# China on the brink of Catastrophe?



## SirRumpole (2 April 2014)

Did anyone see Four Corners last Monday ?

http://www.abc.net.au/4corners/stories/2014/03/31/3972864.htm

China's boom is based on borrowed money from "shadow banks", and if these debts are called in, China's economy could crash and take the rest of the world with it.

It could make the GFC look small by comparison.


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## trainspotter (2 April 2014)

*Re: China on the brink of Catastrophe ?*

You don't get out much do you?

https://www.aussiestockforums.com/forums/showthread.php?t=9746&page=21


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## SirRumpole (2 April 2014)

*Re: China on the brink of Catastrophe ?*



trainspotter said:


> You don't get out much do you?
> 
> https://www.aussiestockforums.com/forums/showthread.php?t=9746&page=21




Not much. I'm happier here without all the financial jargon.


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## trainspotter (2 April 2014)

*Re: China on the brink of Catastrophe ?*



SirRumpole said:


> Not much. I'm happier here without all the financial jargon.




So when CanOZ posted this:-



> Shhhhh, don't say it too loud, they might hear you. Honestly, they have no idea. They're all so addicted to credit they really believe it will just go on forever...




This was too much jargon?


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## SirRumpole (2 April 2014)

*Re: China on the brink of Catastrophe ?*



trainspotter said:


> So when CanOZ posted this:-
> 
> 
> 
> This was too much jargon?




A pearl of wisdom in the sea of confusion. There are a lot of bits to this forum and I haven't the time to look at them all.


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## Julia (2 April 2014)

Just another excuse for some hysteria from the ABC.  Nothing we've not heard over the last several years.


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## sydboy007 (4 April 2014)

i think it's the environmental degradation that will lead to their catastrophe.  Quite possibly this decade they will have such extreme water shortages it will make life very difficult to sustain their.  Between aquifers being depleted or polluted there's little drinkable water left, and not much for crops either.


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## Samtheman (4 April 2014)

US is outsourcing all its jobs to China, China may overtake US as worlds #1 superpower soon source: Brother Nathaniel on youtube.


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## springhill (4 April 2014)

As Julia said, seen it all before.

If, could, should, maybe, crystal balls, tea leaves, rabbit's feet are all irrelevant.

Trade/invest for today. Make money whilst you can. Exit when you feel comfortable, or uncomfortable for that matter.

The rest is white noise.

Did 4 Corners alert us all to the GFC a week before it happened?

Yawn....


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## Trembling Hand (4 April 2014)

springhill said:


> The rest is white noise.
> 
> Did 4 Corners alert us all to the GFC a week before it happened?
> 
> Yawn....




LOL yes they did....



http://www.abc.net.au/4corners/content/2007/s2032799.htm

Funny how poor peoples memory is after such events.


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## springhill (4 April 2014)

Trembling Hand said:


> LOL yes they did....
> 
> View attachment 57465
> 
> ...




According to Canstar, and other sources, you are 2 months out of the timeframe there.

The credit crunch was occurring before Sept 2007

http://www.canstar.com.au/home-loans/global-financial-crisis/

I guess when the ABC is your only form of information......


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## Trembling Hand (4 April 2014)

springhill said:


> According to Canstar, and other sources, you are 2 months out of the timeframe there.
> 
> The credit crunch was occurring before Sept 2007
> 
> ...




What???? Have a look at the index charts. The market made a high after it started. After the two Bear Stearns hedge funds collapsed in July it was all over the media but the "market" was saying it will sort itself out. The Market ignored it til way after it was in the Media. 


You are just trying to adjust your point of view now your throw away line looks silly.


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## IFocus (4 April 2014)

Trembling Hand said:


> What???? Have a look at the index charts. The market made a high after it started. After the two Bear Stearns hedge funds collapsed in July it was all over the media but the "market" was saying it will sort itself out. The Market ignored it til way after it was in the Media.
> 
> 
> You are just trying to adjust your point of view now your throw away line looks silly.




Nov 2nd it all started...............ah memories  really nice if we could have another one. 
.


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## springhill (4 April 2014)

Trembling Hand said:


> What???? Have a look at the index charts. The market made a high after it started. After the two Bear Stearns hedge funds collapsed in July it was all over the media but the "market" was saying it will sort itself out. The Market ignored it til way after it was in the Media.
> 
> 
> You are just trying to adjust your point of view now your throw away line looks silly.




TH I've never cared for what you have to say or your continual petty points scoring, I'm not going to start now.

You have your position, I have mine. C'est la vie.

Back to the thread topic, if you had listened to all the China bears over the past 5 years, along with the rest of the rabbits scuttling to their warrens, you would have missed out on some lucrative opportunities. Continue to do so, if you wish.

China on the brink of collapse? YAWN

Sure it will probably happen one day, but other economies emerge, progress & develop.

Until then, trade/invest the current conditions.


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## springhill (4 April 2014)

IFocus said:


> Nov 2nd it all started...............ah memories  really nice if we could have another one.
> .




No, that is the date the market acknowledged it was happening. It was underway in other facets of the economy before that.


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## Trembling Hand (4 April 2014)

springhill said:


> TH I've never cared for what you have to say or *your continual petty points scoring*, I'm not going to start now.
> 
> You have your position, I have mine. C'est la vie.




 He says as he tries to score some silly low blow..... strange. 

I'm not sure what your problem is but I was just trying to point out that these things are in the media before they fully take hold in the market. Ignoring them on the basis that it was covered by a program on the ABC is incorrect and perfectly illustrated by you first comment.

I was not trumpeting the collapse of the world as it doesn't seem like we are heading straight into GFC II. But dude you seem to have a hardon over something, lighten up. I'm a long way from "missed out on some lucrative opportunities" and it would be nice if you want to aggressively argue at least have the decency of not building a straw man to do so. If you want to be an ar$e do it with facts.


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## springhill (4 April 2014)

Trembling Hand said:


> He says as he tries to score some silly low blow..... strange.
> 
> I'm not sure what your problem is but I was just trying to point out that these things are in the media before they fully take hold in the market. Ignoring them on the basis that it was covered by a program on the ABC is incorrect and perfectly illustrated by you first comment.
> 
> I was not trumpeting the collapse of the world as it doesn't seem like we are heading straight into GFC II. But dude you seem to have a hardon over something, lighten up. I'm a long way from "missed out on some lucrative opportunities" and it would be nice if you want to aggressively argue at least have the decency of not building a straw man to do so. If you want to be an ar$e do it with facts.




YAAAAAAAAWN!

Over and out!


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## Smurf1976 (4 April 2014)

Energy seems to be the real, hard, physical limit in China.

Coal - China mines 3.55 billion tonnes of coal each year, having reserves of around 115 billion tonnes.

No rocket science is required here to see that there is little scope to grow production and that they must be somewhere near the peak now.

It's not a case of this problem being 32 years away (ie 115 divided by 3.55), it's much sooner than that. It's not the case that you have all the mines (and China has a huge number of coal mines) going one day and they all run out of coal the next. Rather, it's a case of one mine runs out this year, another one next year and so on. They'll still be mining coal 100 years from now most likely, but the reserves are such that current production rates clearly can't be sustained for too long.

It's worth mentioning that China's coal consumption is more than 3 times the total exports of all coal exporting countries, and that China is already buying 17% of internationally traded coal. So ramping up imports isn't without some difficulties one would think. 

I'm not saying that the lights are going out in China tomorrow, but the coal issue would seem to be a real impediment to continuing with the recent pattern of development. Eg they have more than tripled coal production since the year 2000 and pretty clearly a repeat of that isn't an option.


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## waterbottle (4 April 2014)

Trembling Hand said:


> He says as he tries to score some silly low blow..... strange.
> 
> I'm not sure what your problem is but I was just trying to point out that these things are in the media before they fully take hold in the market. Ignoring them on the basis that it was covered by a program on the ABC is incorrect and perfectly illustrated by you first comment.
> 
> I was not trumpeting the collapse of the world *as it doesn't seem like we are heading straight into GFC II*. But dude you seem to have a hardon over something, lighten up. I'm a long way from "missed out on some lucrative opportunities" and it would be nice if you want to aggressively argue at least have the decency of not building a straw man to do so. If you want to be an ar$e do it with facts.




TH, can you expand on that? Is this because you think China keep stimulating/bailing out?


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## Trembling Hand (4 April 2014)

waterbottle said:


> TH, can you expand on that? Is this because you think China keep stimulating/bailing out?




Since 2009 the GFC has been in the forefront of everyone's mind. Many have been waiting for an exact replay because they stuffed up GFC 1. To add to it just about every bear cannot think about anything else other than it playing out the same again. They strangely focus on the US re-running it all over. 

There will be another financial induced crisis. They come about pretty often. Yet they never play out the same. The result of GFC was the largest group of consumers taking a 10 count and not getting up for a long time. The US is slowly grinding back up but Japan and Euro land are stuck. Meanwhile China have a different problem, no consumers, dodgy investments, corruption, on and on, they probably will be the next catalysis. But that doesn't mean it will look like and have the same outcome as the GFC.

Get over the GFC its been run. Chances are the "next crisis" will be different in cause, magnitude, timeframe and result. That is a better bet than different circumstances (see china) producing the same outcome (US Euro based credit crisis).


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## waterbottle (6 April 2014)

I found this on another blog:

http://www.afr.com/p/world/guarding_the_global_economy_biggest_4ZaLHtqeG8IKJdGUZ8FJqO


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## DeepState (11 April 2014)

China and GFC....hmmmm

GFC played out with mostly US-sourced sub-prime of various tranches eroding the balance sheets of banks and institutions around the world causing a balance sheet recession and triggering a death-loop between sovereigns and their national banks who called in their implicit puts.

If China goes to catastrophe, the banking system is largely internally controlled and owned.  The impact will be felt via lack of credit availability to fund infrastructure and domestic consumption.  It will dampen trade and confidence globally.  The US banking system is so strong now that the key question is how much capital can be returned.  Japan can't get its banks to lend enough.  Europe....well, let's see what the Asset Quality Review comes up with.  Canadian banks are super strong.  Volcker and Basel III are all being gradually worked towards.  It might cause a set of problems in Europe, but probably firewall there in the developed world as interbank activity has declined quite a bit.  China implosion would have a major impact in Asia where the production chain has become integrated.  It may lead to contagion effects to other EM whose banking systems are suspect.  The world's banks would probably remain intact in the developed world and things would recover as per normal recessionary cycles as opposed to these decade-long credit-related ones.

Is that likely?  Lots of talk about debt as 220% of GDP etc.  At least they spent is on something other than pure consumption vapour...like much of US revolver debt and mortgage refi in the leadup to GFC.  The ghost towns and bridges to nowhere are the worst examples of excess capacity.  But don't take that as an average.

The interbank market has calmed right down after the Credit equals Gold (!!!) and Chaori Solar....developments. They are acting as if there is essentially business as usual risks - pretty much none.  The CDS spreads on the sovereign have widened as the strategy has become clearer.  China understands there is an issue, it is taking action to ensure more discerning practices occur in the loan market for on balance sheet and WMP, it is shaking out hot money and it is regulating off-balance sheet activity more forcefully.  The Required Reserve Margin for banks is 20%.  Massive.  This is the power of a command economy which is able to utilize market forces in areas to meet its ends.  The CDS spreads are not pricing anything materially concerning. The sovereign is underwriting the banking system and yet making things dicey enough in the banking system to keep operators in it on their toes. 

In the lead up to Lehman, the debt markets were pricing material stress in the credit system well before the equity market picked it up.  Forget about the argument that the media preceded or followed the equity market.  Both followed the debt market. 

The Chinese debt markets and derivatives thereon are pretty chilled out right now and so are their banks.


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## sydboy007 (18 April 2014)

In Australia entry into politics seems to have a severe detrimental affect on memory.

In China it seems to have a different impact - increasing suicide rates.

http://worldaffairsjournal.org/blog/gordon-g-chang/mysterious-suicides-chinas-leadership


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