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China's Fragile Economy, Its Housing Bubble, and What It Means To Us: Download
As promised, here is the complete article, China's Fragile Economy, Its Housing Bubble, and What It Means To Us, in a downloadable PDF. You can download it, print it out, and read the entire piece at your leisure. The conclusions aren't encouraging, for them or us.
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They need US more than we need them, No body trusts them, If we don't buy their low quality stuff who will? China has been expert at stealing, reverse engineering, hacking and other enterprizes, even the most thick US politicos are getting fed up. The US people have been fed up for some time. If I'm forced to buy Chinese because nothing else is available it better be dirt cheap or I do without.
The bastards killed my uncle in Korea in the 1950s and haven't said they were sorry.
So dont buy their stuff. Greed and absence of any kind of ethics and honor amongst the US Congress & Senate Members ensures your interests are not taken care off.
Greed and corruption is the order of the day. Wall Street and The Fed will take your ass to the cleaners and leave you butt naked
As for your uncle, am truly sorry but the US had no business to be there in the first place. Wars are meant only to make the rich richer.
"As for your uncle, am truly sorry but the US had no business to be there in the first place. Wars are meant only to make the rich richer."
The same goes for the present US wars in Afghanistan, Pakistan, Iraq, Somalia, etc., Well, on a bright side, the US military is too overextended and the US economy is too broke for any more "adventures" but Obama is "unstoppable" since he will need more and more wars.
PS
Jut wait for Obama to call a military draft...Swedes must be euphoric rewarding a Nobel peace price to the Americana first Marxist president.
The Euro has now resumed it's downtrend on the daily chart and a US dollar rally is coming.
Equity markets can't ignore this for long.
From mid 2009 onwards I warned of an impending USD rally and Euro weakness.
http://www.zerohedge.com/forum/latest-market-outlook-0
It is very interesting that people who are not native Chinese, do not speak Chinese, never lived and worked there for extended period of time, do not know and understand Chinese history and culture, etc., are claiming to be specialists on China. Then, these "specialists" tell us about China, its successes and problems, as well as predict China future. Unfortunately, these specialists are no better than fortune-tellers using a stack of cards.
Yes, I am not a Chinese. I do not speak Chinese. I did not live in China. So, what shit do I know about China and its economy?
Well,
- I was born in a communist country and my farther was a scientific adviser to their communist rulers (so, I do know something about communist countries and ways they function and operate)
- I graduated from a leading country university were I met and befriended with many Chinese exchange students many of whom are now belong to the present Chinese ruling elite.
- After emigrating to the USA, my first boss was Chinese. He was a very good and capable boss. 80% of his company scientists were Chinese. The majority of them came either from China or Taiwan. I spent 5 years working with them side-by-side never having a single problem.
- Later, I worked for many leading US companies and again I worked with many Chinese.
Now, my take on China:
- China is a communist state with much more flexibility than other failed/bankrupt communist states led by highly dogmatic, uneducated, and illiterate leaders. China leaders are well educated and smart.
- Chinese "experiment" is not unique. A similar "nation building" policy was implemented under Stalin. In a less than twenty years, USSR from a backward/agrarian county became a world superpower. The Chinese approach is very closely associated with the Lenin "NEP" (New Economic Policies) when a communist party preserving its dictatorial control over political and economic life allowed elements of free-market economy.
- China strategic intentions are
-- Using domestic cheap labor, develop substantial foreign hard -currency reserves
-- Using these hard-currency reserves, to acquire high-technologies and build/acquire strategic commodities to substantially modernize their industrial and military capabilities.
-- Significantly expand and improve strategic and tactical military capabilities
-- If opportunities allow, improve standards of living of its people.
- Chinese communist party security apparatus is strong enough to liquidate any possible domestic challenges at very early stages. Consequently, discussions of Chinese domestic unrests are more wishful thinking than a reality. Any domestic economic problems will be portrayed by Chinese propaganda as the Western imperialism conspiracies/intrigues against China and its people.
- Discussions of a potential Chinese economic bubble burst are also unfounded. Chinese communist, central-planning economy will just redirect its domestic priorities and spending. In a case of substantially reduced foreign trades, Chinese will redirect their spending to domestic economy and accelerating of their military buildup.
- As for Chinese bogus statistics and bureaucratic corruption, it is a nature of any socialist/communist society as well as government bureaucracies all around world.
The Bottom Line: Western economic models and analysis are not easily applicable/transferable to China political & economic life. As a central-planning communist economy, China is doing great!
There are some basic points being ignored here:
1. Who runs the banks in China? - The government.
2. Who can forgive debt in China? - The government.
3. Who creates money in China? - The government controlled banks.
4. What would happen if the Chinese government called in its loans? - Mass panic, deflation, and depression.
5. What would happend if the Chinese government called for a debt jubile? - Nothing. Everyone restarts with a clean slate.
6. Can the Yuan be shorted? - No it's pegged to the dollar.
7. What's China's economic future? Anything the government chooses it to be.
China looks terrible from a Western private-banking perspective because the debt has to be paid; But China looks great frrom a central planning perspective, because in the end it's just numbers in a ledger column.
You are mostly right in all your points except the last, number 7: Reality has a way of intruding on even the most insulated. The rulers cannot create any economic future they chose because the markets are larger, more complicated and smarter than even 100,000,000 Chinese rulers put together.
So, it will not end well for China's current rulers, nor for most of their wealthy.
... and yet, centrally planned economies never fulfill their potential, routinely grind their subjects into the ground, and collapse in spasms of violence.
Hmmm... somehow, I think there's a flaw in your analysis somewhere...
Shoddy workmanship and profligate construction...
sounds like all the "luxury" buildings they've put up in NYC over the past few years.
First, most economic statistics from China are inaccurate.
The economic statistics in the western world are rigged as well, so this is a non argument to me. The real U.S. GDP is negative since 2001, so it is already a depression since many years:
http://www.shadowstats.com/alternate_data/gross-domestic-product-charts
Your point about Western economic statistics is ill-founded in regard to the Chinese stats.
We have learned in the markets here in the west how to gauge and reconcile the lies. in other words, the US/UK stats in particular are "fudged," whereas economic stats in China are basically outright inventions because corruption and graft are such a systemic problem that it is nearly impossible to even approach a reasonable assessment of their true organic growth.
And please don't come off rebutting that the US/UK corruption is as rampant if not worse than that of the East. That is akin to comparing apples and oranges, as the western nations' public officals prefer their gains in political assets as opposed to tangible assets, such as cash.
Chinese mayors and town officials, property owners and developers are all cutting corners and shafting the Chinese people at the expense of shoddy workmanship and profligate construction. They have been pocketing enormous sums over the past several years and the latest loan bubble has only made the situation worse.
I am afraid that this will not end well at all for the Chinese.
Liked the articles thanks for getting them up. There is massive malinvestment and China has to purge the bad investment and debt, like a lot of places have had to do in the past. Again I'll point to America on it's rise. Many, many depressions and a violent civil war on it's way to it's top. From what I can tell nations don't rise in a straight line, there is a lot of lows that a nations has to face even on an upswing and it's how they handle the down times that determines their fate. Take Japan, if they would have liquidated their malinvestment and killed the zombies they probably would be in far better shape. Or compare the Great Depression of the 30s with the depression of 1920. Now I think China, and the world for that matter, are on the wrong course to fix the problems, but there is still a chance to pull out of the debt, government stimulus nightmare for several nations. So few nations have it right it's likely the winner will be determined by picking the leper with the most fingers.