A Pessimist's Guide to 2016

Discussion in 'Property Market Economics' started by Graeme, 21st Dec, 2015.

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  1. radson

    radson Well-Known Member

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    China still has a ways to go to catch up to Japan in terms of GDP and age

    The Gross Domestic Product per capita in China was last recorded at 3865.88 US dollars in 2014

    The Gross Domestic Product per capita in Japan was last recorded at 37595.18 US dollars in 2014.

    China
    Median age total: 36.7 years
    Birth rate 12.17 births/1,000 population (2014 est.)

    Japan
    Median age total: 46.1 years
    8.07 births/1,000 population (2014 est.)
     
  2. Kangabanga

    Kangabanga Well-Known Member

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    not sure where you got your figures from? Pretty sure China is the world second largest economy now and there were plenty of business news articles about it overtaking japan's economy around late 2010.

    List of countries by GDP (nominal) - Wikipedia, the free encyclopedia
    List of countries by GDP (nominal)
    List by the International Monetary Fund (2014)

    1 [​IMG] United States 17,348,075
    2 [​IMG] China 10,356,508
    3 [​IMG] Japan 4,602,367

    As for age, you are confusing what i am saying. I'm comparing China's problem of an aging population today to a similar problem Japan had 20 years ago when their economy crashed. I am not comparing the two countries as they are today.

    China's debt to GDP levels are very high, much like Japan's was back in 1990 before their big crash and the beginning of their prolonged recession/deflation.
     
  3. radson

    radson Well-Known Member

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  4. Kangabanga

    Kangabanga Well-Known Member

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    when you do per capita the number looks so much smaller for china, but that doesn't change the debt levels as a percentage of GDP, which is what debt load means, which is what really matters and impacts the economy when deleveraging of that debt happens.
     
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  5. radson

    radson Well-Known Member

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    Good point

    "A rapid increase in debt in a short space of time has historically been a good predictor of financial trouble, from Japan in the 1990s to southern Europe in the 2000s. But there is no level that automatically triggers crises. Since most of China’s debts are held within the government-controlled bits of its economy (state-owned firms are the biggest debtors and state-owned banks their biggest creditors), the country has the means to avoid an acute crisis. It can, in effect, roll over bad loans as they come due or abstain from calling them in. However, although that spares the economy short-term pain, it leaves it with a chronic ailment. Ever more credit is needed to sustain growth. Loans that should have gone to sprightly companies with promising new ideas go instead to corporate zombies."

    http://www.economist.com/news/finan...tripping-economic-growth-deleveraging-delayed
     
  6. Graeme

    Graeme Well-Known Member

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  7. Kangabanga

    Kangabanga Well-Known Member

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    There have been already quite a number of oil company bankruptcies since latter half of 2015. This area consists of billions loaned out by US banks to highly leveraged shale plays using the excess liquidity from the FED Quantitative easing. So basically billions could be lost and it will be hard to predict how much damage that will do to the financial system, especially when credit from banks dries up as they try to shore up losses from this sector. this could lead to a credit crisis.

    Big banks brace for oil loans to implode

    Of course USA is not the only country affected. Other oil companies across the world are affected too. And other oil support related big industries like Oil Rig builders are being severely affected.

    Sovereign wealth funds from oil countries are also selling off their assets around the world in order to sustain their countries whilst they gain market share.
     
    Last edited: 21st Jan, 2016
  8. Graeme

    Graeme Well-Known Member

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    If the cause of the GFC was too much debt, then increasing borrowing isn't a sensible solution. But that seems to be what's happened.

    Debt.png

    William White's comments (from the article I posted last night) are that the solution will be an orderly write-down of debts, and those with healthy bank balances would be on the hook for it.

    I think that a lot would depend on how it's handled. If I had a large chunk of my savings wiped out, whilst a property investor had his or her mortgages reduced, whilst being able to retain their portfolio then that would be manifestly unfair. But if it only benefited personal property, and house prices fell sharply (unlikely without another crisis) then I might see the loss of cash as a worthwhile trade.

    Then again, it is entirely theoretical at this point. Though Iceland and Ireland have had mortgage forbearance schemes.
     
  9. Graeme

    Graeme Well-Known Member

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  10. Graeme

    Graeme Well-Known Member

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    Paul Mason reckons that there are three questions that need to be answered in order to fix the UK housing market. It's worth reading, and the abbreviated version is that the issues are:
    • What's the minimum space a person should have to live in?
    • What's the optimal balance between the rental (private and social) and owner-occupied sectors?
    • How much should we be paying for housing?
    Mason makes a claim that whilst mandating space and price limits would stop housing from being a free market, it's been heavily supported by government initiatives to prevent a crash, and hence is rigged. Essentially it's a one-way bet, which is possibly why the Doom and Gloomers have got it wrong.

    Whilst the article is about the UK, many of the arguments could apply to Australia.

    So why bring this up?

    Here's a piece that says central bankers are out of ammo, and that's what's behind the stock market rout.

    If there's nothing left in reserve then I think that governments are running out of options in dealing with emerging crises. That's going to include housing, and with base rates somewhere around zero in most countries, there are limits to what can be done to reduce borrowing costs further.

    So maybe if things go pear-shaped, there'll be a less pronounced response next time...
     
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  11. Graeme

    Graeme Well-Known Member

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    Mervyn King, former governor of the Bank of England, reckons a major financial crisis will happen sooner, rather than later unless the banks are reformed.

    Given how much money those institutions have burned lobbying for the status quo to more-or-less remain, I doubt that preventative measures are going to be put in place. :(

    King gets a huge amount of abuse for either not tackling the housing bubble, which is ironic because he was one of the first establishment figures to warn of it; or for not being tough on banks, when he was rather unpopular with The City for taking them to task.
     
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  12. Skilled_Migrant

    Skilled_Migrant Well-Known Member

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  13. See Change

    See Change Well-Known Member

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    Heard a great interview with John Howard . He recognizes that Trump is saying what a large vocal minority of Americans agree with , but a view point that has been buried by political correctness .
    He believes that he might win the republican nomination , but won't win against Hilliary as he scared to many people who might otherwise vote for the GOP .

    I'm fairly certain Howard used the word unstable to describe trump

    Yep , just checked . Here's the link

    Australia's Howard `Trembles' at Prospect of Trump Presidency

    Cliff
     
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  14. Chabs

    Chabs Well-Known Member

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    I have to say, I think Trump is very egotistical and does not sound like an honest/sensible person at all nor would he be a good fit as president. I have to respect though, the fact that he is challenging the status quo and that he is an extremely capable/talented person when it comes to getting his way. A lot of his arguments have been misconstrued by the media to make them sound much worse than they do.

    Recent example includes: Apparently he was "endorsed" by a former KKK significant member. he did not immediately condemn the KKK > interpreted as a KKK sympathiser. In reality: He wasn't even "endorsed". In addition, he purposely gave a non-answer to media when asked about his impressions of the "endorsing".

    He's clever, this creates media buzz and get his name more out there, in the next few days he will properly address the issue and get even more media attention.

    I've been closely following the US election and both Trump and Sanders have seen the short end of the stick from big-media representation. Hilary on the other hand seems to be constantly glorified. Interestingly I would argue that Trump + Sander's positions on policy are also the most "common person" friendly. Both are also not bought out by corporate interest, so I guess that would explain why.
     
  15. See Change

    See Change Well-Known Member

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    Sanders , who most people had never heard of until around 1-2 months ago comes across as an honest well meaning politician and probably would make a good president , but I think the chances of him getting much past the republicans would be small.

    My hope is that the democrats actually get a majority in the congress / senate, but I don't know the likelihood of that happening , otherwise we will have a repeat of obama , vision , dreams , but minimal if any put into reality and 8 years wasted in petty wrangling

    Cliff
     
  16. Perthguy

    Perthguy Well-Known Member

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    George Bush. 'nuff said really.
     
  17. Ted Varrick

    Ted Varrick Well-Known Member

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    All of this stuff sounds awful.

    The last time I turned on the TV, wasn't Martin Sheen the president (or Harrison Ford)?
     
  18. Heinz57

    Heinz57 Well-Known Member

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    Ronald Reagan last time I watched
     
  19. Graeme

    Graeme Well-Known Member

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    They got Brexit and Trump right. The EU is looking a bit wobbly, partially from immigration, and partially from banks, but I don't think that it's about to crumble.
     
  20. Barny

    Barny Well-Known Member

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    is trump a negative? My optimism says only 1 right.