Govts are still shell shocked by the 08 GFC. However, bailing out banks during the era of high inflation would seethe lot of people. Expect severe polarization and normalization of extreme political parties getting more vote.
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European Economics Thread
- Thread starter PiSigma
- Start date
Not to be a dick, but all the China collapse youtube videos that were popping up like weeds weeks ago seemed ironic and a projection of what's to come and are happening in continental Europe. All, the coping, and hoping that these idiots in western Europe trying to worry about China are beyond idiots when their continent's respective countries overall economic health, especially their financial sectors aren't in great shape, let alone good shape.
It's really high time for these folks in the west to pay attention to the problems of their own making in their own houses before worrying on someone else's least of all a country as successful as China.
As they love to cite in the west: play stupid games; win stupid prizes.
No f... surprise here for those who had worked at and with CS.
broadsword
Brigadier
What's behind the CS predicament?
What is remarkable is the depths of their lack of knowledge.
It is quite obvious those anti-China pundits know very little about China.
It is quite obvious those anti-China pundits know very little about their own countries, where they hold citizenship and where they reside in.
Whatever games they are playing, it sounds like a loser's game.
It is like they suspect they are going down, but since they are dumb they cannot figure it out, so they decided that if they are going down they must drag China along with them, therefore they stay on top.
They have no idea what they are talking about.
There has been a lot of talk about the real estate problems in China. Yet, real estate prices did not collapse in China.
Now there could be a major bank in Europe going under, because of insolvency. They could be worth the price of zero. The British Pound making headlines because it is tanking. The Euro was doing that too before.
Here we have European instruments that are actually going down a lot, and yet this is brushed over, while the world's biggest asset class the Chinese real estate market from what I understand, did not go down in price, yet there is a crisis in China.
Prices are collapsing means no crisis. Prices are stable means there is a crisis imminent or occurring.
Well, we gotta admit, the degeneracy is kind of impressive.
That is why we keep on watching the crap show. Heh!
I don't want to make it sound like China does not have a problem, but EU banking crisis is a real problem that's probably larger than any other ones. I saw a tweet recently where a British woman said that she had mortgage lined up 2 weeks ago at 4.5%. And then it got changed to 10.5% 2 weeks later. adjustable rate mortgages are just more common outside of America. A lot of people are not going to be able to afford to pay mortgages in the coming month as interest rates continue to go up and government bond yields continue to go up.
So, this is my thought process around the current banking sector trouble. No idea how accurate it is.
excessive lending/economic shock during COVID made financial institutions even more fragile.
supply chain shock, russian/ukraine war/sanctions, excessive lending led to high inflation
high energy cost lead to economic downturn and business closure
general economic weakness lead to weaker currencies across Europe
this leads to financial institutions betting against Europe
higher market volatility means more margin needed -> banks need more cash
companies failing lead to more bad loans usual -> bank losses
bank losses lead to loss of confidence in certain banks
loss of confidence lead to investor taking money out -> bank run
which pushes central bank to try to figure out how to bail out the banks -> not every bank will be bailed out
banks going under means less money to lend -> bad for businesses
pushes to a larger recession -> lower tax receipt
weakened currency + lower tax receipt + gov't stimulus -> larger deficit
larger deficit and loss of faith in Euro -> sovereign debt crisis like in 2010 to 2014.
we are several years away from this fully playing out, but I think we are getting close to that initial shock of 1 or 2 major banks failing, which lead to them getting bought out or just ceasing operations.
On top of this, UK and Japan are hugely problematic.
So, this is my thought process around the current banking sector trouble. No idea how accurate it is.
excessive lending/economic shock during COVID made financial institutions even more fragile.
supply chain shock, russian/ukraine war/sanctions, excessive lending led to high inflation
high energy cost lead to economic downturn and business closure
general economic weakness lead to weaker currencies across Europe
this leads to financial institutions betting against Europe
higher market volatility means more margin needed -> banks need more cash
companies failing lead to more bad loans usual -> bank losses
bank losses lead to loss of confidence in certain banks
loss of confidence lead to investor taking money out -> bank run
which pushes central bank to try to figure out how to bail out the banks -> not every bank will be bailed out
banks going under means less money to lend -> bad for businesses
pushes to a larger recession -> lower tax receipt
weakened currency + lower tax receipt + gov't stimulus -> larger deficit
larger deficit and loss of faith in Euro -> sovereign debt crisis like in 2010 to 2014.
we are several years away from this fully playing out, but I think we are getting close to that initial shock of 1 or 2 major banks failing, which lead to them getting bought out or just ceasing operations.
On top of this, UK and Japan are hugely problematic.
Agree.
China has a lot of problems. That cannot be denied, nor understated.
However, there is where the vast differences really appear between east and west.
1. China is still economically and financially strong. So whatever problems there are, there is some ammo to combat it, and there is time to combat it. Hence, that is why it seems the CCP is moving as slowly as it can. To make a long story short, the strength of the Chinese economy permits and allows various policy levers that the government can use at their convenience, blah blah blah.
For example, if the PRC does not like what the RMB is doing, they will do something about it, where as the new leaders in England, what are they going to do about the Pound ...
Not to mention inflation, recession, and being at 20% at the polls, far lower than Boris! Why they get rid of him anyways!? It is like they want to lose.
2. The difference between east and west, appears to be rather stark in this forum's semiconductor thread.
One side is building up, thinking about the future.
The another side, is making it up on the fly, every month there is a new ban or sanction.
One side is planning ahead for the long term. The other side is making all these short term moves and trying to put out all the fires at the same time.
This chip act, and this chip-4 alliance, those are moves for the long term. The problem is no one knows what those two things are actually suppose to do. Logically, there is no long term plan, just more short term maneuvering.
To me, this is very important. One side is planning for the long term. The other side has no such plans, and are just flailing away at whatever new problem that should appear.
The Americans are now talking out loud about sanctioning China's ability to make memory chips.
Do they mean they want to use their power to stop China from making memory chips now, or forever and ever? The latter seems impossible, (given the state YTMC chips are at currently). So, this is just for the short term, more short term thinking.
To compound this short term thinking problems, often these short term solutions do not even work. The trade war, and Huawei building out the 5G network in China are examples.
China is just not interested in trying to counter European or American short term moves.
That Pelosi incident, after that, it became clear as day. That was a political stunt. So naturally, counter a political stunt with another one, just to make a point.
But no, mainland China takes that opportunity to change the status quo, for the long term.
This short term move being met by long term moves being played by the other side, seems to be manifesting itself far more now in the tech war.
What is interesting, is that both sides believes they got them where they want them, and believe their moves work. Blah blah blah.
A quick note, that should be obvious, but just to clarify.
If you're thinking about the long term and making moves to that effect, then you will always be ahead of the other guy who only makes short term moves.
If you're thinking long term, you're two or three steps ahead of those who don't.
Look at Huawei. After President Trump fined ZTE, Huawei got the message, started an inventory build up of chips, and more R&D into other areas, such as pushing forward the Harmony O/S and doing their own chip research, in particular stacking. Are those long term moves going to pay off for Huawei?
If you're thinking about the long term and making moves to that effect, then you will always be ahead of the other guy who only makes short term moves.
If you're thinking long term, you're two or three steps ahead of those who don't.
Look at Huawei. After President Trump fined ZTE, Huawei got the message, started an inventory build up of chips, and more R&D into other areas, such as pushing forward the Harmony O/S and doing their own chip research, in particular stacking. Are those long term moves going to pay off for Huawei?
Case and point - Here's a frog that didn't realise the fact that himself is already swimming in a pot of water that is gradually boiling:
#YuropenYunyunIsDaNextSuperpowah
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