The problems, deferred from late 2008 with massive state spending, have simply become too large. And we must remember that he works inside a complex, collective political system that is generally unable to meet challenges swiftly.
April 14, 2014
"Collapses occur when people lose confidence. That is now happening in China."
"Premier Li Keqiang has a few tools at his disposal, but they look insufficient to stop a general collapse of property prices across the country."
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The problems, deferred from late 2008 with massive state spending, have simply become too large. And we must remember that he works inside a complex, collective political system that is generally unable to meet challenges swiftly.
Wait,what country are we talking about here?
In two years, there will be some real bargains to be had.
I thought we had the complex system that couldn't deal with problems swiftly.
I read something in the New York Times that said that. And something about trains.
Tom Friedman hardest hit.
When my wife and I visited China in 2011, we saw a lot of newly constructed buildings that were empty. Google "Ghost Cities of China" for some really interesting photos. About the only way they could fill all those empty buildings (and cities) would be to implement the forced migration from rural areas that was discussed last year.
The global economy is largely like a three-legged milkstool, with China, the US and the European Union making up the legs. If any one of the legs collapses, so does the stool. And all three of those economies is weak with a staggering amount of debt barely able to prop up things for a while longer. Anything that can't go on forever will eventually end and we may be getting there soon. The correction for all this could set things back for a generation or more.
Collapses occur when people lose confidence. That is now happening in the US>
Its all Bush's fault
And we must remember that he works inside a complex, collective political system that is generally unable to meet challenges swiftly.
Nobody tell Thomas Friedman.
Anybody who pointed out that massive spending was a risky scheme was swiftly excoriated as a troglodyte.
I was in China over last summer and there was a ridiculous amount of overbuilding. A lot of over staffed, under customered restaurants.
Lord knows I am not opposed to people using resources to create homes and apartments, but China is a big example of what happens when it's the government and not the market that decides to tear up space and build huge concrete buildings everywhere. Killing trees, filling the rivers with silt, filling the atmosphere with particulates and other byproducts of making building materials. And for what, empty rooms people can't afford to live in or just plain don't need or want.
"The correction for all this could set things back for a generation or more."
You're thinking is too optimistic. This could lead to complete collapse of America's economy, causing complete devastation and a radical reordering of our society...or potential collapse of the world economy, and possibly to world war, as the world's powers fight more desperately to remain in more, rather than less advantaged positions.
"Its all Bush's fault"
Yes, and Obama's, and the several presidents and congresses preceding Bush, going back to at least Reagan. Don't be so narrow in your focus, (though, your snark is duly noted).
It's the fault of economic policies meant to enrich the already rich, which inevitably will further impoverish the already impoverished.
Mr. Cook, you do understand (don't you?) that the topic of discussion is China. It is the fault of no U.S. president.
And on cue comes Cook's anti-capitalist rant. Of couse it never occurs to him that government policies that direct capital to certain sectors inevitable result in mis-allocation of capital and the subsequent problems that causes.
@Robert Cook 10:12
"It's the fault of economic policies INSTITUTED BY ECONOMICALLY IGNORANT POLITICIANS THAT RESULT IN enrichING the already rich, which inevitably will further impoverish the already impoverished."
@Robert Cook
"You're thinking is too optimistic. This could lead to complete collapse of America's economy…"
It may be your hope , but this bubble in China will have little or no effect on the US economy. Real estate suffers a cycle of overbuilding on a regular basis. I doubt the Chinese have allowed the kind of financial shenanigans that our government encouraged, then ignored, that was the cause of our financial crisis.
"And we must remember that he works inside a complex, collective political system that is generally unable to meet challenges swiftly."
Much like the USA, and one of the many arguments in favor of the free market. However, government being a necessity, and the tendency of government being to increase and exercise its power, free markets are always distorted by government. The trick is to keep that distortion in check as much as possible.
The Chinese "banks" (if you can even call them that) are going to be no more responsible for the bursting of the Chinese bubble than the American banks were in 2008. Yet they will be blamed, and government will act as if it is the cure, not the disease.
But China put on the Olympics and didn't kill dogs.
Or did they? The only coverage along those lines that I remember involved making sure that the homeless were somewhere else. Maybe they were killing dogs too.
Maybe they can put the homeless in those buildings.
I wonder if that would turn out better than US public housing projects.
"And we must remember that he works inside a complex, collective political system that is generally unable to meet challenges swiftly."
Much like the USA, and one of the many arguments in favor of the free market. However, government being a necessity, and the tendency of government being to increase and exercise its power, free markets are always distorted by government. The trick is to keep that distortion in check as much as possible.
The Chinese "banks" (if you can even call them that) are going to be no more responsible for the bursting of the Chinese bubble than the American banks were in 2008. Yet they will be blamed, and government will act as if it is the cure, not the disease.
@khesanh0802
This is not just about the "bubble" in China--though if China decides to go off the US dollar, it would immediately ruin us, so economic matters in China can have very great impact on us--but about the unstable economies occurring all around the world at this time, and the continuing growth of the world population even as the resources we take for granted to maintain modern societies as we known become ever more scarce or hard to access affordably, or become polluted with poisonous chemicals, and so on.
In other words, the world at large is in the shit right now. When is the big flush going to happen?
@tim mcquire...
No, the topic is why collapses occur. The quote, from a Chinese official, regarding his country's circumstances at time, is that collapses occur due to lack of confidence. Well, that may or may not be, (or is actually only part of the story), but it leads to one having to consider what will cause America's collapse (and when).
And when one great nation collapses--whoever is first--one must fear cascading consequences in the form of collapses elsewhere. A world of collapsing economies is a world primed for cataclysmic global war.
It's not a lack of confidence per se. China is literally aborting/murdering its future. That coupled with the misaligned development engendered by centralization, has ensured a Dodo Dynasty.
People want instant or immediate gratification without consequences. They take comfort in promises of dissociation of risk. Unfortunately, only a select few will ever enjoy that dream, and most only for a short time.
The principles of evolution are simple. The limitations of mortal beings are well known. Yet, people still maintain a pretense of divine-like knowledge and skill. Not even with a reduced problem set can these mortal gods succeed in managing the world's resources and human population.
"The Chinese 'banks' (if you can even call them that) are going to be no more responsible for the bursting of the Chinese bubble than the American banks were in 2008."
In other words, greatly responsible.
The one child policy will hinder any recovery from the bubble in the Chinese housing market. If the Chinese economy hasn't peaked yet it should peak soon and begin to decline as the population rapidly ages.
"...free markets are always distorted by government."
That is, governments are always distorted by too powerful markets; they become servants of the markets.
It's the fault of economic policies meant to enrich the already rich, which inevitably will further impoverish the already impoverished.
So what do you propose? Redistributionist policies? Central economic planning? Or are you just regurgitating class warfare rhetoric?
Same tired old shit.
China'a a mixed economy just like the US-- "mixed economy" meaning, as usual, "markets and regulation combined in such a way that, no matter how much regulation is in the mix, the markets always get blamed for anything that goes wrong."
That is, governments are always distorted by too powerful markets; they become servants of the markets.
The flip side to that is, of course, that governments distort markets (see Uber and taxi regualtions in DC and NYC). Or are you really suggesting that banks and "the market" colluded to build buildings that no one wanted (that's why they're empty). Is that really what you're asserting?
Illuninati:
Whereas Americans abort/murder principally for money, sex, ego, and convenience, the Chinese abort/murder principally to reduce the problem set. The result is an aging population, which is undermining the economic balance. This is what happens with centralization schemes that engender misaligned development through distortion of organic growth, including circumvention of natural feedback. Tens of million of human lives murdered and enslaved. This is especially problematic with converged migration, when it exceeds the rate of absorption (e.g. assimilation) by a community or geography. That is why major population centers are more likely to be libertine and progressive, with a demand for abortion/murder, and progressive levels of financing and subsidies.
The classic example of market collapse is a bank run -- it starts slowly and ends in panic. This article describes a collapse in the beginning stages, as the supply of new customers dries up but before real panic sets in. It's not inevitable that the collapse will continue to the stage of panic selling -- involving price cuts far steeper than 30% -- but very possible it will.
It's the fault of economic policies meant to enrich the already rich, which inevitably will further impoverish the already impoverished.
There is some truth to that, but it's inevitably the fault of the government that distorts the market. Cronyism, and the desire to use one's power for personal enrichment, is not an argument for a more powerful centralized government, but the opposite.
Robert Cook said...
@khesanh0802
This is not just about the "bubble" in China--though if China decides to go off the US dollar, it would immediately ruin us, so economic matters in China can have very great impact on us--but about the unstable economies occurring all around the world at this time, and the continuing growth of the world population even as the resources we take for granted to maintain modern societies as we known become ever more scarce or hard to access affordably, or become polluted with poisonous chemicals, and so on."
Set the example and off yourself. Folks notice that those who are forever bemoaning population growth and the 'evils' it entails somehow believe that they are exempt, as if their existence doesn't contribute to the problem and neither does their children.
As for dumping the dollar, really? China is going to do this to gain what? As for unstable economies-gee notice that they all have on thing in common: central banks fueling bubbles in order to avoid or delay the disasters imposed by their respective governments fiscal and regulatory schemes. it would be nice if the world actually embraced capitalism and free markets instead of state directed economics.
No, Robert Cook ,the subject is a coming collapse in China. A collapse of the U.S. is not under discussion even if part of the quote is a broader statement of one man's beliefs about collapses in general.
People want instant or immediate gratification without consequences.
For most of the history of the US, the federal government took on debt during times of emergency or crisis (Revolutionary War, Civil War, etc.) and paid it down in times of relative calm.
It wasn't until the second half of the 20th century that some smart politicians realized that you didn't actually have to pay it back as long as someone was still willing to lend you more. That touched off the entitlement state we have today, where for the last 50 years politicians have borrowed against the future to give benefits/buy votes in the present. Eventually someone will have to pay up, but not yet.
I suspect it won't be much longer before the bill comes due.
That is, governments are always distorted by too powerful markets...
I don't even know what this means. Does anyone know what this means?
How do you distort a government? The implication is that governments have some kind of "pure form" that they would assume if left to their own devices, but it can't mean that because that's nonsense.
Seriously, does anyone know what this means?
"The problems, deferred from late 2008 with massive state spending, have simply become too large. "
thank god that could never happen here!
And if it did, just print up some trillion dollar coins. Problem solved.
"So what do you propose? Redistributionist policies?"
The policies I'm referring to, the policies that have become accepted as "the norm" beyond which only crazed radicals would venture, are redistributionist policies. They're redistributing wealth from those in the middle and the bottom to the people at the top.
That is, governments are always distorted by too powerful markets...
It is what lobbyists do.
"'That is, governments are always distorted by too powerful markets...'
"I don't even know what this means."
In democratic or representative governments, the government purportedly is organized by and is representative of and serves the interest of the people: it makes laws and sets policies that benefit the people and that are assented to by the people and reflect their views. Money flowing into government from the "markets" turns the government into a servant of the wealthy, the people be damned. The masses are seen as a necessary evil, to be controlled as closely and harshly as possible, to provide ready and cheap labor, until it is no longer needed and may be discared, to serve as piggy banks for the rich--even while the charade of "freedom" is maintained by all.
" Of course it never occurs to him that government policies that direct capital to certain sectors inevitable result in mis-allocation of capital and the subsequent problems that causes."
We have had a crony capitalist economy during the Clinton and Obama administrations. During Bush I we were still gliding on the end of the Reagan economy. We built up the military and won the Cold War. Reagan had Tip O'Neill spending as fast as he could and I criticize Reagan for not trying harder to slow spending. Bush II was never conservative and then the Clinton chickens came home on 9/11.
Now, we have the Obama economy and the Obama debt crisis. The next step will be either a revolution or a repudiation of debt.
If anyone wants to know the cause of the 2008 melt down look at some old YouTube videos of Bush officials trying to get the 2006 Democrats to rein in Fannie Mae.
China is a preview and the lefties think it is anybody's fault but their own.
Now, we have the Obama economy and the Obama debt crisis.
When was the last time a Republican President balanced the budget?
Obama hands surplus off....to a Clinton? Irony. Surprise: Obama might just leave office with a budget surplus.
Micheal K we always have had a degree of crony capitalism. The difference between now and the past prior to the TR and Wilson Administrations is that since them the federal government has so much more power to extract protection money and sell indulgences to the high bidders. Cook thinks that giving the same whores and gangsters more power will make them less corrupt. Garage believes that Obama might end with a surplus. I rather doubt it but if it happens it will only be due to reduced spending and that will mostly come out of the defense budget. But what you won't see is Democrats proposing that any surplus be used to pay down the debt.
"Cook thinks that giving the same whores and gangsters more power will make them less corrupt."
No. We must remove the power from the whores and gangster and place it back in the hands of the people...which will never happen as long as the plutocrats retain control over the mechanisms of government.
"The difference between now and the past prior to the TR and Wilson Administrations is that since them the federal government has so much more power to extract protection money and sell indulgences to the high bidders"
Absolutely. For what it is worth, JP Morgan used his power and wealth, but mostly his moral power, to rescue the economy in 1903. Today, we have men, and a rare woman, who use their power and wealth to get richer and more powerful through their connections in government, usually Democrats.
garage thinks Clinton balanced the budget. That is how little he understands about the US economic situation. Congress, mostly under Democrats, used the Social Security surplus that accumulated before 2000 to spend and spend. Clinton declared a budget balance that DID NOT INCLUDE the money taken from Social Security as debt. The Republicans had a chance to do better under Gingrich and, to his shame, they did not do any better. Now, the Social Security fund is empty and the "trust fund" is filled with US IOUs. garage thinks this means it's still full.
"which will never happen as long as the plutocrats retain control over the mechanisms of government."
If you want a list, look at Obama donors.
This is not just about the "bubble" in China--though if China decides to go off the US dollar, it would immediately ruin us,
It's always amusing when you wax eloquent on things economic. China is in no position to drop the US dollar.
Far from "ruining us" the Chinese are taking their surfeit of greenbacks and spending them as fast as they can on real property here in the good old US of A. US dollars in the hands of Chinese investors are driving up the price of real estate on the west coast. And for some reason they find real estate in Detroit compelling. From an economic point of view this is a good thing.
Name a plutocrat.
governments are always distorted by too powerful markets; they become servants of the markets.
Which is another way of saying that governments are distorted by individuals expressing their desires by voluntarily engaging in commerce, bound by the rule of law. And that is as it should be. The trouble comes when government has increased power, which makes it more vulnerable to those who distort it to their own end, through crony capitalism.
"If you want a list, look at Obama donors."
Sure...they're donors for everyone who gets into power, in either party.
""If you want a list, look at Obama donors."
Sure...they're donors for everyone who gets into power, in either party."
Sure, no argument but we see the truth. Your side doesn't. Obama has been a boon to crony capitalists. The green fraud especially.
"governments are always distorted by too powerful markets; they become servants of the markets."
Government intervention always distorts markets; markets become servants to the government.
I think mine speaks more truth.
"Obama has been a boon to crony capitalists."
Yes, as has every president going to back Reagan, (if we limit ourselves to recent times). Every president we've had for decades has been despicable.
Obama is not a unique case, and if you think he is, you're fooling yourself; he is doing exactly what his immediate predecessors have done: enabling the predators of society--the crony capitalists, and Wall Street and the financial institutions--to continue in their predations and parasitism on the rest of us.
If Romney had won this most recent election, he would be doing the same with great enthusiasm, (given that he is one of those parasites).
Barring an unimaginable sea change in American politics, whoever our next President will be, of whichever party, will continue the same.
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