[threadbear]

Here's something rather interesting, I found on a new forum board called IndexCalls. Really great commentary. It's an international forum, based in Vancouver, BC, so for Canadians interested in getting insight as to how the meltdown may personally effect us, they may be helpful.

http://www.b4dabell.com/forums/index.ph ... =19&st=280


From the Sydney Morning Herald, here's an article quoting various folks as saying:

1. China will make no more than a token renminbi revaluation in the near future.

2. Chinese leadership feels that it can't in near future do anything, including floating the renminbi, that would threaten its export-driven boom. The price of curtailing exports to USA would be collapse.

3. The whole thing is going to collapse in any event:

"[A]t investment bank Morgan Stanley, its China-watching economist Andy Xie also sees an economic machine going at high speed towards a crash, similar to the meltdown that hit Asian economies in 1997.

"'China is an export and investment-driven model and the connection between exports and investment is basically that the state banking system takes the money earned by exports and puts it into investment regardless of returns,' Xie says. 'That model is likely to last until the crisis.'"

4. One reason for Chinese economic fragility: Non-performing loans held by Chinese banks are estimated at 46% - 56% of GDP.

"Full speed ahead to another Asian meltdown" 9 May 2005
http://www.smh.com.au/news/Business/Ful ... click=true

Registration is required for this on-line version of the Syndey Morning Herald, but here's a link to it.

[Leanan]

This is basically the same argument that someone posted earlier, based on a prediction by a Texas think-tank. They were predicting that China would collapse by the end of the year, and oil would fall to $30 a barrel.

Don't count on it. People have been predicting that China will collapse for years. They were supposed to collapse in 2000, I think, because of their weird rural credit union system. Then they were going to collapse because the wealthy, westernized provinces would pull away from the rural, traditional ones. Now it's their supposed bad loans.

They do have a lot of bad debt dating from their Communist days, but my bet is that it won't be a problem. They also have solid growth and a ton of cash (thanks to the trade deficit), so they'll be able to pay their debt.

Another reason they won't suffer an Asian collapse: the very protectionism we rail against. The Asian tigers had trouble because foreigners swooped in when their economies began to boom and bought up everything at a discount rate. China won't have that problem, because of their barriers to foreign investment. They learned from others' mistakes.

[threadbear]

Leanan, China is much more resilient than most think, Leanan, agreed. Their other major strength is having a tradition of being able to change direction, on a dime, if circumstances require it.

[Russian_Cowboy]

$this->bbcode_second_pass_quote('Leanan', 'D')on't count on it. People have been predicting that China will collapse for years. They were supposed to collapse in 2000, I think, because of their weird rural credit union system. Then they were going to collapse because the wealthy, westernized provinces would pull away from the rural, traditional ones. Now it's their supposed bad loans.

[Free]

Yep my bet is too on a crash of China in the near future (1 year), which maybe gives us a bit of time until PO really starts to come home... (2008 maybe)

[smiley]

$this->bbcode_second_pass_quote('', 'C')hina's economic growth will be killed by the high cost of energy BEFORE the same phenomenon kills the economic growth in the western countries. Here is a table how many KWh of energy the world's largest economies need to produce $1 worth of GDP:

[Leanan]

I still say, don't count on China's collapse. China has a few advantages over us. They are physically close to Russia, and Russia still has a lot of oil to spare. I believe they are building a pipeline, or at least talking about it. They have centralized control and fewer environmental laws, which will make it easier for them to adjust. For example, running their factories at night, when energy use is lower, and burning less desirable (dirtier) coal. And they have more money than they know what to do with. It's the result of the trade deficit. We use a lot more than we produce, they produce a lot more than they use. So we have a huge debt, they have a ton of cash. Which they can use to buy oil.

[Russian_Cowboy]

$this->bbcode_second_pass_quote('smiley', '1')) How much of this energy is imported as opposed to generated locally(coal, gas, hydro, wind)? Energy which is generated from local resources only adds to the GDP.

[Russian_Cowboy]

$this->bbcode_second_pass_quote('Leanan', 'I') still say, don't count on China's collapse. China has a few advantages over us. They are physically close to Russia, and Russia still has a lot of oil to spare. I believe they are building a pipeline, or at least talking about it. They have centralized control and fewer environmental laws, which will make it easier for them to adjust. For example, running their factories at night, when energy use is lower, and burning less desirable (dirtier) coal. And they have more money than they know what to do with. It's the result of the trade deficit. We use a lot more than we produce, they produce a lot more than they use. So we have a huge debt, they have a ton of cash. Which they can use to buy oil.

[Leanan]

$this->bbcode_second_pass_quote('', 'A')s far as the American debt owned by China is concerned, I would not worry too much. The bond yields are below inflation, so China effectively pays the US by buying its bonds.

[airstrip1]

Even the Chinese economic miracle is not immune to a contracting market

http://www.reuters.com/audi/newsArticle ... ID=8442693

[smiley]

$this->bbcode_second_pass_quote('', 'M')ost of this energy is exported in the form of goods and services. However, the triple China+Indonesia+Vietnam is a near-monopolist in manufacturing snickers, toys and other often superfluous stuff. For that stuff, the term "export advantage" makes no sense. There is no country in the world for China to have an advantage over. With energy prices high, the demand for other cheap and energy-intensive goods, Chinese and non-Chinese, will sink worldwide. People will not be able to afford them anymore and will have to do without. However, the production of these cheep goods is the specialty of China, so it will be hit hardest

[threadbear]

Smiley, There was the Great Depression, Tulipmania, Hedgefund debacle. This one will be the "The Great Stuffed Toy, Snickersbar, Powerdown" What do you think. Trademark time?

[Leanan]

That Texas think tank predicted we'd be protected from collapse because other countries would pour their money into the U.S. The safe haven from the economic storm. So we wouldn't need the Chinese investments.

I wouldn't count on that. Yes, the dollar did well when the Asian tigers "collapsed." (If you can called dropping from 15% growth to 9% a collapse.) But back then, the euro didn't exist. There's another option now.

[Russian_Cowboy]

$this->bbcode_second_pass_quote('threadbear', 'S')miley, There was the Great Depression, Tulipmania, Hedgefund debacle. This one will be the "The Great Stuffed Toy, Snickersbar, Powerdown" What do you think. Trademark time?

[jaws]

$this->bbcode_second_pass_quote('Leanan', 'T')hat Texas think tank predicted we'd be protected from collapse because other countries would pour their money into the U.S. The safe haven from the economic storm. So we wouldn't need the Chinese investments.

I wouldn't count on that. Yes, the dollar did well when the Asian tigers "collapsed." (If you can called dropping from 15% growth to 9% a collapse.) But back then, the euro didn't exist. There's another option now.