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

[touchring]

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

Your assumption is that the new world order is going to be the same as the previous world order - dominated by a single democratic/free country.

I've already warned this on my multiple posts in the last couple of years that the fall of America's influence and scrwe up of the Middle East will lead to a new world order that looks nothing like the past US dominated world order.

It's fun watching the mass orgy in Syrian Colosseum (FSA vs Assad vs ISIS vs Turkmen vs Kurds vs Al Qaeda) but the whole world is also watching the spectators in the Colosseum. At the back of everyone's mind is - who is responsible for this? Who sabotaged the poor Syrians? The MSM may not talk about this, but it doesn't mean the 6 trillion people in the world don't think about that, both consciously and subconsciously.

I know that the MSM and many people like to use GDP or the number of Fortune 500 companies to measure America's strength or even for China, but in realty, dominance is not just about the economy alone - if not Japan would have the same dominance as China does today when they were number 2 in GDP. I note that the Great Depression of the 1930s also didn't stop the US a century ago.

The biggest battle is on ideology and mindshare, and the mindshare in the entire South East Asia has already been captured by China, so much so that China can occupy the South China Sea and no one can or dares to do anything about it. In fact, if you read the news nowadays, except for the Philippines, no one even complains about it.

The last time Japan tried to take over South East Asia, they bombed the hell out of Subic Bay and Pearl Harbor. Today, China does it without firing a single gun.

The crack down on the finance industry is a good example of how the new world order will look like in the future.

Apparently China is Purging more than foreign technology these days

Tell me again how China is going to dominate the world economy...

Markets| Fri Dec 4, 2015 5:56am EST

Foreigners drawn in as fear and loathing grip China's finance industry

A widening regulatory probe into some of China's biggest brokerages has set nerves jangling in a financial industry still recovering from a summer of turmoil, with fear of becoming entangled in investigations spreading among foreign investors.

People working at domestic securities firms report an ugly mood after news in the past week of increased scrutiny of the sector by authorities. A nervous inertia is slowing new business as staff are encouraged to report their bosses or colleagues for corruption.

"It's creating a very dog-eat-dog environment," said a partner at a Chinese mutual fund. "People collect evidence on their bosses, because if they get rid of their boss, it means that they can get promoted faster."...

..."Everyone is absolutely terrified of China," said a director at an international brokerage in Hong Kong, echoing the sentiment of many in the industry contacted by Reuters. Most did not want to be identified due to the sensitivity of the issue...

..."They put a notice on all the floors with the number that you can call anonymously to encourage people to dial in. They say they just want people to report corruption," said a source at Guotai Junan...

...Brokers, consultants and lawyers said foreign investors operating in China were becoming increasingly reluctant to speak publicly on market issues in case they attract adverse attention from regulators.

While they welcome the need to investigate and prosecute rule breakers, they say a lack of legal recourse in China creates the fear about being caught up in the net. When authorities call executives in, they say they are never sure if they are being asked to help with enquiries or are under suspicion and when they might be released.

A lawyer who has assisted foreign firms caught up in the probes said some were introducing new onshore compliance programs, although that did not guarantee keeping out of trouble.

"You can't 'comply' because there is no rule of law," he said. "The best thing you can do is establish processes for who is likely to be taken away, and how to make sure they aren't disappeared forever."...

[GRG55]

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

Your assumption is that the new world order is going to be the same as the previous world order - dominated by a single democratic/free country.

I've already warned this on my multiple posts in the last couple of years that the fall of America's influence and scrwe up of the Middle East will lead to a new world order that looks nothing like the past US dominated world order.

It's fun watching the mass orgy in Syrian Colosseum (FSA vs Assad vs ISIS vs Turkmen vs Kurds vs Al Qaeda) but the whole world is also watching the spectators in the Colosseum. At the back of everyone's mind is - who is responsible for this? Who sabotaged the poor Syrians? The MSM may not talk about this, but it doesn't mean the 6 trillion people in the world don't think about that, both consciously and subconsciously.

I know that the MSM and many people like to use GDP or the number of Fortune 500 companies to measure America's strength or even for China, but in realty, dominance is not just about the economy alone - if not Japan would have the same dominance as China does today when they were number 2 in GDP. I note that the Great Depression of the 1930s also didn't stop the US a century ago.

The biggest battle is on ideology and mindshare, and the mindshare in the entire South East Asia has already been captured by China, so much so that China can occupy the South China Sea and no one can or dares to do anything about it. In fact, if you read the news nowadays, except for the Philippines, no one even complains about it.

The last time Japan tried to take over South East Asia, they bombed the hell out of Subic Bay and Pearl Harbor. Today, China does it without firing a single gun.

The crack down on the finance industry is a good example of how the new world order will look like in the future.

I'd be careful about what assumptions you make about my assumptions.

As to your closing line, I seriously doubt it. It is no more sustainable than East Germany trying to keep its people in using a wall. This crack down in China is yet another visible example of the severe limitations of China's current economy and governance - they are flailing around incapable of dealing with even the most modest of economic stresses in their economy. And that is why the outcome for China, especially in terms of talent and capital leaving, will be worse than it needed to be.

[jk]

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

This crack down in China is yet another visible example of the severe limitations of China's current economy and governance - they are flailing around incapable of dealing with even the most modest of economic stresses in their economy.

the chinese gov't is always described as being afraid of social unrest which might threaten the ccp's legitimacy in its powerful role. this gives rise to the thought that the ccp may be more interested in public opinion than the governing parties in the u.s., where the veil of democracy obscures the awesome power of big money.

[touchring]

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

the chinese gov't is always described as being afraid of social unrest which might threaten the ccp's legitimacy in its powerful role. this gives rise to the thought that the ccp may be more interested in public opinion than the governing parties in the u.s., where the veil of democracy obscures the awesome power of big money.

Jk, I think you're really getting a hang of how things works in a Chinese styled authoritarian state which is quite amazing for someone who isn't living in China or even Asia. The Internet and social media has created a unique situation in which the CCP has become very conscious of their image both locally and abroad. This phenomenon is very recent, only in the last 3-4 years.

[GRG55]

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

Jk, I think you're really getting a hang of how things works in a Chinese styled authoritarian state which is quite amazing for someone who isn't living in China or even Asia. The Internet and social media has created a unique situation in which the CCP has become very conscious of their image both locally and abroad. This phenomenon is very recent, only in the last 3-4 years.

Still falling back into old patterns under stress however. I wonder how many more will be "disappeared" before this newfound consciousness of their image kicks in?

Can we assume that their image is important enough now that they won't shoot their own citizens once again?

[jk]

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

Still falling back into old patterns under stress however. I wonder how many more will be "disappeared" before this newfound consciousness of their image kicks in?

Can we assume that their image is important enough now that they won't shoot their own citizens once again?

shooting outliers is part of shaping the public's perceptions.

[touchring]

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

Still falling back into old patterns under stress however. I wonder how many more will be "disappeared" before this newfound consciousness of their image kicks in?

Can we assume that their image is important enough now that they won't shoot their own citizens once again?

Anything is possible and the future is unknown, but I don't believe entirely in what the MSM says. MSM tells you what you like to hear, and what they want you to hear, not facts.

One of my past Chinese associate is a falungong practitioner (non-political) so I know what happened to him when the authorities knew, but that was a long time ago.

I also heard of stories of a person/friend that got arrested and disappeared after a hacking incident involving a state bank many years ago. People talked about it in mockery - that crazy guy..

Everyone knows what's taboo - falungong, tiananmen massacre, taiwanese independence and politics, criticizing Mao.

[jk]

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

Everyone knows what's taboo - falungong, tiananmen massacre, taiwanese independence and politics, criticizing Mao.

as i said, shooting outliers is part of shaping the public's perceptions.

[jk]

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

gary shilling:

Chinese economy is becoming more consumer-led




As the leaders of 17 countries gathered in the Philippines Wednesday for the annual Asia-Pacific Economic Cooperation forum, Chinese President Xi Jinping stated the obvious. "The Chinese economy is a concern for everyone," he said. "We will work hard to shift our growth from just expanding scale to improving its structure."
What he means is that China's economic deceleration -- the official growth rate of 6.9 percent is a six-year low -- is the sign of an economy in transition. It's moving from an over- reliance on exports and government-led investment to an economy that is more consumer-led.
So how's that going? First the bad news: The industrial goods-producing sector of the Chinese economy is in recession and likely to remain there for at least another year.
Now the good news: The domestic-oriented service sector is likely to keep growing at low, double-digit rates -- and that should result in real GDP growth of 4 percent to 5 percent.


Until recently, China's economy grew rapidly, thanks to a booming manufacturing sector that imported raw materials and equipment to produce goods that were exported to North America and Europe. Slow growth in the developed world, however, put an end to that ploy.
China's other stimulus, infrastructure investment, resulted in ghost cities and a pile of debt now totaling 208 percent of gross domestic product. Together, the debt overhang and excess capacity will limit future growth.
Now, exports are declining after decades of 20 percent annual growth. An earlier housing boom, driven by aggressive bank lending in response to the 2007-2009 recession, has been followed by a decline in construction. Growth in capital investment continues to slow. The industrial sector's growth rateplummeted from a 22 percent annual rate in the second quarter of 2007 to a mere 0.2 percent in the third quarter of this year.
You might think all these weak numbers signal that the Chinese economy overall is headed toward recession. I don't believe so, and here's why:
Services (which includes consumer spending) grew at a healthy 12 percent annual clip in the third quarter from a year earlier. True, the stock market bubble and housing boom propelled that growth, which is falling back to earth now.
Still, since the recession, the service sector's share of GDP has grown while the industrial sector's share retreats. Since the first quarter of 2007, services gained 8.2 percentage points of GDP, to 51 percent, while the industrial sector's share dropped 5.8 points, to 40 percent. The remaining 9 percent is agriculture. Services' share of GDP first topped that of industry in the second quarter of 2012.
A major obstacle to consumer spending in China is its high -- and rising -- savings rate. It was 30 percent in the first quarter, compared with just 4.8 percent in the U.S. in September. Chinese households save huge portions of their limited incomes because of the obligation in a Confucian society to provide for one's family, but also because pensions are limited and China lacks a social-safety net.
There is evidence, however, that Chinese consumers are spending more. Passenger rail traffic continues to grow by a solid 10 percent. Interest in personal health and sports is growing, and the number of marathons and marathon participants doubled between 2011 and 2014. After a slump in sportswear sales following the 2008 Beijing Olympic games, sales are again jumping. Internet traffic through mobile devices has nearly doubled this year, and movie box-office revenue is up more than 50 percent.
Sales for technology, alternative energy, education, media and entertainment companies are rising much faster than those in basic industries. Twenty newer Chinese stocks tracked by Goldman Sachs had 23 percent revenue growth in the first half of 2015 versus a year earlier, compared with 2 percent for older companies.
Further evidence of the shift can be found in employment growth, which is increasing for the services sector and declining for heavy industry. Since 2007, the labor force in services rose 8.2 percent, but just 3.1 percent in heavy industry.
On balance, then, China's heavy industry is retreating while services are rising. What will these trends mean for future growth?
Bear in mind that the service sector also is vulnerable. The earlier boost to financial services by the stock market and housing bubbles has been reversed. Also, laid-off workers from private heavy industry and state-owned enterprises have reduced purchasing power.
Using regression analysis, my firm measured the effects on GDP of various combinations of growth in the manufacturing and industrial sector and the services sector. For the third quarter, the 0.2 percent growth in secondary industries (manufacturing, energy, construction and mining) combined with the 11.9 percent advance in the tertiary sector (services) results in a total GDP gain of 5.4 percent.
Adding the 0.5 percent GDP contribution from the ever- shrinking primary sector (agriculture), the total comes to 5.9 percent -- still below the (likely overstated) official 6.9 percent growth rate, though not by much.
Chinese statisticians have no doubt been inflating their GDP numbers since Mao's Great Leap Forward in the 1950s demanded big output gains -- or else. Overstatements are probably greater now that growth is slowing.
Even if services rose at an optimistic 13 percent, when combined with flat manufacturing growth in future years, GDP would still rise only 6 percent annually. A more realistic flat manufacturing sector and 10 percent growth in services yields 4.3 percent overall GDP, but don't count on the Chinese National Bureau of Statistics to report a number that low!
So even Beijing's newly reduced growth target of 6.5 percent is unrealistic. The 4 percent to 5 percent range is more likely -- and that's based on clearly overinflated historical numbers. Still, ongoing growth in the services and consumer sector should stave off recession in China and actual declines in GDP.
As China shifts from an export- and infrastructure-led economy to one more domestically driven, its impact on other economies will drop. In particular, China's role as the vacuum for the world's commodities will continue to recede.
Look for the recent nosedive in commodity prices, be it copper and other nonferrous metals, iron ore, coal or other basic materials, to persist. On the other hand, Chinese food imports may gain as rising personal income levels result in diet upgrades. It takes more grain to turn pigs into pork than it takes to satisfy human nutrition needs directly with corn.
China will no longer dazzle the world as it did in past decades by taking over global manufacturing and growing rapidly. But at least slower, domestic-led growth will be more sustainable.




_ Gary Shilling, a Bloomberg View columnist, is president of A. Gary Shilling & Co., a consultancy in Springfield, New Jersey.

[Southernguy]

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

Interesting....
So, what do your think about oil at less than 38 dollars pb?
Is EJ's take, quite a while ago on seeing oil in the 20's range about to happen?

[GRG55]

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

One of the other things I have posted a few times in the past is my firm belief that, contrary to popular political opinion in the USA, the Chinese currency is OVERvalued, and if it was allowed to free float it would decline, not rise, against the US$.

What a surprise

Behind Chinese Yuan's Tiny Drop, Indications of True Crisis Lurk

January 12, 2016 — 5:32 PM MSTThe Chinese yuan’s 6 percent decline over the past five months is hardly anyone’s idea of a crisis. On average it comes out to a drop of less than 0.04 percent a day. But behind the scenes, Chinese policy makers are unleashing a torrent of measures to stabilize the currency and prevent it from tumbling.

Added up, these efforts rival some of the biggest currency defenses seen in emerging markets over the past two decades. Here’s a quick look at the central bank’s most aggressive steps.

Hong Kong has become a key focal part for policy makers. Over the last two days, they bought enough yuan there to push overnight borrowing costs for the currency to a record 67 percent on Tuesday from just 4 percent at the end of last week. These rates, designed to discourage speculators, are even higher than those at the peak of Russia’s defense of the ruble in 2014 and Brazil’s intervention in 1999.

In propping up the exchange rate, the People’s Bank of China also burnt through more than half a trillion of dollars in foreign reserves in the past 12 months, cutting them to $3.3 trillion. The draw-down was almost equivalent to the entire stockpile of Switzerland, the world’s fourth largest holder...



Pimco Bets Dollar to Extend Advance Against Chinese Yuan

January 11, 2016 — 6:18 PM MST




Chinese Officials Push Back Against Yuan Devaluation Concerns [the Yuan is "contained"]

January 11, 2016 — 5:55 PM MST

Chinese officials pushed back against views the nation’s currency is on a one-way weakening path.

Betting against the yuan will fail and calls for a large depreciation are “ridiculous” as policy makers are determined to ensure the currency’s stability, Han Jun, the deputy director of China’s office of the central leading group for financial and economic affairs, said at a briefing in New York on Monday.

“It is pure imagination that the Chinese yuan will act like a wild horse without any rein,” said Han, adding that short selling the yuan “will not succeed.”




The Chinese Are Converting Their Cash to U.S. Dollars

January 14, 2016 — 2:00 PM MST

Karen Chou, a 32-year-old bank worker in Beijing, had a New Year’s resolution: sell yuan, buy dollars.

“I’m not optimistic about China’s economy,” she said, after rushing to exchange some of her savings for U.S. currency as part of heightened demand at some Chinese bank branches in the first weeks of 2016.

Chou first made her call on the yuan after a surprise devaluation in August last year. Renewed dollar purchases by the likes of Chou highlight China’s struggle to restore confidence in the currency -- and further swell a record build-up of foreign-currency holdings by Chinese citizens.

The risk for the central bank is that households’ currency stashes may join outflows of capital that threaten to destabilize the economy as businesses and individuals bet against the yuan, which is forecast to further devalue this year.

More than $840 billion exited China in the first 11 months of last year in an unprecedented exodus, according to a Bloomberg gauge. Suspicious patterns in export and import data for December, released this week, fueled speculation that money is flowing out disguised by phony trade invoices, a practice that has happened before...

[GRG55]

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

Bolt? As in Bolt of lightning? They should have named it the Chevy Ben, after Franklin and his famous kite.
Looks like it might appeal to the young urban set. Has that non-offensive androgynous look that GM (and others) have fallen in love with; less masculine than the BMW i3, but not as "cute" as a BMW Mini.

And I notice the Volt 2 styling is slightly less plain vanilla GM than v.1, but nothing that is going to get anyone excited. What is with the General Motors design studio these days? They need to fire half of them, send the other half out to dealerships to try to flog their bland cars for a few months and maybe they'll smarten up. Doesn't matter if it is all-electric, hybrid or hoary monster ICE powered...people want to buy something they can be proud to own and show off just like #2, the trophy spouse.

Every now and then there's a flicker of design talent trying to break out at GM. It is usually displayed in their concept cars, never the variants that make it to production unfortunately. Here's this week's example from the Detroit Motor Show...a Buick concept evocative of the very best of the Rivieras that ever rolled out of a GM plant in the 1960s (and a nod to a few of the styling themes from the '66 Olds Toronado). Now if they set up to offer this in a hybrid version I think they would smoke the miserable sales results of the Volt.

Buick followed up last year's Avenir with another interesting design exercise for this year's Detroit show:

http://www.buick.com/avista-concept-coupe.html

[jk]

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

i was amused last night when trump, during the republican debate, said he was going to make the chinese raise the value of their currency.

[ProdigyofZen]

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

What a surprise

Behind Chinese Yuan's Tiny Drop, Indications of True Crisis Lurk

January 12, 2016 — 5:32 PM MSTThe Chinese yuan’s 6 percent decline over the past five months is hardly anyone’s idea of a crisis. On average it comes out to a drop of less than 0.04 percent a day. But behind the scenes, Chinese policy makers are unleashing a torrent of measures to stabilize the currency and prevent it from tumbling.

Added up, these efforts rival some of the biggest currency defenses seen in emerging markets over the past two decades. Here’s a quick look at the central bank’s most aggressive steps.

Hong Kong has become a key focal part for policy makers. Over the last two days, they bought enough yuan there to push overnight borrowing costs for the currency to a record 67 percent on Tuesday from just 4 percent at the end of last week. These rates, designed to discourage speculators, are even higher than those at the peak of Russia’s defense of the ruble in 2014 and Brazil’s intervention in 1999.

In propping up the exchange rate, the People’s Bank of China also burnt through more than half a trillion of dollars in foreign reserves in the past 12 months, cutting them to $3.3 trillion. The draw-down was almost equivalent to the entire stockpile of Switzerland, the world’s fourth largest holder...



Pimco Bets Dollar to Extend Advance Against Chinese Yuan

January 11, 2016 — 6:18 PM MST




Chinese Officials Push Back Against Yuan Devaluation Concerns [the Yuan is "contained"]

January 11, 2016 — 5:55 PM MST

Chinese officials pushed back against views the nation’s currency is on a one-way weakening path.

Betting against the yuan will fail and calls for a large depreciation are “ridiculous” as policy makers are determined to ensure the currency’s stability, Han Jun, the deputy director of China’s office of the central leading group for financial and economic affairs, said at a briefing in New York on Monday.

“It is pure imagination that the Chinese yuan will act like a wild horse without any rein,” said Han, adding that short selling the yuan “will not succeed.”




The Chinese Are Converting Their Cash to U.S. Dollars

January 14, 2016 — 2:00 PM MST

Karen Chou, a 32-year-old bank worker in Beijing, had a New Year’s resolution: sell yuan, buy dollars.

“I’m not optimistic about China’s economy,” she said, after rushing to exchange some of her savings for U.S. currency as part of heightened demand at some Chinese bank branches in the first weeks of 2016.

Chou first made her call on the yuan after a surprise devaluation in August last year. Renewed dollar purchases by the likes of Chou highlight China’s struggle to restore confidence in the currency -- and further swell a record build-up of foreign-currency holdings by Chinese citizens.

The risk for the central bank is that households’ currency stashes may join outflows of capital that threaten to destabilize the economy as businesses and individuals bet against the yuan, which is forecast to further devalue this year.

More than $840 billion exited China in the first 11 months of last year in an unprecedented exodus, according to a Bloomberg gauge. Suspicious patterns in export and import data for December, released this week, fueled speculation that money is flowing out disguised by phony trade invoices, a practice that has happened before...

Trade of the 2010's is upon us.

[GRG55]

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

i was amused last night when trump, during the republican debate, said he was going to make the chinese raise the value of their currency.

Presumably by crashing the US$. LOL

From a while back on this same thread
http://www.itulip.com/forums/showthr...145#post275145