OK, first a clip from
Boxing Day 16 December 2006, when the idea that the US housing market could bust was.. oh, unthinkable (link courtesy Antony Mayfield):
Note that this does all the tropes of US news (and yes, it is Fox News, so it’s even worse than normal) as noted by Kieren: nobody is actually allowed to say anything – note how the anchor interrupts people as they’re about to wind up their point – and nobody considers that anyone else has anything sensible to say; the idea is just, and literally, laughable.
What a lot of idiots the ones who aren’t Peter Schiff of Euro Pacific Capital (may his tribe increase) suffer the silence of the phones.
Next, a fascinating post about “Chimerica” – which is a chimera of China and America – by Niall Ferguson, who points out that an interesting ramification of that:
In our view, the most important thing to understand about the world economy over the past 10 years has been the relationship between China and America. If you think of it as one economy called Chimerica that relationship accounts for around 13 per cent of the world’s land surface, a quarter of its population, about a third of its gross domestic product and somewhere over half of economic growth in the past six years.
But now that party is drawing to a close, and not just because of the housing bust in the US (which was paid for by the money accrued by those saving their wages and company profits selling goods to the US that were made in China, which put it in banks which used it to buy US Treasury bonds, which issued it as cheap money to US banks, which lent it out to people to take out big mortgages on homes in excess of their value but which they could use to buy more goods made in China, which kept the circle going.. until people in subprime-land couldn’t keep up their repayments. Breaking the circle. But it’s not only in the US that the circle is being broken.
If the United States has a War on Terror, China has a War on Nature, by which I mean that the environmental effects of China’s breakneck industrialisation resemble an unprecedented assault on the natural world. And it does feel a little bit like a War on Nature when you visit China. I was in Beijing not long after the Sichuan earthquake happened, on the day of that extraordinary and universally observed public silence. It reminded me strongly of the atmosphere in the United States after the terrorist attacks of 9/11. But who was the enemy? All the extraordinary, formidable devices of the government’s propaganda machine were deployed to extol the virtues of the rescue workers and to emphasise the suffering of the victims. But there was no enemy except nature. It is nature, I suspect, that will resist China’s industrialisation far more effectively than anything else. But until environmental constraints begin to bite, Chinese growth represents a huge challenge to the world’s ability to produce commodities and extract fuels. That is the main reason why commodity prices look as if there is a war on.
OK, scary. And that’s before I’ve found the link to the piece I read the other day (on my iPod Touch, so can’t find the link here) with graphs about how housing had held up the US through the 2001 “recession”.