Political Posts

[mcliu]

Clearly the sanctions have not worked. For the most part, Russian elites and commoners have stood behind Putin.

 

Ukraine's going to turn into a blackhole of money for the West, much like Iraq and Afghanistan. This money would have been better spent building domestic infrastructure, renewable energy, education and healthcare. The way democracy wins against autocracy is not through wars but to show that the system is superior.

 

Georgia surrendered to Russia after 12 days. Georgia is still an independent country and its infrastructure is largely left intact. GDP per capita has increased >30% since that war. The longer Ukraine fights, the great probability the country will be left in ruins. 

[Castanza]

18 minutes ago, mcliu said:

Clearly the sanctions have not worked. For the most part, Russian elites and commoners have stood behind Putin.

 

Ukraine's going to turn into a blackhole of money for the West, much like Iraq and Afghanistan. This money would have been better spent building domestic infrastructure, renewable energy, education and healthcare. The way democracy wins against autocracy is not through wars but to show that the system is superior.

 

Georgia surrendered to Russia after 12 days. Georgia is still an independent country and its infrastructure is largely left intact. GDP per capita has increased >30% since that war. The longer Ukraine fights, the great probability the country will be left in ruins. 

agree with this take! US needs to get back to its roots of noninterventionism. We have enough problems at home. 
 

M.K. Bhadrakumar (former Indian ambassador) has had a lot of good articles on the subject. 
 

“US went into this with a 4 pillar approach and every single one has failed” 
 

https://www.indianpunchline.com/ukraine-grain-deal-is-a-feel-good-event-but-road-to-peace-is-long-and-winding/

[changegonnacome]

19 hours ago, Castanza said:

agree with this take! US needs to get back to its roots of noninterventionism. We have enough problems at home. 

Agree somewhat…….US foreign policy energy & $ are being wasted in Ukraine…..when the real peer competitor ( China) is rising fast and making moves globally (BRI)….US needs to pivot back to Asia fast……being embroiled in the shit show in Eastern Europe is not smart and I’m sure Xi wakes up everyday hoping more military hardware & US military mind power is getting dumped into Ukraine to fight a fading fake boogeyman enemy like Putin/Russia.

[Castanza]

2 hours ago, changegonnacome said:

Agree somewhat…….US foreign policy energy & $ are being wasted in Ukraine…..when the real peer competitor ( China) is rising fast and making moves globally (BRI)….US needs to pivot back to Asia fast……being embroiled in the shit show in Eastern Europe is not smart and I’m sure Xi wakes up everyday hoping more military hardware & US military mind power is getting dumped into Ukraine to fight a fading fake boogeyman enemy like Putin/Russia.

Yup, the US is stretching itself thin on resources and sentiment. This country is already war weary, recruitment was down 40%, the military has gone woke and people who actually do the hard shit in the military feel ostracized. US needs to take a step back and get its own house in order first. China is a bigger deal long term. And getting drug into a 10-15 year land war is not beneficial in any capacity. 

[changegonnacome]

You cant make it up........this Vogue thing might do more to dis-unite European leaders than Russia dialling back gas supplies.

 

Vogue Photo Shoot for the Zelenskys . Its like something from Wag the Dog if anyone remembers that movie.

 

 

Edited July 28, 2022 by changegonnacome

[Spekulatius]

I do wonder if China is heading for a meltdown. The real state crisis with boycotts paying mortgages , developers going broke (Evergrande) sort of looks like a meltdown to me.  Zero COVID adds to this disaster. The tech crackdown reduces economic growth. Aligning with Putin. “Belt and road” a monumental failure. The list of planned economic policy failures failures goes on and on. Xi as a leader is a disaster. That’s what happens without checks and balances. Maybe not an outright meltdown, but I would not be surprised if China’ economic growth just matches the US going forward or even turns out to be lower.

 

[Parsad]

2 hours ago, Spekulatius said:

I do wonder if China is heading for a meltdown. The real state crisis with boycotts paying mortgages , developers going broke (Evergrande) sort of looks like a meltdown to me.  Zero COVID adds to this disaster. The tech crackdown reduces economic growth. Aligning with Putin. “Belt and road” a monumental failure. The list of planned economic policy failures failures goes on and on. Xi as a leader is a disaster. That’s what happens without checks and balances. Maybe not an outright meltdown, but I would not be surprised if China’ economic growth just matches the US going forward or even turns out to be lower.

 

 

I think they've had enough time to stretch out their liabilities.  This was all supposed to come to a head shortly after the GFC...never did and they've slowly dealt with much of it.  They'll probably get hit now as we're seeing, but they can likely manage the total exposure at this point better than 5-6 years ago.  Cheers!

[Spekulatius]

The GFC was a very different situation and China was not in the center of it. They had 9.8% GDP growth in 2008. They could growth out of problems easily back then. They also had good demographics back then and now it’s rapidly turning worse (1 child policy effects lead to labor force shrinking)

 

Its different now, their economy is growth I’m much slower and their real estate sector has been growing in leaps and bounds since then, as it is the preferred way to store wealth for the Chinese, which they may find out to be a boondoggle now. Thats why I think some are refusing to pay their mortgage. 

Biggest problem is Xi - he is the worst leader since Mao. The zero COVID policy alone is costing them several percent of GDP growth, but I guess that he and other leaders are now so invested in the idea that they can’t let go of it. Same with the common prosperity theme that’s not working out that great either.

 

While it’s difficult to predict China or a meltdown , I think the chances are much much higher now than they were in 2008.

Edited July 29, 2022 by Spekulatius

[sleepydragon]

If Xi doesn’t get “re-elected “, the market is going to turn around.

so far, it seems be still most likely going to get re-elected.

But nowaday, impo,  a lot more Chinese, maybe most Chinese don’t support him anymore (unlike a few years before when he first came to power and vowed to crack  down corruptions). this could make a difference.. i think there could be a possibility that he’s “re-elected “ but eventually sidelined over time.

 

 

[Spooky]

I agree and hope Xi doesn't get a third term - his sharp pivot towards Marxism and nationalism and away from Deng Xiaoping's reforms is bad for China's economic growth long term and the world. Real estate is a huge part of China's GDP (~30%) and it involves significant amounts of leverage. Average people boycotting their mortgage payments leading to government censorship. Seems like a huge meltdown in the works to me. The narrative that China can handle it no problem seems odd to me and I haven't seen any good evidence to this effect - similar to the GFC we don't know the extent of the contagion to the different banks from this fallout and real estate is a much higher percentage of GDP than it was in the US at the time. Combined with most average citizens' wealth being tied up predominantly in real estate and there is a big problem there. Add on top of that zero covid and like 20% youth unemployment and things could get ugly quick. Also, they have crushed what was a vibrant VC ecosystem and replaced it with central / state directed investments in certain industries. 

 

[Lazarus]

I wouldn't count China out simply because of Xi. In any massive economy, business will find ways to ignore dumb rules. And on the macro side, China has huge geopolitical influence throughout Asia and into the Middle East and Africa. Even if the Belt and Road initiative isn't working yet, it's infrastructure and could still bear fruit. 

 

I think the biggest intangible is the ongoing effect of the single child policy and the strong work ethic. One grandchild among 4 grandparents - huge pressure to succeed. The surplus of males compared to females just fuels competition even more among the men. Combined with a 9-9-6 work ethic, their society is pretty much guaranteed to succeed. I'm happy putting a high % of my investments in FXI for the long term.

[sleepydragon]

I follow some Chinese activist’s YouTube channel and there’s almost daily speculation that Xi has already been sidelined, but I speculate it’s more likely wishing thinkings from these guys.

 

I try to be optimistic. It’s not Xi’s China. People will not easily give back what they’ve gotten. 

[mcliu]

If you follow western media, China has been heading into a meltdown every year for the last 20 years.

[Castanza]

1 hour ago, Lazarus said:

I wouldn't count China out simply because of Xi. In any massive economy, business will find ways to ignore dumb rules. And on the macro side, China has huge geopolitical influence throughout Asia and into the Middle East and Africa. Even if the Belt and Road initiative isn't working yet, it's infrastructure and could still bear fruit. 

 

I think the biggest intangible is the ongoing effect of the single child policy and the strong work ethic. One grandchild among 4 grandparents - huge pressure to succeed. The surplus of males compared to females just fuels competition even more among the men. Combined with a 9-9-6 work ethic, their society is pretty much guaranteed to succeed. I'm happy putting a high % of my investments in FXI for the long term.

 

9-9-6 = guarantee to succeed as a society? That's a bold statement. Historically being overworked and having no time for social life is a guarantee for failure. Why would China be any different. That type of environment just sows dissent, anger, jealousy and ultimately corruption as people look for ways to climb the ladder and beat the grind. Humans are humans.

[crs223]

I might just have "grump old man syndrome", but:

 

• US: students focus on race/inequality/mouthing_off/no_homework.  China: math/engineering/beatings
• US: Glued to tik-tok 7 hours per day.  China: working 9-9-6
• US: Theft, drugs, decriminalized.  China: executions galore
• US: guilty are let free.  China: innocent are punished
• US: companies regulated by lobbyists.  China: companies regulated by party
• US: propaganda says opposite political party is the enemy.  China: propaganda says americans are the enemy

 

... we'll see how things go after ~20 years... hopefully US is doing the right thing... for our kids' sake.

 

PS: never been to China... so I'm just imagining what it's like over there.

 

[Dave86ch]

36 minutes ago, mcliu said:

If you follow western media, China has been heading into a meltdown every year for the last 20 years.

 

They are clearly the winners, radio propaganda is never been so loud.

Edited July 29, 2022 by Dave86ch

[sleepydragon]

34 minutes ago, crs223 said:

I might just have "grump old man syndrome", but:

 

• US: students focus on race/inequality/mouthing_off/no_homework.  China: math/engineering/beatings
• US: Glued to tik-tok 7 hours per day.  China: working 9-9-6
• US: Theft, drugs, decriminalized.  China: executions galore
• US: guilty are let free.  China: innocent are punished
• US: companies regulated by lobbyists.  China: companies regulated by party
• US: propaganda says opposite political party is the enemy.  China: propaganda says americans are the enemy

 

... we'll see how things go after ~20 years... hopefully US is doing the right thing... for our kids' sake.

 

PS: never been to China... so I'm just imagining what it's like over there.

 

 

56 minutes ago, Castanza said:

 

9-9-6 = guarantee to succeed as a society? That's a bold statement. Historically being overworked and having no time for social life is a guarantee for failure. Why would China be any different. That type of environment just sows dissent, anger, jealousy and ultimately corruption as people look for ways to climb the ladder and beat the grind. Humans are humans.

996 is not the life style of most Chinese. I will say the life in US is more competitive for an average person. 
996 is the life a someone who work in a high tech company in China, and many US startups employee work the same hours.. just look at Elon Musk… 996 everyday 

 

 

[Castanza]

1 hour ago, crs223 said:

I might just have "grump old man syndrome", but:

 

• US: students focus on race/inequality/mouthing_off/no_homework.  China: math/engineering/beatings Yet all China does is steal IP. Their innovation track record is not great. And anything that has potential to become great is a black box that likely has the CCP parties hand so far up it's ass it eventually is just a puppet. 
• US: Glued to tik-tok 7 hours per day.  China: working 9-9-6 That's a choice in the US. Social media is problem everywhere. You can work hard and make something of yourself in the US without working your life away. Unless you want to live in poverty it's not in China. 
• US: Theft, drugs, decriminalized.  China: executions galore I agree US Judicial System is becoming a joke
• US: guilty are let free.  China: innocent are punished I agree with both but at least we still have due process in the US. 
• US: companies regulated by lobbyists.  China: companies regulated by party Lobbyist model although terrible is still preferred imo . 
• US: propaganda says opposite political party is the enemy.  China: propaganda says americans are the enemy Two party system is doomed to fail in the end. Communist party is guaranteed to fail. 

 

... we'll see how things go after ~20 years... hopefully US is doing the right thing... for our kids' sake. 20 years is probably not a good timeline to view success of a nations. US has a lot of stuff to fix for sure. 

 

PS: never been to China... so I'm just imagining what it's like over there.

 

 

1 hour ago, Dave86ch said:

 

They are clearly the winners, radio propaganda is never been so loud.

 How and winners of what? 

 

1 hour ago, sleepydragon said:

 

996 is not the life style of most Chinese. I will say the life in US is more competitive for an average person. 
996 is the life a someone who work in a high tech company in China, and many US startups employee work the same hours.. just look at Elon Musk… 996 everyday 

 

 

 

I guess I don't know enough about it. But from what I've read and the docs I've seen, it seems like it's not just in tech. It's also factory workers, middle and lower middle class. It seems like people are getting burnt out and they make less comparatively to their counterparts in the US. Both White and Blue collar workers. It seems like the only motivation for doing this is because they have to because they have to support their family. There is nothing positive about that as it's purely desperation. The 9-9-6 also seems to be evolving into forced overtime and 24x7 support. Elon Musk is not a normal human. There are very few people who want to work that much. You average Joe wants to work to live not live to work. That belief has been held by the majority in every country all throughout history. It just reeks of CCP and Corporate propaganda.  Again, just my observation so I could very well be wrong. 

[Spekulatius]

There is another article from the WSJ about the Chinese economy. It seems that the leaders were not too concerned about the property market or decided it’s not worth it risk because of external costs (high housing costs)

https://www.wsj.com/articles/chinas-leaders-arent-sweating-growth-slowdown-11659094452
 

 

I would say this much, housing is highly levered typically and has a huge multiplier effect on GDP. Someone owns all those mortgages in China, presumably banks. It also requires a lot of material, heavy equipment, energy.

 

Yes a lot of people have been predicting a doomsday in China before, but zi don’t think we ever had a confluence or so many factors and a lousy leadership  hampering the economy. Maybe Xi sails into the sunset, but I think this is very wishful thinking. I am not a macro guy generally, so I think the right course is to watch this closely and see which way it goes. I don’t have anything invested in China either so I am more concerned about the externally impacts that the direct ones.

Edited July 29, 2022 by Spekulatius

[Sweet]

Just because commentators have wrongly predicted the decline of China in the past doesn’t mean they are wrong about the serious economic challenges.

 

A country growing at a rapid clip, with lots of inwards investment, and a huge current account surplus, can mask these challenges through sheer momentum.

 

When the economic momentum slows / stops / reverses, economic challenges can become serious economic problems.

For China, the inward investment appears to be slowing, and it may cease to be the workshop of the world, with Western government hostile and suspicious.  The greatest economic miracle might yet become an economic disaster - I think there will be a reckoning.

[Spekulatius]

Pretty good summary on bank frauds and mortgage boycotts. Apparently 70% of the household wealth is stored in real estate but Ci point is that houses are to live in, not for speculation. Chinese do not tend to rent out their investment properties, because they lose value (they become used).

 

I can attest to this as well - was told the same when I was in China years ago.

[Parsad]

4 hours ago, Spekulatius said:

Pretty good summary on bank frauds and mortgage boycotts. Apparently 70% of the household wealth is stored in real estate but Ci point is that houses are to live in, not for speculation. Chinese do not tend to rent out their investment properties, because they lose value (they become used).

 

I can attest to this as well - was told the same when I was in China years ago.

 

China also has two sets of books...so write downs will never be seen by the public.  When your banks are state-controlled, they essentially have a lifeline of $14T a year.  The government isn't asked to intervene, they will intervene.  

 

After GFC, I remember the China experts that Fairfax used to bring to our dinner every year for a couple years.  The real estate bubble and bad loans by developers were known back then.  From what we were hearing, it was certain that China would have a day of reckoning.  Well guess what?  10 years later and we hear about bankrupt developers each year, but somehow no real estate crash.  The handful of times we've seen China real estate prices get volatile and citizens protest, it has been squashed.  

 

I saw the huge oversupply myself in a couple of cities about 7-8 years ago.  But still no crisis!  Still no correction.  And I saw the massive, vacant centers myself!  At the same time, I also saw the massive amount of wealth that China now had.  The technology they possessed.  The megacities that actually had people living in them.  The vehicles and hubbub of commerce everywhere.  

 

With China its like the three monkeys...hear no evil, see no evil, do no evil.  And here are the accounting books you should look at...don't worry about that other set!  Cheers!

[Spekulatius]

@Parsad What is strange about this is that despositors lost their money because a criminal gang managed to get control of this bank in Hanan and then plundered it, leaving the depositors out cold. I wonder how this is even possible. Don’t they have deposit insurance or a bank regulator ?

 

From the report it sounds like the central government pushes down the responsibility to handle all this down to the local government , including what to do on the housing end. that sort of makes sense, considering that China is a big place, but now it really depends on the local government how this works out. Systemic issues also are hard to handle on a local level.

 

I am not really doing anything, just watching, but if the confidence in the banking system cracks, we can see some funny stuff happening. So far, these incidents seem small.

[sleepydragon]

1 hour ago, Spekulatius said:

@Parsad What is strange about this is that despositors lost their money because a criminal gang managed to get control of this bank in Hanan and then plundered it, leaving the depositors out cold. I wonder how this is even possible. Don’t they have deposit insurance or a bank regulator ?

 

From the report it sounds like the central government pushes down the responsibility to handle all this down to the local government , including what to do on the housing end. that sort of makes sense, considering that China is a big place, but now it really depends on the local government how this works out. Systemic issues also are hard to handle on a local level.

 

I am not really doing anything, just watching, but if the confidence in the banking system cracks, we can see some funny stuff happening. So far, these incidents seem small.

I think the local “bank” that got into trouble is one of the many small private banks in China, usually controlled by local business man. They are not insured. They are private banks. And depositors know that. They are offered very high interest products , some depositors traveled across cities to deposit money with them. 

[Spekulatius]

9 minutes ago, sleepydragon said:

I think the local “bank” that got into trouble is one of the many small private banks in China, usually controlled by local business man. They are not insured. They are private banks. And depositors know that. They are offered very high interest products , some depositors traveled across cities to deposit money with them. 

This makes sense.The guy who lost ~$150k was asked to “invest” the money and I was wondering about this , since pretty much everyone should be able to put money in a bank account. So he probably collected money from his relatives/ family and put it in one of those high interest rate account in this private bank and got screwed.

 

Now, I still wonder how the banking system works. Most banks in China are private , since they trade as shareholder corporations. Is banking in China not regulated? No deposit insurance? What happens to depositors money if one of the large banks goes belly up?

Edited July 30, 2022 by Spekulatius