tag:blogger.com,1999:blog-2761684730989137546.post9215182164369384313..comments2024-03-28T20:28:01.733-04:00Comments on Mike Norman Economics: Reuters — U.S. Treasury Secretary Lew Says Excess Capacity "Corrosive" for China Growthmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger13125tag:blogger.com,1999:blog-2761684730989137546.post-89105021117010067702016-06-06T12:35:37.599-04:002016-06-06T12:35:37.599-04:00Excess capacity is especially great if you have re...Excess capacity is especially great if you have retirees that don't produce but need/want to consume that excess capacity.mmcoskerhttps://www.blogger.com/profile/09340832287496890370noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-5761548458590900882016-06-06T10:50:24.024-04:002016-06-06T10:50:24.024-04:00I am skeptical about news and analysis about China...I am skeptical about news and analysis about China. I've more or less given up on Pettis and Keen is probably right about private debt but that's largely RE. Nothing that the China government can't handle if they know how to use the tools they have have. They have a very different POV than the neoliberal West and didn't get caught up in the crisis of 2008 the way the West did. The West is still digging out.<br /><br />I'd be more sanguine if China floated, but if they perceive they need to, they will. Right now, they are milking the peg.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-34827529129805295232016-06-06T09:39:36.303-04:002016-06-06T09:39:36.303-04:00Keen is right, the issue now is how that is dealt ...Keen is right, the issue now is how that is dealt with (how 'accommodative' is the state to transfer wealth to households and pvte sector in order to reduce the debt bubble, what policies are taken to stabilize labour market and social tensions, etc.). Pettis has written about this too, very much in-line of what Keen has said.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-39007858758939167032016-06-06T02:26:44.251-04:002016-06-06T02:26:44.251-04:00Tom Hickey,
I am interested in what you think abou...Tom Hickey,<br />I am interested in what you think about what Steve Keen says about China having a private debt problem. Do you think that he is correct? Also, it doesn't seem that you follow Keen very closely, what do you think of his theory about private debt rising by twenty percent over five years as being an indicator of an economic problem?<br /><br />http://www.forbes.com/sites/stevekeen/2016/03/27/the-seven-countries-most-vulnerable-to-a-debt-crisis/#458264f04edcGLHhttps://www.blogger.com/profile/02791463748430739099noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73492557174590484442016-06-05T21:09:43.001-04:002016-06-05T21:09:43.001-04:00This comment has been removed by the author.Ryan Harrishttps://www.blogger.com/profile/04815033054435303399noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-488657303130908962016-06-05T19:42:05.182-04:002016-06-05T19:42:05.182-04:00Real buffer stocks beat export led growth.Real buffer stocks beat export led growth.Randomhttps://www.blogger.com/profile/04445772572707818311noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-22063033726806407172016-06-05T19:31:11.229-04:002016-06-05T19:31:11.229-04:00Excess steel will ultimately be consumed, while an...Excess steel will ultimately be consumed, while an excess in automobile manufacturing capacity is resolved through retooling. I would cite the latter example as a mis-allocation to the extent that those factories cannot be recycled.<br /><br />If steel were a perishable good like strawberries, then that would be another consideration.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-73652218115306412492016-06-05T17:52:05.102-04:002016-06-05T17:52:05.102-04:00What's happening in China is that the governme...What's happening in China is that the government attempting to shift an investment-export led economy to an domestic demand based consumer economy more in line with developed countries. <br /><br />This means that the "supply-side needs to be restructured" in economese. In a capitalist country, workers would just be laid off and they would have to wait on jobs being created for them, maybe. Socialist systems don't work that way, since they are run for the people.<br /><br />China can stand building up inventory to keep workers employed until jobs are ready for them. The rest of the world is fortunate that China is willing to sell overstock at cut-rate prices. They should STFU and take a bargain when they see it.<br /><br />Of course, now that the arms race is on again, China will have domestic use for steel, for example. Chinese military strategy tends to be based on swarming anyway. The US Navy can carry only so much ordinance and address so many targets simultaneously. The Chinese can easily swarm those sitting duck targets without the US being able to resupply in a timely way.<br /><br />The US has no problem putting developing countries agriculture under with subsidized agriculture. Calling foul on China is hypocritical.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-91651679326719737892016-06-05T17:20:02.300-04:002016-06-05T17:20:02.300-04:00Bob that makes sense from the point of view of an ...Bob that makes sense from the point of view of an individual corporation, maybe a sector (if there is shortages of capacity in other sectors then there would be a mis-allocation) but when we are talking about the whole economy there is no such thing as 'excessive capacity'.<br /><br />I think this is what Lew here is referring to (didn't read the original news) and Tom mention of steel is an example.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-34664363107161618462016-06-05T17:07:38.392-04:002016-06-05T17:07:38.392-04:00China's steel production capacity has grown fr...China's steel production capacity has grown from 812 million tons to 1.13 billion tons in the last two years. The next largest producers are Japan at around 110 million tons and US at 85 million. China is a giant in steel.Ryan Harrishttps://www.blogger.com/profile/04815033054435303399noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-79548045384679433502016-06-05T17:06:04.996-04:002016-06-05T17:06:04.996-04:00This comment has been removed by the author.Ryan Harrishttps://www.blogger.com/profile/04815033054435303399noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61739802392600272562016-06-05T16:56:09.384-04:002016-06-05T16:56:09.384-04:00Private businesses are usually not in the habit of...Private businesses are usually not in the habit of producing commodities so they can keep it in storage. Commodities are produced to be sold, hopefully to yield a profit.<br /><br />Steel is a primary resource, so this shouldn't be a waste over the long term. However, when we read articles about excess capacity in automobile production, that is a better example of resource mis-allocation.Peter Panhttps://www.blogger.com/profile/09473311771939167712noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10443972750721036712016-06-05T16:49:37.858-04:002016-06-05T16:49:37.858-04:00Excessive capacity can only mean two things: insuf...Excessive capacity can only mean two things: insufficient demand or the sector being so productive that it has excessive capacity even at full demand.<br /><br />In an ideal economy every sector has 'excessive capacity' while demand is fully supplied, and because there is huge surplus whenever a new product or market is created it reaches capacity quite fast. This would be a society of surplus where everything is widely available, when that starts to happen new organization forms may make more sense instead than the typical for profit corporation with shareholders, as new incentives may start to make sense. The current choice appears to be subsidizing the industry in question so it remains "profitable" instead (take for example certain agro-business).<br /><br />In a economist head the world is upside down, I can't understand what's going in their head to get it so wrong.Ignaciohttps://www.blogger.com/profile/16082008115484199316noreply@blogger.com