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    imatworkdarnit2Hamilton Nolan
    6/06/16 5:02pm

    So, are they going to revalue those cities full of empty apartment buildings? Or, possibly, they will be selling off of their international real estate holdings to pay their debts?

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      XrdsAlumimatworkdarnit2
      6/06/16 5:10pm

      Given the terrifyingly efficient manner in which the Chinese government is likely to address the domestic fallout from their crash, a lot of rich Chinese citizens might finally use those safe deposit boxes in the sky they purchased in Vancouver, San Francisco, Toronto and NYC. Assuming they can get out in time.

      But yeah, for the other international real estate holdings it’ll be a fire sale, which means property values will fall in certain areas of the U.S.

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      DaJawnimatworkdarnit2
      6/06/16 5:20pm

      The question is how will a fluctuation in the $/RMB, coupled with a fire sale of Chinese-held real assets affect the US economy. Upside for consumers, downside for holders of real assets...

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    ArkHamilton Nolan
    6/06/16 5:08pm

    Chinese meltdown? Hell, we’re eight years out from the last crisis. We’re just about due for another one, especially since that whole experience resulted in jack shit as far as financial reform goes.

    Auto loans? Student loans? Derivatives? Housing Part Deux? Who knows!?

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      ╰(　´◔　ω　◔ `)╯< Woke and BokeArk
      6/06/16 5:10pm

      All I know is that I emptied my retirement account and used all that money to stockpile ammunition and beef jerky.

      And I’m all out of beef jerky.

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      Flying Squid (I hate me more than you do.)╰(　´◔　ω　◔ `)╯< Woke and Boke
      6/06/16 5:11pm

      Don’t worry, ammunition is filled with essential minerals.

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    The noble houseHamilton Nolan
    6/06/16 5:02pm

    Who owns there debt? Us? That would be hilarious, they own ours we own theirs no one owns themselves.

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      Flying Squid (I hate me more than you do.)The noble house
      6/06/16 5:04pm

      The Chinese actually only own a small percentage of U.S. debt despite what a lot of politicians claim. The vast majority of U.S. debt is held by the U.S.

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      Violent FellowkneesThe noble house
      6/06/16 5:09pm

      “China owns us” falls into the category of “one of those bullshit things that was pushed for political purposes.”In reality, China owns about $1.25 trillion of US government debt, but America owns about $1 trillion of Chinese government debt. Weird huh.

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    Violent FellowkneesHamilton Nolan
    6/06/16 5:15pm

    This is how China does business- 1. You apply for a 50-year land lease to build something. 2. If you know the right people you get approved, regardless of market need. 3. The government lends you the money to build the thing. 4. The thing fails.

    China has an overcapacity problem- they built too much shit according to the above-super-corrupt system, (and probably not enough of some other shit that they really needed) and lent all the money out to do it. But this feels like a problem that will fuck China and its people, and drive down the value of their currency and exports. While this is likely to be a negative for the few amount of US industries that export to China, it is likely to be a positive for American consumers and service industries. It will probably be bad for Africa because of all the Chinese investment there and also to countries in China’s neighborhood that export heavily to China. But for the US, it could be great.

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      Brian, The Life ofViolent Fellowknees
      6/06/16 5:50pm

      It could put a kink in the higher-end west coast real estate market, too. The wealthy Chinese have been buying houses here like crazy for the last couple years.

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      55_mercuryViolent Fellowknees
      6/06/16 5:51pm

      The US does a HUGE amount of business with China. For example All US car manufactures sell way more cars there than in the US. Its not just the US, but practically every single western country seeking to cash in on China’s growing wealth. Aircraft. Robots. Agriculture. Industrial equipment, and so on.

      If China’s economy crashes it will be the worst economic situation perhaps since the 1930's or even worse.

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    Dr.Strangelove'sChildHamilton Nolan
    6/06/16 6:00pm

    The financial repercussions of this don’t scare me nearly as much as a huge population of single military age men with no prospects for work or marriage.

    That type of demographic pressure could, coupled with a financial collapse, lead the Chinese government to engage in a “Short, Victorious War” to distract them from their systemic problems.

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      PotbellyJoe and 42 othersDr.Strangelove'sChild
      6/06/16 10:35pm

      I attended a summit of world business leaders about 13 years ago as effectively a note-taker. This was item #1 on their list of fears for the stability of the world; the 70+ million gender gap in China.

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      PoodletimeDr.Strangelove'sChild
      6/06/16 11:18pm

      Oh, Lord, that’s a horrible thought. Let’s hope it doesn’t come true!

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    ObtuseLautrecHamilton Nolan
    6/06/16 5:11pm

    We do business with a couple of vendors in China. Every one of them is so enamored with the fact that they’re now a ‘democracy’ and have found out how awesome ‘capitalism’ is that they can’t stop telling us how their company is the next Microsoft and that they’re personally the reincarnation of Carnegie or Rockefeller. It reminds me of the bubble run-ups of the 90s, early aughts and ‘08. The new Chinese business establishment is soooo excited to have access to stuff (including wealth) that only used to be available to top party leaders that they’re practically giddy with affluenza. Reminds me of the guy who has the super expensive car but has no idea how to care for it. Hope we won’t be alone in salvaging it from a ravine in Shermer, Illinois.

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      Count SmorkulaObtuseLautrec
      6/06/16 5:58pm

      You just reminded me of my teenage crush on Mia Sara.

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      ChanObtuseLautrec
      6/06/16 6:20pm

      I have lots of family in Hong Kong (all of it, in fact), and China fever is a surprisingly prevalent disease even among the educated circles there.

      I’ve had people with varying amounts of skin in the game brag to me about things like WeChat being bigger than WhatsApp, while forgetting that WeChat only exists because it allows government snooping. And “China owns the US because of all the debt,” while forgetting that China does not currently lead in R&D—a critical means to economic growth.

      I’ve learned that “access to a market of 1.4 billion people” really means “a large, cheap labour pool to produce gadgets that they couldn’t afford anyway.”

      China’s middle class is becoming a huge thing, though, so the competition and innovation are probably coming sooner than later. I just try to view it without rose-tinted glasses.

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    sour duckHamilton Nolan
    6/06/16 5:04pm

    I can’t wait for someone to tell me to buy gold because of this.

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      Cam/ronsour duck
      6/06/16 5:11pm
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      XrdsAlumCam/ron
      6/06/16 5:22pm

      The funniest part of that scam is he’s selling numismatic gold to the suckers instead of gold bullion.

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    ╰(　´◔　ω　◔ `)╯< Woke and BokeHamilton Nolan
    6/06/16 5:08pm

    What does this have to do with the price of tea in China?

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      Topher╰(　´◔　ω　◔ `)╯< Woke and Boke
      6/06/16 5:13pm

      Obviously, the price is going to crash, badly. A crash like a bull in... some kind of... store that sells really fancy tableware.

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      ╰(　´◔　ω　◔ `)╯< Woke and BokeTopher
      6/06/16 5:15pm

      The term is a Bull in a Crate and Barrel.

      Why some fool put a bull in each of those is beyond me.

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    ninjaginHamilton Nolan
    6/06/16 8:12pm

    I don’t often agree with you, but you are making a very salient point in this post in here. Where I differ is in the assumption that because economies are more interconnected today, we will catch China’s cold. China has effectively insulated non-Chinese economies from the problems because of strict ownership rules. It’s a double-edged sword. They made the rules to pipeline most profits and growth in value to the state, but they have also pipelined most of the risk to themselves as well. So yes, I agree that China’s troubles don’t bode well for the global economy, but there’s more insulation from those troubles than one might assume if we were talking about Canada, for example. The hardest-hit people in China are the ones that don’t buy much in imported goods. The well-heeled will cut back a bit, but the party will protect them and the state will fudge the books to make it work out. I ould expect China to want to keep riding on the dollar (and buying those bonds!) for a long time to come.

    No reason to be scared, chicken little.

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      Poodletimeninjagin
      6/06/16 11:28pm

      I’ve gotta agree with you on almost all points, except for the snotty remark to HamNo. That’s the interesting thing about hybrid totalitarian economic systems — their freakiness means that fewer other economies should be affected. They have been, to use a La Boheme analogy, taking in each other’s laundry for some time now. Once Mimi finally keels over, much of the damage should be limited to the closed artist’s circle that represents the essentially closed Chinese economy.

      Taking in outside money and then using it in singular and unusual ways (building empty resort blocks, enriching Party higher-ups, buying real estate in other countries at hyper-inflated prices) does not a full, rich, vibrant modern economy make. The upside is, I hope, that, as you suggest, the damage to other countries will be limited to a few sectors where folks are over-invested in Chinese instruments, have focused too much of their energy into selling into the Chinese market, or are banking on the insane payday of wealthy Chinese folks moving their money abroad.

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      BCDFGninjagin
      6/07/16 11:13am

      There’s insulation, but I think it’s not quite the way you put it. There is a high degree of protectionism about ownership of equity in Chinese companies, and a lot of state assistance of Chinese companies. That prevents foreigners from ever being held responsible for the activities of nouveau riche Chinese investors’ speculation.

      On the other hand, the PRC is the number one global destination for foreign direct investments: factories being the classic example, but also its real estate, warehousing and transport sector.

      In a meltdown of the Chinese market, I wouldn’t worry so much about the first order effects (losses of asset value). I would worry —a lot— about the effects of a prolonged crisis in China on things like supply chains and shipping, because a problem there is a shit sandwich that the rest of the world will have to bite.

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    portland1Hamilton Nolan
    6/06/16 4:59pm

    But the analysis comes in part from Goldman Sachs. Doesn’t that mean it’s evil and false? Weren’t we all pretending that they were WORSE THAN HITLER AND ANYONE CONNECTED TO THEM IS AN ENEMY OF THE ONE TRUE SAVIOR? Huh? No? Yes?

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      Aelricportland1
      6/06/16 5:04pm

      I’d say that they are familiar with financial crises

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      phunkshunportland1
      6/06/16 5:10pm

      You can say a whole lot of things about Goldman Sachs, but you cannot say that they are bad at what they do, because they’re not. I think we can all agree with that.

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