So the recession is over right?

[Holaloperho]

For real? That sounds like "cheap money" looking for borrowers. A bubble in the making. Asian Financial Crisis in the offing?

No major indications as of yet. What problem areas there are seem to be mostly domestically based, ie confined to idiosyncracies in individual economies. Plus, you'll find that the kind of straight-forward crisis like 1997 would have a much harder time working now, since emerging economies are generally ready for it and have mitigating policies in place. For now, this isn't hot money chasing after stuff as much as it is a genuine rebalancing of the world economy towards "emerging" markets. It's an ongoing process, and hick-ups happen along the way, but it's ultimately the way to overcome a couple of centuries of colonialism and warfare in Asia and Latin America.

Just gotta manage it properly, which is where the Asian economies are actually better at listening to the helpful suggestions coming from places like the IMF than Latin America has been of late.

Yes, the world's economy are rebalancing, but it is conduct in a very slow paste, for example, China are still heavily depends (and getting more dependence on) on exporting and domestic consuming are not increasing greatly even though the government are encouraging people to spend more money.

The "economic miracle" in developing countries are simply cause by huge amount of investment conduct by both the gov. and private sector which used money lend out from the bank and THE BANK GET THOSE MONEY FROM ALL THOSE HOT MONEY create by the QE

[Greensheeep]

NO it's not, and it's going to get WORSE before it CRASHES. All part of the Agenda.

[Stevid]

The recession is over, Definitely.

We're (the developed world - US included) now in the slump - the period of stagnation and weak growth that follows particularly bad recessions. A particularly bad slump is known as a Depression. I don't think we're quite in that territory yet.

There was a recession?

[Neu Leonstein]

The "economic miracle" in developing countries are simply cause by huge amount of investment conduct by both the gov. and private sector which used money lend out from the bank and THE BANK GET THOSE MONEY FROM ALL THOSE HOT MONEY create by the QE

If that is the case, at this point available statistics don't show it.

Which country specifically are you talking about though. I might have a look into it just for the hell of it.

[Sovereign Spirits]

Whatever helps folks sleep at night is usually what they accept as truth. I don't think this is any different in the realm of economics.

[Holaloperho]

The "economic miracle" in developing countries are simply cause by huge amount of investment conduct by both the gov. and private sector which used money lend out from the bank and THE BANK GET THOSE MONEY FROM ALL THOSE HOT MONEY create by the QE

If that is the case, at this point available statistics don't show it.

Which country specifically are you talking about though. I might have a look into it just for the hell of it.

China.
the only reason why China is able to maintain its growth during the recession period when developed countries' suffer is because china give out a four trillion dollars stimulation pack during that period of time and this project are heavily involve with building more infrastructure and order banks to lend out more money.

Link for reference :http://en.wikipedia.org/wiki/Chinese_economic_stimulus_program

[Neu Leonstein]

China.

I'm aware of that and its consequences. But China is a shitty example of an Asian emerging market. It also doesn't have a hot money problem.

[Holaloperho]

China.

I'm aware of that and its consequences. But China is a shitty example of an Asian emerging market. It also doesn't have a hot money problem.

It have a huge hot money problem, the housing market have a huge bubble and their price are ridiculously high; beyond any normal Chinese ability to afford .
Infect, this is the case for most Asia countries/region (India, Malaysia, Hong Kong, Singapore, Taiwan, etc)

[Neu Leonstein]

It have a huge hot money problem, the housing market have a huge bubble and their price are ridiculously high; beyond any normal Chinese ability to afford .

That's not hot money. The Chinese government places extremely tough restrictions on foreign money going into China. Believe me, Chinese banks would love to channel some hot cash that way. But they can't. What little can be managed basically has to be squeezed through loop holes relating to Hong Kong exporters, IIRC.

Infect, this is the case for most Asia countries/region (India, Malaysia, Hong Kong, Singapore, Taiwan, etc)

I'm sure property prices are pushing up in many of these places. But as I said, the data available at the moment does not suggest that this is because of foreign cash. It's just a symptom of fast growth and a lot of confidence.

[Holaloperho]

It have a huge hot money problem, the housing market have a huge bubble and their price are ridiculously high; beyond any normal Chinese ability to afford .

That's not hot money. The Chinese government places extremely tough restrictions on foreign money going into China. Believe me, Chinese banks would love to channel some hot cash that way. But they can't. What little can be managed basically has to be squeezed through loop holes relating to Hong Kong exporters, IIRC.

The Chinese government is posing a lot of restriction on foreign investment, but black market in financial sector in China help bypass this barrier.

[Holaloperho]

I'm sure property prices are pushing up in many of these places. But as I said, the data available at the moment does not suggest that this is because of foreign cash. It's just a symptom of fast growth and a lot of confidence.

Maybe foreign hot money is not the reason, but I am pretty sure their is a huge bubble in the housing market; their price is out of reach by normal people.

[Neu Leonstein]

The Chinese government is posing a lot of restriction on foreign investment, but black market in financial sector in China help bypass this barrier.

Do you have any evidence for this?

[Holaloperho]

The Chinese government is posing a lot of restriction on foreign investment, but black market in financial sector in China help bypass this barrier.

Do you have any evidence for this?

My mom is able to buy a house in China as a foreigner despite many Chinese province and city forbid foreigners to buy houses

[Neu Leonstein]

My mom is able to buy a house in China as a foreigner despite many Chinese province and city forbid foreigners to buy houses

For general reference, "my mom does X" does not constitute valid evidence, unless you can prove that she does in fact do X.

But, accepting that your mom is able to buy a house, that is not hot money. She can't quickly take her money out again, especially when she is in fact living in China. Hot money consists of liquid, quickly reverseable flows - fixed investment is basically the opposite of that.

Plus, the Chinese economy is doing trillions of US dollars of investment a year. Your mom's house purchase doesn't really translate to there being a black market for finance in China large enough to drive any prices.

[Barringtonia]

My mom is able to buy a house in China as a foreigner despite many Chinese province and city forbid foreigners to buy houses

For general reference, "my mom does X" does not constitute valid evidence, unless you can prove that she does in fact do X.

But, accepting that your mom is able to buy a house, that is not hot money. She can't quickly take her money out again, especially when she is in fact living in China. Hot money consists of liquid, quickly reverseable flows - fixed investment is basically the opposite of that.

Plus, the Chinese economy is doing trillions of US dollars of investment a year. Your mom's house purchase doesn't really translate to there being a black market for finance in China large enough to drive any prices.

So the way they get around it is that the official ownership papers remain in a Chinese citizens hands but a contract is written between that citizen and a foreigner. That means it can then be sold on as if it was owned, or essentially anything can be done with it. It would appear very risky but the invisible hand ensures it's in the interests of the citizen to hold to the contract since it's an overall revenue source.

It's similar to operating companies, have a citizen actually own it on official paper but run it on your own as you wish. One can obtain work visas in this way too, a citizen sets up a fictitious company and you're employed under that.

This is happening in Africa as well, where individual contracts are honoured so that people can do business without screwing around with government, licensing and bribes.

[Holaloperho]

My mom is able to buy a house in China as a foreigner despite many Chinese province and city forbid foreigners to buy houses

For general reference, "my mom does X" does not constitute valid evidence, unless you can prove that she does in fact do X.

But, accepting that your mom is able to buy a house, that is not hot money. She can't quickly take her money out again, especially when she is in fact living in China. Hot money consists of liquid, quickly reverseable flows - fixed investment is basically the opposite of that.

Plus, the Chinese economy is doing trillions of US dollars of investment a year. Your mom's house purchase doesn't really translate to there being a black market for finance in China large enough to drive any prices.

First of all, my family live in Hong Kong and it is a special administrative region under China. We were one country, but we run in a different system, therefore, we are seen as foreigner by the Chinese government.

Second of all, my mom use the black market financial system to transfer more then a million hong Kong dollars in one day into China since China only allow a person to transfer in or out maximum 20000 RMB between China and the rest of the world.

Third of all, I don't really understand what do you mean by "investment"

[Neu Leonstein]

Third of all, I don't really understand what do you mean by "investment"

Basically any domestic economic activity that is not current consumption. Building roads, buying machines, and I think building a new house would count as well. Chinese people save a lot (can't blame them, since they basically have to care care of themselves and their families in old age and sickness, and getting reasonable loans from the banking system is difficult) and all that gets channelled into the banks, who then use it to finance investment. Since the government likes this (it gives its big banks lots of cheap money to go give to favoured projects and support exporters), it only very slowly moves away from subsidising this system.

Either way, no foreigners are required for this process, and to the extent that they get to be involved it is monitored very closely by the authorities. While I don't doubt that there are loop holes and not-100%-legal ways of getting around that, I don't think that's a large enough factor to change my mind: China doesn't have a hot money problem at the moment, it has too many capital controls in place.

[Snot Sniper]

QE is an odd thing. Some call it "printing money" and though it involves no new printed paper it is a bit like that, except that the "new" money is only entered into the economy indirectly, by buying Treasury offerings (bonds and such).

To simplify by pretending that the US really was printing new money: this would increase US inflation (lower the dollar). I don't see how that creates a crisis in Asia?

It create crisis because those money which were create by the fed doesn't cause banks in the US to lend more money out domestically, instead they turn into hot money and enter the developing countries. That the reason Asia have a lot of "cheap money" waiting to be lend out.

OK. I'll call it "hot money" now. Like a hot potato, no-one wants to hold it.

At the meantime, two third of USD are not circulating in the US, Instead, they were use as clearing currency for most trading conduct in the rest of the world. Therefore, printing more USD won't really increase the inflation of USA greatly.

By one third I guess. I remember it being raised as a concern at the time, but the majority opinion being that liquidity was more important.

If what you say is correct, that two-thirds of the QE money would have effects offshore, then the "easing" of money supply should have too. And I can see that Asia (among others) doesn't benefit from more money supply.

Buy gold with it

[Neu Leonstein]

By one third I guess.

Two things: it doesn't matter where a US dollar is. Its existence adds to total US money supply, since you can at all times use it to buy stuff in the US, even if you probably won't while you hold it.

The second thing is that inflation is not a 1 to 1 function of money supply over the short to medium term. Nor are inflation expectations.

[The House of Petain]

Of course it is, you can always trust an economist

Actually I was watching an interview with Bernanke and I was amazed at his bluntness, how they [the Feds] simply added enough zeroes to resolve the problem. Is that how things work now? If I owe $1,000, can I take away a zero? Is that a choice?

HMMoG, and we put these folks in charge of our nation's finances.

(Yes, I realize it's not that simple. I think my point is I'm cynical of how many billions upon billions we spend, and how we often print more and more to do it)

[Neu Leonstein]

(Yes, I realize it's not that simple. I think my point is I'm cynical of how many billions upon billions we spend, and how we often print more and more to do it)

Cynical is fine. Factually incorrect is not.

[The House of Petain]

(Yes, I realize it's not that simple. I think my point is I'm cynical of how many billions upon billions we spend, and how we often print more and more to do it)

Cynical is fine. Factually incorrect is not.

how is it not?

[Ryan12]

no since there have been government shutdowns clearly its we are still in a rescission

[Snot Sniper]

I'm sure property prices are pushing up in many of these places. But as I said, the data available at the moment does not suggest that this is because of foreign cash. It's just a symptom of fast growth and a lot of confidence.

And people with earnings or earnings prospects wanting a house of their own so they don't have to live in their grandmother's basement?

But more seriously, China is big but its population is even more big. Population is pretty dense, and isn't the pattern globally that prosperous nations have land prices higher the greater the population density?

(Talking about the fast-growth areas of China of course, not overall)

[Snot Sniper]

no since there have been government shutdowns clearly its we are still in a rescission

*checks Google news*

Are you talking about Minnesota?