Someone is sitting on a mound of $3.2 trillion in foreign exchange reserves, and yet this is possible:
With the same force that powered the most ambitious rail programme in history, China has slammed the brakes on its investment in high-speed trains.
The sudden halt has led to system-wide whiplash, leaving workers without pay, battalions of heavy machinery sitting idle and setting back plans for bullet trains that were meant to carry the nation’s future.
…Spending had already been slowing after a surge from stimulus money in 2009 but the decline since the Wenzhou crash in July has been precipitous. In year-to-date terms, investment in railways and transport had been up 7 per cent in the first half of 2011. By the end of September it was down 19 per cent, according to official data.
There is little chance of a return to the construction frenzy of the past five years but the government appears to be slowly setting the high-speed rail plans back in motion. Restarting the investment would provide an immediate boost to the weakening economy. Longer term, it is also expected to encourage a big structural shift, opening up China’s interior to make domestic growth more self-sustaining.
But this is less encouraging:
Passenger numbers have fallen sharply since the Wenzhou crash. About 151 million trips were made on Chinese trains in September, almost 30 million fewer than in July, according to ministry data.
This time is different. It’s the end of a 3-year-tragedy. You simply need to get through.
You should report on why the Chinese invested in passenger train infrastructure: that to do otherwise would interfere with commercial trains in a country with a poor road system. When coal trains get delayed because of passenger trains on the same track, or vice versa, you can understand why expanding passenger train service on a different line solves two problems, and possibly three (an underinvestment in roads).
Where was the Austro analysis of the US economy preceding the housing bubble.
“Where was the Austro analysis of the US economy preceding the housing bubble.”
http://marginalrevolution.com/marginalrevolution/2005/01/if_i_believed_i.html
http://marginalrevolution.com/marginalrevolution/2005/01/shiller_on_hous.html
So, you think two cites to Shiller’s prediction in 2005 that housing was in a bubble, and Alex’s concurrence, establishes the point?
What do you think would establish the point?
http://blog.mises.org/3651/credit-bubble-becoming-mainstream/
Shiller, who is a non-Austrian v. the Maestro, who is.
See the papers of chief economist William White and his BIS research team published between 2003 and 2009 archived at the BIS web site.
“Where was the Austro analysis of the US economy preceding the housing bubble.”
You would have found related discussions at the Mises web site and at my own web sites.
Greg, How can listening to a REGULATOR, the BIS, constitute the proposal an Austro position? You don’t need regulation because the market will regulate itself, as you would say.
Next you’ll say that Volcker is an Austro.
Black is white and white is black.
I was writing about it in 06. As Greg says, the Misesians were pounding their fists on the virtual table and shouting furiously about it.
Most of us simply stated that while we couldn’t predict WHEN it would happen, it HAD to happen.
The austrian position is that the government creates booms and busts. It is what it is. And yes, we were right.
Every market mistake is created by the government, in your view, so you can never be wrong.
But, then, if the market contains all the information, and informed actors like yourself are in it, it will be self-correcting or the event will not happen because you will take a market position opposite it. And, we don’t need derrivative or other regulation, because the counterparty would never assume a bad risk.
I don’t know how you can square these inconsistent views.
I don’t know how you can square these inconsistent views.
It would be more inconsistent to be able to predict bubbles. The conclusion of the Efficient Market Hypothesis is not that bubbles don’t happen, but that they can’t be predicted (and especially not their timing.)
The evidence that you’re asking for would actually do more to discredit EMH than the lack of it.
The very fact that bubbles and crashes are not predicted is evidence for EMH.
John, I don’t think your argument makes sense.
To say: “It would be more inconsistent to be able to predict bubbles.” following a cite to some Austrians who predicted a bubble is to add more inconsistency, not less.
Every market mistake is created by the government, in your view, so you can never be wrong.
Nonsense, the government has not forced massive subsidies onto every market.
But, then, if the market contains all the information, and informed actors like yourself are in it, it will be self-correcting or the event will not happen because you will take a market position opposite it.
So very much wrong with that statement, starting with the notion that betting against an event necessarily causes it not to happen — in fact, quite often the opposite is true.
Dang, Google sure is hard to figure out, isn’t it Bill?
Here’s a link with quite a list of Austrian’s predicting the bubble: http://www.lewrockwell.com/block/block168.html
Those you cite would be surprised to be called Austrians!
Somebody writing for Lew Rockwell would be surprised to be called an Austrian? That’s pretty hard to believe.
Lew Rocket was not the only person in that long list.
And, Bill, *I* didn’t cite either Lew Rockwell or anyone on that list.
“Where was the Austro analysis of the US economy preceding the housing bubble.”
Peter schiff saying constantly on Fox news that we were in a housing bubble and everyone laughing at him.
So did Shiller.
You didn’t ask for evidence that Austrians were the only ones making the call.
That’s true. And, it proves another point, doesn’t it.
Nor did he cite the Austrians who said the market would work and therefore there wouldn’t be a bubble because markets contain all information and there would be someone on the other side preventing the bubble. See Larry Kudlow.
Not what Austrians say, Bill.
Laughing at Fox news is a matter of habit. The medium descredited the message perhaps?
No, the people on Fox News were laughing at him. Not, people were laughing at Fox News. There are clips on YouTube.
I confidently predict high-speed rail will do just as well in China as it has everywhere else.
I hear that is has already been a smashing success.
High-speed rail is a great idea in a world in which air travel doesn’t exist as a means to move rapidly between distant points without the need for tracks.
But it’s one of those things that sort of becomes its own raison d’etre. I think it’s mostly because of the enormous possibilities for graft.
…aaaaaand right on cue:
http://hotair.com/archives/2011/11/01/ca-bullet-train-triples-in-price-adds-13-years-to-deployment-schedule/
Well, the Japanese record is hard to beat, though the French TGV, the German ICE, and the Spanish AVE are still in the running, as is the stepchild Eurostar Chunnel service.
But why care about what Japan or Germany are doing – it isn’t as if either country comes close to matching American manufacturing prowess, right? (Siemens has recently started manufacturing a 40+ year old streetcar design in California – sadly for Siemens, they couldn’t find any Americans actually capable of welding meter long sections of steel together as part of assembling the trains, so they had to bring in their own welders to teach their American colleagues how to do it. Which won’t matter much in the long run – Siemens doesn’t build streetcars like that for its other markets – they use composites and glass, reducing weight significantly while providing a panoramic view.)
Japanese regular speed rail is very successful and profitable. The high speed rail is not, overall. Certainly not when you take capital spending into account. The Tokyo-Osaka line might be, but it certainly encouraged ridiculous spending on the Touhoku and Jouetsu Shinkansen, which plunged the railways into massive debt, leading to it being nearly insolvent. The train company was later privatized, and has continued with the model of the government paying for all the capital costs, and the train companies covering operating costs.
The operating costs are profitable; the capital costs are a massive sinkhole. (Which is not true of the regular speed rail.)
This is similar to what happens all over Europe. I suggest you read this report by Amtrak’s Office of the Inspector General. Of course, that paper was written with a look towards Amtrak getting capital subsidies, so they had an interest in arguing that all foreign high speed rail networks were really subsidized at a massive level.
Still, I do care about what Japan and Germany are doing. I’m very familiar with Japan’s rail network (only slightly with the others.) I find that railfans in the US generally are not really familiar with foreign train networks and their funding.
An interesting difference for the ICE is that it shares the same track as the regular rail (albeit upgraded). That ought to impact capital costs. AFIK TGV etc. utilize separate track.
Sorry, here’s the correct link to the study.
Since your claim is completely incomprehensible, I am sure it is the full story :rolls eyes:
I of course hate the way that our federal highway spending has used General Fund money since 2008, but it’s still certainly possible to fund the road capital spending out of user fees.
Highways are funded out of tolls and user fees in Japan, and in other countries.
High speed trains are not.
California is putting a high speed rail line in between Bakersfield and a woman’s prison in the middle of no-where.
Comments on this entry are closed.