[The] "economic model, which leaves bureaucrats guessing about the market effects of their directives, is ultimately untenable." A. Gary Shilling
Sounds like Shilling is talking about our current economy in the United States, doesn't it? He's not talking about us. He's talking about China--the country whose economy is tightly intertwined with our own.
Why should you care?
While macro views of the world economy don't get you listings or buyers, it's important to stay on top of events which can affect the earning of our daily bread.
Shilling's article this morning on Bloomberg.com paints a bleak picture of China's economy headed for recession following a period of amazing growth.
Inflation is the boogyman. Imagine if you had to conduct your real estate business under the current constraints imposed by China's central government:
- Want to buy a second home? Minimum downpayment: 60%.
- Want to buy a primary residence? Minimum downpayment: 30%
- Are you a mortgage lender? The central government sets annual limits on bank loans in advance. If your bank loans the entire amount by the end of June, you'll have to wait until January 2012 for your next loan.
Government at any time, and in any country, is an experiment. We're blessed in the United States to have a say in how our government works. Especially in these economic times, that's not a blessing to be taken lightly.
(photo courtesy Forbes.com)
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They are tightly controlled and growth cannot happen forever when markets cannot take ideas where the ideas want to go. And the numbers coming out of there are never accurate!
They have the "benefits" of total government control, ie communism. Something we seem to be working closer and closer to......we are getting periously close to socialism as it is.
Hmmm....does that sound like the Chinese version of QRM? So, our QRM is not as draconian, but it will have the same effects....
Funny that Shilling would make these comments against Central planning/control about China when there is so much similarity with what we face here.
Mike
Very interesting post the over regulation in Washington is having a negative effect on the economy.
Good luck and success.
Lou Ludwig
Mike - I remember Japan in the 80's and how everybody was concerned that their economy would overrun ours and the chaos would begin. Then we started to tax them like they were taxing us. The next thing you know, they were building plants in the USA and hiring american workers because it was a better business decision than paying 25 percent import taxes. When will we do the same with China and Mexico? I don't think we have a fair trade agreement with either of those countries, they tax our goods and we don't tax theirs. Seems a little unbalanced.
They were talking on the news today about manufacturing jobs coming back to the U.S. because pretty soon it will be the same or less expensive to do so. Good news, I guess.
This is a very interesting post. America probably doesn't realize how good we have it.
Cara,
Our society is more interested in being entertained...
Jane,
I don't know if that's a good trade-off for the devalued dollar.
Larry,
Good point!
Lou,
Good to see you.
Ron,
When I read between the lines, it's an indictment of our own direction.
Brett,
It may be.
Than,
Some benefit!
Jay,
Thanks for being the first to comment!
Mike in Tucson
Our society is more interested in being entertained... <------ that's the truth. Many (way too many) have no idea what is really going on... meanwhile, China is setting up little cities right here in our country.