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China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

nytimes.com

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Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#71

Post by llukas »

zeusk wrote: post #69
hackuser wrote: post #53

Earlier quoted context omitted.

Agreed, to an extent (though not every 'expert' is equally reliable). Two ways I look at it: 1) Generally, the nature of a bubble is that nobody knows when it will pop. People knew about the U.S. asset bubble in the mid-2000s for years, but even those not caught up in the bubble mass psychology couldn't accurately predict when it would collapse. The same was true of the dot-com bubble around 2000. You can be right th…

> There was a stock broker looking for new business. He cold called 512 people (he must have been a quant); half he told to sell X stock, half he told to buy. The next week he called the 256 for whom he'd made the right prediction and did the same again: Half he told to sell, half to buy ... several weeks later he was down to 16 people. He called all of them and said, 'look, I was right 5 times in a row ...'. Except,…

At least not something that registered broker can do more than once.

FTFY

Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#73

Post by adrenalinelol »

ProfessorLayton wrote: post #41
justicezyx wrote: post #27

Earlier quoted context omitted.

Following that reasoning, that probably means China's economy situation would be much worse.

I believe the OP is putting the agency's credibility into question, which I think is valid, considering their role in the financial crisis. https://en.wikipedia.org/wiki/Credit_rating_agencies_and_the...

There was a financial incentive to look the other way. That doesn't exist in this case.

Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#74

Post by arkis22 »

dragonwriter wrote: post #29
theprop wrote: post #23

Earlier quoted context omitted.

Are you seriously suggesting that US government deficits are run to invest in education and infrastructure? Deficits are mostly attributable to military spending. I'm doubtful that killing people in other countries who present absolutely no threat to you is productivity-enhancing.

> Deficits are mostly attributable to military spending. Post-WWII federal deficits are mostly attributable to declining total effective income tax rates.

Source? The first couple of graphs here: https://en.wikipedia.org/wiki/Income_tax_in_the_United_State..., suggest otherwise. We've rarely had income taxes as a higher percentage of GDP than we do now.

Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#75

Post by state_less »

wu-ikkyu wrote: post #61
matheweis wrote: post #43

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?

>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? The central banks, obviously. Many of them not being beholden to a nation but to private individuals.

At the end of the day though, even private individuals are beholden to the people in the nation. It's a social contract, so people may no longer agree to allow those private individuals to be wealthy and run the banks.

That said, if you're holding the wealth, it's not too hard to keep the shop running (people happy) so long as you don't get bored, reckless and feckless.

Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#76

Post by Mtinie »

hackuser wrote: post #58
paradite wrote: post #48

Earlier quoted context omitted.

Similarly, if you use Western standards to measure economic metrics of China, everything looks weird. 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.

> I wouldn't worry too much about the debts that they owe to the state. Why not? The state can forgive the debt, but when those resources disappear from the economy then many people will lose out.

> ...when those resources disappear from the economy then many people will lose out.

My initial reaction is "...and?"

Not because I'm trying to be obstinate or lacking empathy, but because I'm trying to hard visualize a situation (re: China) where those who lose out legitimately can do anything about it.

They can't realistically move, or revolt. They can starve[0], but that's happened in the past and the State really didn't suffer for it.

--- [0] https://en.m.wikipedia.org/wiki/Great_Chinese_Famine

Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#78

Post by alexbeloi »

alexbeloi wrote: post #8
theprop wrote: post #6

What about the US's debt-fueled government? Sustainable?

US debt to GDP ratio is half that of China, not claiming the trend is sustainable but that (at least according to Moody's) China is more at risk of a runaway debt-spend crisis than the US is.

I can't seem to edit my comment anymore. In an attempt to correct the record, I'm very wrong about my claim in at least a couple of ways.

1. I made that statement without checking my facts

2. I recalled from the news today that China had a debt to gdp ratio of about 250% (this is total debt to gdp, including debt held by consumers and corporations)

3. I compared it to a number in my head of US debt to gdp ratio being about 100% (this turns out to be about government debt to gdp).

At the very least, the thing I intended to say is wrong or an unequal comparison at best.

Re: China Can’t Sustain Its Debt-Fueled Binge, Moody’s Says

#80

Post by WillPostForFood »

theprop wrote: post #67
WillPostForFood wrote: post #35

Earlier quoted context omitted.

I know there is some fake news floating around with a chart that purports to show 57% of spending goes to the military, but it's been debunked. 28% goes to healthcare (Medicare), 25% to Social Security, 16% to Defense. http://www.politifact.com/truth-o-meter/statements/2015/aug/...

It's hardly fake news. It's actually the truth. Of discretionary federal government spending, ~57% does go to the military (if you don't include interest expense on the deficit I believe...removing that...) https://www.nationalpriorities.org/budget-basics/federal-bud...

It becomes false when you remove the "discretionary" from the label and just call it Federal Spending. And the the labels aren't that useful anyway. Mandatory spending isn't mandatory, it is just pre-programmed. One the main reasons we are in debt is that the only place that there has been any focus on cuts is the discretionary side. And if you make across the board cuts in discretionary spending as happened with the Obama budget deal, that pie chart doesn't change because there is no visualization of it shrinking versus the other 50%+ of spending. Defense spending had been shrinking for the last 5 years as a percentage of GDP.
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