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The central authorities control the central bank, the banks, and perhaps importantly: the press. And of course policy/taxation. So they can stop a lot of rampa

The central authorities control the central bank, the banks, and perhaps importantly: the press. And of course policy/taxation. So they can stop a lot of rampant speculation through a variety of measures, meaning hopefully, they can kill any bubble-like blowups. As you say, there's a lot of poor folks and a lot of empty homes, maybe that does mean a haircut for home owners, but it might possibly be done in a way that doesn't cause any bursting bubbles. So long as there is something to underpin reality (like ex-poor people wanting homes) they can make a soft landing for all of this. The more existential concern is: 'what then'? The path has never been so uncertain.

ethbro 8y ago
I'd say the danger for China is not being unable to handle a consumer bubble. As you've pointed out, they have a lot of tools. It's their not recognizing they're creating a government supply bubble. The real weakness of demand economies historically hasn't been their difficulty producing basic things (that they feel are necessary), but knowing when to stop producing things. Absent free market signals, there's not a lot to tell you when to put the brakes on.
- sonnyblarney 8y ago
  That's a great point, that said, I'll bet they're aware of the problem you mention :) But macro-macro I see China going the very same thing Germany/UK/France, then Japan, then Korea did after WW2: they all rebounded to a certain degree and did so with nationalist fervour where applicable, and then kind of softened as they stopped having as many kids... and the kids lost the hyper passion their parents did. China is almost there with a lot of this, and soon it won't matter what they do, there's a limit to the demand for their stuff, they can only build so many homes, and they're having fewer babies, and those babies don't want to be slaves. China is 1980's Japan, just a lot bigger.
- hopler 8y ago
  You mean "command economy"?

ethbro 8y ago

I'd say the danger for China is not being unable to handle a consumer bubble. As you've pointed out, they have a lot of tools. It's their not recognizing they're creating a government supply bubble. The real weakness of demand economies historically hasn't been their difficulty producing basic things (that they feel are necessary), but knowing when to stop producing things. Absent free market signals, there's not a lot to tell you when to put the brakes on.

sonnyblarney 8y ago
That's a great point, that said, I'll bet they're aware of the problem you mention :) But macro-macro I see China going the very same thing Germany/UK/France, then Japan, then Korea did after WW2: they all rebounded to a certain degree and did so with nationalist fervour where applicable, and then kind of softened as they stopped having as many kids... and the kids lost the hyper passion their parents did. China is almost there with a lot of this, and soon it won't matter what they do, there's a limit to the demand for their stuff, they can only build so many homes, and they're having fewer babies, and those babies don't want to be slaves. China is 1980's Japan, just a lot bigger.
hopler 8y ago
You mean "command economy"?