Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

World edges closer to deflationary slump as money contracts in China
The Telegraph ^ | 5/13/2012 | Ambrose Evans-Pritchard

Posted on 05/14/2012 12:41:11 AM PDT by bruinbirdman

All key indicators of China's money supply are flashing warning signs. The broader measures have slumped to stagnation levels not seen since the late 1990s.


Chinese ghost city

Narrow M1 data for April is the weakest since modern records began. Real M1 deposits – a leading indicator of economic growth six months or so ahead – have contracted since November.

They are shrinking faster that at any time during the 2008-2009 crisis, and faster than in Spain right now, according to Simon Ward at Henderson Global Investors.

If China were a normal country, it would be hurtling into a brick wall. A "hard-landing" later this year would already be baked into the pie.

Whether this hybrid system of market Leninism – with banks run by Party bosses – conforms to Western monetary theory is a hotly contested point. The issue will be settled one way or the other soon.

What seems clear is that China's economy did not bottom out as expected in the first quarter. It is flirting with real trouble. Yao Wei from Societe Generale says a blizzard of awful data "screams out for easing".

China's electricity output – watched religiously by bears – slumped in April. It is up just 0.7pc over the last year. State investment in railways has fallen 44pc, with an accelerating downward lurch over recent months. Highway construction has dropped 2.7pc. "The data shows extreme weakness in the Chinese economy," said Alistair Thornton from IHS Global Insight in Beijing.

The Yangtze shipyards tell the tale. Caixin magazine said eight of the 10 largest builders in the country have not received a single new order this year. "A wave of closures in the shipbuilding industry has yet to begin. A hurricane is approaching," said one official.

Housing sales slumped

(Excerpt) Read more at telegraph.co.uk ...


TOPICS: Business/Economy; Crime/Corruption; Foreign Affairs; News/Current Events
KEYWORDS:
Navigation: use the links below to view more comments.
first previous 1-2021-36 last
To: piytar

We owe the Chinese lots and lots of money. Just Friday it was announced that the Green River oil shale had about as much recoverable reserves as the entire rest of the world. http://www.freerepublic.com/focus/news/2882771/posts?page=41


21 posted on 05/14/2012 4:00:04 AM PDT by muawiyah
[ Post Reply | Private Reply | To 3 | View Replies]

To: Southack
Deflation will happen as a direct consequence of lower costs of production, delivery, and sale brought about by mechanization, automation, robotics, computerization and improved methods (smart guys thinking about it).

The United States currently has 20 million people unemployed as a consequence of these processes. We'll probably end up with another 20 million unemployed from the same processes in just a decade.

We have to figure out how to keep folks employed and paid.

22 posted on 05/14/2012 4:03:01 AM PDT by muawiyah
[ Post Reply | Private Reply | To 16 | View Replies]

To: piytar

The biggest item in most people’s budgets is a place to live. While homes could deflate still further, rental costs will likely inflate.


23 posted on 05/14/2012 4:05:39 AM PDT by rbg81
[ Post Reply | Private Reply | To 3 | View Replies]

To: muawiyah
The United States currently has 20 million people unemployed as a consequence of these processes. We'll probably end up with another 20 million unemployed from the same processes in just a decade. We have to figure out how to keep folks employed and paid.

How about the Post Office?

;^)

24 posted on 05/14/2012 4:07:16 AM PDT by Lazamataz (To the wall, street occupiers!!!!!)
[ Post Reply | Private Reply | To 22 | View Replies]

To: Uncle Lonny
India has several hundred ancient temples where it is known that gold was set aside. They popped one of them open several months ago. First reports were that it had billions in gold. Then they said $45 billion in gold. More recently stories have circulated that it was $145 billion, and they were still digging through the network of underground rooms finding more.

Now what do you imagine news like that does to the price of gold?

25 posted on 05/14/2012 4:08:09 AM PDT by muawiyah
[ Post Reply | Private Reply | To 7 | View Replies]

To: Lazamataz
We mechanized, automated and computerized the bejaysus out of postal operations. They only need about 300,000 people these days and are looking to layoff 250,000 in short order.

If you wanted to do a study on DEFLATIONARY PRESSURES AND THEIR CONSEQUENCES you could start at USPS.

Since the early 1970s they had a 700% increase in productivity per workhour. I was one of the first of the budding young employees at Headquarters to come up with a device that would displace one employee for every one device purchased. That became a goal or ambition of others as well, and they worked it to the bone.

26 posted on 05/14/2012 4:16:43 AM PDT by muawiyah
[ Post Reply | Private Reply | To 24 | View Replies]

To: rbg81
You can buy a house in the DC suburbs for $250,000 to $350,000 ~ and rent it out for $2000 to $2700 per month.

That would enable you to pay off the mortgage before you'd exhausted the depreciation.

27 posted on 05/14/2012 4:18:58 AM PDT by muawiyah
[ Post Reply | Private Reply | To 23 | View Replies]

To: Lazamataz
I’ve heard convincing arguments that the core of the problem lies with the repeal of the Glass–Steagall Act around 1999. Only 8 years later, we had our inevitable crisis.

BINGO!!

The dynamite (CRF) was already in place, but Gramm-Leach-Bliley (1999) put the match to the fuse.

28 posted on 05/14/2012 4:25:56 AM PDT by Roccus
[ Post Reply | Private Reply | To 9 | View Replies]

To: Son House
China has a substitute for debt that works just as well to stagnate things ~ it's called 'a spare billion people'. Even as the number two economic powerhouse in the world, everybody there is still, on average, hopelessly impoverished.

Those spare billion would not, even with a doubling or tripling of income, be able to capitalize on their newfound wealth. Rather, fewer would starve, or die young, or be slaughtered as babies.

More hootches would be built, but they'd be the same mud-walled tarpaper augmented roof designs everybody else has. Pig breeding would not be done in a more elegant fashion ~ that being limited to the amount of food available, and no more fields would be put to the plough than they are now able to work.

The ducks would quack, the noodles would slurp, green onions would pop up in protected window boxes ~ and China ~ the real China ~ would slumber on into the immedate post neolithic future!

29 posted on 05/14/2012 4:26:40 AM PDT by muawiyah
[ Post Reply | Private Reply | To 14 | View Replies]

To: muawiyah
Couldn't we just hire them into the Post Office to stand there, idle, and look disinterested?

I mean, it's worked for so many decades....

;^)

30 posted on 05/14/2012 4:29:54 AM PDT by Lazamataz (To the wall, street occupiers!!!!!)
[ Post Reply | Private Reply | To 26 | View Replies]

To: Lazamataz

We got rid of that stuff years ago. Nobody just stands around looking disinterested. They were incorporated into the operation of the Great Machine at the heart of the planet (or which will be eventually).


31 posted on 05/14/2012 5:23:16 AM PDT by muawiyah
[ Post Reply | Private Reply | To 30 | View Replies]

To: gunsequalfreedom

And those savings were used to back the construction of those “ghost apartments” pictured above


32 posted on 05/14/2012 5:27:57 AM PDT by tom paine 2
[ Post Reply | Private Reply | To 5 | View Replies]

To: Uncle Lonny

I knew something was up when gold dealers on TV started advertizing selling at dealer cost with little or no commission. That told me that the smart money was selling their hoard or at least a lot of it.


I don’t know if it is still going on, or even what the details were (minimum purchases?)but I saw some ads a few months ago where dealers were offering $250 cash or so to first time gold buyers.

I am also unsure if MSM covered Soros and Buffet predicting a *gold bubble*, but when I mentioned it to a friend who is heavily invested in physical and miners, she was scathing that the fundamentals didn’t support the term *bubble*. That’s true, but all I could think of was that in a manipulated market, none of the old methods still operate. She eventually agreed.

I mentioned those two predictions to an extreme liberal and she turned absolutely bloodless. I thought at the time that it was interesting that even die-hard supporters of zerO and Co. were hedged with gold.

And yet: still another friend works for an international manufacturer with a lot of infrastructure in China. They are actually all over the world and our friend spends half his time in a plane going to Saudi, Japan, China and a couple of places here in the USA. His employer is doing alright to the point where the employee is putting off retirement as long as possible.

There just may be a lot of denial out there or people are expecting enough government intervention to change the predicted outcome. Or the predictions are overwrought to begin with. I just don’t have enough real information to judge, however, I expect bi-flation and would not be surprised to see price controls at some point.

The worst of all worlds, in other words.


33 posted on 05/14/2012 5:57:38 AM PDT by reformedliberal
[ Post Reply | Private Reply | To 7 | View Replies]

To: muawiyah

I sold my NoVA house in 2006 when the market was at its peak. Prices have about halved since then. According to my old neighbor, the guy who bought my house would like a word (or more) with me. But, hey, no one put a gun to his head. That’s what homes were selling for at the time.


34 posted on 05/14/2012 7:43:27 AM PDT by rbg81
[ Post Reply | Private Reply | To 27 | View Replies]

To: tom paine 2
And those savings were used to back the construction of those “ghost apartments” pictured above.

All the stuff we bought at Walmart provided a bunch of the money too. My guess is the biggest threat to the ordinary Chinese citizen's savings will be inflation, not those buildings but I could be wrong.

35 posted on 05/14/2012 9:38:00 AM PDT by gunsequalfreedom (Conservative is not a label of convenience. It is a guide to your actions.)
[ Post Reply | Private Reply | To 32 | View Replies]

To: gunsequalfreedom

The banks that loaned out the money will collapse taking the investors with them.


36 posted on 05/14/2012 12:59:09 PM PDT by tom paine 2
[ Post Reply | Private Reply | To 35 | View Replies]


Navigation: use the links below to view more comments.
first previous 1-2021-36 last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson