Chinas Bust. The Next Financial Crisis

m0nkeycheese on 19/07/2012 - 17:20

Ok, before I start I have no affiliation with this guy nor do I support all his views. Also he is selling something. Doom and gloom sells everyone knows that, but he does have some interesting things to say. Especially regarding the way the Chinese Government perceives business. Ive always wondered how things made in China can be so cheap and the reason is China doesn't care about profits but about politics after all they are a communist society.. They want the power, and they certainly have achieved that!

Watch;
http://www.portphillippublishing.com.au/research/vp/SMSI/n07…

Also, whenever I post anything controversial the comments seem to be directed at me personally. Obviously its expected but please keep any '12yr old' comments to a minimum. FYI this guy is ment to have a pretty good track record for getting things right.

Discuss :D

Financial

Comments

  • cuteduck on 19/07/2012 - 19:25
    -7

    Rubbish and Boring….ZZZzzzz

    • StewBalls on 19/07/2012 - 22:10
      +1

      Just wait for the Michael Bay version, you'll love it…spoiler: there's explosions & shaky-cam! :p

      • m0nkeycheese on 19/07/2012 - 22:44
        +2

        Cuteducks comment was the typical 12 year old comment I was expecting.. I wasn't disappointed :D

        • StewBalls on 19/07/2012 - 22:48
          +3

          Could've been worse…it might've ended in BAM!!! ;)

        • m0nkeycheese on 19/07/2012 - 23:26
          +3

          Haha so true! You know you're a OzBargain addict when u can cross reference threads lol

  • pauldegab on 19/07/2012 - 20:47
    +3

    i subscribe to one of their publishings (used to be two). They have got a lot wrong over the past 24 months. I would have been better off not listening to them on many occassions. They'll promote a lot of their winnings, but not a lot of their losses. They seem to do a lot better when things are on the up in the market, but then again, most of us do anyway.

    • m0nkeycheese on 19/07/2012 - 21:21

      Thanks for the info. Good to know

  • the crocodile on 19/07/2012 - 22:02
    +5

    So this guy has the full revealation of the Chinese economy after 2 cold beers with a mate?

    Profit before people? Does he know of the massive lay offs from the government owned enterprises in the late 1990s?

    Is he aware that the Chinese economies are not just made up of government enterprises, but a significant portion is made of international companies?

    Is he aware of the significant jump in Chinese people's income? has he not noticed the huge number of Chinese migrants and visitors at our shore?

    Not doubting that China does have economic risks and political risks. But to put the matter so black & white will only be successful to convince the naives.

  • [Deactivated] on 19/07/2012 - 22:27
    +5

    I am no expert when it comes to economics, but I can tell you that some parts of this dude's elongated presentation are true. There's also 1 thing that he has forgot to mention - the corruption. Anyway, most of us Asians know whats going on and I have already taken steps to future-proof myself to protect my home, etc. I also cringe my teeth everytime I see Aussies go on strike for better pay. I am sure that they deserve the payrise, but don't go on strike in such a time of uncertainty.

    I can also confirm that China is building cities the size of Shanghai, n fact, around 3 - 4 every year in order to keep the masses employed. These people just can't afford to buy what they build, so most new cities lay dormant. I am not sure how many of you followed the Dubai story of boom to bust - I know it well, I worked there for 2 years. China's fate is pretty much what Dubai's was…

    Do your own research. Neg me if you want and call me a pessimist - I am far from that!

    I leave one statement that you may have heard before - CASH is king! (And buy some USD).

    My 2 cents worth.

    • StewBalls on 19/07/2012 - 22:32
      +3

      I also cringe my teeth everytime I see Aussies go on strike for better pay.

      You should note that Aussies don't always strike simply for better pay, frequently it's for safer working conditions…something that should be very close to the heart of many Asian workers.

      • [Deactivated] on 19/07/2012 - 22:42

        Agree - no arguments about safer working conditions. But generally speaking, most of the recent strikes have all been about wage increase as the main driving force to strike.

        • StewBalls on 19/07/2012 - 22:43
          +1

          The most recent one I can think of was about sweeping retrospective changes to worker's comp legislation in NSW.

          I know that if I was a fireman working in a hazardous role, I would want to know WorkCover had my back if I got hurt…Barry O'Farrell has other ideas though! ;)

        • [Deactivated] on 19/07/2012 - 22:47
          +1

          Coles? VIC Teachers? Nurses? Customs? QANTAS?

        • StewBalls on 19/07/2012 - 22:50

          NSW Firefighters about a fortnight ago…sorry, I don't keep track of every bit of industrial action, I'm not sure when those unions you've mentioned last struck!

    • m0nkeycheese on 19/07/2012 - 23:03
      +1

      I actually got from the video that cash ISNT king. According to what he says the western banks control the gold value so as to make sure people don't loose faith in the US dollar. Imagine if everyone bailed trading USD in favour of gold? The US would fall over. What China is effectively doing is building up their stocks of gold so as to over ride the current manipulation of the prices. Basically whoever has the most gold has the power.

      • [Deactivated] on 20/07/2012 - 08:00

        As I said, don't believe everything this guy tells you. Whilst there may be valid reasoning to go to gold as a safe haven in times of war, etc, the ecomonies of each Country is much more global than those of the past. When 1 currency fails, it brings down a succession of other Countries. In fact, if you read behind the lines, America & Europe are China's biggest debtors in terms of I.O.U. It is not in China's interests to devalue the USD nor the GBP.

        Furthermore, this guy's presentation is skewed around trading in shares, etc linked to gold - and that's speculation!

        He also fails to mention that India is amassing gold as well - in fact, all countries (if they can afford to) will buy gold as a "safety" reserve. Hear of "don't put all your eggs in 1 basket"? This is why any treasury has bonds, cash, foreign currency, and gold reserves.

        Furthermore to this, China has the majority of the worlds most precious material/metal called "black" something (maybe a mineral sand? can't remember the name) which ALL electronics require. So all this hype about gold is bulldust. If they wanted to, all they need to do is to starve all electronics makers of this precious metal and that will gain the same result as the so-called gold stockpiling.

        Anyway, enough said. I am no economics expert. If you guys do a bit of researching, you'll find out that my 2 cents worth (now probably 5c worth) has its reasoning.

        • m0nkeycheese on 20/07/2012 - 08:42
          -1

          I think the other mineral your referring to is platinum. I could be wrong tho

        • StewBalls on 20/07/2012 - 10:57

          It could be platinum, a mate of mine was telling me recently to sink money into that instead of gold…I'm more a bricks & mortar man myself though! ;)

          It could also be Thorium. China has significant reserves AFAIK (as do Australia & India), and they are leading the way in molten-salt reactor technology.

        • [Deactivated] on 20/07/2012 - 12:43

          http://en.wikipedia.org/wiki/Rare_earth_element

          scroll down to the section where it mentions China…Self-explanatory.

        • StewBalls on 20/07/2012 - 13:08
          +1

          Forgive me, but I fail to see how we made the leap from "the worlds most precious material/metal called "black" something (maybe a mineral sand?" to "Self-explanatory" with a wiki link to 14 discrete rare-earth minerals???

        • nakedposition on 27/07/2012 - 21:18

          If you don't understand economics, why are you making statements to try and convince others?

          I really doubt there is any material/metal called "black" something, which is in ALL electronics. Electronics were around before REE's joined mass consumption. Copper and Silicon would probably be in almost all, if not all electronics.

        • cdeep0 on 28/08/2012 - 12:29

          ..the black metal is "rare earth material" a combination of few minerals..

    • huntress_love on 20/07/2012 - 12:18

      I dont think USD is the way to go as there's no standard and considering the debt, it's going to fail, its just a matter of time.

      try gold instead!

  • retiredfeline on 19/07/2012 - 22:39
    +1

    Drat, I came here hoping to see some risque images before the post got deleted. ;)

    • m0nkeycheese on 19/07/2012 - 22:45

      Bust.. haha love it

      • StewBalls on 19/07/2012 - 23:53
        +2

        That's the trouble with Aussie financial stuff…it's either BAM or bust! ;)

  • StewBalls on 19/07/2012 - 23:53
    +1

    Hmm, not saying that I believe everything this guy is saying is 100% correct, but he's red-flagged (no pun intended) a lot of the same inconsistencies about China's involvement in the Aussie resources boom that have been nagging at me for a few years now. I've got a few mates in mining, they've told me a few stories that have had me scratching my head at times, wondering where's the cheese? :o

    Great watch m0nkeycheese, thanks! :)

  • scotty on 20/07/2012 - 09:58
    +3

    ARGH MC! Did you just get us to watch a long propaganda video with a sales pitch at the end, i.e. an advertisement? It starts with a beer chat between two mates with no much data/reference to back up these claimers (other than "Angang steel" is loosing money). 1 in 4 state business are loosing money? 3 in 4 are MAKING money then? I've seen way better doomer videos and yes I believe China has its problem — no boom lasts forever, but this guy's presentation is just unconvincing.

    It's fine if it's just a economic-doomer video (like a zillion others that have been posted over the last decade). The warning is fine — don't put your full trust in our resource boom and do brace for slow downs. Don't spend more than you have, don't borrow more than you can pay back, etc…

    Then starts the sales pitch. "Let me tell you something so you can increase your wealth 10 fold… but buy THIS BOOK first."

    Hmm.

    • StewBalls on 20/07/2012 - 10:15
      +1

      I've actually spent a fair bit of time in Liaoning province, so I'm going to ask my friends there (and expat local mates) about some of this stuff. Some of them are in engineering/manufacturing so hopefully they will have some perspective on it. AFAIK, none of them work for Angang, but despite being a big place China is a small world, they might have heard some rumours! ;)

      As you say, it's a lot of doom & gloom propaganda for a sales pitch, and you wouldn't trust all of it except for the smart generic advice you've highlighted; but it really does raise the same questions that a lot of people have been asking about the resources boom. I'm lucky, I've insulated myself very well from these sorts of things (investment wise), but his advice to look at the big picture is a fantastic take-home message for potential investors.

    • m0nkeycheese on 20/07/2012 - 10:25
      -3

      Yeah its a sales pitch, thats why I mentioned it at the start. I just think he has some possible good theories to where the market is headed. The whole point was to get peoples opinions on the situation in China. The fact is Gold keeps going up, in times of economic distress that always happens. The difference in today is that never before has there been such a windfall between the amount of money printed to the amount of gold backing it up. After all, the cash you have in your bank is MENT to be a representation of gold right?

      Im neither for or against this guy… But I reckon its a pretty good topic to discuss :D

      • scotty on 20/07/2012 - 10:45
        +1

        After all, the cash you have in your bank is MENT to be a representation of gold right.

        I thought we have switched from gold standard to fiat currency ages ago? And even with gold standard it still builds on people's desire on that shining precious metal. I am not a economist and have no idea how things work, but I always wondered — what happen if gold is no longer desirable? The only visible gold in my household is mine and my wife's wedding bands. Maybe I just have no idea why people artificially put so much value on gold…

        As StewBalls has said, yes this guy gave some good advice. Just that his presentation lacks sufficient info to back up his claims. They might be true, but why should I be convinced?

        Then the RED ALERT ads. Arghhh.

        Indeed the world economics feel like a crashing plane now. While the treasurers and economists around the world are trying to tune parameters to make it a safe landing (or prolong the inevitable), I feel some of those doomsayers are just running around trying to sell their parachutes to individuals.

        • m0nkeycheese on 20/07/2012 - 11:02
          -1

          Yeah your right 1971 was the year they switched to fiat currency my bad.. I think gold has more value when it comes to manufacturing electronics.

        • StewBalls on 20/07/2012 - 11:25
          +2

          Indeed the world economics feel like a crashing plane now.

          IMHO it's more like the old whack-a-mole game…it's always up in one or more places, then beaten down to pop up in others! I tend not to worry too much about it, things always right themselves…it's just the natural ebb & flow of human nature. :)

      • nakedposition on 27/07/2012 - 21:23

        Gold does not always go up in times of economic distress.

        http://www.gold.org/assets/images/content/investment/Demand_…

        1 use of gold according to the World Gold Council for 2010 and 2011, Jewellery by a reasonable margin too.

  • [Deactivated] on 23/07/2012 - 22:07

    Dude it's propped up by chinese foreign reserves. It's a state owned company.

    Who cares, it will pay it's debt.

    This guy in the video is smoking pot.

    It's like how the US keeps printing money even though it's in debt.

    Same shit, ALL LEGAL!

    ALL LEGAL!
    ALL LEGAL!
    ALL LEGAL!

    Who cares about profits, it's just greedy bastards out there that don't realise there is over $100 quadrillion in the economy. Earning $100k a year from investments is nothing. That's just a small pint of the beer. That guy is stupid. China doesn't care about this shit, they just keep building more and more. Funding it with FX reserves.

    Now what?
    America does it too, except it uses debt instruments.

    Who cares about economic growth? As t -> 0, g -> 0.

  • StewBalls on 28/07/2012 - 08:22
    +2

    I had a chat to a mate from Shenyang who watched this video after I sent the link…a long educational chat in fact!

    Long story short, this guy is on the money with a few of his observations, but his vision of doom & gloom does not take into account the extremely significant differences between Chinese & Western banking, corporate, investment & governmental structures.

    Angang steel is well known, and being a pseudo-govt business it's not a suitable representative of Chinese corporate profitability overall as it is almost totally geared toward sustainable local infrastructure building. Using Angang as a model is like trying to measure the profitability of the local shire council.

    There was a lot for me to absorb, but clearly this guy is missing a lot of key factors in his arguments. The most glaringly obvious omission/error is that the one-child policy in China is actually creating a workforce shortage; leading to the outsourcing of labour to other (cheaper) countries for many manufacturers! I hadn't realised this myself, but despite the huge population the OCP has resulted in a major shift in the available labour market…to the point where they're not creating jobs willy-nilly for zillions of people as implied here, they're actually struggling to fill positions & keep factories open!

    Take home message: Most Chinese people are expecting a moderate downturn in China's economy, but not for the reasons the guy in this video is discussing & nothing like the bust this guy is predicting either…he just hasn't looked at it the right way!

    • iseenya on 31/07/2012 - 15:44
      +1

      Thanks, Stewballs - you're bringing valuable perspective that was badly needed in this discussion.

      • StewBalls on 02/08/2012 - 17:36
        +1

        No probs, I actually learned a lot from this myself…my head is still swimming with some of the stuff he told me about business structures in China! :)

  • rehab on 30/07/2012 - 08:35
    +1

    I used to subscribe to these guys for years.

    Word of warning, if you decided to subscribe to their free daily email, you will get spammed every day mercilessly.

    They even start sending you personalised emails where they accuse you of being financially stupid for not taking up their offers.

    Also, they are incredibly negative about everything. I gave up after 4 years of them predicting a massive property crash every week.

    Makes for interesting reading, but make sure you don't give them your real email address

    • m0nkeycheese on 30/07/2012 - 18:02

      Sounds like good advice!

    • ozb-442 on 02/08/2012 - 08:44

      Wow.

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