I think it's time to make it more appealing for potential buyers. Real estate can be quite the rollercoaster! the stress and uncertainty are getting to me. I think I'll cut rents to attract potential buyers and exit the market, but i'm at crossroads if to allocate the entire liquidity value to my stock portfolio?
"Overall, buyers hold a lot of the cards right now, and sellers are having to give out more concessions to close a deal." All the best, buying on sale is actually one of the best ways to invest in stocks, and advisors are ideally suited for such task
Until the Fed clamps down even further I think we're going to see hysteria due to rampant inflation. If you are in cross roads or need sincere advise on the best moves to take now with financial markets will be best you seek a fin-professional with fiduciary responsibilities who knows about mortgage-backed securities for proper guidance.
Annette Marie Holt is the coach that guides me, you probably might have come across her before I found her through a Newsweek report. She's quite known in her field, look-her up.
I appreciate it. After searching her name online and reviewing her credentials, I'm quite impressed. I've contacted her as I could use all the help I can get. A call has been scheduled.
I’m an equity manager based in Hong Kong. I’ve invested in China for 20 years but not interested in allocating capital to China markets anymore. HK/China markets will most likely be a value trap for years to come.
The Chinese and Russian and EU markets peaked in 2008 and with US banking help, EU has hobbled along slightly improving. But China and Russia never recovered. The past 16 years of your investment has been a loss. All the Chinese GDP numbers since that event are just made up as China has declined. Now the end of the bell curve and huge drop off you just noticed? You didn't notice when China installed Dollar export capital controls in 2015?
As a South Korean, I know how hard it is to shift from a government-driven investment-led model to a market-driven one. South Korea (the model of Deung's Open Policy) used to a typical investment-led model. The model the late President Park designed is a mixture of Lenin's 'unequal' development and Imperial Japan's Manchuria development, appied to a totally new context, the GATT regime coupled with a set of generous US policies toward South Korea. Of course, entrepreneurship has been amazing as Peter Drucker said. This model got into a deep crisis in the 1970s. The Yom Kippur War and the first Oil Shock almost killed the economy. The Second Oil Shock following the Iranian Revolution was even worse. But the Value Added Tax system began to work in 1978, which gave transparency and checked moral hazard. (South Korea is one of the earliest adopters). And finally, the late President Park, in Jan. 1979, nine months before being assassinated, decided to shift to the market-driven model. They called it ‘the stabilization model’. (They called the investment-led ‘the growth-centered model’)... From Oct. 1979 to May 1980, a political turmoil. Then a military ‘junta’ came in. The junta gave full power to the civil bureaucrat elites, who had a firm belief in the market-driven model. By 1988, South Korea had got into a track toward a developed economy. An authoritarian ruler (the late President Park) chose the VAT system for transparency and gave up the government initiative (for the shift to a market-driven economy). The junta gave full power to the civil bureaucrats. This type of reform is not at all a common phenomena. The per capita GDP of South Korea in 1979 was just above that of China in 1990. China had done the opposite for the last 33 years. … Too strong ‘connections’ have developed between political power(the CCP), business men and the military(the PLA). No way back… This worries me since we South Koreans live next to China and are facing its puppet(North Korea).
Thank you for info on S Korea..... Half of the lesson is have market, and have stability, and let modern technology and methods work to boost output. It's hard to mess up the boost from cell phones, they save 1 hour a day by letting people connect faster and move data easier.. it's hard to mess up boost from stable electricity unlike old eratic power. Hard to mess up boost of reliable transport...... Hard to mess up boost of modern medicine but must drop all the stupidly of "Traditional Asian Medicine" and prayers....... Hard to mess up mega boost of letting female half of population work in all jobs..... Modern and safe banking .... modern water and sewer, , , , . We in West are impressed by S Korea, for using these modern tools so well....
South Korea use to have trade surpluses year over year with China Now? 👇 South Korea, caught between the two superpowers, reported a trade deficit of US$18 billion with China in 2023 - its first such deficit since they established diplomatic relations in 1992, according to data from the South Korean Ministry of Trade, Industry and Energy (MOTIE).Jan 16, 2024 Analysts suggest South Korea’s trade deficit with China will persist as Beijing reduces dependence on foreign chips SCMP
There was only2 dollars in the begining,now there are trillions,it's a much dreaded syndrome of over population of dollars.who is going to stop it before they take over and polute the whole earth,I think we are doomed.😅😊😮
you understand your economics, for china to become consumer driven they would need to use the yuan as reserve currency and open their markets do you think they will try that, or try same model they have now?
I have noticed a very common pattern. If you talk or write in English about bad things happening in China, then there will be many comments saying that the same, if not worse, things happen in the US too. If you do it in Mandarin, then the comments are they happen in Taiwan too.🤣
China hires Chinese students to defend the country. Those English writers studied outside so give example of us and those local students know only taiwan. They are hired and paid by government. 😂😂
@@christopherelliot4964China never let US investors own anything but chinese equities which have ALREADY crashed. The pain is transitioning supply chains out of China which is why Mexico and Vietnam are booming.
In China you can buy gold, but every purchase is registered so the gold can be easily confiscated. And it is illegal to take gold out of China. They will stop and confiscate gold at the airport.
You cannot buy gold in china using unguarantee usa dollars???... so usa dollars is consider useless inside China??...all due to usa not dare to assure and guarantee its usa dollars notes???... so if usa dont guarantee it dollars for hold??. Then china also ban usa dollars for buying gold in china also???..
Too much debt. Over priced RE. Govt reckless spending. Liabilities piling up. Interest rates artificially low. Insane borrowing. "Now they are stuck". Is this China? Europe? or the US?
China has problems but does have super hardworking population who will work for $10000/yr and not expect any welfare or health benefits. This is better than France or UK or US. But yeah China has been dumb financially.....
@@karylhogan5758 .... By definition there is always work, even if lower paid and grunt work. It's the genius of market forces... one might even say the West with Unions and Welfare and MUCH HIGHER TAXES is worse at choking off the desire to work... China has great labor policy but awful corrupt leaders.
Thank you. This is extremely good. This is the best in-depth analysis that takes the right viewpoint in my opinion, which is that the CCP economy has to be analyzed completely differently from western economies. This guy may not be right in all respects with respect to what is going to happen in the future, but at least he’s hitting the nail on the head, in analyzing the CCP economy in his own unique fashion.
Such a good podcast, contains everything you need to know about the most important macro-economic elements in China on a national level and in global context.
I know it seems impossible, but the CCP has started a new initiative to build housing in rural communities. Yes, they are doubling-down on building more housing in China.
Because they still have tons of poor people in rural area living in terrible housing. It is a country of a 1.4bn people. The last time I was there a few years ago, even the middle class still live in small and substandard houses--you just need to be a guest to find that out. They have not overbuilt. They just need to make poor people more productive, so they afford better housing. In a way, hiring poor people to build housing is like Ford paying $5, so his workers can eventually afford his cars.
@@tannhaeuserx464 By every metric they have overbuilt and that over construction becomes more absurd because China will never be as politically suicidal as to try a western immigration system and will try to deal with a shrinking population in a rational manner. The problem is so much of it is built in a centralized manner meaning a lot of it is impractiable for use. Building concrete shells while ignoring rural towns and villages still living in 1910 serf conditions because the CCP has some weird issue with being disgusted by old chinese villages next to their modern buildings. So instead of upgrading the towns they just try to build a city in a random field like 100 miles away and try to push all those surronding townspeople into it
@@TheRiiiight Have you been to China and see how people there live? I have been quite some time and over and been to many places. Pudong district was developed, Milton Friedman called it a Potemkin village. I think you have less clue than he did.
@@tannhaeuserx464 I never said China is all underdeveloped for whatever shadows it is your trying to box with. Chinese cities are amazing and better than the dumpster fire trash heaps that passes for cities in modern America where they can't even sell commercial real estate or skyscrapers because they're literally fucking worthless. But rural china and rural america are not at all in the same ballpark when it comes to modern development.
Jack is the best host on youtube. Did the guest say "When Shanghai was a cow pasteur?" - Sir, Shanghai has been an international metropolitan city for hundreds of years... Regarding Chinese real estate, sounds to me like what's happening there is no different than what's happening in U.S. stock market. Both were/are ponzis, exept theirs have burst, ours have yet to pop. They overbuilt real estate, and we're over building capital/market prices. The U.S. has the reserve currency, thus we can export inflation/fiat for far longer than China can. China is less concerned about the stock market 🙏
Pudong which is across the river from the Bund ins Shanghai was undeveloped in the 1950s. Shanghai has been a major city for hundreds of years but was much smaller in area and population.
I've worked in construction across Asia, mainly Japan and China. The decision on when to pick an advisor is a very personal one. I take guidance from ‘ Monica Mary Strigle ‘ who shorted the Chinese index . she's well-qualified and her page can be easily found on the net.
Shorting the Chinese index is a bold move, is this a continuous strategy or just a one time thing and who is this Monica if I may and how did you make such a turn over?
Most of Chinese debt is internal debt. Which they have stuck on their Local Governments and corporations, which they can sweep under the table The USA has even more internal debt than China has, and yes they can sweep that internal debt under the table. But the USA has shown a history of taking that internal debt and turning it into an external Sovereign debt. Which is basically sticking much of that debt, onto the American people In the end China can pay off its external Sovereign debt. The USA can’t pay off their external Sovereign debt it stuck onto its people
@@DW-op7lyI don’t know about whether they can sweep it under the table. Certainly they are getting better at rolling it over. I don’t think USA and China have similar debt risks, external debt denominated in your own currency is manageable
China's Creative Accounting: How It Buried Its Debt and Forged Ahead with Stimulus What is China's secret? According to financial commentator Jim Jubak, it may just be "creative accounting" -- the sort of accounting for which Wall Street is notorious, in which debts are swept off the books and turned into "assets." China is able to pull this off because it does not owe its debts to foreign creditors. The banks doing the funding are state-owned, and the state can write off its own debts. Jubak observes: China has a history of taking debt off its books and burying it, which should prompt us to poke and prod its numbers. If we go back to the last time China cooked the national books big time, during the Asian currency crisis of 1997, we can get an idea of where its debt might be hidden now. The majority of bank loans, says Jubak, went to state-owned companies -- about 70% of the total. The collapse of China's export trade following the crisis meant that its banks were suddenly sitting on billions in debts that were clearly never going to be paid. But that was when China's largest banks were trying to raise capital by selling stock in Hong Kong and New York, and no bank could go public with that much bad debt on its books. The creative solution? The Beijing government set up special-purpose asset management companies for the four largest state-owned banks, the equivalent of the "special purpose vehicles" designed by Wall Street to funnel real estate loans off U.S. bank books. The Chinese entities ultimately bought $287 billion in bad loans from state-owned banks. To pay for the loans, they issued bonds to the banks, on which they paid interest. The state-owned banks thus got $287 billion in toxic debt off their books and turned the bad loans into an income stream from the bonds. Sound familiar? Wall Street did the same thing in the 2008 bailout, with the U.S. government underwriting the deal. The difference was that China's largest banks were owned by the government, so the government rather than a private banking cartel got the benefit of the arrangement. According to British economist Samah El-Shahat, writing in Al Jazeera in August 2009: China hasn't allowed its banking sector to become so powerful, so influential, and so big that it can call the shots or highjack the bailout. In simple terms, the government preferred to answer to its people and put their interests first before that of any vested interest or group. And that is why Chinese banks are lending to the people and their businesses in record numbers. In the US and UK, by contrast: banks have captured all the money from the taxpayers and the cheap money from quantitative easing from central banks. They are using it to shore up, and clean up their balance sheets rather than lend it to the people. The money has been hijacked by the banks, and our governments are doing absolutely nothing about that. In fact, they have been complicit in allowing this to happen. Huffington Post
China has a different economy than Western capitalist countries. In the West, at least 70% of the wealth is in private hands. When there is a bubble followed by a stock market shock, for example in 1929, then private capital collapses. The economy remains in the doldrums for up to half a decade until growing consumption needs slowly drags it back to normality. In China's case, 70% of the wealth is in the hands of the government in LGI's, SOE's, Central government corporations, and so on. The approximately remaining 30% is private holdings, which have severely collapsed. Large China banks are recycling government debt. The government owns the banks, which loan to the government which pay off the debt to the banks that the government owns ad neuseum. Small privately owned China banks have already collapsed. Meanwhile there is NO private holding liquidity in China. Even large corporations, like Alibaba where the founder is Jack Ma, has lost 78% of it's value. Finally, the CCP are going after foreign commercial law firms and accounting companies in China (to start with). This is the manifestation of the CCP's fiat Foreign Anti Espionage Law in which a SUSPICION of espionage by Western and other non-Chinese Asian individuals and their foreign firms can land them in a Chinese jail for an indetermined period of time (the is no Habeas Corpus in China) with trading indefinitely frozen for that company. Foreign companies are leaving China in ever increasing droves, including large Western banks like Bank of America. When banks leave, you know investment is at a dead end. The future of China also looks very bleak, so for the eternal hopefuls out there, go invest instead in India or Indonesia. Your investment risk is now lower than China's with potentially higher returns, like in the early days of China, as these very large countries economies are still largely under developed with a young dynamic demographic. However, In terms of demographics of China, it is literally in terms of growth at a terminal end thanks to the One Child Policy. China's median population age is now higher than the United States. Old people are not heavy consumers. This failing demographic for China is unrecoverable for the next 40 years. Go elsewhere.
It wasn't One Child Policy, they didn't build enough hospitals, daycares, schools, and police who would stop 1m kidnappings. With this situation from 1990 to 2020 avg Chinese mom said ok zero or 1 kid for me. Only exception is the 10% rich and 20% very small villages. The commies chose this by having a sucky country. US sucks in other ways ... India and Indonesia at the least dont have massive child kidnapping the police ignore...
Nah, they just need to buy up all commercial real estate in NYC & convert them to residential all with US tax money & move there. Many of them have US citizenship like Blinken so it would be a very quick solution.
With all due respect, thousands of years of murder and hatred. I think space between BOTH nations is a much better alternative that current arrangements. Maby the kidds of the next generation dont even need to be taught to hate at all and practice democracy.
@aaronb8698 hasn't been thousands of years. The area was Canaanite in the bronze age. It was isrealite for most of the Iron Age and it was Roman for about 700 years after that until 600 something A.D. And it was strongly controlled property of the Ottoman Empire through the 1917. It didn't really start getting violent until around 1900 when the Muslims in the area began having pogroms against the jews those combined with the Holocaust led to the establishment of both States
As a retired CPA/bank examiner/auditor (25 years with the FED), I fully agree with the Ponzi scheme analogy. Brian McCarthy has more clarity on China's "scheme" than I've heard from anyone else. However, the Chinese cultural scheme (with aid from CCP/PBOC) has a different huge wrinkle. The Western analysts' failure to understand Chinese economics is our predisposition to accept their financial statements and financial data as having SOME level of reliability. The Chinese have leveraged their grand illusion to bleed capital from the West and keep the ball rolling. I'm of the opinion that debt/liabilities regularly disappear from financial statements and economic data. "All the risk rolls up to the government, and then it become a question of credibility...and do people want to hold the liabilities of that government?" That is true to a point. Because the Chinese have no respect for Western accounting, the "rolled-up" liabilities cease to exist..."poof"...they'd disappeared. This is what short-circuits all market forces and allows the economic illusion to continue indefinitely.
It is a mafioso mentality. West: you owe me $1 billion dollars in interest on that loan I gave you, CCP. China (while polishing their gun on the table): what are you talking about, I don't owe you any money. Who dis? New phone.
The Ponzi -Fiat system used world wide, you can be SURE it will collapse sooner or later. The Romans invented the scheme, because of greed, it collapsed & everyone using it since then collapsed, this great Ponzi system will do also.
Great interview. Fills in more of the story of China’s economy and prospects. Appreciate the quick take on impact of Chinese slump on the rest of the world. External impact deserves its own video discussion.
😂😂😂a relative works for an American aeronautic manufacturer and was contracted by China to work on their 737 knockoff. They constantly pressured him to show them his Boeing and Airbus manuals. 7 years and counting and still no airplane😂😂😂
China leads in 37 of 44 critical technologies of the future but let’s just focus on where they are behind on right now 🙄. In fact there is a 7 volume 27 book series on what the Chinese invented that says we stole from them Including the invention of the Rocket What happened to China you might ask? China spent the better part of a millennia trading places with India for top economy in the world By the 1430s it was by far the top economy and technological leader in the world . But their emperor at the time started the slow process of closing in on itself closing off its borders their own nationalism Like we are seeing with far right Governments and you Americans these days This lead to 400 years of decline and then an eventual semi colonization of China for 100 more years And They did not run up the external debt like you Americans are running up these days 👇 IP Theft Is What Once Helped Make America Great That was certainly the case for the United States. The practice of grabbing intellectual property was a staple of U.S. economic strategy since the outset of the nation’s founding. The play Hamilton has brought new and deserved respect to the first secretary of the treasury. But his many economic achievements should not blind us to the fact that theft of intellectual property was a linchpin of his manufacturing strategy. RealClearMarkets
919 made in China flying making domestic flights and soon international flights. 929 is under test. At the recent air show in Singapore they received many international orders. There's no need for recipes. Make a trip to China to see for your self.
This author makes total sense. He has the best read and analysis of China economy. This is the first time I have a profound understanding of the difference between entrepreneurial and central planning economics.
He has great understanding of Chinese economy but like most economist he ignores the effects of geopolitics and he is slightly ideological bias. There are 2 situations that he mentions that he is skeptical that would work hugely in China’s favor one is innovation that means cars and shipbuilding plus planes, the other is the lowering of interest rates in US.
As an observer of Japan’s post-bubble economy, I see a lot of parallels. Given the power of the central government in China, I don’t think we’re going to see collapses like we’d seen in other economies like Greece or Argentina; rather, a protracted stagnation like we’d seen in Japan similar to Japan’s Lost Decades. In any case, I don’t think China’s nominal GDP will surpass the US for a long time ~ if not ever.
There is 2 things that is in China’s favors that he dismisses one is US lowering interest rates should a recession hit US 2 innovation in China holding up the GDP. China unlikely to go the way of Japan because China has innovation on her side whereas Japan had the plaza accord and the chip restrictions that destroyed Japan’s economy. China has BRI and chip breakthroughs plus innovation. Besides China still has BRICS currency.
@@LanNguyen-vd4zt The plaza accord devalues the dollar and indirectly raises the value of Japanese yen which to an export driven economy is a huge blow.
I was enlightened of this some 25 years ago in a conversation at work. A coworkers friend made a fortune shorting Chinese companies that were basically house of cards businesses set up to draw foreign investments. These businesses were totally encouraged by the PROC , with full knowledge that sooner or later the crap would hit the fan and come crashing down. I was totally taken back and refrained from any China investment since. China has no concern for anybody else because they are just trying to keep their heads above water. Beware of China.
The ICBMs that China has aimed towards the US almost certainly run on American-designed chips. Seems absolutely insane that the US allowed that to happen. Now that the US finally has a Chips Act, it seems masochistic to have left so many wide gaps in it. Makes my blood boil.
The head of the Chinese rocket forces was recently sacked because it was found that a huge proportion of their strategic missiles were non-functioning. As in the fuel tanks were actually filled with water.
You would be surprised to learn that chips that go into space in the modern day still use ancient chips from the early 90’s. Chips act does not solve that.
Microchips are just a commodity now like corn or wood. They have proliferated around the world and can't be regulated away except at the bleeding edge, which aren't needed for ICBMs (we had those in the 60s).
After buying TSLA shares for 10 years, I'm struggling to make gains presently. How can I adjust or revamp a million dollar portfolio to make profits steadily, or do I consider defensive investments despite market high?
dollar cost average into the stock. when the price goes down, buy puts and reinvest to bring your average down, or better still seek professional guidance to avoid any fiasco
The issue is most people have the “I want to do it myself mentality” but not equipped for a crash. Ideally, advisors are perfect reps for investing jobs and at first-hand experience, my portfolio has yielded over 300%, summing up nearly $1m, since covid outbreak to date.
good gains! how can I get such guidance if you dont mind me asking? i am 34 and new to investing, my ultimate goal is to set myself up for financial success so I can retire early and comfortable
Can't divulge much, I take guidance from *Whitney Kay Stacy* ' a renowned figure in her industry with over two decades of work experience. I'd suggest you research her further on the web.
thankfully came across the consulting page of melissa Maureen Ward just after inputting her full name on the web, i'm super impressed with her qualifications and it was easy to schedule a call session with her
The overbuild in housing in the US in the 2008 crisis was, I have seen reported, 2-4%. In China it may be as high as 100%. Even if the number were 25% that is at least an order of magnitude larger. The number of mortgages that are underwater is large and growing. People are willing to "give away" their properties. The idea here is that the new owner would just take over the mortgage. The original buyer would lose their downpayment and any other equity they have paid in but would be out of the mortgage. The option of personal bankruptcy in China does not exist. The government has actually been advertising, on electronic billboards, the names and ID information of over 8M defaulters, many of them homeowners. These people are restricted from using public transport in many cases, among other things. On top of all of this there is the demographic crisis. Where is demand going to come from? The number of births is now lower than at time since the CCP took over. It is down 53% from the takeover. As for the financial institutions, by western standards they would be insolvent. Several in their "shadow banking" sector, some of the biggest, have already failed. A big portion of the assets on their books is real estate. Disregard the official statistics. Housing stock in the used market is massive and prices are down somewhere between 25% and 50% depending on the location. Even in commercial office space, some of the biggest, richest cities are seeing 20% vacancy rates with no relief in sight. Don't forget the belt and road projects. The numbers I have seen show that 60% of those loans are at risk or non-performing. By the way, while the counterparty risk was the big issue in 2008, the origin of the issue was government intervention in the housing market.
@@TR-xr4ut It only makes sense. You don't actually own the land, the state does. It is also a brilliant way to keep your construction buddies in business, constantly repairing and replacing. The construction industry is a good solid source of graft for the officials. So, everyone is happy, no?
@@louisgiokas2206 No, it costs money to build them, money that home buyers paid with their life savings and retirement funds, they throw everything into that apartment.
I told an old school classmate in 2008 who is no longer with us a member of CCP if CHINA'S ECONOMYS DIRECTION? I TOLD HIM CHINA WILL COLLAPSE COMPLETELY. BECAUSE OF IT WAS SO OVER LEVERAGED FROM INTERNATION DEBTXS!!!
Or goes and steals it from other countries’ maritime EEZs. as Trade and/or diplomatic ties weaken, these countries will be much less tolerant of these incursions .
They either import it in the legitimate/conventional way, or they simply go into other peoples’ fishing grounds and steal it. < Waves hello from the Republic of the Philippines>
I have a question: What happens if Russia runs out of money? The Russian state fund has already been halved. Would the Chinese still be able to support Russia with loans or would they do so? Thanks and greetings from Germany
@@danielch6662 The USA is creditworthy and can borrow on the capital market as normal. But who will lend to Russia? Russia has no problem in its own currency, but no one really wants the rouble at the moment.
Xi Jinping is nothing if not pragmatic in the worst sense. The "restructuring" of China will be brutal and may cost half the population. But that in Xi's mind is a low price to retain power. China as a prospective challenger to the US is finished, but to Xi that's not the only game in town.
Basically what i got from this interview is that most of what was said applies to the US to whatever extent as well. Key exception being that China is authoritarian run and the government has no one else to pass the hot potato to in 4 years time and has decided to pop the bubble. And its worth noting that it has actually afford itself to do so. Who else can? On a side note, one funny thing Brian mentioned is that deflation is wealth destruction. But so is inflation, so what’s up with that?
Deflation destroys the wealth of the wealthy by driving capital asset prices lower while inflation drives the wealth and survivability of those without much wealth into poverty. So, he is correct but the question that should be addressed is "Is it better to have credit inflated assets collapse in price, the blameless wealth of the rich or is it better to have a lower cost of living. The caveat to that is that many of those who are not well off will lose their jobs and suffer along with the rich. The short answer is that we actually need a depression and the sooner we have it the better. Too many people who are otherwise sound talk of the hardship as unimaginable that comes with a depression but to quote Brian "that ship has already sailed." We will have hardship regardless and turning a few dials (say, liquidity injection or interest rate reductions) will not solve that conundrum.
@@davisutton1So actually deflation is infinitely worst than hyperinflation? Deflation the wealth of the rich is destroyed but the poor lose their jobs. Inflation the poor moves into poverty but may maintain their jobs while the rich get richer?
deflation is 10 times much worst, it mean your people no longer have the money to buy things and drove the economic downward while inflation means its a healthy economic, just dont inflate like 100%
In the 1930s deflation parts of the country literally tan out of cash. No one was willing to surrender a dollar today for a pair of shoes because those shoes would sell for 90 cents next week. Utah tried to put in place faux currency of sorts so farmers could sell wheat to buy diesel. Deflation is nasty stiff. Read the forgotten man by amity shlales
European economy is deeply dependent on China, both on the import side, but also on the export side. What prevents China to mandate that part of its trade with Europe is labelled in Chinese currency? That would be a very aggressive move, but I don't see how we could say no without shutting down our economy.
China is not this evil monster out to hurt the US. They just want to build better lives for their own people. Americans is always worried about China can hurt them in a million different ways. Well, yes. They can. But they don't want to. Let's not push them to the wall and try to force them.
same here. I usually laughed at those ppl cuz it's very easy to realize mot of their thesis are BS if one knows a little about China. This guy's thesis sounds legit and this time could really be different.
The real estate model in China was not sustainable. The government recognized this in 2018, with the 3 red lines. They've working to clean up the mess for the last 6 years. One could argue, this is near the end of the real estate problem in China. Evergrande could not be wound down gradually, it had to be liquidated. But the rammfications of this is miniscule compared to Lehman. Part of the reason is they've had 5 years to isolate the problem. The US govt did nothing until Lehman Bros collapsed. That caused a global recession and without the bailout would have collapsed the whole western financial system.
Yes, now explain to all these dunces, how the local governments in China finance their operations and they will begin to understand the problem with China RE markets.
Some of the EV auto makers that received their government subsidies are already going bust because of the deflation. One of the biggest EV auto maker, like BYD, is building a plant in Mexico to get their footprint in the Americas.
The world is deep in Greed and Gluttony. Balance is key. Portions of food at restaurants and packaged are unnecessary. Assets in portfolios of the much wealthier are too great. The per person demand for each of these categories is unbalanced.
An apartment (extreme example) in Shenzen/Beijing is about 46 times the average household income. Besides, ALOT of ppl are getting laid off or have their salaries reduced by 30%. This will take a decade at least to sort out.
@@FRIPPE_THE_GREATNo this will probably sort out in 1-2 years because most economist of China doesn’t look at geopolitics. China overtook Japan as the biggest car exporter in 2023. As of end 2023 Huawei’s sales of smartphones in China has risen to number 2 an increase of 59% yoy and Xiaomi has risen about 10% whereas Apple sales has dropped 10%. So innovation will be in China’s favor as car brands inJapan and Korea are destroyed by Chinese cars. Whereas once Huawei starts exporting smartphones Apple’s shares will decline significantly.
@skydragon23101979 you have to be economic illiterate if you think that smartphone export is going to solve these problems unless your market is the milkyway. Besides, exports are actually shrinking...
Interesting facts about Chinese apartments. 1) when you get your apartment from a developer the apartment has no paint, tiles, shower fittings taps etc so it is an unliveable shell. 2) if a Chinese apartment is rented out then it becomes a used apartment and value falls like a used car. Better to keep the apartment brand new and unoccupied to preserve its value which means that building lots of apartments doesn’t fix the housing crisis with many workers moving to the areas where there is more work.
These two “ experts “ don’t know what they are talking about I shouldn’t think the Chinese are at all worried about what they have to say. They would be better investigating why the richest country in the world has 187 million people drowning in debt with no money even though some are working 3 jobs. How about that?
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What no-one seems to be reporting on is that most of China's housing construction is unlivable. "Tofu Dregs", construction. Companies knew these buildings were going to remain empty and therefore everything inside is sub standard, unsafe to occupy, and worse, unable to be brought up to occupied condition. Most a movie set like facade.
During deflation, the value of leveraged (collateral) assets stops going up, goes flat, or declines. However, the debts still have to be paid, unless there is significant defaults and deleveraging. This means that cash flows become more valuable, since so many holding debt are losing their income stream and capital gains since the assets aren't producing profits. This is called debt deflation. The government and banks usually respond by debasing the currency to lower interest rates in an attempt to reflate the economy. The print money to buy bonds which lowers interest rates and reduces purchasing power of consumers.
Terms such as inflation or deflation have different meanings, such as monetary inflation or economic deflation. Yes, it’s confusing for those getting started in money, banking, and economics. Brian and I need to start a RU-vid channel covering the basics. Best advice: buy a used Economics textbook book by the late, extraordinary Campbell R. McConnell, professor at University of Nebraska, both CPA and banker. Non-Keynesian.
@@netizenkane2230 so you're actually talking about inflation by monetary stimulus after a deflationary debt default cycle. Again, how does the deflation itself lead to a currency devaluation without subsequent inflationary monetary stimulus....??
In extreme deflationary events, there can be capital flight and a reverse in foreign direct investment. This is one of the reasons governments tend to intervene. Also somebody has to take the losses on the deflating assets, which usually means banks, and then bank regulators (deposit guarantee corp.), i.e. government. This can hurt long term growth prospects. It can have far reaching consequences.@@elliotthovanetz1945
Rampant deflation can cause capital flight and collapse in FDI flows. Lending collapses. Banks will take losses and have to be bailed out or see depositors lose. Credit markets seize up and rates will go much higher. High rates can restrict economic activity which hurts long term growth prospects for both public and private sector. @@elliotthovanetz1945
That is what happens when some rich dude gets send by a richer dude to China. He is completely sheltered from the Chinese reality. Credit to him he got as much as he got..
They have been saying for years that they don't want asset bubbles. They want money to flow into productive resources so manufacturing will be the driver for the economy. They have growth and no inflation so this will keep the people happy for the time being. As for EV it looks like BYD is making money. That means the ROI is fine. Cheaper housing is meant for the younger people to get into the housing market. This is hoped to promote the birthrate. They are trying to get people to spend more by making savings less attaractive.
The CCPs move further into authoritarian governance and laws should have investors realizing they cant expect China to follow the same moves the US Fed/banks would to resolve these issues. The CCP pulls tge strings mentioned to stay in power. They have to. There ia no leader next in line. There is no other party to switch to if this one fails for 4 or 8 years. I love China and its people. The CCP is a different story.
Very interesting. I didn't hear Brian point out that as this massive property asset bubble bursts people will typically sell competing assets in a panic effort to hold up their household wealth. So even if China tries to prop up new asset classes it don't think it will matter - those too will be sold. This is why asset price correlations go to 1 when financial bubbles burst.
Just think what is going to happen in America when folks realize the same thing has happened over here but not just in Real Estate but with everything. The actual value of assets in the US are half of what people think they are.
32:02 Another point I disagree, The world definitely wants and needs Chinese EVs and other cars. For context, China car export was less than 1 millon in 2020, in 2023, 5 millions were exported. I think this trend will continue to grow in the near future. Here in Australia, affordable EVs are finally here and we had a 100% growth in uptake, Thailand had 600% growth. Malaysia, Indonesia and majority of places around the world are taking up EV fast. Chinese EVs are going to sell like hotcakes if their government does not put barriers on it.
Even Russians are complaining about Chinese car quality. They won't compete and shouldn't be allowed in Western markets anyway due to the massive subsidies, tariffs, and price dumping.
Id expect China EVs to be banned in west. Period. It's just too visable and humiliating an export for French or US politicians to allow. US capped Japan ally car imports to keep 60% car making local. Europe will keep 80%. . . .China if smart will not try to sell cars but stick with selling batteries.... Cars also by definition need reliable manufacturer service and wow is Chinese customer service awful, they just laugh if you complain, that doesn't work if complaining about safety defect in family SUV.... Politicians will easily ban China car imports...
I marveled at how your guest described the 2008 collapse without using the words fraud and corruption. And the perpetrators never saw the inside of a prison. Typical hedge fund manager jargon.
1:17:00 10T$ to bail out the economy would be like burn that much money. But how much money did they blow (on uneconomic infrastructure) to get where they now?
I think if you really knew what was going on with the fed and the treasury, there probably would be little difference. All central planners in the end.
It can be portrayed like a household finance. In China, the head of the household has all the cash and savings while his children and spouse are held all the credit card debt and are responsible for all the household expenses. He is living in a delusion as he all his friends and acquaintances how rich and how good his is at personal finance. In the US, the Dad would on many occasions, pickup debt from his household, all the while getting blamed for his supposed reckless spending and debt.
This is so good. Thanks! Completely agree with the 2015-2016 solution. They should have started a baby version of the three red lines then, so everybody knew what was coming. So Evergrande etc would not be able to squander the 100s of billions as they did
I would like to hear more on the host’s statement that in the 19th century the US engaged in IP theft (in lieu of innovation) comparable to what China has carried out in the last 75 years. Which presidents/Congresses directed such mass theft? And in what sectors did this program of theft-not-innovation did this occur? Fill me in.
24:50 While I agree with Brian on whole hose of things, I don't agree with Chinese GDP being fake. Yes China does have a property glut peoblem and its not trivial, I think Chinese wealth in general has increased dramatically to the extent that I would seriously considered living in their third Tier cities than places like LA with lack of infrastructure, parks, affordable transportation systen and safety. If anything, Chinese wealth are undercount if you consider the ownership of home, availability of affortable and fresh food the convinace of their advanced transport system. Yes consider an average worker in a third tier City might not buy much in America, but they certainly buy much better things than the majority of Americans in America.
For the last 20 years sophisticated Chinese investors have been buying US real estate instead of buying into the Chinese Ponzi scheme. My retiring friends in Pasadena sold their house in San Marino to a Chinese couple and paid cash for a much larger house outside Dallas Texas.
