Print

Please login or register.
1 Hour 1 Day 1 Week 1 Month Forever
Login with username, password and session length

[Owlbread]

Does anybody know where I could find a map of Japan showing where support for the Japanese Communist Party is strongest?

[MetalSlimeHunt]

I searched a bit, and I doubt you'll find one, the JCP is just too small.

[10ebbor10]

On a side note, isn't Shanghai sinking, or is that simply something I remember incorrectly.

[RedKing]

Yes, and it has been for at least a century. Funny thing happens when you pack gigatons of steel and concrete onto what is essentially a river delta: it sinks.

Though actually, the bigger problem is groundwater extraction. A city that big extracts tons of water from the water table every day, which when the soilbase is clay, means a fair amount of mass over time. Estimates are that the center of Shanghai has subsided 2.6m since the first survey in 1921.

[evilcherry]

Yes, and it has been for at least a century. Funny thing happens when you pack gigatons of steel and concrete onto what is essentially a river delta: it sinks.

Though actually, the bigger problem is groundwater extraction. A city that big extracts tons of water from the water table every day, which when the soilbase is clay, means a fair amount of mass over time. Estimates are that the center of Shanghai has subsided 2.6m since the first survey in 1921.

The same problem exists for every city on riverside plains.

[RedKing]

Yes, and it has been for at least a century. Funny thing happens when you pack gigatons of steel and concrete onto what is essentially a river delta: it sinks.

Though actually, the bigger problem is groundwater extraction. A city that big extracts tons of water from the water table every day, which when the soilbase is clay, means a fair amount of mass over time. Estimates are that the center of Shanghai has subsided 2.6m since the first survey in 1921.

The same problem exists for every city on riverside plains.

True, but most cities don't have 80 million people in the metro area.

[RedKing]

And we're back! Couple of big items going on in the Pacific Rim these days, even without kaiju and jaegers.

1. The Chinese stock market is going down in flames, but then that's after a year or so of going UP in flames, so it's not all it appears to be. There's been some discussion in the Euro politics thread, and we can continue that here.

First off, converting your money into cans of baked beans is a great idea; those are fucking delicious - money is not delicious. Maybe you shouldn't convert all of your money into baked beans at once, but still. Foreign investment in China exceeded foreign investment in the USA in January.

FDI != stock investing.

FDI is foreign companies (or venture capitalists) sinking money into partial ownership of a company. Which can take place through a stock purchase, but there are other avenues. More to the point, it's not speculative. You don't buy a company to flip the stock and make a quick buck, you buy it use its assets/markets/brand/technology to make MORE money. Some of that FDI contributed to the stock rise, no doubt, but that's the part that's SUPPOSED to. Which, based on the numbers I'm seeing thrown around, would have accounted for roughly 4% of the total stock market gain, if every bit of that FDI was stock purchases on the Shanghai.

The vast majority of that bubble is Chinese-made and Chinese-owned. Which just underscores the tremendous economic power of the Chinese and why reforms in China have to happen SLOWLY. The sheer size of the population is a force-multiplier for all kinds of effects, good and bad. Chinese fads can make or break entire industries and foreign economies without ever intending to.

Case in point: Chinese milk consumption. One of the lowest rates in the world, milk consumption per capita has been steadily rising since 2000, from about 11kg per year to about 25kg per year by 2008 (by contrast, the US rate was 253kg per year in 2007. Finland tops the world, at 361kg per Finn per year. And yet still find room to drink all that beer and vodka....)

But despite that modest increase -- the equivalent of an extra 1.2 ounces of milk a day -- the net effect was to revitalize the dairy industry in several countries, including the US (where milk consumption has been on the wane for 30+ years, such that US milk consumption is half of what it was 30 years ago). Coupled with Chinese distrust of their own domestic milk production (thanks to several high-profile incidents of melanine poisoning), milk exporters are seeing record numbers.

And all this because milk is seen as a healthy food and a sign of affluence in Chinese culture.

2. The TPP! It's not just for Americans (and it's not for the Chinese yet). So far the only members are Brunei, Chile, New Zealand and Singapore. But once the US, Japan, Korea and Australia sign on and ratify it, shit is going to get real.

 

[RedKing]

Ok, you've convinced me that the Chinese stock market crash could be localized to China and Southeast Asia. What would it take to increase the chance of this turning into a fully-fledged global meltdown?
Purely for research purposes of course

So, three things (the first, concerning; the second, fucking terrifying):

1. Hong Kong and Taiwan are in that weird sort of position of being China-but-not-China. The Hang Seng closed down 6% today alone. The HK and the Taiwanese markets ARE fully integrated into the world economic landscape and DO have foreign investors. A lot of that FDI we discussed (I don't have the numbers in front of me, and some of them may even be "state secrets") is from Taiwan and Hong Kong, because they don't have some of the same restrictions on investment that say, American, European, or Japanese investors do. So there is a potential contagion to those two countries, which could in turn trigger a cascade effect.

2. If enough people lose enough money and get pissed off enough about it, there could be civil unrest. This is the nightmare scenario for every government of China ever. And why they're so slow in trying reforms. And why you're seeing a confusing and somewhat counter-productive government response, which has ranged from attempts to freeze the market, to halting all IPOs for the next six months, to ordering all state-owned enterprises to not sell any shares, to government purchases of suffering stocks to slow down the crash, to editorials in government-sanctioned media outlets accusing foreign governments (specifically Japan) of "meddling" in China's markets.

Widespread civil unrest in China would have a serious negative effect on the Chinese economy, which would have major implications on the export economies of...well, just about everybody. Chinese imports plummet, rest of the world's economy goes to shit in months.

The thing is, trying to keep the stock prices where they were is unsustainable and a bad idea. They need to have an exit strategy for a lot of the retail investors so they can get out without losing TOO much money.

Here's the thing: the government *wanted* the population putting money into the stock market to make it grow. The problem is that everyone raced in, in a chance to get rich (if you think America is the land of "get rich quick" schemes, you ain't seen nothing like China) and overheated the market. It's like "Hmm, I wish our campfire was bigger. Hey, I'll let anyone who wants to be warmer throw a stick on the fire and stand here too." And then 800 million sticks later, OH GOD WHY IS EVERYTHING BURNING??!

The real concern domestically for China is that people were doing some rather foolish things (not unlike Americans at time), such as taking out loans to get more money to put into the stock market. Now their stock is worth way less than the loans, and they're deep in debt. Not everyone was doing this, and traditionally stock investing has been seen as something more akin to gambling than economics. So the average Chinese family historically hasn't held much stock, in the same way that a lot of Americans play the lottery, but only the truly stupid and/or desperate go cash in their entire paycheck and blow it on Powerball tickets.

But there's some question as to whether that might have changed over the last year, when money was seemingly pouring from the sky and people were getting rich overnight. The allure of 150% annual returns might have prompted risky behavior from a traditionally fiscaly conservative population.

If a lot of those families did in fact cash in hard assets and leverage themselves to go all-in on the Shanghai, this could have long-lasting effects.
But if (as I'm thinking and hoping) it was mostly the twenty-something IT crowd (who have a lot of money, comparatively speaking, and are looking for ways to spend it), then it won't be as bad for the country overall. Sucks hardcore for them, but they have time to rebuild. GenX'ers didn't get burned as bad in the US dot-com bubble in part because we didn't have the money to really sink into it, and because we were all probably too stoned or slacker to get involved.

In the long run, this could be a good lesson for a Chinese population still learning the nuances of market capitalism.

3. And then there's just the good old-fashioned market panic. Even though the Chinese market crash should be mostly self-contained, even seasoned investors in the West aren't always aware of conditions. They just read a story, see "$3.5 trillion dollars lost on Shanghai market in last month" and go "Holy shit, I better move some of my money into bonds and commodities. And maybe pull out of emerging market funds too, those countries just don't know what the hell they're doing". And there seem to be a lot of Western outlets publishing shallow, sensationalist coverage of this because they'd rather have click-bait revenues than calm the markets down.

Markets are fundamentally about herd mentality. Learning to predict the herd can make you a fortune. Misreading the herd can get you trampled. And panicking the herd gets EVERYBODY trampled.

[FearfulJesuit]

Before people start making the inevitable comparisons to America in '29, I'll just point out that the economy had already been in recession since late 1928, and the stock market crash was just when everyone realized it. That's not what's going on here, so I would tentatively hope that it won't be as bad.

[mainiac]

2. If enough people lose enough money and get pissed off enough about it, there could be civil unrest.

Of the 1,300 million people in China, 50 million own any stocks.

I hate to sound like the heartless evil capitalist here, but -- you pays your money, you takes your chances. This isn't manipulation or ethical wrongdoing like the Wall Street crash, this is the laws of economics asserting themselves. The vast majority of these "gains" were hot air and dreams, and they're evaporating.

I am so proud of you, son.  It's the words I've been waiting for so long.

[RedKing]

Yeah, I don't see any comparison to '29. Chinese economic growth in the first quarter of 2015 was still at 7%, a rate most countries would be dancing in the streets to have. It's the slowest Q1 growth in six years, but people who start doomsaying from that need to be slapped around with a large trout.

My take is that the Shanghai index will flatten out around 2300-2500, a bit above where it was a year ago. There's enough intrinsic worth in the market to give it a floor there. This is a market correction, not an economic implosion.

2. If enough people lose enough money and get pissed off enough about it, there could be civil unrest.

Of the 1,300 million people in China, 50 million own any stocks.

And in most countries, 50 million unhappy people would be enough to topple governments. Granted, China isn't most countries. But that's still potentially enough to cause a problem. Unrest breeds unrest. If millions are protesting in the streets, the PRC has the unenviable task of silencing the protests without resorting to another Tiananmen. And if they don't silence the protests, people see that and think "Well, I didn't lose any money on stocks, but I'm upset about X, so I'll join in the protest" and then you start getting a real problem.

As I said, stock trading in China is mostly pai gow for rich kids. But those kids are social media-savvy. It would be fascinating to watch QQ and Weibo to see what people start posting (and I have no doubt the PSB already has a battalion of people doing exactly that).

[mainiac]

Well I heard on NPR that the median investor had $15k.  Not chump change for a middle income country but certainly not "rich kid pai gow".

The stock market in China just isn't as big a deal as in the US.  Despite having a much higher household savings rate the total value of stocks cap at, IIRC, 40% of so of the US market cap before the bubble burst.  It's a lot like when Obama tanked the price of gold to fuck with the gun owners, an economic sideshow.

[RedKing]

Well I heard on NPR that the median investor had $15k.  Not chump change for a middle income country but certainly not "rich kid pai gow".

The stock market in China just isn't as big a deal as in the US.  Despite having a much higher household savings rate the total value of stocks cap at, IIRC, 40% of so of the US market cap before the bubble burst.  It's a lot like when Obama tanked the price of gold to fuck with the gun owners, an economic sideshow.

$15K in China is pretty upper middle class. Average household income is still only about $10-11K, and there's still a major divide between rural and urban. The big thing is that cost of living (thanks in large part to state controls) is still quite low, as is inflation (which is kind of stunning considering over two decades of double-digit or near-double-digit growth). So all those increases in urban wages translate almost entirely to disposable income.

The thing is that projections have China's middle-middle class increasing dramatically over the next ten years. They're moving into their version of the 1950's, with mass consumerism and many rural families urbanizing and getting amenities like a TV, a car/scooter and a refrigerator for the first time.

Spoiler (click to show/hide)

Of course, there's a strange irony that's a bit unprecedented here. America's (and Europe's) postwar consumerism boom was accelerated in part by using Japan (and later Taiwan and Hong Kong) as our offshore factory, supplying American demand for cheap TVs and cars. But in order to supply a country the size of China with all the mass produced crap they're going to want, you'd have to outsource that to...China. Which in turn will bring more people into the middle class, which will increase the demand, in a feedback loop. At a certain point, it's not even about price points (because rather quickly, you're going to be able to get cheaper goods made in Vietnam/Bangladesh/etc, which is already happening in some industries) it's about production capacity. If 1.3 billion Chinese all decide they want a new fancy toothbrush, you can't offshore that production out of China and keep up with demand unless you turn several small nations into nothing but toothbrush factories. Kind of makes me wonder if that's why China has such an interest in Africa -- Chinese tweens in 30 years might be walking around with iPhone 18 retinal implants made in a factory in Tanzania by exhausted, suicidal Africans.

To be honest, China hitting its consumer boom phase kinda scares the hell out of me for what it means for resource utilization globally. Forget peak oil, we could start hitting peak everything.



One question some may be wondering is, "What about India? Isn't their population just as big? Why don't they have this kind of disruptive effect?"
The short answer is, India just doesn't have their shit together enough to be an economic disruption. Yet.
They're undergoing many of the same transitions (increasing middle class, increasing urbanization, better access to health care and education) that China has been undergoing, but they have two major obstacles that China doesn't:

1. Decentralized government. China suffers from this to some extent as well, but more in the implementation side of things. Directives still come from the top down, and are at least complied with in letter, if not in spirit. India, on the other hand, has a fairly weak federal system in which the state governments often ignore or outright fight policies from New Delhi that they disagree with, especially if the political party in control at the state level is opposed to the party in control of the federal government.

2. Heterogenous population. India has more social divisions than you can shake a stick at. Caste, religion, linguistic, ethnic, ideological, historical, etc.  China is 98% ethnic Han and has been a unified state for most of the last 2000 years.

There are a lot of other obstacles such as uneven infrastructure, staggering poverty in large areas, rampant corruption, etc. but most of those either stem from the two items above, or are actively exacerbated by them.

[Sheb]

Re: government, I'd also point at incentive. China's governor might disrespect Beijing's order now and thenbut further promotion depend on pleasing Beijing, in large part through fostering growth. There is no such incentive for Indian local governments.

[RedKing]

Yeah, that goes back to that whole "unitary government" vs. "decentralized government". Or perhaps more accurately, bureaucracy vs. democracy.

Officials in China are beholden to Beijing for support, not voters. Although it's a lot more complicated than that, and there are regional powerbases that exist in contrast to Beijing (Chongqing being the most prominent one, but also Guangdong and Shanghai). But in general, if you're a Party official in China, you need to tow the party line, at least in appearance if not in actuality. And they're trying to crackdown on the ones who aren't complying with new anti-corruption efforts. These have been well-received by the general population, even if there's been a bit of blowback from the fact that some pretty high-ranking officials have been found to be corrupt.

Anti-corruption efforts in India immediately run smack-dab into partisan politics. Any attempt by Congress Party to punish allegedly corrupt BJP officials is decried by the BJP as baseless slander, and vice versa when the BJP is in power. And then if the official is from one of the non-national parties (common in places like West Bengal), it opens up even more divides. And parties are extremely reluctant to reveal and punish corruption in their own ranks, because of the PR problem.