Wednesday, January 14, 2009

If your waiting for China to save the world economy, this guy reckons; forget it.

A tidal wave of discontent threatens China

The whole world is suffering from an economic crisis. Some in the West, like a desperate drowning man clutching at a straw, have said the Chinese Government has a lot of money, let us beg them to save us from the crisis. But they do not realise that the Government in Beijing does not know how to save itself.

Posted by flintster1994 @ 04:01 PM (763 views)
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9 thoughts on “If your waiting for China to save the world economy, this guy reckons; forget it.

  • stillthinking says:

    No comments for this?
    Anyway, this would seem like China is a disaster waiting to happen. This dissident is suggesting capital flight. Which is kind of strange because there are loads of people who would love to buy the remnimbi in exchange.

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  • stillthinking you know my views on this already. Setting aside lack democracy, diversity, freedom of speech, forgetting about poor demographic, absence of allies and relative lack of resources their rapid recent growth has been every bit as connected with the binge as debtor nations. Also they are just too small, their GDP however however much it has grown is less than 10% Europe and America combined.

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  • Stillthinking says:

    bellwether, I was a bit surprised by the income disparity. but if what you are saying about the gdp is correct (I don’t doubt you), how can they have been funding the US current account deficit?

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  • don’t want to knock what they have achieved which is incredible but there is still a long way to go before there is a real shift of economic power from west to east

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  • Stillthinking says:

    bellwether, I was a bit surprised by the income disparity. but if what you are saying about the gdp is correct (I don’t doubt you), how can they have been funding the US current account deficit?

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  • stillthinking says:

    wow, the site f*cked up on postings. Not the first time. Here,

    bellwether, I was a bit surprised by the income disparity. but if what you are saying about the gdp is correct (I don’t doubt you), how can they have been funding the US current account deficit?

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  • Official figures on the deficit put it at a bit less than 500billion, a huge figure but not impossible for a creditior with a GDP of a few trillion – and China are massive savers. Also they don’t fund it alone.

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  • stillthinking says:

    It seems to me, that when the mortgage security market dried up and collapsed, and then died, that the main force for this must have been China refusing to accept anymore. Just before the whole thing kicked off I remember there was a piece in the news about a veiled threat from China about funding the US deficit. Very very shortly after that the whole thing went to pieces. I don’t blame China at all for refusing to buy mortgages with essentially optional repayment scheme, but I wonder if their refusal to soak up anymore (which they are fully entitled to refuse) was the original trigger for the collapse in the market.
    The gross bubble in the states had to end anyway, so I suppose it doesn’t matter, but … Also there was a considerable amount of pressure over the Fannie Mae Freddie Mac guarantees from the US taxpayer. I think the mistake China made was that they held on to the balloon too long. They knew that they could continue growing rapidly by funding an american deficit. They also knew that they needed to decouple, they must have done. However, for whatever reason they hung on too long. Now they are trying to kick start their domestic market but they left it three (or more) years too late. They should have gone for internal demand before. IMHO. Now too late.

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  • mountain goat says:

    I wasnt around yesterday to comment on this.

    We are going into a global recession, everyone will be affected. My view is those countries that are currently running trade surpluses will recover first. China has the excess capacity USA had in 1930 but not the insolvency due to credit bubble that happened in the 1920s. The other issue about recovery is population demographics. China has a large productively aged population which means it will do well for the next 10 years. India will take over from there because their population is younger. The USA by contrast has had a boom partly because of the productive baby boomer generation which is now aging and set to be a big drag on their economy.

    This is the economic situation. Of course a Chinese dissident is going to say social unrest will crush China. I don’t like or agree with China. I support a free Tibet. Social unrest will happen in every country badly hit by the recession, but I don’t expect China to suffer more from this than elsewhere.

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