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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

#251

Post by woodandsteel »

drcode wrote: post #31
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…

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 seems like smart people have been predicting that China's growth is unsustainable on a regular basis for at least 15 years

If you mean sound growth, they were right. That has ended and growth is increasingly based on financial tricks that will make things worse in the long term, so I would say the experts turned out to be correct.

Also, even with all the debt, yearly GDP growth is down from the previous 10% to something like 6%, so again the experts were right.

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

#252

Post by woodandsteel »

timthelion wrote: post #186
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…

It is not true that the Greek crisis happened in plain sight. The government actually cooked the books in order to comply with European lending regulations: https://en.wikipedia.org/wiki/Greek_government-debt_crisis#D...

I don't buy that excuse. Everyone knew the Greeks are very corrupt, and one feature of corrupt governments everywhere is they fake their economic numbers. So the lenders really should have looked deeper. They didn't because they knew the EU would bail them out.

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

#253

Post by ryandamm »

grzm wrote: post #234
ryandamm wrote: post #231

Earlier quoted context omitted.

Great, detailed response -- I learned a lot from this, so thank you. Also, I think it's hilarious/curious that the actual economist's response is buried in a thread. Internet message boards (yes, even HN's) are not kind to actual expertise.

> Also, I think it's hilarious/curious that the actual economist's response is buried in a thread. > Internet message boards (yes, even HN's) are not kind to actual expertise Would you elaborate on this, in particular what you mean by buried? I'm assuming you're referring to 'spangry's responses. Given the nature of threading and where 'spangry chose to respond, I don't see how it could be anywhere other that where i…

Sure, I'll elaborate, but it may not be terribly illuminating.

As for why it's "hilarious" (okay, overstatemetn) -- it's not really a critique of how comments work -- more just that this is sort of an off-topic subject matter for the audience, and spangry is trying to reply to a comment.

If I were spangry, I would've replied to the post itself. I think HN commenters are pretty thoughtful, and his detailed post probably would've risen to the top, and enhanced the overall conversation.

So the right way to read my snark is more as a commentary on the fact that economics is a technical subject, but most technical readers at this site are technical in different ways. I would assume the top comment (and attendant conversation) would be spot-on for the latest framework or software technology, though.

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

#254

Post by deepGem »

dis-sys wrote: post #200
deepGem wrote: post #169

Earlier quoted context omitted.

I think the only credible credit rating agency is Standard and Poor's. It'll be interesting to see how they react to this downgrade by Moody's.

S&P is arguably worse - S&P was fined $1.5B for its shameful role before GFC, it refused to downgrade problematic assets because their business revenue relies on all those junk assets being rated AAA[1]. [1] http://www.bbc.com/news/business-31115174 Should I trust what S&P is saying given their track records like this?

Oh man, thank you for bringing this to my attention. I thought they were the last credible source since they were the first to downgrade US sovereign rating in 2011 or 2012.

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

#255

Post by dredmorbius »

viraptor wrote: post #250
dredmorbius wrote: post #202

Earlier quoted context omitted.

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

Can't edit original now. Image is at https://imgur.com/N6dOFMS Source pdf (page 1): https://www.rba.gov.au/publications/bulletin/2017/mar/pdf/bu...

Thanks. Ah yes, the "let's rebase our optimistic forecast to the current values, but otherwise leave the model unchanged" concept.

US DOE and IEA oil forecasts are similar.

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

#256

Post by [deleted] »

cletus wrote: post #101

China's development has really been fascinating. 10-20 years ago I can remember the analyses arguing China can only continue to grow with liberalization, even outright requirements for democracy. Perhaps these pronouncements are still being made. I've come to believe that what's really useful to people isn't "democracy" or "freedom" rather rather stability. That means political and economic stability. One thing I fin…

[deleted]

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

#258

Post by kerbalspacepro »

dgregd wrote: post #246
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…

China doesn't import that much goods from the west. So crisis there shoudn't have big impact on US and Europe. Except real estate market. It seems that US, European land/houses are the only thing Chinese are interested in.

It will have an impact on resource-exporting countries though.

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

#259

Post by rhizome »

mistermann wrote: post #166
rhizome wrote: post #107

Earlier quoted context omitted.

Absolutely, but if the US (Moody's, even!) idea of China's cycle is valuable, then so must theirs be of ours.

Surely the analysis exists, but China isn't dumb enough to publish such things.

But Moody's is? I find this unconvincing. Could it simply be that it's available but remains untranslated?

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

#260

Post by hackuser »

scandox wrote: post #188
hackuser wrote: post #184

Earlier quoted context omitted.

> a parable Ha, that's a great observation; I hadn't thought of it. On one hand, I'm very uncomfortable with any implied comparison to the most well known practitioner of parables. On the other, many others have used the form. Maybe I'll write all my HN posts in parable form - 'those who have ears to hear' will understand; the others I won't have to deal with. I could use it for business emails too. Coming up with th…

Gotta say (as a non Christian) nothing wrong with Jesus' reasoning and storytelling skills. Just a case of one bad axiom I guess.

To be clear, I wasn't uncomfortable with the implied comparison because I have something against Jesus or the Gospels. I was uncomfortable because I don't want anyone to think for a moment that I am comparing myself to him. (I'm not.)
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