From the Atlantic, ‘the Chinese Are Just Like Us’ (greedy unsophisticated speculators):

… it sounds to me like Chinese investors have the same irrational exuberance that once gripped U.S. markets. No one likes to stand in the way of a runaway train.

On some level, China’s situation could end up being worse than ours: generally our investors bet on bubbles with their own money. In China, that money is coming from government stimulus and loans.

On the optimistic side, the author fails to note that a lot of Chinese are also very similar to us with regards to buying useless, expensive crap. Anyone who rails against conspicuous consumption in the West should take a stroll down one of the more affluent boulevards of a Chinese city. There is also no glory in saving money on something nice – a premium price is worth it’s weight in bragging rights. Credit cards are also becoming a problem. My generation in the U.S. takes materialism as a given, and just as often glorifies potemkin poverty (some of us, anyway). Where is this crassitude-with-Chinese-characteristics coming from? The fact that it’s all very new, for starters – there’s also something about hierarchy in transitional economies… Not quite sure what though. Regardless, there’s still a lot of slack left, at least in terms of what some people are willing to put, and many want to take out.

Considering underutilized ‘consumption capacity’ and the vast amount of underemployment (both skilled and unskilled) the case for ‘dumb investments’ becomes somewhat more complicated. Certain periods of the Industrial Revolution had all the characteristics of a bubble, and the same fundamental factors were at work (large amounts of labor underutilization, and rapid returns to simple investments in infrastructure and mechanization). The context of authoritarian cronyismharmonious socialist society matters, but were we really so different?. Forcing the narrative into a ‘bubble-no-bubble’ lens is going to lead to analytical errors and oversimplification of an extremely complex and interesting process.