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Marc Faber: "China And The US Are On A Collision Course", Sees 10% Real Inflation In China

Tyler Durden's picture




 

Marc Faber was on Bloomberg TV sharing his thoughts on China's 5th RRR tightening in 2010. While the man whose on the ground perspective affords him a good sense of what is really happening, does not anticipate major adverse developments out of the recent round of tightening posturing, he does warn that unless China manages to control commodity inflation, things could get ugly, essentially reiterating what Albert Edwards said yesterday. "Inflation is a dangerous situation everywhere in the world. I think in general that Consumer Price Indices published by China and the US do not reflect the real cost of living that households in these countries have. In Emerging Economies it is worse in the sense that if you have a per capita income of $1000 per year, food accounts for 50% of our expenditures... Even if China tightened, interest rates are still far below the true rate of inflation, and I spoke to a lot of people in China - my view is that inflation in China is running at 10% per annum." On Bernanke's overnight defense of his failed policies: "All I would say is that the problem of the world is that the US overconsumed and spends too much on consumption, and as can be expected some currencies didn't want their currencies to appreciate too much. I think that China and the US are on a collision course, both economically and politically." In other words, our speculation that China and the US are playing a global game of chicken is validated, the problem is that billions of people will suffer no matter who blinks first.

 

 

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Fri, 11/19/2010 - 11:24 | 741005 goldmiddelfinger
goldmiddelfinger's picture

I've been thinking for a week that China's 4.3% reported inflation is about as accurate as our weekly job claims or ISM figures, &c.

Fri, 11/19/2010 - 11:33 | 741044 Careless Whisper
Careless Whisper's picture

oh really. maybe one year in a re-education camp will change your mind.

Fri, 11/19/2010 - 11:29 | 741022 IQ 145
IQ 145's picture

 Bet your bibby. I always appreciate hearing from Dr. Faber. He gets a lot of useful information and he can think straight; and does so.

Fri, 11/19/2010 - 12:23 | 741260 MsCreant
MsCreant's picture

I'm sorry your intelligence is limited by that number.

Fri, 11/19/2010 - 12:32 | 741296 Mad Max
Mad Max's picture

He just omitted the decimal.

Fri, 11/19/2010 - 13:20 | 741468 Assetman
Assetman's picture

My IQ is between 0 and 160.

It does't really impress anybody, because people keep thinking it's at the low end of the range. :)

How's the clan doing?

Fri, 11/19/2010 - 15:32 | 741857 DoChenRollingBearing
DoChenRollingBearing's picture

What's an IQ?

Fri, 11/19/2010 - 16:38 | 742037 Winston Smith 2009
Winston Smith 2009's picture

At the Fed, it apparently stands for "Idiocy Quotient."

Sat, 11/20/2010 - 20:46 | 743589 ebworthen
ebworthen's picture

He has a farm in Thailand; always thinking ahead.

Imagine the the lifestyle there. 

Three minute clip, full of common sense, including hash-hish, food, war, and smelling the roses: 

http://www.businessinsider.com/marc-faber-explains-why-he-likes-living-in-thailand-clip-2009-5

Fri, 11/19/2010 - 12:02 | 741161 HarryWanger
HarryWanger's picture

I'd believe even the most bizarre stat out of our government before I'd consider anything out of China to be remotely accurate. 

Someone posted a link to photos of pollution and people in China - horrifying. They don't give a fuck about their own people, you think they would ever tell the world anything resembling the truth?

Unbelievable that the media - Bloomberg, CNBC, CNN, etc. report any number from them and rejoice. Ask those people with their faces and bodies destroyed by the government's quest for growth how they feel.

Fri, 11/19/2010 - 12:22 | 741228 spartan117
spartan117's picture

Why must people like you always project your standards onto others?  What do you think the industrial revolution here in the US was like?  You think companies back then had "green" initiatives?  You don't go from a dark age into enlightenment overnight.  You expect China to become a post-industrial country by bypassing the industrial stage? 

Fri, 11/19/2010 - 17:48 | 742215 Citxmech
Citxmech's picture

If "green tech" is powerful enough to "save us," why would they need to go through all the trouble of dirty tech?

They should be at an advantage because they can start green from the get-go...  unless all this "clean energy" crap is just... crap.

Fri, 11/19/2010 - 12:27 | 741284 MsCreant
MsCreant's picture

Harry, don't for a second act like we (that is you and I, typing on these computers) don't participate in their destruction. You point the finger at their government and industry and three fingers point back at us. We make the market that makes their slavery and fucked up environment possible. Their huge population is also part of the problem.

Fri, 11/19/2010 - 15:34 | 741863 DoChenRollingBearing
DoChenRollingBearing's picture

This is the kind pf place where Cog Dis jumps in!

:)

Fri, 11/19/2010 - 14:57 | 741745 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

China learned how to rig their books from the best, Harry.  And about the lifestyle difference, we know the Chinese live in an '84 esque land, but we do not?  How about they know they are chained by their government but most in the "Free World" could never believe that when they play video games and watch movies they are imprisoning their mind, body, and soul?  How about when 'Mercans eat fast food they do not know they are poisoning themselves.  Which is worse Harry, knowing your life struggles, or living a lie.  This is rhetorical as I am sure your answer will be, "Viva la manzana!  Viva la Corporación!"

Fri, 11/19/2010 - 12:27 | 741282 kaiten
kaiten's picture

Well, here´s something about China´s food inflation:

" Vegetable prices in the first 10 days of this month jumped 62.4 percent from a year earlier, the Financial News reported today, citing a survey by the Ministry of Commerce. "

 

http://noir.bloomberg.com/apps/news?pid=20601089&sid=aPWaTV6RJ4kI

Fri, 11/19/2010 - 13:01 | 741410 Bartanist
Bartanist's picture

With some foods jumping 60% and food being 50% of their household budget, it seems that something has to break ... and most likely it will be wages going higher, which will increase prices here in the US, which should then decrease consumption ... and there you have it, "Bernanke's virtuous cycle", where we all circle the bowl together.

We don't need to put more money into our system. China needs to put more money into their system to stimulate an larger internal economy. Undfortunately the ship of Chinese economics turns quite slowly, even more slowly than the US. 

Fri, 11/19/2010 - 16:45 | 742052 Winston Smith 2009
Winston Smith 2009's picture

And, ideally, the hungry Chinese will then rise up in revolt, overthrowing their authoritarian regime and replacing it with something like our corporate-controlled facade of a constitutional republic. ;-)

Sat, 11/20/2010 - 13:24 | 743198 thefedisscam
thefedisscam's picture

What about the latest U.S. CPI, claims Food inflation is 0%?

Fri, 11/19/2010 - 11:26 | 741010 NOTW777
NOTW777's picture

look at the jump in china food prices

Fri, 11/19/2010 - 11:29 | 741024 Spitzer
Spitzer's picture

I would drink her bathwater.

Fri, 11/19/2010 - 12:12 | 741206 Horatio Beanblower
Horatio Beanblower's picture

But, would you be willing to pay for it?

Fri, 11/19/2010 - 13:22 | 741478 Assetman
Assetman's picture

If he's paying in dollars, why wouldn't he?

Fri, 11/19/2010 - 12:14 | 741218 Bam_Man
Bam_Man's picture

While wearing your trademark black socks?

Dierdre is quite hot. And far more competent than any of the bubbleheads on CNBS.

Fri, 11/19/2010 - 13:02 | 741414 Kurtieboy
Kurtieboy's picture

Smoking hot but very annoying. Terrible interview. She kept on interrupting Mark before he could finnish his sentence.

Fri, 11/19/2010 - 11:31 | 741025 Apostle of Unknown
Apostle of Unknown's picture

These are the well known numbers: China has an annual investment rate of 50% of GDP; on top of that a 50% of GDP stimulus last year; and a peg to a currency that is actively being devaluated. How can the China story not fit in a traditional credit-driven boom story? How can this not end in a recession?

Fri, 11/19/2010 - 11:37 | 741065 tmosley
tmosley's picture

There is a big difference between a recession and an economic collapse.  People seem to think that China is somehow going to collapse back to the way it was back in the 70's.  More likely, they get a depression from all of the economic intervention which will last only as long as the economic intervention lasts.  My guess is that it will be analogous to the Depression of 1920, though probably somewhat sharper, and perhaps a bit longer as they seem to want to intervene more than the US did at that time.

We'll see though.  I'm not investing in China just yet, and I'm certainly not planning on moving there.  I could see things changing to the point that I would within five years, though.

Fri, 11/19/2010 - 12:27 | 741278 Temporalist
Temporalist's picture

You think they will let you access ZH there?  Don't plan on posting here if you move.

Sat, 11/20/2010 - 07:06 | 742901 Quantum Future
Quantum Future's picture

Everytime I have been to China I have always been able to access ZH; however it is a different experience as no U-Tube links work and many of the links posted by commenters work especially GW's articles.

QF

Sat, 11/20/2010 - 15:58 | 743357 AnAnonymous
AnAnonymous's picture

You think they will let you access ZH there?  Don't plan on posting here if you move.

 

Stupid comment. Big delusion.

Power only cares to censor what constitutes a threat to it.

Quite a number of people confuse freedom of speech with their irrelevancy to the power apparatus. Harmless people are no threat to powerful people and thus allowed to speak.

A guy reported that US citizens came to testify about their fraud and walked out free of any judicial threat.

Several options:

these guys spend their time and fraudulously acquired money:

-on mundane parties, heroizing their theft

-touring the Bahamas

-buying $5000 sexual partners

-working to exploit the new round in the Ponzi

-hiring a crew of $100 per hour lawyers to censor people writing what these guys self confessed before a court of Justice, leaving them free people with a clear mind

 

Still, some people really believe because they write stuff somewhere on the Internet, these guys are going to opt for the last option, regardless of the attraction of the other options.

Get real, your so called freedom of speech is innocuous to them. Save if they are mental, they wont spend a penny on your diatribe. Dont inflate your importance.

Fri, 11/19/2010 - 12:40 | 741330 Raging Debate
Raging Debate's picture

Excellent analysis.

Fri, 11/19/2010 - 13:30 | 741513 InfinityZero
InfinityZero's picture

Simple. Be productive.

Fri, 11/19/2010 - 11:30 | 741031 tip e. canoe
tip e. canoe's picture

"the problem is that billions of people will suffer no matter who blinks first."

welcome to cold war 2.0 set in a Kondratiev winter.

Fri, 11/19/2010 - 11:30 | 741032 Thunder Dome
Thunder Dome's picture

10% Real Inflation--is that good?

Sat, 11/20/2010 - 19:58 | 743556 snowball777
snowball777's picture

Only for mortuaries.

Fri, 11/19/2010 - 11:31 | 741033 MGA_1
MGA_1's picture

Wow... prices controls... won't work.  How much longer does China want to stay pegged to our currency?

Sat, 11/20/2010 - 03:53 | 742831 Non Passaran
Non Passaran's picture

Harsh penalties for speculators and hoarders, actual and perceived, seem to help.

Sat, 11/20/2010 - 13:35 | 743210 thefedisscam
thefedisscam's picture

It all depends on how they can effectively excute the price control.

If anyone knows a little bit history about China, they should know the inflation in Shanghai in 1949 when CCP take over the power was much much worse than the inflation now. Guess what? Chinese gov. did a wonderful job to control the price!

The inflation in 1988-1989 or so was also worse than it is now, even the gov. number was 18%-19%, but the sky did NOT fall!

Fri, 11/19/2010 - 11:32 | 741043 breezer1
breezer1's picture

don't we all know that our own cpi is also a product of central planning propaganda.

Fri, 11/19/2010 - 11:52 | 741119 kridkrid
kridkrid's picture

All of our official numbers are.  25 of 26 UE numbers have been revised upwards (and likely are false to begin with).  What was the misreporting a couple of weeks ago where 2 (two) people were counted multiple times skewing income numbers (upwards across the board hiding declining wages and upwards in a big way at the top to add fuel to the "hate the rich" propaganda).  Banana Republic... full on... no turning back.

Fri, 11/19/2010 - 15:17 | 741806 CrashisOptimistic
CrashisOptimistic's picture

All right.  Slow down.

The people working at BLS compiling CPI numbers do not get up in the morning and look in the mirror and plan to go in and be a conspirator.  They are normal people like anyone else.

They have a survey.  They investigate what % of each American's budget is each item in their categories. Then they go to stores and survey the items' prices.

It's not rocket science and it's not conspiracy.  Lots of things drag down overall inflation to counter the things that spike.  Rents are NOT going up.  The foreclosed people haven't even been evicted, and when they are their credit history gets them refused at apartment complexes.  They move back home.  They do not drive rents up.  With rents not rising, that is a big part of housing.  Then you have cars, which are not increasing in price and are a big part of the household budget.

In other words, there is entirely too much attention paid on ZH to this Williams Shadowstats guy, who compiles his results with a staff of no one and zero budget.  BLS is staffed with normal, regular people who are trying to do accurate measurements.  They measure healthcare.  They measure food.  They measure housing.  They know what % each is of the total average budget.

Their results have been challenged many times over the decades and in response to thechallenges they re-examine their methodology and adjust it when they, a collection of people trying to be accurate, decide it needs changing.  They do a pretty good job.

The number is what it is.  The US is in deflation.  Not inflation.  This should not be surprising in the post Peak world.

Fri, 11/19/2010 - 20:54 | 742546 MrSteve
MrSteve's picture

A pox on this of Orwellian cow manure! The BLS measures food, sure, fine folks working hard every day, sure: who decides to omit food and fuel from the CPI? There's the rub; bureaucrats collecting checks while doing the evil Maser cylinder's bidding.

 

Tell somebody buying a Jockey cotton T-shirt at Target for $9 a shirt there is no inflation. What of the grains and oil at $80 plus per barrel?

The credit market situation is not the same as the value of the currency. No one is buying PM on credit.

 

 

 

Sat, 11/20/2010 - 20:00 | 743558 snowball777
snowball777's picture

There was an article recently about the COMEX raising the margin requirements for Ag and Au.

What do you think margin means?

Fri, 11/19/2010 - 22:23 | 742700 Kayman
Kayman's picture

All CPI numbers are a based on a False Premise- that quality on all products are the same.  They are not.

And that is why the so-called China led consumer deflation in the U.S. over the past decade, is just another piece of propaganda.

Fri, 11/19/2010 - 13:20 | 741472 Zero Debt
Zero Debt's picture

Isn't it exciting when two centrally planned economies (US Fed and the Communist Party) try to out-battle each other by out-fudging their statistics in order to out-smart each other through multiple levels of deceptions?

 

Fri, 11/19/2010 - 11:33 | 741047 moofph
moofph's picture

..are they avoiding the blink...or planning a wink-wink?

Fri, 11/19/2010 - 11:37 | 741062 RobotTrader
RobotTrader's picture

CRB Index is now in a full crash mode.

A month from now, the discussion will be....

"What inflation?"

Falling gasoline prices are now creating an instant tax cut for consumers.

We seem to be awash in crude oil, but there is an acute shortage of UGG boots.

Any wonder why consumer stocks like DECK continue to skyrocket?

CRB Index is now in a full crash mode.

 

A month ago, the discussion will be....

"What inflation?"

Falling gasoline prices are now creating an instant tax cut for consumers.

We seem to be awash in crude oil, but there is an acute shortage of UGG boots.

Any wonder why consumer stocks like DECK continue to skyrocket?

 

Fri, 11/19/2010 - 11:42 | 741083 Dr. No
Dr. No's picture

UGG Kensington is bullish on uggs. Ugg, got any insider info?

Fri, 11/19/2010 - 11:47 | 741103 Ragnarok
Ragnarok's picture

Salesforce.com is exploding, P/E of 235, up 14%.  LOL.

Fri, 11/19/2010 - 11:55 | 741129 tmosley
tmosley's picture

Where are gas prices falling, praytell?

They are right were they have been for the last month here, which is a two year high.

Fri, 11/19/2010 - 11:58 | 741144 HarryWanger
HarryWanger's picture

Down a bit here in Seattle.

Fri, 11/19/2010 - 12:33 | 741301 macholatte
macholatte's picture

 

AAA Fuel Report

http://www.fuelgaugereport.com/

Fri, 11/19/2010 - 15:26 | 741840 Mrmojorisin515
Mrmojorisin515's picture

why am i not suprised you are from seattle.  At least here in the burgh we've taken our hard knocks. We only suffer from one bubble here, and that's healthcare.  Prob the last one to be popped.  Yinz out there are only about to begin feelin em.  Go Stillers

Sat, 11/20/2010 - 20:05 | 743564 snowball777
snowball777's picture

Wake up, dumbass.

http://bit.ly/accQ0g

Fri, 11/19/2010 - 12:57 | 741395 cpgone
cpgone's picture

What do I buy for the next 3,6,12 months?Buy and sell targets.

Id really prefer option trades.

You are looking back. Thats what accontants do.

 

 

Fri, 11/19/2010 - 14:55 | 741757 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Awash in crude?  bahahaha!  And next you will add light sweet to this sentence for more humor!  Brilliant!

Continue to quote the Sauds about reserves before you type, it is hilarious! 

Fri, 11/19/2010 - 15:21 | 741833 CrashisOptimistic
CrashisOptimistic's picture

How can there be inflation in a collapsing economic system?  It is more or less impossible to raise the prices of things no one wants.

Sat, 11/20/2010 - 04:40 | 742852 1984
1984's picture

But what about prices of stuff people need?

Fri, 11/19/2010 - 11:37 | 741066 Steak
Steak's picture

Sitting in a chair?  Will you be staring at a screen the rest of today?  Repent before the end destroys us all!  Leave your lives behind and repeat these noble words of truth:

It's like gold dust* Ya hear me coming through your spe-ea-kers, You see me mashin up your air waves, I know you can't get enough of my sound.

isthmus crypticus (a playlist): http://www.youtube.com/view_play_list?p=598FDBCC54AD4860

*i propose this track be ZH's anthem of the weekend

Fri, 11/19/2010 - 11:48 | 741102 Bob
Bob's picture

Caught it on your first post, Steak--got me movin' like I ain't done for a very long time.  Much appreciated. 

Fri, 11/19/2010 - 12:43 | 741346 Steak
Steak's picture

Bob you made my day with that one, keep rockin it :)

Fri, 11/19/2010 - 12:03 | 741165 jomama
jomama's picture

reminds me of my raver days

Fri, 11/19/2010 - 12:43 | 741348 Steak
Steak's picture

ask your boss if they could pick up glowsticks for the supply closet, say its just in case the power goes out ;)

Fri, 11/19/2010 - 11:38 | 741069 Djirk
Djirk's picture

You mean the goverment stats are not accurate.....c'mon?

Hey China a 1/2 point raise in interest rates will not tame the animal spirits, just ask Greenspan. Jack it up 500bps.

Ban leveraged speculation on commodities or better yet ban financial speculation on commodities, that will help with inflation.

Fri, 11/19/2010 - 11:44 | 741071 Yardfarmer
Yardfarmer's picture

Of course the now rapidly deflating US housing bubble could not have been effected without the intervention by Mr. Greenspan and the Federal Reserve in the way of the now infamous Greenspan Put and aggressive loose monetary policies accomplished by the Maestro during his tenure at the Federal Reserve but most dramatically from the dawning of the new millennium onwards with the critical participation of the Chinese and their massive purchase of US Treasury bonds and the "vast recycling of insupportable US deficits by China and other creditor nations" In effect Greenspan exported US inflationary policies into the international markets and in the process fueled globalization and helped create the new economic engine in China and SouthEast Asia. Without the acquisition by China of US$ through US securities, higher interest rates would be inevitable and with that the end of the Greeenspan housing bubble. It has been suggested that Greenspan and Federal Reserve's interest rate manipulation concommittant with massive injections of liquidity have radically disrupted the natural K-Wave cycles, artificially extending the summer cycle with drastic and dire consequences for the US and World economies which are now plunging headlong into a grotesquely exaggerated and horrendously distorted K-Wave winter cycle. http://kushmonster.blogspot.com/2010/09/if-current-brouhaha-over-20.html

Fri, 11/19/2010 - 12:34 | 741308 Caviar Emptor
Caviar Emptor's picture

It started even before Greenspan. The major question of the post-Bretton Woods Fed was how to combat inflation in an economy with national insolvency and where money printing was used to provide liquidity. 

One of the solutions: export America's industrial and manufacturing might to China where the labor force would do the same thing cheaper. 

That was a very short-sighted and self-defeating strategy. 

Greenspan's "Goldilocks Economy" was just a deflating economy balanced by the same inflation of input costs.

Fri, 11/19/2010 - 11:40 | 741075 NOTW777
NOTW777's picture

cnbc LYING through their teeth about obamas Molest America program

Fri, 11/19/2010 - 11:46 | 741101 bugs_
bugs_'s picture

Obama's Molest America program is just a natural extension of the Clinton/NoW "one free grope" policy.

Fri, 11/19/2010 - 11:45 | 741097 Kina
Kina's picture

Yep...there will be an ever increasing number of little actions from China to deal with problems trying to chase its tail, until they realise they to leap ahead of the problem to deal with it. In the mean time Shanghai will yoyo.

Fri, 11/19/2010 - 11:54 | 741126 Horatio Beanblower
Horatio Beanblower's picture

Shadow banking...

 


"This week, a senior banker friend gave me a poster that had been created by downloading a chart recently produced by economists at the New York Federal Reserve.* It was shocking stuff.

Entitled The Shadow Banking System, the graphic depicts how money goes round the modern world, particularly (but not exclusively) in the US."

 

https://www.fidelity.co.uk/investor/news-insights/expert-opinions/gillian-tett/details.page?whereParameter=/default/main/Fidelity/EMEA/UK/Marketing/WORKAREA/Content/templatedata/content/expertopinions/data/gillian-tett/shadow-banking&WT.mc_id=TWDM0001

Fri, 11/19/2010 - 12:41 | 741336 Tyler Durden
Tyler Durden's picture

This piece and much more was discussed here about 5 months ago- The Current Account implications arising from the shadow banking system's collapse are the biggest threat to modern finance. Still, nobody has figured out that this is by far the most important issue in the world economy so far. They will eventually.

Will The Record Plunge In Shadow Liabilities Impair Current Account "Shadow" Deficit Funding And Guarantee A Double Dip?

Fri, 11/19/2010 - 12:49 | 741369 Raging Debate
Raging Debate's picture

Correct analysis but the double dip won't be called a double dip now because the NBER declared the recession over so it will be a "new" recession. That way, people like us without a PhD in Economics that called it right down to the quarter won't be listened to. http://seekingalpha.com/search/?source=search_general&q=ithinkbig+and+w&cx=001514237567335583750%3Acdhc2yeo2ko&cof=FORID%3A11%3BNB%3A1&goto_search_tab=#1082

Fri, 11/19/2010 - 12:54 | 741387 Horatio Beanblower
Horatio Beanblower's picture

ONLY five months ago?  Tut, tut, Tyler.  Must do better.

 

There is only one place for news - zerohedge.com

Fri, 11/19/2010 - 14:44 | 741718 linrom
linrom's picture

Well, Steve Keen and us Minsky fanboys have not been swayed by all this hyperinflation cheerleading. In fact, according to Minsky the next crisis should be of larger degree than the 2007-2009 GFC.

Sat, 11/20/2010 - 11:33 | 743068 bob resurrected
bob resurrected's picture

any chance for an Q2 & Q3 update on this article?

Fri, 11/19/2010 - 11:57 | 741139 Fraud-Esq
Fraud-Esq's picture

Faber in the house. He's a little defensive of his HK/China book, no?

Fri, 11/19/2010 - 12:02 | 741156 lizzy36
lizzy36's picture

One believes that it is not a coincidence that Obamanomics went international this morning with this statement:

LISBON, Portugal (AP) - Obama says US will work with Portugal, rest of Europe to solve Portugal's financial problems.

As a mere two weeks ago Chian had this to say:

LISBON, Nov. 8 (Xinhua) -- China and Portugal on Sunday reaffirmed their commitment to a stronger comprehensive strategic partnership between the two countries.

There is a good momentum in the development of the comprehensive strategic partnership between China and Portugal, visiting Chinese President Hu Jintao said when meeting with Portuguese Prime Minister Jose Socrates in Lisbon, the capital of Portugal.

This game is just starting to get interesting.....stay tuned.

Fri, 11/19/2010 - 13:03 | 741417 trav7777
trav7777's picture

nobody should be confused:  China WILL try to attach itself like a leech to the Euro and try to run the mercantilist ponzi by cannibalizing european productive capacity and trading for debt just as SOON as they see the US's inability to continue the game.

Fri, 11/19/2010 - 14:46 | 741731 linrom
linrom's picture

They already have. China acquired long-term leases of Greek shipping ports just with that goal.

Fri, 11/19/2010 - 22:32 | 742711 Kayman
Kayman's picture

Now, all they gotta do is import Chinese labor, to do the work.

Fri, 11/19/2010 - 12:17 | 741231 Double down
Double down's picture

Did she say "Shanghai, Thailand"?

Fri, 11/19/2010 - 12:25 | 741266 Horatio Beanblower
Horatio Beanblower's picture

Chiang Mai (New City) - elephants, beer and girls.

Fri, 11/19/2010 - 12:36 | 741317 Double down
Double down's picture

Thanks, it is important

Fri, 11/19/2010 - 12:23 | 741258 LadyH
LadyH's picture

How is Faber on the ground? he's in THAILAND not CHINA.

 

I know that US education has seen better days but I assure you that there is language, culture, deep blue sea and a major mountain range between the two. May as well be in New York.

Fri, 11/19/2010 - 12:50 | 741374 Raging Debate
Raging Debate's picture

Faber has an office in Hong Kong.

Fri, 11/19/2010 - 13:01 | 741398 i-dog
i-dog's picture

dup

Fri, 11/19/2010 - 13:00 | 741406 i-dog
i-dog's picture

Faber has been based out of Hong Kong for over 30 years. That's in China.

Fri, 11/19/2010 - 12:25 | 741267 Caviar Emptor
Caviar Emptor's picture

China: post-communist economy adopting capitalism at the margins

US: post-capitalist economy adopting communism at the margins. 

Think about it. China issued more IPOs on the NYSE than the US last year. In that same time period, US nationalized major companies (errr, excuse me, 'conservatorship' which rhymes with 'conservative'). It socialized losses and risk while privatizing gains in the financial sector. US government enetities have a bear hug on the real estate sector, financial sector, insurance, autos and many more. 

In the US today 40% of citizens receive funds from government sources. 

 

 

Fri, 11/19/2010 - 12:46 | 741358 Thunder Dome
Thunder Dome's picture

Sadly, totalitarian China is the blueprint for USSA.

Fri, 11/19/2010 - 12:56 | 741391 Caviar Emptor
Caviar Emptor's picture

We've been slowly moving toward fewer personal freedoms in our society. It's become accepted that your movements, buying patterns, and conversations can be monitored, analyzed in the name of security and progress.

Fri, 11/19/2010 - 13:51 | 741567 Cruel Aid
Cruel Aid's picture

Absolutely, I've got cameras on roads way out of town here. And my wifes new drivers license, bar code,mag strip, thumbprint. Spot road rectal exams coming in the name of DUI.

DUI big topic lately.

The last 10 years have been eye and jaw opening!

Sat, 11/20/2010 - 14:03 | 743244 thefedisscam
thefedisscam's picture

You can keep dreaming. Maybe you will see the U.S. dismissed Before China!

Fri, 11/19/2010 - 12:37 | 741314 firstdivision
firstdivision's picture

This is something I have been intrigued with since the crisis broke out 2 years ago.  I placed a bet with a good friend that we would see a revolution in China in less than 15 years.  China has been suppressing its own people more lately than before.  Watching a documentary on a girl that went from the countryside to the city for work and education was an eye opening experience. 

People in the countryside are quickly becoming aware that they will not be able to afford food soon.  Additionally, people in the cities are starting to feel it with food and rents (and those that are dorm-ed or if you will accept the term 'commercially imprisioned' are getting less and less pay).  People that went into the cities were to make money to send to family in the country and those flow of funds has been falling. 

The shadow inflation will be the camel that breaks many backs of sovereign stability in many places.  India is looking to explode with a fervor over food inflation, as are places in the Middle East again.  This upcoming spring/summer could become interesting unless the inflationary pressures on commodities lets up a bit.  The pull back the past couple of days shows that speculation was a bit rampant, but prices over the year are still overtly high.  This could get ugly in a way that no only threatens sovereign stability, but also bring the fact the financial crisis has not been resolved front and center with commodity funds blowing up. 

Fri, 11/19/2010 - 13:18 | 741437 Bartanist
Bartanist's picture

The question for me is which government will create the "war" first. Governments have this nasty habit of creating wars to deflect attention from their greed and incompetence.

If the US people start revolting, China will be painted the bad guy and off we go.

If the Chinese people start revolting then the US will be painted the bad guy and it starts from the other direction.

One way of interpreting the Hopi prophecy of WWIII is that if we start the war then things will not go so bad for us, however, if China starts the war then it will be very bad for us ...

Hmmm ... can I choose "Option C" and just tar and feather Ben Bernanke, Hank Paulson, Alan Greenspan, GW Bush, Obama, Barney Frank, Lloyd Blankfein ... and maybe 100 of their closest friends and then throw them into the closest volcano as a ritual sacrifice to appease the gods?

(kill two birds with one stone, so to speak)

... before the Great White Brother returns from the stars.

Fri, 11/19/2010 - 13:19 | 741467 Life of Illusion
Life of Illusion's picture

Ha, who’s flag did China Burn?

JAPAN

Started in 2007.

http://en.wikipedia.org/wiki/Ministry_of_Defense_(Japan)

Fri, 11/19/2010 - 15:20 | 741831 suteibu
suteibu's picture

Japan is the US's beachhead in Asia.  When Hatoyama/Ozawa government wanted to change the dynamics between the US/Japan and China/Japan to be more equal, Obama snubbed Hatoyama, the media trashed him (remember WAPO calling him "loony"), and embarrassed him out of office.  The new PM, Kan, is one of Japan's most famous "community organizers" and now Obama's BFF.

How do you threaten the US in Asia?  Go after Japan.

Sat, 11/20/2010 - 13:59 | 743239 thefedisscam
thefedisscam's picture

that is true. But is the U.S. indeed willing to sacrafice thousands of lives to defend Japan in case needed? just like they did in Korea in 50s, and in Vietnam in 60s?

Clinton went to Japan, claims the U.S. already prepared to sacrafice thousands of U.S. soldiers lives and prepared a memorial Wall, bigger than the ones for Korean and Vietnam War, in order to defend Japan in case needed.

does anyone really believe her?

 

Sat, 11/20/2010 - 17:52 | 743439 suteibu
suteibu's picture

Of course not.  Japan is expendable.

Sat, 11/20/2010 - 04:19 | 742843 Non Passaran
Non Passaran's picture

Wages in China have been going up, not down, JFGI. Number of people who go to big cities and manufacturing centers on the coast is getting smaller because opportunities in hinterland are getting better (partially because of the scarcity of labor, which makes wages grow). IMHO China is less likely to have a revolution than the US or EU. I think you will lose your bet.

Sat, 11/20/2010 - 13:53 | 743233 thefedisscam
thefedisscam's picture

+10!

glad to see some cool head judgement about China's situation.

Sat, 11/20/2010 - 14:02 | 743242 thefedisscam
thefedisscam's picture

Apparently, you are brain-washed by your own media. LOL

I will place a bet, that you will lose your bet<g>

 

Fri, 11/19/2010 - 12:42 | 741342 Thunder Dome
Thunder Dome's picture

Faber has an awesome ponytail.

Fri, 11/19/2010 - 13:19 | 741466 blunderdog
blunderdog's picture

I think in general that Consumer Price Indices published by China and the US do not reflect the real cost of living that households in these countries have.

Has anyone ever claimed that the CPI in the USA is *intended* to reflect cost of living?  It's a matter of simple public definition that it doesn't include any of the most critical household expenses.

I like Faber, but this is like "Thank you Captain Obvious."

Fri, 11/19/2010 - 17:00 | 742091 Winston Smith 2009
Winston Smith 2009's picture

It was intended to reflect a true cost of living prior to the Boskin Commission whose real goal, among others related to deception, was to fudge the calculation to reduce entitlement COLA increases. Thus, as shadowstats.com states:

"In general terms, methodological shifts in government reporting have depressed reported inflation, moving the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living."

http://www.shadowstats.com/alternate_data/inflation-charts

Fri, 11/19/2010 - 20:49 | 742542 blunderdog
blunderdog's picture

Yah, Winnie, ya got me.  I shouldn't have used the word "ever."

It's been a bit too long, though, don't you think? 

Anyone who believes CPI is "intended to represent cost of living" is someone who is dead-set committed to denying reality.  It is publicly announced that CPI skips food/energy costs.  Those costs, in every meaningful sense, DEFINE the concept of "cost of living."

"Living" depends on heat and food.  Not so much the clothes and electronics and shit.

The Constitution lays out all the powers the Federal Government has any right to exert, too.  ;)

Fri, 11/19/2010 - 14:23 | 741646 tahoebumsmith
tahoebumsmith's picture

It's nothing more then a war fought without weapons and China is winning. I've called it the "China Trap" for years and like all the little mice, we have been led right into it by the Chinese Pied Piper. They have taken over the industrial complex of the world and financed our debt to make us more dependent on their production. They are the dealers and we are the addicts. Now they control the majority of precious minerals and introduce,"indigenous innovation". They leave us in our pitiful state, having to monetize our own debt and turn the cold shoulder on America and move on to the next part of the globe. When the NWO created their plan to make a World currency, China decided it was time to take matters into their own hands. Now we have a dependent society that can't release itself from their grip. When a food shortage becomes a reality, they will feed their people and we will be the dog waiting for some table scraps.

Fri, 11/19/2010 - 17:15 | 742109 Winston Smith 2009
Winston Smith 2009's picture

As Karl Denninger has pointed out, our financial nuclear option toward China and our debt to them is that it can go to zero with the stroke of a Presidential pen. And we still hold the ultimate trump card in the world: food. I don't need to add, but I will, that we hold a military stranglehold on the oil producing regions of the world (the primary reasons for the war on Iraq and US presence in such regions) while the Chinese have a military that consists of a _whole bunch_ of potential nuclear-crisped bodies holding unfired rifles, no force-projection air force, no force-projection navy and a tiny nuclear force that isn't anywhere close to being capable of a rapid strike while being totally vulnerable to one.

No, China is NOT holding all of the cards.

Sat, 11/20/2010 - 04:32 | 742848 Non Passaran
Non Passaran's picture

These advantages do exist but are decaying at about 5-10% per year. China just needs to sit and wait for say another 5-10 years. Ten years from now they will probably be able to get what they want without a fight. Unfortunately the West has pretty much squandered almost all of its advantages. >nuclear force that isn't anywhere close to being capable of a rapid strike while being totally vulnerable to one Can you elaborate on the vulnerability part?

Sat, 11/20/2010 - 05:03 | 742864 1984
1984's picture

Or they just need to knock out the orbiting satellites the projected forces depend on.  Didn't they demo something like the a while back?

Sat, 11/20/2010 - 13:51 | 743227 thefedisscam
thefedisscam's picture

yes, agree. Time is on China's side!

Fri, 11/19/2010 - 15:09 | 741799 papaswamp
papaswamp's picture

Interesting blurb from FT..:

Mr Wen’s principal motivation is to try to restrain such behaviour and anchor inflationary expectations. Not only do fears about inflation damage the Communist party’s image of economic competence, they could set off damaging consequences for the rest of the economy. Chinese households hold $4,500bn in bank deposits, which are currently earning negative real returns. If they started to lose confidence in the long-term value of their bank savings, it could unleash a destabilising flood of funds into other markets."

http://www.ft.com/cms/s/0/b8d3f7de-f3db-11df-901e-00144feab49a.html

Sat, 11/20/2010 - 04:52 | 742858 Non Passaran
Non Passaran's picture

It's good to be reminded of this every now and then.

Historically "other markets" used to be real estate and equities. The former is being clamped down on and the equities market sucks because of the world economy.

Ideally (for those long PM), PM is the next other market. If just 5% of that money went to physical gold and platinum...

Sat, 11/20/2010 - 13:49 | 743224 thefedisscam
thefedisscam's picture

FT journalists should learn some Chinese history! 1988-1989 inflation rate in China was high as 18%-19%  in China (official figure, that means the real inflation rate should be even higher). So what? CCP still in control until  now more than 12 years later.

 

Fri, 11/19/2010 - 15:19 | 741827 Big Ben
Big Ben's picture

I don't buy the argument that US policies are causing China's inflation. The Fed is printing dollars, not yuan. The purchasing power of China's currency is controlled by the Chinese central bank.

I believe that the Chinese government is printing money and using it to purchase dollars earned by Chinese exporters in order to maintain a fixed exchange rate vs. the dollar. This money printing is causing the inflation. If the Chinese government continues this policy, inflation will cause Chinese wages to rise, forcing price increases in Chinese goods sold in the US. On the other hand, if China stops printing, then the Chinese currency will rise vs. the dollar, and again Chinese import prices will rise in the US.

Either path leads to higher prices for Chinese imports in the US.

Sat, 11/20/2010 - 04:57 | 742860 Non Passaran
Non Passaran's picture

I believe that the Chinese government is printing money and using it to purchase dollars earned by Chinese exporters in order to maintain a fixed exchange rate vs. the dollar.

I believe it's not, because M. Pettis explained that this does not happen the way you say it does and his explanation is sound.

On the other hand, if China stops printing, then the Chinese currency will rise vs. the dollar, and again Chinese import prices will rise in the US.

They can't "stop printing" (RMB) because exporters normally get paid in dollars (and other foreign currencies). But this isn't a problem as I wrote above.

 

Sat, 11/20/2010 - 13:46 | 743221 thefedisscam
thefedisscam's picture

Things are slowly changing. More and more China's trade is settled with RMB. HSBC estamites in 5 years, $2 trillion worth of China's trade will be using Yuan to settle.

Sat, 11/20/2010 - 13:44 | 743220 thefedisscam
thefedisscam's picture

The U.S. prints $ causes the US$ devalue, that causes commodity price going up, and that is the MAIN reason for inflation in China and the Whole world.

People here sounds so funny that seems ONLY China has inflation. NO, NO, NO! Inflation is everywhere! It is only China's higher than some other places.

Go and ask people who live in India, Thailand, ... whether the inflation is bad. You will be surprised.

Fri, 11/19/2010 - 15:53 | 741900 DR
DR's picture

Chinese businesses face European struggle
http://www.atimes.com/atimes/China_Business/LK18Cb03.html

"In what amounts to reverse outsourcing, French workers would thus be producing Chinese goods, albeit under the label "Made in France".
.....
"The project is due to take off in early 2011 with the arrival of some 800 Chinese workers who will be housed in facilities that the Americans had built for their troops. They will be followed by three to four Chinese firms establishing operations in the CBD, later to grow to some 40. While some of the Chinese workforce and management will be retained, over the years the scheme is expected to provide some 4,000 jobs to the Chateauroux region."

Fri, 11/19/2010 - 16:23 | 741999 i-dog
i-dog's picture

The Chinese are also doing the same thing in northern Italy ... using Chinese workers in Italian factories to produce "Made in Italy" clothing.

Sat, 11/20/2010 - 13:39 | 743217 thefedisscam
thefedisscam's picture

why not? this is called "Yi Yi Zhi Yi"

Fri, 11/19/2010 - 16:40 | 742041 YHWH
YHWH's picture

I wouldn't want to be a dog in China now.

Fri, 11/19/2010 - 18:52 | 742359 vitaminc
vitaminc's picture

Inflation in China is much higher than 4.3%...

Sat, 11/20/2010 - 13:38 | 743214 thefedisscam
thefedisscam's picture

By the SAME token, the food inflation rate in the U.S. is SIGNIFICANTLY higher than the official number of 0%!!

Fri, 11/19/2010 - 21:06 | 742567 ptolemy_newit
ptolemy_newit's picture

"You think they will let you access ZH there?  Don't plan on posting here if you move."

I am here reading ZH every day!  CCP love the site??

 


Sat, 11/20/2010 - 05:54 | 742875 pak
pak's picture

The story that QE2 is in fact a declaration of war on Bretton Woods 2 by the Fed is not new. It is in fact more than a month old:

http://economistsview.typepad.com/economistsview/2010/10/fed-watch-the-f...

http://macromarketmusings.blogspot.com/2010/10/bretton-woods-2-vs-qe-2-s...

Tyler, sometimes big stories originate from Fed-friendly sites!!

Sat, 11/20/2010 - 10:33 | 743023 sabra1
sabra1's picture

Bloomberg:

Japan Coast Guard Warns Two Chinese Ships Near Disputed Island
Sat, 11/20/2010 - 19:44 | 743483 Fu Manchu
Fu Manchu's picture

 

As someone with connections to very powerful factions within the Chinese military, I would like to point out that it is the Middle Kingdom, not the United States, which holds the ultimate trump cards.  You see, we can annihilate your country in a matter of minutes by detonating the thermonuclear devices we have planted under La Palma Island and Yellowstone.  Electromagnetic pulse weapons could be employed to knock out your electrical grid, after which your country would descend into Stone Age chaos.  At that point the PLA would sweep in at their leisure to mop up any pockets of resistance and set about transforming the United States into an agricultural colony of China.  So please, if you Americans have any ideas of escalating this war of words, I suggest you think again.

Sat, 11/20/2010 - 23:58 | 743837 i-dog
i-dog's picture

Are you related to 'Madhouse' (from the post below)? You do realise that La Palma is off the coast of Africa, don't you?

Since geography is not your forte, I'm assuming that you are a stoned American!!

Sun, 11/21/2010 - 01:37 | 743975 Fu Manchu
Fu Manchu's picture

http://www.youtube.com/watch?v=v4XR7i1YaG8

Watch and learn yankee dog!  Bwahahahahahaha!!

Sun, 11/21/2010 - 02:27 | 744027 i-dog
i-dog's picture

You watch too many disaster movies. You need to get out more often.

Sat, 11/20/2010 - 20:48 | 743593 Madhouse
Madhouse's picture

Replace the FDA with a real food safety agency and stop the wall of poison shit from China hitting our shores every day. That will solve lots. Talk about the elephant in the room..

Sun, 11/21/2010 - 02:24 | 743832 i-dog
i-dog's picture

"the wall of poison shit from China"

You have Chinese driwall made from poisoned shit? And elephants wandering around your room? Wow ... what medications are you on? I hope they're FDA approved!!

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