The United States lost the trade war Trump started with China

[VCheng]

You did not say that. But clearly anyone who knows what is happening in the US, knows that there is no meaningful infrastructure investment happening in that country, WHY?. And if you have lived and travelled in that country you would know that its infrastructure is collapsing. Even the most ardent Right wingers who always bleed red/white and blue will say that. Look at what happened to the electric grid in the South especially Texas. It collapsed. Look what happened in the North East a few months ago - electric system collapsed for days/weeks in places like CT, MA and elsewhere.

In Pakistan we complain about a few hours outage here and there. In the US major areas of the country like the NorthEast loose electricity for days because the infrastructure collapses. It is old, its is falling apart. Travel to Michigan - it is a war zone. Detroit and its outlying areas. Flint, Philly, you name it. Dont look at the small bubbles in and around cities - the majority of America is crumbling. BTW I am not cheering for it. I hope America gets its act together as I have always believed that a strong America is as important for the World as a strong China. It keeps both honest.

America's infrastructure is decaying — here's a look at how terrible things have gotten

America's infrastructure is desperately in need of investment, according to the American Society of Civil Engineers.

www.businessinsider.com

US investments usually happen in cycles when large leaps are planned and funded. It will be worked out soon enough, no worries.

 

[TigerOfMysore]

Do you have any facts to contribute to your wall of text? Assets depreciate over time, this is offset by revenue and amortized over many years of use with maintenance. Capital investments that do not generate sufficient returns consume state funds for upkeep and results in non performing loans and contribute to deficit spending. China’s share of non performing loan far exceeds any other nation on earth.

In 2020 Chinese banks officially disposed off 466 billion dollars in NPLs..unofficially who really knows...

2020: Chinese banks dispose $467b in non-performing assets

China's banking sector disposed of 3.02 trillion yuan ($466.6 billion) in non-performing assets in 2020.

news.cgtn.com

learn economics it’s more useful than Mandarin.

You are the analyst of a web forum with Colonel badging so I will bow to your command of economics.
The only point I was making is to argue VCheng's comment that China can bask in all this glory of building infrastructure but the bill will be due once maintenance kicks in.

Unless the Chinese are pre-grade level buffoons which I dont think they are, they will always undertake projects that either have strategic value or have a financial model to generate funds (and the sum of this value does not always need to be net zero). Though I am sure there are some dumb vanity project too that creep through such as their over-investment in housing. For example a dam will generate power (but also provide more land for agriculture - intangible value over time), which is a source of rev. A road will generate tolls so rev, but also connect people or cities to drive greater economic activity and goods to market (intangible value). A rail system will generate people and goods transport so rev (plus allow for military movements - so strategic for defence). I fail to understand why it is so difficult for people who live, breath and shit the West, can ever think a brownie or in the crude Western vernacular a yellow can do things right. I have been hearing your type sing China's demise for decades, and when someone shows them a mirror (your own warts) or asks them to look outside the window to China, they revert to ad-hominems like "learn economics" or something more primitive, etc. (maybe, just maybe I know a bit more about economics than lead on).

In terms of China's NPLs - I think that was a spectacular move on the part of the Chinese. Their banks will now have a clean balance-sheet. Where China's washed off $400B (though cleaned off the balance sheet does not mean those are the losses to the economy), US washes off the housing crisis, the defence $3trillion accounting misplacement, the auto-industry pension plans - I can go on, like money grows on trees. The only way it gets away with it is because of the Greenback's reserve status. That my friend will end faster than you think, and then we'll see where the US standard of living goes to. Because of some people's blind hatred or their own hubris, they fail to see their own cracks, because they are too busy pointing at others imperfections. It is also rich for someone like you to talk about toxic balance sheets. The US is a master of balance-sheet toxicity, so much so we can never be certain how toxic US Banking balance sheets are, because of their masterful gymnastics in hiding these bad assets in exotic instruments nestled layers deep in complex products. Things that eventually blow up in a bang!!!

I hope the US focuses a bit more internally to fix its warts before it is too late.

BTW I still think learning Mandarin is a worthwhile pursuit. Maybe you and I can agree - on learning economics in Mandarin.

 

[Hakikat ve Hikmet]

It will take some time, but this ship will change course to more welcoming waters. It will be fun to see how the Chinese pay for maintaining all they are building in the coming decades. Building infrastructure is easy. Maintaining it is not.

The China that tamed the Hwang Ho river via sheer human hard work would be able to maintain her staffs too! But, how far she'll succeed in foreign expeditions is another question.....

 

[VCheng]

The only point I was making is to argue VCheng's comment that China can bask in all this glory of building infrastructure but the bill will be due once maintenance kicks in.

For major infrastructure projects with long life spans, the maintenance costs can be several times the initial costs, indeed. With changing demographics, China will have a huge issue to deal with in the next few decades in this regard.

I have been hearing your type sing China's demise for decades,

Oh you mean like predicitng USA's demise like this?

The only way it gets away with it is because of the Greenback's reserve status. That my friend will end faster than you think, and then we'll see where the US standard of living goes to. Because of some people's blind hatred or their own hubris, they fail to see their own cracks, because they are too busy pointing at others imperfections.

The China that tamed the Hwang Ho river via sheer human hard work would be able to maintain her staffs too! But, how far she'll succeed in foreign expeditions is another question.....

As I said above, how China will be able to maintain all the infrastructure built will be the real test. And we shall see the results in a few decades.

 

[SQ8]

What really matters is moving US chip consumption domestic or in countries where the US is priority. That really has proven to be an achillees heel of industry here.

 

[TigerOfMysore]

For major infrastructure projects with long life spans, the maintenance costs can be several times the initial costs, indeed. With changing demographics, China will have a huge issue to deal with in the next few decades in this regard.


Oh you mean like predicitng USA's demise like this?




As I said above, how China will be able to maintain all the infrastructure built will be the real test. And we shall see the results in a few decades.

I will never say nor want the demise of the US. I will however say that there are stronger indicators of a decline of US wealth and power than there is of the decline of China. That that is based in facts and are clearly visible in a number of indicators. From social fabric (right vs left struggles) the lack of trust in the government, the corruption in government, the declining education system, the bloated federal budgets and military spending, the social support programs and their erosion, the judicial system and its inequity. Each of these areas and more are clearly getting worse. So yes I will say the US is declining, but I'll base that on facts, not a wish or desire.

People who say China has been declining or about to implode have been saying that now for nearly 2 decades. The opposite seems to be happening. So those views are often predicated on wishes and desires, even when data is showing just the opposite (china's economic and scientific output is increasing, while there is more social cohesion and a sense of optimism in China). So I think you are being a little harsh on me when you say I am doing the same when it comes to the US.

 

[VCheng]

I will never say nor want the demise of the US. I will however say that there are stronger indicators of a decline of US wealth and power than there is of the decline of China. That that is based in facts and are clearly visible in a number of indicators. From social fabric (right vs left struggles) the lack of trust in the government, the corruption in government, the declining education system, the bloated federal budgets and military spending, the social support programs and their erosion, the judicial system and its inequity. Each of these areas and more are clearly getting worse. So yes I will say the US is declining, but I'll base that on facts, not a wish or desire.

For each one of areas that catch your eye, there are more things right that you ignore. USA is a pretty open society and all the public debate that highlights the faults also speak to the fact that the system continues to apply itself as needed to correct and improve things. That is the beauty of it that eludes most outside observers.

People who say China has been declining or about to implode have been saying that now for nearly 2 decades. The opposite seems to be happening. So those views are often predicated on wishes and desires, even when data is showing just the opposite (china's economic and scientific output is increasing, while there is more social cohesion and a sense of optimism in China). So I think you are being a little harsh on me when you say I am doing the same when it comes to the US.

Just one word: demographics. china is going to contract before it achieves all its claims, much to the disappointment of many.

 

[TigerOfMysore]

For each one of areas that catch your eye, there are more things right that you ignore. USA is a pretty open society and all the public debate that highlights the faults also speak to the fact that the system continues to apply itself as needed to correct and improve things. That is the beauty of it that eludes most outside observers.



Just one word: demographics. china is going to contract before it achieves all its claims, much to the disappointment of many.

I will agree with both your points. US has an open society that is given to self correction. And one hopes they can go through this process and self-correct. The mistake US has made in the last few decades is the belief that they will remain a uni-power in the world. That mindset built a ton of hubris in their policy makers. This led to dumb moves in Afghanistan and Iraq and other places. This hubris also leads them to this mindset that they cannot accept an equal. That is just plain dumb thinking. US needs to find how it works in a non-adversarial way in a world where there are multiple great powers. I hope the US finds a way to compete through its own innovation and strength of character and culture. That is where the US strength lies not its military. By giving the US military an over-sized role, the US finds nails all over the world to hammer. The military industrial complex of the US though overtly seems to be its strength, I would argue is a long term liability on so many different levels. Unfortunately the US of recent years is relegated to some third rate pirate mindset country that sees every objection, a nail to beat down. That is not sustainable for the US and it will fail, against the head-wind of a world that will stiffen its resolve. In large measure China is an example of it as are others.

Chinese demographic bomb is a factor you rightfully point out, that can cause issues. I think China will undertake two steps in this. One they'll open themselves to immigration and become a more inviting system. They have already started this (small steps): through their efforts in Hong Kong and mainland China by attracting some of the best minds from around the world in science and technology. I see them doing more of this. Secondly as you are aware they have loosened the child limit. Though I do agree it will be interesting to see how they navigate this challenge. I am confident they will manage.

 

[dbc]

Unless the Chinese are pre-grade level buffoons

No it’s worse they are an authoritarian regime with no checks and balances.
China has a history of excesses going back many centuries be it dynasties, the nationalist or communist - they have repeatedly invited tragedies due to their own lack of self restraint.

US washes off the housing crisis

Once again you are completely out of your depth.The bail out wasn’t free money it was paid back with interest.

As The New York Times reported, August 2012, the Treasury decided itwould send all Fannie and Freddie profits into the general fund. Since then, the bailout has been paid back with an additional $58 billion in profit, again reported by SOMC. Fannie remitted $147 billion, and Freddie paid $98 billion.

What Was the Fannie Mae and Freddie Mac Bailout?

The Fannie Mae and Freddie Mac bailout cost billions of dollars but saved the housing market from even worse destruction. Learn about how and the effect it's had.

www.thebalance.com

 

[TigerOfMysore]

No it’s worse they are an authoritarian regime with no checks and balances.
China has a history of excesses going back many centuries be it dynasties, the nationalist or communist - they have repeatedly invited tragedies due to their own lack of self restraint.




Once again you are completely out of your depth.The bail out wasn’t free money it was paid back with interest.

As The New York Times reported, August 2012, the Treasury decided itwould send all Fannie and Freddie profits into the general fund. Since then, the bailout has been paid back with an additional $58 billion in profit, again reported by SOMC. Fannie remitted $147 billion, and Freddie paid $98 billion.

What Was the Fannie Mae and Freddie Mac Bailout?

The Fannie Mae and Freddie Mac bailout cost billions of dollars but saved the housing market from even worse destruction. Learn about how and the effect it's had.

www.thebalance.com

The bail out was a bail out. If the US had not pumped in billions of dollars the entire housing market would have collapsed. So I agree this was a smart move. But to think that this was somehow a benign move that only resulted in some cash flow windfall of the Fed is too simplistic a view. Yes on a pure balance sheet basis you can make that argument, but that would be only be a half truth. There was real loss to real people.

Millions of people lost their livelihoods, their homes, their 401Ks. Millions. Could it have been worse, sure. But to think that somehow the housing crisis was a short term blip that the US overcame unscathed is very bold of you and a myopic view that I often hear from Wall Street types. What the US accomplished was shifting of wealth. By supporting the banking sectors, its inflated bonuses and salaries, they protected the rich class (the few), whereas the middle and lower class got ground to a pulp and got left holding the check. Their life savings their homes, and their paltry wealth was extinguished.

The problem with your approach is you think money is free. It is not. The deficits the US runs, has to be eventually paid. Currently the fed does a masterful job of printing more money and shifting losses on its books, where banks (which the fed is) comes out always whole, but the depositors get the bill. You are correct that the bail-out was eventually paid back with interest, but what you perhaps under-value is that millions of people paid for that, though their wealth erosion and larger federal deficits which will need ot be paid through increase in taxation. Could it have been worse, sure. But that does not take away the fact the people lost their wealth and their standard of living fell. While social programs and safety nets were further eroded.

But then again what do I know about economics.

 

[Hakikat ve Hikmet]

What really matters is moving US chip consumption domestic or in countries where the US is priority. That really has proven to be an achillees heel of industry here.

The US China schism is getting to another level as far as chips, software etc. are concerned! The IC companies are being advised to decrease their dependence on the Chinese foundries as much as possible. Moreover, no support to the Chinese IC endusers besides the publicly available data sheet from the manufacturers. The IC fabrication tool manufacturers are also receiving lots of headwinds. The ultimate objective is the complete separation....

 

[dbc]

Millions of people lost their livelihoods, their homes, their 401Ks. Millions.

do you ever support your claims with facts? Millions and Millions? Really?

..and 10 years later household wealth is higher than it was prior to the Great Recession of 2008.
According to the IMF, WorldBank and Moody et al everyone recovered what they lost in the downturn. 10 years after the crisis inflation adjusted house hold wealth is higher than it was prior to the crisis in 2007-2008.

The assertions you make don’t stand up to cursory scrutiny.

Read this Washington Post analysis titled A guide to the financial crisis — 10 years later

https://www.washingtonpost.com/business/economy/a-guide-to-the-financial-crisis--10-years-later/2018/09/10/114b76ba-af10-11e8-a20b-5f4f84429666_story.html

 

[TigerOfMysore]

do you ever support your claims with facts? Millions and Millions? Really?

..and 10 years later household wealth is higher than it was prior to the Great Recession of 2008.
According to the IMF, WorldBank and Moody et al everyone recovered what they lost in the downturn. 10 years after the crisis inflation adjusted house hold wealth is higher than it was prior to the crisis in 2007-2008.

The assertions you make don’t stand up to cursory scrutiny.

Read this Washington Post analysis titled A guide to the financial crisis — 10 years later

https://www.washingtonpost.com/business/economy/a-guide-to-the-financial-crisis--10-years-later/2018/09/10/114b76ba-af10-11e8-a20b-5f4f84429666_story.html

You are a funny man. You quote Moody's and rating agencies that gave AAA rating to MBS and CDS/CDO, the very instruments that led to the collapse.
The entire rating system is a farce and we know it. Even the audit functions give a false sense of rigor. And yes Millions lost their livelihoods, their 401Ks lost value et al. Some losses were higher than others, but millions were impacted:

"The collapse of the housing market during the Great Recession displaced close to 10 million Americans as rising unemployment led to mass foreclosures.1 In 2008 alone, 3.1 million Americans filed for foreclosure, which at the time was one in every 54 homes, according to CNN Money.2 The demise not only ruined the American Dream but increased skepticism among the younger generation that had yet to enter the housing market."

You have to be tone deaf or live in a Park Ave Penthouse to think Americans didn't loose a lot in the housing market collapse.

How the 2008 Housing Crash Affected the American Dream

The housing collapse of 2008 has all but ended the American Dream.

www.investopedia.com

.

What really matters is moving US chip consumption domestic or in countries where the US is priority. That really has proven to be an achillees heel of industry here.

Right now the US is getting hammered by supply chain constraints. Not sure if this has anything to do with China ( or just an increase in demand with some lingering COVID issues), but electronics supply chain in the US is severely impacting the US and its economy. The US would have a more robust rebound if it could handle this issue.

 

[IblinI]

Dude - I know you are in the zero sum game mindset, but please have some integrity.
So per your logic the fact that US is not building any meaningful infrastructure is because they are smart enough to realize "it is easy to build but difficult to maintain". So best not to build!!

Or is your argument that the existing infrastructure the US has is decaying because it is difficult to maintain. In both those propositions it is not China that looks dumb but the US. They are either not building or not maintaining. Both a loosing proposition.

In terms of China I have extensively travelled in China. It coastal cities were breath-taking. Even its Tier 2 cities some the size of New York have an infrastructure un-paralleled in the world. Gosh even Hong Kong puts New York to shame.

You are correct however to say that maintenance will be a bear but I am confident that China will figure that out. Also China is currently in a build out stage, and each of their projects do take into account maintenance financing. No project is built without that contingency. So I am sorry you are grabbing at straws here.

Lastly keep in mind Chinese economy is build on an exports engine, where the US economy is built on a consumption engine. When inflation hits the US, which it will, consumption will drop and so will the US economy. Lastly China still has a ton of consumption muscle to be built. In the next 30-50 years not only will China be the center of manufacturing, but also the center of consumption (which it already has become in large measure). It has within it a market potential the size of US and Europe combined. The last 300 years of West ascendency is a abberation in human history, which will come back to its norms, with China as "Middle Earth", and there is nothing anyone can do about it.

My advice is learn Mandarin!!!

Why bothered to explain when Biden administration is printing trillions to invest in infrastructure.

 

[TigerOfMysore]

Why bothered to explain when Biden administration is printing trillions to invest in infrastructure.

I guess you are right. I should just bite my tongue. But it is exactly this sort of false bravado that is leading the US down a dark hole.