What's The Next Bubble?

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Jason
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Re: What's The Next Bubble?

Post by Jason » Tue May 14, 2019 11:42 am

Augustus wrote:
Mon May 13, 2019 5:59 pm
I would not invest in China. They have huge amounts of bad corporate/overall debt, most economic statistics are a total sham. It's gotten so bad that most people with money are trying to funnel it all out of the country using things like bitcoin and smurfing (money laundering). The government recently cracked down on that and sent a bunch of people to prison. Capital flight is usually a bad sign.
I recently lost a RE deal to Chinese investors not being to move funds out of the country. Or at least that was the explanation. It happened around the Chinese New Year's. Someone asked what animal was at the center of this year's celebration. I said it "Must be the donkey because my ass just got fucked." That didn't go over too well.

There was a never a discussion of China's political system changing. It's experiment with capitalism was always perilous - an autocratic political system temporarily removing some fetters over one aspect of its society. It was never fully capitalistic in our sense - IPO's were always state controlled, there cannot be grass roots protest against things like environmental issues. It has done better than India which is nominally a democracy.

chenda
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Re: What's The Next Bubble?

Post by chenda » Tue May 14, 2019 3:06 pm

I believe Beijing's official line is that democracy wouldn't work in a country as huge as China, and whilst this is obviously self-serving they might have a point. India, as the only comparable case study, suggests not, which many have argued has basically been a failure as a modern state. Its kinda like having one government by election for the whole of Africa or the whole of the Americas and then some.

Western commentators seem a bit reluctant to fully acknowledge China's immense economic achievement. We get loads of Chinese tourists where I live and you think they grew up hungry during the cultural revolution, their parents were probably illiterate peasants. 40 years later they are taking package holidays to Europe and quaffing wine served to them by white people. That must feel fucking awesome.

I expect China will evolve its own political system which need not emulate western models. Indeed its perhaps more likely the west will emulate China to some degree.

Jason
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Re: What's The Next Bubble?

Post by Jason » Wed May 15, 2019 8:20 am

The problem with India as a democracy is that notions of equality conflict with its entrenched caste system.

Frontline has a documentary on the trade war. I found it to be informative. When their government wants something, it gets done. Fast. And they no longer emulate us. They are doing it their way and the market dependence appears to be turning in their favor. They are four times our size and their middle class is the size of our entire population.

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Kriegsspiel
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Re: What's The Next Bubble?

Post by Kriegsspiel » Wed May 15, 2019 8:40 am

In the interview with Charlie Munger I posted, he talks about China copying Singapore:
Munger: Who would have guessed the Chinese Communists would have improved their big country as much as they have in the last 30 years?

Interviewer: Did that surprise you?

Munger: Well, they didn't the first 20 years. They had the Cultural Revolution. It was crazy. And now they have one of the greatest success records in the history of mankind. I don't know about you, but I did not predict it.

Interviewer: So what is the secret to China's success?

Munger: They copied Singapore. Remember, the Chinese leader said I don't care whether the cat is black or white, I just care that it catches mice. And they copied a very wonderful, famous Chinese man in Singapore, and lo and behold, they found the right Chinese leadership outside China, which amuses me. But he was Chinese. Look at the way it worked, in the whole history of the world, no nation that big has advanced that fast. And they did it by having a bunch of poor people save half their income. They didn't use the wealth of the rich world to get ahead, they used the savings of poor people. I am a huge admirer of what the Chinese have accomplished. And if you ask me who is the one man who did the most for China, it was Lee Kuan Yew of Singapore. They copied him.

Jason
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Re: What's The Next Bubble?

Post by Jason » Wed May 15, 2019 9:15 am

I have to agree with Munger. Once you get past the human rights violations, the vomit inducing fish, the hacking of US tech companies, the one child policy and the death clouds making their way across the Pacific, they have done a remarkable job.

chenda
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Re: What's The Next Bubble?

Post by chenda » Wed May 15, 2019 10:07 am

Right, along with India's intense religiosity and devisiness, and huge linguistic and cultural diversity.

Singapore's semi-free dictatorship may ultimately be copied by Chinese reformers. Free of corruption and crime. They don't shoot dissidents in Singapore, they bankrupt them with libel suits. This is much more civilised.

Capitalism
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Re: What's The Next Bubble?

Post by Capitalism » Wed May 15, 2019 4:41 pm

I think that we are going to see some sort of deflation/hyperinflation at some point. The interest rates can't be lowered much further without consequences. It can cause deflation, which again can lead to hyperinflation. This will end up crashing currencies.

Also, if rates are getting higher than they are now (which is a public goal for FED + ECB), asset prices should drop as investors will see bonds as more attractive than already inflated stocks (the thesis is here that investors money will flow towards the place of the best risk/reward based return). The nearly only option would then be to print money to try and save the economy once again by high inflation, which will crash existing currencies.

Buying bitcoin is might not such a bad idea after all...

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Jean
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Re: What's The Next Bubble?

Post by Jean » Thu May 16, 2019 2:23 am

As anyone bought monero yet?

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