The China Situation

by Wes Bridel on January 9, 2012

in Economic Updates

This China economic update video helps you understand what is going on in the silver and gold markets so that you can be more fully informed to decide what place these metals should have in your portfolio.  This video will discuss what’s been going on over the last 3 months.  We’re continuing a  series of videos which can be found here.

Today, we’ll look at factors in China which could have a huge affect on the world economy and markets such as:  1)  The markets are wanting China to bail out Europe, but China’s not willing to do so without heavy concessions from the west,  2)  China announced plans to liquidate US Treasury holdings (this is something we’ve been warning about for years),  3)  The 15% Top Line debt of China is deceiving, what’s behind the curtain?,  4)  Economic Signs in China?  Shipping, Maccau, & Commodity Orders…,  & 5)  Chinese Generals are getting aggressive towards their neighbors and even the US, is this is a sign of trouble on the horizon?  All that and more in the video below…

We hope you enjoy this video.  If you have not seen The Coming Storm video, you should do so immediately to have a fuller understanding of what lies ahead.  You can do so for free by going here.  Please let us know what you think of this presentation or if you have any questions, leave them in the comment section below.

This is the ninth in a new series of Economic Update Videos. You can watch the entire series of videos at:  1) European Debt Crises, 2) European Debt Crises 2, 3) MF Global,  4)  Gold & Silver Pt 1,  5)  Gold & Silver Pt 2,  6) Gold & Silver Pt 3, 7)  World Economic Update., 8) World Economic Update 2, 9) The Chinese Economy, 10) Inflation or Deflation Concerns?, 11) Inflation Concerns Pt 2, 12) US Economic Update, &  13) US Economic Update 2.

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{ 2 comments… read them below or add one }

CptWayne 02.05.12 at 10:48 pm

China’s debt is internal and is about 150% GDP. This includes contingency debt. So, the question is: Is it sustainable. Yes it is. Our debt is about 100% GDP, but, the US, does not include our contingency debt, such as future Social Security and Medicare/Medicaid payments. Also, we owe 35% of our debt to other folks. Japan is 200% GDP. But like China, it owes itself and is also sustainable. You are dead wrong about sustainability if they do not depend solely on in-country consumption. So, they must grow. Construction is a major part of China’s economy. China has enough of US Treasury notes for redemption to repay their banks. This is really more of a problem for the US if no one buys those redeemed notes. Both the US and China have created a tremendous moral dilemma for themselves by bailing out the banks without a complete restructuring of the banking system, i.e., for us -getting rid of the FDIC.

Wes Bridel 02.06.12 at 12:57 pm

Thanks for leaving the comment Wayne. I agree with alot of what you said, but think you’re “dead wrong” on a couple things. I actually can’t recall the specific point I made that you’re arguing with (and hate watching myself to figure it out), so I’ll leave a quick snyopsis here.

China’s got a big debt bubble that’s going to burst. You seem to think that it’s a positive thing that such a large percentage of their economy is building buildings that no one needs? You’ll have to explain further your thinking there because it’s way off base. Surely, you know about the ghost cities and all manner of other building that has been going on there. They keep building because that’s the way the authoritarian government can keep people working. These people would otherwise throw the bums out. However, there’s a limit to this as the debt piles up and the cost of housing skyrockets. They’re dealing with this now as it comes to a head.

That’s not a long term big problem for China. I view China today as being very similar to the US in 1930. It’s got a depression in front of it. The froth needs to be cleared out. But it has an incredibly bright future. The US went into a depression after 1930, but then went on to have the best economy in the world for decades afterwards. That’s my model fro China going forward (don’t remember if I mentioned that in this particular video, but I’ve stated this many times in the past).

Japan was able to grow it’s massive debt in the past because of two things: 1) it exported more than it imported, & 2) it’s people saved and bought JGB’s.

Those two things have come to an end. Imports are now more than exports and the aging population is now withdrawing more than saving. Japan’s debt problem will cause major change there. I think it will probably not go as badly for them as it will for the US for many of the reasons mentioned above, but it’s still a series issue that will have to be dealt with. And Japan has done an absolutely terrible job dealing with it’s problems over the last 20 years (which got them in this mess), so they could certainly make a bad situation worse since that’s all they’ve done over the last two decades.

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