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I find it hard to believe that this will be contained to Australia and China. Australia certainly deserves what it gets (my home country) given its attitude to

I find it hard to believe that this will be contained to Australia and China. Australia certainly deserves what it gets (my home country) given its attitude towards debt and housing, but I think the contagion is real.

sonnyblarney 7y ago
Contagion is real - but - contagion spreads along specific vectors, some more damaging than others. A China 'slowdown' will probably not hurt the US, in fact, it may give the US leverage. A China 'crash' will surely have emotional contagion among investors, which of course matters, because if they pull the plug on activities it'll translate into real world effects ... But the 'material' contagion of a Chinese crash ... it's harder to predict. I suggest that the issue is far more likely to be damaging as a 'trigger' to a bubble burst or something else, rather than materially damaging in and of itself.
- raducu 7y ago
  I think people fear that the trouble in China is reduced global demand, not just the trade wars or a local problem.
  - sonnyblarney 7y ago
    Yes, it will have knock-on effects, but a serious China slowdown is in and of itself no reason to cause recession pretty much anywhere. Again, it could burst some kind of bubble and start a recession, but a China slowdown itself is not enough.
    - raducu 7y ago
      I was trying to point out that since China's factories are so much export oriented that seeing decreased factory activity most likely means a weak global demand. If the problem was with chinese real-estate, yes, the risk for contagion was minimal.
dageshi 7y ago
Australia and most of Asia largely went through the financial crisis in 2008 with very few problems compared to the US/Europe and China as a deliberate policy has kept its financial system closed to itself, there are fewer ways for a recession to spread between China and the rest of the world in the same way it did during the financial crisis.

sonnyblarney 7y ago

Contagion is real - but - contagion spreads along specific vectors, some more damaging than others. A China 'slowdown' will probably not hurt the US, in fact, it may give the US leverage. A China 'crash' will surely have emotional contagion among investors, which of course matters, because if they pull the plug on activities it'll translate into real world effects ... But the 'material' contagion of a Chinese crash ... it's harder to predict. I suggest that the issue is far more likely to be damaging as a 'trigger' to a bubble burst or something else, rather than materially damaging in and of itself.

raducu 7y ago
I think people fear that the trouble in China is reduced global demand, not just the trade wars or a local problem.
- sonnyblarney 7y ago
  Yes, it will have knock-on effects, but a serious China slowdown is in and of itself no reason to cause recession pretty much anywhere. Again, it could burst some kind of bubble and start a recession, but a China slowdown itself is not enough.
  - raducu 7y ago
    I was trying to point out that since China's factories are so much export oriented that seeing decreased factory activity most likely means a weak global demand. If the problem was with chinese real-estate, yes, the risk for contagion was minimal.

dageshi 7y ago

Australia and most of Asia largely went through the financial crisis in 2008 with very few problems compared to the US/Europe and China as a deliberate policy has kept its financial system closed to itself, there are fewer ways for a recession to spread between China and the rest of the world in the same way it did during the financial crisis.