Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: GST who wrote (109490)	1/23/2011 6:27:48 AM
From: Arran Yuan	Respond to of 110194

Great assessment that is pretty close to reality.

To: GST who wrote (109490)	1/23/2011 12:38:43 PM
From: russwinter	6 Recommendations Read Replies (3) \| Respond to of 110194

Printing more RMB and endlessly recycling USD has become disastrous for China. It is a completely failed policy that they persisted in for far too long. It is true that they could have made a transaction to create a more solid domestic economy based on real wealth. But instead they've gone with the merchantilist and the bubble speculation model. Now instead of a wealthier man in the street, they have powerful inflation that wipes savings out, destabilized production and serious overcapacity, and a small elite crony class getting the bennies. You mentioned the possibility (but not likelihood) for a soft banking crisis. This sounds a lot like the talk we heard back in 2007 about "subprime only". China's banking issues are systemic and massive. They could try and revalue the Yuan much higher, but at this stage I think that would require intervention: selling foreign currencies. It seems the small token revaluations only fuels higher commodity and input prices. They need shock treatment now. They would need to bring home their reserves any way to recapitalize their banks. They should have tried that along time ago, but now they are in emergency mode. That will be hard to execute with developed countries including the US dependent on Chinese reserve financing. Countries like Portugal sold all their latest bill auction to China. So what China needs to do to save itself will be globally destabilizing. Perhaps they might decide that at least they can knock the US off its tenuous perch in the process? What they are doing now is far worse.

To: GST who wrote (109490)	1/31/2011 1:28:14 PM
From: russwinter	1 Recommendation Read Replies (1) \| Respond to of 110194

The gist of this China Post story is that China’s leadership has no choice but to let money losing industries (typically export oriented) collapse, with the hope of pulling off some razzle dazzle transformation (part of the China myth) to high tech and “value added enterprises”. I would say in reality they have been swamped by events, that are crushing China’s exhausted cheap export dependent economic model. chinapost.com.tw Some recruitment centers in the Pearl River Delta see acute labor shortages when factories resume production in February after the New Year break. “I’m 1,000 percent sure the factories won’t be able to find enough workers,” said Liu Hong, a manager at the Longguan human resources market in Shenzhen, one of the region’s largest. “There will be a shortage of millions,” he said. Some Chinese officials — aware that Beijing’s Communist Party leaders including Premier Wen Jiabao advocate raising rural wages to reduce income inequality and speed China’s transformation into a consumption driven-economy — seem willing to let low-margin industries wither away. “A lot of sweatshop factories will go out of business and more value-added enterprises will eventually take their place,” said Crothall at the China Labour Bulletin. Even though the emptying of the Pearl River is being acknowledged, this story suggests it has impacted the undeveloped interior where supposedly some firms are moving. usa.chinadaily.com.cn HANGZHOU, Jan. 21 (Xinhua) -- Pressed by a persistent labor scarcity coinciding with a currency rise, Chinese manufacturers on razor-thin margins are at the crossroads of survival this Chinese YearNew Year. With the Spring Festival travel season starting Wednesday, migrant workers are rushing home for the holiday, leaving factories in east China’s textile production base, Shaoxing City, Zhejiang Province, mired in gloom. Zhang Hao, vice director of Shaoxing Administrative Bureau of Employment, said, “Every year, we send staff inland to recruit workers, but we’ve had no luck recently and our people are returning empty-handed.” More worryingly for Zhang, inland provincial governments are sending people to Shaoxing and other coastal cities to woo their migrant workers home with higher wages and better conditions. Once thought to be an endless resource, the crowds of migrant workers flowing into the booming coastal provinces have greatly diminished, and the labor shortage is starting to affect the underdeveloped interior. Reuters finally picks up this development: reuters.com “It’ll impose tremendous pressure on the manufacturing sector, especially the labor intensive industries,” said Clement Chen, an honorary president of the Federation of Hong Kong Industries and a veteran industrialist in the region. ”It’s not just Hong Kong firms, but Taiwanese, Korean and Japanese firms will all be facing these pressures,” added Chen who expects payrolls to rise by up to 20 percent.