How many times can you lie about growth data and get away with it?

[jabberwocky]

Re: Will China do a Japan?

I wonder if one could see the convulsions the American civil rights movement, charactorized by riots and capital destruction in predominantly black city neighbourhoods in the '60's, as a prelude (prequil? precrime?) to all the "Arab Springs". The response, it seems to me, has been a failure, but has much benefitted TPTB.
It may be that the point of maximum global integration and complexity has been reached, co-incident with peak "affordable", as opposed to "cheap" energy, so that the ability to buy off dissent may more limited.
If the world is finite, exponential banking just can't work.
Every area we discuss is related.

[c1ue]

Re: Will China do a Japan?

That is how I think about it. If China did not have serious problems, why the ghost cities and property bubble?

Several other nations have industrialized quickly, then gone into a long interval of slower growth. These would include South Korea and Taiwan.

What I am wondering, is, will China do a Japan--try to extend rapid growth for a few more years, end up creating big bubbles, and then spend 30 years paying for it.

The problem of using the other 'Asian Tigers' as an example is that they're all small - with the exception of Japan. When you're tiny, you can get away with mercantilizing your way to prosperity.

Japan was also able to do so, but to a significant degree due to the Cold War plus the other post WW-II benefits gained (i.e. not having to pay for national defense, being inside the US economic umbrella, etc etc). However, Japan while large is still much smaller than the US much less the OECD.

China, however, has a larger population than the US plus the rest of the OECD.

The OECD has about 1.2 billion people, while China alone has 1.3 billion.

Put another way - the relative economic burden of Japan mercantilizing its way to prosperity is 1/10th that of China. For Taiwan, it is 1/60th. For South Korea, it is 1/24th. etc etc.

A second point is that China is so big. While the per capita economy of China is relatively small, the total GDP is quite large. Why does this matter? Well, it matters because all economies are inefficient. In a large economy, the inefficiencies in any given area can be gigantic.

Thus the question I would ask is: are the 'empty cities' and other forms of obvious economic inefficiency proportionately worse than the excesses of the Asian Tigers when they were growing up? Doesn't anybody remember all the crazy crap the Japanese would do - like buying Sears tower, half of Hawaii, Monets, and what not?

How does Dubai building an essentially empty city plus an entire empty archipelago with a tiny economy and tiny population compare?

Equally, the US built a tremendous amount of excess housing capacity in its bubble era - ranging from empty houses to large numbers of occupied houses which are simply too ginormous for any form of economy. The occupancy rate in the US is under 90% (i.e. vacancy rate over 10%) - what is the equivalent rate in China?

http://www.census.gov/housing/hvs/fi.../q412press.pdf

	Q4 2011	Q3 2012	Vacancy Q4 2012 (%)
All housing units	132475	132961
Vacant	18389	17927	13.48%
Year Round	13887	13587	10.22%

The US supposedly has 118 million households - a smaller number than the number of housing units above but larger than the actual numbers of housing units enumerated under owned/rented in the above report.

China, however, has 401 million households. If there are 45 million empty housing units in China, then they're exactly at the US level in terms of vacancy rate.

My view is that the jury is still out. The real question is going to be: for every empty city, how much other actual beneficial (either in short or long term) infrastructure is built?

... so there is the risk of unrest - Arab Spring.

To avoid that, the government will do everything that is needed to prolong economic growth. So the question now is how long you can prolong a bubble??

Given that the US is doing the exact same thing - I'm not at all clear what your point is.

[Polish_Silver]

fixing the US

Luckily here in the US, we have a one-party democracy.

No problemo . . .

Don,

Perhaps you would like me idea to reform the senate.

Each seat represents 1% of the votes nationwide apportioned by party. That way, greens and libertarians get 5% in the next election. Anti-war and anti-bank parties will form.

Campaigns will be about ideas instead of slogans.

[BadJuju]

Re: fixing the US

Proportional representation would be great.

[don]

Re: fixing the US

There's plenty of ways to improve representation but it ain't gonna happen. Third parties in the US have a history of effectively altering the main parties trajectory - not winning elections but influencing them. Even that's been choked off in our Neoliberal Fantasia. Remember when Ralph Nader was a legitimate third party candidate (what you think of his politics is immaterial here) and was frozen out- at the door- in the canned "presidential debates".

[Polish_Silver]

Re: fixing the US

Ron Paul has complained about this, describing the system as a monopoly. (The two parties agree on so much stuff, such as not reforming banks.) The existing politicians have an interest in perpetuating the lousy system. So how can change occur? A wide spread grass roots movement like Tea Party or Occupy?
A "vote out incumbent trend"?

Independent voters becoming 80% of the electorate?

(Much of the votes for the main parties happen because of "strategic voting" ie, people have to choose between a candidate they believe in, and a candidate that can win.
I refuse to vote strategically. I only vote for candidates I feel proud to support.

[Polish_Silver]

Re: Will China do a Japan?

The problem of using the other 'Asian Tigers' as an example is that they're all small - with the exception of Japan. When you're tiny, you can get away with mercantilizing your way to prosperity.
. . .

China, however, has 401 million households. If there are 45 million empty housing units in China, then they're exactly at the US level in terms of vacancy rate.
...


Given that the US is doing the exact same thing - I'm not at all clear what your point is.

I think his point was that the US has a mechanism for orderly change, or at least some of the voters still think it does. China does not have an orderly mechanism for change that includes direct input from the population. So they can only change policy by destroying the system.

You gave some good arguments that China may not be in that much of a bubble, and that's what Rogers seems to think.

But, if China is in such great shape, why do they have capital controls, and why do they keep playing games with the currency?

It seems to me the policy of perpetual devaluation is a sign of something wrong.
(I'm certainly including the US in that idea)

[don]

Re: Will China do a Japan?

I think his point was that the US has a mechanism for orderly change, or that some of the voters still think it does. China does not have an orderly mechanism for change that includes direct input from the population.

You gave some good arguments that China may not be in that much of a bubble, and that's what Rogers seems to think.

But, if China is in such great shape, why do they have capital controls, and why do they keep playing games with the currency?

It seems to me the policy of perpetual devaluation is a sign of something wrong.
(I'm certainly including the US in that idea)

My concern is the US, not China. I do not see the deterioration of America through Sino filters.

Harping on China is a typical misdirection play of the MSM, something we don't need here on the 'tulip.

[shiny!]

Re: Will China do a Japan?

China, however, has a larger population than the US plus the rest of the OECD.

The OECD has about 1.2 billion people, while China alone has 1.3 billion.

What is OECD?

[jabberwocky]

Re: Will China do a Japan?

I believe it stands for "Organization for Economic Cooperation and Developement". The developed world, essentially (if that means anything anymore!)

[jabberwocky]

Re: fixing the US

I wouldn't be surprised to see a legitimate 3rd party arise with the next leg down. The tea party and OWS both got coopted by party operatives almost immediately. It was sickening.

[GRG55]

Re: Will China do a Japan?

What is OECD?

http://www.oecd.org

34 member states, mostly developed countries in the Americas and Europe, plus Japan and S. Korea.

[shiny!]

Re: How many times can you lie about growth data and get away with it?

Thanks, jabberwocky and GRG55.

[c1ue]

Re: Will China do a Japan?

I think his point was that the US has a mechanism for orderly change, or at least some of the voters still think it does. China does not have an orderly mechanism for change that includes direct input from the population. So they can only change policy by destroying the system.

Once again, this belief would be much more credible if China was still Maoist, or even Communist.

If we look at behavior changes - China has exhibited a far greater change in government and societal behavior than the US in the same period of time (i.e. the last 20 years).

Yes, the CCP changed likely due to fear - as opposed to the US failure to change due to arrogance/complacency/whatever, but then again the reason doesn't really matter, does it?

If in fact the CCP is in touch enough to realize when a paradigm is broken - and changes, I fail to see exactly what the problem is.

Equally Singapore - that shining example which touchring has gushed on about before - is hardly a 'real' democracy. Or at least, it is really hard for me to see what the difference is between a democracy where the same family holds power for multiple decades vs. a tyrannical Communist regime which at least rotates notional leadership.

[GRG55]

Re: Will China do a Japan?

Once again, this belief would be much more credible if China was still Maoist, or even Communist.

If we look at behavior changes - China has exhibited a far greater change in government and societal behavior than the US in the same period of time (i.e. the last 20 years).

Yes, the CCP changed likely due to fear - as opposed to the US failure to change due to arrogance/complacency/whatever, but then again the reason doesn't really matter, does it?

If in fact the CCP is in touch enough to realize when a paradigm is broken - and changes, I fail to see exactly what the problem is.

Equally Singapore - that shining example which touchring has gushed on about before - is hardly a 'real' democracy. Or at least, it is really hard for me to see what the difference is between a democracy where the same family holds power for multiple decades vs. a tyrannical Communist regime which at least rotates notional leadership.

Singapore would seem to be the model the Chinese want to emulate...on a grander scale (and with their ubiquitous "Chinese characteristics") if they can pull it off. I wouldn't bet against them overall, but I do think there's going to be some very serious "bumps in the road" as they try to make that journey...