i just posted this to a e-mail roundtable i participate on.
the post i was responding to was this
<<As for the US trying to get the banks to make new loans, I note that Chinese banks are making massive new loans as instructed by the Government. In the short run, this has helped the A share market rally, home and car sales increase, etc. I also note that many companies who were desperate to sell equity stakes to Private Equity firms in December are no longer desperate, and now want to sell stakes at approximately double the valuations they were agreeing to in December as they have been given lifelines of credit from the banks. And with the massive new lending comes a bit of kickbacks, corruption, etc. with at least some of that money flowing into Hong Kong as home sales up significantly, with strong interest from "newly wealthy" Mainlanders who want to shove some of the money offshore as well as the fact that if they "invest" US$1 million or more in Hong Kong, they are eligible for a Hong Kong resident ID card. Mainlanders too want the easier travel that comes with that along with a large number looking to redomicile I suspect in order to reduce their tax burdens.
In sum, Chinese banks are increasing their bad loan portfolios although that will not be evident for some time (years perhaps). And while I think HK real estate has one more big move lower in the next year (still tied at the hip to the global economy), I am becoming increasingly bullish on real estate in Hong Kong, Singapore, and Switzerland on a long term basis of 5+ years as those that are wealthy enough and are willing to relocate will increasingly seek to abandon high-tax locales such as London (50% tax rates) for low tax domiciles such as HK, Singapore & Switzerland. I only hope that prices drop enough in the next 12 months so that I can buy a place here that is nice and something that I can finally afford. I'm guessing the bottom in real estate prices here will be about 25% higher than the lows set in 2003 during SARS....... But this is only a guess..... So I want to be leveraged long HK real estate before the impending inflation re-emerges in a year or two....>>
and i quote my response, more additional thoughts than response,
i agree with what you noted and make a few top-of-mind front-of-eye observations:
- the nature of problems in China and USA are different, and linked by the reserve dollar in the big picture and connected by trade in the small frame
- the once-in-hundred-years systemic reform in china must necessarily go slow, but the results showed up fast due to (i) low base, (ii) magnitude of earlier collapse, as well as because of (iii) out-sized USA aid in the form of trade, not so dissimilar to that offered to Europe and Japan after the war, intentional or not
- China needs to and is shifting focus inward, even as it continues to pick up global manufacturing, if slowing rate from USA, then accelerating against Europe, and based on the cost structures, dire imperatives, and size of actual and potential internal markets for goods up and down the value chain, i would say resistance would be futile even if necessary, until and unless something or someone hits the proverbial wall somewhere
- Europe needs to ensure it has a good life, for as long as possible, until not, either by way of demographic storm or the usual, war, pestilence, famine, or disease
- USA can still choose its course forward, because of demographics and reserve currency and resource status, but if the choice continues to be left with the current lot of wastrels in the congress, media, financial institutions, and acquiesced by the unwashed mob, I hope luck is with them and will be the deciding factor. USA needs a benevolent dictator. Ouch, there, I said it, and I hope the USA media does not champion one, for that is a dangerous experiment with much for-sure downsides and only one possible upside.
- Substantively, the monetary policies and fiscal policies of China and USA are not and cannot be that different, because the need for circulating paper money, regardless of why, is still the need, and the fraud that must accompany such circulation, and increase of such circulation, must be maintained while spun.
- The end result of the fiat money inflation games in China and USA, and so the end-games, may well and should be different, and when revealed on revelation day, may well end the world as we now know it.
- The follow-on issues, and these might only become substantive issues come 10 years from now, are the issues we know of but are not yet dire, and they be:
(i) expectation of babyboomer retirees on all three continents vs purchasing power realities of same; how p*ssed off they would be
(ii) the ease with which groups of financial elite can continue to rob, pilfer, and abscond with without apparent harm
(iii) the fate of allies of the financial elite, they be the politicians and lawyers and other hangers on
(iv) the change in docility of the tax-sheer and tax-cows in all jurisdictions
(v) the end-game against any well-armed and p*ssed populations
etc etc
and, on the issue of sars, bird flu and swine flu
- sars, out of the blue, beyond expectation, with fatality rate high enough to quick-freeze-stop entire societies, had impact as would a meteor on hk, striking dead center
- bird flu, a mere iceberg all was staring at, watching and briefing, and counting mostly dead birds rather than humans, and so, no big deal
- swine flu, has the potential of being a meteor strike, dead center, and simulatneous everywhere, as the chromosome travels hidden within apparently healthy carriers, kept in resting state by onset of warm weather, and then, especially if a genuinely new strain or worse, something interesting, making true debut in winter
the flu cases outside of mexico, at this juncture, may well be not of the same as that striking within mexico, because flu happens ALL THE TIME, and so the kill rate of the outside-of-Mexico flu cases may not be indicative of the real thing
watch n brief on swine flu recommended.
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