Chinese Economics Thread

Discussion in 'Members' Club Room' started by Norfolk, Jan 10, 2008.

  1. ZeEa5KPul
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    ZeEa5KPul Junior Member
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    This is the first post I've read from you that I agree with wholeheartedly. I will just add that debt needn't even be inflated away, it can simply be voided to avoid the negative effects of inflation. This is even more true of China's economy, where the government is the ultimate owner of both major lenders and major borrowers. Debt is ultimately a political question, not an economic one.

    I think debt management should 'borrow' (nyuk, nyuk) an idea from forestry: controlled burning. Not very long ago it would have been considered insane to set fires to fight forest fires, now it's a common practice. Debt should be similar - regulators should proactively and periodically 'burn' bad debts so as not to have a dangerous buildup that could fuel an uncontrollable conflagration like what happened when Lehman collapsed.
     
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  2. Hendrik_2000
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    Hendrik_2000 Brigadier

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    I don't know men there is no free money some one has to pay the interest and If your borrow from foreign country the money get transferred It is estimated that US pay
    http://www.crfb.org/blogs/interest-...oBKdi1SjU_QOl-5P4j8_R5alAvRdGD9kaAgp7EALw_wcB
    By our estimates, annual interest spending will rise from $263 billion (1.4 percent of GDP) in 2017 to $965 billion, or 3.3 percent of GDP, in 2028. The 3.3 percent of GDP total for interest in 2028 would be the highest on record. The previous record was 3.2 percent of GDP in 1991, a time when debt as a percent of GDP was much lower but interest rates were much higher.

    [​IMG]
     
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  3. Hendrik_2000
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    Hendrik_2000 Brigadier

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    IMF contradicts Trump: China hasn't manipulated its currency
    PAUL WISEMAN and MARTIN CRUTSINGER,Associated Press 7 hours ago
    https://www.yahoo.com/news/imf-contradicts-trump-china-hasnt-211818770.html

    (AP) — The International Monetary Fund sees little evidence that China's central bank has deliberately reduced the value of the nation's currency — a position at odds with the Trump administration's decision this week to accuse Beijing of manipulating the yuan.

    The IMF said Friday in its yearly review of China's economy that the yuan has been "broadly stable" against other currencies, suggesting there's been little intervention by the People's Bank of China. A weaker yuan would give Chinese exporters a competitive price advantage over foreign rivals.

    The Treasury Department on Monday named China a currency manipulator for the first time since 1994. The move, reversing its decision in May to keep China off the blacklist, came after Beijing's central bank let the yuan drop to its lowest point in 11 years.

    "Clearly, they are manipulating their currency," White House trade adviser Peter Navarro told CNBC Friday.

    China's central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2% against the dollar during the day. The central bank can buy or sell currency — or order commercial banks to do so — to keep the yuan's price from swinging too widely.

    In letting the yuan slide, the central bank was responding to economic reality. China's economy is slowing — partly because President Donald Trump has slapped tariffs on $250 billion worth of Chinese imports — and market pressures are pulling the currency down.

    The world's two largest economies are locked in a tariff war over U.S. allegations that China is stealing trade secrets and forcing foreign companies to hand over sensitive technology. Twelve rounds of talks have failed to end the impasse, and a Chinese delegation is expected in Washington next month to continue the negotiations.

    But Trump rattled financial markets Friday by saying it would be "fine" with him if talks got called off. The Dow Jones Industrial Average fell 90.75, or 0.3%, to 26,287.44, and the Nasdaq dropped 80.02, or 1%, to 7,959.1
     
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  4. Dolcevita
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    Dolcevita Senior Member

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    Exactly. IMF rebukes U.S. Treasury Secretary Steven Mnuchin and Trump administration further erodes US Treasury Dept's credibility.
    Contrary to the recent US Treasury labeling, , IMF should label the Trump administration as currency manipulator for this latest stunt.
    Trust in US federal institution including FAA, FDA, US Treasury are taking major hits.

    https://www.politico.com/story/2019/08/09/imf-report-trump-currency-manipulation-1653096
    https://www.washingtonpost.com/opin...in-has-damaged-his-credibility/?noredirect=on
     
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  5. Jura
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    Jura General

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    now I read
    Alibaba.com sales point to strong private trade in China
    Source:Global Times Published: 2019/8/9 20:39:52
    http://www.globaltimes.cn/content/1160912.shtml

     
  6. ZeEa5KPul
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    ZeEa5KPul Junior Member
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    The dynamics are very different when the debt is owed in a foreign currency. I'm talking about powerful countries (really only the US and China) that borrow in their own currencies.

    This is a very good comparison that illustrates another point I often try to make - debt-to-GDP is meaningless. It's comparing a stock (debt) to a flow (GDP). What should be compared are cost of debt (interest payments) to GDP and debt to accumulated wealth.
     
  7. Hendrik_2000
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    Hendrik_2000 Brigadier

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    Sofar US escape paying huge sum of interest because of the reserve status of US dollars and recycling of petrodollars. But it won't last forever The supply of dollars is huge and the trust in dollar is due to relative government effectiveness. But with ever growing deficit and dysfunctional government, I can see the beginning of the end of dollar hegemony
     
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  8. antiterror13
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    antiterror13 Colonel

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    The analysis based on the interest would stay low until then (which is doubtful) .. the interest/OCR could go up higher instantly for many scenarios, like war in ME (Iran) or China dump the Treasury and many other scenarios. Trump is very unpredictable and highly nepotism and less and less countries trust the US now ... and very fast. Also trade war which was initiated by Trump would make the situation is unpredictable and dangerous.

    Imagine if the interest would go up to 10% which is not impossible ... how much interest the US govt would have to pay?
     
  9. Anlsvrthng
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    Anlsvrthng Senior Member
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    The USA government control directly the interest and the inflation.

    It is a political decision / transfer of wealth that you can see on the chart, NOT a graph of a mathematical function.
     
  10. Hendrik_2000
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    Hendrik_2000 Brigadier

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    Nobody control interest As I said dollar is trusted so foreigner are willing to accept low interest because of the security of the principa.l Add to that trillion of recycled petrodollar because the saudi effectively paid US for guaranteeing the security of house of Saud. Any oil transaction must be paid in dollar guaranteeing demand for dollar
     
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