Is China rolling the dice...

[Corruptbuddha]

...or merely in massive denial?

This is a report from CBS (via TheBlaze) that explains that China has not only a Real Estate Bubble but a Debt Crisis as well. (Watch the 60 Minutes report...it's unREAL)

http://www.theblaze.com/stories/2013/03/04/surreal-get-a-closer-look-at-chinas-largest-ghost-city/


I suppose the question isn't one of when these issues will start to kill China's economy as it's already happening...but what will it do to ours? Can we absorb the second largest economy in the world taking a crap?

 

[gabriel]

obviously the bubble doesn't include all of china

 

[Corruptbuddha]

Did you see the video?

Since you replied in 3 minutes, and the video is 12 minutes plus long, I'm guessing you did not.

Watch it, it's enlightening.

 

[gabriel]

I don't need a video to tell me what I already know

 

[Corruptbuddha]

So, since the post was about the contents of that video, you felt obliged to comment on the issue it brings up without seeing what it had to say about that issue to begin with?

All right.

 

[gabriel]

I know exactly what it said about the part of the issue I addressed

 

[Corruptbuddha]

So, which part of the Chinese economy is immune to a bubble bursting?

 

[gabriel]

who said any of it was?

 

[Corruptbuddha]

You did.

"obviously the bubble doesn't include all of china"

Your words, correct?

A bubble is, by it's very nature, a phenomenon that effects an economy, correct?

So, since this economic bubble doesn't effect all of China, I was wondering if you could elaborate and show some part of that economy that wouldn't be effected?

 

[gabriel]

well for a start, the correct word is AFFECT. and secondly I didn't say the EFFECTS wouldn't be felt in all of china.

 

[Corruptbuddha]

Thanks for the word check.

So what were you saying?

That there is no housing bubble in specific parts of China?

 

[gabriel]

obviously

 

[connorbug]

...or merely in massive denial?

This is a report from CBS (via TheBlaze) that explains that China has not only a Real Estate Bubble but a Debt Crisis as well. (Watch the 60 Minutes report...it's unREAL)

http://www.theblaze.com/stories/2013/03/04/surreal-get-a-closer-look-at-chinas-largest-ghost-city/


I suppose the question isn't one of when these issues will start to kill China's economy as it's already happening...but what will it do to ours? Can we absorb the second largest economy in the world taking a crap?

The problem is that China and the US are in an unrealistic debtor/creditor relationship. The result is that China implements policies, like its former firm peg of the yuan to the dollar, to 'export at all costs' this can have a tendency to overheat an economy as goods essentially leave the system.

The risk is that they unravel the system quickly and the terms of trade deteriorate rapidly, ie. they just start dumping dollar denominated assets.

 

[gabriel]

I love watchin folks that talk just to hear themselves talk!! lol

 

[Corruptbuddha]

So?

That's irrelevant to the overall effect that a bubble of this size (called the largest in human history) would have on that ENTIRE economy.

What's your point?

 

[Corruptbuddha]

Definitely not what one would call a 'healthy relationship', is it?

My issue with all this is one thing: How much of an impact will the #2 economy tanking have on the US economy?

My answer: Hell.

 

[gabriel]

you have only yourselves to blame

 

[fairsheet]

Definitely not what one would call a 'healthy relationship', is it?

My issue with all this is one thing: How much of an impact will the #2 economy tanking have on the US economy?

My answer: Hell.

I don't know enough to pass judgement on the top-linked piece. But, I DO know enough to know that China's future isn't all wine n' roses, as some might assume. BUT...I don't think it's NECESSARILY a problem for us. It's all about the imports and the exports.

We import more than we'd like from China. We export less than we'd like and less than we should, to China. If China's "issues" cause them to dump even MORE exports into our market, that wouldn't be good. If they cause them to sell us less, that would be good.

On the flipside, if China's "issues" cause them to be less able to buy our goods in the future, that would be a bad thing. BUT...it wouldn't be ALL that bad a thing, since our economy isn't currently very reliant upon exports to China.

 

[gabriel]

if their issues cause them to stop financing your debt, you've got a problem

 

[Days]

China and Japan buy our bonds to devalue their own currency, so they keep the cost of their goods cheap.

If we didn't have such a huge trade deficit from that action in the first place, we might not have such a huge debt for them to finance. IOW, they are financing our debt with our money. If we stop giving it to them, we won't have the debt to begin with.

it isn't that simple, but it is happening.