Author: desperado123

Andy Xie: Australia would be next Spain   [Copy link] 中文

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Post time 2012-7-11 17:57:33 |Display all floors
zglobal Post time: 2012-7-11 17:10
Across every part of Australian commerce the country is totally uncompetitive.

Australia has no economy of scale to do any manufacturing.

Other than that, Australia is a very fine place where every thing just works....
I've made my living, Mr. Thompson, in large part as a gambler. Some days I make twenty bets, some days I make none. There are weeks, sometimes months, in fact, when I don't make any bet at all because ...

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Post time 2012-7-11 18:37:38 |Display all floors
lebeast Post time: 2012-7-11 17:00
Yes, I've read his stuff for a few years and agree with what I've read too

He is now mainstream : ...

mainstream? doubt it, at least not as popular as Paul Grugman although they hold opposite opinion about economic management.

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Post time 2012-7-11 19:26:02 |Display all floors
desperado123 Post time: 2012-7-11 20:37
mainstream? doubt it, at least not as popular as Paul Grugman although they hold opposite opinion  ...

well, he appears (or is quoted) in the Sydney Morning Herald and The Age and, I think also the Financial Review, so that is pretty mainstream

(beast ex machina)

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Post time 2012-7-11 19:39:02 |Display all floors
lebeast Post time: 2012-7-11 19:26
well, he appears (or is quoted) in the Sydney Morning Herald and The Age and, I think also the Fin ...

ok, but quotations don't  equalize mainstream right?

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Post time 2012-7-11 19:41:46 |Display all floors
desperado123 Post time: 2012-7-11 21:39
ok, but quotations don't  equalize mainstream right?

he is mainstream

here's an article from 2010 - sydney morning herald:

''My maid just asked for leave,'' a friend in Beijing told me recently. ''She's rushing home to buy property. I suggested she borrow 70 per cent, so she could cap the loss.''

It wasn't the first time I had heard such a story in China. Some friends in Shanghai have told me similar ones. It seems all the housemaids are rushing into the market at the same time.

There are benefits to housekeeping for fund managers. China's housemaids may be Asia's answer to the shoeshine boy whose stock tips prompted Joseph Kennedy to sell his shares before the Wall Street Crash of 1929.

Another friend recently vacationed in the southern island-resort city of Sanya in Hainan province and felt compelled to visit a development sales office. Everyone she knew had bought there already. It's either buy or be unsocial.

''You should buy two,'' the sharp sales girl suggested. ''In three years, the price will have doubled. You could sell one and get one free.''

How could anyone resist an offer like that?

The evidence in official-corruption cases no longer involves cash stashed in refrigerators or starlet mistresses in Versace clothing. The evidence is now apartments. One mid-level official in Shanghai was caught with 24 of them.

China is in the throes of a vast property mania. First, let me make it perfectly clear that calling China's real-estate market a ''bubble'' isn't denying China's development success. As optimism is an essential ingredient in a bubble, economic success is a necessary condition. Nor am I saying that prices will drop tomorrow. A bubble evolves and bursts in its own time. When it is about to burst, I'll let you know.

Expectations of a Chinese currency revaluation are, perhaps, the most important force inflating the bubble. First, it plays to the latent human desire for a free lunch. You just need to exchange your money for Chinese yuan. According to all the experts on Wall Street, you can only gain. The money has been gushing into China.

Second, the revaluation story has kept Chinese money inside the country. The dollar has always been the safe-haven asset for Chinese. This is why Chinese banks had a large dollar deposit base. Of course, anybody who was somebody had dollars offshore. Now all that money is back. More importantly, any income, legal or otherwise, now stays in China.

Flats beat cash

Why would corrupt officials keep apartments rather than cash? Well, according to Wall Street, the yuan is going to appreciate. So holding dollars is out of the question. And why hold Chinese cash when property prices are always going up? The corruption money can be turbocharged in the real-estate market. Only when they are caught do they understand the downside of holding fixed assets.

The massive liquidity waves have prompted Chinese banks to lend as much as possible. One Wall Street tradition adopted quickly in China was bonus recipients signing company checks to themselves. All you need is to report eye-popping quarterly earnings. It is an easier game than on Wall Street: The Chinese government keeps the lending spread wide by fixing both the deposit and lending rates. You just have to lend. The earnings will follow. Might the loans turn bad in three years? Well, I'm not going to give back my bonuses, right?

For a bubble to last you need a force to hold it together when it stumbles. Wall Street kept pumping out new natural or synthetic products to turn debt into demand for assets. Local governments play this role in China.

Future profits now

When it comes to interested parties, Chinese governments are knee-deep in the bubble. They get all the money from land sales. Land values have risen to half of the development cost. In hot spots, land costs more than the development - the governments want to collect the future price gain immediately.

When properties are sold, transaction and profit taxes kick in. Developers pay more levies to the governments than they earn. When developers finally book their earnings, they must put it to work, as good Wall Street analysts would recommend, so they buy land. As land prices are much higher, their measly earnings aren't enough, so they have to borrow. The governments get all their earnings and debt repayments. Can you blame them for boosting the market whenever it slips?

Land obsession is another force at work. China was a rural economy not so long ago. The most important asset was always land. ''Be a government official and become rich'' is a millennium-old Chinese saying. It didn't explain where the money went. It always went into agricultural land. In cities, you only see buildings, not paddy fields. But the buildings sit on land.

Now housemaids are in the market. Who else? Never underestimate 1.3 billion people. In China, they say you should take the shoeshine boy's advice. Many would listen to him.

Welcome to China, the land of getting rich quick.

(Andy Xie is an independent economist based in Shanghai and was formerly Morgan Stanley's chief economist for the Asia- Pacific region. The opinions expressed are his own.)

(beast ex machina)

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Post time 2012-7-11 20:01:04 |Display all floors
Australia is heading for a financial battering but not on the scale of the five poor men of Europe (Greece, Spain, Ireland, Portugal, Italy).  

Australian's as a rule don't like to think much about financial matters, except where it concerns themselves and in the past 20 years or so the general view has drifted far more to the right and towards the self serving greed is good ideal as practised in several major nations who shall remain nameless.  This and the rise of American style expectations (big house, several vehicles, new cars for the kids etc) has left most Australian's in deep debt at a personal level.

Part of this has been fostered by local politicians, who it is fair to say are a bunch of self serving maggots who are only interested in winning elections and not interested at all in good governance. As long as they can say "You've never had it so good" they will continue to fiddle while Rome proverbially burns. The other part has been fostered by the Australian media, shows such as "The Block" and various other property and lifestyle shows have been pushing many Australian's in to what could best be described as a monumental game of "Keeping up with the Joneses" a game most Australian's love to play as they have to have bigger and better than their neighbours in most cases as it's part of the Australian psyche of being "top dog".

Couple this with no manufacturing industries worth talking about, a current account deficit that's blown out to the epic proportions and very low savings by most Australians and a recipe for disaster is sown. However, not all Australian's are quite as thick as they look.  Some here do really prepare sound financial plans for themselves and don't play the consumerism game.  They will be the lucky ones when the mining bubble bursts, and that is likely to burst in 2015 when a lot of major international mining projects come online and the price of commodities will come under considerable pressure with the likelihood of price per ton reductions of more than 25% in many cases, pressure that many miners in Australia will simply not be able to carry due to the high cost of mining in some locations.

In the longer term it's anyone's guess, but I'd say Australia will have a period of several years of real grief and some massive firesales and cheap property from those who have overextended.  

As for lionscub .. how many Australian Aboriginals do you personally know?
Per Ardua Ad Astra

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Post time 2012-7-11 20:37:24 |Display all floors
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