World Economics Thread

[bladerunner]

:coffee::coffee::coffee:



No, definitely no. Chinese banks won't collapse. Reasons are as follows:

1. For the past 20 years, Western governments and economists had been predicting that Chinese banks would collapse. But, they didn't china::china::china. Back then, Chinese governments didn't have a lot of monies in reserve and the banks were burdened with huge bad loans. However, the governments did manage to reduce those loans and turned the situations around, and banks did make profits nana::nana::nana.

2. Chinese banks have gone through two financial crises - Asian Financial Crisis in 1997 and the Current Crisis. Chinese governments and banks have enough experience to manage and control risks caused by non-performing loans.

3. Since all Chinese banks are state-owned, with 2 trillion dollars in reserve, Chinese governments have the ability to come to the rescue when needed.

4. As of last year, all Chinese banks are the most profitable banks in the world. So these banks can absorb bad debt expenses easily. The worst that can happen to these banks is that their profits drop, but their existence won't be jeopardised.

5. Since these free lendings are part of the government stimulus packages (monetary policy), governments are fully aware that a certain amount of monies will become non-performing loans. This percentage of bad debt expense has already been taken into account in the budget. So, there will be no cause for panic if it happens. Besides, the monetary policy that Chinese governments implements in the stimulus packages is a short term strategy to stimulate the economy. These bad debts can't accumulate to the point that they will jeopardise those banks.

6. Remember this "Market economy with Chinese Characteristics". Back then, we were poor and lack of talents in the financial field, but we still managed to turn our banks around and made them become profitable entities. Now, we have the skills, the brains, and the means; we can manage this bad debt risk a lot more effectively.

Look what happened to Japan? At one stage healthy banks , biggest reserves, world asset acquisitions, and then it all went wrong, a decade later they are still suffering.

On the subject of cars, You are making the mistake of in equating budget with luxury and reliability. Budget cars should not in their capacity be any less reliable than a luxury car, they are separate issues. Toyota made good cars all through its range, that's why they are so popular.

 

[pla101prc]

I doubt it and you are making one very big generalisation and if you are prepared to look , there are just as many economists that are confident in Americas future. Its taken some serious pounding, but its economy is still three times plus larger than any other country, andthe resilence of its people with its proven ability to innovate, it will still lead the world for most of this century.

I dont know what you mean by military power diminishing, but the technological superiority will be maintained in the decades to come, but how they apply their military, needs some re thinking, as wars of the ww2 scenario are unlikely. They are more likely to resemble what we have now, and in that they are gaining experience.

the way i see it the US prominence is generally going in a downward trend in the next 30 years. maybe there will be a breaking point where the country just suddenly collapses like the soviet union, otherwise its gonna be a repeat of the Britains.
the problem is they have lost productivity. their manufacturing sector is basically out of commission, you start to get manufacturing companies that look more like a bank. there will be more of chryslers in the future.
to add to that, i you look at the fiscal dilemma that the US is in right now, there is virtually no way out of it except for inflation and higher taxes, both of which are going to hurt the ppl big time. by 2040 the US will look a lot like the soviet union.
as for military power, i dont think any country will have the ability to challenge the US globally within the next 15-20 years. but for that reason the US will be compelled to fight more wars to get themselves out of the economic trouble, of course that will most likely to backfire.
ppl tell me that the US will innovate their way out of their trouble. first of all they havent any tide-changing innovation since the internet. obviously because the financial sector is important innovations, sorta like the electric cars. and input of technology works the same way as the input of labour and capital, there is a diminishing return. there are things that are simply good enough that the market doesnt need anymore improvements unless there are revolutionary changes (which is impossible at the moment). like your cell phone for example, some company developed this cell phone that allows you to talk anywhere in the world like antarctica and sahara desert...well who the heck is gonna need that? its got no market. technology is useless if the market does not want it. there is one area however, that still has a high demand for technology change, that's medical technology. unfortunately drug companies now spend more resources marketing than researching, so another example of money killing innovation. what you are seeing in the US is a classic sign of and "ageing society" not in terms of the ppl ageing, but their mentality. ppl are getting lazy, expecting profit on ridiculous things like buying a house on mortgage. its impossible to think that these americans will be willing to live the Chinese style even if they have to. they'll just blame the government, which is why i am saying there is a chance that the country might fall apart in the future (like a looong future like 50 years).

 

[pla101prc]

Look what happened to Japan? At one stage healthy banks , biggest reserves, world asset acquisitions, and then it all went wrong, a decade later they are still suffering.

On the subject of cars, You are making the mistake of in equating budget with luxury and reliability. Budget cars should not in their capacity be any less reliable than a luxury car, they are separate issues. Toyota made good cars all through its range, that's why they are so popular.

first of all Japan's economy is fundamentally sound. i think i have said this somewhere else but its the loss of motivation that is the problem. even so Japanese economy will persist. if the same thing happens to the US right now, the US wont be nearly as well off as Japan.
there are a million reasons to explain why the financial crisis happened in Japan but generally we can say that firms stopped making profits on their investments. but can you say that for China's 4trillion yuan stimulus? the stimulus simply accelerated a lot of projects that the government had plan for anyway. this is different from America's stimulus, where they just randomly scramble together a few things and call it a stimulus. i dont see any marginal revenue for fixing a bridge, sure you have to fix it if its broken but i dont know why they are expecting to make money off of that. on the other hand, China is building things that they did not have before, there will be a lot of porks and corruption but in general no experts have yet to declared that the package wont generate any revenue.

 

[Rising China]

:coffee::coffee::coffee:



No, definitely no. Chinese banks won't collapse. Reasons are as follows:

1. For the past 20 years, Western governments and economists had been predicting that Chinese banks would collapse. But, they didn't china::china::china. Back then, Chinese governments didn't have a lot of monies in reserve and the banks were burdened with huge bad loans. However, the governments did manage to reduce those loans and turned the situations around, and banks did make profits nana::nana::nana.

2. Chinese banks have gone through two financial crises - Asian Financial Crisis in 1997 and the Current Crisis. Chinese governments and banks have enough experience to manage and control risks caused by non-performing loans.

3. Since all Chinese banks are state-owned, with 2 trillion dollars in reserve, Chinese governments have the ability to come to the rescue when needed.

4. As of last year, all Chinese banks are the most profitable banks in the world. So these banks can absorb bad debt expenses easily. The worst that can happen to these banks is that their profits drop, but their existence won't be jeopardised.

5. Since these free lendings are part of the government stimulus packages (monetary policy), governments are fully aware that a certain amount of monies will become non-performing loans. This percentage of bad debt expense has already been taken into account in the budget. So, there will be no cause for panic if it happens. Besides, the monetary policy that Chinese governments implements in the stimulus packages is a short term strategy to stimulate the economy. These bad debts can't accumulate to the point that they will jeopardise those banks.

6. Remember this "Market economy with Chinese Characteristics". Back then, we were poor and lack of talents in the financial field, but we still managed to turn our banks around and made them become profitable entities. Now, we have the skills, the brains, and the means; we can manage this bad debt risk a lot more effectively.

7. Last but not least, there is a special group of Chinese that I can't not mention. They are ethnic Chinese financial experts from South East Asia, Australia, North America, Europe and other parts of the world, who tiredlessly provide expertise to China over the years when called upon to help strengthen China banking system. They will be forever an indispensable force outside China to help safeguard China banking system.

 

[pla101prc]

7. Last but not least, there is a special group of Chinese that I can't not mention. They are ethnic Chinese financial experts from South East Asia, Australia, North America, Europe and other parts of the world, who tiredlessly provide expertise to China over the years when called upon to help strengthen China banking system. They will be forever an indispensable force outside China to help safeguard China banking system.

every country has that, its called think tank lol. the US has like 1400 think tanks and they still make stupid choices. so it has more to do with structure than individuals.

 

[AssassinsMace]

Look what happened to Japan? At one stage healthy banks , biggest reserves, world asset acquisitions, and then it all went wrong, a decade later they are still suffering.

Are you saying China is just like Japan? Western experts can't even figure out how China is where they are now. China still hasn't collapsed during this financial crisis which according to the "experts" was imminent because China's dependency on exports. China immediately came out with a stimulus package that virtually everyone says is a better one than America's. Japan was a deer-in-the-headlights when "all went wrong." That alone tells you there's a different mindset. And how can all these Chinese buy cars when according to Western figures shouldn't be able to afford? They go about the same price as in Western countries too. I remember it was said that the Chinese car market would be at most the same size as the European market. Now it's larger than the US. China is a lot more dynamic than you think.

 

[pla101prc]

Are you saying China is just like Japan? Western experts can't even figure out how China is where they are now. China still hasn't collapsed during this financial crisis which according to the "experts" was imminent because China's dependency on exports. China immediately came out with a stimulus package that virtually everyone says is a better one than America's. Japan was a deer-in-the-headlights when "all went wrong." That alone tells you there's a different mindset. And how can all these Chinese buy cars when according to Western figures shouldn't be able to afford? They go about the same price as in Western countries too. I remember it was said that the Chinese car market would be at most the same size as the European market. Now it's larger than the US. China is a lot more dynamic than you think.

agreed. western analyst rarely "gets it right" on matters concerning China. that's y CIA often relies on Taiwanese intelligence to get information on China. Edward Said explains this the best. western analysts tend to measure China by western standards, so if they observed something that happened in China, like say the Tiananmen square incident, they'll say "look, similar things happened in *insert European country* and they turned democratic, so the military wont listen to Deng, the people will rise up and China will become a democracy...none of that happened in the end. i remember back in the 98 financial crisis, everyone was saying that China is gonna let the RMB drop because their export was taking a huge hit, they based that analysis on what they themselves would do in that situation...and that didnt end up happening. a lot of times they make their assumption based on paradigms of China being a "dictatorship" or "communist", obviously your predictions are gonna be way off if you oversimplify things like that. its not that all of the western experts are stupid, some of them are stupid, but there are a selected few who say it to entertain the government and media, cuz if the government doesnt like what you are saying then they'll cut your funding.

 

[kliu0]

deleted

 

[bladerunner]

Are you saying China is just like Japan? Western experts can't even figure out how China is where they are now. China still hasn't collapsed during this financial crisis which according to the "experts" was imminent because China's dependency on exports. China immediately came out with a stimulus package that virtually everyone says is a better one than America's. Japan was a deer-in-the-headlights when "all went wrong." That alone tells you there's a different mindset. And how can all these Chinese buy cars when according to Western figures shouldn't be able to afford? They go about the same price as in Western countries too. I remember it was said that the Chinese car market would be at most the same size as the European market. Now it's larger than the US. China is a lot more dynamic than you think.

No Im not saying China is like Japan structurally or mindset, Im just using it as a eg. where things were going exceedingly well, with predictions it would even surpass Americas GNP before the wheels fell off. Well at least China has the benefit from avoiding mistakes made by Japan.
Anyway Im not opposed to China's day in the sun, its the timeframe that we disagree on.
On your comment that the Westerners still haven't figured on how you are managing the crisis, pr'haps it won't be long before they suggest you really are cooking the books, after all that has been alluded to alot of times by various commentators.
In an early thread I posted an article, pointing out in a previous banking crisis in America the Feds did not require the banks to write down the value of their assets.Ive forgotten the technicalities on how it was supposed to work exactly, but it did, and with very little damage to the society at large. If they used the same tactics this time, we could have avoided a crisis.
Anyway there has been quite a lot of commentators suggesting that a separate entity should be created to hold these bad assets, with huge financial gains when they come good. In that case why write them down at all and let someone else make a profit.?

 

[crobato]

ADB is probably more influential than the IMF now when it comes to the Asian region.