Chinese make bubbles!

[Ahmed]

A stock market bubble has just burst in China: what is its genesis?
Chinese industry is focused on the export of its manufactured products and its sustained growth in this area has made it “the workshop of the world”. The political and social balance is based on strong and continuous growth, however, since the American-European crisis of 2008, exports suffered a significant decline, despite the massive financing of American and European consumers by debt. The Chinese government then strongly encouraged the development of domestic consumption (a policy that had succeeded in the United States during the interwar period): the money from exports was supplemented by the accumulation of (private) debt; this has mainly resulted in a massive investment in the real estate sector, which can be explained in two ways:
in 35 years the population of cities has exploded, going from barely 20% around the 80s, to a projected percentage of 60% in 2020.

The domestic consumer market has never been able to take off due to the low wages of the mass of "little hands" in the industry and has turned to real estate for which loans were granted by banks with great generosity. little observant and with the blessing of the state.
It is above all this speculative aspect in real estate which explains that in a few years, the quantity of concrete used far exceeds that used in the USA throughout the XNUMXth century.
However, and for the same reasons as in Spain, this real estate bubble which corresponded to nothing, except to a capital self-valuation, collapsed gradually, despite the constant support of the authorities, which only fuel the bubble, without solving anything.
A transfer of liquidity was then carried out towards the stock market values ​​whose prices then soared quickly, by a well-known speculative ripple effect (the increase generates the increase, because everyone wants to have their share of the pie); today, a sharp correction sees prices collapse and many shareholders in difficulty because of the risky practice of borrowing to purchase securities ... The government is moderating this fall as much as possible thanks to its means of interventions, but China remains faced with its contradictions: on the one hand, a productive apparatus directed towards the outside and therefore fragile and uncontrollable; on the other hand, the impossibility of an internal market due to competition from other countries with low labor costs and the development of robotization which does not allow those who produce the goods to buy them.

In short, the Chinese model, which wanted to imitate the economy of the old continent and which had successfully passed the stages, in turn comes up against the contradictions of its model, with all the violence that the historical contraction of its mercantile epic implies.

[elephant]

Phew! I was afraid that they started to copy Champagne and Perrier (Laurent or water - anyway)

[Leo Maximus]

The Chinese are very good at blowing bubbles. And it always ends up exploding:

https://www.youtube.com/watch?v=Cm2iWnPtgKw

https://www.youtube.com/watch?v=aUarSU9Ee70

https://www.youtube.com/watch?v=VKaaGmnoKCQ

A threat to humanity and, instead of acting, we let it happen!

[Ahmed]

I have the feeling that in the summer, there is sagging and bubble trapping in the air!

Another reason for the impossibility of creating an internal market is that it would be nightmarish to imagine adding a new consumer society with 1,3 billion members! Old recipes are not exportable because they would face the physical limits already close at hand.

[I Citro]

The economic bomb which you revealed the existence does not seem to unleash the crowds, Ahmed.

However, this is a WORLD stock market crash (-40%) that occurred simultaneously in China, the USA and Japan ...

No media relayed this considerable event to the point that the American stock market was purely and simply closed.
Preventing any transaction is indeed a way like any other to prevent a crash ...

As you said, these are reminiscences of the crash of 2008 that was never resolved. On the US side, each dollar of growth having required 3 dollar of subsidy, this system under infusion can only hold a time ...

On the Chinese side, the support of the internal market has produced the same perverse effects as those which caused the subprime crisis. I am talking about massive investment and unbridled speculation. This generated speculative bubbles with the creation of virtual wealth (stock market or real estate values) supported by credits ...

I would not dwell on stock market speculation but on real estate speculation.

Since the Sichuan earthquake, just before the Beijing Olympic Games, major reconstruction works have been added to the construction of new cities. Investors have rushed to speculate, driving up prices for real estate with no destination value yet ...
To put it simply, speculators did not yet have a clientele of users of these goods but exchanged them (between speculators) on the hypothetical standard of living that future buyers would have ...

These goods, entire cities, have not found a population agreeing to live there at insane prices and its remained on the arms of speculators too greedy ...
The warning signals had however been drawn for a long time, some experts declaring that it was impossible that cities of such importance do not consume a tenth of the electricity of a classic city ...

[Leo Maximus]

The economic bomb which you revealed the existence does not seem to unleash the crowds, Ahmed.

However, this is a WORLD stock market crash (-40%) that occurred simultaneously in China, the USA and Japan ...

No media relayed this considerable event to the point that the American stock market was purely and simply closed.
...

What is happening in Asia does not interest Europeans (apart from the English).

Stock indexes have returned to their levels of a few months ago. The Nikkei has "collapsed" to the point where it is ... 13% above its level of January 1st.

No media, not quite. There are Les Echos and a few others.

Beijing is trying its hand at the market while controlling its effects:

http://www.questionchine.net/soubresaut ... es-pekin-s

[I Citro]

When we talk about global economy, butterfly effect, ...

Each event concerns us and has or will have consequences for us ...

Wait and see.

[Ahmed]

When it is the Chinese who indulge in "speculation unrestrained"(sic), we can indeed fear the worst!

What is happening on this continent cannot be without consequences for Europe.

[Leo Maximus]

Beijing does not give in to panic at all:

http://www.lesechos.fr/journal20150710/ ... 136115.php

Boursorama gives the origins of the stock market crash:

http://www.boursorama.com/actualites/kr ... 6954bdb182

(Info from the day before yesterday)

[Ahmed]

The Chinese authorities have technical possibilities of intervention which can calm the cyclical game, however the economy is now supported by the increasingly massive recourse to credit * and that the injection of new liquidities will only swell the bubble.

* China's total debt (State, industry, finance, private sector) was around 2008% of GDP in 153, it currently stands at 282%. In this group, the share of the state remains low, but the thickness of its "mattress" of dollars is largely illusory, since a massive recourse would be likely to devalue it in great proportions.