CHINDIA - 20 year bull market

[dj_420]

hi guys

couldnt find a thread on the emerging china india growth story so thought we should start one, this report shows the incredible growth chindia could undergo over next 15 years, meaning a 20 year bull market!

just like peoples opinions on this

http://www.usfunds.com/docs/presentations/chindia/viewhtml.asp?pageid=1

 

[nizar]

meaning a 20 year bull market!

Amen!

 

[purple]

meaning a 20 year bull market!

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mmmm....you mean 20 years of :drink: LOL

2007 estimates
China population 1.3 billion
India population 1.1 billion

cars, houses, electricity for a total of 2.4 billion (and growing) people in just 2 countries..yep. looks like upwards, but with some big corrections too.

 

[Boyou]

THE big correction mightcome from our planet....not the markets ....or Chindia(has this term ben coined?)


Cheers Ya'll

 

[Smurf1976]

THE big correction mightcome from our planet....not the markets

IMO there's more chance of me landing on Mars than of the world producing enough oil to fuel a US-style car dependency in China and India whilst continuing to run the rest of the world as well.

If China and India are to grow then they're going to have to do it in some way that doesn't involve burning millions of barrels of crude oil every day. Either that or the rest of the world stops using the stuff.

But whilst there's still coal to power factories and generate power, anything we do about greenhouse gas emissions in Australia is essentially pointless. We talk about an emissions trading scheme. Fair enough. But it misses the point that China will add more coal-fired power plants than Australia has in total by the time even the strongest anti-coal group could get a plan in place.

In short, we've done basically nothing to the environment and used essentially no natural resources compared to what we're likely to try and do over the next few decades. If the planet is going to be the limit then IMO we're going to find out the hard way.

Lots of opportunities here of course but I don't consider waterfront property to be one of them... Not unless you're a fish anyway.

 

[lakemac]

My place has at least 5m to go before the lake laps at my laundry door. Not sure about next door though...

My thoughts are that the earth has been much warmer and with higher concentrations of CO2 several times in the past way before humans came on the planet. We give ourselves far too much credit for changing things.

Do we really know how much CO2 and/or O2 that is given off by 79% of the earth's surface coved in ocean. The oceans are the planets lungs. Not the tree you have in your back yard.

We will as humans eventually change fuels. Market forces will supply the driving force. You can see it happening now. The rise of companies providing water tanks and solar heating. It will take time to replace oil and/or coal but it will happen. My view is let market forces determine the outcome. The planet will give us enough feedback to drive the change. Either that or Darwin (ie. evolution) will win LOL.

As to a 20 year bull run - I don't think you will get that long. Why? The banks will yank the chain in China once it is self sustaining ie its own internal markets are large enough to not need the US consumer base. I give it no longer than 5 years.

 

[Kimosabi]

IMO there's more chance of me landing on Mars than of the world producing enough oil to fuel a US-style car dependency in China and India whilst continuing to run the rest of the world as well.

If China and India are to grow then they're going to have to do it in some way that doesn't involve burning millions of barrels of crude oil every day. Either that or the rest of the world stops using the stuff.

But whilst there's still coal to power factories and generate power, anything we do about greenhouse gas emissions in Australia is essentially pointless. We talk about an emissions trading scheme. Fair enough. But it misses the point that China will add more coal-fired power plants than Australia has in total by the time even the strongest anti-coal group could get a plan in place.

In short, we've done basically nothing to the environment and used essentially no natural resources compared to what we're likely to try and do over the next few decades. If the planet is going to be the limit then IMO we're going to find out the hard way.

Lots of opportunities here of course but I don't consider waterfront property to be one of them... Not unless you're a fish anyway.

Luckily, the infrastructure in Australia is so poor, the coal the Chinese order this year should arrive in China in about 2020.

I think this has been the Howards major contribution to reducing Greenhouse gasses so far.

 

[lakemac]

Luckily, the infrastructure in Australia is so poor, the coal the Chinese order this year should arrive in China in about 2020.

You been peeking out at our Newcastle shore line have ya?
Horizon just filled with coal ships waiting to load...

 

[sam76]

My place has at least 5m to go before the lake laps at my laundry door. Not sure about next door though...

My thoughts are that the earth has been much warmer and with higher concentrations of CO2 several times in the past way before humans came on the planet. We give ourselves far too much credit for changing things.

Do we really know how much CO2 and/or O2 that is given off by 79% of the earth's surface coved in ocean. The oceans are the planets lungs. Not the tree you have in your back yard.

We will as humans eventually change fuels. Market forces will supply the driving force. You can see it happening now. The rise of companies providing water tanks and solar heating. It will take time to replace oil and/or coal but it will happen. My view is let market forces determine the outcome. The planet will give us enough feedback to drive the change. Either that or Darwin (ie. evolution) will win LOL.

As to a 20 year bull run - I don't think you will get that long. Why? The banks will yank the chain in China once it is self sustaining ie its own internal markets are large enough to not need the US consumer base. I give it no longer than 5 years.

Looks a bit choppy - lots of whitecaps out there!

 

[dj_420]

As to a 20 year bull run - I don't think you will get that long. Why? The banks will yank the chain in China once it is self sustaining ie its own internal markets are large enough to not need the US consumer base. I give it no longer than 5 years.

so what do you mean by self-sustaining? are you implying a self-sustaining country would have no imports just exports?

by your definition the US is a self sustaining economy yet they are one of the biggest consumers in the world. to do this they rely heavily on imports.

if china's growth reaches developed markets standards they will rely MORE on imports. why? as the country grows and grows it will become more dependant on imports. china is typically a manufacturing country, ie assembly, production lines, etc, but for china to be a manufacturing country it needs to import raw materials.

countries will typically leverage their core competence (what they are good at) china is good at manufacturing, you will see more finished products coming out of china in the future. to be effective in this they have to be huge importers of goods needed for manufacturing, ie raw materials.

one other point, why would a country want to be self sustaining??? that means they reduce their potential markets to one country rather than international markets. i dont think businesses that relies on exports is going to just "yank the chain". from what you stated you are implying that once china reaches a certain size it wont export to the US???

economies rely on international trade for growth and profit, it would be crazy that china would stop relying on US consumers as that would mean huge profit cuts, reduced growth, reduced market share, increased prices for goods that are no longer imported. something i think you will find business just wont do.

in the future we could see china economy rival US, this means another massive consumer on the world stage for all types of goods and services. these massive economies cannot run by themselves they become increasingly reliant on foreign imports for them to grow and develop. take oil for eg, china does not have its own oil supplies to run their country. i dont know much about food staples in china either but im sure at some point they may have to be a massive importer of food.

i think you will find that china will continue importing and exporting and also relying on US as consumers well into the future.

 

[lakemac]

Hi dj_420,
I agree with your analysis from a macro economic viewpoint. China will need to continue to import raw materials and will continue to export finished goods - as Germany and Japan do.

What I mean by self sustaining is in a financial sense. China has yet to reach a "critical financial mass" if you like in which the internal economy (as driven by its growing urban population) generates enough demand and consequently has absorbed enough credit that as a central banker you could produce a recession without causing the system to collapse back onto itself. You don't want to undo all your hard work until it is ready.

To give you an idea of how far they have yet to go you only have to look at the stock market. It is not "mature" yet. Still very jitterish and has very little substance. You push it too far and it will totally collapse and be next to impossible to restart. To a certain extent the bankers are already testing its resilience. The recent drops in their markets are not co-incidence. The head fox puppet Greenspan openly talks about it and their market deflates a bit too quick. Soufle not quite ready yet...

Why cause a recession - remember control and interest are the drivers. You let those that borrow build up businesses, others buy up the land using your thin-air credit. Then when you want to buy out the business you drop the credit. You get distressed sellers. Fundamentals of the business don't change, just the share price. Meanwhile you are still collecting interest from those caught out. Yes you get some bankruptcy but who cares - it was only thin air anyway. You get far more who continue to pay off their loans till they die (mort = death... you get the idea). Again if you doubt this have a look at the top 20 shareholders of most large companies. They are banks or nominee companies. How do you think they got there? To prove this you need to dig back into the archives - original shareholder statements when the company was but a mere speck on the financial landscape.

The washup in all this, yes China/India/US will continue to import stuff. The underlying intrinsic value of stuff never changes. As I said an apple is still an apple no matter how much you pay for it. The key is how much you pay for it. Remove the credit the amount you pay for anything will drop - just ask anyone who lived through the Great Depression or if you have Japanese friends ask them. They know.

Increase credit and you have inflation. Increase credit too much and you get hyper-inflation. It has nothing to do with banana crops or oil.

Note the scarcity of a thing can drive up its *intrinsic* value. eg. oil. It is a useful commodity in high demand so its intrinsic value will rise. This is true inflation. What you get when the CPI goes up is the inflation primarily caused by credit creation washing into the financial system.

You are right in that countries would be stupid to stop trading with each other - trouble is countries don't control their own credit creation process. The banks do. Again I point to Japan in going from a booming economy in the 1980s to a basket case starting in 1990. No amount of trade can undo what a credit squeeze can do.

 

[dj_420]

ok so i understand the internal factors will help to cool off a booming economy. But surely the combined effect of another emerging global economy such as china and the US will ensure that the global demand for materials will keep prices well above historical averages.

internal influences will be just that "influences" rather than decisive factors that will change the economy's growth.

i thought that despite these fiscal efforts the simple fact of supply versus demand would ensure a continued period of growth. of course the govt and financial institutions dont want a complete runaway economy they would rather a controlled and stable growing economy.

in the same way they wouldnt want to push the country into a recession. too much monetary tightening and interest rate rises would not be healthy for the economy and see the reverse happening, reduced investment and reduced output.

eventually we will see china's growth reduce to a more controlled percentage maybe 5%? but isnt this an economy that has never been on a world stage before, so we have a new area of supply and demand including the US. not to mention india which has begun industrialisation.

i just think we have entered a new stage of global growth, one that will ensure pre 2000 prices for almost all commodities are unlikely to be seen again.

 

[lakemac]

Hi dj_240,

Forget governments. They don't control economies.
Forget interest rates. They don't affect economies anywhere near as much as credit creation/destruction.

Best example to prove both of these assertions in one hit is Japan. Due to a historical quirk, interest rates were originally controlled by the government. So if either of government control or interest rates does impact an economy explain why Japan with zero percent interest rates, set by the government, has been a basket case since credit was withdrawn in the early 1990s by their central bank.

Same thing in Germany of late. Both countries are highly industrialised, highly skilled and both are on ice.

I really do hope they give us a soft landing so to speak. Recessions are not pleasant.

The bottom line is the prices you pay for anything are controlled primarily by credit creation/destruction. Take away the credit (for whatever reason) and prices drop. Yeah they may not drop below Yr 2000 figures but that has more to do with how much credit is taken away.

People in the 1920s would have never thought the 1930 depression was possible. The economy was booming. Widespread electricty generation had just started to transform society (thanks to one very under rated engineer - and no it was not Edison - he was a hack in comparison to Nichola Tesla. You can thank him for widespread electric power, flourescent lighting, electic motors, broadcast radio - no not Marconi - he did not invent broadcast radio - Tesla did).

Commodities were at an all time high then too.
They dropped in price to an all time low during the 1930s.
To prove this find a library with copies of the Wall St Journal from that period of time. Look up the prices of copper, coal and wool - all high demand products of the time.

You might be surprised how far prices can drop if you remove credit.

 

[dj_420]

ok thanks lacmac, didnt realise credit creation/destruction had so much to do with it

ill have a look into it, i know more on macro than i do internal factors