China’s Economy: Not All It Seems
Rich Lowry – National Review
It is manifestly true that a closed, low-income economy that adopts some market reforms can grow quickly; that a dictatorial government can manipulate the economy to serve its ends; and that government-directed investment can build lots of bridges. None of this, though, makes for a sustainable, First World economy, let alone a juggernaut that should be feared and envied by the United States….Some perspective is in order with regard to China’s economic position vis-à-vis the United States. As Derek Scissors of the American Enterprise Institute points out, “American national wealth is almost twice that of China and Japan combined,” and “the average American makes 12 times as much annually as the average Chinese.”…. For a truly modern economy, China needs a commercial banking system, less powerful state-owned enterprises, free capital flows, greater labor mobility, and a proper retirement system, not to mention the rule of law, property rights, and an independent judiciary, among other things.
Marilu Rodriguez, a young adult or “millennial,” checks a news website on her smartphone before boarding a train in Chicago on March 13, 2015. (AP)
How Market Crash Hurts Millennials
Andre Spicer – CNN
Recent research suggest that millennials are likely to face an uphill battle for the rest of their career while those who graduated during better times are spared of the hurdle.
When the economy sours, the hardest hit are often the young people. Following financial crises, they tend to lose their jobs more quickly than other age groups…..
There is also mounting evidence that people who graduate during a downturn face an uphill struggle for the rest of their career. One study of Stanford MBA students found that if they graduated during a downturn, it was less likely they would get a lucrative job in an investment bank….During tough times, young people might give up on the corporate world and try to go it alone by starting up their own businesses. This seems like a great idea, especially given the hype on start-ups, but in reality, the majority of new businesses fail after a few years.
Traders Edward Curran, left, and Neil Catania work on the floor of the New York Stock Exchange, Aug. 25, 2015. (AP)
Why China’s Response to Economic Freefall Is Incomplete
David Ignatius – The Washington Post
The problem is that as China tries to turn this corner toward slower growth, it swings the rest of the global economy along behind, as in a game of “crack the whip.” What begins as an orderly transition becomes a disorderly rout—exacerbating the very problems that China was trying to cure….David Smick, a financial consultant who’s very wise about international markets, writes in the latest issue of his magazine, “The International Economy” that hosing markets with money doesn’t change the fundamentals of investor behavior. He estimates that after 2008, more than $17 trillion was devoted worldwide to programs for stimulus, bailouts or guarantees. “The result: After an initial sugar rush of economic activity, global growth, trade and cross-border financing since 2010 have all plummeted,” writes Smick. “It turns out the massive flood of money failed to drive human behavior.”The Man Who Got China Right
Joe Nocera – The New York Times
In the fall of 2009, Jim Chanos began to ask questions about the Chinese economy. What sparked his curiosity was the realization that commodity producers had been largely unaffected by the financial crisis; indeed, they had recorded big profits even as other sectors found themselves reeling in the aftermath of the crisis.
When he looked into why, he discovered that the critical factor was China’s voracious appetite for commodities: The Chinese, who had largely sidestepped the financial crisis themselves, were buying 40 percent of all copper exports; 50 percent of the available iron ore; and eye-popping quantities of just about everything else. That insight soon led Chanos to make an audacious call: China was in the midst of an unsustainable credit bubble….
As it turns out, China’s economy began to slow right around the time Chanos first made his call. No matter: Most China experts remained bullish. Chanos, meanwhile, was … regularly sending out emails when he came upon articles that seemed to confirm his thesis: stories about newly constructed ghost cities and troubled banks and debt-laden state-owned enterprises