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Asian Economic Engine Stalls Out

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Asian Economic Engine Stalls Out

Unread postby ReverseEngineer » Thu 22 Jan 2009, 03:45:10

Kiss off any ideas the Asians are going to dig us out of this mess with vast reserves of capital.

$this->bbcode_second_pass_quote('', '*') Japanese exports plunge record 35 percent in December

* China's economy slows sharply in Q4

* Sony to cut more than 2,000 jobs - report

* Yen climbs near 13-½ year high vs dollar


Reuters

The collapse of the consumer economy in the First World nations that bought the cars and TVs is rapidly taking down the production economies of Asia. Although these are the "creditor" nations to the world, their positive balance sheet is totally dependent on exports, which have fallen off a cliff over the last few months. As noted here in threads on shipping and trade, virtually nothing is moving off the docks and inventories are swelling past the ability to store all the stuff.

There really is nothing to do but shutter the doors on the factories, which of course is putting millions of Chinese and Japanese and Korean factory workers out of work. While our unemployment porblems here are clearly bad, countries dependent on their exports from factories are just getting KILLED here.

The Chinese are talking about redirecting their economy internally, however about nobody has suggested a workable plan by which this might be accomplished anytime too soon. Meanwhile, the political situation becomes increasingly more unstable, and the likelihood the Chinese Goobermint can maintain enough control to keep even a local economy running becomes increasingly smaller each day.

Meanwhile, back there on the Consumer side of the equation, the Pound Sterling is just taking a major beating here, and the Brits are pretty much sunk under in a world of debt. Even one of our Best Choice Doomstead Nations, New Zealand is on the brink of Bankruptcy and its getting pretty clear that the international system of trade and finance won't recover anytime too soon. At this point, its become each Nation for itself, and certainly for economies like Britain or Japan or China its far beyond the capacity of the IMF to provide Bailout Loans.

So, my question to the group economic pundits is this: When does the de-coupling start? In order for any individual country to attempt to make sense of their economic system, they have to pull off the general grid here which is unbalanced and pulling everyone down together. Within your country, decoupling is good because you can set your money supply to match whatever your resources are and continue some kind of trade within your country. Its bad for you internationally because you can't use your currency to buy Oil. The only way you might get oil if you have none within the borders of your country is to Barter for it or Steal it.

It would be my guess that the Chinese will be the first ones to bite the bullet and pull off the grid. At some point here they just won't buy debt from the US, and then we have to go off the grid also. With no production and no exports, the positive balance of trade the Chinese have had that supports their economy is gone. Whatever savings they have will be quickly burned up just meeting the day to day bills, its like losing your job and having money in the bank, but your daily costs of maintaining your house drain the savings in just a few weeks or months, depending just how thrifty you were. I cannot see the Chinese surplus remaining high much longer, certainly not high enough to keep loaning money to the US.

I think the next two months is going to see great destabilization of the Asian Goobermints. All over the world, I think you are going to see a wave of Nationalizations of Industries and Banks as each country tries to consolidate and keep their own internal system running to some degree. The G7 is getting together to deal with the Brit problem of the Pound, and the Asian countries no doubt will get together to deal with their export problems. I am betting on a Bretton Woods style conference of all nations sometime in the next year, possibly by the Summer. The edifice they are using now is just toast, and something new has to be put in place. How they will resolve this is anybody's guess, but it will no doubt be quite entertaining.

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Re: Asian Economic Engine Stalls Out

Unread postby ohanian » Thu 22 Jan 2009, 05:22:46

There is one thing I do not understand.

Maybe you can explain it to me.

Japan buy stuff from China. China buy stuff from Japan.

Why don't Japan and China get together and agree with this plan.

Japan prints a fix amount of yen and give it to any Japanese citizen on the condition they buy Chinese goods.

China prints a fix amount of yuan and give it to any Chinese citizen on the condition they buy Japanese goods.

If the amount in yen EQUALS the amount in yuan then everything balances out and both country benefits in terms of jobs for the people.
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Re: Asian Economic Engine Stalls Out

Unread postby ReverseEngineer » Thu 22 Jan 2009, 06:11:48

$this->bbcode_second_pass_quote('ohanian', 'T')here is one thing I do not understand.

Maybe you can explain it to me.

Japan buy stuff from China. China buy stuff from Japan.

Why don't Japan and China get together and agree with this plan.

Japan prints a fix amount of yen and give it to any Japanese citizen on the condition they buy Chinese goods.

China prints a fix amount of yuan and give it to any Chinese citizen on the condition they buy Japanese goods.

If the amount in yen EQUALS the amount in yuan then everything balances out and both country benefits in terms of jobs for the people.


The problems would be first off that there is really nothing the Japanese produce the Chinese don't, and vica-versa. Chinese don't really need to buy anything from the Japanese, Japanese don't really need to buy anything from Chinese.

Second problem would be neither the Chinese or Japanese have their own supply of Oil to use for energy to produce goods to sell to each other. Both industrial economies are SOL unless they can buy oil, which they cannot unless somebody else is buying the goods they produce with oil.

The Chinese would like to make their OWN population the consumers of their own production, problem here being that to make a profit the Chinese barely pay a subsistence wage, so they can't afford to buy what Chinese Factories they work in produce.

The stuff they produce isn't really what anyone needs, and now nobody is buying it because they don't have excess money to spend on stuff they don't really need. So ow they are stuck with millions of unemloyed workers and have to figure out how to put food in their bellies, elsewise those populations will go ballistic. They are in a WORLD of SHTI.

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Re: Asian Economic Engine Stalls Out

Unread postby Southpaw » Thu 22 Jan 2009, 10:48:43

if all the countries are going down the drain. I really wonder who will rise after all this mess is over? I doubt China will keep taking orders from the U.S.A. after all the mistakes they have made.

What do you think Reverse Engineer?What will happen after the recession/depression ends? do you think that U.S.A. and to a lesser extent the E.U. will still be the dominant force in the world?
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Re: Asian Economic Engine Stalls Out

Unread postby s0cks » Thu 22 Jan 2009, 17:01:40

"Best Choice Doomstead Nations, New Zealand"

Looks like that title will be put to the test, and ironically, not by peak oil.
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Re: Asian Economic Engine Stalls Out

Unread postby bratticus » Thu 22 Jan 2009, 17:13:39

$this->bbcode_second_pass_quote('ReverseEngineer', 'T')he Chinese are talking about redirecting their economy internally, however about nobody has suggested a workable plan by which this might be accomplished anytime too soon.


Have they tried inventing unions? lulz.
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Re: Asian Economic Engine Stalls Out

Unread postby eXpat » Thu 22 Jan 2009, 17:33:56

$this->bbcode_second_pass_quote('Southpaw', 'i')f all the countries are going down the drain. I really wonder who will rise after all this mess is over? I doubt China will keep taking orders from the U.S.A. after all the mistakes they have made.

What do you think Reverse Engineer?What will happen after the recession/depression ends? do you think that U.S.A. and to a lesser extent the E.U. will still be the dominant force in the world?


Haa, but who says anyone will rise? :twisted:
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Re: Asian Economic Engine Stalls Out

Unread postby lawnchair » Thu 22 Jan 2009, 21:30:34

$this->bbcode_second_pass_quote('Southpaw', 'i')f all the countries are going down the drain. I really wonder who will rise after all this mess is over? I doubt China will keep taking orders from the U.S.A. after all the mistakes they have made.

What do you think Reverse Engineer?What will happen after the recession/depression ends? do you think that U.S.A. and to a lesser extent the E.U. will still be the dominant force in the world?


In a crashing end-of-trade, debts-defaulted scenario, everyone's pretty overshot. The US, though, has enough energy resources that in a serious run to using what we have (nukes, hydro, coal to liquids if not old-time coal-fired steam engines, natural gas directed to fertilizer first, and better land management practice as we go), we could feed ourselves in a total autarky. Even keep the lights on much of the time. Canada would do even better, in most regards (possibly they'd do even better together). Happy motoring? No. Sorry. You're not getting that one way or the other. Nobody is getting that. Enough bread and circuses to keep the people from revolt. Just maybe. Maybe not. It'd be tense. In China and India, though? If the dollar defaults? And millions of man-hours amount to nothing but pollution and rusting plastic pumpkin molds? Far less pleasant outcomes.
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Re: Asian Economic Engine Stalls Out

Unread postby Southpaw » Thu 22 Jan 2009, 22:24:25

$this->bbcode_second_pass_quote('eXpat', '')$this->bbcode_second_pass_quote('Southpaw', 'i')f all the countries are going down the drain. I really wonder who will rise after all this mess is over? I doubt China will keep taking orders from the U.S.A. after all the mistakes they have made.

What do you think Reverse Engineer?What will happen after the recession/depression ends? do you think that U.S.A. and to a lesser extent the E.U. will still be the dominant force in the world?


Haa, but who says anyone will rise? :twisted:


Yeah I'm starting to doubt that anyone will rise again any time soon also.
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Re: Asian Economic Engine Stalls Out

Unread postby ReverseEngineer » Fri 23 Jan 2009, 03:25:11

$this->bbcode_second_pass_quote('Southpaw', 'i')f all the countries are going down the drain. I really wonder who will rise after all this mess is over? I doubt China will keep taking orders from the U.S.A. after all the mistakes they have made.

What do you think Reverse Engineer?What will happen after the recession/depression ends? do you think that U.S.A. and to a lesser extent the E.U. will still be the dominant force in the world?


Well first off, as anyone who reads my stuff regularly knows, I don't label what we are experiencing either a recession or a depression, I label it as a monetary sytem collapse. Even in depressions although there is a vast shrinkage in the money supply as asset values are rendered worthless, the underlying principles of the monetary system still hold up. In other words, in the Great Depression, you still were able to reboot the economy through a confiscation of Gold, the general impoverishment of most members of society and the consolidation of wealth into the hands of the few. Then the process of lending and leveraging capital began over again.

I don't see this as possible again in the near term, the idea that Gold is Money doesn't work with such a small supply of gold relative to the large number of people on earth at the moment. After a significant die off it might work again, but even then I doubt it. Booting up a new Fiat system is even less likely to play well in the near term, since that demands a level of trust that has been violated so badly its hard to imagine how anyone would trust a bank again for a couple of decades at least.

Trying to figure out who will come out on top of the rubble pile after all is said and done here is quite a bit like trying to predict who would come out on top after the Fall of the Roman Empire, it took a few hundred years of the Dark Ages for Feudal societies to emerge, then another 1000 years or so of wars between those societies for hegemony over territory before you had the final emergence of a Banking Oligarchy which consolidated power on a worldwide level through control of the money supply. Much like the Roman Senate, this particular Oligarchy is in its death throes now, as the money disappears so also the power disappears with it and without this central force holding the societies together, you are bound to see a dissolution into varying levels of anarchy in all societies. A new Dark Age if you will.

I'm of the opinion these days the spin down is going to take a fair amount of time, and will be punctuated by some attempts to restore organizational hold after a balkanization of the nation states, which probably will take a good decade to work through by itself. You'll see wars betwen neighboring states in places where the nation states are geographically small, and civil wars in the nation states that are geographically large. The biggest weapon in both types of wars will be very old fashioned, starvation. Nations that depend on food imports right now are the least likely to fair well through this period. Nations that currently run industrialized food production like the US will through theft or extortion try to keep enough oil flowing their way to keep producing enough food, and the implicit war for oil we see now will become a good deal more explicit. Although we have a force in Iraq trying to hold that Oil and continue to support the Israelis as a Beachhead from which to operate in the Meditarranean, the real prize here we are protecting is the House of Saud. As long as the US can keep the Saudis supplied with food, the Saudis will supply the US with Oil.

The Ruskies have their own Oil supply, and they have good ag land to be tapped in Ukraine, and they will likely consolidate around that. However, their own internal battles will be quite intense to keep that system working. The Chinese are the other Big Player, and one has to figure they will hook up with the Iranians at some point in a Food for Oil Barter system, but to do that the Cinese will have to take a big hit on their current population first. China likely will undergo a serious balkanization and massive Civil War, I would not be at all surprised to see the Chinese population cut in half in a decade through War, Famine, Pestilence and Death as the Four Horsemen of the Apocalypse run herd on that society. However, they are big enough and have an industrial apparatus to run a war machine and plenty of bodies to provide as Cannon Fodder, so anybody on the same land mass as the Chinese has to be plenty worried when they start mobilizing for war, and they almost certainly will.

Far as I can see in the near term, the US seems the best positioned with good ag land, some oil of its own, and at least for so long as it lasts the best military hardware. Once a real shooting war starts though, I think most of the good hardware goes down in a couple of years, and its for the most part irreplaceable stuff. Once its gone, maintaining the food for oil barter with the Saudis won't be possible, and so how well we transition off industrialized ag to more human-animal permaculture based methods would be the determining factor toward what size population we could maintain in the aftermath. I'd bet on a decrease in population size here from the current 350M or so down to perhaps 100M in 50 years, but that is just a WAG.

Anyhow, once the largest portion of population all over the world is pushing up daisies, some forms of social organization will reemerge on a smaller scale. It will be a long time if ever one country is ever "on top" again, its more a question of who will be left who can learn to live together in a world of limited resources. None of us will be around to see it from this plane of existence, but if you believe in an afterlife as I do, you might see it from the Great Beyond.

See you on the Other Side.

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Re: Asian Economic Engine Stalls Out

Unread postby yeahbut » Fri 23 Jan 2009, 04:59:24

$this->bbcode_second_pass_quote('ReverseEngineer', 'A')nyhow, once the largest portion of population all over the world is pushing up daisies, some forms of social organization will reemerge on a smaller scale. It will be a long time if ever one country is ever "on top" again, its more a question of who will be left who can learn to live together in a world of limited resources. None of us will be around to see it from this plane of existence, but if you believe in an afterlife as I do, you might see it from the Great Beyond.

See you on the Other Side.

Reverse Engineer


Good holiday was it? :-D :-D
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Re: Asian Economic Engine Stalls Out

Unread postby ReverseEngineer » Fri 23 Jan 2009, 05:43:49

$this->bbcode_second_pass_quote('yeahbut', '')$this->bbcode_second_pass_quote('ReverseEngineer', 'A')nyhow, once the largest portion of population all over the world is pushing up daisies, some forms of social organization will reemerge on a smaller scale. It will be a long time if ever one country is ever "on top" again, its more a question of who will be left who can learn to live together in a world of limited resources. None of us will be around to see it from this plane of existence, but if you believe in an afterlife as I do, you might see it from the Great Beyond.

See you on the Other Side.

Reverse Engineer


Good holiday was it? :-D :-D


The BEST! I came back from Hawaii with a much more Upbeat spin, don't you think? ;-) I'm actually of the opinion now that I might be able to take another trip to Hawaii next year and bring even more kids along for the ride :-) Long term prognosis is not good, but I think the military and the slope will hold up for another year as drivers for our local economy. Every day is a blessing though, and regardless of how it plays out I'm at peace with my choices and what I do in this world. I love my job, and I love writing and I can do both for right now. It won't go forever, but for right now I am a very lucky man indeed.

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Re: Asian Economic Engine Stalls Out

Unread postby bratticus » Sat 14 Feb 2009, 13:55:39

http://www.youtube.com/watch?v=sznf43meyhs

Bloomberg video which quotes someone as saying China's electricity consumption indicates a mere 2% growth.

Chances are the real economic conditions are being hidden.

$this->bbcode_second_pass_quote('', '1'):49 "and experts at New York-based hedge fund Balestra Capital are even more pessimistic. They say that declining electricity output indicates [that] growth could slow to 2%"
Last edited by bratticus on Sat 14 Feb 2009, 14:07:09, edited 1 time in total.
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Re: Asian Economic Engine Stalls Out

Unread postby Quinny » Sat 14 Feb 2009, 14:07:09

Growth :)
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Re: Asian Economic Engine Stalls Out

Unread postby bratticus » Sat 14 Feb 2009, 14:12:59

$this->bbcode_second_pass_quote('', '[')b]China’s GDP Growth Slowed to 6.8% in Fourth Quarter

By Kevin Hamlin and Li Yanping
Bloomberg
January 22, 2009

... skip ...

“China is in a recession regardless of what the highly massaged official numbers claim,” Nouriel Roubini, a professor at New York University, wrote today on his Web site http://www.rgemonitor.com. He said China’s year-on-year growth figures are “highly misleading” because they fail to capture a sharp slowdown in output last quarter. Declines in electricity output and manufacturing suggest an overall contraction, he wrote.

... snip ...
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Re: Asian Economic Engine Stalls Out

Unread postby bratticus » Sat 14 Feb 2009, 14:28:01

Massive unemployment and growing social unrest in China

http://www.youtube.com/watch?v=5NoHV2yDYD0
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Re: Asian Economic Engine Stalls Out

Unread postby shortonoil » Sat 14 Feb 2009, 18:48:35

bratticus said:

$this->bbcode_second_pass_quote('', 'B')loomberg video which quotes someone as saying China's electricity consumption indicates a mere 2% growth.


Bloomberg printed recently that China’s exports declined by 17% in January. Last year China grow by 9.5%. Unless compensated for by an increase in internal demand (which seems unlikely for a country that has just lost 20 million jobs and shut down 100,000 factories) China’s economy is now contracting by 7.5% per year.

Reiterating: North American and Europe are heading for an economic situation that will make the Great Depression look like a Quaker Picnic. Asia, which has pursued the greatest misallocation of resources in history - will starve!


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Re: Asian Economic Engine Stalls Out

Unread postby turner » Sat 14 Feb 2009, 21:50:29

The front page of the paper in HK yesterday reports massive numbers of empty ship containers. They are running out of space for them and are proposing to relocate them to the old airport site. Obviously they're not expecting to use them any time soon!
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Re: Asian Economic Engine Stalls Out

Unread postby bratticus » Sun 15 Feb 2009, 21:21:37

Holy Cow!

This was November 2008 data

Image

Wonder what it looks like now.
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Re: Asian Economic Engine Stalls Out

Unread postby bratticus » Sun 15 Feb 2009, 21:31:08

found Dec 2008
Image
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