Comments on: Bankruptcies and Plant Closings Rising in China http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html Mon, 23 Nov 2009 12:30:27 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24073 Anonymous Sun, 02 Nov 2008 11:45:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24073 anon@2:42<br/><br/>You're right about China in the long run. But, as Keynes said, in the long run we're all dead. The next ten years may be very, very bad. anon@2:42

You’re right about China in the long run. But, as Keynes said, in the long run we’re all dead. The next ten years may be very, very bad.

]]> By: mxq http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24048 mxq Sun, 02 Nov 2008 03:33:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24048 The one child policy is going to be devastating to this country...that's probably one of the reasons why the savings rate is so high...older couples probably cannot rely on a massive web of their children or grandchildren to support them after retirement or in case of health problems. They're pretty much on their own. The one child policy is going to be devastating to this country…that’s probably one of the reasons why the savings rate is so high…older couples probably cannot rely on a massive web of their children or grandchildren to support them after retirement or in case of health problems. They’re pretty much on their own.

]]> By: Ether_S http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24040 Ether_S Sat, 01 Nov 2008 21:51:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24040 China is going through its own 1929.<br/><br/>"Giving rise to an inherently unbalanced dynamic of accumulation resulting in an over-accumulation of capital, culminating in periodic crises of devaluation of capital. The origin of crisis is thus located firmly in the sphere of production, though economic crisis can be aggravated by problems of over-production in the manufacturing and related production sectors and the lowered demand." China is going through its own 1929.

“Giving rise to an inherently unbalanced dynamic of accumulation resulting in an over-accumulation of capital, culminating in periodic crises of devaluation of capital. The origin of crisis is thus located firmly in the sphere of production, though economic crisis can be aggravated by problems of over-production in the manufacturing and related production sectors and the lowered demand.”

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24038 Anonymous Sat, 01 Nov 2008 21:17:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24038 Two weeks ago, reports on this blog had Paul Volcker in China as part of some economic negotiations. Now, I am reading other websites that suggest the White House global economic conference may involve some type of dollar devaluation. Personally, I have my doubts that another Plaza Accord ( 1980's) could be orchestrated or tolerated. In any event China would have to be part of any dollar devaluation discussion. As the global recession begins, this may be the last chance the USA gets to convince the world that the American consumer can somehow save the world from a long cold winter. Two weeks ago, reports on this blog had Paul Volcker in China as part of some economic negotiations. Now, I am reading other websites that suggest the White House global economic conference may involve some type of dollar devaluation. Personally, I have my doubts that another Plaza Accord ( 1980’s) could be orchestrated or tolerated. In any event China would have to be part of any dollar devaluation discussion. As the global recession begins, this may be the last chance the USA gets to convince the world that the American consumer can somehow save the world from a long cold winter.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24026 Anonymous Sat, 01 Nov 2008 18:42:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24026 I too worry about the figures that are bandied about as well as political stability in China, but at the same time, this is marathon, not a sprint. <br/><br/>As long as (i) the social institutions in China hold together through this downturn and (ii) China continues to invest in its physical and educational infrastructure, the next 20 to 30 years are going to see a huge redistribution of wealth from the West to China. If communications costs continue to dwindle toward zero and technology finds a way to bring cheaper, greener transportation, the vast gap in per capita income between the West and China will be reduced one way or another.<br/><br/>I wouldn't get too caught up in the minutia and or the short term. I too worry about the figures that are bandied about as well as political stability in China, but at the same time, this is marathon, not a sprint.

As long as (i) the social institutions in China hold together through this downturn and (ii) China continues to invest in its physical and educational infrastructure, the next 20 to 30 years are going to see a huge redistribution of wealth from the West to China. If communications costs continue to dwindle toward zero and technology finds a way to bring cheaper, greener transportation, the vast gap in per capita income between the West and China will be reduced one way or another.

I wouldn’t get too caught up in the minutia and or the short term.

]]> By: Phil http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24020 Phil Sat, 01 Nov 2008 16:58:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24020 Agree with ANON 12:58<br/>"I'm sure the "8% growth" involves some pretty accounting techniques..... Excessive overcapacity and malinvestment."<br/>Last year there were a couple of articles that stated that many of the profits of Chinese companies were from (at the time) the ever rising stock market. That plus the other stories of how many Chinese citizens were hocking everthing to get into the market was the tell tale sign for what is occurring now. Agree with ANON 12:58
“I’m sure the “8% growth” involves some pretty accounting techniques….. Excessive overcapacity and malinvestment.”
Last year there were a couple of articles that stated that many of the profits of Chinese companies were from (at the time) the ever rising stock market. That plus the other stories of how many Chinese citizens were hocking everthing to get into the market was the tell tale sign for what is occurring now.

]]> By: fresno dan http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24002 fresno dan Sat, 01 Nov 2008 14:39:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24002 me dumb<br/>http://blogs.cfr.org/setser/2008/10/21/the-end-of-bretton-woods-2/#more-3906<br/><br/>It was about the hit to the economy as a whole - not exports<br/>“Charles Dumas of Lombard Street Research estimates that China makes 1-2 per cent on its (largely) dollar reserves. It then loses up to 10 per cent on the exchange rate and suffers a Chinese inflation rate of 6 per cent for a total real return in renminbi of about minus 15 per cent. That is a loss of $270bn a year, or a stunning 7-8 per cent of gross domestic product.”<br/><br/>Of course, it that is really true, wouldn't China be losing less money if it exported less, because it will have less ?yuan or dollars? to buy dollars (i.e., treasuries)??? Man, my brain hurts... I'm gonna take a nap. me dumb
http://blogs.cfr.org/setser/2008/10/21/the-end-of-bretton-woods-2/#more-3906

It was about the hit to the economy as a whole – not exports
“Charles Dumas of Lombard Street Research estimates that China makes 1-2 per cent on its (largely) dollar reserves. It then loses up to 10 per cent on the exchange rate and suffers a Chinese inflation rate of 6 per cent for a total real return in renminbi of about minus 15 per cent. That is a loss of $270bn a year, or a stunning 7-8 per cent of gross domestic product.”

Of course, it that is really true, wouldn’t China be losing less money if it exported less, because it will have less ?yuan or dollars? to buy dollars (i.e., treasuries)??? Man, my brain hurts… I’m gonna take a nap.

]]> By: fresno dan http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-24000 fresno dan Sat, 01 Nov 2008 14:30:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-24000 I believe it was Brad Setser (I don't know how to find his old posts) who had some analysis about China's devaluing the Yuan and buying treauries. In this analysis, China knocks off another 15% of the nominal price of its exports. <br/>We must have exported some of our internet geniuses to China - We don't make any money on the content we give away, but we make up for it with increased eyeballs. (you can't eat eyeballs...well, you can but you don't want to) I believe it was Brad Setser (I don’t know how to find his old posts) who had some analysis about China’s devaluing the Yuan and buying treauries. In this analysis, China knocks off another 15% of the nominal price of its exports.
We must have exported some of our internet geniuses to China – We don’t make any money on the content we give away, but we make up for it with increased eyeballs. (you can’t eat eyeballs…well, you can but you don’t want to)

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-23989 Anonymous Sat, 01 Nov 2008 12:40:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-23989 China has surprised us on the upside for so long that some people think the usual laws of economic advance don't hold for them. They do, and there will be a crash.<br/><br/>It's not the toy and shoe industry in Guangdong that should be worrying us. China's foreign trade will weaken considerably, and there will be job losses as a result, but that's just a normal cyclical downturn. <br/><br/>The scary part is the vastly overexpanded investment sector. Last year, investment contributed 4.3% to the 11.4% increase in China's GDP, compared with 4.3% domestic consumption and 2.7% net exports. For years there have been reports of vast overcapacity buildup in heavy industry and a growing bubble in real estate.<br/><br/>If the global trade downturn (or collapse) triggers a breakdown in the investment sector, then we will see the chinese economy contracting - yes, contracting. The Financial times reported yesterday that over half of chinese steel capacity is already lying idle and steel prices have collapsed. Let's see what happens next. China has surprised us on the upside for so long that some people think the usual laws of economic advance don’t hold for them. They do, and there will be a crash.

It’s not the toy and shoe industry in Guangdong that should be worrying us. China’s foreign trade will weaken considerably, and there will be job losses as a result, but that’s just a normal cyclical downturn.

The scary part is the vastly overexpanded investment sector. Last year, investment contributed 4.3% to the 11.4% increase in China’s GDP, compared with 4.3% domestic consumption and 2.7% net exports. For years there have been reports of vast overcapacity buildup in heavy industry and a growing bubble in real estate.

If the global trade downturn (or collapse) triggers a breakdown in the investment sector, then we will see the chinese economy contracting – yes, contracting. The Financial times reported yesterday that over half of chinese steel capacity is already lying idle and steel prices have collapsed. Let’s see what happens next.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising.html#comment-23974 Anonymous Sat, 01 Nov 2008 07:45:00 +0000 http://www.nakedcapitalism.com/2008/10/bankruptcies-and-plant-closings-rising-in-china/#comment-23974 Who really knows what goes on in Red China behind its iron curtain? Who really knows what goes on in Red China behind its iron curtain?

]]>