Comments on: Fun with the Global Economy http://poliblogger.com/?p=11534 A rough draft of my thoughts... Fri, 05 Oct 2024 06:39:38 +0000 http://wordpress.org/?v=2.0.4 by: Buckland http://poliblogger.com/?p=11534#comment-1360325 Wed, 28 Feb 2024 17:08:57 +0000 http://poliblogger.com/?p=11534#comment-1360325 China banking system has a huge problem on their hands with Non Performing Loans. China admits to roughly 15% of loans at their banks to be NPL, concensus estimates puts the number at 25%, while some analysts put the number as high as 50%. Some perspective: In the US S&L debacle of the 80's our banking system peaked at about 4% NPL, Japan went into a 15 year recession when they hit 11% from which they have only recently recovered. This is the issue that has the potential to strangle the Chinese economy, not possible captial gains taxes. This will be huge in the decades ahead. A China that can't grow at 10%+/year can't keep the economy ahead of the folks coming off the farm for a better life in the cities. If they can't deal with the 7 million /year that leave the farm then unrest breaks out. It's easy to focus on places in the world where Americans are getting shot at. However developments over the next decade in China will do more to determine the world our children live in then anything happening in Europe or the Middle East. Unfortunately it's just not the trendy part of the world right now China banking system has a huge problem on their hands with Non Performing Loans. China admits to roughly 15% of loans at their banks to be NPL, concensus estimates puts the number at 25%, while some analysts put the number as high as 50%. Some perspective: In the US S&L debacle of the 80’s our banking system peaked at about 4% NPL, Japan went into a 15 year recession when they hit 11% from which they have only recently recovered. This is the issue that has the potential to strangle the Chinese economy, not possible captial gains taxes.

This will be huge in the decades ahead. A China that can’t grow at 10%+/year can’t keep the economy ahead of the folks coming off the farm for a better life in the cities. If they can’t deal with the 7 million /year that leave the farm then unrest breaks out.

It’s easy to focus on places in the world where Americans are getting shot at. However developments over the next decade in China will do more to determine the world our children live in then anything happening in Europe or the Middle East. Unfortunately it’s just not the trendy part of the world right now

]]> by: Steven Plunk http://poliblogger.com/?p=11534#comment-1360324 Wed, 28 Feb 2024 16:15:54 +0000 http://poliblogger.com/?p=11534#comment-1360324 It's my understanding the initial fall in Shanghai was a reaction to the rumor of a caital gains tax being imposed. That fall coupled with Greenspan's comments (which were not as bad as reported) really frightened investors in the US. Then we had a failure of the trading system when the buy orders bottlenecked while the sell orders did not. It was something of a perfect storm that should have been prevented. Given all that the herd promptly panicked. It’s my understanding the initial fall in Shanghai was a reaction to the rumor of a caital gains tax being imposed. That fall coupled with Greenspan’s comments (which were not as bad as reported) really frightened investors in the US. Then we had a failure of the trading system when the buy orders bottlenecked while the sell orders did not. It was something of a perfect storm that should have been prevented.

Given all that the herd promptly panicked.

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