tag:blogger.com,1999:blog-4815867514277794362.post6316380151404180418..comments2024-03-08T06:18:28.125+11:00Comments on Bronte Capital: The Macroeconomics of Chinese kleptocracyJohn Hemptonhttp://www.blogger.com/profile/03766274392122783128noreply@blogger.comBlogger110125tag:blogger.com,1999:blog-4815867514277794362.post-15422455077478604922014-08-27T13:50:12.498+10:002014-08-27T13:50:12.498+10:00Kleptocracy, like mafia, is a word. I agree with a...Kleptocracy, like mafia, is a word. I agree with a lot of what you write, but I wonder how different you consider China to be from the rest of the world. Is the US a kleptocracy? To put it another way: does the political economy of the US enrich a small elite at the expense of the wider population? Think about the bailouts. Think about the stagnation of middle-class incomes for the past three decades. Think about the Gini coefficient. To use the word kleptocracy suggests the system is evil and unsustainable. I don't think it's so black and white. I don't think the US system is evil, though it clearly serves the interests of the rich few over the many. I don't like China's system, but they have made enormous economic progress there, and people's lives on the whole have got much better. I don't think this is all a mirage, or destined for reversal and collapse. Similarly, I don't think all Chinese listed companies are dishonest. We can point to plenty of corrupt US companies - Enron, WorldCom, CountryWide, the banks. That doesn't make the US stock market as a whole a ponzi scheme.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-81517506491690624472012-10-16T07:06:51.377+11:002012-10-16T07:06:51.377+11:00This article is so extreme as to be meaningless. F...This article is so extreme as to be meaningless. Far too many generalizations without any supporting facts. China has 20$ of the world's population, 7% of the arable land and 1/3 the global average water per capita. What exactly did you expect them to do to control population. Every single major nation in the world went through exactly the same developement issues as China is going through now. And China, like all those countries, has a very strong group who are striving to continue the reform that has taken place over the past 30 years. As someone once said, by all means light the way forward, but recognize the distance travelled, You have done neither. <a href="http://ensurevsinsure.net" rel="nofollow">ensure vs insure</a>Anonymoushttps://www.blogger.com/profile/09897371240344047653noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-13631575962461430422012-09-08T16:16:47.018+10:002012-09-08T16:16:47.018+10:00An interesting assessment of the relevance of infl...An interesting assessment of the relevance of inflation & deflation in Chinese politics and economics. To everyone who says 'tsk tsk those terrible Chinese officials' might I remind you of the continuing Wall street, Fed & Government rip off where banks enjoy deregulation when times are good and bailouts when the chickens come home to roost. But you are probably a banker so you're blind to your own klepto traits.<br /><br />The most important issue raised here for me was the US stock scams. What are we western governments doing about preventing our stock markets from becoming a black market at the hands of Chinese SOEs? Especially since the Chinese are now making it harder to tell the difference from legitimate operations and sharks?<br /><br />Thanks for raising these issues.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-10351392884610651572012-09-04T11:21:36.608+10:002012-09-04T11:21:36.608+10:00May I suggest you avoid travel to mainland China f...May I suggest you avoid travel to mainland China for a while.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-75693288948287619882012-09-02T22:53:38.598+10:002012-09-02T22:53:38.598+10:00The article is still very interesting but the conc...The article is still very interesting but the conclusion is still wrong.<br /><br />For those of you who say that there will be a revolution because a low rate of inflation will endanger the banks holding the peasants' savings, it's the easiest thing in the world for the Chinese Central Bank to guarantee those savings with its printing press.<br /><br />Therefore (as I said much earlier in this comment thread) the real revolutionary danger comes from the "masses" fed up with an excessively HIGH rate of inflation, so if the kleptocracy wants to stay in power it will simply have to "steal less;" it's most certainly not going to revolt against ITSELF, because whatever would result from that would certainly be inferior to, say, simply cutting its current income in half.Mark B. Spiegelhttps://www.blogger.com/profile/17812922729002094771noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-26565452944598970532012-07-06T22:38:28.882+10:002012-07-06T22:38:28.882+10:00So if the official deposit rate is 3pc and lending...So if the official deposit rate is 3pc and lending rate is 6pc, what are funds really being held / loaned at to borrowers / SOEs to enable 'looting'?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-48154620592374322452012-07-05T16:57:36.261+10:002012-07-05T16:57:36.261+10:00The real way they steal from the peasants is throu...The real way they steal from the peasants is through acquisition and rezoning of farmland into urban land which is then developed and sold off at 100x the price.<br /><br />Until the peasants own the land they farm they are condemned to poverty.<br /><br />This rezoning and government-developer linked corruption is responsible for a huge portion of the corrupt wealth generated and it is literally all about stealing from farmers.<br /><br />Government workers and SOE workers on the other hand were granted their own apartments over a decade ago in the cities .<br /><br />No country has raised peasants from poverty without land distribution programs. Having land gives them assets , financial stability and something to borrow against eg for factory setup or to finance childrens education.<br /><br />An example of a successful Land distribution policy was in Taiwan during Japanese rule and then afterwards with the KMT.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-24486423812315596092012-07-02T17:21:14.714+10:002012-07-02T17:21:14.714+10:00Your synthesis is interesting but incomplete.
F...Your synthesis is interesting but incomplete. <br /><br />For one thing, there have been many kleptocracies which have lasted for decades or even generations. Take Marcos in the Phillipines or Suharto in Indonesia, as recent examples. <br /><br />Likewise, a subtler approach is used by Lee's family in Singapore. Briefly, it's very difficult for foreigners to do business there unless they go into partnership with one of Lee's children. That is accepted, perhaps grudgingly, in Singapore as being the done thing for business, although it certainly means that general populace must suffer higher prices, etc. <br /><br />Another point is that the rulers of China are not squeamish. They are, after all, communists. They heartily endorse the view that you can't make an omlette without breaking eggs. And they were brought up to believe that the end justifies the means. So they will do whatever it takes to stay in control. <br /><br />Don't forget that they saw their fathers kill tens of millions of dissidents during the cultural revolution. Indeed it was the obvious success of that repression which has emboldened the current generation of party leaders. <br /><br />The mistake that we Westerners often make is to think that our values are shared by others. In the present context, there are many 'bleading-heart liberals' in the West who make the mistake of thinking that their ideals are shared by everyone indentifies themselves as of the 'left'. The problem, however, is that the Chinese communists are of the old school - their aim is to seize power and to hold it all costs. <br /><br />So, I don't think there will be a revolution in China. There may be rumblings from time to time, but any organised threat will be crushed ruthlessly.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-54584182611745852242012-06-23T15:45:55.799+10:002012-06-23T15:45:55.799+10:00Really recommend a quick read of Yu Hua's &quo...Really recommend a quick read of Yu Hua's "China in Ten Words" to the author and commenters alike. Any discussion of China as a kleptocracy without so much as a brief nod to the social mores (or lack thereof) that got it where it is today is ... incomplete, to put it kindly.<br /><br />One of the things that struck me -- and I've lived and traveled quite a bit in SE Asia, where the corruption is similar in scope but very different in feel -- was the simple acceptance, on a really deep level, of fraud being just as good as the real thing. Things like falsified interviews being published as genuine because that's how the journalist "imagined" a famous person would respond, or those infamous knock-off electronics that barely resemble the genuine article. <br /><br />When there's no stigma attached to such practices, when it's shrugged off or warrants no attention in the first place, why shouldn't falsified bank records be just as good as the real thing? And with the corruption so deeply entrenched, doesn't this stop being a moral question and become a matter of simple survival? Honesty can still quite literally get you "disappeared."<br /><br />And then there's the phenomenon of "blood barons," blood bank traders, who have built outrageous personal wealth by pimping out poor peasants to hospitals... and the fact that this is a tremendous <i>improvement</i> on the prior state of affairs.<br /><br />I know economists are still fighting to be taken seriously as a "hard" science, but as long as squishy humans are involved in the process of pushing money around, the soft stuff is relevant. You can't predict whether the kleptocracy will self-correct, slowly consume itself over a period of decades, or explode in bloody Cultural Revolution II: Kleptocratic Boogaloo if you're sticking your fingers in your ears every time history and culture come up.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-28192793204722649442012-06-21T16:52:22.014+10:002012-06-21T16:52:22.014+10:00i am chinese and i applaud you...this is exactly w...i am chinese and i applaud you...this is exactly what we need to push us forward and why we will overtake the US in 10 years, during then people like you will still be bashing on the same exact things. <br /><br />there is nothing new in this article. people have been bashing china for decades and where it is now? <br /><br />but i see you just learned what china is about...so i can understand how you feel about it compared to what you know about your country. just ask a very simple question..is china growing more or less corrupted and kleptocratic than before?<br /><br />people just simply don't learn that they don't learn. keep up the bashing, we really and seriously need it to keep going forward.plxtalnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-65747951539776078832012-06-20T06:19:06.901+10:002012-06-20T06:19:06.901+10:00NYT.
"... a broad consensus of Chinese ec...<a href="http://www.nytimes.com/2012/06/17/world/asia/in-shift-china-stifles-debate-on-economic-change.html?_r=1&pagewanted=all" rel="nofollow">NYT.</a><br /><br /> <i>"... a broad consensus of Chinese economists says the country is overdue for another big push to encourage private enterprise and to foster a shift toward a more consumer-driven economy. The challenge, they say, is turning back China’s domineering state sector. But that seems increasingly unlikely. Publicly controlled enterprises have become increasingly lucrative, generating wealth and privileges for hundreds of thousands of Communist Party members and their families. And in a clear sign of its position, the government has moved to limit public debate on economic policy, shutting out voices for change."</i>Labanhttps://www.blogger.com/profile/12031578024191117985noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-52847239263443076692012-06-19T05:35:17.931+10:002012-06-19T05:35:17.931+10:00What you say is also true of the US economy which ...What you say is also true of the US economy which has clearly morphed into a Kleptocracy - of the RICH -by the RICH - for the RICH.<br />Government sponsored Capitalism aka Kleptocracy is faling the people all over the world. TRILLION$ have been stolen! <br />A fact of current observed reality - IMNSHO!!!!!!!!Defining Qualityhttps://www.blogger.com/profile/15313002278611680758noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-79327979300848048992012-06-19T05:24:14.757+10:002012-06-19T05:24:14.757+10:00Replace the word "China" with the words ...Replace the word "China" with the words "United States" and you can see how China just copied our Kleptocracy.<br />Sad but true IMNSHO!Defining Qualityhttps://www.blogger.com/profile/15313002278611680758noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-42533974616528188062012-06-18T19:43:38.726+10:002012-06-18T19:43:38.726+10:00Amazing article as usual john.Amazing article as usual john.Adam Heslophttps://www.blogger.com/profile/09961161290770104193noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-31711752253436672372012-06-18T15:10:34.179+10:002012-06-18T15:10:34.179+10:00I think the argument is diminished somewhat by the...I think the argument is diminished somewhat by the fact that savings rates are not 1% as stated.<br /><br />As mentioned by others, the 1 year deposit rate is 3.5% and the 5 year rate is 5.1%. Having your money 'tied up' for five years generally isn't a problem if you are indeed saving to avoid 'starving in old age'.<br /><br />Longer term real rates are actually thus roughly zero percent to very slightly negative; certainly not steeply negative enough to facilitate a high level of looting?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-85648231740228754882012-06-18T04:48:50.399+10:002012-06-18T04:48:50.399+10:00When I scan-read US Corporate Law for the first ti...When I scan-read US Corporate Law for the first time, it was quite a surprise to me because it was basically about how to siphon out money accumulated in a corporation legally. The corporate low has evolved along that line. Since the revelation many years ago, I've gotten it that is what power is and it's no accident that 90 percent of US Congress have been made up of riches. They are aware of that with understanding what power can accomplish. <br /><br />Awareness of people holding power about power knows fundamental differences regardless of capitalism, communism, democracy etc. They gather at Devon or some exclusive resort and are pleasantly surprised to find how many common concerns they share.ピリットhttps://www.blogger.com/profile/01794715786724699831noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-24522584955112705712012-06-16T03:17:30.254+10:002012-06-16T03:17:30.254+10:00Great article, and 'hat's off' for hav...Great article, and 'hat's off' for having the guts to come out and say it!<br /><br />Further thoughts here:<br /><br />http://thatretiredguy.blogspot.com/2012/06/hempton-is-brave-man.htmlThat Retired Guyhttps://www.blogger.com/profile/01121475911514146175noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-18226762844325991222012-06-15T09:33:21.248+10:002012-06-15T09:33:21.248+10:00Maybe useful to watch Akira Kurosawa's movie &...Maybe useful to watch Akira Kurosawa's movie "The bad sleep well" about post-war corporate corruption in Japan... though China could easily be an order of magnitude worse.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-28258339189826653262012-06-14T23:19:51.852+10:002012-06-14T23:19:51.852+10:00Keep purchasing and holding the Treasury is not ou...Keep purchasing and holding the Treasury is not out of financial return calculations; rather, they clearly understand that's the business licence fees that they have to pay to keep them in business aka power in China.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-75273424936587844182012-06-14T22:55:35.547+10:002012-06-14T22:55:35.547+10:00I'm not a quantity surveyor but that "pal...I'm not a quantity surveyor but that "palace" as evidence of kleptocracy seems weak. We'd need to know the cost per square foot and how it compares with standard HQ buildings at comparable Western companies. From the photo you can't tell whether it's solid gold or injection moulded shiny plastic. These neoclassical facades also don't look particularly expensive if mass produced. I'd bet that their site is cheaper per worker than the Apple flying saucer.<br /><br />Also we'd need to put it to scale, a posh atrium and a couple of floors of executive suite can be a tiny and barely relevant percentage of building costs if it's in a 10000 worker factory complex, and not necessarily out of line with what Western companies spend on exec suites (a less glitzy style is not necessarily cheaper to build).<br /><br />More generally I think the claim of kleptocracy should be measured: how do the Chinese one-percenters fare compare to one-percenters elsewhere? I don't know the answer, but we need a bit more evidence than has been submitted so far.cighttp://commentisglee.wordpress.com/noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-31959130827082755012012-06-14T01:25:10.627+10:002012-06-14T01:25:10.627+10:00"the slightly bigger problem of the derivativ..."the slightly bigger problem of the derivatives bubble"<br /><br />That the derivatives market far exceeds the debt market, the equity market and the global economy seems to me sufficient proof that most derivatives are not "hedges" and indeed are probably being used for some alternate improper purpose.Absalonhttps://www.blogger.com/profile/09131268683451462949noreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-56064756696049915552012-06-13T23:15:38.505+10:002012-06-13T23:15:38.505+10:00Nice article. In the long run there are severe mac...Nice article. In the long run there are severe macro-economic repercussions such as the lobsided demographic structure each child has two parents, four grandparents and theoretically 8 great-grandparents to care for. That means extremely high lavbour productivity.<br /><br />kleptocratic systems tend to be based on a pyramid structure where the "generated returns" are not completely based on actual wealth, but at least in part on hot air. That is not tenible in the end, see the financialcrises in europe.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-30911114983741530292012-06-13T16:06:36.284+10:002012-06-13T16:06:36.284+10:00Richard Koo had an interesting perspective on the ...Richard Koo had an interesting perspective on the theory of a connection between a lack of safety net, demographics & high savings rate. Summary:<br />http://ftalphaville.ft.com/blog/2011/02/17/491041/<br />Full:<br />http://www.scribd.com/doc/48988968/Nomura-R-Koo-2011-02-15Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-49820552339554233292012-06-13T12:34:45.860+10:002012-06-13T12:34:45.860+10:00Quote:
I start this analysis with China being a kl...Quote:<br />I start this analysis with China being a kleptocracy – a country ruled by thieves. <br />end quote.<br />America is ruled by sociopaths, and its people are looted by corrupt capitalist elites. Any of the recent exposures of Wall St houses get through to you ? So, are the Chinese authorities any different. Is the pot calling the kettle black ?Henry Balfournoreply@blogger.comtag:blogger.com,1999:blog-4815867514277794362.post-15216650756960367422012-06-13T07:57:00.231+10:002012-06-13T07:57:00.231+10:00Why piss on the Chinese? The same is being done t...Why piss on the Chinese? The same is being done to the Middle Class of any of the "Western" nations.Anonymousnoreply@blogger.com