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Just as I do not dismiss warnings about banks, except pointing out that fussing about China banks is akin to fretting over the water utility, as in 'not applicable' in a meritocratic society that aims for common-prosperity for the greater-good
Kyle might finally be getting it at least by the headline even if wrong in content per CNBC's Q&A ...
Kyle misunderstands the context ...
As far as babies go, I wager that the Chinese, unlike the self-gender-selecting-ing going on elsewhere, and perhaps especially in places like Brazil, have not forgotten how to make babies. Incentivise per capitalising given time, just like the so-called 'ghost cities' non-problem, shall work out. China will not run out of babies, or out of babies of the 'right' skin pigmentation :0)
Bass, one of the most vocal China hawks on Wall Street, has said it's important to understand what, exactly, President Xi is looking for. According to Bass, China is "experiencing similar problems that we are in the US" when it comes to housing prices.
Xi has been managing a broad-based crackdown on the Chinese economy all summer. Now, it's time to confront the issue
Now, China is entering this period of weakness with over $50 trillion worth of credit in their system, with their annual GDP at around $15 trillion.
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Compared with China, the US had GDP of $17 trillion with another $12 trillion off-balance-sheet when Lehman collapsed. China is at 3.6x ahead of its "Lehman moment", while the US was only about 1.7x.
What's more, China is still a relative newcomer to the capital markets business, Bass said. China adopted a western-style financial system in 2001 after they joined the WTO.
There are now 1.3 births per woman in China and you need to be at 2.1 to actually just sustain your population, Bass said. So for many working-age Chinese males, population dynamics are at a critical level and the reason being is the Chinese men can't afford houses so they're all living with their parents and the fact that Evergrande went on a credit binge and built all of the housing and Chinese property took off because their central bank continued to print so much money. Now, it's trying to rein in property prices and he's trying to do it as quickly as possible because China's on an unsustainable path lower.
"Right now," Bass says, everyone who believes China's going to grow at 6% a year ad infinitum "is just dead wrong," but if we just divorce ourselves from any value judgments about China and think about the the future of the plan of the globe - if we always think about the Chinese consumer and we all at one point wanted to move forward in a symbiotic way where we sell things to China, and their consumers buy things from us.
It's nice to think about, but this unfortunately just isn't how China works. Investors must realize that they're not investing "in a real market."
Bass added: "You still have an economy with a closed capital account they have one-way capital flows dollars in. Now, imagine if dollars start heading out."
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