Sunday, July 08, 2012

China is a country that, except for some international mutual funds, I have no investments and I avoid the Renminbi when dabbling in currency trades. That economy is simply too opaque and I'm not sophisticated enough or arrogant enough to tease out the truth. I found this interesting and tempts the bear in me.



Anonymous Anonymous said...

Much of America's investment in its industrialization was wasted. Most schemes didn't pay off at all and we only think of the successes. Private investment is often wasted: witness current times. There is much hyperbole about China. Does it really matter that they've "wasted" a substantial portion of national savings? Stories these days are written through the lens that government is inefficient and through the Austrian lens of "malinvestment". These stories rest on some karma argument in which these "sins" are repaid. Yeah, right. Like all the bad stuff that's happened to bankers. Karma is a bitch only if it is. Fatalism helps. - M

4:53 AM  
Blogger Kim said...

Point well taken M, though I believe the type of wasted investment that Pettis is talking about goes far beyond poor, bad or foolish investments that occur all the time. A similar example in developed economies is the recent housing/credit bubble in the US, UK, Ireland and Spain. The recovery from that mess will be ongoing for a long, long time.


11:48 AM  
Anonymous Anonymous said...

Sure, some of the empty places in China will go to waste, but the over-building in Spain was mostly for vacation homes and that in Ireland was driven by the overseas Irish.

The only real comparison to Chinese style building may be Saudi Arabia; they've been building and are planning whole cities. SA has a lot of people, but they don't have enough of an economy to support them. They rely on oil money to keep it all going - and to support a population that has exploded relative to economic capacity. China has much more of an economy.

US housing is recovering. I don't see much hope for Europe at the moment. M

8:43 PM  

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