Posts by stephen walker
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speaking of the metaphor in this post title...
From the LA Times:
First, Tao Shoulong burned his company's financial books. He then sold his private golf club memberships and disposed of his Mercedes S-600 sedan.
And then he was gone.
And just like that, China's biggest textile dye operation -- with four factories, a campus the size of 31 football fields, 4,000 workers and debts of at least $200 million -- was history.
"We're pretty much dead now," said Mao Youming, one of 300 suppliers stiffed last month by Tao's company, Jianglong Group. Lighting a cigarette in a coffee shop here, the 38-year-old spoke calmly about the bleak future of his industrial gas business. Tao owed him $850,000, Mao said, about 60% of his annual revenue. "We cannot pay our workers' salaries. We are about to be bankrupt too."
Government statistics show that 67,000 factories of various sizes were shuttered in China in the first half of the year, said Cao Jianhai, an industrial economics researcher at the Chinese Academy of Social Sciences. By year's end, he said, more than 100,000 plants will have closed.
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@gio
i'm sure lots of people are quite bewildered, especially the ones under 30 who have been told since they were teenagers that the US system of "free-market capitalism" is superior to Japan's old-style business system.
people who are a bit older do know that rampant speculation can lead to spectacular losses. Japan's own "Lehman shock" happened in 1997 when the smallest of the big-four brokerages, Yamaichi, went belly up. and urban real estate in many places lost 70-90% of its peak value between 1992 and 2002, so the myth of always rising land prices was laid to rest.
but just like NZ, most people have no inkling of just how close to disintegration the death star really is. it's all bound to come as a terrible shock.
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It was the Feds (along with the Japanese central bank) that created the whole free money property/share boom in the first place.
No.
The Plaza Accord in 1985 among the US, Japan, UK, France and West Germany let to a spectacular property and share market bubble between 1986 and 1992 in Japan, aided by inept management of the money supply by the Bank of Japan and ridiculous lending policies by Japanese financial institutions.On the other hand, Greenspan gave us the dotcom "boom" (scam) and housing bubble (superscam) of 1998-2007. But he could not do it all on his own. He needed lots of dodgy stockbrokers and mortgage lenders to really turn it into something impressive.
Debt-fuelled asset price inflation is what this mess is about.
The key word is debt--the willingness to create it (by the lenders) and the willingness to take it on (by the borrowers).In NZ, the banks have borrowed short-term offshore at low interest rates to lend long-term at high intererest rates, mainly to finance house purchases. At ridiculously inflated prices.
The lenders and borrowers are both to blame.
And all the other rah-rah scam artists like the real estate agents and the media making money from advertising.Don't they have anything else up their sleeves than printing *more* free money?
Um, no. Not since they all accepted the Friedmanite dogma in the early to mid-80s in toto. There is only one tool in the whole monetary policy toolkit, apparently. Unless of course your entire economy is imploding in slow motion, in which case lots of other ways of creating more money for failed bankers become "absolutely necessary", or so it seems.
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It's certainly an issue for a range of businesses if people who have their health and employment and aren't crippled by debt or negative equity stop spending money.
stop spending money???
that's just outrageous!
healthy people, employed people, not-severely-indebted people,
suddenly decide to stop spending money for no reason other than all that gloomy economic news?
how utterly irresponsible can you get?!
don't they know that if everyone just decided to stop spending money, the whole frigging economy would grind to a halt?
it's the height of selfish behaviour, imnsho.
you would certainly think that if the media have incited such antisocial behaviour among the masses of economically robust consumers, well, let's just hope that someone calls this fear-mongering media to account.
ffs, don't they know that it's their solemn duty to the country to rah-rah real estate prices, NO MATTER WHAT!
won't someone please think of the real estate agents and mortgage brokers. -
I wonder what http://crikey.com.au Canberra correspondent Bernard Keane has got to say now?
Do you reckon he reads the SMH? If so, he's in for a bigger shock than when the Aussie cricket team got thrashed by India the other day...
World gives Aussie dollar a walloping
The big fall in the Australian dollar prompted London's Financial Times to dub the currency the "whipping boy" of foreign exchange markets.
speaking of currencies going down the gurgler...
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woops.
"party votes cast" -
imho, the 5% threshold is too high.
one vote out of every 20 electorate votes cast.
that is a huge barrier and denies people legitimate representation of their views.i suggest halving it AND only giving an exemption for parties that win TWO electorates. this one-seat business is particularly crappy.
In theory, party A could win 4.9%, no electorates and get zero seats. Party B might win 2.1%, one electorate and get three seats. That's pure bullshit.
Under my suggested change, a party that wins 2.5% and no electorate gets three seats. A party that wins one electorate and 2.4% gets one seat (rather than the three under the current rule).
Not perfect but better. And best of all, it's goodbye to all those one-man shows masquerading as parties.
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Thanks for your perspective, Jamil.
NZ should be promoting clean, organic produce and high quality products made from natural ingredients....NZ has missed huge opportunities by not becoming much more of a leader on environmental issues at a much earlier stage.
Except organisations such as Fonterra are not even vaguely onto it when it comes to formulating truly long-term sustainable strategies.
Instead of trying to produce higher quality products using the same or fewer resources, they go hammer and tongs destroying NZ's environment on a scale unseen since the native forests were cleared. Mass pollution and degradation of NZ's fresh waterways and lakes, unprecedented aquifer depletion in the Canterbury Plains, huge levels of synthetic fertilizers wreaking havoc on the soil. It may be a good get rich quick scheme for the dairy farmers but it surely isn't a long-term strategy for enhancing NZ's "clean green" image overseas.
The mentality in the NZ dairy secor appears the same as Wall St. or the City. Fast profits and bugger everyone else when it all (inevitably) collapses. They could have chosen to go down the low-input, organic path, but they chose not to because it would have meant less money in the short term. My rather Freudian explanation for Fonterra's wreckless behaviour is that I believe they think size is the most important thing. I mean, how could they have been so naive in taking such a large stake in San Lu with people on the board, without having a hands-on technical presence to ensure quality and safety were being maintained? China has been having major food contamiunation scares for years! Their credibility is in tatters. There would have to be a complete change in mindset at Fonterra to turn things around in China, IMO.
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steal from the new emergers of high net worth
zzzzzzzzzzzzzzzzzzzzz
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but they have lived through worse
i would politely suggest that "they" have not lived through worse, if "they" is the urban, young, "middle class".
what percentage of the Chinese population is old enough to remember the worst excesses of the cultural revolution (i.e. pre-1970) or the famines of the 1950s, etc? So, what percentage of the population is over 50 or so?
so i don't think the 20-something people with money now can remember even Tiananmen, let alone the worse stuff before that.
and you reckon the PLA is going to save the day for the CCP again?
maybe, maybe not, IMO.