Quote:
Originally Posted by Amputate Your Head
Yes, exactly. Most people are walking around in a self-induced fog, oblivious to what's happening around them. As long as they've got a shiny phone, or a new episode of 'Modern Family' to zone out on.... nothing else matters. I mention these things to people, and they look at me like a dog does when you try explaining algebra.
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"In a democracy, people get the government they deserve"
Fuck em!
The only people who know what is going to happen are those in charge, everyone else is just speculating. Perhaps all the cards will come falling down in the next year or two or perhaps we'll have another 20 or 30 years of boom & bust economic cycles. The UK for example are having another housing boom as are many other countries.
AMP See if you can get yourself a torrent for this BBC show -
This World - How China Fooled The World with Robert Peston
Here it is
Very interesting show, here are some of the cliff notes
Quote:
China will have replicated the entire US commercial banking sector in the span of half a decade.
China's boom is ending, it's probably around 2004 - 2005 in comparison to our 2007/08 crash
A debt explosion that dwarfs what we've experienced in the West
Most of the money for China's growth since 2007/08 was borrowed from banks which was the start of their credit orgy.
Shadowing banking system emerged and took over what the state owned banks where lending,
Off balance sheet entities where able to go to the banks, borrow copiousus amounts of money so that they built themselves up into enormous borrowing entities which is all very similar to our own off balance sheet vehicles
So lending isn't happening through the local state owned banks and the Chinese government has lost control of lending, the problem is a huge porportion of China's debts are hidden
In some Chinese cities house prices are still rising up to 20% per year and their housing bubble is just as bad if not worse than our own in the west.
So the rich are buying the high priced homes and keeping them empty as investments, massive oversupply of property and estimates are around 15% of all Chinese property are empty
Whole thing boils down to corruption and why the government have been unable to stop it, the building boom has made 1000s of local officials very rich, so they allow project after project, local officials oppriate the land and then sell it on to local developers and big backhanders are involved.
In 2008 the chinese banking sector was $10 trillion in size now (2014) it's around $24 - $25 trillion that increase is equivalent to the size of the entire US commercial banking sector which took more than a 100 years to build so that will mean China will have replicated the entire US system inside half a decade.
China's total indebtedness is around twice it's GDP up from 125% just 5 years ago, there is no example in history of that level of debt explosion now leading to a collapse
China has a massive challenge trying to transform into a consumer lead economy due to their history of poverty and a lack of a welfare state, due to this the average Chinese citizen saves around 1/3rd of their income compared to 1/20th in the west.
In 2014 credit growth is still twice as fast as GDP growth, mathematically there is no way to grow out of this problem when credit is twice the size of the economy and growing twice as fast.
George Magnus, Former Chief Economist, UBS Bank
"I don't think anyone really knows how much longer this credit genie can stay outside the bottle, my own view is that China in 2014 is maybe where the west was in 2005 - 2006, it's not an imminent danger of a financial implosion but it's drawing nearer all the time"
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Perhaps the plan was for China to borrow their way out of recession to avoid a global depression worse than the 1930s which would allow the Western economies time to recover before China goes into a serious recession.
Or maybe we all go down together!
"May you live in interesting times!"
