An interesting article from ZeroHedge, with obvious impacts for Australia: http://www.zerohedge.com/news/2015-09-12/miracle-cataclysm-why-commodity-bust-will-last-years I suggest reading the article as it has charts to go with it. I suspect that it is becoming likely the poor of China will cause civil unrest when this all goes to hell. It was very hard to unite China in history, and i suspect it will become hard to unite it in the future too - unless they have a common cause (no points for guessing what that might be).
I feel sorry for the poorer Chinese, who are the ones that will cop the brunt of problems, without reaping the real benefits of the boom.
People have pointed out that commodity busts can last for several years and even decades. The question for us here in Australia is how we will be impacted by the convergence of this slackening commodities demand and a government unable to even acknowledge that it is a possibility? Someone in the comments pointed out that it may not be over just yet. There could be another desperate round of money injection:
I'd say the current govt has acknowledged this possibility from day 1. That's was part of the narrative for cutting the expenditure and getting back to surplus asap in the first budget. (Whether they were too soft is another issue.) The problem is that they have largely been unable to sell the narrative to the opposition and some cross-benchers who do wish to ignore the possibility and not only keep unfunded spending promises but add yet more spending.
I'd like to see where Joe Hockey or Abbott specifically stated that the China downturn and global slackening of demand is a serious issue for Australia. We're seeing just the opposite in their current rhetoric with Hockey going on about our "prosperity momentum" and that he expects strong growth in China. The "budget emergency" rhetoric has completely disappeared. Spending continues unrestrained, and it can't all be blamed on the opposition. Spending under the Abbott government is now at a higher level of GDP than in all but one of Labor's years in government (the GFC stimulus).
What commodities bust? Things are apparently going really well according to the public commentary coming out of our government. Here's some quotes by our treasurer on demand for Australian commodities and the future of our economy: May 12, 2015 14 July, 2015: "So far as I am concerned and the Treasury is concerned, our budget forecasts for the Chinese economy remain unchanged. We expect growth of 6.75% this year, 6.5% next year and 6.25% the year after, so our relationship with the Chinese economy remains unchanged by recent volatility," Aug 15, 2015: "We've got prosperity momentum" Aug 15, 2015: "I'm still confident about our forecasts from the May budget and I remain more bullish about the region and the global economy than others," Aug 25, 2015: "I'm absolutely confident, absolutely confident, that the fundamentals of the Australian economy and the global economy are still good, are still good. Without doubt, that is the situation." Sep 3, 2015: "There is no risk of recession in Australia," Sep 8, 2015: "I think there's a general misread of the performance of the Chinese economy and the determination of Beijing to make sure its economy continues to grow, and grow relatively strongly," Sep 8, 2015: "Our volumes of iron ore -exports to China are the highest level ever, and they're going to continue to grow in volume" Aug 17, 2015
In the last 300 years, commodities have followed a 57 years cycle (give or take 2 years). Right now is a correction, like in 2008. Commodities are set to boom until the end of the 20's. ps. the money has to go somewhere... DEUTSCHE BANK: We examined 200 years of data and concluded stocks, bonds, and housing are at 'peak valuation' http://www.businessinsider.com.au/d...sing-near-peak-valuation-2015-9#ixzz3l8zgO3Ak
if you sit on your arm chair and read western media, your impression of China is that of a corrupt communist bubble ready to burst or even collapse with social unrest and political upheaval But as a middle class Chinese growing up in China, I've seen real changes in the standard of living in the past decades. I still vividly remember the old days when we still used a coal cylinder stove. And the real progress when we got our first gas stove, our first television, telephone, shower and air condition. Those so called "failed policies" has lifted most amount of people out of poverty in the shortest amount of time in human history (myself included). I dont think most people here realize just how poor the chinese were 30 years ago, when millions died from starvation. Obviously they still have a shit load of problems and are nowhere near as developed as the western world, but compare to where they were 30 years ago, the average quality of life has improved drastically.
I don't think anyone is saying that life hasn't improved dramatically for many people in China. The question is, will the pace of growth continue? What will be done in an attempt to maintain growth and to ensure social stability?
A move from an export driven economy to a successful domestic consumption economy would be the way to go. It's always a bumpy transition though
Millions died from starvation directly from Mao Tse-Tung's idiotic policies, not because they were poor.
yada yada I remember reading newspaper articles just a few years ago explaining why the commodity boom was going to continue for another 20 years now the predictions are the bust will go on indefinitely nobody has a clue Commodity stocks used to be called CYCLICALS for a reason !
I'm guessing that the greatest genocide of the 20th century included rich and poor alike. I wonder if the true extent of the suffering and death under Mao will be written out of Chinese history?
I'm often amazed at the effect of propaganada, and at a deep societal level. I was listening to some history of Stalin's daughter, who defected at first opportunity and who was loved by Stalin, as described by one of the Kremlin overlords, 'as a cat loves a mouse'. Point of the story is that the massively sickening death warrants signed by Stalin, often for 30 or 40 thousand people in the afternoons 'signings' had little or no effect on Stalin. Most ordinary people would at least take pause, but Stalin regularly signed warrants for that 30 or 40 thousand, and then retired too dinner and one of the comedy movies he was fond of. The psychopaths who rule are just that - psychopaths. If we're lucky we end up with just a sociopath. The point of this being, that Stalin received hundreds and thousands of letters from the populace seeking is intervention as 'obviously mistakes have been made'. Letters of appeal to the very executioner who had been painted as 'Uncle Joe', father of the revolution with a boundless love for the people. Mao had a similar ruthlessness and that history is truly shocking, though hardly less shocking than the control of the emperors who went before him. Render unto caesar and keep your distance from leaders! As for commodities - nobody knows except those leaders, and they're not going to tell YOU!
True that socialsm always leads to mass loss of life (Russia under Stalin, China under Mao, Cuba under Castro, Zimbabwe under Mugabe... etc But then, the move into (Crony) Capitalism during the Great Depression also resulted in widespread starvation, death and suffering... I suspect the only thing we can be sure of that "Change" leads to death. :/ ?
@JulieW, that's been a popular topic of discussion among social and political students and academics for some time, the Nazis being one group which often form the centre of such discussions. Their passion for genocide during the day and for Mozart at night.
China averaged one regional famine a year for nearly a millennia, yes that was awful, the famine under Mao has no parallels, but the ability of China to achieve did security is no small feat and happened under the CCP. Love them or hate them.
The rich fled to Taiwan with most of China's gold. They avoided the worst of Mao's idiocy. Those who stayed quickly became poor under Maoism. The starvation wasn't as a result of being poor, it resulted directly from Mao's policies.
