<<Mish raises much the same concerns>>
... relax ...
My short comment regarding globaleconomicanalysis.blogspot.com is that Mish is wrong, because his underpinning premise is wrong, so all else follows naturally.
My longer comment is tagged to mish’s missive per below.
<<Problems in China continue to mount. Money supply is growing rampantly out of control, property prices are in a bubble, exports are weak, commodity speculation is pervasive, and GDP growth is more of a mirage than real>>
… <<the songs from the hymn book sounds vaguely familiar, and had been sung for the past 30 years by … let me see … Business Week, New York Times, Economist, Stratfor, Wall Street Journal, Gordon Chang, Maurice MQ, CB Ilaine … and perched where I am, I do not figure this iteration of fretting will work out any different, because the premise is wrong.
The correct premise is that:
China has been undergoing a once in 800 years systemic reform, re-energizing a bottomed-out civilization towards its natural mean, and as the inexorable approach the inevitable, 600-years of pent-up demand must be sated as only a continental economy can do. Do not think Japan. Think America, at least what America was.
The first 20 years of the reform (1982-2002) was powered by cheap labour;
The second 20 years on 10 years rolling basis (1992-2012) was and will be powered by cheap labour and cheap capital, courtesy of dying Japan and giving USA; and
The future, from now on out, will be powered by cheap labour, cheap capital, and cheap intellectual capital, enhanced by correct policies especially as compared to the true wastrelism elsewhere.
It is just as well that the non-believers can no longer fall back on the rubbish that be (i) Western transparency, (ii) American capitalism, (iii) Corrupt asian values, (iv) Unworkable central planning, and funniest of all (v) Democracy of the wanting mob to make their case as the inexorable marches towards the inevitable.
So, one point at a time, here we go.
<<Money Supply Growing Record 29.74%
… What is China doing with all that printing? >>
… what is wrong with cheap capital when you know what is needed and must be done, per plan, in keeping with schedule, in alignment with the force?
The Chinese culture invented at least ink, paper, printing press, paper money and banking, is one of the more mercantile and entrepreneurial lot on this planet, and has seen more dead money than all surviving nation states bar none. The Chinese know, chromosomally, what to do with paper money.
Whether all of the liquidity per quantitative easing is put to immediate good use or not is simply immaterial, and immediate and all correct use is in any case impossible, not even in the centrally planned USA. The only important issue is whether such largess is partially put to good use, and will progressively gravitate towards for productive ends. China is building a new nation, geo transforming the planet within its domain, and surging out in all directions, adding positive energy to an otherwise foolishly American constrained world. China is saving the world, and sure, some waste will occur, so what? Which Chinese family does not want a new and larger apartment or a first car? What is paper money but a schema that forces circulation of wealth for the greater good. As long as the pie is growing, forced circulation is a win-win, by degrees. When the pie is caving in, forced circulation is a lose-lose, of course.
In the context of rapid ad highly distributed growth environment, some waste is just and justifiably unavoidable. A mall here, a city there, but so what, in the context of 1.4 billion thrifty, diligent, entrepreneurial, flexible, and yearning souls.
American voodoo economics, pretending to be science, should have lost all credibility already, and yet some of its illogical premise continues to poison the world’s view.
<<China Plans To Control Property Prices
… Note the insanity. China want to control prices by building more. It already has completely empty shopping centers, condos, and even a completely empty city>>
… what precisely is wrong with the logic that more supplies in the right places will serve to ameliorate price increases so that more folks will have the wherewithal to engage with and partake in the new paradigm economy, that which is part and parcel of an once in 800-years systemic reform?
<<China's Empty City
… That is an amazing video of a completely empty city>>
… gush gush … the apparent phenomenon of empty Ordos has been hashed over by many analysts, all knowing not much beyond vacancy rates. Ordos is a special case, situated in inner Mongolia, sitting on top of a whole lot Message 26100601 and will serve as an technical and administrative base for the jump-off to People’s Democratic Republic of Mongolia where they have hardly enough people, a lot of fooey democracy, more a nomadic grazing ground than a republic, but much coal, plenty of uranium, and a whole lot of gold as well as wealth of rare earth elements.
The geo-political tapestry is missed by the economists, naturally, because they are trained, but hardly educated, and certainly not learned.
If Mongolia borders America, regime change would be for sure, whereas the Chineese are simply bidding for the concessions in line with local business etiquette.
<<China Has Trouble Maintaining Demand Growth
… China, the world’s third-largest economy, faces “increased difficulties” in maintaining growth in domestic consumption, the nation’s top economic planning agency said.>>
… I wish the analysts that mish reads would be more holistic in their view, so that the apparent contradictions they in turn see would chime a few bells of doubt.
We are supposed to believe that (i) China, the nation of 600-years of pent-up demand is having trouble drumming up demand, and otoh, its officialdom, very responsible one at that, finds it (ii) necessary to re-introduce debtor’s jail for credit card offenders comprised of folks who wish to demand.
I suppose non-science / non-engineers, i.e. economists have a harder time dealing with time lags, feedback loops, and such intricacies.
<<Moderately Loose Monetary Policy?!
… Bubble Concerns In ‘Sizzling’ Shanghai>>
… which is it, China having trouble generating demand or China demand so strong that bubbles are everywhere?
The truth, naturally, is in between. Economically there are two China’s. There is a relatively more prosperous urban coastal middle kingdom and a comparatively more wanting rural inland china domain.
The Beijing mandarins, as would any other, have a difficult time crafting one econo-monetary-financial-regulatory regime that works ideally for both China’s, and so must zig, and then zag, to following on fro. A simple read of all the wrong-headed and ill-informed, certainly mistakenly premised econ reports by any American entity on China would show the obvious truth.
<<True Believers
… Instead I side with Andy Xie who states “China’s asset markets are a Ponzi scheme”>>
… Tang and Sung Dynasties were also ponzi schemes, and they lasted awhiles
<<Copper Stockpiles Soar
Chinese Pig Farmers Speculate In Copper>>
… yes, all true, but mish seem singularly unable to ask the follow-on and natural question that can be managed by any 3-years young, that question being “given that the farmer is unable to borrow from banks due to systemic constraints placed by the official, from where does he get the money to speculate on copper … can the ‘rich’ American farmers speculate on a similar scale in copper? … the answer can only be, the farmers who does the speculation are fabulously wealthy from the off-takes of once in 800-years systemic reform, and you see them on the beaches of Waikiki, and meandering the streets of paris.
<<Chinese Banks Learned Nothing From Citirella>>
… I will not waste time again, third time in 10 years on Si to rehash my comments with regard to China banking system, that which is a conduit for simple money transfer, effectively underwritten by the state, now enhanced by ‘public’ listing and so lightening the officialdom burden, and that which is not of the same breed as the system existing in usa, the variety that is a mere convolution to expedite theft via bonusing.
Chinese banks bonuses are counter-balanced by capital crime execution risk – a more equitable system
<<Scylla or Charybdis?
China is in a Scylla or Charybdis scenario. If China continues to inflate it will overheat. If it doesn't, unemployment and unrest will soar, and the economy will implode. Either way, there is no winning solution.
Peak oil and environmental pollution compound China's problem immensely. China is simply on an unsustainable path for many reasons.
Various Chinese asset bubbles are guaranteed to pop, but as I have said many times, the timing of such events is unknown. In this case however, I am more apt to believe sooner, rather than later.>>
… gee, above could have been and were written many times over the past 30 years, and yet, given the wrong premise, has invariably come to naught each and every iteration, as Chinese zigs with astuteness and zags with agility.
China is only sustainable if America does not take its natural place in the new and coming order of planet choreography, and so we should have no worries on what might be, as America make do with less so that more can partake.
As to bubbles guaranteed to pop and systems sure to poo, I can only see one big bubble on this earth, and it is not epi centered in Beijing.
Timing? 7 – 15 years.
All a matter of underpinning premise, and developments are simply and just tracking true.
China will save the world.
Cheers, TJ |
