Thursday, May 19, 2011

WTF are the Chinese doing?

This one I can not figure out. This makes absolutely no sense whatsoever. Perhaps someone can 'splain this to me.
The Lee County Conservative posted about the perfect storm brewing in China.
My comment was that China has a much bigger conundrum in that they hold a massive amount of U.S. debt, and when we go down, their market goes bye-bye, and the U.S. paper they are holding becomes worthless.
To confound China's situation, for some inexplicable reason, they are building cities like there is no tomorrow.
heeey, wait a minute. No that can't be it.
This is no small thing. China is consuming roughly half the cement and steel production of the world, to produce empty cities. I've seen a few random news articles, and certainly heard about the Chinese driving up the cost of building materials in my line of work, but to see it is startling for me.
Al Fin has it, go RTWT and watch the video.

The Chinese Autocracy has lost its ever loving mind.

[edit] Wait, I figured it out. The chinese have been toying with capitalism in localized spots for some time now. They are trying to figure out how to create an economy as robust as the US economy used to be. Yeah, they're not gettin it so much. The economic impact from the development of real estate is huge. It's why the eeeconomisissts watch housing sales and new construction starts so much. The chinese are using the underpants gnomes approach. Step 1, steal all the underpants. Step 2 ???. Step 3, profit.
Let's hope they don't experiment with subprime mortgages lest they call in our loans...


  1. It's really not surprising that a bunch of central planners can't manage an economy that's growing at 8% a year (nominally) without massive misallocation of resources.

    Right now, those misallocations are counted in the growth. Think about it - if your MBO is to increase GDP, you steer investment into something that gets counted as part of GDP. Anything at all, as long as it gets summed with the rest.

    And if there's an actual use for that spend, then so much the better.

  2. As always, BP brings the wicked smaht.
    Me, I use underpants gnomes.


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