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If you count them, then you might be tempted to count on them.
Don't Count on China's Consumers to Save the Global Economy
One single statistic completely undermines that idea that the Chinese consumer will lift the global economy: The proportion of the China's GDP contributed by the household sector (wages, salaries and consumption) peaked at 56% in 1983 and has since dropped to 36% -- roughly half the size of the consumer economy in the U.S.
Once again, I'm not a believer in the Chinese economic miracle story. It's just an opinion of course.
Investment, including foreign direct investment, accounts for 44% of China's economy, a higher level than Japan or South Korea ever reached in their modernization drives.
Even more startling, much of this investment is borrowed. China's mostly state-controlled banking system made loans last year that were worth one-third of the nation's economic output, and this year, it's on track to hit 20% of GDP -- a total of roughly $2.5 trillion in new credit over two years.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
12 hours ago
9 comments:
Why, it's almost as if someone discovered a whole new continent of subprime!
Who Struck John,
Indeed!
The Jim Rogers of the world would have you believe that desperately accepting paper dollars in exchange for hard goods is a sign of economic strength though. We should all move there ASAP and enjoy the prosperity! Maybe we too can toil all day in factories making real goods for next to nothing in pay so that we can afford to buy a few square inches of overpriced real estate per year.
July 26, 2007
Jim Rogers cautiously bullish on China stocks
"If you invest in bonds anywhere in the world, sell it," he said. "If you invest in shares, think of Asia," he added.
Shanghai Composite Index
July 26, 2007: 4,346.46
July 23, 2010: 2,572.03
That's a 41% loss. Meanwhile...
30-Year Treasury Bond
July 26, 2007: 4.95%
July 23, 2010: 4.01%
That's 0.94% extra interest each year for 30 years. Simple back of envelope math (close enough for government work) makes that worth about an extra 28%.
Fast forward...
January 20, 2010
China Asset Bubbles: Even Jim Rogers Is Getting Nervous
Has Rogers ever commented on all the copper being stored on Chinese pigfarms?
That would seem to be an important consideration regarding his current view that other parts of the Chinese economy and financial markets are not similarly bubbly (see here and here for more on that subject).
While Rogers has a tremendous track record over the years and has been quite good on nearly all of his long-term market calls, he has been famously wrong on a number of important occasions. About five or six years ago he repeatedly poo-pooed the idea of gold as an investment because he thought the central banks had too much of the stuff and would be willing sellers - not buyers - in the years ahead.
March 3, 2003
Recap of March 1: More Games?
Jim Rogers thinks the market is indicating something good is about to happen. Gold is going down and the dollar has stabilized. Whether that means there will be peace or that there will be a quick war, I'm not sure.
Jim Rogers: I wouldn't be buying oil stocks now, because most of them are overpriced...
Exxon & Chevron Charts
In hindsight, March 3, 2003 was a decent entry point for gold, but perhaps only for those who wished to triple their money.
Gold
Gold's price: $345.50 vs. today's $1189.70.
In hindsight, March 3, 2003 was also a decent entry point for oil stocks, but perhaps only for those who wished to double their money.
Chevron's adjusted price*: $25.39 vs. today's $73.52
Exxon's adjusted price*: $29.47 vs. today's $59.72
* Close price adjusted for dividends and splits.
That graph of CPI is instructive; after a massive inflation shock no inflation has ever been seen, its amazing! Now, can you buy all your real goods for 1991 prices? Go ahead and try it!
I am with Watchtower, metals or TP, TP seems more useful for all the crap I keep reading (euro stress tests, etc). You may be on to sumthin!
GYSC,
"That graph of CPI is instructive; after a massive inflation shock no inflation has ever been seen, its amazing!"
Where are you seeing that in anything that I have posted?
Mark,
bed time and I know you know better so look at your CPI graph again and see what its telling ya!
Its called "fighting the last war" or something.
GYSC,
You know I know better? Seriously? That's your argument? Well, apparently I don't know better.
The chart shows 2.4% inflation per year over the past 10 years and at roughly the rate that the Fed prefers. What is it you see? Hyperinflation?
The chart is what the chart is. It shows that the last 10 years of inflation have been well within the historical norms. It most certainly does not show that "no inflation has ever been seen" or that you can "buy all your real goods for 1991 prices".
The chart does nothing to explain why investors should buy metals that have gone up in price by 400% over the toilet paper that hasn't.
If you really want a "fighting the last war" argument then you might consider Glenn Beck "touting" gold. You might also consider what his motivations might be a full 10 years into gold's impressive rise (similarly impressive to the unsustainable real estate bubble, real estate being another supposedly safe store of value "at any price").
July 22, 2010
Consumer Reports Raises Doubts About Gold Firm Touted By Glenn Beck
One of the nation's top independent consumer advocates has just released a report that casts strong doubts on the aggressive sales tactics at Goldline, the precious metals dealer endorsed by Glenn Beck and other conservative radio and television talk show hosts.
Is it because Glenn Beck cares about investors and wants them to be able to protect their wealth?
In one price comparison, Consumer Reports found Goldline was charging nearly twice as much as a competitor for a popular gold coin set.
Apparently not.
He's our Fearmonger-in-Chief though and he's prepared to fight the last war as long as it takes.
GYSC,
Perhaps there is a misunderstanding here? I'm really trying to understand your main point and I'm coming up short.
The CPI chart I offered shows the average inflation rate over the previous 10 years. It is averaged data. Short-term inflation shocks are therefore averaged out.
For example, the most recent data point on the chart shows the average annual inflation rate from June 2000 to June 2010.
Mark,
So if if i do the opposite of what Rogers says, I can make a lot of money...
remy,
If I moved to China (Rogers moved to Singapore) then I'd probably need a lot more money than I have now.
China Faces Criticism for Sentence of Journalist
The Uyghur American Association, based in Washington, said the 15-year sentence “represents the Chinese government’s policy of no tolerance for any type of Uyghur dissent, as well as the government’s campaign to tightly control the flow of information and stem public criticism of official policy.”
Based on what I write on my blog, I'd probably need to bribe a lot of corrupt government officials.
Meanwhile...
Buying votes in China village polls 'costing more'
In China the cost of bribing a voter in a grassroots election can be more than 100 times greater than it used to be, according to a report in an official newspaper that covers legal affairs.
Bribery inflation!
Some even involved the the use of fortune tellers, the paper said.
Oh the humanity!
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