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

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

#141

Post by Camillo »

JumpCrisscross wrote: post #112
Mtinie wrote: post #98

Earlier quoted context omitted.

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.

> The vast masses of Chinese citizens are not those people. I can't recall a single civilization where the majority of people were "those people". The point is there are enough who demand enough that mortgaging the non-influential majority to pay for "those peoples'" bread (or as you put it, "hookers and blow") will be a short-term patch at best. (Reverse wealth transfers are not uncommon in a regime's dying days. Ca…

This may be a banal point, but do you think the increasing concentration of wealth within the American upper class, with a simultaneous impoverishment of the middle class, is such a reverse wealth transfer?

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

#142

Post by state_less »

mistermann wrote: post #125
state_less wrote: post #75

Earlier quoted context omitted.

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.

Luckily, they also control the government and military.

The citizens elect the government, so I have to take issue with this point. Wealthy people do have quite a bit of influence though.

Basically what I'm saying is, we can elect a government that serves our own interest if we cared to.

If it does get ugly, and the government/military turns on its citizens then the US as we know it will be dead or on life support. Probably, in such a scenario, people won't go quietly into that night.

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

#143

Post by toomuchtodo »

pfarnsworth wrote: post #131
toomuchtodo wrote: post #4

Earlier quoted context omitted.

Like a local financial crisis. On the plus side, tier 1 cities are going to cool off (real estate price wise) if a lot of Chinese money gets burned up instead of outflowed.

If by cool off you mean crash, then yes you're right. But it won't be a soft landing by any stretch of the imagination.

Tomatoe tomahtoe. Toronto's RE market is already hitting the brakes within the last week; buyers are walking from deposits, sales are down, listings have shot up. Everyone is trying to get out the door at once.

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

#144

Post by mistermann »

state_less wrote: post #142
mistermann wrote: post #125

Earlier quoted context omitted.

Luckily, they also control the government and military.

The citizens elect the government, so I have to take issue with this point. Wealthy people do have quite a bit of influence though. Basically what I'm saying is, we can elect a government that serves our own interest if we cared to. If it does get ugly, and the government/military turns on its citizens then the US as we know it will be dead or on life support. Probably, in such a scenario, people won't go quietly int…

> we can elect a government that serves our own interest if we cared to.

In theory, I'm still waiting to see it in practice. The Bernie Sanders situation from last election was a decent illustration of how legitimate the election process is, and they took care of him before the gloves even came off. (Trump was far trickier but as it turns out he's more of the same, if not worse.)

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

#145

Post by state_less »

HillaryBriss wrote: post #126
state_less wrote: post #50

Earlier quoted context omitted.

US government borrows money from the Fed. People (China) also buy Treasury bonds, but I think this is much smaller than the debt we owe ourselves. 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.

but, strictly speaking, the Fed isn't the same as the federal government. also, the US government has borrowed a whole hell of a lot of money from outside sources (e.g. corporations, US investors, and foreign governments from Japan to China to Saudi Arabia to European nations)

The Fed was enacted by the federal government and lives under its rule of law. I'm not sure what you're digging at.

I think we need numbers because I don't know what you mean when you say, "a whole hell of a lot of money." It looks like the citizens hold 70% of the debt. And keep in mind, these countries come to us to put their money in treasury bonds. They buy bonds that don't pay a very spectacular rate either (2.28% for 10 year bond). I'd caution against the rhetoric that we are broke, or people don't want to lend to us. It's often pushed by people who want to reduce federal spending (usually spending cuts on healthcare and welfare for the less fortunate).

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

#147

Post by valarauca1 »

spangry wrote: post #52
gitah wrote: post #34

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…

As a developing country, China has lots of easy productivity growth just by adopting current technologies on the technological frontier. High rates of growth in developing countries, with the rate slowing as they 'catch-up' to more developed countries, is also what the bog-standard macro-growth model (Solow-Swan) predicts.[0] To simplify, developing countries will have lots of labour inputs and relatively few capital…

Solow-Swan model is based on neoclassical economics that assumes a closed market with zero technological growth. In the event of technological growth it assumes a steady state is still reached. And I quote, "Due to Common Sense." [1] How TF do you consider this a valid scientific theory?

This is a theory based on NeoClassical economics which modern Behavior Economics finds that the models of NeoClassical economics fail in nearly every situation [2].

The Solow-Swan model has no rigor, predictions, or testable results to justifying its usage nor faith in its system. Science is a quantitative game, yet economics isn't?

[1] https://academic.oup.com/qje/article-abstract/70/1/65/190377...

[2] http://www.slembeck.ch/pdf/learning.pdf

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

#148

Post by cubano »

dis-sys wrote: post #63

Moody's? Is that the same credit rating agency which intentionally inflated credit rating for risky mortgage investment and eventually fined almost $1b[1]? It is just so funny that an agency that has already destroyed its own creditability is still running around and doing credit rating for others. [1] http://www.abc.net.au/news/2017-01-14/moodys-agrees-settleme...

Yes I believe that would the one and the same.

I find it very ironic that Moody is pointing a finger at China's "debt-fueled binge" when plenty of federal debt issues are staring us right in the face here in the US.

The 8 years of Obama doubled a national debt that had taken about 230 years to accumulate. No regime in the history of America has even come close to that debt figure, and current US obligations looking forward cha-ching in ar around $200T more, far more then we can ever hope to afford.

China, being a one-party communist rule, probably has a much better chance of fixing its issues then we do due to the lack of any political infighting. It's leaders can do whatever they need to fix budget shortfalls, irregardless of having to worry about reelections.

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

#149

Post by JumpCrisscross »

Camillo wrote: post #141
JumpCrisscross wrote: post #112

Earlier quoted context omitted.

> The vast masses of Chinese citizens are not those people. I can't recall a single civilization where the majority of people were "those people". The point is there are enough who demand enough that mortgaging the non-influential majority to pay for "those peoples'" bread (or as you put it, "hookers and blow") will be a short-term patch at best. (Reverse wealth transfers are not uncommon in a regime's dying days. Ca…

This may be a banal point, but do you think the increasing concentration of wealth within the American upper class, with a simultaneous impoverishment of the middle class, is such a reverse wealth transfer?

A salient difference between existential and incidental reverse wealth transfers appears to be (a) the existential pain the rulers, as a whole, defer by enacting them and (b) their intent. Consider the 2008 bailouts [1]. The masses helped, in part, pay the salaries of well-compensated professionals [2]. But could Washington, D.C. have let the banks fail? Probably. Were politicians primarily concerned with the bank executives rebelling? Or were the masses interests' in mind? I think it's safe to say the latter was the intent behind the bailouts, even if a good amount of the former happened along the way

Another example is the scientific and military grant-making processes. Such grants may fund labs and companies with wealthy owners and managers. But that isn't the intent behind the grants. Furthermore, politicians--as a group--don't existentially fear the defense contractors or contract-lab operators.

Now consider Venezuela. Babies are starving [3]. Yet bondholders get paid. Why is the government more afraid of its bondholders than citizens? If it's because the government fears the bondholders' reactions, e.g. military insurrection, more than popular revolt then it's a desperate maneuver.

[1] https://en.wikipedia.org/wiki/2008_Bank_Bailout

[2] https://en.wikipedia.org/wiki/Emergency_Economic_Stabilizati...

[3] https://www.nytimes.com/2016/05/16/world/americas/dying-infa...

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

#150

Post by adrianratnapala »

csours wrote: post #113
skookum wrote: post #89

Earlier quoted context omitted.

Not sure if you are trying to be sarcastic, but: https://en.wikipedia.org/wiki/International_Nuclear_Event_Sc...

Fukushima and Chernobyl are both classed as 7s, but the amount of radiation released at Fukushima was at least an order of magnitude less than Chernobyl, with 80% of that falling on the ocean. Fukushima caused half as many people as Chernobyl to evacuate. No one died as a direct result of Fukushima, as opposed to 2 immediate + 28 cleanup deaths from Chernobyl. Fukushima definitely deserves to be taken seriously, and…

Another difference is that Fukushima was just one result (and by far not the worst result) of a huge natural disaster.
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