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China's house of cards tumbling? States battle the Big Boys in Beijing.

Discussion in 'Sports and News' started by printdust, Jul 5, 2011.

  1. printdust

    printdust New Member

    http://news.yahoo.com/china-local-goverment-loans-issue-greater-thought-moodys-021748152.html

    Sure as hell sounds like there's problems that rival ours.
     
  2. The Big Ragu

    The Big Ragu Moderator Staff Member

    Their banks might be at risk, as Moody's is suggesting. But it's nothing the Chinese central bank couldn't clean up relatively easily if there was about to be a rash of defaults that put faith in its banks at risk.

    Moody's is suggesting that China has $900 billion of public debt, instead of $530 billion.

    Contrast that to the $14.3 TRILLION of public debt the U.S. has, and it would be difficult to say that they have problems rivaling ours.

    The Chinese say their public debt is 20 percent of GDP. Moody's puts it at more like 35 percent of GDP.

    Our Federal debt just passed 96 percent of our GDP.
     
  3. LongTimeListener

    LongTimeListener Well-Known Member

    And also, China has a system where the government tells the companies how it's gonna be. We have a system where the companies tell the government how it's gonna be. I think we'd all bet the same way on which system would lead to a more efficient solution for the debt problem.
     
  4. Michael_ Gee

    Michael_ Gee Well-Known Member

    It is always difficult to tell what's what in these stories as China's large institutions, both governmental and non-governmental, treat accounting and statistics as branches of the creative arts and make up numbers as they see fit.
     
  5. Armchair_QB

    Armchair_QB Well-Known Member

    Worked well for the Soviet Union...
     
  6. Hokie_pokie

    Hokie_pokie Well-Known Member

    Yep, and Cuba's kicking butt, too.
     
  7. LongTimeListener

    LongTimeListener Well-Known Member

    There you go. Good comebacks both. Yeah, China's not a growing economic power at all, they are definitely headed for doom. Stick with that ...

    Not saying I would want to live under that system. Just saying that when the government has a problem related to the economy, the government has a smoother path to solving that problem if it's in charge. We have a massive debt crisis and we can't even get companies to pay a dollar of tax on billions and billions of dollars of profit.
     
  8. printdust

    printdust New Member

    Don't forget the thriving western sector of the country..... caviar and the best of wines for all....
     
  9. The Big Ragu

    The Big Ragu Moderator Staff Member

    Our debt problems are public. It has nothing to do with our market economy.

    Our government has spent too much and it hasn't generated enough revenue.

    Your statement: "We can't even get companies to pay a dollar of tax on billions and billions of dollars of profit," is silly and wrong. The U.S. corporate tax rate is 35 percent, easily among the highest in the world.

    As for the thread topic, China may or may not have a local debt problem. Jim Chanos, who is fairly well known short seller, had been sounding this horn for a while, saying that China's local government debt problems are worse than our subprime problem was, and that their banks might be in danger. That could be true. It's just hard to know.

    Along the lines of what Gee said, China has made very strong moves toward a market economy. But in order to function as one efficiently, there needs to be transparency, and investors need information to make informed decisions. And the Chinese can be very opaque and even downright dishonest, still, even if their reporting requirements have gotten much better. So, even though what Moody's issued guidance about isn't something no one had thought about already, it's nice to at least see it doing what a rating agency is supposed to do, for once -- even if it still is following (the lead of people like Chanos) rather than leading.
     
  10. Azrael

    Azrael Active Member

    What did Exxon pay in US Federal taxes last year? -$156 million

    http://money.cnn.com/galleries/2010/news/1004/gallery.top_5_tax_bills/2.html

    Exxon paid the most taxes last year of any U.S. company, by far -- but not a cent went to the IRS for income taxes.
     
  11. LongTimeListener

    LongTimeListener Well-Known Member

    Ragu -- I was thinking of the GE story in the New York Times a few months ago about their tax bill of zero dollars on profits of $14 billion. But Azrael's Exxon link illustrates the point just as well. Those aren't uncommon occurrences.
     
  12. The Big Ragu

    The Big Ragu Moderator Staff Member

    I thought your statement was saying that U.S. companies are evading taxes. I am sorry if I was incorrect.

    In the case of GE, they are a global company, and because our tax rates are higher than 95 percent of the world, they headquarter elsewhere and pay taxes there. It's pretty rational.

    In the case of Exxon, our lawmakers give them subsidies because of the giant game of interest politics that runs our political system. You can buy off politicians. Corporations are not the only entities that do that to their benefit, for what it is worth. And your problem should be with the politicians who trade their influence for that cash like that, as much as, or more, than with the entities that play the game to their advantage.

    What I said remains true: Our government has spent too much and it hasn't generated enough revenue.

    That has nothing to do with our market economy.
     
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