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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

#91

Post by [deleted] »

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.

[deleted]

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

#92

Post by JumpCrisscross »

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.

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

Example? The largest countries' central banks are accountable to their governments.

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

#93

Post by sopooneo »

hackuser wrote: post #53
drcode wrote: post #31

Earlier quoted context omitted.

It seems like smart people have been predicting that China's growth is unsustainable on a regular basis for at least 15 years... it's tough for an average HNer like myself to take the time to tell which "expert" is just blowing smoke and which expert truly has a handle on the salient facts- Guess all I can really do is simply wait and see who ends up being right...

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…

I believe this was actually the plot of an episode of the kids educational show "MathNet"* in the early 90's. I've often wondered if people just do this over email now, but automated. And why write to just 512 people about who's going to win tonight's football game, when you can have your script write to 1,048,576? Or does this happen?

* Actually a show within the actual show "Square One TV"

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

#94

Post by zanny »

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 average US citizen should say the US citizen holds much of the US debt. Since they do. About 70% is domestic, and 7% is owned by China.

The Chinese are in a similar boat. About 60% of their debt is domestic. Their inflating debt, however, is in part what is driving the gap between the two, and they are ramping up foreign debt faster as a result.

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

#95

Post by matheweis »

Amygaz wrote: post #49
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?

I forgot where I read that, but Bernanke said that most of their debt is internal, so not as bad a problem as it sounds.

They being China or the US?

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

#96

Post by siidooloo »

rhizome wrote: post #77

You know what I'd like to see? What conclusions China's economics community have had about the US environment.

The US economy will see a series of booms and busts. As all economies will. As will China's. When? Who knows? But I wouldn't be the one to bet on never.

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

#97

Post by r00fus »

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 biggest group holding US debt are its citizens. The social security trust fund has been raided for decades by the general fund to spend on defense security state and has not been paid back.

Politicians and their funders hope everyone is hoodwinked into forgiving the debt or just taxing everyone more to make up for the stolen^W borrowed money.

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

#98

Post by Mtinie »

JumpCrisscross wrote: post #88
Mtinie wrote: post #76

Earlier quoted context omitted.

> ...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…

> They can't realistically move, or revolt Some can. Those are the ones who matter. No man rules alone--political leaders are only powerful insomuch as they can incentives or coërce others to act for them. A ruling class whose living standards is falling is a ruling class more willing to entertain other leaders. "Certain types of unemployment are likely to be perceived as more politically costly than others - e.g. be…

The vast masses of Chinese citizens are not those people.

History isn't in agreement, and time after time, the peasants will starve before the bourgeoisie suffer to a point that they feel enough pain to revolt.

It's economically cheaper for the State to continue to pay for the ruling classes' requisite "hookers and blow" than it is to pay for social programs.

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

#99

Post by osrec »

Large seas of debt made sense when they were somewhat more underdeveloped, and every additional unit of debt could be used for 'easy' value creation. As it currently stands, I don't see their rate of value creation servicing their debt. Similar dynamics, albeit to a lesser extent, are in play in India and other countries in South East Asia.

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

#100

Post by r00fus »

adrenalinelol wrote: post #73
ProfessorLayton wrote: post #41

Earlier quoted context omitted.

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.

They failed their mission to instead chase profits to the detriment of the public. What's to say they don't have a financial incentive here?
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