Will China lead the world into depression?

[Lucille]

Will China lead the world into depression? (http://blogs.telegraph.co.uk/ambrose_evans-pritchard/blog/2009/01/15/will_china_lead_the_world_into_depression)


Albert Edwards at Societe Generale has issued another terror alert:

Sell everything. Hide in a bunker with plenty of whisky. The S&P 500 index of US shares is about to crash through its half-century support line to 500.

"Technicals say it is time to bail out. Cut equity expose and prepare for rout. US depression looking likely. While China's 2009 implosion could get ugly."

Mr Edwards -- who is of an "Austrian" persuasion, ie hates excess debt -- was one of the very few economists to see this whole crisis coming, and to issue warnings clearly and emphatically (unlike others who now claim to have been seers, but in fact hedged). He said interests rates would be slashed to zero and that bond yields would fall to the lowest in history. All this has occurred.

The key argument is that markets have been sold a pup on the China growth miracle and have massively underestimated the risks for the global FX and trading system as this unravels.

"The Chinese economy is imploding and this raises the possibility of regime change. To prevent this, the authorities would likely devalue the yuan. A subsequent trade war could see a re-run of the Great Depression.... Do you really trust politicians to "do the right thing"?

[...]

"Could the economic situation in China become so bad that it threatens the regime itself? Of course it could. But before being swept away in a tidal wave of worker unrest it has one key tool in its economic armoury it has used before. MEGA-DEVALUATION. China has a track record of such things. At the end of 1993 the authorities devalued the yuan by 33pc."

A replay would be the surest route to a Smoot-Hawley II.

"Amid confidence that the ongoing, massive, monetary and fiscal stimulus will prevent a repeat of the Great Depression, will it instead be competitive devaluation and implosion of world trade that we should watch out for."

This is not my view. I believe the Chinese leadership will hold the line and behave responsibly, as they did in 1998. I wouldn't want to bet the farm that Albert Edwards is wrong.

What do you think?

Comments from China especially welcome.

[garyallen59]

will china "lead" the world into depression? haha

[PatriotLegion]

I think the US is doing a pretty good job so far on dragging the world markets to shambles....

All to the thanks of our government and poor judgments on dealing with the problems correctly.

[acptulsa]

I think the US is doing a pretty good job so far on dragging the world markets to shambles.....

...those most dependent on us (i.e. China) will be right behind us, yes. But as to who takes the lead, I'm with you.

[slacker921]

How much do they have invested in the US that they could dump if they need cash? .. What's the source of that big stimulus that China promised it's people?

Why wouldn't China just begin building consumer markets in Asia? (I know a buyer for one of the major US retailers who about a year ago told what seemed to be a strange thing at the time - the manufacturers in China said their government no longer wanted them trading with US retailers.. they were going to start trying to sell to other countries). It might take some time, but they'd be much better off.

[mach700]

China and India are responsible for $60 Trillion to $120 Trillion loss which has destroyed world economy.

China & India are "world's headache".

USA, Russia and Europe should collectively Bomb China & India back to stone age.

http://www.ronpaulforums.com/showthread.php?t=175142

[PatriotLegion]

China and India are responsible for $60 Trillion to $120 Trillion loss which has destroyed world economy.

China & India are "world's headache".

USA, Russia and Europe should collectively Bomb China & India back to stone age.

http://www.ronpaulforums.com/showthread.php?t=175142

China and India are the biggest leeches to lost jobs here in the States. I'm sure the rest of the Western world has also used China's cheap commie labor to make billions in profits at the cost of there own citizens jobs.

Nah. I don't see the US, Europe or Russia doing anything to China or India but it would be nice to remove these 2 Counties from the problems with jobs leaving daily to these nations. But if China and India were not the leeches no more other nations will "fill the gap"...

[mach700]

China & India have "hidden desire" to rule the world.

China & India want to dominate USA & Russia in terms of military, economy, technology, status and strength.

China & India should be stopped now.

[AJ Antimony]

I'm pretty sure Peter Schiff is telling everyone to invest in China. He says when the US enters its depression, the world will only follow the longer it tries to support us and be involved with us. Once countries like China stop loaning us money to waste, their economies are going to flourish. All of a sudden the Chinese, the ones who produce so much of what we consume, will be consuming what they themselves make. Plus, Peter says the fundamentals are so much stronger in China than the US. The US has no savings (rainy day funds), so the depression will be especially hard on those who are eyeballs in debt. Contrarily China saves their money so they'll be able to live through whatever hard times hit them over there until they recover.

[fatjohn]

China & India have "hidden desire" to rule the world.

China & India want to dominate USA & Russia in terms of military, economy, technology, status and strength.

China & India should be stopped now.

What the hell? Actually they have more reason to dominate the world then you do right now they are the majority. Right now the world is dominated by the minority it's even worse.
This comment is outrageous.:mad: What do you think that the USA has done last decades moron!!!! Comments like this makes me hope that the US are going down hard. If I only knew no innocent people would be hurt I would be able to sustain those feelings.

You are an ignorant fuck spreading such hate on this forum. Like it is us vs them.

[mach700]

Remember some years back when USA fighter plane collided with Chinese fighter jet. China displayed its military power by holding captive USA jet and its pilot (don't remember exactly what had happened). USA was helpless and felt weak.

In fact no country in this world is safe from "China's Hidden Desire".

China is a "Hub from computer hackers" they have waged a war against USA in the past.

China's military growth and desire should be stopped right now before they become a big trouble for the whole world.

[fatjohn]

Remember some years back when USA fighter plane collided with Chinese fighter jet. China displayed its military power by holding captive USA jet and its pilot (don't remember exactly what had happened). USA was helpless and felt weak.

In fact no country in this world is safe from "China's Hidden Desire".

China is a "Hub from computer hackers" they have waged a war against USA in the past.

China's military growth and desire should be stopped right now before they become a big trouble for the whole world.

Open your eyes. The biggest trouble is the USA and it's totalitarian regime that is being formed. You have a lot of thinking to do about Dr Paul's stand on foreign policy.

[kathy88]

Remember some years back when USA fighter plane collided with Chinese fighter jet. China displayed its military power by holding captive USA jet and its pilot (don't remember exactly what had happened). USA was helpless and felt weak.

In fact no country in this world is safe from "China's Hidden Desire".

China is a "Hub from computer hackers" they have waged a war against USA in the past.

China's military growth and desire should be stopped right now before they become a big trouble for the whole world.


dude, we don't do war here

[mach700]

India back-stabs USA (will not sign CTBT or NPT)

New Delhi, Jan 17 (PTI) India has asserted that it will not sign the Comprehensive Test Ban Treaty (CTBT) or Nuclear Non-Proliferation Treaty (NPT) notwithstanding its bilateral atomic agreement with the US, which is expected to pursue these pacts during the Obama government. "We will not sign CTBT or NPT and we have made it absolutely clear to the US that we are bound by the bilateral agreement with it and India-specific safeguards with the IAEA," External Affairs Minister Pranab Mukherjee told India Today Group Editor Prabhu Chawla in an interview

http://in.news.yahoo.com/20/20090117/1416/tnl-india-will-not-sign-ctbt-or-npt-pran_1.html

[dwdollar]

I don't want any totalitarian regime to dominate the world. Be it China, America, or the UN.

[orafi]

China and India are the biggest leeches to lost jobs here in the States. I'm sure the rest of the Western world has also used China's cheap commie labor to make billions in profits at the cost of there own citizens jobs.

Nah. I don't see the US, Europe or Russia doing anything to China or India but it would be nice to remove these 2 Counties from the problems with jobs leaving daily to these nations. But if China and India were not the leeches no more other nations will "fill the gap"...

chinas not a leech. our gov ern ment is

[mach700]

India back-stabs USA (will not sign CTBT or NPT)[/url]

I think India received "civil nuclear deal" from USA on the condition that India will sign CTBT & NPT.

If India can change it's decision as per external requirements, what is the guarantee that India will not first use Nuclear weapons in wars against Pakistan and China.

What is the difference between India & Iran.

[Chester Copperpot]

China and India are responsible for $60 Trillion to $120 Trillion loss which has destroyed world economy.

China & India are "world's headache".

USA, Russia and Europe should collectively Bomb China & India back to stone age.

http://www.ronpaulforums.com/showthread.php?t=175142

You cant be serious...

[Lucille]

The US bugs, again:


"Errors made in US economic policy-making (http://www.news.com.au/business/story/0,23636,24915240-14334,00.html?from=public_rss), financial supervision and markets are the ultimate causes of the crisis," said Zhang Jianhua, research head at the People's Bank of China, in an opinion piece carried by the People's Daily.

Some observers in the West are blaming China and other nations' high savings rate and trade surplus for fuelling excess consumption and asset bubbles in the United States, he said.

"Such views are ridiculous and irresponsible in the extreme," Mr Zhang wrote in the harshly worded piece in the Communist Party's mouthpiece.

[...]

It was the loose monetary policy, lax supervision and huge fiscal deficit in the United States that caused the financial turmoil, he argued.

The big US trade deficit is a result of its own economic structure, according to the article.

"Theories that try to shift the responsibility for the crisis to countries with high savings are severely lacking in self-criticism, which is urgently needed if we are to... prevent similar crises," Mr Zhang said.

[Chester Copperpot]

dude, we don't do war here

We do, when It's DECLARED! HAH!