China Thread

[AM64]

The currency is the most critical element in all of this.

Right now, China is deliberately manipulating its currency to make it weaker than other currencies to help with their ability export. But eventually, the race to the bottom that all of the world's central banks are engaged in right now will end, and all of these countries will have to reset their currencies. At that point, China's currency will be the strongest out there. A strong currency helps the local economy buy imports and that will just feed the Chinese dragon even more because they will now be able to buy all of the raw materials it needs for its booming manufacturing/industrial base to supply its emerging middle class. Now granted, I don't think the average middle class standard of living will equal the average Americans right now, but you will see a significant portion of the population enjoying a much better standard of living.

Diddling with currencies - floating exchange rate is about as stupid as it gets. If economists got their minds out of the muck they'd understand money is a medium of exchange and not a commodity. Of course, there's money to be made and political gains with it as a commodity, but think how the world would be if we decided to float weights and measures for fun and profit. Devalue the inch vs the meter by a few percent etc

 

[Rasputin_Vol]

Diddling with currencies - floating exchange rate is about as stupid as it gets. If economists got their minds out of the muck they'd understand money is a medium of exchange and not a commodity. Of course, there's money to be made and political gains with it as a commodity, but think how the world would be if we decided to float weights and measures for fun and profit. Devalue the inch vs the meter by a few percent etc

You are preaching to the choir regarding floating currencies.

 

[LouderVol]

The currency is the most critical element in all of this.

Right now, China is deliberately manipulating its currency to make it weaker than other currencies to help with their ability export. But eventually, the race to the bottom that all of the world's central banks are engaged in right now will end, and all of these countries will have to reset their currencies. At that point, China's currency will be the strongest out there. A strong currency helps the local economy buy imports and that will just feed the Chinese dragon even more because they will now be able to buy all of the raw materials it needs for its booming manufacturing/industrial base to supply its emerging middle class. Now granted, I don't think the average middle class standard of living will equal the average Americans right now, but you will see a significant portion of the population enjoying a much better standard of living.

Not sure how you are reconciling China's extremely "floated" currency and their "strong" economy.

and it still doesn't solve the problem of China is manufacturing at a scale that isn't needed. and that will only get worse with a global collapse. Doesn't matter how much they can make if no one is buying. Its kinda the opposite of a hoarder mentality. yay jobs, but boo no income.

 

[Rasputin_Vol]

Not sure how you are reconciling China's extremely "floated" currency and their "strong" economy.

and it still doesn't solve the problem of China is manufacturing at a scale that isn't needed. and that will only get worse with a global collapse. Doesn't matter how much they can make if no one is buying. Its kinda the opposite of a hoarder mentality. yay jobs, but boo no income.

Again, let me explain one more time. You are correct, right now, they are over-producing. That is partially because the countries in the West that they normally import to are collapsing and in debt. However, once the system resets, no one will be in a better position to hit the ground running than China. With their manufacturing base, they will be able to get raw materials at a discount and use that to then support Chinese domestic demand and become less dependent on exports to the West. They will also be able to easily expand in Asia as a whole. Asian demographics are younger and growing while Western demographics are older and shrinking, so they will have more room to expand in these markets.

 

[Rasputin_Vol]

Not sure how you are reconciling China's extremely "floated" currency and their "strong" economy.

Again, the reason why they are manipulating their currency is because precisely because of the problem you spoke of. They are hoping to boost their exports. But that tactic is no different than what every other central bank around the world has been doing.

 

[LouderVol]

Again, the reason why they are manipulating their currency is because precisely because of the problem you spoke of. They are hoping to boost their exports. But that tactic is no different than what every other central bank around the world has been doing.

essentially I agree.

I don't think we have messed with the dollar enough to keep corporations from shutting down and/or leaving the nation, if anything its the opposite. and we don't straight up ban companies from leaving or shutting down. I agree we are messing with the value of the dollar to an extent, but China is on a whole different level. and it has very little to do with meeting demands for the world and a whole lot to simply keep their population employed.

China is not playing the long term game, they are trying to make it to the next inning. If they stop messing with the yuan, either now or later, it won't help their people. even after a collapse and surge later letting the yuan rise vs the world won't let re-emerging countries buy from them. as we found out, its not about capacity of production, but cost that drives who makes what. as soon as China changes that they are no longer making widgets for the world.

and before during and after their stock market crash their central government was messing with the value of the yuan to bring it up, not down. They literally made it illegal to get any cheaper, or for people to pull out. I admit I don't understand geo-economies/money rates very well. But imo, the reason you are seeing them pull away from the dollar is because their own money is so bad and being so heavily invested in our money ties up assets that could help stabilize their own. On that front I agree with what they are doing, and wish we would do that to.

again its not what other nations are going to do, it what the companies are going to do.

 

[Rasputin_Vol]

essentially I agree.

I don't think we have messed with the dollar enough to keep corporations from shutting down and/or leaving the nation, if anything its the opposite. and we don't straight up ban companies from leaving or shutting down. I agree we are messing with the value of the dollar to an extent, but China is on a whole different level. and it has very little to do with meeting demands for the world and a whole lot to simply keep their population employed.

China is not playing the long term game, they are trying to make it to the next inning. If they stop messing with the yuan, either now or later, it won't help their people. even after a collapse and surge later letting the yuan rise vs the world won't let re-emerging countries buy from them. as we found out, its not about capacity of production, but cost that drives who makes what. as soon as China changes that they are no longer making widgets for the world.

and before during and after their stock market crash their central government was messing with the value of the yuan to bring it up, not down. They literally made it illegal to get any cheaper, or for people to pull out. I admit I don't understand geo-economies/money rates very well. But imo, the reason you are seeing them pull away from the dollar is because their own money is so bad and being so heavily invested in our money ties up assets that could help stabilize their own. On that front I agree with what they are doing, and wish we would do that to.

again its not what other nations are going to do, it what the companies are going to do.

That's the only game they play... the long game. While in the West, we make decisions based on quarterly info, they make decisions over years/decades.

As far as preventing emerging markets from buying from China, that may work right now, but with China coming out with their alternative to the SWIFT payment system, there would be no way to prevent free trade with China by some 3rd party.

As far as them pushing up the yuan, we saw just last year that they de-valued the yuan, which triggered a near crash in our markets here a few weeks later. And that was just a 1.9% devaluation.

China Rattles Markets With Yuan Devaluation - Bloomberg

 

[LouderVol]

That's the only game they play... the long game. While in the West, we make decisions based on quarterly info, they make decisions over years/decades.

As far as preventing emerging markets from buying from China, that may work right now, but with China coming out with their alternative to the SWIFT payment system, there would be no way to prevent free trade with China by some 3rd party.

As far as them pushing up the yuan, we saw just last year that they de-valued the yuan, which triggered a near crash in our markets here a few weeks later. And that was just a 1.9% devaluation.

ChinaÂ*Rattles Markets With Yuan Devaluation - Bloomberg

not saying a third party would keep China from trading with the world. Saying that a higher yuan isn't as conducive to maintaining the status quo as the lower yuan is. the higher the yuan, the less likely companies are going to stay there. A lot of China is America sped up, as soon as they go to a true middle class system you are going to see companies leave China for the same reasons they did here.

Without a true middle class there is no need/demand for a higher value on the yuan.

 

[LouderVol]

That's the only game they play... the long game. While in the West, we make decisions based on quarterly info, they make decisions over years/decades.

As far as preventing emerging markets from buying from China, that may work right now, but with China coming out with their alternative to the SWIFT payment system, there would be no way to prevent free trade with China by some 3rd party.

As far as them pushing up the yuan, we saw just last year that they de-valued the yuan, which triggered a near crash in our markets here a few weeks later. And that was just a 1.9% devaluation.

ChinaÂ*Rattles Markets With Yuan Devaluation - Bloomberg

and the article states it was a one time devalue, and goes on and on about the raising value over the last two decades and how the goverment has controled that growth. again a lot of that stuff I wish I understood more as far as the relation of a countries "dollar" value vs their investment in other moneys and what that does to relative costs, but the article doesn't seem to imply a downward trend on the part of the central government.

Tuesday’s devaluation was a one-off adjustment and shouldn’t be interpreted as a sign that the yuan will enter a depreciation trend, PBOC chief economist Ma Jun was cited as saying in a Caixin report. The central bank said it will stabilize market expectations and ensure the new reference-rate mechanism will take effect “in an orderly manner.”

 

[Rasputin_Vol]

essentially I agree.

I don't think we have messed with the dollar enough to keep corporations from shutting down and/or leaving the nation, if anything its the opposite. and we don't straight up ban companies from leaving or shutting down. I agree we are messing with the value of the dollar to an extent, but China is on a whole different level. and it has very little to do with meeting demands for the world and a whole lot to simply keep their population employed.

China is not playing the long term game, they are trying to make it to the next inning. If they stop messing with the yuan, either now or later, it won't help their people. even after a collapse and surge later letting the yuan rise vs the world won't let re-emerging countries buy from them. as we found out, its not about capacity of production, but cost that drives who makes what. as soon as China changes that they are no longer making widgets for the world.

and before during and after their stock market crash their central government was messing with the value of the yuan to bring it up, not down. They literally made it illegal to get any cheaper, or for people to pull out. I admit I don't understand geo-economies/money rates very well. But imo, the reason you are seeing them pull away from the dollar is because their own money is so bad and being so heavily invested in our money ties up assets that could help stabilize their own. On that front I agree with what they are doing, and wish we would do that to.

again its not what other nations are going to do, it what the companies are going to do.

And again, as I stated before, they will have the strongest currency, which allow them to import the raw materials they need for their industrial base. A strong currency makes imports cheaper, a weak currency makes what you are exporting cheaper to everyone else. Right now, China is in the weak currency phase. In the aftermath, they will have by default the strongest currency.

 

[Rasputin_Vol]

not saying a third party would keep China from trading with the world. Saying that a higher yuan isn't as conducive to maintaining the status quo as the lower yuan is. the higher the yuan, the less likely companies are going to stay there. A lot of China is America sped up, as soon as they go to a true middle class system you are going to see companies leave China for the same reasons they did here.

Without a true middle class there is no need/demand for a higher value on the yuan.

I'm confused... why do you think companies left America? It had nothing to do with America having a vibrant middle class.

 

[Rasputin_Vol]

and the article states it was a one time devalue, and goes on and on about the raising value over the last two decades and how the goverment has controled that growth. again a lot of that stuff I wish I understood more as far as the relation of a countries "dollar" value vs their investment in other moneys and what that does to relative costs, but the article doesn't seem to imply a downward trend on the part of the central government.

"Controlled that growth", meaning making sure it stayed weak enough for a competitive advantage in trade. Without manipulation, the yuan would be much stronger than it is right now.

 

[Rasputin_Vol]

and the article states it was a one time devalue, and goes on and on about the raising value over the last two decades and how the goverment has controled that growth. again a lot of that stuff I wish I understood more as far as the relation of a countries "dollar" value vs their investment in other moneys and what that does to relative costs, but the article doesn't seem to imply a downward trend on the part of the central government.

One example of how currencies can wreck havoc is for some of these emerging market countries. They were able to borrow in USD terms with very low rates a few years ago, but as the USD strengthened, it raised their costs of extinguishing that debt because even though they borrowed at a low rate, the exchange rate quickly moved against them and as a result, the cost of USD has gone up (it takes more of their local currencies to pay down the same amount of USD debt).

China doesn't have this problem because they have little to no external debt. Yet another reason why China is better poised for the next phase than most other countries.

 

[LouderVol]

I'm confused... why do you think companies left America? It had nothing to do with America having a vibrant middle class.

labor costs. they had to pay more. More dollars, and higher value dollars. When China makes the switch to higher value yuan they are going to face the same issue.

 

[AM64]

I'm confused... why do you think companies left America? It had nothing to do with America having a vibrant middle class.

I think it had a lot to do with a vibrant middle class and even more to do with blind corporate greed and ambition. The vibrant middle class was vibrant because it had a good income and benefited from manufacturing. However, that meant siphoning money that could be redirected to stock holders (including top level management). Sending jobs to countries like China cut production costs significantly. That was done overtly by moving production facilities or by quietly allowing under-priced foreign good to replace US made goods.

The blind part is the stupidity behind recognizing why and how the middle class was vibrant, and that as it dwindles, markets for goods dwindle, too. Too many people are watching the middle class contract while thinking (many incorrectly) they will fall in the upper side of the divide; when before the rise of the middle class, most people were below the divide.

Politics and government intervention have their role in the whole mess. Without the various welfare programs - including the dramatically extended unemployment, the pain and misery index would have likely forced some corporate reanalysis. Shifting taxed and fictitious money around falsely keeps the market for goods on a somewhat sound basis - for now, but Greece thought they had it all figured out, too.

 

[Rasputin_Vol]

I think it had a lot to do with a vibrant middle class and even more to do with blind corporate greed and ambition. The vibrant middle class was vibrant because it had a good income and benefited from manufacturing. However, that meant siphoning money that could be redirected to stock holders (including top level management). Sending jobs to countries like China cut production costs significantly. That was done overtly by moving production facilities or by quietly allowing under-priced foreign good to replace US made goods.

The blind part is the stupidity behind recognizing why and how the middle class was vibrant, and that as it dwindles, markets for goods dwindle, too. Too many people are watching the middle class contract while thinking (many incorrectly) they will fall in the upper side of the divide; when before the rise of the middle class, most people were below the divide.

Politics and government intervention have their role in the whole mess. Without the various welfare programs - including the dramatically extended unemployment, the pain and misery index would have likely forced some corporate reanalysis. Shifting taxed and fictitious money around falsely keeps the market for goods on a somewhat sound basis - for now, but Greece thought they had it all figured out, too.

Sounds like the problem is corrupt businesses and corrupt politicians working together to siphon off of society as a whole is the problem.

 

[VolStrom]

Sounds like the problem is corrupt businesses and corrupt politicians working together to siphon off of society as a whole is the problem.

From what I understand, US corporations earnings are 12% of the GDP today versus 6% 40 years ago. That money came out of the middle classes pocket and went towards CEO pay and stock holders.

I'm sure some also went towards politicians as lobbyists were almost unheard of 40 years ago.

The entire system is F'd up and short term thinking is killing our economy.

 

[AM64]

From what I understand, US corporations earnings are 12% of the GDP today versus 6% 40 years ago. That money came out of the middle classes pocket and went towards CEO pay and stock holders.

I'm sure some also went towards politicians as lobbyists were almost unheard of 40 years ago.

The entire system is F'd up and short term thinking is killing our economy.

And that short term strategy is unsustainable. It only works until the corporate/political greed and taxation to support the illusion have bled the middle class dry.

Ras is right about the Chinese having a long term strategy - the Chinese have had long term strategies since before most western cultures existed. Their short game is to get our industry, and our "leaders" have been played beautifully. The long game is to be the world power when they've sucked the life out of everybody else.

Whether it works and how long it goes is probably dependent on where the first revolutions break out. Unfortunately our millennials are too full of themselves and too dumbed down to see the world beyond a smartphone. My generation among others have been in the driver's seat while it was happening, so we don't get a pass either.

 

[Rasputin_Vol]

Old news, surprised this hasn't made bigger headlines. I swear, we are debating allowing crossdressers to use the ladies room in the USSA while the Commie Chinese are pulling this nonsense.

Judge in China Rules Gay Couple Cannot Marry

 

[Rasputin_Vol]

The Future of Banking Is in China - WSJ

 

[LouderVol]

I'll stick with the Swiss for now.

 

[Orangedogsrule]

From what I understand, US corporations earnings are 12% of the GDP today versus 6% 40 years ago. That money came out of the middle classes pocket and went towards CEO pay and stock holders.

I'm sure some also went towards politicians as lobbyists were almost unheard of 40 years ago.

The entire system is F'd up and short term thinking is killing our economy.

Don't know where you're from but I live on Earth.


https://en.m.wikipedia.org/wiki/History_of_lobbying_in_the_United_States

 

[Rasputin_Vol]

Why are we messing with these guys? This has been their territorial waters for over 2000 years.

U.S. Navy Chief Says He’ll Keep Sailing in South China Sea

Speaking with reporters at the Pentagon on Tuesday, Richardson said he “made it absolutely clear” to the Chinese that Washington will look after its “interests in the area and commitments to allies.”

We have no interests over there other than to be the block bully. These clowns are going to poke and poke with China and Russia until they kick off a hot war. Makes no sense.

 

[Pacer92]

Why are we messing with these guys? This has been their territorial waters for over 2000 years.

U.S. Navy Chief Says He’ll Keep Sailing in South China Sea



We have no interests over there other than to be the block bully. These clowns are going to poke and poke with China and Russia until they kick off a hot war. Makes no sense.

Just like with Russia, this agenda is designed to restrict China militarily and economically..

Keeping the shipping lanes of the South China Sea open, while prodding Asian neighbors to undermine regional interest in favor of US hegemonic interest..

 

[LouderVol]

Why are we messing with these guys? This has been their territorial waters for over 2000 years.

U.S. Navy Chief Says He’ll Keep Sailing in South China Sea



We have no interests over there other than to be the block bully. These clowns are going to poke and poke with China and Russia until they kick off a hot war. Makes no sense.

it has not been 2000 years. it might have been theirs 2000 years ago but they left the playing field. AND ITS STILL CLOSER TO OUR ALLIES THAN IT IS TO CHINA!!!!!!

hell, through the Philippines we have a more recent claim to the SCS than China has put forth, and that was 100 years ago. They need to get out of our water.

this is why America can't just pull of the world stage. once you do that you take yourself out of the game and other people fill it. China wants back in, but too bad others have taken up residence.

and again according to their own laws they created and signed (without any US involvement) the waters are not theirs! if you are going to respond to one thing Ras, respond to this point.