Nouriel Roubini has cast aside his mantle as the lugubrious "Dr Doom" of the global economy, scathingly dismissing market panic over China as "manic depressive" behaviour by ill-informed investors.The Telegraph
"China is not in free-fall," he told the Ambrosetti forum of world leaders on Lake Como.
Mr Roubini, a professor at New York University, described the alarmist reaction to the Shanghai stock market rout as "excessive, unreasonable and irrational".…
Nouriel Roubini dismisses China scare as false alarm, stuns with optimism
Ambrose Evans-Pritchard
6 comments:
If Roubini is bullish on China, does that mean we should be bearish?
I have more faith in Steve Keen's analysis of the situation, though no one can predict what the Chinese government will do.
I don't think the communist party in China are in any hurry (yet) to relinquish excessive power to financial markets. These markets might be manipulated by forces beyond their control.
Democracy allows faceless economic elites to buy the executive. In China and Russia that won't happen, those in power become the economic elites.
He's probably long...
Their post-industrial transition isn't going to go perfectly smooth in every respect but they are doing a pretty impressive job of it so far. Zte, Xiaomi, Oppo, One-plus and Huwaei are killing Apple and Samsung using the Toyota strategy. Apple, like GM and Ford is in complete denial because they see themselves as above the fray. But China is in it for the long game, they are subsidizing these companies for the long haul and Apple has ZERO chance of making it out unscathed, they are so fat, over priced and complacent in the market, with inferior product, and they are designing a space ship office while the competition makes great, better specification product, with better software that is much, much less expensive -- 1/10th the price. Even without marketing they are killing it, taking huge amounts of market share around the globe, quietly on the bottom end but regular buyers are realizng that those bottom end phones are actually better than their top-priced brands. They have 10 times the number of engineers and software developers. That is just China's entrance into consumer electronics.
Whether accounting, healthcare, pharma, bio-tech, automotive, nearly every industry is being upgraded and globally competitive all at once in China. Really impressive stuff. It should be far more disruptive to the good old boys clubs in the US, Japan and Europe that have divided markets and have had little motivation to compete on price. The US is clearly alarmed as Obama's biggest $upporters are in the cross hairs and have him preparing sanctions to protect their businesses from competition from Chinese companies with much better access to capital and labor. The entire software industry will be up-ended.
What was the condescending stuff that Dems told Red state workers? Those jobs have already been lost and they are never coming back. Now China is coming after the white collar blue states. Time pull some of those euphemisms out and dust them off. Think of how much better off people are when they can buy a Zte phone for $60 rather than an apple for $500. Consumers win. When people can buy cancer drugs for $5.00/pill rather than $500.00 a pill. Consumers win. When hospitals can buy health care equipment for thousands that used to cost millions. Consumers win. There will be some small amount of displaced workers in places like Boston, Seattle and San Fran, but we have provisions for them.
In all seriousness though, worker assistance programs can provide a few hundred dollars for them to move and a few community college grants to ensure they upgrade their skills to become useful citizens with skills that are needed in a modern economy! Not to worry.
With a little push by US-EU sanctioning themselves into isolation they may get most of the world market at this rate.
Lower costs are awesome, but they also have lower labour costs (overall) for now (even with all the outsourcing the west is doing), maybe lower costs in middle and top management. You can be quite competitive when you don't need to pay outsized wages and bonus to your management.
On bearish/bullish China, Pettis has already described what needs to happen. There won't be any financial collapse in China, there is not going to be a '2008 China version' and those waiting for it will rot. But that does not mean the bubble hasn't exploded. The problem is right now that there needs to be a transition from an economy with over-investment and excess production capacity to a consumer economy. This means there will be a need for transfers of wealth to households from govt/corporations/banks (all the same in the Chinese system) someway, somehow.
The problem is that this will not benefit a lot of the elites who have benefited from the previous over-investment period. Meaning that the leadership at the party may have to crack some skulls and there may be some cleansing. In any case, right now the Chinese system is proving to be both way more flexible (over the decades) and more competent at dealing with challenges and evolving.
I tend to agree with the Chinese leadership, that moving to an other system right now may throw China into chaos with it's long history of corruption, warlodism and will be weaker and subject to Western sabotage (like in the late XIX and early XX century). Just like the West has been doing recently in the MENA area, creating chaos.
The Chinese leadership understands that the primary challenge is controlling elites rather than the people. Some of the Russian Tsars understood this, too, protecting the people from excesses of the powerful boyars. And it is a reason that Putin is so popular and hated by Western elites he tossed.
Post a Comment