CHINA WILL BE A BIGGER BUBBLE THAN JAPAN

Superb analysis out of SocGen analysts this morning.  Dylan Grice says the Chinese economy has many similarities to the Japanese economy before it imploded in the 90’s.  He cites 8 reasons why the Chinese economy is likely to be an even larger implosion than the Japanese economy:

Studying the lessons from Japan’s lost decade(s) is key for anyone seeking to understand today’s post-bubble world. But a closer reading of Japan’s financial history illuminates today’s China far more. In the early 1980s, on the eve of its financial liberalisation, Japan was the rising power from the East set to overtake the West. Younger and growing rapidly, it was still a decade away from its climactic and catastrophic bubble peak. This is where China is now.

  • Japan’s deflationary experience since its bubble burst haunts policy makers and investors, who are confronted with a bewildering range of theories explaining what has gone wrong and how a similar scenario can or can’t be avoided.
  • But the real cause of Japan’s deflation is probably more demographic than debt-related.  If so, maybe we should be more worried about the side-effects of an ongoing stimulus overdose aimed at reviving the dead, rather than fighting a more ordinary bout of flu.
  • Japan has been the first industrial economy to begin demographic contraction. Indeed, thanks to Deng Xiaoping’s 1979 one child policy, China will soon face the same problem.
  • But it is unlikely China will suffer the same immediate fate. In fact, further reflection on the similarities between China and Japan leads one to realise that many of the challenges confronting China today have already been faced by Japan, demography being only one.
  • From the strained currency diplomacy to the accusation of favouring exports over domestic demand, from the Western marvelling at Confucian capitalism to the sense of inevitability about the rising of a great power in the East … all were as true for Japan 30 years ago as they are of China today.
  • And Japan 30 or so years ago might be a more fruitful analogy altogether. There is a clear historic coincidence of manias and geopolitical shifts. In the 1980s, Japan’s developing financial bubble reflected a shifting of the balance of power in its direction.
  • But the geopolitical shift towards China now underway dwarfs that seen in Japan in the 1980s, and probably anything yet seen in the history of the modern world. A commensurately seismic mania would lead to excesses beyond all proportion to the periodic bouts of frothiness seen so far.
  • Japan’s experience also hints at what may be the future catalyst unleashing this frenzy: capital account liberalisation. Financial history is filled with financial liberalisations gone wrong and Japan’s bubble can be traced directly to the removal of controls on international capital flows and banking in the early 1980s. Seeking a larger international role for the renminbi, China is now, albeit tentatively, embarking on a similar path. Full liberalisation, when it occurs, could be the starting gun for the biggest bubble the world has ever seen.

socg

Source: SocGen

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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • Chrispy

    TPC,

    Readers who like that piece may also want to look at this article by Andy Xie at Caijing.com – http://english.caijing.com.cn/2009-09-16/110251471.html
    As someone who spent 8 years in finance in Japan, both articles resonate well with me.

    Chrispy

  • http://www.pragcap.com TPC

    nice addition Chrispy. Thanks.

  • Aki_Izayoi

    I think China’s biggest problem is too many people. Also, it has to compete with Indians. Of course, after the black death, real wages went up (actually no, since there were laws initially that prevented a rise in wages.)

    I do not think the low marginal productivity of labor (which is what one gets in an overpopulated region) is compatible with a consumer economy.

  • jt26

    The question is whether we’re seeing a repeat of the 2000, 2007 dual US bubble (now 2007, 2014?) … I’ve been thinking there is a possible 1-2 yr macro trade here (precisely because there is a bubble forming). One thing I’m struggling with is understanding the Chinese government and the totally different financial regulatory regime and how to interpret signals of tightening. The lack of independent information (private economics; private credit) and somewhat isolation from world credit markets makes it difficult. I want to play, but I think India is still better risk/reward profile.

  • Don Jaime

    I experience two Chinas. The one I see when I visit there (since 1993) and one I read about in the Western media and they are as different as the earth and the moon.
    We in the West generally forget that China unique combination of free market economy and command political structure, makes it able to quickly change direction or tweak it’s path toward and objective whereas our democracies have to discuss for years or decades a critical change in domestic or international political or economic policy. Example, national health policy in the USA. The Chinese like all human beings make mistakes, but they are able to correct them quickly whereas we can’t. For that reason, they will get through OK, bubble or no bubble, just as they have in the current crisis…cruising along at a GDP rate than we can only dream about.

  • maggie

    Having taught Chinese exchange students for over 25 years, I can only say that China’s young are energetic, enterprising, efficient and no-nonsense. They are vastly different from the teens and young adults of the West, in general. They move fast, seek answers rapidly, and act. With this mindset, I feel they can contribute significantly to prevent major economic crises in China. Secondly, if it is true that China is stockpiling vast amounts of precious metals, then, they well may be in a position in the future to control the global politics of gold and silver price and demand (quite unlike the Japanese situation). Third, with the Chinese govt. advocating return to rural areas and building of infrastructure in such areas, China is putting its money back into its economy. In the long run, this should help the Chinese farmers and strengthen the agrarian basis of the country. (The Japanese never had the land nor the resources to do this.)
    Third, with China beginning to do business in yuan rather than in dollars, the ultimate goal of displacement of the dollar as the world currency may be more likely than is realized. With a government run primarily by engineers, rather than lawyers, royalty or career politicians, China is quickly and efficiently making deals with commodities outfits globally, particularly in Australia, Africa and Latin America. The truth about China is a mystery on so many levels, but I do not see that it mirrors the situation which occurred in Japan…..

  • DDT

    This is an awesome article. I had a vision of another 10 years of hyper-bubble growth in China, just because the world thinks they are the next USA. The resulting implosion would be horrendous. However, I don’t don’t believe the world has enough credit left to fund such nonsense. We are all tapped out.

    “China [is a] unique combination of free market economy and command political structure, [which] makes it able to quickly change direction or tweak it’s path toward and [an?] objective”

    That’s the whole point of a free-market economy: not everybody goes down the same path, which is good if its a dead end. We spent the 20th century proving that humans aren’t smart enough to manage ultra-complex systems like economies. Fat better to delegate to everyone, since we are all about the same intelligence, and people on the ground have vastly more correct information than some bureaucrat stuck in the capital. Central planning is NOT one China’s advantages, but rather an extreme weakness.

    There have been several videos of empty Chinese factories and totally vacant super-malls (think las vegas scale, not mall of america). I don’t know if these are representative or just one-offs. But they are worse than anything I’ve seen in the USA, including Las Vegas.

  • William

    I am a New Zealander living in China and I have found that until you live here, it is hard to get a handle on what really goes on here.

    I believe the cunning Mandarins in Beijing will not let the economy suffer a Bubble like Japan, however I agree there is probably a Bubble in Residential Property. This is being brought about by massive building of new apartment blocks and rampant speculation by those who buy them in the hope that the price will go up at some stage in the future. While this has proven so for some, it has not for others and it has had the effect of driving up the prices to levels which are becoming unaffordable for some, particularly those moving from the countryside to the cities.

    Despite the “flashiness” of cities like Shanghai, one must remember there are over 850,000,000 peasants in the Chinese countryside who have been promised more money and better conditions by the Chinese Government. This condition was not like Japan, even 30 years ago. Also, the 850,000,000 peasants are prepared to create considerable social unrest to get what they have been promised and the Government members will not be wanting to give up their current position, income and power because they know if they fail to deliver, their days are numbered.

    With the current economic crisis, the Chinese Government have told local manufacturers to shift their focus from exports to domestic and while this is generating less export earnings, they are still considerable. The Government are also stimulating demand. The Japanese have a domestic market which is 1,200,000,000 people smaller than Chinas.

    The Chinese Stock Market will have its ups and downs, but this should not be confused with the Bubble Effect. It is purely due to greed, stupidity, lying and cheating, mainly on the part of the Company bosses and partially due to investors being starved of good investment opportunities.

    The reality is that Japan reached its position of economic power quickly because in the first instance it was propped up by the USA and secondly, its population was well educated, relatively small but highly motivated to achieve. China is the exactly the opposite.

    So endth the lesson.

  • Barry

    China cannot develop a domestic consumer market big enough to power its economy for a long time (as Aki mentioned above), not without realistic social security (pension, health care, job security – entailing actual civil rights). And how will China liberalize so long as it relies on exports, since the yuan is kept artificially low? Add in opaque accounting and massive hidden bad loans at the GSEs and banks, a complete disregard for intellectual property, the incipient environmental costs and of course, centralized planning and official corruption, and China looks like it has a rocky road.

  • sailor-jo

    Though all capitalistic societies get into bubbles and busts I cannot see the comparison between Japan and China. Japan was a different society on a different level of development from where China is now. It was a democracy with all it’s flaws whereas China is has a dictatorial regime with other flaws. Both want to dominate world economy but China with it’s huge population has more weight.

    China is still a rural society that has a lot of catching up to do while the Japanese have everything they can think of except space. China does not have that much space either but they can manage. China has a shadow population all over the world, from the Caribbean to Malaysia to South Africa. Their determination to beat the west is tremendous and their smarts match the Japanese.

    Look out!

  • William

    Sorry Barry, you seem to be misinformed like many people in the West when you state:

    “China cannot develop a domestic consumer market big enough to power its economy for a long time (as Aki mentioned above), not without realistic social security (pension, health care, job security – entailing actual civil rights).”

    Firstly there is a will to do things here, and once agreed upon things happen, unlike in the USA where the President has to grovel in front a the Senate, home of the vested interests. If the say in China they will spur domestic consumerism, then that is what will happen. Will the money run out… my guess is hell no, this is already a vast and powerful country and while the USA has been busy squandering its wealth, China has been busy generating its own and building relationships with many countries that the USA has ignored… these countries now supply China Oil without the US Speculators margin for example.

    Secondly, each of my employees receives wages and by Law I also pay into a special Government account for them money which covers a number of things including insurances, pension and health care. If you would also care to read the offical Government Employment Contracts which each worker must be provided with, you will see that Chinese workers also have a fair degree of ‘Job Security’ built into it, I would suggest much more than enjoyed by many in the USA when they lost their jobs over the last year.

    As I said before, if you don’t live here, its hard to know what is really going on and Western media report only what they consider to be ‘sensational’ to sell their product.

    There are many positive things going on here (China) and to be honest, at the present time I find it amusing that the USA, which has shit in its nest big time has had to go cap in hand to China to bail it out. I also find it amusing that the USA which has lived high on the hog for a long time, failed to realize what is going on in China till too late, but hey, that’s arrogance for you.

    Now have a happy day now ya hear as you contemplate paying off your countries debt.

  • gmiller

    The reader comments are even better than the article.

  • William

    Sorry to say it but I think the original article is pure crap. If that guy gets paid for writing then, where can I get a similar job?

    The original writer seems to have forgotten market size:

    Japan: 127,288,416 (July 2008 est.)

    USA: 304,059,724 – Jul 2008

    China: 1,330,044,544 (July 2008 est.)

    China is a juggernaut that is not yet up to full speed. There is considerable National Pride here too and people buy into strong leadership which sees their country advance because they know that they too will be better off. So wake up the rest of the world.

    I might add, I am neither Chinese nor a Communist and was born in the UK and have lived most of my life in New Zealand.

  • John Doodle

    I agree the Socgen article is a wash-out, does not deserve space in pragcap.

    As far as stock market investors are concerned, China is similar to Japan in only one area – between 1970s and 1980s, Japan’s export industry faced tremendous protectionism in the West, and a stong desire in the US and Europe to force japan to allow its currency to strengthen and thus weaken its exports. The yen did go up, but its export driven economy did not. The same will happen to China’s currency and they will face even more protectionism as the west’s only “tool” left as they find it harder and harder to extricate themselves from the current mess. But China would not stop being a global export power even if the world’s demand falls 20%. So China’s exports would also fall 20%, but commodities are also 20% cheaper (actually iron ore is 30% cheaper), soy bean and palm oil etc are all cheaper, so what’s the impact on China? Its trade surplus is marginally weaker, but it is now being re-deployed to more tangible assets than buying worthless US treasuries.

    Someone says China cannot develop its domestic market to absorb the excess industrial capacity? Sure, americans love 50 in LCD TVs, so the chinese factories making them will go bust, but others would re-tool and re-kit to make 20in LCD TVs, those that sell for 10% of the amrican TVs for the Mcmansions that are not being foreclosed (the last I checked, Best Buy don’t even carry the 20in any more). America is peventing creative destruction, something happening in China everyday.

    Too many analysts bloggers and economists have never visited Asia (did you know Krugman visited China for only the second time, and e has been to Asia less than 5 times, yet he was awarded Nobel prize on economic development in developing countries), yet they feel qualified to comment on Asia’s ability to adapt. Most economists still think that because of the now beaten to death claim of being overly-dependent on exports to the west, Asia would be like Germany, suffering from nearly 9% chronic unemployment. Well, what da ya know? There is not a country in Asia whose jobless rate is above Japan’s now at below 6%.

    In the end, the Germans, once they have dealt with their corrupt bankers, can be consoled by one lesson from this crisis, and that is that there is some justice in this world after all. You reap what you sow, and this mess started by irresponsible consumerism and short-sighted politicians bankrolled by greedy bankers in the west, would inflict the greatest pain in the west. Sure Asia and China would suffer for a short while as they had, but Asian seems to be moving on not too badly, while the west remain saddled like japan for the next 3 decades and 2 generations, and still blowing bubbles in the asset markets.

  • asdf

    I have to agree with many of the commentors that articles like these are crap. The author arrives at a conclusion by spinning standard formulas that never really captured reality and put inappropriate anecdotes that don’t apply. Classic academic idiot as referenced by Taleb, this fool tries to reduce the massive and dynamic entity that is China down to eight simple factors. Then again, economists and bankers aren’t really the sharpest tools in the shed, they just make themselves appear and act that way.

  • William

    Since this US created financial crisis started, it is true that many Chinese export manufacturers have closed down and some tens of millions have lost their jobs. However as many of them were “Migrant Workers”, they have gone back to their homes in the small towns, villages and farms where their families are. Most I guess have gone back to working the land as they did before becoming a “Migrant Worker”.

    So can such a person be classed as being unemployed under these circumstances?

    To make matters more interesting, the Chinese Government have been giving loans through certain banks to some of these people so that they can create their own businesses in their home district. Somewhat differsent to the USA again where only the wealthy Bankers have been getting the Government handouts.

    Communism ‘vs’ Capitalism is such an interesting study these days I find… so back to the original topic of this thread… “Forthcoming China Bubble to be like Japans was”… yeah sure.

  • http://www.ibankcoin.com/jakegint JakeGint

    It’s heartening to see the guy who lives in China thinks the latest Industrial Autocrats (Communist version.02) have figured out how to really make a top-down Planned Economy work.

    I just hopes he’s not investing anything more than a spirited interest in the prospect.

    ________

  • William

    Thanks for the comments Jake. I guess you are from the USA but have never been to China? It’s comments that like that sum up the sentiment of the USA… please keep up the good work trying to repair your failed business model.

    Don’t get me wrong in my previous comments, the Chinese are by no means perfect in any way, but what they do have the ability to do is come up with a plan/direction and make it happen. They look at things as being in the best interest of the many I guess rather than the few.
    They are also strong believers in R & D which over here that means Replicate & Duplicate and they do a damn good job of it with your IP.
    Time will tell whose system is the best but if one was to look at the current state of afairs then I would say that US Capitalism version.69 has gone down on itself one too many times.

    Would I invest my own money here you ask, “hell no” is my answer and I would never, never go into a Joint Venture with Chinese here either. But can I make money here, the answer is unashamably “yes” as they have real money to spend because they actually earn it here, not just print it like the US Fed does.

  • Jay

    Has anyone noticed that since we began allowing abortion that we have had a labor shortage? And this is why we have become addicted to the Mexican labor pool? We will be demographically swamped by Mexicans soon….does anyone care if this country becomes Northern Mexico? I for one am in favor of allowing Europeans to come over here in equal numbers if they want to! Stop making it so hard for Europeans to get emmigrate here! And make abortion illegal again! Remember Serbia and Kosovo: they lost it partly because it was demographically overrun by Albanians. And then the world demanded they give it to the albanians. Will a similar situation happen to us in 100 years? Will we be asked by the international community “in the name of fairness” to give the whole Southwest back to Mexico?

  • Alex

    Yes indeed, the reader response is telling a great deal as to how the current world view is on China and our future. China is perceived by many as the “juggernaut” ect, however the chinese economic development is, and it’s not just China, totally unsustainable, there is not enough space and raw materials on this planet for this insanity to continue for to much longer. Take a look around and ask yourself can this consumerism continue? someone needs to do the work and everybody wants to eat, never mind the Mercedes or Porsche for every chinese peasant that is not going to happen. Speaking of competence in the chinese goverment, if they had been so smart they would have never allowed the automobile in China to become a drag on their land. So in short it would appear Chins is indeed working hard to reflate their bubble, it will blow, we just don’t know ecactly when. War will likely follow and we can then reduce the world population by a significat number and start again. Cheers

  • http://www.pragcap.com TPC

    Just got around to reading the great comments….I am a little surprised at the positivity regarding China’s recent economic boom. This is a civilization and economy that has existed for thousands of years and has accomplished less than American capitalism accomplished in the last 100 years. I am not saying that the U.S. model is perfect by any means, but let’s not lose sight of the incredible successes of capitalism over the last 100 years.

    Recently, the Chinese have essentially copied that model and implemented in their own country over the course of the last 25 years and the results have been stupendous, but let’s not go discrediting the U.S. while claiming that the Chinese model is now some “juggernaut” when in reality all they’ve done is copied the western capitalist model….I know it’s easy to focus on recent performance, but American Capitalism has created the most productive and innovative economic boom in the history of man. The fact that the U.S. grew to become the largest economy in the world in just over 200 years while having a much smaller population than most others speaks volumes about the incredble power of the system we created.

    Thus far, China’s foray into capitalism is very much a work in progress. As of now they are still an export driven economy that does not innovate or consume on a grand scale. Let me know when China begins , inventing, producing (and consuming) the products that shape every day life on a scale that the U.S. has….Then we’ll know they have truly perfected their own version of the Capitalist model. Until then they are simply an enormous population with a great ability to serve as a middleman in the global economy.

  • BullishMark

    China is the latest investment fad that everyone thinks is a sure thing. The odds of everyone being correct are low.

  • William

    “There are none so blind as those that don’t want to see”.

  • tangshui

    China survival had and has been her ability to unite and reformulate. Although a socialist nation but ever so adapted to constant changing world, she evolved quickly from problems because her younger generation learn from their parent to get back up from each failure. Western world see China a step backward but I see China eventually out pace western world by her hemogeny trait. Japan greatness came by copied, studied western technologies back in ’70. I guess many have forgotten the coined phrase “made in Japan” inferior products that was made with cheap material. Well, China is at this stage but much more quality put into their finished products. If one come to China see the replicate vehicles made in China: BMW, VW, Audi, GM, and Ford, you would think these vehicle were imported. Yet they cost about the same as if purchased in U.S. She encourages domestic car purchase by giving discount to boost employment. China gov’t wants foreign companies produce cars and other high tech products in China: 1. to gain employment for her people; 2. get the ojt and know how; 3. technologies transfer instead stealing informations; 4. ramp up her own economy and give self esteem to individualism; 5. more tax collect both from the buyers and the producers. How’s that for socialist gov’t? There are less red tapes involve which makes any project forge ahead without delay. Not like many western gov’t work project must go through enviro-impact study and high insurance liability and cost over-run caused by work rules and unionism. Safety was never forsaken since engineer personals are valuable in their infrastructure need. Yes, China has trillion $US for whatever, if any thing goes errie, she can sustain within, not implosion as some doomsayers try to play Chinese who never set foot on her soil. Yes, I am retired Chinese-American. I have come back to roost in China cause it’s still my root, nothing can change that. Have a good day, all. Tangshui

  • http://www.pragcap.com TPC

    Blindness, in the investment world, is overlooking long-term trends in favor of near-term gyrations….

    And believe me, Americans are very much aware of the changing competitive landscape and the fact that many nations are hot on their heels. To imply that Americans are blind to what is going on in the world is incorrect. Perhaps many don’t wish to admit it, but blind they are not. Free market competition is one of the foundations of American capitalism. This will likely drive the next great innovative phase in American capitalist history as it has been the foundation of the system that made this country great….

  • William

    Sorry TPC, I was not referring to the USA in general but you in my last comment.

    As a student of history, I am sure you would know that China has a very long and successful past where many inventions came forth, plus civilization and their economy florished and I am talking 1000’s of years here. However in the last 200 or so years China was held back back by:

    1) The intervention of Western Countries in China’s affairs including the British forcing opium upon the general population so that they could have their own way with trade
    2) A number of foreign countries (USA included) ceding parts of China as their own territories.
    3) The occupation of Japan of parts of China from 1931 to 1945
    4) The strict rule of Communisim from 1949 to 1978

    Certainly a long period where the real China, of traders and money makers was unable to function in any form of capitalistic model.

    The US economy on the other hand really only got started in the early 1900’s. It was helped by two world wars in which it managed to bleed the British Treasury white and it was only after WW1 that the USA gained manufacturing ascendancy over the British Empire which had really ruled the world both geographically and through trade, enterprise and banking.

    Remember these dates?

    Wall Street Crash of 1929
    October 19, 1987
    Dot Com Crash 2001
    The Crash of 2008

    Seems your model of Capitalism is failing more regularly doesn’t it?

    You say: “Let me know when China begins, inventing, producing (and consuming) the products that shape every day life on a scale that the U.S. has”… well come on over and see that everyday life does exist here and that in most respects things are already very Western and on a scale far greater than in the USA.

    You also say: “but American Capitalism has created the most productive and innovative economic boom in the history of man”. What absolute arrogant nonsense and I suggest you refer to books on The Roman Empire that last approx 600 years, some of the Chinese Dynasties that lasted 1000’s of years and certainly on the British Empire which lasted nearly 500 years before ever making a comment like that again.

    With regards to “(China has)a great ability to serve as a middleman in the global economy”, you need to wake up to the fact that they, the Chinese “own” you now with the amount of money that they have lent your country for without them, I guess you would be bankrupt. The USA needs to realise that the one who controls the purse strings is the master and that makes you the servant in this new world Global Economy.

    It is never easy when there is a new kid on the block bigger than oneself. It is very easy to go into denial and hit out at those that suggest some change to your own failed ways of doing things may be necessary to get you out of the hole that you have dug for yourself.

    I hope that the USA and China can both come to terms with their positions in the world and yes, I am comfortable with my position in the world.

  • jt26

    There have been many economic models and socio-economic scenarios. There have been periods of great money making and losing opportunity from the Netherlands to Argentina to Korea to the US, from Wild West free markets to managed capitalism. People have made and lost money in real-estate, tech, US Big Cap, 4 Tigers, EM, pork bellies, Fx; under democracies and kleptocracies … anyone have any facts on how we can make more than we lose? The quasi-political debate is interesting but a mere side show to this.

  • http://www.pragcap.com TPC

    William,

    There are many flaws in your argument.

    First off, the 4 minor market declines you mention are mere bumps in the road. You don’t really think markets go up in straight lines do you? The Chinese market recently fell 75% from the peak which is the largest decline of any developing nation in the last 50 years. What does that say about your argument regarding China? One or 4 data points are meaningless in the grand scheme of things….

    Second, the innovation of the last 25 years is simply remarkable when compared to any other period in human history. Granted, things such as the aqueduct or whatever you might be referring to in ancient Rome, are phenomenal, but technological advances of the last 25 years are simply unmatched. While a minor market decline (and massive rise) did result from the tech boom of the 90’s, what really resulted was the most stream lined and efficient business model in the history of man. How much more productive have companies like MSFT & CSCO made the human race? Nothing in the history of man even compares.

    As for China having the upper hand….That is laughable. That just shows how little you actually know about the current game of economic chess. The Chinese have no choice but to buy our debt because of their weak export based economic model. It is because they are the middleman in every transaction that they are being flooded with dollars and forced to buy our debt. They have no choice. Thus, the recent comments on why they “hate” us. http://pragcap.com/china-hates-us

    I am not saying that the American Capitalist model is perfect or that China can’t do it better, but to discredit the last 100 year economic boom as something that isn’t remarkable is simply misleading. Personally, I think the only reason the U.S. has grown to such incredible power in such a short period of time us because the U.S. system cradles innovation while many other governments hold their citizens back. Will the state run government in China actually allow broad innovation to flourish? They haven’t proven that in the last 25 years and until they begin innovating and PRODUCING they will continue to be a middle man in an end product world.

  • Alex

    The dicussion is heading to be about China’s and America’s accomplishments, fact is China is dependent on exports, with the world consumer having serious spending problems we can expect China being seriously impacted. Most all of the world exporters are looking at the US to consume to “save” the day, well that will be a good trick to pull off, never mind the recovery blather by Bernanke and company. The developed world and China is in a economic bubble where the powers in are attempting to reflate at all cost, all have the same problem, to much production capacity and no way to make people buy something they can’t afford. Cheers

  • William

    TPC, you are correct about the 75% decline in prices on the Chinese Stock Market. However, very, very few Chinese companies have gone Public and the Stock Market is not a true relection of the status of Chinese Companies.

    With regards to China having no choice but to buy US Debt…. how do you know its not a very cunning plan on the part of the Chinese to strengthen their position so that they ultimately call the shots?

    I have heard no Chinese express the comment that they hate you either, they reserve that for the Japanese.

    You say “what really resulted was the most stream lined and efficient business model in the history of man” how can you say that when this very same system in just the last “bump in the road” has wiped out the savings of hundreds of thousands of your own countrymen? Your system is fatally flawed. Basing your economic system on the greed of the few is not the way to go. The time for one country taking the wealth from other countries for next to nothing is over. The time for betting on two cockroaches climbing up a wall and similar schemes is also over. The time for debt funding everything instead of funding it through ones one capital is also over.

    It has been fun playing devils advocate here and I truely hope that, what ever happens in the future for all countries is sustainable and brings wealth and happiness to all.

  • http://www.pragcap.com TPC

    William,

    Thanks for being a good sport in this debate. At least we agree on one thing – your last statement.

    Although I know your average Chinese citizen has no ill will towards Americans I can assure you that the government is very frustrated with the U.S. as their comments can attest to. The Chinese are in a most unenviable position by being flooded by dollars and having no choice but to purchase U.S. based assets with those dollars. Otherwise, they would be forced to exchange those dollars for domestic currency and effectively risk rampant inflation. It’s a fascinating dynamic really. Trust me, they wish they were not in this position. That is why they are trying to promote domestic spending and attempting to diversify their economy from the export based model. They know they are a position of weakness, but are slowly and surely strengthening that position.

    The American Capitalist system created more millionaires in the last 50 years than any system known to man. Per capita, the successes of the system are nothing short of astounding. There are 4MM millionaires in the U.S. vs just 825K in China. Per capita you can’t even compare the successes of the two systems. The U.S. is simply head and shoulders above.

    The fact that the U.S. market is just 20% off its all-time highs (after the worst recession in 75 years) is negligible in the grand scheme of things. You say the system is destined to fail, but the Chinese are essentially copying the system. Hmmmm.

  • William

    Sorry TPC, I was not going to make any more comments but can’t help myself.

    The Chinese are getting rid of their US$ by spending them on raw materials, minerals etc that they will use not necessarily use in the immediate future but when the need is there, whenever that may be. Some will be re-exported as finished products, the rest will be consumed domestically.
    The US lead economic downturn has made these items cheaper to buy and when the market does turn around, they will obviously be worth a lot more vs the US$ which will still be spiralling out of control due to inflation caused by prinitng too much paper money. The Chinese have also been building up their gold reserves to hedge against inflation.

    With regards to the numbers of millionaires you quoted, I wonder how many still are after investing with the likes of Maddog Madoff? I guess too, it will be only a question of time before the number of millionaires in China exceeds that of the USA. A couple of years ago, I read that 55,000 Chinese were attaining US$ millionaire status per year, but I am sure this figure will be lower now.

    Yes, China has a long way to go to catch the USA and it is this distance in time and achievement which I think will ensure that there is not a major Bubble like Japan experienced.

    In saying that they (the Chinese) will have to overcome a number of things like:
    1) A Banking system which is like New Zealand was 40 years ago, can you believe they still use rubber chops?
    2) Government corruption where it is who you know and the amount of money that you offer around in envelopes that gets things moving for you.
    3) An education system that teaches students to copy and cheat.
    4) A business system where greed often leads to such stupidity that people lose their lives for one reason or another.
    5) Pollution, although they really are starting to address this.
    And so many more things….

    But, unlike the US Government, the Chinese Government know they have to deliver on their promises to their people. Failure to do so will not just see them voted out, there would be a social revolution that would see them killed and all their ill gotten gains lost. Maybe that would be a good solution for many of the bastards in the USA that have brought about this current crisis?

    Is that Pragmatic enough for all Capitalists, Chinese and American?

  • macaca

    William and TPC,

    thanks for the great debate!

    2 points:

    1. will the Party be able to produce enough economic incentives to keep the system going in spite of endemic corruption? the Sichuan earthquake destroyed many school buildings while others next door were unphased… strongly suggesting corruption in the construction bidding, etc… the Party adeptly focused the media on rescue and reconstruction while ignoring the liability of the officials.

    2. can environmental damage be reversed…poisoned well water and “cancer villages” a tragedy for the rural population and another source of resentment toward factory owners.

  • William

    Macaca, here’s my take on your two points.

    It would often seem that officials at Local Government level don’t always obey their Beijing hieracy. As a result corners are cut and when it comes to the likes of construction, innocent people pay with their lives for someone elses greed. To cover up the discontent, Local Government officials in Sichuan have been arresting those protesting over the loss of their children!
    However it is in the news regularly that some local Government official or other is caught for corruption then tried, have their worldly possessions taken off them by the State then either jailed or shot. The message will at some time in the future, get through… one hopes!
    I have only one experience with corruption and that was with Customs Officers needing money (in an envelope) to ensure my personal effects did not sit on the wharf till the end of time. I made a complaint, was met by the No2 in Customs for my area and he was horrified. They had only just sacked 11 in that same office for corruption. Result of my meeting was more sackings and further education for those left.

    As I have said several times before, despite their failings in some areas, the Chinese Government know that if they stop delivering on their economic incentives, there will be massive unrest which could lead to a revolution here. I am sure the end of the Government in Romania a few years ago (up against the wall out the back of Parliament Building and Ak47’s blazing away) is etched in the minds of the people in the Chinese Government. The result of any revolution in China would be very bad not only for China but the rest of the world.
    The Government are not short of ways of incentivising the domestic economy making the money go round. Currently, they are not short of foreign exchange either.

    With regards to environmental issues, all in China is not quite as it is portrayed in Western media. Believe it or not, they have made some very positive steps to addressing some of the issues. From what I know they are:
    1) Jan 2008, Government legislated no more plastic carry bags to be issued free at supermarkets after June 1st 2008. Result, trillions of bags no longer made and used.
    2) 2007 or 2008, Government legislated that they wanted 70,000 wind turbines generating electricity within a certain time frame… things seem to be well under way to achieving this first stage in reducing their dependance in burning coal for electricity generation.
    3) In the Province where I live and the one south of here where I have spent considerable time, there have been 10’s of millions of shrubs and trees planted out not only to look good, but also to help soak up CO2 etc. This will help reverse some of the problems from the past and the scale of these plantings has to be seen to be believed. I assume it is also going on in other areas from the fleeting glimpses I have had when visiting other Provinces.
    4) One of the many Coal Fired Power Stations has just completed trials of a chimney stack scrubber. Seems this worked well taking out particulate matter and gases (I think). Next step I am sure will be Government will legislate that by a certain date all CFPS’s must have same scrubbers.
    5) Recycling is very much alive and well here with all plastics, metals, glass, etc processed, not dumped.

    With regards to the really badly polluted areas, I have no idea how they tidy things up once pollutants have got into the ground water. Maybe highly sophisticated filtering systems…? But I am sure that where there is a will (and the money) there is a way. The Government are/will kill those responsible for the really bad pollution and when they have killed enough, others will think twice about polluting.

    Only when China revises its education system will things start to change. People here are not taught to think or reason. They are taught to cheat and copy so that they can obtain certificates which may lead on to a good job. Because “wealth” is a new phenomenon here, people do things without understanding the ramifications of their actions in there rush to acquire it.
    The “herd” mentality is also prevalent with people in general being very Nationalistic. They are also very reluctant in most instances to speak out against the wrongs of the system.
    But despite all their failings, there are some genuinely nice people here and a very, very strong will to achieve and create a better world, something that seems to have been lost in the West some years ago when complacency set in.

  • Special K

    William is right…the Chinese leaders are smarter than the markets and other WORLD leaders and will navigate their economy past other nation economies.
    Once world wide focus is redirected at the Chinese and there true ambitions (money) the Chinese people will be caring pitch forks in the streets.
    A resource economy is inevitable.

  • William

    Look at my comment on 21st September and then read this:

    SYDNEY (Reuters) – Britain’s The Independent newspaper Tuesday reported that Gulf Arab states were in secret talks with Russia, China, Japan and France to replace the U.S. dollar with a basket of currencies in the trading of oil.

    The U.S. dollar eased after the report, written by Middle East correspondent Robert Fisk and monitored on The Independent’s Web site. It cited unidentified sources in Gulf Arab states and Chinese banking sources in Hong Kong.

    Fisk said the proposal was for trade in crude oil to move over nine years to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, including Saudi Arabia, the United Arab Emirates, Kuwait and Qatar.

    “Secret meetings have already been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme, which will mean that oil will no longer be priced in dollars,” said the report. It added that France had also been involved in the talks.

    Most Gulf Arab states have pegged their currencies to the dollar.

    The Independent said U.S. authorities were aware that the meetings had taken place but had not discovered the details and were “sure to fight this international cabal.”

    The issue of shifting oil trade away from the U.S. dollar has been raised occasionally in recent years, but analysts and experts say it is unlikely to occur any time soon.

    “I don’t think we will see much concrete actions coming out of such discussions because even when the dollar is weak, it doesn’t mean that commodities are undervalued,” said David Moore, commodities analyst at the Commonwealth Bank of Australia.

    “In fact, when the dollar weakens, commodities prices tend to increase by a higher ratio.”

    Iran began settling most of its crude oil exports in non-dollar currencies, primarily the euro, several years ago, but the actual price for its oil is still set in dollar terms.

    The U.S. dollar dipped in the wake of the report, with analysts cautious about reading too much into it, particularly given the nine-year timeframe.

    The euro edged up to $1.4691 from $1.4662 before the news broke, while the dollar eased to 89.00 yen from 89.40.

    “This looks to be a very long-term thing with a few hurdles to cross,” said Jonathan Cavenagh, currency analyst at Westpac in Sydney. “Foremost, China needs to be more flexible with its currency.”

    “Still, this is U.S. dollar negative news which is moving markets and shows that central banks not just in Asia are looking to diversify away from the US dollar,” he added.

    (Reporting by Wayne Cole; Editing by Mark Bendeich and Dayan Candappa)

    The US$ is on the way out as the International Trade Currency… which nation will implode through the Bubble Effect???? China or the USA??? Me thinks not China.

  • http://www.pragcap.com TPC

    William, you seem to have this disillusionment that the US can “implode” and not have a horribly negative impact on China. The two are closely connected economically. I think your obvious regional biases cloud your judgment a bit.

  • William

    For me, China is just a place to conduct business and make money. It is not an easy place to do business as many things here are so old fashioned and slow. I certainly agree that ‘currently’ the two countries are very closely intertwined, I mean they have loaned the USA so much money, they basically own you.
    Have a look at this article:

    DALIAN, China (Reuters) – Following are highlights of a speech by Chinese Premier Wen Jiabao at a meeting of the World Economic Forum in the northeast city of Dalian.

    OVERCAPACITY A CHALLENGE:

    “The major challenge we are facing now is overcapacity, which has come at the same time as a sharp decline in external demand. These problems are creating new difficulties for enterprises.”

    CHALLENGES AHEAD:

    “The foundations of China’s economic recovery are not stable, not solidified and unbalanced. There are still many uncertainties in the outlook of the global economy.

    “There is still heavy downward pressure on external demand, and there are still many factors restricting the expansion of domestic demand in the short term.

    “The effectiveness of some policies will wane gradually and it will take time for some long-term reforms to show results.”

    RISKS, INCLUDING INFLATION:

    “We should fully implement and continuously improve policies and discover and resolve new problems in a timely manner. We should be alert and prevent all potential risks, including inflation.”

    POLICY DIRECTION STABLE:

    “We cannot and will not change the direction of our policies at an inappropriate time. The top priority of our work is to maintain stable and quick economic growth, so we will unswervingly stick to a relatively loose monetary policy and a proactive fiscal policy.”

    “Overall, the policies and a slew of packages we took to address the global financial crisis were realistic, timely, helpful and effective.”

    NEED FOR GLOBAL ACTION:

    “All countries in the world need to improve their consensus and strengthen macroeconomic policy coordination, carry out and implement responsible fiscal and monetary policies that comply with their own national conditions, and maintain consistency in their macroeconomic policy direction.

    “They need to press ahead with the reform of the global financial system, enhance cooperation in international financial monitoring, establish an effective crisis alert and handling system, enhance the capacity to handle and prevent potential risks, and promote financial stability and sustainable economic growth.”

    OPPOSING PROTECTIONISM:

    “Protectionism will only drag down the recovery of the global economy. We should be alert to protectionism taking different forms and hidden protectionism. China will fight resolutely against trade and investment protectionism. We will do what we have said.”

    NEED FOR BETTER-BALANCED GROWTH:

    “We need to take it as a priority in our development strategy to achieve balanced development between the rural and urban areas as well as between different geographic regions, focusing on creating new room for growth.

    “We need to implement a more active policy to create jobs.”

    CONTINUING REFORM

    “We need to press ahead with reform of the prices of natural resource products, continue to deepen reform in the taxation and financial systems, enhance capital markets and the banking system, and improve the RMB exchange rate mechanism.”

    He said the reform plans for 10 key industries launched earlier this year would greatly improve China’s ability to sustain its growth.

    BOOSTING DOMESTIC DEMAND:

    “Boosting domestic demand is a long-term strategy for China to develop its economy.

    “China must greatly adjust the structure of internal and external demand and continuously increase the role of domestic demand in boosting economic growth.”

    (Reporting by Eadie Chen, Aileen Wang and David Stanway; Additional reporting by Langi Chiang and Zhou Xin in Beijing; Editing by Jason Subler and Ken Wills)

    All I look forward to is a world which is a little fairer and more equitable than it was under US rule where your MultiNationals where like the Vikings of old. In the meantime, I suggest that you guys have a damn close look at yourselves and see and correct the mistakes that you have made. But I guess you have all lived so high on the hog for such a long time at the expense of others that will be difficult to do. I seems many there fail to even recognise you have a problem. Good luck.

  • http://www.pragcap.com TPC

    It sounds like this is very personal to you William. I would only conclude by adding that you are making vast generalizations about the U.S. and its citizens (the government of the last 8 years does not speak for all of us) and the wealth gap is the highest in the history of the country so those “high on the hog” you refer to actually represent a small minority of the country.

    Other than that you are probably right, which means you are mostly wrong in your accusations and undue hatred of America. But feel free to defend communist China….That makes a lot of sense.

  • William

    Its not personal at all but I do believe that in life you get back what you give out…

    I have been to the USA on business and holiday a number of times. I have met a number of nice folks there and in China, most of my European friends are from the USA too. I am not anti “USA” or anti “Americans”. But you have to admit that as a country, you have many issues to address.

    Look around at your country folk, morbid obesity is rampant. You don’t get this way without living high on the hog. Very sick….

    This same greed has seen your labour rates ratched up to such high levels, many of your once sucessful companies can not longer compete on the world stage and many of your products suffer quality issues like your cars for example.

    The greed in your financial institutions has seen peoples investment money gambled at the whim of reckless individuals whose only concerns was their commissions. Much of these so called investments have not been into companies which produce product and sell for profit but pure speculation. You countrymen involved in this fraud seem to in the most part got away without punishment despite the fact that they nearly brought down the worlds financial system.

    In health care you once lead the world, now your system is beset with legal problems because litigation is the name of the game and the cost of your meds is higher than any other Western country because the lobbyists bribe those in Washigton to maintain the status quo and not allow generics to be sold. man you have a problem there.

    Then you have your Multinationals who have raped and pillaged at will overseas. Ever heard of Bhasmati Rice? They have been growing it in India and Pakistan for over 4000 years. Then some greedy clown from the USA comes along. In September 1997, a Texas company called RiceTec won a patent (U.S. Patent No. 5,663,484) on “basmati rice lines and grains.” The patent secures lines of basmati and basmati-like rice and ways of analyzing that rice. RiceTec, owned by Prince Hans-Adam of Liechtenstein, faced international outrage over allegations of biopiracy. It had also caused a brief diplomatic crisis between India and United States with India threatening to take the matter to WTO as a violation of TRIPS which could have resulted in a major embarrassment for the United States.[2] Both voluntarily and due to review decisions by the United States Patent Office, RiceTec has lost most of the claims of the patent, including, most importantly, the right to call their rice lines “basmati.” This was a huge victory for Indian farmers who could have faced enormous economic losses from the patent.

    Yup thats the way to make friends and influence people.

    And so it goes on… personally I think the world has had just about enough of the antics of a number of your politicians and your business people. Its time you guys realised we all live on a very small planet.

    and one final thing… more on your bubble burtsing… have a nice day now ya hear…

    The price of gold is surging on world markets amid fears that the old economic order, based on the supremacy of the US dollar, could be breaking down.

    A new spike has sent the cost of the precious metal to a level not seen before. The dollar slid sharply after yesterday’s report in The Independent that Gulf Arab states are secretly planning to stop trading oil in dollars, and a senior UN official said that the US should be stripped of its position as the main source of currency reserves for other countries.

    The developments come on top of speculation that the Obama administration is operating a policy of benign neglect of the dollar, engineering a devaluation that could help repair some of the economic damage caused by the recession.

    Not since the collapse of the Bretton Woods system in 1971 has gold been treated as the equivalent of a world currency, but The Independent reported that it could form part of a basket of currencies that would be used for oil trading by the end of the next decade.

    The dollar index – which measures the greenback against other currencies – fell 0.7 per cent yesterday and the dollar was lower against all major currencies except the British pound.

    The US government’s $11.86 trillion debt would be easier to repay if the value of the dollar was lower. There is growing concern among economists that the Obama administration could be content to see the currency fall. That would make US exports more competitive and could spark a manufacturing jobs revival.

    Overseas governments are in a bind because they hold trillions of dollars as currency reserves. The situation is particularly sensitive for oil-producing nations, who are paid in dollars for their exports and therefore hold particularly high dollar reserves.

    Gulf Arabs have begun planning n along with China, Russia, Japan and France – to end dollar dealings for oil, moving instead to a basket of currencies including the Japanese yen and Chinese yuan, the euro, gold and a new, unified currency planned for nations in the Gulf Co-operation Council, which includes Saudi Arabia, Abu Dhabi, Kuwait and Qatar.

    Secret meetings have been held by finance ministers and central bank governors in Russia, China, Japan and Brazil to work on the scheme.

    The revelation was met with public denials yesterday. The Saudi central bank governor, Muhammad al-Jasser, said: “The future is in god’s hands. Today, the conditions are good for the arrangement we have.” The Japanese Finance Minister, Hirohisa Fujii, said he “doesn’t know anything about it”.

    Dennis Gartman, the US investment guru who writes the daily Gartman Letter, said that no one should be surprised to hear denials. “We are certain that spokespeople for every single nation will be brought to the fore to deny that any such meetings have occurred, that no such decisions have been made, that it is not in anyone’s interest to have held such meetings or made such decisions,” he told clients as The Independent’s story broke. “The market will care not a whit.”

    Simon Johnson, the IMF’s former chief economist, said the countries involved would calculate it was not in their interests to drive the dollar down. ” It would only be great news for the US. They have to pay lip service to the strong dollar policy, but if someone else were to engineer a devaluation, that would be lucky break for the US.”

    – THE INDEPENDENT

  • William

    how can I post pictures please?

  • http://www.pragcap.com TPC

    Use the tags to post pictures.

    William,

    You seem to be in favor of a downfall of the USA. You sound entirely biased in my opinion and your generalizations about the state of the average American are a clear sign that you believe the government of the last 8 years and the actions of Wall Street represent your average American. Like most foreigners, you’ve been to the US a few times and witnessed the war atrocities under Bush and the economic downfall of the last year and come to grand generalized conclusions about all Americans – most of which are false.

    We are the largest, richest, most innovative and most productive nation on the planet. No civilization has come to dominate the global economy in as dramatic a fashion as the USA has over the last 150 years.

    You trash America, yet we remain the most powerful military, economic and innovative resource the world has. People do the same thing to WalMart here in the states yet they continue to crush the competition.

    I am not terribly familiar with the Austrlian economy, but did you not suffer from many of the same economic plights that you trash America for? In fact, I am quite certain that your housing bubble was far larger. Much like China, you have benefited from the implementation of the system that America perfected. Now you trash it?

    Your logic seems biased and hate filled in my opinion which gives it little to no merit.

  • William

    150 years ago, ENGLAND not the USA was dominating the Global Economy and continued to do so well into the 20th Century. At that time in history, the USA was gearing up for its first Civil War and its industrial base was in its infancy.

    Please don’t try to rearrange history to support your failing short lived system.

    And for your information, I am from New Zealand, that little country in the South Pacific that stood up to your country in the 1980’s and said “NO MORE NUKES IN OUR COUNTRY THANKS!” We are the only country to have done that and boy, did your politicians hate it.

    So how can I post pictures on this site????

  • William

    THERE IS NOTHING WORSE THAN BEING IN A STATE OF DENIAL.

  • http://www.pragcap.com TPC

    You’re getting upset William. No need for that. I don’t know where your anger stems from, but it’s obvious that you have a deep hatred for America. I am not the person you should be angry at.

    If you’re trying to find out how to insert images I’ll send you on a short trek – use your horrible USA branded computer to browse the internet (which was founded by the evil US Dept of Defense) to Google (a horrible American company) to find the code (which was written by a terrible American).

    Good luck and enjoy all of these terrible American inventions which have made you so miserable!

    PS – Try not to enjoy my awful American blog which you visit daily!

  • William

    Bravo, there is nothing like a good wind up is there? I enjoy the daily thrust and parry here, many thanks. I makes me happy to provide your blog with a little entertainment and some good old fashioned truths.

    I made my computer while living in New Zealand out of parts which came from Japan, Taiwan, Korea and China.

    It uses software that MS stole from Apple and to show my contempt for MS, I haven’t paid them for the priviledge of using it.

    It is not anger that I am feeling for your country and I can understand why you are defending it so strongly, instead I feel pity for you. I feel real pity for all those hard working Joes who have lost their jobs to Asia because their politicians and union bosses were so short sighted. I feel pity for all those hard workers who saved for their retirements and have been swindled out of their investments by the recent batch of US con men. I feel sorry for those in your military who are in a number of countries losing their lives to support your armaments industry while trying to tidy up the mess created by your politicians and multinationals.

    Most of all, I feel sorry for those of you in the US who can see that your country has done no wrong, both within its own borders and overseas. Without a change in thinking, the current round of economic woe is nothing compared to what will befall you as a nation. Get out a bit, start to make friends again, don’t be so focused on yourselves. Don’t shoot the messengers who bring you the truth and offer suggestions.

  • http://www.pragcap.com TPC

    I respect your opinion William. And I even agree with much of what you say. But none of us want or ask for your pity. This country has done more for you than you’re willing to admit, but you’ve lost site of the forest for the trees. You act all unbiased yet you sit in Liaoning China on a computer invented in America….

    Enjoy your Windows XP and the internet that allows you to so freely abuse and “pity” those whom you know nothing of. Just remember that it is the great American ingenuity that allows you to do it….

  • William

    Ok I take my pity, back.

    The first computer was developed by Charles Babbage (of England). It was called the Differential and Analytical Engine. The programmer for this computer was Ada Lovelace (first programmer). [Not quite correct. Babbage's Differential Engine was not the same as his Analytical Engine. The Differential Engine came first and was more limited.]
    The first completely electronic computer was developed in England in 1943. It was known as Colossus. It took up 1,000 Sq. ft. weighed 30 tons/60,000 pounds. And took 150 kilowatts which is enough power to light up a small town.

    The clever people in the UK invented many things that you guys try and claim as your own.

  • William

    Oh I love this….

    From Wikipedia, the free encyclopedia
    Timothy Berners-Lee

    Born 8 June 1955 (age 54)[1]
    London, England[1]
    Residence Massachusetts, USA[1]
    Nationality British
    Education The Queen’s College, Oxford
    Occupation Computer Scientist
    Employer World Wide Web Consortium and University of Southampton
    Known for Inventing the World Wide Web
    Title Professor
    Religious beliefs Unitarian Universalism
    Website
    Tim Berners-Lee
    Notes
    Holder of the 3Com Founders Chair at MIT’s Computer Science and Artificial Intelligence Laboratory

    Sir Timothy John “Tim” Berners-Lee, OM, KBE, FRS, FREng, FRSA (born 8 June 1955[1]), is a British engineer and computer scientist and MIT professor credited with inventing the World Wide Web, making the first proposal for it in March 1989. On 25 December 1990, with the help of Robert Cailliau and a young student staff at CERN, he implemented the first successful communication between an HTTP client and server via the Internet.

    Please note “British” Engineer, not American.

  • http://www.pragcap.com TPC

    You get my point William….Have a nice day!

  • William

    Thanks TPC, you too, and thanks for the fun debate.

  • http://www.pragcap.com TPC

    Please tell me you’re kidding. The internet was discovered in the 1950’s (when your Englishman was in diapers) by the US defense department – not 1990….

  • http://www.pragcap.com TPC

    Seriously though – I am off to bed. Have a great day William. We’ll catch up some other time. Best, TPC.

  • Uncle B

    Americans bankrolled their banks with taxpayers money is a “Socialist” move that shocked and dismayed the Capitalists of the world! Bankruptcy and its spoils were whisked away from the eager and hungry vulture capitalists looking for 10 cent on the dollar bargains by a semi-communist , almost totally socialist government act! American! do not fear socialism, you fvcking well “OWN” GM(America) right now! Goddammit! Now, Look honestly at your Holocaust: 45 thousand a year! Kicked out of society! Disenfranchised by lack of adequate medical care! They DIE! How many are Jews? Is Weisental foundation watching? Are Old German Jews worth more than young American Jews? Where is the outcry! The photos of the dying in the slums? The tumors as big as your head? the caskets? The burial grounds? The drama! Did the first Holocaust really occur? Did they not say, “Never Again?” Were they kidding? lying? Did the first to the furnaces die in vain, and is allowing this American holocaust as proof! The Star of David, stained in Palestinian blood, now covering over the American Holocaust? Are the medical insurance companies the new “SS” ? the new “Gestapo” ? Accountants their “Storm Troupers”, the “Selection committees” for the corporatists the corporations? For higher ROI? Is America Fascist? not Socialist at all? Democracy – a word for convenience and excuse only? To the Jewry of America , Shame! Shame! Shame on you! Rise up and defend! Stop hiding in Israel! America like any country will only show greatness in the way it can affortd to treat the least of Americans – right mow, our record is world wide and dismal! We look like modern day Fascists – even Hitler took better care of his own, allowing/enforcing a humane euthanasia over death in the slums, like dogs,from untreated disease! America will shrink in dimension forced by Asian activity and some will struggle to revive a hopelessly unsustainable “Status Quo” , wiser folks will adapt to the changes, the astounding paradigm shifts thrust upon the very fabric of America by the flight of good, hard earned entrusted capital from America where it was entrusted to be invested, to Asian markets, the “Yuan” and to finance “Super Factories” in Asia and to buy resources through-out the world! Free trade opened the doors, and higher ROIs than usual gave incentive, the money took wing, only the investors, the Uber-Rich, unpatriotic, treasonous, shameless capitalists will profit, and America is doomed to the greater depression to pay for it in the next naturally occurring downturn of the capitalistic economy we so nobely live and die for in our wars around the world! We are the world’s biggest suckers, losers to Wall Street treasonists, lost our life savings to swindlers and shysters in a high stakes banking play, about to face conscription for our mercenary services in Afghanistan on behalf of Halliburton(Dubai) fort a pipeline to China’s Turkmenistan Oil Fields, We face a disgruntled Israel ready to “Push the Button” for us in the Middle East, after having lost Iran’s “South Azadegan Oil fields ( the largest oil find in the Middle East in the last Thirty years) by a sale to China, and now face Chinese plutonium in Iran , with Chinese plutonium delivery systems, to protect their new oil acquisition and finally to balance “Mutual Destruction by Nuclear fact for the Jews of Israel, no longer protectable by their close affiliation with U.S.A. no longer harboring concealed weaponry, openly a Nuclear power, and a weak one at that! The worm has turned! We have entered into the “Fourth Turning” in America! A new day is about to break fourth for Americans, unfettered by Capitalist grip, Corporative lobbiests, our vote restored to power over the shareholders vote, the dollar no longer our captor, we are free! I see the silent revolution on the horizon, just after the gully that brings the greater republican depression, a demolished dollar, the “Yuan” in international trade, and the Amero – detached from corrupt capitalism and Washington – a new age for the innocent peons of America! Your trials soon over, dear sweet American peons, a new life of sustainability freedom from the chains of corporatist, capitalists, and their propaganda dogs! Free At Last!