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China's Subprime Crisis Is Here
31–40 of 219 posts
Re: China's Subprime Crisis Is Here
#32Earlier quoted context omitted.
I too have grown tired of shitty articles with shitty headlines that make some misunderstood argument on why China is about to have a bad time. It's at the point where I'm wondering if these publications are just fishing for clicks.
We've been in constant crisis mode since 2000 (just as I graduated college). This crap kept me from buying a home, delayed marriage and children, etc. In my mid 30s, I have no job security, almost no retirement and no home. I had no idea life in the 21st century was going to be so miserable for young people in North America. I guess this is globalization in action :(
I've heard others say that, but I don't understand: Other than the 2008 recession, which was a much worse one than its predecessors, what is any worse than earlier periods?
If you are thinking of 9/11, before that we had the Cold War, against an enemy many orders of magnitude more dangerous and damaging.
I almost think that conservatives who sell crisis, to justify all sorts of things from civil liberties restrictions to wars, have unfortunately been believed.
I do think our government has functioned extremely poorly since 2000, as the GOP has put ideology before responsible governence. I know people will think I'm partisan, but how else can you characterize voting, multiple times, to not only shut down the whole government but actually trying to make it default on its debt?
Re: China's Subprime Crisis Is Here
#33The American media seems to jump at any opportunity to dismiss China as an economic threat. It makes us feel more secure but leads to a public informed only about one side of China's story. Namely the part our ego can handle. China has regularly surpassed the US in number of cars sold since 2009. China also holds more US debt than any other country. Another way to put that is the US government owes China over 1 trillion USD. This, I believe, is the real reason the American media trips over themselves to write stories that sooth away the nagging fear that China is, or even already has surpassed us economically.
Edit: more interesting facts.
- China's percent GDP growth is more than twice that of the US. (7.4% vs 2.4% in 2015)
- China's government has $3.9T in cash reserves vs the US' $434B.
- China has twice as many children enrolled in primary and secondary school and 50% more undergrads than the US.
We can only say but, but, but for so long.
Re: China's Subprime Crisis Is Here
#34The root cause of 08 financial crisis is not simply 'subprime loans' that can't be repaid. It's because of trillions of derivatives that those banks hold, and lack of liquidity when banks are making wrong bet. China doesn't have many complex financial engineerings as US did in 07/08.
It was broader than subprime and derivatives even. It was a general real estate (housing) bubble. Home prices became massively inflated and the various investments tied to housing came crashing down. A similar result can be expected in China when the music eventually stops.
When price go up it doesn't mean a it's a bubble.
Getting loans is way harder/regulated in China than 06/07 US. Currently 25+% down payment or 70% for 2nd home is required. -- Comparing in 2007 banks only asks for 3% down.
Re: China's Subprime Crisis Is Here
#35Assuming this headline is correct, what effects would that have on the global economy?
Probably small. China's financial system isn't entwined with the US/European system as much (the Fed buys bonds from the ECB, and vice versa). Commodities will be hit the hardest, because China will stop importing them. Alan S Blinder estimated that a very severe recession in China would affect the US GDP by .2% So that kind of gives you an idea.
China holds more US treasury bonds than any other country. How are we not intertwined?
Re: China's Subprime Crisis Is Here
#36Is it right that China owns a lot of its own debt AND a lot of US debt as well? And also heard that China supposedly has the largest gold reserves in the world, dwarfing any other country in comparison. Could that count for something?
Re: China's Subprime Crisis Is Here
#37This doesn't seem like a particularly compelling argument. Bad loan volumes have risen, but not above historical highs. As a percentage of total debt, the article says bad debt is at 1.67%. This is up 51% from 1.25% in the last year. Considering the amount of margin that's been wiped out as a result of the stock bubble popping, this doesn't seem terrible. In addition, it doesn't seem like this rate is accelerating (s…
The number is not that bad. Comparing to US Bank Nonperforming loans ratio,
Quarter Total Loans Nonperforming Perc 2013 Q1 7,658,238,093,000 261,202,393,000 3.41 2013 Q2 7,732,341,313,000 239,430,499,000 3.10 2013 Q3 7,802,034,024,000 221,209,596,000 2.84 2013 Q4 7,893,109,125,000 207,256,779,000 2.63 2014 Q1 7,930,820,793,000 195,236,127,000 2.46 2014 Q2 8,109,181,723,000 181,567,784,000 2.24 2014 Q3 8,160,095,554,000 171,922,840,000 2.11 2014 Q4 8,309,545,800,000 162,654,076,000 1.96 2015 Q1 8,362,016,000,000 152,966,093,000 1.83 2015 Q2 8,546,950,627,000 144,686,145,000 1.69 2015 Q3 8,642,299,288,000 139,164,401,000 1.61 2015 Q4 8,839,565,653,000 137,835,965,000 1.56
Re: China's Subprime Crisis Is Here
#38Michael Pettis is one my favourite China commentators, with a big focus on the shifts necessary in the balance sheet and composition of growth, and whether that can be done smoothly or necessarily through some catastrophe. Not to mention a broader view of the political economy of the change.
Here's a recent post he did that's worth a read (at least through the nine point summary): http://blog.mpettis.com/2016/01/will-chinas-new-supply-side-...
Re: China's Subprime Crisis Is Here
#39The American media seems to jump at any opportunity to dismiss China as an economic threat. It makes us feel more secure but leads to a public informed only about one side of China's story. Namely the part our ego can handle. China has regularly surpassed the US in number of cars sold since 2009. China also holds more US debt than any other country. Another way to put that is the US government owes China over 1 trill…
US treasuries are at historically low rates -- if China dumped 'em all it probably wouldn't move the needle that much. And the reason they hold so many is not as some control play against the US -- its because it was the best way to devalue their currency enough to support exports.
Re: China's Subprime Crisis Is Here
#40Earlier quoted context omitted.
Isn't the bigger issues China's structural draconian limits to freer movement of capital, external investment, the imaginary/real value of ghost cities and scale of holding illiquid foreign debt?
I think the bigger issue is that China faces labor competition on the lower end of the unskilled market from South East Asia and India and is trying to enter the lower end of the skilled labor market but finding out that the Americans, Europeans, and Israelis are fairly competitive. I'm generalizing and neither list of countries is exhaustive.
China is miles ahead of South East Asia and much of India. Chinese tourists go to places like Vietnam and are seen as wealthy and sophisticated by the locals. From the Western perspective it may seem like China, SEA and India are on a level playing field but that is far from the truth.