Hi Bert, I read the article and have a few thoughts. Any venom detected would be only due to imagination and even if real, not directed against you:0)
As I noted in an earlier post about my rest in the public trading room of the brokerage office, PRC shares are dropping like a rock. As David had pointed out in his response, the market had been on a rip-roaring zip upward, and is due for a rest or even sharp tumble.
The specific trigger of the current market tumble is understandable … apparent there are about US$ 60 mm floating around out of illegal bank borrowings (obtained via bribes) that was in the market ramping certain shares, the authorities got wise and are now looking for folks to shoot against that proverbial wall, though more literally. The resulting panic sell is thus perfectly understandable:0) The broader population is figuring that the authorities will not tolerate manipulation, thus the big boys will leave the scene of melee, leaving the market indices to flounder. Everybody rushes for the exit on the shot of a gun.
Imaging such discipline applied to Nasdaq; wow, what a day that would be!
So, the reporter drawing the connection between the book and the current stock market tumble is just that, reportage, badly done.
<<On close examination, in short, the shenanigans in the Chinese domestic stock markets dwarf even the most acerbic view by critics of what went on in Wall Street in 1998-2000. At some stage, therefore, the bubble has to crack.>> …
I agree, though this is not what national collapses are made of. As I had noted, 90% of the current crop of small investors (60 million small accounts) will lose money over the course of the coming 10-20 years. Soldiers fighting for progress, to be remembered as fools, but necessary for capitalism’s development.
<<damning feature of the Chinese economy … the banking system>>
I have addressed the banking issue in this post as a glaring example of reporters’ ignorance and laziness.
Message 16172978
and so this is pure, absolute, brain porridge … <<Then at least one possible mechanism for collapse is blindingly clear … state banks …the result will be systemic collapse, final and total.>>
<<Economist and the Financial Times>> … when a writer believes that these two publications are pro-China, well, that puts the writers in the category of folks with a severe agenda problem, because I pick these two, WSJ, NY Times and Washington as some of the most anti-China concepts around:0) I read them though, because I want to understand.
<<Once the actual state of the Chinese banking system and the Chinese economy in general becomes a matter of firm public knowledge outside China>> …
Outside public knowledge of some dark China secrets triggering a collapse? Yup, the banks are in trouble, so what?
<<confidence will collapse, just as it did in Russia>> … the reporter does not understand China, and he apparently also does not understand Russia … <<defaulting Commie basket case took less than a month>> … and that says so very much about the reporter.
<<For one thing, foreign journalists who report adversely on Chinese progress tend to have their
residency papers revoked>> Ancient history and total brain porridge; and besides, I get some of the best information on China dirt from Taiwan and Hong Kong papers even if I can never set foot in China.
<<Imperial trick … plausible statistics that "prove" that China is the fastest growing country in the
world>>. Anybody investing in China, lending to China or trading with China based on government statistics deserve to have every penny of their daughter’s education fund go to money heaven:0)
The stats are crap. Exports are over-stated due to Value-added Tax rebate frauds. Imports are understated due to smuggling. Poor area’s stats are exaggerated to win government transfer payments. Rich area’s stats are under-stated for escaping accusation of allowing over-heating. The sum generally adds up to government announced target, by magic, and the truth, I do not know. I look at restaurant dynamics, construction cranes moving, traffic jams, and such tea leaf reading.
<<4.9 percent per capita -- still impressive but by no means the "fastest growing economy in the world.">>
China now has the most number of working construction cranes (exports a lot too) and tugboats, and this would be pretty astounding achievement based on 4.9% growth.
<<half the pool of $350 billion net investment into China represents "round-trip" investment by Chinese savers>> so. Factories do not like internally generated savings and investments?
<<Since the return on the remainder of the investment is close to zero, this represents another $175 billion of cost free foreign funds transfer to the Chinese economy>> Why do people invest in China? Charity:0?
<<And what of the much vaunted 40 percent Chinese savings rate? With personal income representing around 60 percent of gross domestic product, if the Chinese had saved 40 percent of their income since 1991, and had received a net 5 percent dollar return, their total savings today would be $2.49 trillion, well over 200 percent of GDP. However, the domestic banking system is almost a monopoly; until very recently, there was no significant stock exchange, and foreign banks are not allowed to take deposits from domestic savers. Therefore, the pool of savings in 2001 must comprise total domestic bank deposits of $800 billion (including any "gray" corporate deposits), plus "roundtrip" foreign investment of $175 billion, plus a maximum of say $200 billion in gold and stock market investment, giving a total savings stock of $1.18 trillion, less than half the figure that it would be if the savings rate were 40 percent (it's possible, too that there
were some savings before 1991.)>>
China’s stock market cap is around $600 mm, and a much larger state bond market that finances all them new cities, highways, dams and power stations. The reporter is “out to lunch”.
<<nation of diligent savers thwarted by an oppressive economic system>> …
Many developing countries would love to be oppressed in such a manner, with standard of living improving noticeably from year to year for 20 years.
<<Not whether, or even how, but only when>> …
If the reporter and Prof Chang really believe this, suggest they take out an additional mortgage on their homes, deposit the proceeds in brokerage account and short a bunch of China shares traded on the US exchanges:0)
My guess about the good professor …
apaics.org
… is that he has some kind of inferiority complex, possibly a grudge, and being still an associate professor at his apparent age, looking for the next grant to continue his try at full professorship and so he says what he does to make his living.
Living is hard.
Chugs, Jay |
