How big of a false dawn will there be?

[william the wie]

got any info about Chinese and Russian entitlements?

Not really. Most of the information I have on it comes from "The Economist" in hard copy. To the best of my recollection China provides medical services and a small supplement based on the idea that granny watches the grandchild and cooks, the Russian pension plan is insolvent and inadequate except for free heating. Mostly I found out about these bennies en passant as part of budgetary/debt stories.

 

[loosecannon]

they don't sound like economy breakers, or justification for the economies of Russia and China to suffer due to an aging population.

IMO the aging population theories are dubious in the first place because while real we certainly can't afford to double our population every 40 years to solve our systemic economic impasses. But the theory also seems predicated on assumptions, like a debt based currency and a top heavy entitlements burden.

IMO it is over rated and too broadly applied.

Globalization is exporting jobs to nations without entitlements baggage explicitly to avoid those burdens and to cash in on the cheap labor those conditions support.

 

[william the wie]

they don't sound like economy breakers, or justification for the economies of Russia and China to suffer due to an aging population.

IMO the aging population theories are dubious in the first place because while real we certainly can't afford to double our population every 40 years to solve our systemic economic impasses. But the theory also seems predicated on assumptions, like a debt based currency and a top heavy entitlements burden.

IMO it is over rated and too broadly applied.

Globalization is exporting jobs to nations without entitlements baggage explicitly to avoid those burdens and to cash in on the cheap labor those conditions support.

Seriously LC, the US is one of the least entitlement addicted societies in the world particularly as a percentage of per capita GDP. Brazil has entitlements for virtually everything imaginable, likewise Argentina, South Africa, Botswana and on it goes. Just look at some of the threads on this board about the Greek bailout and the entitlements involved. Poor countries are poor due to either conflict or entitlements. The Chinese "miracle" was simply ending Mao's Iron rice bowl policy. People had to work or not get paid and suddenly China became more efficient. That is true pretty much worldwide.

 

[loosecannon]

while the US may rank in the middle on the scale of entitlements we rank at the very top in terms of the costs of those entitlements.

Lots of third world nations may have "more services" at their income parity level, but the costs of those services is miniscule.

Mexico subsidizes tortillas, we give out food stamps to buy junk food.

 

[william the wie]

While I am sure you have numbers supporting that you also have a much better idea of where the problem areas are here. Taking an example, UE/UC, that you've debated you really have to look at congressionally mandated budget, definitions and methodology that BLS has to work with to see why UE data doesn't smell right for higher levels of unemployment implicitly you have to propose alternative budget, definitions and methodology to really criticize it. The BLS is designed to be inexpensive and at least 90% accurate in the normal unemployment range of 4.5-8%. Outside of that range of course it is inaccurate, BLS data is not designed to be accurate outside of that range. What range do the CTs want to calibrate UE measurement to? These kinds of problems in figuring out how to fund UC the most common entitlement people use is multiplied by each entitlement in each country and you have to be intimately aware of context to figure out costs.

Just as with US numbers there is data lost in the footnotes, off the books and in different levels of government. In China and to a lesser extent Brazil and India the major entitlements are in construction and infrastructure. Brazil may not have ghost cities built on spec but they do have massive ghost industrial parks, I've talked to Brazilians who claim to have seen square miles of never used factories in Brazil's northeast. China is building high speed rail service from the coastal plains to the Tibetan plateau and the foot hills of the Tien Shen mountain ranges, not to mention granting access to the second most deadly desert in the world, the Tali Makin. 60% of China's GDP is officially construction and infrastructure projects but there are lots of indications such as subsidized gasoline prices that the costs of this jobs program is grossly understated and may exceed GDP. In India, if I understand the reports, the states are paying for wildcat road building and sending the bills to New Delhi but that is so bizarre I tend to dismiss it. Building four lane highways from Podunk to Dogpatch as the norm is really strange. But all of the above are entitlements to high paying jobs.

 

[loosecannon]

No they aren't.

Entitlements are benefits you accrue for not working, or benefits you accrue for working, they are not the benefit of work itself.

while it might be true that China's stimulus programs exceed their GDP I would never believe such a claim unless it was verified.

Meanwhile all evidence points to a Chinese economy that has the real goods: industrial strength, industrial employment and industrial strength global market share.

I challenge anybody to prove that the Chinese spend 10% as much as we do providing entitlements to a population 4 times as large.

 

[william the wie]

A jobs program is a jobs program and open ended jobs programs everywhere are simply disguised UC

 

[loosecannon]

nah, that is stimulus.

Once the jobs funding is gone the jobs disappear. Entitlements are enduring.

 

[Blair]

Australian floods have taken out many of their coal fields and the US as the Saudi of coal will take up most of that slack.

Chinese Capital Control reform will inject something in the low trillions of capital into the world economy as it gathers speed.

The US is still best of the worst by a fairly wide margin so its safe haven status will kick in as the EU crisis worsens.

That's the good news. The bad news.

The EU crisis will worsen until it hits bottom but then all of the lovely loot will flow right back out just as soon as everyone is certain that the bottom has been reached.

The Australian coal fields will reopen and take back the China and Indian markets due to a better than 2 to 1 logistics advantage relative to the US.

The CCC reform is supposed to cushion the Chinese real estate bust, which is going to happen. Once it happens the flow of new money will end and perhaps reverse.

In future episodes of how the US capital markets implode banking and residential real estate are still steering for the big splash at the bottom and the splash will be big.

So what are going to be some of the non-obvious effects of these capital flows?

There is less production of coal in ASIA this year as well , so there can be a shortage of coal around the world and the prices will rise cause suppliers will pay to the country which gave them a high price .

 

[william the wie]

That demand has outstripped supply for many grades of coal across the continent is definitely possible. That in each country demand is outstripping supply of desired grades of coal is very possible. But the entire continent of Asia has hit a decline in the domestic supply of all grades of coal with most of Siberia having multiple layers of peat bog (the very lowest grade of coal)? I am pretty sure that is a gross oversimplification.