Comments on: Will Asia’s downturn be worse than America’s?

By: Edward Harrison

Edward Harrison — Sat, 27 Dec 2008 20:06:56 +0000

Jing, for a more pro-China growth analysis, take a look at what Marshall Auerback had to say. I disagree with him regarding the likely severity of a Chinese downturn, but we both agree that China is still the growth story to watch.

By: Jing

Jing — Wed, 24 Dec 2008 18:44:04 +0000

Tokyo Joe has everything backwards. He isn’t describing China so much as the United States. The Chinese people already have little enough faith in their own government and their savings reflects their wariness about government nannyism. The only expectations that the average Zhou has of the government is that bureaucrats will try to steal from them. Stock ownership is relegated only to a minority of the total population unlike in the U.S. American’s are the real dopes thinking that they can dig their way out of a credit collapse with more debt and government cheese. You will be hard pressed to find actual Chinese expecting to be driving a mercedes, but the legions of yuppies driving BMW-3 series (the quintessential mark of middle class conspicuous consumption, the yuppie-mobile if you will) will suddenly find themselves late on their payments. They will be in for a shock as a whole generation enters retirement only to find their homes, 401ks, pensions, etc worth far less than they had thought.

By: theeconomysucks (theeconomysucks)

theeconomysucks (theeconomysucks) — Wed, 24 Dec 2008 09:23:13 +0000

Will Asia’s downturn be worse than America’s? | Credit Writedowns http://tinyurl.com/6u2zlj

By: tokyo joe

tokyo joe — Tue, 23 Dec 2008 21:32:34 +0000

What concerns me most about China is the possibility of social unrest. The populace not only expects the government to provide or at least fine tune everything, they also expect to be driving a Mercedes in the near future. Unfortunately, the economy has yet to meet the expectations of about 750,000,000 peasant farmers, and of those gainfully employed, approximately 140,000,000 have stock accounts, most of which have an average cost around 4000 SSE. It is slowly sinking in to all parties that Uncle Wen and Uncle Ho cannot provide everything to everyone. Dashed expectations can lead to unbecoming behavior, particularly when the populace has no recourse against the self-appointed officialdom.

By: Life through these eyes :: Tidbits 22/12/2008 :: December :: 2008

Life through these eyes :: Tidbits 22/12/2008 :: December :: 2008 — Mon, 22 Dec 2008 13:30:13 +0000

[...] Will Asia’s downturn be worse than America’s? Credit Writedowns [...]

By: Edward Harrison

Edward Harrison — Sun, 21 Dec 2008 22:54:04 +0000

I would be bullish on emerging markets if it weren’t for the nasty downturn they are about to work through. Mark Mobius has turned bullish again and is actively buying shares in the emerging markets. I remain more skeptical. Denis, I can’t fault the logic of your thinking about the Chinese NOT spending any stimulus given to them by their government. That is why the Chinese are subsidizing exports. I will be writing a lot more about this shortly, but the U.S. has already filed a complaint with the WTO saying that the export subsidy is tantamount to a tariff. It looks like we may have Smoot-Hawley in another form here. In my mind, this is big news.

Stephen Roach has always said decoupling was a crock and he has been proved right. The question is whether the emerging markets/Asia will rebound quicker. I am making the case here to not assume this is the case as I might have previously. Watch for more on this in the coming weeks, especially the export subsidy stuff. I’ll post when I get more info.

Cheers, guys.

By: John Creighton

John Creighton — Sun, 21 Dec 2008 20:18:03 +0000

I always questioned the emerging markets/decoupling theory. I herd a few days ago on BNN that they actually admitted that the decoupling theory has proved to be wrong. I think that emerging markets are still trading at a much higher price to earnings then first world countries. I bet their is an opportunity to make money on the spread as emerging markets correct their price to earnings valuations with companies in north America. The problem though is the famous quote about markets remaining irrational longer then a person can remain solvent. The other problem is that emerging markets well now overvalued still have more long term growth potential.

By: Denis

Denis — Sun, 21 Dec 2008 20:06:29 +0000

Excellent find, I never thought about it this way. It makes a lot of sense.

On a related note I was recently thinking about Chinese stimulus program. It seems that if Chinese government gives money to their own people, they are likely to hoard rather than spend. In that sense it might be better to give the money to the Americans who are more likely to spend than the Chinese. And then it occured to me that this is exactly what was going on for the last 30 years or so – Chinese and Japanese governments were stimulating consumption in the US via purchse of US treasuries to stimulate manufacturing in their home land.

By: edwardnh (Edward Harrison)

edwardnh (Edward Harrison) — Sun, 21 Dec 2008 12:00:20 +0000

Will Asia