Quote from MajorUrsa:
Yes, good point, they do seem to have a problem with all types of addictions, but I don't see much difference with the US population in that respect. US has an entire state devoted to gambling, alcohol was recently an important enough problem to have it totally banned, thus allowing the mafia to get a real foothold, and more recently, opium, both from Afghanistan and coke from Columbia is causing world-scale problems. And let's not forget the 'addiction to oil'.
Anyway, I don't think you can blame the current stock-bubble and the pending problems with the US$ on a group of gambling chinese housewives.
Ursa..
from the SA link:
"The U.S. Fed killed the party when they raised interest rates. The Chinese are in the process of raising rates and raising reserve requirements; it's only a matter of when inflation scares the crap out of the PBOC and they overshoot. Right now they're still under the delusion that they can control the economy. They have been trying to slow growth for 4 straight years now, with no effect. Since the country can cover their tracks with bad CPI data (and GDP growth, and non-performing loans, and...) for awhile, they can prolong the inevitable. But the inevitable always comes. The longer the wait, the bigger the fall."
I agree 100% with this comment. China is just starting to play with "free-markets" and their govt. thinks they can rig the game outright. The market always knows more then you, or in this case, the Chinese government.
Yes, they produce lots of goods we consume, but they don't have some magic wand that allows them to do it on the cheap. They have a growing populous that wants more and more of what our society has everyday, from mortgages to credit cards to Pepsi. The past few decades has seen an arbitrage opportunity with regards to their labor costs. Ask any arbitrageur: the markets always correct the imbalance.
A few more poison toothpaste scares or some more chemicals in pet food and we'll see companies in the US wake-up and realize that the lack of regulation in China - which is the reason for their low-cost of production - is going to impact their bottom-line when they lose consumers. I do not agree with regulation in the vein of Sarbanes-Oxley, et al. but I do in the vein of Underwriters Labratories.(UL)
It will be a cold day in you-know-what when any regulation body in China is not State-controlled.
