Interesting couple of gold articles in the middle of the AFR today. One by Peter Wells is titled "Credit Suisse says gold's plunge may presage global liquidity shock" Stack, stack, stack, stack, stack a-stacking we will go, a-stacking we will go.
They owe 3 trillion with over a billion people & the US owes over 20 trillion with around 300 million ....seems acceptable :
Meanwhile, in the US municipal bond market... http://www.reuters.com/article/2013/04/16/municipals-sec-idUSL2N0D328Y20130416
Internally there might be 3 trillion in debt but the country has 3.3 trillion in foreign reserves (mostly US dollars/bonds) US has 20 trillion national debt and only 400 billion foreign reserves (gold) But the US is safe and China will run into problems.... right..... <--- hey look what I found on the web!
There is a continuing disbelief from Western commentators that China will be the world's biggest economy in coming years, they just can't accept it. Only 7.7% growth? Oh no! China is doomed!
Thats what i keep thinking . Just because it isnt in double digit growth theyre all doom & gloom lol . Most countries in the world could only wish they were growing at that rate
who have they been borrowing off? Now i am confused - i thought the Chinese had been lending money to the world?
The only problem is its not real growth. it's credit fuelled growth (sponsored by the state) with no hope of ever recouping the investment. One giant ponzi scheme in other words. China's economic future is not good.
Just to be contrarian against my own posts, the China debt thing is essentially all internal debt so they can mandate anything damn thing they want to ride out the defaults. Heck, they've been more than willing to financially repress their own citizens and make up prices for the past few decades what's one more. However, it is indicative of the level of malinvestments that are happening in China (principally due to the omnipotent but unknowing Government). Washing out of these malinvestments will happen at some stage and that adjustment will be the painful part for non-Chinese (e.g. Australia). In terms of Chinese per capita wealth (not total), the way that these malinvestments are washed out of the current system will massively affect what happens next decade when they hit their own population ageing time-bomb. In my mind, indications are that stronger control by the Government will be tried before a relaxation of its grip around the citizens throats. In this case relative stagnation and even civil war are possible whilst the US will potentially have a resurgence based on new technology and the game-changing shale oil. China clearly has a purchasing power strength currently lacking in most other economies. If it decides to exert it (by depegging their currency from the US dollar) and allow the bankruptcy of tens thousands of unproductive businesses they have a strong chance of becoming the world's largest economy by a big margin. Politically though, I seriously doubt how much relinquishment of control will happen, especially given that the current internal malinvestments and debt needs to be washed out before they open themselves up to international competition.
You ever read any Harry Dent stuff? If I understand your words correctly I think you're saying pretty much what he said in "The Great Depression Ahead: How to Prosper in the Crash Following the Greatest Boom in History".
You just reminded me that I bought that a few years ago but loaned it to a friend before actually reading it (was in the middle of a few others at the time). Sounds like I should get it back and read it.
What it does mean is they won't be demanding as many raw materials from Australia with lower growth. Might have an effect here...
To be honest, I'm sure China lies through their teeth about their economic statistics. It's not like there are independent auditors that can verify the claims from whatever chronie bureau that releases the numbers. I wouldn't be surprised if their actual growth rate wasn't actually much lower and their debt was much higher than 3 trillion.
Don't get me wrong, it's not the greatest book in the world, but it does really outline the affects that things such as median age and other demographics have to do with economies.
& that is inevitable at some stage & like i keep saying china are not our only trading partner theres still a long way to go b4 our resources boom is dead .....a looooong way .
