Which will go bust first, Italy or China?

Well, of course, I pose the question but as per usual I haven't a clue as to the answer.  I have been forecasting (oh alright then, guessing!) both events for some time now but today I can offer you a very much more professional summary of the China problem courtesy of Mr. Jeremy Warner in The Telegraph.  What I can say with some conviction is that if Italy goes bust because of its debt it might produce an exceedingly loud bang in Europe but if China goes 'tits up' the entire world will feel some massive reverberations!

This is a relatively recent phenomenon; up until the global financial crisis, China’s debt problem was nothing to get too concerned about. But then came Lehman’s and the consequent collapse in Western demand. To compensate, and keep its own growth on track, China launched a fiscal and monetary stimulus of unprecedented size and scope. Since then, growth in debt has far outstripped economic output, rising from around 170pc of GDP at the time of the crisis to more than 300pc today.[My emphasis]

By and large, I am exceedingly doubtful about Trump's tariff war with China but given the current strength of the American economy my guess is that 'Uncle Sam' can take the collateral damage more steadily than China.  All those 'zillions' of Chinese people, former peasants or the sons of peasants, have been given, for the first time ever, a taste of 'the good life' and they will be exceedingly pissed off if it collapses all around them.

……………………………………………………………………………..

A corrective, or perhaps I should say, another opinion, this time from A E-P in The Telegraph who suspects that China, under its strict, or shall we say, dictatorial system, will march steadily on through any trade crisis that results from the current tariff 'war'.  What do I think?  I'll tell you when it's over - I should live so long, my life already!

 

Comments

[Cuffleyburgers]

And there was me thinking China ws the number one owner of US T Bills.

[thud]

China will find a back chanel way to appease Trump and if he doesn't go all out on belittling them he will have a significant victory under his belt, but face and all that stuff does count here.

[David Duff]

Maybe, baby, ooops, sorry, I mean 'Thud' but check out my "corrective" above.

[Pat]

Whatever actually happens, China will put on a face of all going well until it absolutely can't. Of course that attitude will hinder China in the never ending process of correcting mistakes. Hence ultimately China will fall behind or blow up.
Prediction as to timing is impossible as warning signs are/will be deliberately hidden.

[Cuffleyburgers]

Aep is a somewhat more perceptive and intelligent commentator than warner.
It's been obvious for years.

[Loz]

AEP is the mother and father of all "cry wolfers"! He was blathering on about the Euro taking down the EU for nearly a decade now, and China taking the world down due to a credit bubble. None of whatever he predicts ever happens! And things happen that he fails to predict, like Blighty voting leave.

To predict what's going to happen next you'd be safe going with the opposite of whatever he predicts.

His non-predictive commentary is better, like this absolute must read about the left's peculiar, conflicted posture ref the EU ...

https://www.telegraph.co.uk/business/2018/09/19/british-lefts-strange-love-affair-right-wing-austerity-europe/

The right's claim that the EU is a socialist project is as deluded as the left's affinity for what is a neoliberal, ordoliberal, Libertarian, call it whichever, project and ethos.

He talks that palpable fact out admirably.

But an oracle he is not.

SoD

[Bob]

An inevitably more integrated world motivates both the right and left. In general the current difficulty with globalization is that money moves across borders much more easily than people. At the moment globalization can rightly be seen as a financially elitist, neoliberal project; thus the rise of nationalism. It can also be seen as a mechanism to increase social cohesion and decrease conflict. The challenge is finding ways to make the new economy more equitable. Nationalism is an attempt to achieve the opposite, which makes it both politically popular and the most self-defeating answer.

For example rural voters put Trump in office largely based on his nationalistic rhetoric. This is what they've gotten in return:

https://www.fb.org/news/farm-bureau-details-trade-tariff-impacts-on-agriculture

https://www.upi.com/Top_News/US/2018/09/19/Farmers-struggle-to-legally-import-workers-threatens-US-crops/3711537355230/