Yes Virginia...It's a Bubble...

[jk]

Re: Yes Virginia...It's a Bubble...

Can you perhaps give me some examples, e.g. clothing, computers, airplanes? I have a hard time visualizing generalizations.

Thanks.

As we know, Apple relies on manufacturers in China, such as Foxconn and Pegatron, to assemble its iPhones. That’s not just for cost savings: Apple needs the speed that Chinese manufacturing affords to be able to make quick changes to its production lines in order to ramp up the next-generation iPhone, and it needs their reliability and volume to deliver 31.2 million iPhones per quarter.
But assembly is just the last chapter in the story. Before those factory workers can assemble all those components into an iPhone, someone has to make those components. As it turns out, those parts come from all over the world — including China’s Inner Mongolia, where most of the rare earth elements needed to make the screen, the glass, and the speakers come from."
http://venturebeat.com/2013/07/31/iphone-manufacturing-graphic/

[shiny!]

Re: Yes Virginia...It's a Bubble...

As we know, Apple relies on manufacturers in China, such as Foxconn and Pegatron, to assemble its iPhones. That’s not just for cost savings: Apple needs the speed that Chinese manufacturing affords to be able to make quick changes to its production lines in order to ramp up the next-generation iPhone, and it needs their reliability and volume to deliver 31.2 million iPhones per quarter.
But assembly is just the last chapter in the story. Before those factory workers can assemble all those components into an iPhone, someone has to make those components. As it turns out, those parts come from all over the world — including China’s Inner Mongolia, where most of the rare earth elements needed to make the screen, the glass, and the speakers come from."
http://venturebeat.com/2013/07/31/iphone-manufacturing-graphic/

Thanks, jk.

Although some people think they simply must have the latest iPhone, most people can live without one. Are there more critical items that would cause real hardships for people to do without? Little widgets that factories and machines around the world are dependent on in order to run?

I mean, I go to Home Depot and almost everything in there is Made in China. If my air conditioner goes kaput in August and the part it needs is only made in China, I could die.

[Polish_Silver]

Re: Yes Virginia...It's a Bubble...

Can you perhaps give me some examples, e.g. clothing, computers, airplanes? I have a hard time visualizing generalizations.

Thanks.

Lots of laptop computers are made in China. But, many of the expensive components, such as disc drives, memory chips, micro controllers, are made in Japan, Taiwan, the US. So if China stops producing those laptops, there is now a huge surplus of chips, disc drives, etc.
(and there is usually overcapacity in those areas anyway!)

[Polish_Silver]

Re: Yes Virginia...It's a Bubble...

"... any significant reverse for China’s corporate sector could quickly spread to other countries."

My theory is that the eventual collapse of the Great Wall of Money will cause:
. . .
4. A collapse in demand for UST from China that results from trade (USD-negative and inflationary)
5. Elimination of "America's IMF" as China loses its ability to finance the U.S. federal budget deficit that will explode during the resulting global economic crisis as outlays rise and tax receipts decline (USD-negative and inflationary)


The ultimate "Ka" event that leads to "Poom" via a failed reflation of the reflation of the reflation of the original 1995 to 2000 asset bubble.

How much of the current deficit is being purchased by China?

And would they need to sell off UST to shore up the domestic economy?

Would that even work? Stimulate domestic demand to compensate for falling US demand caused by USD crash?

[Polish_Silver]

Re: Yes Virginia...It's a Bubble...

"... any significant reverse for China’s corporate sector could quickly spread to other countries."

My theory is that the eventual collapse of the Great Wall of Money will cause:

1. A global finished goods supply crash as tens of thousands of businesses in China shut down (inflationary)
2. Global recession and output gap (deflationary)
3. An explosion in unemployment and political unrest in China and an attendant need to externalize the crisis (inflationary)
4. A collapse in demand for UST from China that results from trade (USD-negative and inflationary)
5. Elimination of "America's IMF" as China loses its ability to finance the U.S. federal budget deficit that will explode during the resulting global economic crisis as outlays rise and tax receipts decline (USD-negative and inflationary)

The ultimate "Ka" event that leads to "Poom" via a failed reflation of the reflation of the reflation of the original 1995 to 2000 asset bubble.

How much of UST is China buying now?

[jk]

Re: Yes Virginia...It's a Bubble...

How much of UST is China buying now?

http://lmgtfy.com/?q=china+purchases...ies+statistics
try the first link

[touchring]

Re: Yes Virginia...It's a Bubble...

"... any significant reverse for China’s corporate sector could quickly spread to other countries."My theory is that the eventual collapse of the Great Wall of Money will cause:1. A global finished goods supply crash as tens of thousands of businesses in China shut down (inflationary)

Not sure if we can categorized the factories in China that produce the real goods, (e.g. iPhone, plastic cups, etc) together with the speculation houses.Factories are having a hard time recruiting workers because everyone wants to be a white collar office worker - not quite unlike the US pre-2008 when everyone wants to be a real estate broker or banker.If the bubble collapses, that may benefit the manufacturing industry. Of course, some factories that indulged in speculation may close down, but the workers they hire and their equipment will be quickly taken over by competitors, many of whom are Taiwanese and other foreign companies with long term contracts with foreign buyers, such as Foxconn with Apple.

2. Global recession and output gap (deflationary)

This will probably affect luxury goods producers (France, Italy and Germany) the hardest and iron/copper commodity producing companies.

3. An explosion in unemployment and political unrest in China and an attendant need to externalize the crisis (inflationary)

Unlikely any unrest can be worst than the Uighur "rebelllion" with their indiscriminate non-stop suicide bomb attacks.

4. A collapse in demand for UST from China that results from trade (USD-negative and inflationary) 5. Elimination of "America's IMF" as China loses its ability to finance the U.S. federal budget deficit that will explode during the resulting global economic crisis as outlays rise and tax receipts decline (USD-negative and inflationary)

Perhaps we need to factor in the ultimate fall in commodity prices from reduced demand from China that may benefit the US. Of course, there's the unknown Iraq factor now with ISIS in the picture.

[GRG55]

Re: Yes Virginia...It's a Bubble...

I think any country that grows rapidly will have a convulsion after the rapid growth. The reason is that during the growth a lot of people are working on the new infrastructure, new housing, new factories, roads, everything. When the growth slows down, all the carpenters, road pavers, etc. have much less work to do---they are just maintaining existing stuff. They have to learn new professions. Companies have to be liquidated.

The "new normal"?

[jk]

Re: Yes Virginia...It's a Bubble...

i want to know how much of that cement was real cement, as opposed to fake cement, cement documented and paid for but never delivered, adulterated cement, concrete, gypsum or hardened toothpaste.

[GRG55]

Re: Yes Virginia...It's a Bubble...

i want to know how much of that cement was real cement, as opposed to fake cement, cement documented and paid for but never delivered, adulterated cement, concrete, gypsum or hardened toothpaste.

What if the second largest economy in the world was actually only one-third the size reported?

Chinese Trader Said to Pledge Metal 3 Times for Loans

By Bloomberg News

Jul 3, 2014 4:07 AM MT

Decheng Mining pledged the same metals stockpile three times over to obtain more than 2.7 billion yuan ($435 million) of loans in China’s Qingdao port, a person briefed on the matter said, citing preliminary findings of an official investigation.

Local authorities are checking metal inventories worth about 1.54 billion yuan including 194,000 tons of alumina, 62,000 tons of aluminum and some copper, the person said, asking not to be identified as he isn’t authorized to speak publicly...

...Bank of China Ltd., Export-Import Bank of China, China Minsheng Banking Corp. and 15 other Chinese banks have lent a total of about 14.8 billion yuan to Chen Jihong, Decheng Mining’s owner, and his companies, the person said...

[lakedaemonian]

Re: Have they looked under the Sofa Cushions?

This should be under "you can't make this stuff up".

One hundred thousand tons. How big a pile is that?

I'm guessing about 250 cubic metres?

[coolhand]

Re: Yes Virginia...It's a Bubble...

The "new normal"?

What is going to be worth more in 20 years, that cement that china used or the US Treasury bonds that China didn't put that money in? Before you answer, make sure to go take a ride on the Eisenhower highway system that was built 60 years ago.

Is China's infrastructure a bubble? Absolutely. But in the face of UST's that lost 80% of their value against: Oil, food, cement, copper, gold, etc. in the past 10 years, why would they put their money into anything except hard assets?

[coolhand]

Re: Yes Virginia...It's a Bubble...

What if the second largest economy in the world was actually only one-third the size reported?

Chinese Trader Said to Pledge Metal 3 Times for Loans

By Bloomberg News

Jul 3, 2014 4:07 AM MT

Decheng Mining pledged the same metals stockpile three times over to obtain more than 2.7 billion yuan ($435 million) of loans in China’s Qingdao port, a person briefed on the matter said, citing preliminary findings of an official investigation.

Local authorities are checking metal inventories worth about 1.54 billion yuan including 194,000 tons of alumina, 62,000 tons of aluminum and some copper, the person said, asking not to be identified as he isn’t authorized to speak publicly...

...Bank of China Ltd., Export-Import Bank of China, China Minsheng Banking Corp. and 15 other Chinese banks have lent a total of about 14.8 billion yuan to Chen Jihong, Decheng Mining’s owner, and his companies, the person said...

You don't want to compare economies on that metric...trust me. Take a look at JPM's derivative book...$95T.

Another way of looking at it: China defaults on the loans - who has the metal, and what is its value? Now, when the COMEX is levered 100-to-1 and defaults, who has the metal and what is its value?

[Polish_Silver]

Size of the pile:

I'm guessing about 250 cubic metres?

I calculate a cube 30.3m on a side! That is thirty thousand cubic meters.

Starting numbers:

alumina density 4g/cubic cm

1000 g/kg

1 metric ton = 1000 kg

missing alumina

123,000 TONS.

A large suburban lot with a 10 story house on it.

[lektrode]

Re: Size of the pile:

I calculate a cube 30.3m on a side! That is thirty thousand cubic meters.

Starting numbers:

alumina density 4g/cubic cm

1000 g/kg

1 metric ton = 1000 kg

missing alumina

123,000 TONS.

A large suburban lot with a 10 story house on it.

hot damn!
dont eye love it round here when the engineers get all fired up with the NUMBERS!!!
(even when theys from 'the palmetto state' - seein as thats somehow a disadvantage -altho insult is how i read it;)

ok - but seriously now, P_S?
or anybody else with The Numbers - what would be very illuminating, is: how many days/months of DEMAND for this material would a 123,000 TONS represent?

this would shed some light/perspective on this latest conspiracy 'theory'
(altho its starting to appear as anything BUT a theory)