21 Dec 2012
FULL MEMBER
- Joined
- Nov 3, 2011
- Messages
- 894
- Reaction score
- -2
Maybe you could try saving all that breath that you wasted huffing and puffing on a 'fat, hopeless, South Indian bronie'. Seriously, the amount of racism on just one site.
‘Rats leaving a sinking ship’ as China’s equity bubble implodes
- Thread starter Foggy_Bottom
- Start date
TheFlyingPretzel
FULL MEMBER
- Joined
- Mar 12, 2013
- Messages
- 1,275
- Reaction score
- 23
- Country
- Location
Welcome to the subcontinent.
Shoonya
FULL MEMBER
- Joined
- Mar 22, 2015
- Messages
- 261
- Reaction score
- -2
- Country
- Location
China's Equity Market looks in deep sh!t at least on charts. Whether there is some element of truth in the above report regarding rats leaving a sinking ship, can easily be verified by FII's daily or weekly net outflows data.
sherin616
FULL MEMBER
- Joined
- Feb 6, 2014
- Messages
- 560
- Reaction score
- -4
- Country
- Location
World economy may slip to 1930s-like depression: Rajan
Press Trust of India | London Jun 26, 2015 11:30 PM IST
The global economy is “slowly slipping” into Great Depression-like problems of the 1930s, Reserve Bank of India (RBI) Governor Raghuram Rajan has cautioned, asking central banks from across the world to define the “rules of the game” to find a solution.
Rajan, among the few to have predicted the 2008 financial crisis, said the problem was a “broader” one and for the entire world, not just for industrial countries or emerging markets. The former International Monetary Fund (IMF) chief economist, who had earlier warned against competitive monetary policy easing by central banks globally, said the situation was different in India on this front, adding RBI was more focused on reducing lending rates to spur investment.
Advertisement
“We need rules of the game in order to effect a better solution. I think it is time to start debating what the global rules of the game should be on what is allowed in terms of central bank action,” he said at a London Business School event here. The RBI governor was addressing a conference organised by AQR Asset Management Institute on ‘The Central Banker Perspective’.
“I am not going to venture a guess as to how we establish new rules of the game. It has to be international discussion, international consensus built over time, after much research and action,” he said.
“But I do worry that we are slowly slipping into the kind of problems that we had in the 30s in attempts to activate growth. And, I think it’s a problem for the world. It’s not just a problem for industrial countries or emerging markets. Now, it’s a broader game.”
The Great Depression refers to a period of severe global economic downturn in the 1930s, which had affected almost all countries. It began in 1929 and continued till the late 1930s, the longest and most widespread period of global economic depression.
Asked about interest rate cuts from an Indian perspective, Rajan said, “I try to shut out market reactions as far as I can. We (India) are still in a situation in which we have to spur investment and I am worried more about that….So, I shut out the asset price reaction and think more about ‘is this going to bring bank lending rates down and, therefore, channel cheaper credit into firms and then they will invest?’ However, the issue gets much more complicated for other markets.”
Rajan highlighted the tremendous pressure for growth, which in turn created enormous pressure on central banks to take action. Seven years after the economic crisis of 2008, central banks had a lot, both during and after the crisis, he said.
In 2005, during his tenure at the IMF, Rajan had written a research paper, ‘Has Financial Development Made the World Riskier’, in which he had said developments in the financial sector had made the world “much better off”. But this development, he said, had also led to the emergence of a whole range of intermediaries and “under some conditions, economies may be more exposed to financial sector-induced turmoil than in the past”.
At the London Business School event, Rajan said: “The question is are we now moving into a territory in trying to produce growth out of nowhere or we are, in fact, shifting growth from each other, rather than creating growth?...Of course, there is past history of this during the Great Depression, when we got into competitive devaluation.”
During the first four years of the Great Depression, global gross domestic product is estimated to have fallen about 15 per cent. The crisis is said to have been begun in the US, with the ‘Black Tuesday’ stock market crash of October 29, 1929. During the Depression, global trade is estimated to have more than halved and countries recorded decline in tax revenues, corporate profits and personal income. Unemployment had soared, with widespread impact on industry and agriculture.
Rajan also highlighted the need for countries to work together on capital flows. “We have to become more aware of the spillover effects of our actions and the rules of the game that we have; what is allowed and what is not allowed needs to be revisited.”
PSBs will need additional capital: RBI
Reserve Bank of India (RBI) Deputy Governor R Gandhi (pictured) on Friday said state-owned banks were “adequately” capitalised at present but would need additional money to comply with global capital adequacy norms in the future.
“Right now, the banks are adequately capitalised. That is right. What we are telling banks and the government is going forward, keeping in view the future growth that is likely to come in economy and also based on Basel-III norms, additional capital will be needed...prevention is better than cure, so if banks are adequately capitalised well in advance, that gives a lot of confidence to banks,” Gandhi said.
| Business Standard Mobile Website
Press Trust of India | London Jun 26, 2015 11:30 PM IST
The global economy is “slowly slipping” into Great Depression-like problems of the 1930s, Reserve Bank of India (RBI) Governor Raghuram Rajan has cautioned, asking central banks from across the world to define the “rules of the game” to find a solution.
Rajan, among the few to have predicted the 2008 financial crisis, said the problem was a “broader” one and for the entire world, not just for industrial countries or emerging markets. The former International Monetary Fund (IMF) chief economist, who had earlier warned against competitive monetary policy easing by central banks globally, said the situation was different in India on this front, adding RBI was more focused on reducing lending rates to spur investment.
Advertisement
“We need rules of the game in order to effect a better solution. I think it is time to start debating what the global rules of the game should be on what is allowed in terms of central bank action,” he said at a London Business School event here. The RBI governor was addressing a conference organised by AQR Asset Management Institute on ‘The Central Banker Perspective’.
“I am not going to venture a guess as to how we establish new rules of the game. It has to be international discussion, international consensus built over time, after much research and action,” he said.
“But I do worry that we are slowly slipping into the kind of problems that we had in the 30s in attempts to activate growth. And, I think it’s a problem for the world. It’s not just a problem for industrial countries or emerging markets. Now, it’s a broader game.”
The Great Depression refers to a period of severe global economic downturn in the 1930s, which had affected almost all countries. It began in 1929 and continued till the late 1930s, the longest and most widespread period of global economic depression.
Asked about interest rate cuts from an Indian perspective, Rajan said, “I try to shut out market reactions as far as I can. We (India) are still in a situation in which we have to spur investment and I am worried more about that….So, I shut out the asset price reaction and think more about ‘is this going to bring bank lending rates down and, therefore, channel cheaper credit into firms and then they will invest?’ However, the issue gets much more complicated for other markets.”
Rajan highlighted the tremendous pressure for growth, which in turn created enormous pressure on central banks to take action. Seven years after the economic crisis of 2008, central banks had a lot, both during and after the crisis, he said.
In 2005, during his tenure at the IMF, Rajan had written a research paper, ‘Has Financial Development Made the World Riskier’, in which he had said developments in the financial sector had made the world “much better off”. But this development, he said, had also led to the emergence of a whole range of intermediaries and “under some conditions, economies may be more exposed to financial sector-induced turmoil than in the past”.
At the London Business School event, Rajan said: “The question is are we now moving into a territory in trying to produce growth out of nowhere or we are, in fact, shifting growth from each other, rather than creating growth?...Of course, there is past history of this during the Great Depression, when we got into competitive devaluation.”
During the first four years of the Great Depression, global gross domestic product is estimated to have fallen about 15 per cent. The crisis is said to have been begun in the US, with the ‘Black Tuesday’ stock market crash of October 29, 1929. During the Depression, global trade is estimated to have more than halved and countries recorded decline in tax revenues, corporate profits and personal income. Unemployment had soared, with widespread impact on industry and agriculture.
Rajan also highlighted the need for countries to work together on capital flows. “We have to become more aware of the spillover effects of our actions and the rules of the game that we have; what is allowed and what is not allowed needs to be revisited.”
PSBs will need additional capital: RBI
Reserve Bank of India (RBI) Deputy Governor R Gandhi (pictured) on Friday said state-owned banks were “adequately” capitalised at present but would need additional money to comply with global capital adequacy norms in the future.
“Right now, the banks are adequately capitalised. That is right. What we are telling banks and the government is going forward, keeping in view the future growth that is likely to come in economy and also based on Basel-III norms, additional capital will be needed...prevention is better than cure, so if banks are adequately capitalised well in advance, that gives a lot of confidence to banks,” Gandhi said.
| Business Standard Mobile Website
thesolar65
SENIOR MEMBER
- Joined
- Jul 3, 2012
- Messages
- 4,922
- Reaction score
- -12
- Country
- Location
World economy may be slipping into 1930s Great Depression problems: RBI's Raghuram Rajan
World economy may be slipping into 1930s Great Depression problems: RBI's Raghuram Rajan - The Economic Times
World economy may be slipping into 1930s Great Depression problems: RBI's Raghuram Rajan - The Economic Times
Beidou2020
SENIOR MEMBER
- Joined
- Dec 3, 2013
- Messages
- 7,857
- Reaction score
- -48
- Country
- Location
Chinese stock market is taking a correction as people are taking profits.
Chinese economy is the number 1 contributor to global growth.
Chinese market will go up after this correction. Anyone that has invested in Chinese stock markets know its volatile due to retail investors being very dominant. It goes up sharply and corrects sharply. It's part of the Chinese stock market.
Stock market does not represent the economy. Chinese economy is built on strong fundamentals with a strong manufacturing base, huge savings and high investment. China is a net creditor to the world and has a current account surplus. With massive forex reserves, China has a lot of room to further invest in its economy. China also has a lot of room for further policy loosening as property market is heavily tightened due to surging property prices and once its loosened, the proper market will be back which feeds into other various sectors of the economy such as steel, glass, cement, auto, furniture markets.
The real bubble here is the Indian economy that is built on a staggering debt level producing very little output.
The debt level in India is significantly underestimated. Debt is okay if its used to finance infrastructure for future investment in the economy but Indian debt is built on consumption that give no future returns. Importing and consuming depreciating consumer goods give very little benefit to the economy, in fact it burdens the economy with debt and no assets for future returns. The weakening of the Rupee from 40 to 65 is proof the fundamentals of the Indian economy is built on fraud as their budget and current account deficits are weighing on the Indian economy.
Indian fundamentals are weakening as the years go by. @RiazHaq did an excellent analysis on the Indian economy where most indicators were pointing to further weakening of the Indian economy which is contrary to the headline GDP 'growth' numbers which are highly overstated.
IMO the entire Indian 'growth' story is built on debt-based consumption. Indian consumers are way too poor to consume goods which is why they have to go into debt to consume. This is very unsustainable. India also relies on the import of Chinese goods as its population cannot afford to consume expensive goods. Without affordable Chinese goods, the only driver of the Indian economy (consumption) would stop. You can only go on for so long on a path of debt-based consumption as you run out of other people's money eventually. Indian savings are not being used prudently.
India has no industrial base and its economy is dominated by services that earn very little from exports. Thats why India run big current account deficits which has led to a big collapse in their currency with very little upside.
India is also a net debtor nation that owes more to the world than assets it owns.
Economic fundamentals are extremely difficult to change whereas a stock market represents just a few companies in the overall economy. Stock market surge in the US only benefitted the big multinationals but the overall economic fundamentals got weaker as companies used low interest rates to borrow money and pay down its debt instead of investing in the real economy. They also used the borrowed money for share buybacks to improve their earnings per share.
Chinese economy is the number 1 contributor to global growth.
Chinese market will go up after this correction. Anyone that has invested in Chinese stock markets know its volatile due to retail investors being very dominant. It goes up sharply and corrects sharply. It's part of the Chinese stock market.
Stock market does not represent the economy. Chinese economy is built on strong fundamentals with a strong manufacturing base, huge savings and high investment. China is a net creditor to the world and has a current account surplus. With massive forex reserves, China has a lot of room to further invest in its economy. China also has a lot of room for further policy loosening as property market is heavily tightened due to surging property prices and once its loosened, the proper market will be back which feeds into other various sectors of the economy such as steel, glass, cement, auto, furniture markets.
The real bubble here is the Indian economy that is built on a staggering debt level producing very little output.
The debt level in India is significantly underestimated. Debt is okay if its used to finance infrastructure for future investment in the economy but Indian debt is built on consumption that give no future returns. Importing and consuming depreciating consumer goods give very little benefit to the economy, in fact it burdens the economy with debt and no assets for future returns. The weakening of the Rupee from 40 to 65 is proof the fundamentals of the Indian economy is built on fraud as their budget and current account deficits are weighing on the Indian economy.
Indian fundamentals are weakening as the years go by. @RiazHaq did an excellent analysis on the Indian economy where most indicators were pointing to further weakening of the Indian economy which is contrary to the headline GDP 'growth' numbers which are highly overstated.
IMO the entire Indian 'growth' story is built on debt-based consumption. Indian consumers are way too poor to consume goods which is why they have to go into debt to consume. This is very unsustainable. India also relies on the import of Chinese goods as its population cannot afford to consume expensive goods. Without affordable Chinese goods, the only driver of the Indian economy (consumption) would stop. You can only go on for so long on a path of debt-based consumption as you run out of other people's money eventually. Indian savings are not being used prudently.
India has no industrial base and its economy is dominated by services that earn very little from exports. Thats why India run big current account deficits which has led to a big collapse in their currency with very little upside.
India is also a net debtor nation that owes more to the world than assets it owns.
Economic fundamentals are extremely difficult to change whereas a stock market represents just a few companies in the overall economy. Stock market surge in the US only benefitted the big multinationals but the overall economic fundamentals got weaker as companies used low interest rates to borrow money and pay down its debt instead of investing in the real economy. They also used the borrowed money for share buybacks to improve their earnings per share.
Luca1
SENIOR MEMBER
- Joined
- Jul 26, 2014
- Messages
- 2,237
- Reaction score
- -3
- Country
- Location
Either you are Gordon Chang disguise as a state department worker, or you are here to troll. It's easy to take China lightly if they are as vulnerable as you think. But reality had proven otherwise.
After years of boosting global growth, developing economies now a major drag on world economy
It was only five years ago, but it feels like a different era. Roger Agnelli, the then chief executive of Vale, the Brazilian mining company, had just taken delivery of the first of an order of 35 Valemax ships, the biggest dry bulk carriers ever built. The vessels, bought primarily to ship iron ore to a voracious China, were so large that each one could carry iron ore sufficient for the steel to build the Golden Gate Bridge in San Francisco three times over.
“We are living through our best days . . . I strongly believe that even better days are ahead of us,” said Mr Agnelli in 2010. But Vale’s fortunes would soon begin to fade. Mr Agnelli was ousted a year later, and China temporarily banned the ships from its ports on safety grounds. In the first quarter of this year, the company reported its worst financial performance in six years.
Vale’s problems are symptomatic of a broader malaise, with emerging markets slumping in the first quarter to their weakest performance since the 2008-09 crisis. China’s appetite for metal ores and other resources is on the wane, Brazil’s once-buoyant economy is in recession, Russia is in crisis and several smaller countries are also suffering declining growth and capital outflows.
The worry is that these problems are no longer contained within emerging market economies; they are spreading to the developed world too. The dependable boost that the global economy has derived from the youthful dynamism of its developing countries for well over a decade — with the exception of during the global financial crisis — has recently become an outright drag. The Bric countries (Brazil, Russia, India and China) — long seen as the world’s growth engine — are now a particular burden.
Emerging markets: Trading blow - FT.com
hellraider
BANNED
- Joined
- Jun 27, 2015
- Messages
- 104
- Reaction score
- -1
- Country
- Location
You seem to have learned economics at Taliban School of Economics along with Riaz Haq.
Foggy_Bottom
BANNED
- Joined
- Dec 11, 2014
- Messages
- 1,053
- Reaction score
- -2
- Country
- Location
We don't take the chinese in china lightly, nor chinese immigrants like you. It's just that one can see them coming a mile away like a car salesman, in both instances.
Kyusuibu Honbu
BANNED
- Joined
- May 21, 2010
- Messages
- 15,305
- Reaction score
- -21
- Country
- Location
Well said,
Chinese Intelligentsia think deception as panacea to all threats faced by China, without considered the fact,the tactic of deception can only be used once.
The are redundantly deceptive and think the opponent will respond the same way.
Last edited:
