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Global economic meltdown, Part Deux: China?

Discussion in 'Sports and News' started by 2muchcoffeeman, Nov 10, 2009.

  1. 2muchcoffeeman

    2muchcoffeeman Active Member

    A very interesting article popped up on Politico today:<blockquote>The conventional wisdom in Washington and in most of the rest of the world is that the roaring Chinese economy is going to pull the global economy out of recession and back into growth. It’s China’s turn, the theory goes, as American consumers — who propelled the last global boom with their borrowing and spending ways — have begun to tighten their belts and increase savings rates.

    The Chinese, with their unbridled capitalistic expansion propelled by a system they still refer to as “socialism with Chinese characteristics,” are still thriving, though, with annual gross domestic product growth of 8.9 percent in the third quarter and a domestic consumer market just starting to flex its enormous muscles. . . .

    But there’s a growing group of market professionals who see a different picture altogether. These self-styled China bears take the less popular view: that the much-vaunted Chinese economic miracle is nothing but a paper dragon. In fact, they argue that the Chinese have dangerously overheated their economy, building malls, luxury stores and infrastructure for which there is almost no demand, and that the entire system is teetering toward collapse. </blockquote>There's a developing consensus that China is approaching the point of being able to produce far more than it's able to sell.

    Just when you thought you saw a light at the end of the tunnel ...
  2. TheSportsPredictor

    TheSportsPredictor Well-Known Member

    Just wait til China tries to collect all the money we owe them. SUCKERS!!
  3. Flying Headbutt

    Flying Headbutt Moderator Staff Member


    All of China is this close to working at 7-11.
  4. BTExpress

    BTExpress Well-Known Member

    What miracle?

    When an economy of 1,300,000,000 wakes up after sleeping for 95% of the 20th century, it's going to have a lot of energy.
  5. The Big Ragu

    The Big Ragu Moderator Staff Member

    This was a quote in your link from Tim Geithner's trip there during the spring:

    “Purchases of U.S. consumers cannot be as dominant a driver of growth as they have been in the past,” Treasury Secretary Timothy Geithner said during a trip to Beijing this spring. “In China, ... growth that is sustainable will require a very substantial shift from external to domestic demand, from an investment and export-intensive growth to growth led by consumption.”

    That is wishful thinking, not a realistic outcome.

    China's fortunes rose when they liberalized and allowed more foreign trade. The growth numbers are very impressive, but it is much easier to grow that fast and that dramatically when you are starting from a base of near zero. China has a controlled economy (it's markets are not free) and corruption is rampant. It doesn't have the ability to generate domestic demand to sustain the growth they have seen any more than any other poor country can just make up its mind to be rich. China's growth has been coming on the back of the U.S. and the western world. As long as those countries are in an economic malaise and can't import Chinese goods, it's OBVIOUS that the growth they have been reporting (false prosperity) is a paper dragon that is unsustainable.

    If anyone is worried about China being a savior of any sort, what they should be worried about is that the Chinese have lost all faith in the dollar and are already not buying our debt at the levels they had been. They have been boosting their gold reserves. And the dollar is at a 52-week low. If (and it is way more likely that it does happen than doesn't) their tissue paper economy crashes because of a world economic malaise, it kills both the U.S. and China. We've stupidly dug a huge hole of debt and we are relying on the Chinese to prop us up even a bit so our hole doesn't turn into a black hole. And even though most of China lives on a dollar a day, enough have tasted enough prosperity that if their economy collapses there will be regime change -- which is why the corrupt dictators in power are doing everything they can to create false prosperity right now.
  6. Michael_ Gee

    Michael_ Gee Well-Known Member

    China makes stuff. An economy built on making stuff has its ups and downs, but it will take a punch better than an economy based on whatever the hell it is ours is based on.
  7. RickStain

    RickStain Well-Known Member

    We make a lot of stuff too.
  8. Bubbler

    Bubbler Well-Known Member

  9. Football_Bat

    Football_Bat Well-Known Member

    It's been plain to me for some time now that if China goes down, we go down. Our economies are inextricably linked. They're holding much of our industry and most of our notes, and we're buying their goods cheap (thank you Wal-Mart).

    If China collapses, it'll be a double whammy. The disruption of manufacturing will make many items scarce, and the financial chaos will send the dollar through the floor. Combined, the inflation that'll result will make Argentina look like the paragon of stability.

    Gold is starting to look pretty good right now even at $1,100.

    (GOLD!) :D
  10. 2muchcoffeeman

    2muchcoffeeman Active Member

    Here we go?<blockquote>BEIJING – China moved to curtail bank lending Friday for the second time in a month in the latest effort to cool down its supercharged economy.

    Chinese leaders worry that a stimulus-driven torrent of lending is fueling a dangerous bubble in stock and real estate prices. They also are concerned that the flood of money surging through the economy is adding to inflation.</blockquote>http://news.yahoo.com/s/ap/20100212/ap_on_bi_ge/as_china_economy
  11. Stoney

    Stoney Well-Known Member

    Not even remotely close to as much as we used to. That's the problem.
  12. RickStain

    RickStain Well-Known Member

    I'm curious if that's actually true, or just one of those things "everyone just knows" that isn't actually true.
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