More on China
I know I’ve been discussing this at length lately, but I do think that the potential of a hard landing in China has major repercussions for Canada. And so, I highlight the plight of the People’s Bank of China in their quest to tap the brakes on a $5 trillion economy without swerving off the road.
We anxiously await news of an interest rate decision from the PBoC. I’ll update you when the news is out.
In the meantime I’ll highlight a must-watch CNBC clip from Friday, December 10 where Jim Chanos was interviewed about his position on China. You may recall that Chanos has made a pile of money calling several speculative bubbles and then shorting them appropriately.
Here’s that video in two parts:
Some key quotes/facts:
Construction accounts for 60% of GDP. Exports, which we commonly associate as China’s strength, accounts for only 5% of GDP. That’s scary stuff.
More about the empty cities in China. Adjusted for population, China is now building more residential homes than the US was at the height of their housing bubble. And you may recall that there are already enough empty homes to house half the US population. We’ve discussed both of these phenomena here before.
Harper finds his austerity mojo
You may recall that a few weeks ago I highlighted Jim Flaherty’s remarks about the tough budgets to come. I applauded the move back towards an actual conservative platform and made the following observation:
“If they can hold to this, and if attitudes continue to shift as I think they will, the rise of a truly conservative party in Ottawa will spell big trouble for liberals everywhere.”
Total we find this out:
“Prime Minister Stephen Harper’s Conservatives have lunged ahead of their political rivals in public favour and would be returned to power easily if an election occurred now, a new poll finds.”
“According to the survey, conducted this week, the Conservatives are supported by 39 per cent of decided voters, up four points from a month ago. By comparison, Michael Ignatieff’s Liberals remain at 29 per cent.”
Coincidence? Perhaps. I can’t help but think that people are starting to awaken to the ugly truth about our current fiscal position here in Canada. If the Rob Ford story is any indication, people are looking for leaders who are willing to make to tough decisions for the long-term health of the economy.
I have not been a fan of Stephen Harper. Perhaps I have been unduly critical. As one respected commenter from Ottawa has noted, this minority conservative government has largely had their hands forced with regards to the massive stimulus spending. But they’re not entirely off the hook. Bone-headed moves like loosening mortgage requirements have happened under their watch.
Though I despise Harper’s version of a ‘conservative’ government, I would be greatly interested to see what they would do differently if presented with a majority mandate. If he can stick to with his newly-found austerity mojo, we just may get to see.
The social implications of wealth inequalities
This is not a prediction, but simply a quick observation. I’ll leave you with a famous quote and a neat video clip. You can connect the dots from there:
“An imbalance between rich and poor is the oldest and most fatal ailment of all Republics.” -Plutarch