US Financial Crisis/Bailout, China's Role

swimmerXC

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Not true, 8% is only coined up conveniently by conservative figure in the the government. Current Chinese economy plus the stimulus plan is strong enough to keep unemployment steady. Years ago when mass urbanization was at its peak and State Owned enterprise was closed down, the calculated growth to absorb unemployed workers was close to 7%. Now, the chinese economy is mostly driven by private enterprises. In those days (1990s) most people are employed by state run enterprise and the mass layoff did not cause significant riot. Furthermore, the remaining large State owned enterprise today is flush with cash and are not wiling to lay off workers. Today, the calucalted growth needed to maintain stability is somewhere between 5%-6%. China will see a masive infrastructure projects this year and that will be able to absorb layed off migrant workers, at least enough to prevent to many "mass incidents". Nevertheless, workers dispute with various business is inevitable, but not all of their anger are directly aimed at the state. We need to see mass starvation before "mass incidents" can topple government.

5-6%, I don't know, I find that extremely hard to believe even at 7.5% now factories are closing around China and there are riots, and that is only a 2-3% drop from 9-10% growth. I just don't see China's economy as of right now (and also in a couple of year) tied so much with the US economy and export based that it can achieve a 5-6% without major affects. Maybe in 5-10 years when China's economy becomes more of a tertiary sector economy based on technology and finances then it's growth rate can slow down. :(
 
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crobato

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*Shucks* even the porn industry is looking for a bailout.

Porn industry seeks $5 billion federal bailout
By KEVIN MODESTI

LA DAILY NEWS

Thursday, January 08, 2009

LOS ANGELES — In an announcement that launched a thousand unprintable puns, adult-entertainment moguls Larry Flynt and Joe Francis said Wednesday that they are asking Washington for a $5 billion federal bailout, claiming that the porn business is suffering from the soft economy.

Francis insisted in a phone interview that this is no joke or publicity stunt, though his tone suggested otherwise.

“The government’s handing out money to the auto industry,” Francis, producer of the “Girls Gone Wild” video series, said on the phone from his Santa Monica office. “Why shouldn’t it hand some to an industry the nation could not live without?”

The request, Francis said, was being made in a letter to Rep. Barney Frank, D-Mass, and Treasury Secretary Henry Paulson. The $5 billion figure, he said, reflects the decline in U.S. adult-entertainment- industry revenue from $18 billion three years ago.

If porn producers are feeling the effects of what one wire service called “the sagging economy,” the pain might be felt most acutely in the San Fernando Valley. In 2007, revenue from more than 200 Valley-based adult-content companies was estimated at $1 billion.

One adult-film star from the Los Angeles area said she is feeling the pinch.

The actress who performs as Jenna Presley said her Web site has seen a 20 percent decline in customers, about 1,000 of whom pay $19.99 a month to watch the 22-year-old perform online.

Presley said the downturn has forced her to cut overhead.

“I said, ‘I’ve got to stop paying guys and girls to perform with, and I’ve got to find (other Web site proprietors) to do a content exchange with,’ ” Presley said matter-of-factly.

Instead of paying co-stars, she is posting their videos on her site and they’re posting her content on theirs.

“I haven’t had any complaints,” Presley said.

Other performers, Presley said, have faced pay cuts as video companies take the uncharacteristic step of tightening their belts.

“I know companies are reducing their rates,” Presley said. “Instead of paying a girl $2,000 for a boy-girl (scene), now they’re trying to pay $1,200.”

Presley said she has refused to work for less and so far has not lost business.

“I stand up for myself,” she said. “A lot of girls, the business is so slow, they’re happy just to find work (at any price).”

Despite all that, Presley said she considers the bailout bid by Francis and Hustler chief Flynt “a little crazy” and thinks companies need to cut unnecessary expenses. She said the porn industry, like the auto industry, is to blame for failing to change with the times.

“I’m not taking this bailout request seriously,” Presley said. “I love Larry. He’s a great guy. But he doesn’t need $5 billion.”

Her reaction echoed those of a San Fernando Valley congressman and the head of a Valley business group.

“I regret that two porn-industry executives have used the current economic crisis to launch an obvious publicity stunt,” said Rep. Brad Sherman, D-Sherman Oaks. “As Americans face tough economic times, we need a serious discussion of the issues.”

Bruce Ackerman, president and CEO of the Economic Alliance of the San Fernando Valley, said: “I don’t think it’s a reasonable request — and I would say that of any of the industry groups (seeking bailouts).

“I don’t think you can laugh any of these requests off. I sympathize with any industry that needs help,” Ackerman said, noting that the adult-entertainment industry employs thousands of people in the Valley. “But is it something the taxpayer should be burdened with?”

Flynt’s and Francis’ announcement coincides with the start today of the four-day Adult Entertainment Expo in Las Vegas. They hope to find support for the bailout bid from other industry leaders.

“People are too depressed to be sexually active,” Flynt said in a news release. “This is very unhealthy as a nation. Americans can do without cars and such, but they cannot do without sex.”

Adult DVD sales and rentals have decreased by 22 percent in the past year, the news release claimed, as viewers seek free porn online.

Flynt and Francis will have some convincing to do even in Las Vegas, judging by the reaction of Steven Hirsch, founder and co-chairman of L.A.-based Vivid Entertainment Group, the 25-year-old company that bills itself as the world’s leading adult-film producer.

“To think we’re going to go to Washington and get a bailout is a little unrealistic,” said Hirsch, who said he heard about the Flynt-Francis ploy in the media. “This is not the time to make sweeping statements. This is the time to buckle down and take the steps we need to save our industry.

“This industry is not immune from (the bad economy). People are spending less money, period.”

Hirsch said he thinks Flynt and Francis are “just poking fun at all the industries getting bailouts.”

Hirsch said Vivid isn’t suffering as badly as smaller rivals because its prominent brand name gives the company “a leg up.”

He declined to get specific about Vivid’s revenue.
 

SampanViking

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5-6%, I don't know, I find that extremely hard to believe even at 7.5% now factories are closing around China and there are riots, and that is only a 2-3% drop from 9-10% growth. I just don't see China's economy as of right now (and also in a couple of year) tied so much with the US economy and export based that it can achieve a 5-6% without major affects. Maybe in 5-10 years when China's economy becomes more of a tertiary sector economy based on technology and finances then it's growth rate can slow down. :(

I dont know where you got 7.5% from. Xinhua quoted the NBS just a few days ago for a preliminery growth rate for 2008 at 9.8% and a prediction in 2009 and 9%.

The closure of low end manufacturers on the Coast is only half the story as new job growth is now happening in Interior hotspots, which is why many migrants are heading back home.

I must add that reading the US media in particular and its atitude to the World economy, that if it is in trouble so must everybody else, reminds me of an old Cartoon (Mad I think) from the sixties or seventies, where the Lone Ranger and Tonto; surrounded by apaches, are out of Ammo and heavily outnumbered. The Lone Ranger turns to Tonto and says, "Looks like were done for Tonto" to which a grinning Tonto replies "What you mean we?";)
 

swimmerXC

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I dont know where you got 7.5% from. Xinhua quoted the NBS just a few days ago for a preliminery growth rate for 2008 at 9.8% and a prediction in 2009 and 9%.

The closure of low end manufacturers on the Coast is only half the story as new job growth is now happening in Interior hotspots, which is why many migrants are heading back home.

I must add that reading the US media in particular and its atitude to the World economy, that if it is in trouble so must everybody else, reminds me of an old Cartoon (Mad I think) from the sixties or seventies, where the Lone Ranger and Tonto; surrounded by apaches, are out of Ammo and heavily outnumbered. The Lone Ranger turns to Tonto and says, "Looks like were done for Tonto" to which a grinning Tonto replies "What you mean we?";)


With economic growth forecast at 7.5 percent this year, a level not seen since 1990, Chinese communist leaders likely appreciated the optimistic note from the United States, which is marking 30 years of diplomatic ties with Beijing.

Post 407, also China's 11th Five-Year Plan is to slow the growth rate down to 7.5%

On Oct. 31, UBS issued a growth forecast for next year of 7.5% (down from 8%).
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The World Bank has cut its 2009 forecast for China's economic growth to 7.5 percent, from 9.2 percent previously.
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The central bank has revised its estimate of economic growth this year downwards, to 7.5-8%, which is still optimistic.
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The Economist Intelligence Unit expects real GDP growth to moderate to 8% in 2009, largely owing to the poor outlook for net exports and property investment. Weak external demand will also depress growth in 2010, to 7.5%.
http://www.sinodefenceforum.com/newreply.php?do=newreply&p=92798

I'll also pull up the 7.5% from the World Bank's World Development Indicator if you really want tomorrow when I have time
 

flyzies

Junior Member
Different organisations make different projections of China's economic growth figures; ive read 7% in some and 9% in others.

I really dont know where that "needs at least 8% growth to avoid social unrest" came from. Perhaps it was whipped up by one Western media outlet during all those years of China's economy growing, and others just picked it up and took it for truth. To be honest, i dont think ive heard China's central govt officially saying the country needs above 8% growth every year...tho for them im sure it's desirable to have that.
 

amadeus

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QUESTION: is it possible for the US to default on its national debt to China?

Could this even be a possibility? and what would happen if it did so? I know that the Soviet Union refused to pay the Tsarist debts following the October Revolution...while the USA is far from the USSR, couldn't this also be a possibility?

For example, if the two nations ever go to war over Taiwan in the future, wouldn't that be an excuse for the US to not pay up?

Thanks for your expertise!
 

SampanViking

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To be honest Swimmer, I really do not take too seriously these days any financial forcast issued by a US based Organisation (sorry if that is sailing a bit close to the wind - but hey Viking by name etc:D) in the wake of the financial collapse and regulatory failure.

To use another analogy, it is like living next door to the DIY Disaster Dweeb from Hell, who manages not only to wreck his own house but also yours and the rest of the entire street. Is this the person you approach for an estimate re contract to rebuild and repair? ... personally I think not!!

I agree with you Flyzies about the 8%, I must have stated before that this can only be an estimated agregate average over decades to match the urbanisation/industrialisation targets. The relevance to day to day policy will be zilch!
 

crobato

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Re: QUESTION: is it possible for the US to default on its national debt to China?

If you default on your loans, no one would lend you in the future.

I'm going to move this thread to where it supposed to belong.
 

Autumn Child

Junior Member
actually China does not entirely rely on manufacturing and export for its economy. The last time I check the work force profile in 2007: 45% agriculture, 28% manufacturing and 32% service (include logistics and govt services). So its still mainly agricultural and the service industry including govt is not laying off people. As you can see, there is still huge amount of ppl still employed in the agricultural sector and the service sector. Many people serving in the state owned enterprise and govt positions have iron rice bowl. There are also no shortage of food or energy or excessive inflation at the moment. Most people will not be desperate enough to risk their live to riot or go against the govt at this moment. There are also report of unemployed fresh University graduates. They are probably not happy to be unemployed but since most chinese lived with their parent at that age and most families only have one child, the unemployed graduates simply return home and weather the storm until they find a job.

Estimated number of people that lose job from the crisis is expected to be 20 million compared to 30 million in the 1990s when the govt is shuting down alot of State owned enterprise. The economy and govt today its in much better shape compared to 10 years ago to absorp the excess worker. Note that there are more than 760 million workforce in china today, a 20 million drop in employment is not going to have much impact on social stability. furthermore the stimulus plan should also reabsorp a few million people back to work for infrastructure constructions.
 
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FugitiveVisions

Junior Member
Re: QUESTION: is it possible for the US to default on its national debt to China?

Could this even be a possibility?

Default rate = rate of inflation. With inflation the value of the loan decreases in real terms. You'll never have default because the loan denominated in the dollar, so the US monetary authorities can simply print more money.

Different story for developing countries, as outside creditors don't trust the creditworthiness of native borrowers. Excessive borrowing from foreign sources plus the short-maturity of the loans basically caused collapses in the financial markets of developed countries.
 
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