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There's No Engine for Global Growth Pt 1 (China)

Phoenix Capital Research's picture




 

Swing by www.gainspainscapital.com for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.

 

I’ve been skeptical about China for some time. While I do believe China has made some serious economic progress as a country, I remain thoroughly convinced that ultimately its economic “miracle” will be much like that of the Soviet Union powerhouse in the late 20s: apparently awesome in scope at the time, but a total fraud after the fact.

 

For one thing, China remains a control economy. There is no history that I know of in which a controlled economy works. The primary drivers of macro-economic growth are innovation, technological adaptation, and increased efficiency.

 

In order to have this, you need to have rule of law, strong education, openness to trade, and quality institutions to establish credibility and uphold the rule of law.

 

China is big on trade and education, but sorely lacking on quality institutions and rule of law. Just a few of the more glaring items include:

 

  1. China’s obviously fraudulent economic data.
  2. Rampant corruption of Chinese Government officials (no rule of law).
  3. A lack of individual rights for Chinese citizens (again no rule of law)
  4. A total lack of credible institutions to maintain accounting standards, quality control, protection of Intellectual Property, and the like.

 

One could easily argue that the US suffers from some of these issues (indeed, every country in the world does). However, the US remains, for the most part, a dynamic and open economy with semi-credible institutions and which generally upholds the rule of law (I remain convinced that those who committed fraud and broke the law leading up to the Financial Crisis and since then will eventually be brought to justice).

 

China on the other hand experiences corruption on a scale that is truly staggering to understand. More importantly, the corruption is deeply intertwined with the economic growth story itself.

 

Consider the following story I recently came across.

 

The Chinese Government wanted to build a bridge in one of its many rural provinces. However, the retired government officials (who happened to reside in the best real estate over looking the area in question) complained that doing this would block their view. So the Government… built a far more expensive tunnel instead. It boosted GDP, kept the officials happy, but made absolutely no sense what-so-ever.

 

A few other items of note:

 

  1. In 2010 alone, 146,000 cases of corruption were launched in China (that’s 400 PER DAY).
  2. How much these officials stole is unknown. But… of the 14 cases that were actually reported in the Chinese media, the average amount stolen was 18 MILLION RMB (for perspective, the average college graduate in China earns 2,500 RMB per year).

 

Now, no one knows how much money the 146,000 officials stole in 2010, but one report that was verified stated that just 29 officials were caught stealing 647.18 million RMB that year. Between that figure and the average theft of 18 million RMB the media reports, it’s safe to assume that the 146,000 officials engaged in corruption probably stole a staggering amount of loot.

 

How staggering? Well let’s look to history:

 

Between 1991-2011, it’s estimated that between 16,000-18,000 Chinese officials fled China taking 800 BILLION RMB (roughly $125 BILLION) with them. Bear in mind China’s entire GDP was just 2.1 trillion RMB in 1991.

 

With this kind of insane corruption combined with a desire to maintain ridiculous GDP numbers at all costs, quality goes right out the window.  Case in point, it’s estimated that on average bribes comprise 5-10% of a given project’s costs in China today.

 

Let me say that again… if you are proposing a construction project in China, on average you’ll need to allocate 5-10% of your costs towards bribing officials.

 

Small wonder then that many of the “projects” behind China’s growth “miracle” are falling to pieces… literally.

 

Collapse of New Bridge Underscores Worries About China Infrastructure

 

One of the longest bridges in northern China collapsed on Friday, just nine months after it opened, setting off a storm of criticism from Chinese Internet users and underscoring questions about the quality of construction in the country’s rapid expansion of its infrastructure.

 

A nearly 330-foot-long section of a ramp of the eight-lane Yangmingtan Bridge in the city of Harbin dropped 100 feet to the ground. Four trucks plummeted with it, resulting in three deaths and five injuries.

 

The 9.6-mile bridge is one of three built over the Songhua River in that area in the past four years. China’s economic stimulus program in 2009 and 2010 helped the country avoid most of the effects of the global economic downturn, but involved incurring heavy debt to pay for the rapid construction of new bridges, highways and high-speed rail lines all over the country.

 

Questions about the materials used during the construction and whether the projects were properly engineered have been the subject of national debate ever since a high-speed train plowed into the back of a stopped train on the same track on July 23 last year in the eastern city of Wenzhou. The crash killed 40 people and injured 191; a subsequent investigation blamed in particular flaws in the design of the signaling equipment.

 

http://www.nytimes.com/2012/08/25/world/asia/collapse-of-new-bridge-underscores-chinas-infrastructure-concerns.html

 

True, the US suffered a bridge collapse a few years back, but in China these kinds of disasters are far more commonplace than you would imagine.

 

Spate of bridge collapses trouble Chinese netizens

 

After three large bridges collapse in a single month, Chinese internet users say “I told you so”.

 

A complete section of the Wuyi mountain bridge in Fujian Province collapsed on July 15, killing a bus driver and injuring 22 bus passengers. The following day, gaps appeared in the middle section of the third Qianjiang River Bridge in Hangzhou, injuring a truck driver…

 

All three bridges were built in the mid-to-late 1990s. The Qianjiang bridge in Hangzhou was refurbished in 2005, but minutes from a meeting of the local transportation bureau showed that an incorrect ratio of sand to concrete was used in the maintenance, according to the China Daily newspaper.

Internet users predicted the collapse of the Qianjiang bridge several years ago. As early as 2007, posts on popular internet forum Tianya pointed out that the ratio of sand to concrete used to build the bridge was incorrect, according to the Beijing News. Other posts to the forum pointed out that the bridge was built by the same company responsible for a collapsed bridge in Hunan province, and advised drivers to avoid crossing the bridge.

 

Low quality infrastructure may be caused by corruption amongst officials responsible for overseeing construction projects. The China Daily reports that Zhao Zhanqi, an official responsible for the Qianjiang bridge project, was sentence to life in jail in 2007 for taking over 6 million yuan in bribes during the bidding for the bridge project and during its construction.

 

The world’s longest ocean bridge, spanning 23 miles, opened in Qingdao, Shandong province last month. Chinese internet users soon complained about the rushed construction of the bridge, after pictures of easily loosened bolts and incomplete safety rails along the bridge were posted online. Last year a bridge in Henan province collapsed, killing 37 people.

 

The frequency of bridge collapses in China leads to an attitude of cynicism among some sections of the public. “If the bridges didn’t collapse, how else could we rebuild them and boost our GDP?”, wrote one commentator on Chinese news website Caixin.

 

http://asiancorrespondent.com/60253/shoddy-bridges-trouble-chinese-netizens/

 

For those of you who glossed over that article, the key point is this: three major bridges collapsed in a single month in China. The reason? Shoddy construction courtesy of bribed officials.

 

My point with all of this is that the China growth story has been dramatically overhyped in the Western media. So with that in mind, we have to consider what impact this realization would have on the capital markets.

 

Put another way, imagine if the world found out that China’s growth and recovery post 2008 were largely based on fraudulent data and garbage development projects fueled by easy money and rampant corruption on the part of Chinese officials?

 

Imagine a world in which the China “miracle” turns out to be the China “lie”? The bulls and those desperate to claim that the world is in great shape would lose one of, if not the key pillars of their a growth rgument.

 

Indeed, by some measures China is considered the engine for the post-2008 recovery. So if this engine turns out to be not only sputtering, but broken…

 

            China’s steel mills braced for slowdown

 

Chinese steel traders are short on good news these days. Prices for steel are falling, demand is poor, loans are hard to come by, and no relief is in sight.

 

“There is just no demand,” says one trader in the town of Tangshan. “It’s much worse than [the last downturn] in 2008. In 2008 at least you had buyers talking to you. Not any more.”

 

The collapse of China’s steel market has reverberated around the world: benchmark prices for iron ore, a key steelmaking ingredient, have dropped to three-year lows of $89 a tonne, down 24 per cent in the past month alone. China accounts for about 60 per cent of global imports of iron ore, a market worth more than $100bn annually worldwide and one that is essential for the profits of global mining houses such as BHP Billiton, Rio Tinto and Vale of Brazil.

 

http://www.ft.com/cms/s/0/0db84534-f691-11e1-9dff-00144feabdc0.html#ixzz25cn4xBrh

 

So… unlike in 2008, steel traders in China find people are not even talking to them.

We see similar signs of a collapse in China in the form of iron ore prices, retail sales, oil demand, and on and on.

 

My point with all of this is that China is no longer going to be an engine for economic growth.

 

Swing by www.gainspainscapital.com for more market commentary, investment strategies, and several FREE reports devoted to help you navigate the coming economic and capital market changes safely.

 

Best

Graham Summers

 

 

 

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Mon, 09/24/2012 - 21:38 | 2826629 Jam Akin
Jam Akin's picture

This crap-post is worthless.  

I do wonder how those in capital equipment businesses around the world will fare with the slowdown in China.  It was the last major high growth frontier and now it is settling down.

Mon, 09/24/2012 - 10:47 | 2824247 Pitchman
Pitchman's picture

Earth to Major Graham. 

The Chinese economy in two words:  Rehypothecated Steel!

In America and Western economies it's: Rehypothecation everywhere

 

Did the American taxpayer bail out GM so it could become China Motors?

See: Truth, Liberty, "Transparency" & GM's Bailout - Down Goes The Republic

*

Once again the President promises one thing and works behind closed doors for the opposite outcome.  The Trans-Pacific Partnership trade agreement has been negotiated under conditions of 'extreme secrecy' without press, public or policymaker oversight, see: 'NAFTA on Steroids'

And, if you believe it will be different under Romney you haven't been paying attention.

See: Obama Claims He Will "Outsource Fewer Jobs" As His Trade Representative Secretly Works On "NAFTA ON STEROIDS"

 

Rehypothecation:

"Or, in other words, lose-lose." - Tyler Durden

Mon, 09/24/2012 - 10:38 | 2824215 beatus12
beatus12's picture

some northern china mining provinces

pay is close to 20,000 US dollars/yr

b.t.w. almost zero foreign

licences given last year to mine

because they stole everything

from the f. companies and now

have blocked them out, all the

worlds a fool for China

Mon, 09/24/2012 - 09:21 | 2823954 Sebas27
Sebas27's picture

Bridges are not the problem!! Apparently it's the trucks that are too heavy...

Mon, 09/24/2012 - 09:45 | 2824028 Metalredneck
Metalredneck's picture

Moving all that freight, no doubt...

Mon, 09/24/2012 - 09:07 | 2823907 Grand Supercycle
Grand Supercycle's picture

OVERDUE CORRECTION ...

Due to recent central bank intervention and short covering spikes, these daily charts are extremely overextended and significant correction expected very soon:

SPX, DOW, NASDAQ, NZDUSD, GBPUSD, AUDUSD, COPPER, CRUDE, GOLD, SILVER. [USD strength will return]

http://www.zerohedge.com/news/2012-12-24/market-analysis

http://trader618.com

Mon, 09/24/2012 - 08:33 | 2823795 silverdragon
silverdragon's picture

The reality is Graham needs to make a buck but his budget is a lap top and internet linkup. If he is to be taken seriously he will need to actually go to the country he is writing about so that every man and his dog doesn't take the piss out of him.

I pay my cleaners, more than he says university graduates earn and I am a tight bastard.

Come on Graham man up apologise for not even have been to a Chinese restaurant in the US and then writing about China.

Mon, 09/24/2012 - 08:12 | 2823759 chinucklehead
chinucklehead's picture

'(for perspective, the average college graduate in China earns 2,500 RMB per year).'

This is false.

I live and work in China. I recently interviewed a street sweeper (with the help of a local), who reported earning 1,000 RMB per MONTH. The average public school teacher earns 2,500 RMB MONTHLY, a junior software developer I know in Beijing earns 7,000 RMB MONTHLY.

For most college graduates, a starter position begins at 1,000 or more RMB MONTHLY, and is usually higher in large cities.

Mon, 09/24/2012 - 07:14 | 2823702 silverdragon
silverdragon's picture

"China’s obviously fraudulent economic data. Rampant corruption of Chinese Government officials (no rule of law). A lack of individual rights for Chinese citizens (again no rule of law) A total lack of credible institutions to maintain accounting standards, quality control, protection of Intellectual Property, and the like."

Which country doesn't have fraudulent economic data? The US, European Countries?

Rampant corruption? No Rule of Law? If you actually ran a company here you would know there are more than enough rules and regulation to keep we business people honest. And few enough laws so that the people are free, shitloads of laws equals reduced freedom.

Lack of rights? Same, Same in HK and Singapore two of the best run entities in the world.

Accounting standards?? You mean like US and European countries?? You disingeneous retard.

Quality Control?? The factories making stuff to western specs for western companies are providing the quality western consumers are willing to pay for. Oh wait up, they are broke bums buying crap at walmart. They have made their price/quality decision they decided to buy cheap arse shit so they don't get to cry.

Oh you meant infrastructure, next time send an intern to China with a camera so she can send you back some pictures. Preferably a hot one, definitely not a fat one with an attitude.

Bottom line Graham sorry to mess with your income as this is how you eat but maybe its time to think about flipping some burgers or mastering a new set of skills such as serving some extra large walmart customers.

Mon, 09/24/2012 - 06:57 | 2823686 New_Meat
New_Meat's picture

"In order to have this, you need to have rule of law, strong education, openness to trade, and quality institutions to establish credibility and uphold the rule of law."

oops

Mon, 09/24/2012 - 06:53 | 2823680 silverdragon
silverdragon's picture

Graham,

You obviously do not care about your credibility. If you write about things that you know nothing about, people that do know something, will tear it apart. Misdirection is what you attempted and disrespect is what you achieved.

 

Mon, 09/24/2012 - 04:51 | 2823612 supermaxedout
supermaxedout's picture
  1. In 2010 alone, 146,000 cases of corruption were launched in China (that’s 400 PER DAY).
  2. How much these officials stole is unknown. But… of the 14 cases that were actually reported in the Chinese media, the average amount stolen was 18 MILLION RMB

Compare this to the US.The Us is really paradise.  As we all know, corruption, fraud, betrayal, murder, private prisons (forced labor camps for the poor), torture etc, etc, .......  do simply not exist in the US.

Mon, 09/24/2012 - 02:54 | 2823544 AnAnonymous
AnAnonymous's picture

Decoupling is very hard in this 'american' world. Been pushing the remark for long by now.

The cause is plain to see:
-the world is finite
-the 'american' world is doing the consumption job, which requires a control over resources.

For any other area to decouple from 'american' nations, there should be some uncontrolled large pool of resources to allow that area to start consumption on its own, unrelated to the benefits that consumption brings to 'americans'.

That pool of resources in all likelihood does not exist.

The redispatching/redistributing of resources (as often claimed by 'americans') toward that area, that would be required to feed their own consumption scheme, can not be performed as 'americans' have their grip of the world resources market and therefore determine who gets what. And they pust them first in rank order.

That story of decoupling has been hogwash from the start. But has to be maintained as by 'american' fabulas, resources are not preempted by 'americans' but are redistributed along various patterns including merit, efficiency etc

Decoupling wont happen. There is no spare resources to feed that as 'americans' monopolize the world resources to sustain themselves.

This is a US world order and ultimately, the world is organized to make consumption the easiest possible in the US, the mecca of 'americanism'.

Mon, 09/24/2012 - 02:11 | 2823514 Joe A
Joe A's picture

Corruption is everywhere. In the West project prices are inflated. Tenders are short listed to the happy few. Guess what? The West and China have a lot in common. You see, that is the great lesson of the wars between capitalism/fascims and socialism/communism of the 20th century: They found out they were both collectivist systems so if you can't beat eachother, join eachother. There are two classes nowadays, the haves and the haves not.

Mon, 09/24/2012 - 01:59 | 2823511 Tsukato
Tsukato's picture

 (for perspective, the average college graduate in China earns 2,500 RMB per year).

I live in Chongqing for the last 5 years, and can tell you this guy has no fucking idea of what he's talking about. This salary is per month, and is actually closer to 3000 kuai. It seems he has maybe never been here, of if he did, then he only saw the inside of the Shanghai Sheraton, and had short conversations with the workers there, who told him their salaries in fucked up english.

However, he is correct in that this country is a fucking mess, and the corruption is rampant, and everyone hates everyone, and wants to get the fuck out asap, with as much pilferred money as possible.

One of our buisnesses here deals with helping the rich send their kids abroad, with the plan that the rest will follow afterwards. Tons of people, paying tons of money to get the fuck out of here.

Actually, China's a great place to make heaps of cash at present, and maybe for a while, but it too, will end up as a failed state, without a doubt.

Mon, 09/24/2012 - 09:14 | 2823927 Vendetta
Vendetta's picture

thanks for the info.  A coworker who worked in China about 10 years ago told me all he wanted to do was get out as the pollution was killing him and his family.

Mon, 09/24/2012 - 04:04 | 2823595 SAT 800
SAT 800's picture

Graham Summers has made his reputation on having no fucking idea what he's talking about; but he has an investment newletter you can buy if you're interested.

Sun, 09/23/2012 - 23:21 | 2823283 WiseRoscoe
WiseRoscoe's picture

New developments of ghost cities with rows of high rise condominiums stacked like dominoes that sit empty. GDP was great, now what?

Sun, 09/23/2012 - 22:14 | 2823267 XtraBullish
XtraBullish's picture

Graham - you are fucking dreaming. Read Atlas Shrugged again, take thirty-seven Percodan and call me in the morning.

Sun, 09/23/2012 - 22:10 | 2823262 Rochefort10
Rochefort10's picture

I'm opening up another bottle of Shiraz....screw "Happy Hour"...turns out "Happy Hour" is a Chinese brothel that takes Mastercard.

Sun, 09/23/2012 - 21:59 | 2823255 imppress
imppress's picture

Super article except the part about:

"involved incurring heavy debt to pay for the rapid construction of new bridges, highways and high-speed rail lines all over the country."

Heavy debt to WHO?

Debt for soverign entities such as China and the US isn't always bad if you find Keynesian economics credible (though I'm well aware many ZeroHedge visitors do NOT.)

If China finds itself spending too much, it can arbitrarily float its currency just like we've been begging it to in order to inflate its debt away much as the Fed has done since we have not been ALLOWED to consider direct stimulus since the ARRA more than three years ago.  Tax cuts and QE only.  Result: WEAK recovery and dollars so strong they can tear phone books in half. (DESPITE three effing rounds of the QE crapola.)

I used to worry about national debt until I checked to find out who the creditor natoons are.  Take a look.  There ARE NONE!  All countried "owe" money to what amounts to micro-interest beaing deficit accounts to central banks.  Interest they can pay with more deficit money.  The only limit is inflation, not some absurd notion of running out of fiat money.

China could be out of "debt" tomorrow if it wished. So could we.  Imports prices would go instantly stratospheric, but they WOULD be out of debt. Tey don't want prices to go nutso, so they don't choose to pay their debt. Most folk thibnk it works like credit cards.  It doesn't when you make your own money.

Apologies to everyone I've bored silly with macroeconomics 101.

 

Sun, 09/23/2012 - 21:32 | 2823207 XtraBullish
XtraBullish's picture

Graham - Pay me $5k a month and I'll correect your analysis.

Sun, 09/23/2012 - 21:27 | 2823198 tony bonn
tony bonn's picture

"...I remain convinced that those who committed fraud and broke the law leading up to the Financial Crisis and since then will eventually be brought to justice..."

wait here while i bring you your skittle shitting unicorn from which you can sprinkle pixie dust over the good citizens, denizens, and illegal aliens of amerika...

Sun, 09/23/2012 - 23:08 | 2823341 DeadFred
DeadFred's picture

He also thinks people would be shocked, shocked to find the Chinese data isn't accurate. LOL

Sun, 09/23/2012 - 20:44 | 2823117 Stuck on Zero
Stuck on Zero's picture

I love this: 

Let me say that again… if you are proposing a construction project in China, on average you’ll need to allocate 5-10% of your costs towards bribing officials.

In California the same figure would be 40% of the cost of the project.  We don't call it bribery.  We call it: licenses, exemptions, zoning assessments, EIR statements, filings, plans, compliance, etc. etc. etc.

China is cheaper.

 

 

Mon, 09/24/2012 - 11:17 | 2824379 gilligan
gilligan's picture

Same story in Australia. Infrastructure costs here are nightmarish, largely due to union power. Just corruption under a different guise. At least in China they call it bribes.

Mon, 09/24/2012 - 05:29 | 2823635 MisterMousePotato
MisterMousePotato's picture

You deserve more than just an up arrow.

Sun, 09/23/2012 - 21:31 | 2823206 Heyoka Bianco
Heyoka Bianco's picture

Forty percent could be a bargain in Cali. I know at the height of the housing boom in the Northbay, you could be looking at $50-60,000 in fees alone to build a new home, regardless of any other costs. It's retreated some since, but only because no houses are being built.

Sun, 09/23/2012 - 19:24 | 2822990 Tombstone
Tombstone's picture

Excellent article.  As we in America are about to discover, you can never, never,  never,  create lasting wealth and prosperity through central planning by the government.  Any government.  There is never any method to ensure cost-effective productivity at the micro level.  Government created spending has no limit or consequence for failure or ineptitude.  Programs are never stopped; only refunded with more money.

Sun, 09/23/2012 - 18:06 | 2822863 Salt
Salt's picture

The Chinese saw that we have ghost towns. Couldn't have a ghost town gap, so they built ghost cities. Got a bonus bump in GDP too. :)

Sun, 09/23/2012 - 17:40 | 2822811 President Palin
President Palin's picture

Hey Graham,

Ever been to China?  I doubt it.  I have, and what they have accomplished in a short period of time is impressive.

At least they don't hide the fact they have a centrally planned economy.  Here in the USSA, we pretend to embrace democracy and true capitalism.  Nothing could be further from the truth.

When people say, "God bless America" - I hope they mean it - because we really need it.

Mon, 09/24/2012 - 07:07 | 2823692 Zero-risk bias
Zero-risk bias's picture

I must say when I'm in China, I'm also impressed. No doubt bout that.

It impresses me much that millions if not billions of human hands and minds have toiled and resulted in some of the most up-to-date and vast scaled engineering projects on the planet.

It still triffles me from time to time when I think more about the long term impact of some of these structures and the locations in which they are built. However, for standing the test of time, I don't think we are really at the stage yet where we can judge.

I live in China and wake up to a megatropolis of continual development each day. Firstly, I'd say this. It's easier to replicate and even go one step futher with regards to scale when you've had 100 years to watch how things have been done before.

Secondly, when I wake up each morning, it's not like I'm in paradise on Earth, we are talking painfully barely habitabal atmospheres, sanitation and environmental issues ranging from water safety to not being able to throw toilet paper in my lavatory. (Luxurys I took for granted at home)?

Not only that, but to be honest I glossed over the article with any comparitive analysis regarding the US, because it doesn't really do anyone any favours to compare failed and flawed economic and political models in the East and West.

I don't think a case can really be made for one country needing a bit of luck in the future, either we all don't need any or we all need quite a lot. Seems to be a lot of concurrent issues both side of the pacific.

Wouldn't you agree?

Sun, 09/23/2012 - 18:59 | 2822954 Dr. Bonzo
Dr. Bonzo's picture

Let me guess... by "been to China" you mean you can see it from your Alaskan log cabin? Let me tell you what's impressive... transforming an agricultural economy into the largest industrial powerhouse in the span of 3 generations based on the development of completely new technologies and providing the world with a political template that would inspire a political revolution across the globe into the 20th century. If only we had been smart enough to hold onto it.

I'm not denigrating the Chinese people. But I most certainly won't give the Chinese Communist Party credit for jacksquat. I'll be damned if I'm going to applaud 50 years of deliberate genocide and backwardassation only to arrive at the brink of near collapse and then to decide to swipe other country's development strategies (copying Japan/Korea/Taiwan), other countries' innovation (ours) and other countries (Tibet, Xinjiang) and then rush to my feet and applaud them for committing to a policy of genocide, larceny, fraud and wholesale pillage. As if transforming mud roads into superhighways is _that_ hard. If we had a national construction industry scam instead of an MIC we'd have splendid 8-lane super highways that lead to the middle of the Gobi desert as well I suppose. It's the Age of the Big Lie. Sure, we're in one hell of a bind sitting atop a mountain of derivatives trash... but the sheer wastage of natural resources that China has committed to in pursuit of their glorious "development" will come back to bite us all in the ass when the music ends.

Mon, 09/24/2012 - 02:40 | 2823527 AnAnonymous
AnAnonymous's picture

swipe other country's development strategies (copying Japan/Korea/Taiwan), other countries' innovation (ours) and other countries (Tibet, Xinjiang) and then rush to my feet and applaud them for committing to a policy of genocide, larceny, fraud and wholesale pillage.
________________________

Must be hard to be an 'american' then...

Mon, 09/24/2012 - 01:01 | 2823473 Bro of the Sorr...
Bro of the Sorrowful Figure's picture

Every single point you made about the CCP could be made about the US government. 

I have lived in China for 3 years. It's easier to start small businesses here. Taxes are lower (unless you include Uncle Sam's double taxation). No one tells me what size soda I can or cannot drink (I'm originally from New York). The idea that our government is any different than the Chinese government is ridiculous. 

 

Of Graham's points:

  1. China’s obviously fraudulent economic data.
  2. Rampant corruption of Chinese Government officials (no rule of law).
  3. A lack of individual rights for Chinese citizens (again no rule of law)
  4. A total lack of credible institutions to maintain accounting standards, quality control, protection of Intellectual Property, and the like.

All apply to the US. We have tremendously fradulent economic data. We have rampant corruption (at least the Chinese are open about theirs). We have a complete lack of individual rights. The only point you might be able to argue is a lack of credible regulatory institutions, however if the last decade is any indication then we are almost exactly the same as "communist" China.

Shit sucks huh. 

Sun, 09/23/2012 - 17:33 | 2822797 max2205
max2205's picture

Burrrp!

Sun, 09/23/2012 - 17:32 | 2822792 greggh99
greggh99's picture

"I remain convinced that those who committed fraud and broke the law leading up to the Financial Crisis and since then will eventually be brought to justice."

You should be a comedian with material like that.

Sun, 09/23/2012 - 20:12 | 2823063 Pure Evil
Pure Evil's picture

Maybe he could sub for MDB on his days off.

Sun, 09/23/2012 - 17:30 | 2822786 Eric L. Prentis
Eric L. Prentis's picture

Confirming Chinese economic growth is one big lie; see the Shanghai Composite Stock Index—currently at 2,026.69. The lowest this index has been since February 2009. Enough said!

Sun, 09/23/2012 - 17:18 | 2822762 disabledvet
disabledvet's picture

I think it's safe to say Cornelius Vanderbilt has just about had enough...

Sun, 09/23/2012 - 17:20 | 2822742 akak
akak's picture

 

Spate of bridge collapses trouble Chinese netizens


Actually, Graham, the proper phrasing here would be:

"Blobbing-up Chinese bridge collapsionations trouble Chinese Citizenism citizens".

Sun, 09/23/2012 - 18:09 | 2822871 TheFourthStooge-ing
TheFourthStooge-ing's picture

Chinese citizenism citizens muchly disturbinged by bridge collapsicationism due to impairingness the access now to roadsides formerly having bridging connectitude.

Sun, 09/23/2012 - 17:03 | 2822722 Tenma13
Tenma13's picture

"However, the US remains, for the most part, a dynamic and open economy with semi-credible institutions and which generally upholds the rule of law (I remain convinced that those who committed fraud and broke the law leading up to the Financial Crisis and since then will eventually be brought to justice)."

 

I really wanted to belive in Santa, but that never made it more liekly that he would actually become real. Majical thinking much?

Sun, 09/23/2012 - 17:00 | 2822715 bank guy in Brussels
bank guy in Brussels's picture

Graham Summers states:

« ... the US remains, for the most part, a dynamic and open economy with semi-credible institutions and which generally upholds the rule of law (I remain convinced that those who committed fraud and broke the law leading up to the Financial Crisis and since then will eventually be brought to justice »

Ha!

Don't bogart that bong, Mr Summers ... pass around that stuff you are smokin' ... so we can all share your optimism about the upcoming criminal prosecution of the American elite banksters

Mon, 09/24/2012 - 02:46 | 2823533 AnAnonymous
AnAnonymous's picture

Don't bogart that bong, Mr Summers ... pass around that stuff you are smokin' ... so we can all share your optimism about the upcoming criminal prosecution of the American elite banksters
________________________________________

That 'american' does not need to smoke anything. He only needs to be an 'american'.

Which makes his remark self fulfulling.

As by 'americanism', non prosecuted 'americans' will be not prosecuted because in the end they will have made nothing reprehensible.
It will be useless to prosecute them.'American' justice only sends guilty people in jail.

When speaking of the US and the 'american' rule of law, one must remember that the SCoJ episode toward the Indians and President Andrew Jackson.

When you go that up in magnitude, what should it be different this time? Have 'americans' changed?

No, they havent because US citizen nature is eternal.

Mon, 09/24/2012 - 07:53 | 2823730 TheFourthStooge-ing
TheFourthStooge-ing's picture

AnEncephalous said:

That 'american' does not need to smoke anything. He only needs to be an 'american'.

A very telling statement, that. Very telling indeed. Many words spun after it in order to offuscate the underlying motivation, to externalize the blame.

The hidden factual foundation of the statement is that you simply refuse to share the hookah at the Peoples Liberation Opium Parlour. This coincides with your eternal nature of desiring to consume as many resources as quickly as possible.

But hey, Chinese citizenism is as AnAnonymous hypocritizenism does.

Mon, 09/24/2012 - 04:59 | 2823616 NoClueSneaker
NoClueSneaker's picture

He, being 'american' means "not stoned enough" .... There is a half billion of weird muppets which have HAD their states and some kind of national integrity, laws, economies, lives ... After dope, ( not now, while still stoned ), they'll wake up broke, enslaved, hungry, thirsty, on cold turkey, in the biggest human created jail of all times. Uber junkies are called "europeans" .

Sun, 09/23/2012 - 19:24 | 2822991 Snakeeyes
Snakeeyes's picture

So dynamic that Democrats are staging the biggest tax increase in history that will kill economic growth.

http://confoundedinterest.wordpress.com/2012/09/23/housing-and-the-three-waves-of-tax-tsunami-the-biggest-increase-in-taxes-in-american-history/

Sun, 09/23/2012 - 20:10 | 2823059 Pure Evil
Pure Evil's picture

It's only a tax increase if you have reportable income the IRS can tax.

Not a worry for Romney's 47%.

Sun, 09/23/2012 - 20:18 | 2823074 nmewn
nmewn's picture

I've been thinkin about that comment...and others...maybe O'Barry was speaking to THAT 47% when he said "You didn't build that!" and it was mis-interpreted.

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