41–50 of 263 posts
Moody's also says that bundles of subprime mortgages are a AA+ investment.
Following that reasoning, that probably means China's economy situation would be much worse.
https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...
What about the US's debt-fueled government? Sustainable?
Sustainability is a function of total annual deficit relative to growth in ability to service the debt. Deficits that lead to productivity-enhancing investments will pay for themselves: education, infrastructure, etc. Deficits that result from cutting taxes will not: the idea that we're on the virtuous part of the Laffer curve has been thoroughly debunked in economic, if not political, circles. Furthermore, debt in t…
Yes.
http://cepr.net/blogs/beat-the-press/national-income-account...
As it is likely for someone to mention the Ghost cities, I recommend this video https://www.youtube.com/watch?v=AyBBQ-wF87M&list=PLxh5xkC0W-...
Earlier quoted context omitted.
> People have been waiting decades for Japan's post-boom day of reckoning and we've not seen it. Japan's "day of reckoning" already came: what they've been in for the last 25+ years is the "post-reckoning" of ZIRP, low growth and low inflation. If the Chinese debt bubble explodes, it's not like the country is going to collapse, the most common prediction is that they'll become "Japan 2.0" where the country is functio…
Yeah, it's more like people have been waiting for decades for a day of reckoning for Japan in the sense that the country is still very productive in many senses but has yet to escape its extremely long-term recession. Japan has been punished enough. It's quite tragic.
Earlier quoted context omitted.
When you have a hammer everything looks like a nail. My problem with these kind of analysis is that it pretty much only looks at things from a financial perspective thinking it's the be-all-end all. However, on first level principles, money is simply an abstraction; it's a medium for trading your services for other people's services. And if you become more efficient, you can buy more services with the same amount of…
> However, on first level principles, money is simply an abstraction; it's a medium for trading your services for other people's services. And if you become more efficient, you can buy more services with the same amount of effort and vice versa. The root cause of this increase in efficiency is technology. Pettis does discuss this at length.
From the article, Pettis assumes the following is true:
1) China has overinvested in infrastructure and manufacturing capacity to such an extent
that in the aggregate the cost of additional
public sector investment exceeds the present
value of future increases in productivity generated by
the investment
2) China's long-term sustainable growth rate is substantially below the economy's current GDP growth target
Ok, this is probably a silly question, but who holds all the debt now? The avg US citizen would say China holds much of the US debt, but now it sounds like China is borrowing their way into trouble too... it's not any of these third world countries... who is it?
I think the best model to understand this is Michael Pettis's balance sheet analysis. He covers it extensively, but here's his latest digest of the model: http://carnegieendowment.org/chinafinancialmarkets/66221 It really makes clear how stark the choices are for China. The debt binge of the last ~10 years has masked the flattening out of productive investment, and there will need to be a reckoning. Hopefully it's a…
When you have a hammer everything looks like a nail. My problem with these kind of analysis is that it pretty much only looks at things from a financial perspective thinking it's the be-all-end all. However, on first level principles, money is simply an abstraction; it's a medium for trading your services for other people's services. And if you become more efficient, you can buy more services with the same amount of…
China is still pretty much a planned economy, where the government is in control of major state-owned corporations. I wouldn't worry too much about the debts that they owe to the state.
Ok, this is probably a silly question, but who holds all the debt now? The avg US citizen would say China holds much of the US debt, but now it sounds like China is borrowing their way into trouble too... it's not any of these third world countries... who is it?
Ok, this is probably a silly question, but who holds all the debt now? The avg US citizen would say China holds much of the US debt, but now it sounds like China is borrowing their way into trouble too... it's not any of these third world countries... who is it?
Someone else can chime in with more depth, but basically the US government has been good about not borrowing too much from itself. I just hope we can stay rational as a country and this continues.