11–20 of 27 posts
One reason I'm skeptical about this is the the United States has a ton of debt (this is a definite fact), and someone had to lend us the money. China has over $1T of U.S. Treasury Bonds. It might be plausible that they have cash flow problems, since they can't exactly liquidate $1T of U.S. Bonds, but then why do they keep buying them? In any case, I don't buy this one bit, especially since I haven't heard a single re…
Articles like this always strike as being not only fuzzy from an economic perspective, but also willfully blind to the political implications.
Something is odd with this web page. At least using chrome on Win7 x64. I have VS2008 and SQLProfiler, even the Windows Task manager open in the background and they all have parts flickering every ~4 seconds when this page is opened in chrome. For example in Visual studio the Solution Explorer is refreshing every four seconds. anybody have any ideas? it's kind of unnerving. Or maybe it's just me.
Would love to hear some analysis of this by people who actually know a thing or two about economics. Is it more of the usual baloney?
Would love to hear some analysis of this by people who actually know a thing or two about economics. Is it more of the usual baloney?
Debt is only ever a problem for a country if a) it is trying to maintain a fixed exchange rate or b) the debt is denominated in gold or a foreign currency. Neither of these is true for China, so it's level of debt is not a problem. In fact, under a fiat currency system the entire concept of "debt" is a misnomer for sovereigns. Sovereign debt is must better thought of as interest bearing currency.
I thought China is trying to maintain an exchange rate (or rate "band") with the USD.
In the USA, we stopped publishing our M3 figures 7 or 8 years ago -- a stunning lack of transparency, but as the article says, all governments lie about their finances.
Would love to hear some analysis of this by people who actually know a thing or two about economics. Is it more of the usual baloney?
The basic outcome of that article is that any country is bankrupt on paper if you apply the right criteria and filter them through some historical information super-imposed onto what may or may not be happening now. The fact they picked China gives it a high propaganda rating in my eyes.
Something is odd with this web page. At least using chrome on Win7 x64. I have VS2008 and SQLProfiler, even the Windows Task manager open in the background and they all have parts flickering every ~4 seconds when this page is opened in chrome. For example in Visual studio the Solution Explorer is refreshing every four seconds. anybody have any ideas? it's kind of unnerving. Or maybe it's just me.
Earlier quoted context omitted.
Debt is only ever a problem for a country if a) it is trying to maintain a fixed exchange rate or b) the debt is denominated in gold or a foreign currency. Neither of these is true for China, so it's level of debt is not a problem. In fact, under a fiat currency system the entire concept of "debt" is a misnomer for sovereigns. Sovereign debt is must better thought of as interest bearing currency.
> a) it is trying to maintain a fixed exchange rate I thought China is trying to maintain an exchange rate (or rate "band") with the USD.
Thus, China's "bankrupcy" is nonsense as long as the government is willing to up taxes.
Also, just as you have to evaluate the P/E ratio of a company in the light of its growth rate, you have to evaluate the debt of any entity in terms of its growth rate.
E.g.: would I be happy to loan $100k to someone earning $25k/yr ?
No.
...but what if I knew for a fact that the person's income was going to double every year for the next 10 years?
Well, that's a different story: in 10 years, the person's income will be $25 mill/year, and the debt will be trivially easy to repay.
China has had a 10% GDP growth rate for a decade now. That means that every decade their GDP is 2.5x higher than before.
A "high" debt load (measured in % of current GDP) seems a lot less worrying in that context.
To really nail the issue down, you need to figure out if they're going to keep up that growth rate, and China won't grow at that rate forever ... but another 10 or 20 years sounds like a safe bet.