Bad News Gets Worse For China
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  • Independent George

    …which, in turn, spells bad news for us: if the Chinese face a cash crunch and can’t buy our debts, who will? And I’m not just talking about government debts – just how much would it take to freeze the entire bond market?

  • Richard S

    Good post. To what degree does culture matter in such things? For shorthand, I sometimes hear discussion of the “honor culture” in China. Would it be dishonorable to give an honest accounting? To be sure, people cook the books all over the world. But if multiculturalism is true, it might mean that in some countries it is a more common practice than in others.

  • Ted B. (Charging Rhino)

    The Eastern “honor cultures” differ from the West in that dishonor is shame-based rather than guilt-based. Embarrassment and “looking-bad” to family or others counts more than doing right or wrong.

    A prime example is the 1.5-Billion-USD in speculation-losses that Olympus Camera’s senior management has spent the last 13-years assiduously-concealing from stockholders and the Japanese government.

  • Yahzooman

    A nudge here and push there and the world will careen into the Great Depression of 2012.

    I always thought of Mr. Obama as a reprise of Jimmy Carter. It’s looking more and more, however, like he’s Herbert Hoover.

  • Some Sock Puppet

    I smell war…

  • Harun

    Keeping your currency down, allowing massive inflation, allowing wages to soar 3 times in just a few years time…these are all dangerous things to do.

  • richard40

    “which, in turn, spells bad news for us: if the Chinese face a cash crunch and can’t buy our debts, who will?”. From Independent George.

    Obvious answer, the fed will, by printing endless money to monetise the debt, which will of course send us first into hyperinflation, and then when that reaches its natural limit, into depression. That was always inevitable result of Obamas and Bernanky’s policies. Ask the Germans, they went through the same thing in the 20’s and 30’s, and look where it led them.

    Of course we do have an alternative, cut spending, and reduce the debt and deficit. But of course the Annointed One assures us that would be entirely too cruel, and would only help the rich. Better to follow Greece or Weimer Germany.

  • boqueronman

    Serendipity! I was just reading an article on the high probability that, among all the other Rube Goldberg elements of ObamaCare, the deadlines will likely be missed for setting up 50 state health care exchanges. Once again, F.A. Hayek’s “knowledge problem” – the impossibility of centralizing fundamentally dispersed knowledge in a timely and accurate way – is being confirmed. In the ObamaCare case it is the U.S. health care industry; WRM points out that Hayek’s principle applies equally to centrally planned economies. The USSR financial authorities were also “talented and hardworking.” And look where that wound up.

  • Derek Footer

    Santayana strikes again: why is it no one foresees these financial collapses despite similar scenarios of a property bubble leading to an unstable borrowing situation that leads to financial collapse and/or economic stagnation? Thailand in 1997 and Japan in the late ’80s anyone? anyone? Bueller?

  • Marcellus

    The worst thing and threat for the future of China lie in:

    – cultural aspects (face, guanxi)
    – the egocentric inward focus (no real intention to collaborate with outsiders)
    – a weak legal system (foreigners vs local Chinese)
    – lack of a strong value basis (that includes quality as well)
    – the ageing factor (poor demographics)

    In other words: you will see people moving away from China instead of going to China.

    Visit China and see for yourself. Looks can be deceiving, but in case of China you better look twice.

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