[April Lexington]

I realy, realy hope this isn’t true...

[TigerLikesRooster]

When Japanese economy crashed, it took a couple of years for people to realize that it had indeed done so. We will see the same response when China does. First they say it is not a hard landing but soft one. Then they say it may be serious but China will rebound in a short time. Next the spin is that it may not improve soon but could be managed for a while until the eventual turnaround happens. Then full-scale riots and political turmoil hits and spins will abruptly stop. Finally they will say they have known this all along despite their dismal track record to the contrary.

[Hacklehead]

“I realy, realy hope this isn’t true...”

On the bright side such a collapse would shut up the Andy Sterns of the world who tout China as a model for the US. It would also weaken their military build-up and de-rail their global ambitions.

[Vince Ferrer]

I realy, realy hope this isn’t true...

For the most part, it is true. There was a massive property bubble that is now bursting, in fact Beijing property prices are now down 20% already. Their bubble is proportionately bigger than ours, and will crash harder. Furthering the damage, during the top of any boom there is always a misallocation of capital that pursues more and more economically marginal investment.

Things that appeared to make sense during the boom will appear insane afterwards. China beats everyone by a mile in this regard, building whole unnecessary cities, spending 500 million on the opening ceremony of the Olympics, etc. They also over invested in the manufacturing and export sector, and as a result have extra industrial capacity just when everyone else, including their biggest trading partner Europe, is collapsing.

Also, their wages have been growing now, and factories are moving to other, lower wage countries.

[April Lexington]

I realy, realy hope this isn’t true...

I really, really wish I knew how to spell...