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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

#201

Post by MrBuddyCasino »

cm2187 wrote: post #185
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...

It's funny because these massive debt accumulations invariably end up either in financial collapses or period of very high inflation, both of which can have dramatic impacts on a large part of the population (particularly savers and pensioners). But they are the most predictable thing in the world. Yet no one seems to be worried about them, whether in Europe or in the US. When the collapse will happen, people will be…

Germany cares, for historical reasons. We get yelled at a lot for that.

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

#202

Post by dredmorbius »

viraptor wrote: post #176
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...

Reminds me of the wage growth forecasts picture: https://twitter.com/rpy/status/861877936952967168

"Sorry, you're not authorised to view those tweets."

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

#204

Post by pankajdoharey »

Here's the thing about China, if it doesn't pay up, the world at large can't do anything to China. The world is dependent on Chinese export. If China sinks it will sink the world economy with it. Too Big to fail actually applies to China. If China falls short of paying up its mortgages or loans on time it can't be recovered by anyone. The only thing one could do is wait. So all the talk is useless, China gas got everyone by the balls. There is no way to threaten China, nor can any sanction be put on China because the world trade would suffer. China is indeed the world's factory. In my opinion, Moodys is wrong this Debt-Fueled growth of China will and has to be sustained for safeguarding everyone's investments, China cannot be sunk at this point at any cost. Moodys is not the sole authority on rankings and their opinion matters less and less in the context of China.

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

#206

Post by stupidhn »

ryandamm wrote: post #134
jseliger wrote: post #21

Earlier quoted context omitted.

and there will need to be a reckoning And yet when I read things like this I also think of the cliché, "Markets can remain irrational longer than you can remain solvent." People have been waiting decades for Japan's post-boom day of reckoning and we've not seen it.

Pettis quantifies it (elsewhere in his articles). He's gone on record that there's going to be an explicit or implicit write down, and China's average GDP growth is going to be well below 5% (averaging more like 2-3%) by 2020. I think those numbers are roughly correct. What appeals to me about Pettis's analysis is it's rooted in a simple quantitative model that rests on accounting identities. When you've got a model…

>He's gone on record that there's going to be an explicit or implicit write down, and China's average GDP growth is going to be well below 5% (averaging more like 2-3%) by 2020.

But I'd hardly describe that as a "reckoning". It sounds more like a predictable "regression to the mean"

China's unprecedented growth is unsustainable; people know this. Case in point: this article.

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

#207

Post by chadcmulligan »

MrBuddyCasino wrote: post #201
cm2187 wrote: post #185

Earlier quoted context omitted.

It's funny because these massive debt accumulations invariably end up either in financial collapses or period of very high inflation, both of which can have dramatic impacts on a large part of the population (particularly savers and pensioners). But they are the most predictable thing in the world. Yet no one seems to be worried about them, whether in Europe or in the US. When the collapse will happen, people will be…

Germany cares, for historical reasons. We get yelled at a lot for that.

So how does Germany manage to avoid the same situation?

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

#208

Post by codingmyway »

ryandamm wrote: post #134
jseliger wrote: post #21

Earlier quoted context omitted.

and there will need to be a reckoning And yet when I read things like this I also think of the cliché, "Markets can remain irrational longer than you can remain solvent." People have been waiting decades for Japan's post-boom day of reckoning and we've not seen it.

Pettis quantifies it (elsewhere in his articles). He's gone on record that there's going to be an explicit or implicit write down, and China's average GDP growth is going to be well below 5% (averaging more like 2-3%) by 2020. I think those numbers are roughly correct. What appeals to me about Pettis's analysis is it's rooted in a simple quantitative model that rests on accounting identities. When you've got a model…

This is classic Minsky ponzi finance. I wait to see revelations of fraud and corruption that have been hidden too.

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

#209

Post by don_draper »

pankajdoharey wrote: post #204

Here's the thing about China, if it doesn't pay up, the world at large can't do anything to China. The world is dependent on Chinese export. If China sinks it will sink the world economy with it. Too Big to fail actually applies to China. If China falls short of paying up its mortgages or loans on time it can't be recovered by anyone. The only thing one could do is wait. So all the talk is useless, China gas got ever…

I question the assertion that allowing things to fail like big banks or China would be bad in the long term. And this is economics, which like religion, isn't an exact science so neither of us know for sure.

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

#210

Post by brownbat »

ryandamm wrote: post #15

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…

Pettis's recent articles show he's more optimistic than Moody's in the short term, and more pessimistic than the new optimism driven by a Morgan Stanley bluepaper, "Why We Are Bullish on China."

He's pessimistic in the longrun, but it seems like China may be able to keep the ball in the air for the next few years.

Worth a read: http://carnegieendowment.org/chinafinancialmarkets/68708?lan...

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