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Beijing struggles to defuse anger over China's P2P lending crisis

reuters.com

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Re: Beijing struggles to defuse anger over China's P2P lending crisis

#61

Post by vkou »

seanmcdirmid wrote: post #51
vkou wrote: post #34

Earlier quoted context omitted.

The markets in the US, following 2008, were artificially sustained, too. How hard will they crash?

The US was allowed a crash at least. As for how much we will pay for low interest rates later, I'm sure it will be something bad in the next crash. China has kept pumping up its bubble unreasonably so since the mid-2000s. It has a third-world problem compared to the USA's first-world one.

This may be an unpopular opinion, but in a low-growth first world - which we are probably living in, now, interest rates have to be low.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#62

Post by windows_tips »

Larrikin wrote: post #33
finebalance wrote: post #32

Earlier quoted context omitted.

That's actually a very useful heuristic because, unlike perhaps in the US, in many parts of the world food standards even in higher quality restaurants are rather lax.

Even in the US I learned the hard way about eating lunch early. Chipotle is perfectly fine with serving old steak from yesterday if you're one of the first customers of the day.

Overnight-marinated special.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#63

Post by naveen99 »

varsitywork wrote: post #48
SuoDuanDao wrote: post #24

Earlier quoted context omitted.

I remember a significant anecdote about Chinese assumptions when a Chinese-Canadian I was dating explained she always goes to busy restaurants on the assumption that a lot of customers means they have good food. The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the re…

> in a country with a bias towards savings that's a myth that keeps being persisted, much like their consistent 6-7% gdp growth every year. if you read the article, it mentions that 'He and his family had invested 7 million yuan - their life savings'. "The Myth Of China's 'Excess Savings' Is Weighed Down By Excessive Debt. Bank balances offset against enormous, rapidly rising, bad debts, a property bubble out of all…

Those property prices aren’t unreasonable given lack of property tax and higher population density. It’s the same in india.

https://www.bloomberg.com/gadfly/articles/2018-03-08/don-t-b...

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#64

Post by opportune »

vkou wrote: post #61
seanmcdirmid wrote: post #51

Earlier quoted context omitted.

The US was allowed a crash at least. As for how much we will pay for low interest rates later, I'm sure it will be something bad in the next crash. China has kept pumping up its bubble unreasonably so since the mid-2000s. It has a third-world problem compared to the USA's first-world one.

This may be an unpopular opinion, but in a low-growth first world - which we are probably living in, now, interest rates have to be low.

not an economist, but during periods of wage-inflation (i.e. now or soon), won't interest rates need to increase to prevent the economy from "overheating"?

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#65

Post by varsitywork »

cm2187 wrote: post #54
tonyedgecombe wrote: post #19

Earlier quoted context omitted.

The more they artificially sustain that market the harder the crash will be. It will be painful but I still hope something like that would create democratic reforms.

Actually the europeans are following a similar logic. Try to cushion the pain, amortize it over a long period, hope the problem goes away by itself. You end up 10 years after the financial crisis with an unhealthy banking sector, high unemployment, etc. So it doesn't have to crash but you basically end up having to live with the problem instead of fixing it. The US approach of taking the pain upfront and starting cle…

China can't cushion the pain anymore; they've been doing QE since 2008, and they're at 350-400% debt gdp. Way too high even for developed country, which they are not. That's why they're trying to deflate the shadow debt (20 trillion, 150% of gdp). That's why people are losing tons of money (most if not all their life savings).

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#66

Post by varsitywork »

vkou wrote: post #61
seanmcdirmid wrote: post #51

Earlier quoted context omitted.

The US was allowed a crash at least. As for how much we will pay for low interest rates later, I'm sure it will be something bad in the next crash. China has kept pumping up its bubble unreasonably so since the mid-2000s. It has a third-world problem compared to the USA's first-world one.

This may be an unpopular opinion, but in a low-growth first world - which we are probably living in, now, interest rates have to be low.

US will see high growth because the money that was loaned to emerging markets are coming back.

US recorded 4% gdp growth in Q2.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#67

Post by varsitywork »

vfulco2 wrote: post #4

There is a huge structural issue when investors of all asset classes believe the central government will bail them out. It happens to a vastly lesser degree elsewhere. We saw the folly of it in the US in 2008.

Except China cannot take on any more debt to bail out the investors. We're going to see more and more Chinese investors lose their life savings.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#68

Post by opportune »

vfulco2 wrote: post #4

There is a huge structural issue when investors of all asset classes believe the central government will bail them out. It happens to a vastly lesser degree elsewhere. We saw the folly of it in the US in 2008.

It is still happening with home prices in many, many countries. Too many older people with too much of their net worth tied up in their homes. Essentially governments in many countries discovered, perhaps on accident, that pumping up the prices of homes was an easy way to fund the retirements of much of the older generation without explicitly raising taxes.

The bubble essentially cannot pop because too many people would end up underwater or lose most of their savings - this is a huge political issue. But on the other hand, the bubble cannot continue indefinitely, because if home prices outstrip inflation and wage growth for too long, eventually nobody will be able to purchase a house at all - this is the economic issue. This is not only happening in the US but also many other Western countries and in countries like China (exacerbated by their lack of investment vehicles).

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#69

Post by majormajor »

SuoDuanDao wrote: post #24
21 wrote: post #14

In the last 5 years retail Chinese investors had massive losses in bitcoin, gold, the local stock market, bitcoin again, now P2P. Is it fair to say that they rush from one investment fad to the next, typically buying the top? This is how it looks from far away, can someone with local knowledge comment? http://static.atimes.com/uploads/2015/07/retail-investors.jp...

I remember a significant anecdote about Chinese assumptions when a Chinese-Canadian I was dating explained she always goes to busy restaurants on the assumption that a lot of customers means they have good food. The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the re…

> The western bias is towards being the first to discover an unknown restaurant with great food that just hasn't had time to build a reputation, but that's not how a typical Chinese person would approach the restaurant problem.

"I found it before it was cool" is a comparatively small thing in the US. The crowded restaurants aren't Chili's or On the Border, as trends have changed, but Instagram, Yelp, etc, drive huge crowds to a certain group of winners. The whole "influencer" thing is a marketing industry desire to capitalize on followers, a concept that is very accurately named.

Re: Beijing struggles to defuse anger over China's P2P lending crisis

#70

Post by pentae »

yellowcherry wrote: post #10
dmortin wrote: post #7

I wonder if the average Chinese is aware of these problems if not affected by them directly. If it is not reported in media and you don't know anyone who's affected then how would you know about this? And knowing about is this important, so you don't put your money in such an investment.

It's reported in the Chinese media almost daily right now.

Probably not the part about protestors having their doors kicked in and being rounded up and put into holding centers, I imagine. This is probably the most important thing people should know about.
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