Posted on 11/08/2011 5:37:21 PM PST by Kaslin
Global Crisis: The news these days is filled with stories about the euro zone economies and their ongoing crisis. But another, potentially bigger and even more important crisis is brewing — this one in China.
Amid seemingly endless stories about the Chinese Miracle and how China's soaring economy is about to overtake the U.S. comes news that suggests the death of America as No. 1 may be exaggerated — and, in fact, may be dead wrong.
Indeed, China's economy may be on the cusp of a major growth reversal.
The cause: China's imploding real estate market. Since late summer, Chinese home prices have tumbled, partly a result of Chinese government policies intended to keep the economy from overheating.
Barclays Capital Research, the venerable British bank, predicts China's home prices will fall 10% to 30% next year, hitting the economy hard — and putting at risk the Chinese economy's 20-year string of 10% average GDP growth.
But that's only the beginning of the Big Cooldown.
Much of China's growth over the past three years has been fueled by a massive pile of debt. Chinese banks have lent an astounding $8 trillion since 2008 — an amount that dwarfs the Eurozone's $4 trillion in debt.
That debt binge is now abruptly ending as China begins to ratchet up interest rates and limit home-buying to keep prices in line. An epic bust is coming.
(Excerpt) Read more at news.investors.com ...
The housing in those new cities would be money losers if handed out. Who would live there? Are there any jobs? Have you seen that one Al Jazeera video report on one of these cities? That was years ago, I imagine the crumbling is further along now.
Thanks for the links. Maybe we could have OWS occupy the ghost cities. They seem to get by OK with no visible means of support.
“Maybe we could have OWS occupy the ghost cities.”
Great idea. And with less illegals entering the US, this could make us a net exporter of rioters.
I've read that construction was 60% of China's GDP in 2008-2009. Ours is under 4%. In addition, China's one-child policy has been effective (as opposed to merely being in effect) since about 1981. Their demographic bomb is going to be as bad as Italy's.
Of all the industrialized nations, India has the best demographics, followed (not closely) by the U.S. It's most likely going to be a replay of the 1930s, with China in the role of the U.S., and the U.S. in the role of Britain.
It could get much worse. Unless we stop burning food, it could get as ugly as the 1790s were in France. Various organizations, including Soros funds and several U.S. university endowments, are buying up massive amounts of farmland, as is China. Debts and deficits do matter, as do assets and earnings.
Always important to remember that 35% of China’s people are directly involved in agriculture.
In the USA that number is 6%, and we export more food than any country in the world.
I’ve never understand how people can think of China as a great economic powerhouse when 20% of their people live at or below the poverty level in rural villages.
however, 60+ years of communism has destroyed much of that business mindset on the mainland.
Though also, the abacus was invented c 2700 BC by the Sumerians.
Can you recall where you read that?
Friendly question, not a source challenge.
I believe the USA is the largest chemical consumer in the world.
As recently as 5 years ago, I believe the USA and Germany were the #1 and #2 chemical exporters.
I certainly do not disagree that China is a manufacturing and industrial powerhouse.
My issue has always been “GDP per Capita.”
USA is close to $50,000 per capita.
China, maybe $9,000, and probably lower.
I just don't buy in to the whole “BRIC” economic mythology.
Brazil - about $12,000.
Russia - about $15,000.
India - about $4,000.
Sure, their “growth” is impressive.
But if the BRIC’s are really going to lead economic growth in this century, heaven help us!
“Not bad considering they basically spotted us a 100 yr head start in terms of development. “
That’s a really generous way to put it, considering that most of their technology was piggy-backed on western product development over many decades.
Numerous companies from the West, especially high-tech companies, built factories in China and set up design centers. They gave them the technology base and jump-started their capabilities. The Chinese are masters at corporate espionage as well, so they have acquired lots of other information they needed.
I’m not saying they are not smart, I’m just saying that they didn’t start from zero, not by a long shot.
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