Chile Forum

Watch out for China. It is all political smoke in mirrors. I knew that from my time in China, but the other day watched an economist that specializes in China that said the same thing.

Some of his more interesting points.

The GDP the chinese central gov is reporting is not equal to what the provinces are reporting by almost 50%.

China calculates GDP on production, and not consumption. So if they build a 1,000 cars, that is the GDP. Not that they sold or used a 1,000 cars. They might all be on the scrap heap, or being recycled back in to the factory to produce another 1,000 cars to be recycled. They also include exports in GDP by basing it on productions.

Unemployment is way way higher than the government is reporting.

Westerners are fascinated by all the construction cranes they see around China when they visit. The truth is that most of those crains are standing over incomplete buildings that are empty. I seen similar things in China. Entire cities built overnight that where completely empty.

That bubble is going to burst, and the whole world is going with it.

I think the dry bulk index however will be the first to show the real signs as Chinese stop importing raw materials.

More commentary on the Baltic Dry Index:

http://www.telegraph.co.uk/finance/econ ... slows.html

Remind me, what 3rd world country is Sacramento in, Greg?

James.

Do you think the Chilean Peso will decrease relative to the US Dollar due to reduce copper exports to China or will they both slide together?

Well the thing is that because of the "just in time" supply chain has gotten shorter, raw materials of the kind Chile supplies will come back. It will not be multi-year lows. The world is not going to get less crowed in the long term. screw the stock market. I am long on human nature.

As for China, that Iron ore dispute I believe has a historical political spin for China. Mao in the "Great Leap Forward" killed millions of people and wrecked China's economy at one point (58 - 67 or so), when the central government ordered the production of iron to the exclusion of almost all other things around the time of the cultural revolution. They quit producing almost every other product. Crops went unharvested, people where basically enslaved in cities such as Shanghai, and so on. The modern central government has recognized that as a mistake, but I believe the production of iron ore is still a sore spot and embarrassment that they are trying to explain in the official history of the party. No one wants to return to that. The central government has a long memory and so do the Chinese people. They may very well be looking at this as a face saving issue of national security (i.e. stability) issue. When the Chinese go in to that mode, watch out. This has to do with a lot more than simply some company trying to manipulate prices.

http://wapedia.mobi/en/Great_Leap_Forward

admin wrote:Well the thing is that because of the "just in time" supply chain has gotten shorter, raw materials of the kind Chile supplies will come back. . . .

'Certain, Charles? I'm not: I've read estimates of the Chinese stockpiles of raw materials; copper is in the so-called "People's Republic" to the extent of six to eight years' worth of production. I'd guess that copper and some other prices will remain low 'til worldwide economic recovery is fairly strong.

Ran into an interesting table https://www.cia.gov/library/publications/the-world-factbook/rankorder/2187rank.html. Chile far down the list and US at the bottom...

I would not read too much in to those stock pile numbers in China. Remember, less than say something like 1% of the China lives anywhere near a western standard with all the bells and whistles. Most still do not even have electricity in their homes, a phone, heat (even where it snows). Even the fairly well off new rich middle class, live a fairly barren life style in the "things" category.

While in China, we hung out with a western oil consultant that was running the drilling rigs. He estimated that China has a domestic oil reserve greater than Saudi Arabia. China is still in the early phases of tapping it, and had no plans to consume their own oil for as long as they could hold out.