Linearly increasing: True. I misread the axis. It still doesn't seem to have the form of something in a bubble or clearly unsustainable.
1. That's a fair point. But I suspect this has more to do with less developed capital markets in China than systematic weakness. I wonder if local supply of capital will be able to step up in the next American recession.
2. I think many have been successful in lowering their manufacturing costs. Not sure how an American correction would affect the Chinese economy.
3. Fair.
4. I'm generally skeptical of this argument. US corporations and households have maintained a high level of debt for more than 50 years without significant effect. I guess the Federal gov hasn't been the holder of that debt, but it actually seems better that way because they have the ability to print cash and add a stabilizing effect.
I guess my point is that none of these individually seem extreme enough to cause a problem. Maybe in aggregate there could be a storm.
Interesting point on (1). I wonder if that could trigger relaxed repatriation taxes for corporations in the US. Bringing a few hundred billion home would be great in a liquidity crisis.
I wasn't thinking of (2) that way, but in that case you're right that southeast asian competition is a bigger factor. If cheap manufacturing leaves, China would need to shift to consumer growth, which American companies thus far haven't really cracked (except Apple to an underwhelming degree.)
An interesting aside on (2) would be if a trade-protectionist president is elected in the US. This would re-prioritize from cheap manufacturing overseas to better jobs at home—triggering or accelerating what you were talking about. The New Yorker had a great piece today on how both Sanders and Trump are of that mindset.[1]
(4) might be a case of six in one hand, half dozen in the other. Turned out that the US government did (indirectly) hold all that mortgage debt when it bailed out the banks. That said, it looks better externally to institute QE to bailout companies who backed bad debt than to print money to pay off your own debt.
Either way, I'm not sure we are or aren't at a crisis yet, but they also haven't fixed some basic structural problems.
1. That's a fair point. But I suspect this has more to do with less developed capital markets in China than systematic weakness. I wonder if local supply of capital will be able to step up in the next American recession.
2. I think many have been successful in lowering their manufacturing costs. Not sure how an American correction would affect the Chinese economy.
3. Fair.
4. I'm generally skeptical of this argument. US corporations and households have maintained a high level of debt for more than 50 years without significant effect. I guess the Federal gov hasn't been the holder of that debt, but it actually seems better that way because they have the ability to print cash and add a stabilizing effect.
I guess my point is that none of these individually seem extreme enough to cause a problem. Maybe in aggregate there could be a storm.