Jim Rogers sees US real estate crash
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No offence taken and good to get local feedback.
Like everything it is not black and white. I was not implying that your manufacturing export lead economy would disappear and be totally replaced by internal demand. What has been recognised however by the chinese administration is the unsustainable nature of the chinese growth of the past purely from exports and investment. They are now realizing that at some stage that growth will stop ie in a world recession and they are very vulnerable in that case. That would not mean that the western world would stop consuming, just that their rate of increase in that consumption would stall. In that situation there would be a very large impact on the Chinese economy that could only be mitigated to an extent if the internal demand started to replace some of the external demand. I believe that this internal demand is so far behind the export led demand currently and for the foreseeable future that it would be inevitable that a world recession would have a very significant impact on chinese growth. But who was it that said that the longest journey starts with the first step? At some stage in the future china will be much less immune to external shocks to its economy than they currently are. They are a long way away from it at this moment.
But getting back to Jim Rogers assertion that in the event of a world economic event, that he would see a 30-40 % decline in Chinas stocks, he is recognising that they are overvalued and that this overvaluation is probably due to the extrapolation of the current insane level of external demand for chinese goods and that this level of demand cannot continue forever. This does not imply that the chinese manufacturing industy will dissappear, just that the current rates of growth will fall and this will be reflected in their PE's
I dont think for one minute that the chinese will be replaced in their markets in this scenario which you seem to be implying with your comment about the time lag needed for other countries to develop their infrastructure. In fact just the opposite, there will be if anything a reduction in world capacity growth to reflect the more uncertain demand for their product. It is my understanding however that the chinese manufacturing miracle has been so successful due to the fact that the chinese have kept ahead of the demand curve by "overbuilding" manufacturing capacity and thus removing supply blocks that otherwise would have led to supply constraints and inflation
I am interested to hear your comments about the level of expenditure of the local chinese currently. zThe parallels between their spending patterns are reflected by the US consumer who has been doing the same for years but particularly the past 3-4 when they have been using their houses as ATM's to fund purchases that they otherwise could not afford.
It makes you wonder what the true level of world demand should really be. When you take away these artificial stimuli to demand I think we could all be surprised by where that level really is
most people have stupid loans, like my colleague who has a 80/20 with the second at 13.5% currently (apparently the second is a ARM) with scenarios like this most people with stupid loans will either refi or bail before the market would stabilize. Interestingly the prices do not drop only there are no buyers to the access inventory for all these patsies houses.
He now wants to bail and give it back to the bank at which time someone will buy it who has some cash and brains not to sign a piece of shit loan like the assholes offer to sub prime (read cashless) borrowers.
The problem is there are lots of people who want a house but they have no cash or have shitty credit. The bottom line - fuckism in the US is destroying the middle class, job market and income levels are all time low and you expect people to afford houses?
Dream on, it is a neocon nightmare.....my rich friend in RE says it will be 5 years and this cyclical stuff is nothing new, happened before and will happen again....
He now wants to bail and give it back to the bank at which time someone will buy it who has some cash and brains not to sign a piece of shit loan like the assholes offer to sub prime (read cashless) borrowers.
The problem is there are lots of people who want a house but they have no cash or have shitty credit. The bottom line - fuckism in the US is destroying the middle class, job market and income levels are all time low and you expect people to afford houses?
Dream on, it is a neocon nightmare.....my rich friend in RE says it will be 5 years and this cyclical stuff is nothing new, happened before and will happen again....
You have to know Chinese stock market absolutely has nothing to do with the health of Chinese economy. It's just a huge casino, and no one in China, including individual investors and institutions, are buying stocks for long-term investment, everyone just buy to make a quick killing, and when market crashes they just hold their portfolio being forced to be long-term investor.
During 2001-2005 Chinese economy was very robust but the stock market just kept dropping. Jim Rogers said the Chinese stock market could drop 30 - 40 % , it well could be, but he is talking nonsense when he implies it's due to the cool-down of Chinese economy.Quote from Sponger:
If you were him......
Would YOU tell the world what you were doing in your trading?
Or would you talk up your positions with books, websites, interviews, tv appearances etc - and get out of markets while the bubble is building?
He's not running a newsletter service, he's managing his own fortune - and he's not going to tell you what he's doing until AFTER he's done it. That's why they call it the smart money.
The guy gets to the party early, and leaves way before the alcohol is gone. He just tells everyone he stayed all night
If my understanding is correct he is not a billionare yet, maybe that's why he has a lot of time talking bullshit while his ex-partner Soros is always quiet.
Razor, Bingo, you nailed it.
If the future chinese internal spending is generated by white collars in the city, then it really depends on how the property bubbles get handled.
This is a complex situation. People in the mid 50s would have apartments purhcased cheaper when they were working in SOEs or Local government before the economic reform. People late 30s or early 40s people would have purchased from the retail markets maybe 10 years ago, when apartments were affordable (at least there were no bubbles like the last 3 years). Then you have people in the late 20s and early 30s, who have the most education, the most income (sort of), the biggest spending power, they would have purchased during the last few years, when the housing market develops it bubbles.
Then you have the blue collars who will move back into their hometown in their 40s. Dirt cheap housing back home, and they only rent dirty cheap apartments (300RMB per month etc, that's abut 55 USD?), and have no desire to ever purhcase in a city.
When the World Economy goes down hill or the china's property bubble busts, then the younger middle class will suffer the most, internal spending wouldn't be as helpful in the situation. Yes, the chinese governement is taking the right step, but the effectiveness will be pretty overrated currently. It will be a long for the Chinese Government to meet it goals.
"IF" we are indeed in a crisis, the world economy might go down and China will go down with it. This I have no doubt.
Happy Trading.
Quote from poohbear:
You have to know Chinese stock market absolutely has nothing to do with the health of Chinese economy. It's just a huge casino, and no one in China, including individual investors and institutions, are buying stocks for long-term investment, everyone just buy to make a quick killing, and when market crashes they just hold their portfolio being forced to be long-term investor.
Somehow I agree with this statement. The Shanghi market only have something 20 years history, retail investors are much less educated then let's say US or even HK investors. On 2/28, Shanghi Stock Exchanged managed to have a turn over of a little bit more than 100billion RMB, which HK had 83billion HKD (1 HKD is slightly below 1RMB), and the Shanghi market don't see international involvement like Hong Kong; once the currency and financial markets open up, what would it become? It's like opening up a gold mine for institutions, just think of all those weak hands..
Quote from Willleung:
Must be bored sitting at home
Yeah right...have you seen that guy's cruising mobile...it's a piece of shit and I wouldn't go anywhere but off a pier in it, but he's cruised that thing all over the world.
I've gotta give him credit for going all over the world and having a better life than Soros who's probably done nothing but sit in conference rooms in suits all over the world.
Whether he's right or not, I think he's a bit pessimistic and I don't agree with his stance on China, gotta hand it to him for his lifestyle choice. But you might also want to discount what he says since he's a half-time investor it seems.