Drudge Retort: The Other Side of the News
Monday, November 15, 2021

"Real estate is an important sector of the Chinese economy. It accounts for about 30% of demand," said Yellen in a taped interview with CBS' "Face the Nation" that aired on Sunday. "And a slowdown in China, of course, would have global consequences. China's economy is large, and if China's economy were to slow down more than expected, it certainly could have consequences for many countries that are linked to China through trade," she added to the network.



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A couple three months ago when Evergrande first starting having issues, China was saying that the problem would be contained and not allowed to spread beyond Evergrande.

Either that was an intentional misrepresentation, or it indicates how little China is able to do to contain the Evergrande problem.

Or both.

#1 | Posted by LampLighter at 2021-11-15 12:55 PM | Reply | Newsworthy 1

The China property implosion will be contained to the extent that securities (both equities and debt) from Chinese property developers has remained in the hands of Chinese investors. Some of those stocks and bonds leaked into the wider capital markets, through specialized mutual funds and by risk-seeking private equity types. In other words, the average Joe or Jane will not feel anything in their 401 (k) accounts, since nearly all of the funds available to US retail investors excluded these issues.

The problem that will affect non-Chinese economies is that in the coming year or so a large amount of personal wealth of Chinese folks will disappear when the Chinese property bubble pops. Chinese home buyers typically put down a large percentage of the purchase price of the apartments they bought, and that cash is gone, so there will be millions of Chinese whose personal wealth and standard of living will both shrink dramatically. The shrinkage will affect demand for goods and services (much limited to the Chinese mainland) but will affect demand for foreign autos, other imports, international travel and will affect the ability of Chinese nationals to send their children to the US for college. It will also affect the ability of Chinese nationals to send their investment yuan offshore, since that money will be gone, so the market for condos in Canadian cities, or some investment property in the US will soften.

I'll wager that the domestic pain will be bad for China, but their ability to supply the rest of the world will be limited. Things will be bad for the central government, bit Mr. Xi and his criminal pals are well-insulalted from the heat that will be put forth by the guy on the street in any Chinese city...

#2 | Posted by catdog at 2021-11-15 01:16 PM | Reply

At what point will the entire global economic structure come crashing down? Because I really do not want that to happen in my lifetime. The amount of misery and suffering that will be experienced by average Americans will be nothing less than catastrophic.

#3 | Posted by moder8 at 2021-11-15 01:17 PM | Reply | Newsworthy 1

See, we told you Biden can't run an economy!


#4 | Posted by jpw at 2021-11-15 02:01 PM | Reply | Newsworthy 1

MODER8-given today's mob mentality, it will be civil war, especially when food gets scarce. I am amazed that the U.S. debt hasn't already triggered that collapse, but that 'ole Black Swan is winging it's way towards us.

#5 | Posted by Yodagirl at 2021-11-15 02:04 PM | Reply | Newsworthy 1

Yodagirl: To my own surprise I think you are correct. It would be civil war. This is not the 1920s or 1930s when Americans as a whole were willing to suffer through the Great Depression out of faith that better days would be returning. We feel entitled to have it all, and entitled to have it now. And if we can't, Americans will be willing to kill one another. We are NOT the Greatest Generation.

#6 | Posted by moder8 at 2021-11-15 02:13 PM | Reply

We keep talking about China, while S.E. Asia is there
to take up the slack, while India is there to help take
up the slack. We don't want to be dependent on China,
move our industry demands out of China...

Same reasoning applied to OPEC during the 70's and 80's...

We should be acting now, while they are still on their
knees... It is exactly what they would do.

#7 | Posted by earthmuse at 2021-11-15 02:25 PM | Reply

We don't want to be dependent on China,
move our industry demands out of China...

Corporate America doesn't give a shitake about what you want.

They want more profits.

The way they do it is China with no labor or environmental laws.

That is all that matters to them.

We are at the point in the US that shifting production back here would cause massive misery as for the bottom 90% of America wages have failed to keep up with inflation even with many households having TWO wage earners. Moving production here would cause the price of everyday goods to soar past the affordability of many US households. It would require the top 1% to take less of the profit and that just ain't gonna happen. They need their fifth vacation mansion.

#8 | Posted by Nixon at 2021-11-16 08:55 AM | Reply

Big Guy's 10% is in jeopardy.

#9 | Posted by visitor_ at 2021-11-16 10:41 AM | Reply

"We should be acting now, while they are still on their
knees... It is exactly what they would do."

What's this "We" stuff?
It's not our capital to globalize or re-home.
It belongs to multinational corporations.
Our government is purposed to serve them, not the other way around.

#10 | Posted by snoofy at 2021-11-16 10:43 AM | Reply | Newsworthy 1

#8 | Posted by Nixon

Profits rule - That is agreed BUT they are moving out of China very actively or rather not expanding in China and developing new production elsewhere. Even companies like Tesla are not expanding in China. Some of the problem with doing business in China is you have to provide all your secrets and technology to the country via your local partner which holds at least a 51% stake in your enterprise in China.

I don't know if prices would surge THAT much overall. They would no doubt go up and Electronics would most likely surge though. So wages would absolutely go up. China is just catching on to the automation we are capable of. In the past they were focused on putting all people to work. Note there is massive investment in chip making happening in the United States right now. Intel alone is building 2 plants and investing 20 billion in them.

#11 | Posted by GalaxiePete at 2021-11-16 02:05 PM | Reply

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