Earthquake hitting major city can create world depression.

[c1ue]

Re: Earthquake hitting major city can create world depression.

This so called "inflation" is mostly generated by the Chinese. If you look at their property bubble and China taking half of all commodities produced in the entire world, you will know how much money has been printed. With rate hikes and non-stop tightening, there will come a time when this inflation will change into deflation.

Your economic illiteracy continues to amaze.

China isn't generating inflation. It is allowing the inflation exported by the US to pass through by not allowing the RMB to increase in relative trade value.

If the US were not devaluing the dollar, China would not be seeing anything close to the inflation it has seen.

Yes, there is waste in the real estate industry.

Yes, there is corruption in China.

But the real cause is the US dollar, or lack thereof.

[Raz]

Re: Earthquake hitting major city can create world depression.

Your assumptions are faulty.

China isn't generating inflation. It is allowing the inflation exported by the US to pass through by not allowing the RMB to increase in relative trade value.

If the US were not devaluing the dollar, China would not be seeing anything close to the inflation it has seen.

Yes, there is waste in the real estate industry.

Yes, there is corruption in China.

But the real cause is the US dollar, or lack thereof.

There - I fixed it for you.

"Be kind, for everyone you meet is fighting a great battle".

Philo of Alexandria

[touchring]

Re: Earthquake hitting major city can create world depression.

There - I fixed it for you.

"Be kind, for everyone you meet is fighting a great battle".

Philo of Alexandria

Thanks, I'm actually ok with this.

This view is derived from the belief that China depends on the USA. I do not subscribe to this view.

I believe that China is already an economic superpower, has a consumer economy, and print money regardless of the trade surplus with the USA. China chose to print money to avert a the 2008 recession. No one forced China to print money.

[c1ue]

Re: Earthquake hitting major city can create world depression.

I believe that China is already an economic superpower, has a consumer economy, and print money regardless of the trade surplus with the USA. China chose to print money to avert a the 2008 recession. No one forced China to print money.

One statement in the above series of sentences is correct.

The rest? Pure ideology.

Can you guess which one it is?

[aaron]

Re: Earthquake hitting major city can create world depression.

C1ue, I swear you did not visit the same country that I did. In my opinion, and this is the Rant and Rave section, touchring makes a lot more sense than you do.

[touchring]

Re: Earthquake hitting major city can create world depression.

C1ue, I swear you did not visit the same country that I did. In my opinion, and this is the Rant and Rave section, touchring makes a lot more sense than you do.

I'm sure C1ue did visit China, not once but many times.

The trouble is that you can't use western economics to explain what goes on in China, especially when official statistics are totally ureliable.

The other fallacy is that Chinese do not spend. The younger generation of Chinese do spend and those in the cities spend more than Americans. Of cos, the Chinese spend on different stuff - go to Macau to see how $3000 a year wage earners blow thousands of dollars in one day without blinking an eye.

Anyway, it is not easy to understand China, a NZ billionaire Richard Chandler went to buy Sino-forest after the company was accused of fraud. Now, the stock is suspended by the Canadian authorities. Even a billionaire does not understand China.

Investing in China is like buying HYIP, once the investment blows, you got to exit.

Bond Investors Expect Sino-Forest Default


Bond investors are anticipating that Sino-Forest, the Chinese forestry group accused of fraud, will default on its $1.3 billion of debt, in what would be one of the biggest tests of the Chinese bond market in recent history.

On Monday, $600 million-worth of Sino-Forest [TRE.TO 4.81 --- UNCH (0)] bonds due in October 2017 were trading at 31 cents on the dollar, having plunged from 44 cents at the end of last week. At the same time, the company’s 2014 bonds were trading at 32 cents on the dollar, down from 55 cents.

”Previously the bonds were trading on a yield basis, meaning the company was seen as a going concern,” said Anissa Lee, a Hong Kong-based credit analyst at Nomura. “Now people are looking at it from a recovery perspective. There is a very high risk of default.”

Sino-Forest, which has denied all allegations of wrongdoing, is the biggest of several Chinese companies listed on foreign stock exchanges to have been accused of misleading investors in recent months.

Its bond price falls bode badly for shareholders in the Toronto-listed company – which include Richard Chandler, the secretive New Zealand billionaire who acquired an 18 percent stake in the company last month, after its shares had plunged more than 80 percent.

Trading in the company’s shares was halted by the Ontario Securities Commission on Friday, almost two months after a research firm called Muddy Waters first alleged that the company was a fraud.

In a strongly-worded statement, the Canadian regulator alleged that senior Sino-Forest executives “appear” to have misrepresented revenues and to have exaggerated the group’s timber holdings.

Sino-Forest said in a statement on Sunday that Allen Chan, its chairman and chief executive, had resigned and that three other employees had been placed on administrative leave.

“These actions were undertaken by the company after certain information was uncovered during the course of the independent committee’s review,” Sino-Forest said.

The company added that its independent committee, which is being assisted by auditors at PwC, would publish an interim report on the Muddy Waters allegations in four to six weeks, and complete its review by year-end.

In a further blow to the company on Monday, Moody’s slashed its rating on Sino-Forest debt by three notches from B1 to Caa1 – a level that represents bonds that are of “poor standing and are subject to very high credit risk”.

“The trading suspension, the resignation of Allen Chan and the ongoing investigations add significant negative pressure on the company’s operations and its ability to access additional liquidity,” said Ken Chan, a Moody’s analyst.

Distressed debt investors are trying to work out how much money they could recover from Sino-Forest in the event of default. While the company reported cash of $899 million as of June 2011, it had been spending more than $150 million each quarter.

A further complication is that much of Sino-Forest’s cash, and most of its assets, are located on the Chinese mainland. Foreign bondholders do not have direct security over the onshore assets, and may therefore have difficulty in recovering much money if the company defaults.

Chinese companies have sold more than $33 billion of bonds to international investors since the start of 2010 – five times the issuance of the entire preceding decade.

[flintlock]

Re: Earthquake hitting major city can create world depression.

There - I fixed it for you.

"Be kind, for everyone you meet is fighting a great battle".

Philo of Alexandria

Thank you Raz.

Some of these threads are starting to sound like this

[touchring]

Re: Earthquake hitting major city can create world depression.

It is never easy to understand China. Even a billionaire investor who has invested in HK and China for more than 10 years has been swindled.

I'm not going to speculate when the Chinese bubble will end, but if it ends, even real companies will disappear into thin air as their Chinese managers and operators siphon away land and sell off equipment during the chaos. It will be like the London riots and pillage.

It will be like buying Chinese banks stocks in 1948. You know what happened in 1949.

This will be a huge deflationary event.


http://www.theglobeandmail.com/globe...rticle2147102/

When New Zealand-born billionaire Richard Chandler began buying shares of Sino-Forest Corp. (TRE-T4.81----%) shares last month, he published a paper calling for corporate leaders to act with “integrity, transparency and accountability.”

By that point, Mr. Chandler’s Singapore-based Mandolin Fund had acquired about 48 million shares of Sino-Forest or 19.5 per cent of the company. Since mid-July, Mandolin paid between $4.05 and more than $7.50 a share for a total of about $195-million for its stake. Much of that value disappeared on paper Friday after Sino-Forest’s stock tumbled 72 per cent to $1.38 a share on New York’s over-the-counter market. The shares peaked in late March at just over $25.

Mr. Chandler was recently dubbed by the New Zealand press “the second-richest Kiwi” (his brother Christopher took fifth place). He and his brother amassed most of their estimated $4-billion fortune after they founded Sovereign Global Investment in 1996 to bet on Hong Kong’s booming real estate market, at a time when many investors feared values would plunge after China’s takeover of the British-ruled region the following year.

[lakedaemonian]

Re: Earthquake hitting major city can create world depression.

First of all, I'm sorry to hear of your loss. I hope that your circumstances improve, and that your community is restored to you.

I would certainly never suggest that earthquakes or natural disasters are not traumatic and that they aren't capable of causing immense destruction and suffering.



You raise very good questions, and I am certainly not an expert on re-insurance. However, I would guess that any answers really come down to a matter of which perspective you choose. The global nature of such insurance institutions seems to point to the fact that specific affected regions would indeed likely benefit from the injection of capital that might not otherwise be available to them. On the other hand, if one takes a global perspective there is still a net reduction in the capital available for other economic activity whenever an act of mass destruction takes place. The question is, for a given community, which factor dominates, and how completely?

I suppose any real answer would have to depend on how intimately connected a given community is with the global economy. I can imagine places at both ends of the spectrum, both where the local economy is intimately connected to global economic activity (a hot-dog vendor on Wall Street might see business rise and fall with global economic activity) and where it is completely isolated (a village that is mostly self-sufficient, perhaps by following older, more traditional farming methods).

It seems logical that the more isolated your economy, the more you stand to benefit from insurance, when the ultimate insurer is outside of your community. In the event of a global economic collapse, however, it is hard to imagine that the vast majority of communities will not be in some way affected.

So, like so many questions on iTulip, it eventually boils down to: How much of a doomer are you? ;-)

We've just learned that the NZ EQC fund is now empty due to cost blowouts...so national/government expenses for the quake have to come from government revenue or a new source of revenue must be found:

http://www.nasdaq.com/aspx/stock-mar...of-nz4-billion

[touchring]

Re: Earthquake hitting major city can create world depression.

We've just learned that the NZ EQC fund is now empty due to cost blowouts...so national/government expenses for the quake have to come from government revenue or a new source of revenue must be found:

http://www.nasdaq.com/aspx/stock-mar...of-nz4-billion

Earthquakes are scary. Even a medium size earthquake in the remote mountains of China Sichuan can kill 200,000 people because of substandard building code. At the end of the day, it is the responsibility of the government to ensure strict building codes.

Many buildings can barely stand even without an earthquake. If a large earthquake hits a populated region in central China, the casualty will be in the millions of people. It will be a holocaust like catastrophe of unimaginable scale.

"Styrofoam apartment blocks" in China.





http://wtdevflnt.wordpress.com/2011/...oam-buildings/

[c1ue]

Re: Earthquake hitting major city can create world depression.

C1ue, I swear you did not visit the same country that I did. In my opinion, and this is the Rant and Rave section, touchring makes a lot more sense than you do.

Everyone is entitled to their opinion.

You, who've visited the major urban centers, think China is a 1st world nation.

I, who have ancestors in written records going back over 1000 years in China, and who have relatives and friends there, have a different view.

[touchring]

Re: Earthquake hitting major city can create world depression.

Everyone is entitled to their opinion.

You, who've visited the major urban centers, think China is a 1st world nation.

This is a problem when people use Western democracy standards to judge an autocratic capitalist country.

Take the example of Singapore. According to Wikipedia, Singapore has a GDP of $43,117 and a PPP of $62,100. This is among the highest in the world. The figures sound impressive until you realize that most of the money is actually controlled by the party controlling Singapore. The Singapore "sovereign fund" is one of the most powerful organization in the world with a fund that exceeds $500 billion - real figure is a secret.

The actual Singapore citizen does not live a developed world lifestyle, and if you did not study college, you may like to know that the KFC and McDonalds in Singapore pays $2.90 an hour -
http://en.wikipedia.org/wiki/Economy_of_Singapore

I've even heard Chinese citizens who worked in Singapore on different occasion mocking that life in China is better. Actually I agree. Wages might be marginally higher in Singapore but the cost of living in China is much lower.

Singapore like China is an autocratic capitalist country, and is what China will probably look like in 20 years, except due to the difference in country size, China will have a "sovereign fund" of $50 trillion, in 2011 dollars. A mind boggling figure but this is what China will be in the future.

I put quotes around "sovereign fund" because it will be in actual fact the communist party fund and in the case of Singapore, the dominant people's action party fund.

The bottom line is that China is an economic superpower does not mean that the Chinese people will live a high standard of living or live a good life.

Singapore is a good example that economic reforms without political reforms will only lead to disaster in the long run because politics tend to become more oppressive over time - even the US which is suppose to be a democracy cannot escape this, what more for China which has only one political party?

I, who have ancestors in written records going back over 1000 years in China, and who have relatives and friends there, have a different view.

If you are really concerned of your relatives in China, the first thing you should hope for is for the madness to come to an early end, because either way it will be a disaster to your relatives.

If China wins and found a way to inflate this bubble and maintain control at the same time, your relatives will be no better than during Mao's time in time to come, unless your relatives are high ranking CCP members. If China loses the game, trade war and WWIII starts, China will be at a disadvantage - Chinese people are never good soldiers, whatever the economic status, we all know from history.

The sooner the madness ends, the smaller the impact, and the better for the Chinese people, the people of the world and the environment as well.

[aaron]

Re: Earthquake hitting major city can create world depression.

What is that view, c1ue? Because I do not get it. I feel like you just like to argue.

I do not think China is a 1st world nation. If I said that, I was wrong. However, it is NOT a poor country. Perhaps with a little communist (real) leadership some of the enormous wealth might reach the villages I guess you are talking about.

Back of the Internet Approximations:

China GDP = U.S GDP (give or take )
China Population = 4 x U.S.

China cost of living? I do not know, but I would guess it is 1/2 that of an American? c1ue, you would know. Ask your poor friends how much they can live comfortably on.

Take the numbers.

With 1/4 per capita GDP , but 1/2 the cost of living, the Chinese should all be living half (or better) the American lifestyle (sans oil usage). This would be equivalent to a PIIG lifestyle. Since they are not, I can only conclude that China is a wealthy country with a 3rd-world culture. All the money is being wasted on useless projects, military build up, and huge consumption by small segment of the population. They are capitalist/fascist in the extreme. It did not end well that last time, as I recall.

[c1ue]

Re: Earthquake hitting major city can create world depression.

The bottom line is that China is an economic superpower does not mean that the Chinese people will live a high standard of living or live a good life.

You confuse size with influence.

The reality is quite different right now.

China may grow to become an economic superpower, but right now that is not yet true.

Your ongoing examples of Singapore and China are continuing to illustrate your inability to understand the difference between anecdote and reality.

Singapore is a single city; you could as easily point out Monaco as an example of a successful economy when in reality Monaco today could not exist outside the framework of being a tax haven for Europe and the Middle East.

In the same vein you could choose the Bund in Shanghai as an example of how China is suddenly so modern and wealthy. But the Bund doesn't represent the average, mean, or even upper mean of China any more than Manhattan represents the United States.

If you are really concerned of your relatives in China, the first thing you should hope for is for the madness to come to an early end, because either way it will be a disaster to your relatives.

My relatives will be fine either way. Unlike most of the Chinese today, they have a long term worldview and are (not nearly) as naive and short sighted as the typical Chinese.

As for the madness, what you don't understand is that there is a method to it. While it may easily not end well, on the other hand China has the potential to grow into some of its bubble-dom. The question, of course, is how much growth is organic, vs. export related, vs. faked - and that's a question we'll not know the answer to for decades.

What is that view, c1ue? Because I do not get it. I feel like you just like to argue.

I do not think China is a 1st world nation. If I said that, I was wrong. However, it is NOT a poor country. Perhaps with a little communist (real) leadership some of the enormous wealth might reach the villages I guess you are talking about.

Back of the Internet Approximations:

China GDP = U.S GDP (give or take )
China Population = 4 x U.S.

China cost of living? I do not know, but I would guess it is 1/2 that of an American? c1ue, you would know. Ask your poor friends how much they can live comfortably on.

You clearly don't have any idea, despite your 'visit'.

China as a nation spends more than 1/3 of its income on food. That food is on average of far lower quality than we see in the US. Ditto the housing. Ditto pretty much anything else you can think of, except perhaps public transportation.

As for GDP - I've provided many examples of where China rates in world per capita GDP. The nations above and below China are all poor - why then do you think China isn't?

Again, you can see this for yourself: China nominal per capita GDP rank: 94
Above Belize (97), Tunisia (96) and below Angola (91) and Macedona (93)

Are you now going to tell me these 4 nations are not poor?

China PPP per capita GDP rank: 94
Again flanked by El Salvador, Albania, Jamaica, and Ecuador

1/3 of GDP may not seem like much, but it is.

I feel, on the other hand, you're at the stage where you identify with what's new and cool.

[jpatter666]

Re: Earthquake hitting major city can create world depression.

You confuse size with influence.

The reality is quite different right now.

China may grow to become an economic superpower, but right now that is not yet true.

Your ongoing examples of Singapore and China are continuing to illustrate your inability to understand the difference between anecdote and reality.

Singapore is a single city; you could as easily point out Monaco as an example of a successful economy when in reality Monaco today could not exist outside the framework of being a tax haven for Europe and the Middle East.

In the same vein you could choose the Bund in Shanghai as an example of how China is suddenly so modern and wealthy. But the Bund doesn't represent the average, mean, or even upper mean of China any more than Manhattan represents the United States.



My relatives will be fine either way. Unlike most of the Chinese today, they have a long term worldview and are (not nearly) as naive and short sighted as the typical Chinese.

As for the madness, what you don't understand is that there is a method to it. While it may easily not end well, on the other hand China has the potential to grow into some of its bubble-dom. The question, of course, is how much growth is organic, vs. export related, vs. faked - and that's a question we'll not know the answer to for decades.



You clearly don't have any idea, despite your 'visit'.

China as a nation spends more than 1/3 of its income on food. That food is on average of far lower quality than we see in the US. Ditto the housing. Ditto pretty much anything else you can think of, except perhaps public transportation.

As for GDP - I've provided many examples of where China rates in world per capita GDP. The nations above and below China are all poor - why then do you think China isn't?

Again, you can see this for yourself: China nominal per capita GDP rank: 94
Above Belize (97), Tunisia (96) and below Angola (91) and Macedona (93)

Are you now going to tell me these 4 nations are not poor?

China PPP per capita GDP rank: 94
Again flanked by El Salvador, Albania, Jamaica, and Ecuador

1/3 of GDP may not seem like much, but it is.

I feel, on the other hand, you're at the stage where you identify with what's new and cool.

Not sure if I can agree with you here. I have visited China multiple times and I've been in the "showcase" cities as well as the rural areas where you'd think you've gone back to 1900.

I agree with the view that there are two Chinas -- the coastal regions have substantial (though perhaps bubblicious) wealth while in the interior there are areas of extreme poverty. To me, even though your figures on food are likely correct, the massive population of China allows for some weird skewing. If only 20% of China has a Western standard of living, that is *still* 200 million! Nearly two-thirds the US population! That simply can not be written off.

And having traveled through many Chinese cities that likely few Westerners have ever heard of, I can tell you factually, that these are *not* peasant villages. In most ways they are comparable or even superior in some ways to many US cities. It's not just transportation.