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Yahoo News:- China's New 'Great Wall' Built on Easy Money, Speculation and Toxic Debt


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2009 Jul 28, 1:28pm   2,279 views  6 comments

by scholayil   ➕follow (0)   💰tip   ignore  

Hi

 http://finance.yahoo.com/tech-ticker/article/291000/China%27s-New-%27Great-Wall%27-Built-on-Easy-Money-Speculation-and-Toxic-Debt?tickers=FXI,FXP,RTP,PGJ,XPP,TAO,EEM&sec=topStories&pos=9&asset=&ccode=
The above news reminded me of my recent visit to India to meet family after 2 years.
 
Things have changed there, people are high on something. Again, reminds me of California 1999-2000.
Shopping malls and cars everywhere on roads designed for and by bullock carts.
 
Middle class houses now costs $200K, except that salary is within $5K to 7K per annum and it cost $50K 2 years back!!!! A 2500sqft house in a village now costs $80K, while it can be rented out only $80 a month. Besides, retirement is mostly compulsary in India between 55 to 58.
 
My mother's cleaning lady sold her house last year. This year the government gave her a free house as she has no documented income. She is lovingly known as a BPL (below poverty line) person. If you are APL you pay for her house. My mother thinks the government did a great thing, only she did not know that it partly came from her bank account.
 
My uncle said technology is so great that he went to bank, signed a paper and had money in ATM machine within hours. He is on state teachers pension, not that he needed an instant loan, it is available.
 
I hear countless stories of people buying lots of gold for their sisters and mothers on such instant loan. They are confident the government will write-off loans from BPL and even APL persons.
 
Indian banks have been conservative in the past, the old officers dont like the fact that they are forced to loan without much documentation to any one breathing (seen that before??) - by the government.
 
The government last year wrote off $12Billion worth of farm loans, no wonder there was a rush to buy tractors and farm equipment. The result was that whoever paid monthly, stopped servicing their loans.
 
People tell me India has a huge population and they are not making land anymore(Deja vu). Only, they have not looked outside their plane 10 minutes from the cities. They also tell me about the growth even in a global recession, we know where it comes from.
 
Looks like India is trying hard to keep the Maoists at the border just like china tries to avoid a revolution.
 
So anybody out there still buying the emerging market growth theory, make sure you can get your money back from there.
 
Regards
Sameer

Comments 1 - 6 of 6        Search these comments

1   Vicente   2009 Jul 28, 2:38pm  

Exciting times! Your perspective on how this will end?

2   scholayil   2009 Jul 29, 1:16am  

As usual with bank failures. Since most banks are government owned they will not fail. So all that is left to fail is the Indian Rupees(INR). Indians see decreasing INR value as a good thing and has consistently de-valued it. There is always popular support for de-valuation to bring in outsourced jobs and help exports.

When I was in High school (22 years back) exchange rate was, 1 USD = 10 INR, it moved to 1:20 to 1:30 to 1:40 to 1:50. With all the growth India supposedly had last 7 years, I would have expected it to be 1:20, not 1:48 or 50 that it is now. Unlike China, there is no US/EU pressure on India to upgrade INR. I am expecting to see 1:100 excahange rate in a couple of years.

The population is very young and on a high, They will spend till money is available. As long as outsourcing is strong and oil price is above$50 (Indian immigrant labor, 3 times UAE population work there) they can make merry. If any of these suffer a loss of confidence can be expected.

There may be a limit to money expansion possible, though people in India seemed richer, chicken, fish and vegetables have become too expensive for daily use. They now rely on rice and beef msotly ( that is not a lie, I come from Kerala state where 12% christians, 22% muslims and rest hindus live. Many hindus there eat fish, chicken and beef unlike in many other states)

3   kt1652   2009 Jul 30, 2:25am  

Why are people so worry about China or India when everyday there is headline of US 2big2fail companies on life support? And idiots in DC printing money to bailout failures.
Lets see if Government Motors can compete with Tata to produce a car like the Nano.

4   knewbetter   2009 Jul 30, 9:13pm  

kt says

Why are people so worry about China or India when everyday there is headline of US 2big2fail companies on life support? And idiots in DC printing money to bailout failures.

Lets see if Government Motors can compete with Tata to produce a car like the Nano.

So, can I get that Nano with airbags? I can't defend GM but the Yugo looked like a good idea too.

5   kt1652   2009 Jul 31, 1:15am  

The Nano was not designed for you, the western developed world.
But Tata will gladly sell you a Jaguar XR for $100K if you can afford it.

Cars per 1000 people:
USA 750
China 40
India 5

GM is effectively eliminated from the world market where the growth is. That Oil-pipe SUV business model is US-centric, just like you.
To T-O-B, you keep talking down these two BRIC countries, while I make good money on them now just like I did in 2004. If it falls 8%, I take my profit. Loser calling someone else a loser is pathetic, not investment.
I thought this is Housing Crash Forum, hehe.
Look at the Sterling and you will see the future of the Buck.

6   scholayil   2009 Aug 1, 9:47am  

Idiots may be printing money in Washington - point is India and China are headed the same way, copy cat style. Mistakes repeated - Loose credit - believing stories -

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