/finance/ - Finance

Nobody on here is a financial advisor

New Reply
Files 🖌️ Max 5 files50MB total
[New Reply]

[Hide] (84.1KB, 1024x606+0+0)
a.k.a How should the rest of the world avoid perpetual economic stagnation Japan is experiencing for 30 years

From what I heard from the local commoners' news sites, it seems that the rising costs of everything coupled with high pay cuts in form of taxes and state-run insurances made most of the population to become misers, halting many kinds of trades. 
Most of the workforce in big cities have to cash out 30% of their salary to pay the two above which leave them with very little (<$150) disposable income every month, and the costs could run higher if they took loans.

However I don't think that alone explains why Japan ended up with a staggering level of public debt, nor explains why people are refusing to settle in countrysides where living costs are cheaper.
Replies: >>86
>>85 (OP) 
Although we should obviously explore the hows, but it's always nice to know the why, and in this case this documentary is essential:
The long story short is that the Japs came up with a system of state-controlled development in Manchuria, where bureaucrats designated various economic goals (e.g. produce lots of steel, or build a railway line between these two cities), and then helped businessmen achieve these goals. After ww2 'mericans let all these bureaucrats get into the government, which meant they actually had more power than they ever did in the 30s and 40s, as all the zaibatsu were broken up, so there was no one to say no to them. They pretty much adapted this Manchurian system to Japan, but a bit more indirectly: the state decided to prop up a specific industry, and the central bank told all the commercial banks to give good loans to companies working in that industry. And this way they propped up their economy industry-by-industry, sector-by-sector. Then a new generation of bankers came to work in the central bank, and they actually believed the education they received in the US, and so they decided to deliberately ruin this system in the 80s by causing that infamous housing bubble. They did such a good job that the Japanese economy is still suffering the consequences of their actions.
Replies: >>87
So the common point between US and Japan is that they've experienced economic crisis due to housing bubbles. But how do you even prevent that if house price normally go up in most market? 
Not even the Chinese government with its strong hold on domestic market was willing to let Evergrande and house prices fall by itself.
Replies: >>88
Those three are quite different beasts. In Japan they deliberately kept giving out cheap mortgages like candy, in order to artificially pump up the price, thus creating the bubble. After all, if all buyers can get cheap loans, then sellers can also demand more money for the same property. After a while prices got to the point where they became genuinely unaffordable, so nobody wanted to buy properties, simply because they could not afford it. And if nobody wants to buy something, then it worths less, and suddenly you had lots and lots of Japs saddled with mortgages for properties that are worth a lot less than when they took out those loans. 

In Shina, the same kind of bubble happened, except that this time it wasn't a deliberate attempt by the central bank to crash the economy with no survivors. As one strelok explained it, the average Chinaman is simply not allowed to buy stocks or bonds or land or anything like that, and the only way to invest his savings is to buy a flat. This means that every Chinaman wants to buy flats no matter what, and that leads to prices rising until not Chinaman can afford a house, and this created the same kind of bubble as the one in Nippon, just for different reasons.

What happened in the US was entirely different. There are certain financial instruments called mortgage-backed securities. The way they work is that banks pool together the monthly payments from lots of mortgages paid by average Joes, and sell that as a bond. In other words, you can essentially give a bit of cash to the bank, and they repay you with a constant trickle of money from their mortgages. It somehow made both the banks and the investors happy, because the former could transform that constant trickle of money into cash they can spend right now, and the latter got a rather secure long-term investment. Then the US banks started to handle out mortgages like candy, but unlike in Japan, the problem here is that they gave them to the poor (which I assume means spics and niggers in practice) who could not reliably pay back them back. And yet the banks still sold them as part of those mortgage-backed securities, and so after a while the investors didn't get that trickle of money, and Jose and Jamal are not that good at paying as Joe. In other words, the investors essentially lost a lot of money, and started pulling out from these securities, and the banks were not prepared to deal with that, hence that crisis in 2008.
[Hide] (51.1KB, 351x492+0+0)
Chinese property developers accept farm produce for homes
>Several Chinese property developers have said they would accept food as payment for homes in recent months, as they attempt to attract buyers. The companies advertised deals to let people use produce - including peaches, water melons and garlic - as down payments on new homes. However, some of these unusual offers have now reportedly been pulled. Home sales in China have fallen for 11 months in a row, while this week a major developer defaulted on its debts. 
>Last week, a property company in the eastern city of Wuxi said it would allow peaches be used to offset as much as 188,888 Chinese yuan ($28,218; £23,289) in down payments for homes.
>Another developer in nearby Nanjing said it would accept as much as 5,000kg of watermelon from farmers. It valued the produce at 100,000 Chinese yuan - several times what it would cost at local markets. However, the promotion that was meant to run until next Friday has been suspended, the state-run Global Times newspaper reported. "We were told to delete all promotional posters on the social media platforms," the paper quoted a representative of the company as saying, without giving further details.
>In May, property firm Central China Management ran a 16-day campaign in which it accepted garlic as down payments for homes in China's Qi county, a major garlic-producing region. "We are helping farmers with love, and making it easier for them to buy homes," the firm said in a WeChat post. Under the deal, one catty of garlic, which is equivalent to around 600g, was valued at five Chinese yuan, which is around three times its market price. The company said it had accepted 860,000 catties of garlic in deals involving 30 homes. However, it has since removed an advert for a similar a deal involving wheat, which was launched on WeChat last month. The company did not immediately respond to a BBC request for comment.
>Experts have said the deals are a way for developers to get around local authority rules that limit the size of discounts they are allowed to offer. Official figures for May show that sales of residential properties in China fell by 41.7% from a year earlier, the 11th consecutive month of declines. On Sunday, major Chinese developer Shimao Group said it had missed interest and principal payments on $1bn (£825m) of offshore bonds due that same day. In a filing to the Stock Exchange of Hong Kong, the company said it had seen a "noticeable decline" in sales with "significant changes to the macro environment of the property sector in China since the second half of 2021 and the impact of Covid-19". Meanwhile, embattled Chinese real estate giant Evergrande is in the process of restructuring its business after defaulting on its debts late last year.
Looks like the prices are about to hit the point of being unaffordable, and the developers also expect the price of food to increase in the immediate future.
China crushes mass protest by bank depositors demanding their life savings back
> Chinese authorities on Sunday violently dispersed a peaceful protest by hundreds of depositors, who sought in vain to demand their life savings back from banks that have run into a deepening cash crisis. Since April, four rural banks in China's central Henan province have frozen millions of dollars worth of deposits, threatening the livelihoods of hundreds of thousands of customers in an economy already battered by draconian Covid lockdowns. Anguished depositors have staged several demonstrations in the city of Zhengzhou, the provincial capital of Henan, over the past two months, but their demands have invariably fallen on deaf ears. 
>On Sunday, more than 1,000 depositors from across China gathered outside the Zhengzhou branch of the country's central bank, the People's Bank of China, to launch their largest protest yet, more than half a dozen protesters told CNN.  The demonstration is among the largest China has seen since the pandemic, with domestic travel limited by various Covid restrictions on movement. Last month, Zhengzhou authorities even resorted to tampering with the country's digital Covid health-code system to restrict the movements of depositors and thwart their planned protest, sparking a nationwide outcry.
>This time, most protesters arrived outside the bank before dawn -- some as early as 4 a.m. -- to avoid being intercepted by authorities. The crowd, which includes the elderly and children, occupied a flight of imposing stairs outside the bank, chanting slogans and holding up banners. "Henan banks, return my savings!" they shouted in unison, many waving Chinese flags, in videos shared with CNN by two protesters. Using national flags to display patriotism is a common strategy for protesters in China, where dissent is strictly suppressed. The tactic is meant to show that their grievances are only against local governments, and that they support and rely on the central government to seek redress. "Against the corruption and violence of the Henan government," a banner written in English read. A large portrait of late Chinese leader Mao Zedong was pasted on a pillar at the entrance of the bank. Across the street, hundreds of police and security personnel -- some in uniforms and others in plain clothes -- assembled and surrounded the site, as protesters shouted "gangsters" at them.
>The face-off lasted for several hours until after 11 a.m., when rows of security officers suddenly charged up the stairs and clashed with protesters, who threw bottles and other small objects at them. The scene quickly descended into chaos, as security officers dragged protesters down the stairs and beat those who resisted, including women and the elderly, according to witnesses and social media videos. One woman from eastern Shandong province told CNN she was pushed to the ground by two security guards, who twisted and injured her arm. A 27-year-old man from the southern city of Shenzhen, surnamed Sun, said he was kicked by seven or eight guards on the ground before being carried away. A 45-year-old man from the central city of Wuhan said his shirt was completely torn at the back during the scuffle.
>Many said they were shocked by the sudden burst of violence by the security forces. "I did not expect them to be so violent and shameless this time. There was no communication, no warning before they brutally dispersed us," said one depositor from a metropolis outside Henan who had protested in Zhengzhou previously, and who requested CNN conceal his name due to security concerns. "Why would government employees beat us up? We're only ordinary people asking for our deposits back, we did nothing wrong," the Shandong woman said. The protesters were hurled onto dozens of buses and sent to makeshift detention sites across the city -- from hotels and schools to factories, according to people taken there. Some injured were escorted to hospitals; many were released from detention by the late afternoon, the people said. 
>CNN has reached out to the Henan provincial government for comment. The Zhengzhou Business District Police Station -- which has jurisdiction over the protest site -- hung up on CNN's call requesting comment. Late on Sunday night, the Henan banking regulator issued a terse statement, saying "relevant departments" were speeding up efforts to verify information on customer funds at the four rural banks. "(Authorities) are coming up with a plan to deal with the issue, which will be announced in the near future," the statement said.
>The protest comes at a politically sensitive time for the ruling Communist Party, just months before its leader Xi Jinping is expected to seek an unprecedented third term at a key meeting this fall. Large-scale demonstrations over lost savings and ruined livelihoods could be perceived as a political embarrassment for Xi, who has promoted a nationalistic vision of leading the country to "great rejuvenation." Henan authorities are under tremendous pressure to stop the protests. 
>But depositors remain undeterred. As the issue drags on, many have become ever more desperate to recover their savings. Huang, the depositor from Wuhan, lost his job in the medical cosmetology industry this year, as businesses struggled in the pandemic. Yet he is unable to withdraw any of his life savings -- of over 500,000 yuan ($75,000) -- from a rural bank in Henan. "Being unemployed, all I can live on is my past savings. But I can't even do that now -- how am I supposed to (support my family)?" said Huang, whose son is in high school. 
>Sun, from Shenzhen, is struggling to keep his machine factory from bankruptcy after losing his deposit of 4 million yuan ($597,000) to a Henan bank. He can't even pay his more than 40 employees without the funds.  Sun said he was covered in bruises and had a swollen lower back after being repeatedly stomped by security guards at the protest. "The incident completely overturned my perception of the government. I've lived all my life placing so much faith in the government. After today, I'll never trust it again," he said.
This being China, it could be anything from a tiny local problem to the sign of a coming economic collapse, so I'd rather not make any grand conclusions. After all, maybe they just have some liquidity problems that will be solved soon, or maybe they have a gigantic liquidity problem due to failed loans and investments, and soon we will read this same story every week, but always set in a different corner of the Middle Kingdom.
Replies: >>120
[Hide] (292.9KB, 584x565+0+0)
>This being China, it could be anything from a tiny local problem to the sign of a coming economic collapse, so I'd rather not make any grand conclusions. 
My opinion is unchanged, but maybe I'm starting to err on the side of the latter possibility.
[New Reply]
6 replies | 3 files
Show Post Actions



- news - rules - faq -
jschan 0.8.0