Germany cemented its control over Europe when 25 out of 27 EU states agreed to a pact for stricter budget discipline. The Brits and the Chechs refused to sign. "To write into law a Germanic view of how one should run an economy and that essentially makes Keynesianism illegal is not something we would do," a British official said.
Compare Europe indebtness with China's growing surplus and national savings of hundreds of billions. No debt crisis in China or Singapur. The world is sliding back to the situation of a thousand years ago, when China was so big and self sufficient, that needed nothing from the rest of the world and those Western Barbarians could be discounted as nuisance. And those Barbarians will, once more, try to pirate Chinese wealth.
18 comments:
The suffering is just a by-product. The Greeks continue to live above their means and until they figure out how to support themselves with honest work, suffer they will. The world does not owe them a living. The idea that cuts in government spending is causing the Greek (and other) economies to shrink is a canard. Spending money you don't have does not create wealth - it consumes it. This has nothing to do with Calvinist morality - it is simply a matter of bookkeeping. Of course the Greek cargo cultists would love for the Germans to keep sending them free money that they don't have to pay back but I can't blame the Germans for not wanting to.
K
K
China has some of its own problems with which to contend, including ubiquitous corruption and a huge real estate bubble (literally empty cities) that dwarves the U.S. real estate bubble. The quality scandals (drywall that eats up electronics, toxic human and pet foods, etc.) have also hurt China somewhat.
We will be happy to take Greece's place in the Eurozone.
China is in a very good financial situation. Empty cities will not bankrupt China, and it has enough farmers to fill them in no time. Quality scandals are minor, there is huge demand for China's products. I fel they are doing well.
The farmers don't have enough money to buy real estate in the cities without the developers taking a bath, and we're talking about something like 64 million vacant units. The government has so far been unwilling to subsidize purchases of flats by the millions of Chinese too poor to afford the listed prices, and foreigners are strictly limited as to how many they can buy. When the prices start to fall drastically, the bubble will burst, and it could be very bad.
When I say the bubble will burst in China, the fall in prices of the millions of vacant units will bring other real estate values down with it, eliminating much of the net worth of the Chinese who have been able to afford real estate purchases.
The Chinese property bubble was the problem. It's bursting is the solution. High property prices retard future growth, delay the formation of families, lower social and spatial mobility, capture and freeze productive capital.
What most Western commentators do not realize is that the majority of urban Chinese live in tiny apartments and had been absolutely priced out of the market. As people get wealthier, they don't buy more homes, but bigger and better ones. The glut of "Luxury" real estate in China are really 100+ square meter modern buildings that would be considered modest in America (but palatial to someone living in a 50 square meter Sovietesque bunker).
Something like close to 50% of home buyers in the last few years were the very wealthy buying up property as an "investment" and inflation hedge.
Chinese real estate developers will never take a loss because their margins were astronomical. A lot of the land was simply appropriated via bribes from local communist officialdom. The construction materials/quality are questionable by modern Western standards (though pretty damn good by third world standards). The labor dirt cheap and efficient. The same apartment block built in China costs a fraction of what it would take to build in America but unit prices were selling to buyers at the same price.
When prices decline by 50% or more, the losers will be the rich and the stupid. The corrupt local governments who earned most of their revenue through dodgy land sales. The billionaire developers reduced to mere millionaires.
The winners will be the 1 billion plus Chinese who find quality housing (compared to what they presently have) now suddenly in reach.
Stop dreaming of a disaster falling on the Chinese. It will not happen. Chinese live in very bad housing conditions and will work their Chinese asses off to buy with lifelong mortgages or rent those nice apartments being built everywhere. The Chinese pay their mortgages, unlike some Americans I have heard about. No bubble in China.
When it comes to China, I think there is a lot of anticipatory schadenfreude going on. I would not rejoice too soon - 1st of all it's not clear whether they are really headed for a downfall and 2nd, if and when it comes, it's not necessarily good news for the rest of us.
K
Anticipatory joy about Chinese real estate crisis is misplaced. Say they are 64 million vacant apartments owned by...whom? There are 250 million families anxious to buy, rent, whatever those emptly apartments. The Chinese government has more than enough free money to lend at attractive rates to these people to allow them to buy on mortgage these apartments. As said, Chinese have the habit of paying their mortgages. That is the difference with American mortgage crisis. Americans who bought homes with easy mortgages did not pay and the whole mortgage business collapsed. Chinese who will receive mortgages will not eat but will pay back their debts. No crisis at all. It will work out beautifully. Everybody will be happy. No foreign devil banker will be allowed to profit from Chinese mortgage business. Except a few Israelis who ARE the Chinese mortgage business (under development).
But we Jews are no foreigners in China, we are a recognized CHINESE nationality. Hahaha. True.
American blogosphere makes a big deal of the aging of China's population. The figures say that 10% of China's population is over 65, while Japan - 20%. White America is about 15% and is not getting younger either.
No Chinese collapse is in view. It is a very big, very homogeneous, very strong country.
I saw very few elderly in China and the few that I saw were mostly not in good shape. Until recently life was hard and advanced medical care not available.
But, some sort of demographic crisis is inevitable due to the one child policy. A much smaller generation of children will have to support a larger generation of their parents.
Demography is destiny - as Japan has aged it has lost its dynamism. Sony today announced record losses. Sony was once at the cutting edge of developments in electronics - they invented the Walkman but completely lost the music player market to the iPod. They lost their TV business to the Koreans.
K
I'll take Japanese stagnation over third world dynamism any day of the week; twice on Sundays.
China is simply the last and greatest of the Industrial powers that began their ascent in the 19th century.
So what if China ages in a similar vane as the developed West? Who is coming to come after? The fertile Arabs, Africans, and Mestizos? No.
What about India? Brasil? One cannot know who is waiting its opportunity in the dark corner.
What about India? Brasil? One cannot know who is waiting its opportunity in the dark corner.
Brazil and india are the countries of the future and they always will be. Their breadth and depth of human capital is leagues away from that of china. Brazil is a country of african slaves and amerindians ruled by a lusophone white elite. India is likewise a backward land populated by a backwards people ruled by an exceptionally deluded anglophone high caste elite.
Economic developement derives from three factors: capital intensity, labour, and productivity. Not democracy nor human rights or multiculturalism or diversity that are the buzzwords of the day for the debauched west. India and brazil will never reach prosperity because they are peopled by a population that is a standard deviation or more below the intellect of the oecd.
Brazil I know. 200 million people rather uninterested in learning, with a million strong white/Japanese elite. No foreign or internal conflicts. It makes for a very prosperous country. Not in the European mold, but something different and tropical.
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