a vacation home, for now, until the financing dries up.
For the case of Japan, they seem to be doing OK, buying China grown veggies, and drinking American made Starbucks, earning zeroDotnought Interest rate, have their bank accounts looted, but able to carry on until the savings run out.
Chugs, Jay |
