China, will be Japan writ large...
Posted on 10/23/2016 2:22:05 AM PDT by TigerLikesRooster
China likely to repeat Japan’s lost decades with debt, unbalanced economy, Senate hearing finds
By Harvard Zhang
Published: July 14, 2016 3:16 p.m. ET
WASHINGTON ? China is likely to fall into the same economic trap as Japan did to muddle along with sluggish growth as it hesitates to deal with the overcapacity and excess debt issues, economists told a Senate hearing Thursday.
A further slowdown in the Chinese economy would affect the U.S. by denting the exports of China’s Asian and European trading partners and encouraging a flurry of global currency depreciation, witnesses told the Senate Banking Committee.
“China’s economic-growth model appears to have run its course, and China would now seem to be headed for many years of very slow economic growth, much as happened to Japan for the past two decades,” said Desmond Lachman, an economist at American Enterprise Institute, a conservative think tank.
“It’s very unlikely to get the bubble bursting in a way like in the U.S. because China has control of the banks and state-owned enterprises, it can keep pumping credit to keep zombies alive in much like what Japan did,” Lachman said.
China’s ruling Community Party faces a dilemma between the urgent need to transform the country’s slowing economy, and the possibility of losing control and social unrest if massive layoffs happen. The economists who testified Thursday shared a pessimism of China’s taking actions to become a market-oriented economy.
“China is in trouble, there’s a cancer in the economy and it has metastasized,” said William Wilson, an economist at the Washington-based Heritage Foundation, which advocates limited government and free markets.
China’s continuous overcapacity and credit-bubble issues coincide with the economic and financial problems haunting developed and emerging markets.
(Excerpt) Read more at marketwatch.com ...
Japan once went near the top of world economy in terms of per capita GDP, and then fell into decades of economic stagnation. S. Korea has been coming close to join a group of a dozen countries with high per capita GDP, but now heading toward the same kind of troubles Japan has been battling without much success. China has barely made out of their poverty and started to move up, but about to fall into a same trap. All have similar problems in terms of debts, housing bubbles, and demographics. In addition to that, China has huge overcapacity problems.
Business can cut cost and produce more products but there are simply not enough people with money to buy them, not in U.S., nor in Europe, and now in E. Asia. We all stretched ourselves on borrowed credit, buying and selling more than we can sustain, and it is coming to an end, whether we want to believe it or not.
P!
Eyes glazed over.
What is money on the international level? What some bureaucrap says it is?
Insanity.
And we do the exact same thing. Centralized planning from DC and the maddening level of Federal Regulations and the cost associated with that are a clear prescription for failure.
And we treat the collection of Despots at the UN as if they are world partners? Who is more insane, US or Them?
If China goes bankrupt, who will enroll in American universities?
Different culture and different government, but that doesn’t change basic math...
“Business can cut cost and produce more products but there are simply not enough people with money to buy them, not in U.S., nor in Europe, and now in E. Asia. “
I read an analysis of car sales in the US. When WWII ended there was a huge demand for cars as people migrated from cities to the suburbs to pursue the American dream. The baby boom exploded demand further, keeping it high until the boomers started retiring and giving up driving. Now there is an incredible four registered cars per registered driver.
In 2007 I bought a 2003 Mercury Marauder with 4,000 miles on it. Imagine an awesome luxury car being four years old with just four thousand miles on it. Original list on the car was $45,000 and I paid $21,000.
The point is, when you have a TV in every room, as many do, and every widget you could possibly need, where is the demand for more TV’s and widgets?
As an interesting aside, I stopped in at a car dealer that looks more like a junkyard. (He had a Studebaker on the back lot.) I suspect he is the largest volume car seller in the city by far. The clientele appears to be almost exclusively illegal aliens. The average list price on the windshield was under $2000 along with a list of what is wrong with the car; such as “needs a brake job.” Somebody I know has dealt with him and says when he had a smaller lot he was selling 25 cars a week. Now he has a line of about 10 front sellers that disappear regularly. Once they reach that optimum price per things not fixed they sell within hours or days. I assure you, nobody who buys a $1800 car pays a thousand a year in insurance on it. They are out there with your Audis and BMW’s on the same road with probably no license and no insurance.
China was able to move from a low income country to an upper middle income country with a mixed economic system. It will need to further free its economy to move to high income.
Put your money on India. Democracy is a messed up system of government. But, communism is worse. India will catch up to, and surpass China, because it is a democracy. This may sound crazy, but in India the intellectuals are pro-market and anti-government. The opposite of here.
Plus, Prime Minister Modi rocks! I like Donald Trump’s brashness and Narendra Modi’s humility.
Happy Diwalli Hindus. We too celebrate the victory of light over dark, knowledge over ignorance, and goodness over evil.
I don’t give a sh!t about India China or any other country. I only care about the USA.
If A Chinese factory closes or lays off workers do I give crap? NO.
Thanks central_va for caring about the USA.
America First, says Donald Trump. Our side might not agree as to what exactly is the meaning that our #1 priority is the USA. But, our side certainly opposes those who would take away our heritage and our sovereignty, and sacrifice the jobs and livelihood of our people for the benefit of others.
“I assure you, nobody who buys a $1800 car pays a thousand a year in insurance on it. They are out there with your Audis and BMW’s on the same road with probably no license and no insurance.”
California knows this well.
Over capacity leads to a depression, not a recession, as factories close and jobs are lost.
China, will be Japan writ large...
What are the deets on the Stude, and how much does he want for it?
You wouldn’t know any of this by watching Chinese TV. I happened to catch CCTV in a hotel room in Mongolia recently; the propaganda puff piece I saw would have everyone believe that the Chinese model of socialism has created unprecedented prosperity for everyone, with even better to come. The propaganda was full of scenes of well-dressed people enjoying social events at high-end locations—hardly how I think average Chinese people live.
80% of Chinese live pretty much the way they did over 100 years ago.
I wanted to look at it. They knew nothing about it. It appears to be a ‘48 or ‘49 bullet nose. It’s a four door. Appears to have all the body and chrome, but in kept on doors in Florida condition. I invited him to trailer it to my club’s car show to sell it . Didn’t ask price because to my eye that model is ugly. I will get his number if you want but I will bet he doesn’t have the title.
I was mostly kidding. Can’t afford one but would love to. The bullet nose models were 50 and 51. 1947 through 1949 were the “coming or going” body styles with more or less the same rear ends but more blunt front sheet metal.
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