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Guest Post: Soaring Debt Precedes Financial Crises...

Tyler Durden's picture




 

Submitted by John Aziz of Azizonomics blog,

Things don’t look so good for China:

Screen-shot-2013-01-23-at-5.25.43-AM

Will we see a Chinese financial meltdown in 2013? Or 2014? Or 2015? With global GDP growth on a definite trend downward, with such a tepid Western recovery, and with global geopolitical tensions still high, the last thing the global economy needs is a financial crisis at the heart of the BRIC growth engine. But the data implies that that may just be what we get.

To those who believe that China is immune to such a thing, recall that America suffered the Great Depression immediately previous to becoming a global superpower. China’s economy has undergone a rapid transformation in recent years:

china-economy-12-4

Such a transformation is sure to necessitate some dislocation and fallout — just as America’s transformation from an agricultural to a manufacturing economy did. America ended that process as the global superpower. It remains to be seen if the same will happen for China, but controlling the world’s largest productive industrial base certainly suggests so. The other factor, of course, that presaged America’s rise was a global war

 

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Mon, 01/28/2013 - 21:02 | 3193318 HomeBrewPrepper
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Nothing to see here , move on

Mon, 01/28/2013 - 21:02 | 3193323 q99x2
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Let's the US, EU, Russia and China have a war against the NWO. Take about 5 hours to end it seeing that they only have about 6,000 elite mommy's boys on their side. Don't have to shed any blood only ARREST them.

Mon, 01/28/2013 - 21:03 | 3193325 ebworthen
ebworthen's picture

Can't they grind the unwanted female babies into Soylent Green?

Can't they just sell more iPhones and invade Africa?  Hmmm...Chinese/African babies...will be an interesting mix.  Shaka Kahn?

Mon, 01/28/2013 - 21:22 | 3193365 TheFourthStooge-ing
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.

Can't they grind the unwanted female babies into Soylent Green?

Alas, alas, quintuple alas less two, Chinese citizenism efficiency make doings much better. Extracted female fetusings and female newborns which experiencing the dying accidental become into dried and powdered. This way making double lucky ingredients to elixir giving growth to tiny Chinese citizenism pee-pee with much joy.

Mon, 01/28/2013 - 21:37 | 3193407 eddiebe
eddiebe's picture

We're all insane. Funny comment on the chinese madness though.

Mon, 01/28/2013 - 21:54 | 3193443 King_Julian
King_Julian's picture

+1 Excellent channelling of AnAnonymous.

Mon, 01/28/2013 - 23:02 | 3193609 ebworthen
ebworthen's picture

Zulu Mao?

Sheriiit!

You Amelicans no unerstannd African man powdered penis is aphrodisiarac rike rhino hournn.

Especiarry for your bronde buxrom huneys from Carrifornia dat so easy to get once wre own you.

Hah!  Hah!

Mon, 01/28/2013 - 21:05 | 3193328 adr
adr's picture

China's plan: Buy up all of California, ruin China, transplant the 100 million Chinese with money, let the other billionish die, head East from sunny Cali.

Mon, 01/28/2013 - 21:32 | 3193393 Go Tribe
Go Tribe's picture

California will sell itself to China for sure. Any time you hear bad China news, BTFD.

Mon, 01/28/2013 - 21:39 | 3193401 guinea
guinea's picture

Pacific Northwest and British Columbia are so much more attractive to the Chinese. For one, there aren't barrios and brown people, and the population density is much lower for molding. Seattle metro area has one of the highest Asian populations in the US. Vancouver is already the Hong Kong of the West.

Snow falling on cedars, bitch.

Mon, 01/28/2013 - 21:07 | 3193334 legorf
legorf's picture

The problem is, will someone on earth survive the next big war? I mean, somehow, you need humans to run an economy ... or do ya?

Mon, 01/28/2013 - 21:26 | 3193375 Vendetta
Vendetta's picture

no.  Just a printing press and some algos

Mon, 01/28/2013 - 22:16 | 3193501 Dr. Sandi
Dr. Sandi's picture

I suspect the algos have already figured out how to get rid of the 'useless eaters' which in this case means anything on two or four legs.

Mon, 01/28/2013 - 21:09 | 3193338 Shell Game
Shell Game's picture

"Will we see a Chinese financial meltdown in 2013? Or 2014? Or 2015?" (or 2016? or 2018?)

 

Yes.  Or, crumble.  

Tue, 01/29/2013 - 08:33 | 3194340 Acet
Acet's picture

I can predict with 100% accuracy that there will be a financial meltdown in China (or any other country of your choosing). There will also be one or more booms, one or more wars, a couple of revolutions and countless changes in borders, and quite likelly a change in nationhood.

All this will happen between now and the year 3000.

 

...

 

The secret to accurate forecasting is a long enough timeframe.

 

Wed, 01/30/2013 - 14:13 | 3199450 Shell Game
Shell Game's picture

lol!  Indeed, it's all in the timeline...   ;)

Mon, 01/28/2013 - 21:14 | 3193344 disabledvet
disabledvet's picture

I think a better argument would be to understand that America had no great "industrial recovery" after the end of our Great Patriotic War as the Russians called it. Instead you had an amazing concept of economics revolving around "mass consumption" and the sudden opening of the Halls of Knowledge to the general public...and an era of extraordinary public works...none of which would be possible now nor going forward due to America's Debt Bomb being exploded on the American people. I would argue the American people massively reigning in their alleged profligacy is something that will have a needed and profound impact on all these High Priests of "pricing power." We shall see if the Great Battle for Final Demand can be won by obliterating your one and only buyer...but I have my doubts.

Mon, 01/28/2013 - 21:14 | 3193346 Manthong
Manthong's picture

How do you say "oy vey" in Mandarin?

Mon, 01/28/2013 - 21:41 | 3193420 guinea
guinea's picture

Malegebi.
Made.

Mon, 01/28/2013 - 21:17 | 3193349 Aurora Ex Machina
Aurora Ex Machina's picture

Hmm, you do realise that the Korea / S.Asian crisis of 1998 was brought about directly by America / World Bank / IMF interactions, and they then screwed them over to make sure Western Corporations got their money, right?

And you do realise that this was the cause of the shift in policy (under Clinton) of the Chinese politburo that it would never happen again, and they'd tailor their economy to industrial output in order to grow, and directly satisfy USA demand, right?

And you do realise that Samsung [30%ish of S. Korean GDP] post 1998 vowed never again to be fucked by Western Corporations, right?

 

Top fucking tip: their societies do not function under the same rules that the USA does. After all, they've only had 30 years of prosperity, and China had the willpower to put through draconian single child policies for the "greater good". And the USA has kittens over a debt ceiling, and can't even manage to put people in "power" who aren't retarded at this point.

 

 

Jesus Wept. You're so screwed, and I'm supposed to help save this species? Trolololol; thanks peeps. Bring out the salt pillars, I guess...

Mon, 01/28/2013 - 21:19 | 3193359 Marge N Call
Marge N Call's picture

"and can't even manage to put people in "power" who aren't retarded at this point."

I DARE someone to argue with that one.

Marge.

Mon, 01/28/2013 - 22:00 | 3193454 sunny
sunny's picture

Argue?  I thought he was being generous to the point of pain.  There are many who are mentally challenged, it is the way they were born.  Entirely different to be "willfully" ignorant to the extent that the idiots in DC apparently are.

Then again, we must consider how they got there.  :-(

sunny

Mon, 01/28/2013 - 22:06 | 3193468 Marge N Call
Marge N Call's picture

You bring up a great point Sunny. So you are implying they are intelligent but deceitful, i.e. wilfully ignorant. I suppose my vote for retarded demands more consideration. Maybe obtuse, at most mediocre, and sociopathic is more accurate. Sociopathic is more to the point of your observation of "how they got there". Then of course we must look in the mirror, for what does it say about a society where one must be sociopathic to become a "leader". A coward, liar, and most importantly, deviod of any character or principle.

oops, we are back to your point, how did they get there.

Indeed.

Tue, 01/29/2013 - 05:25 | 3194226 jeff montanye
jeff montanye's picture

sociopathic liars and cowardly bullies pretending to be the manifestations of their bases hopes and dreams:

george bush professed christianity and mocked the pleas for life of a woman he put to death as governor.  killed scores of thousands (maybe hundreds of thousands) of innocents for an aggressive war of choice. 

obama promised transparency and has prosecuted more whistleblowers than all prior presidents while instructing the cia to assist sympathetic propaganda makers.  promised to close guantanamo in his first year.  to avoid "dumb wars".  in all fairness he didn't promise not to initiate a program of assassination of u.s. citizens by executive order but few really saw it coming.  

both reelected however.  i don't know about jesus but i'm starting to tear up.

Tue, 01/29/2013 - 08:59 | 3194379 Marge N Call
Marge N Call's picture

jeff, both "leaders" had a cult group of followers who refuse to see the faults, crimes, of "their guy". Having voted for neither, I can honestly say we pretty much knew what we were getting from bushie. Did anyone think he WASN'T going to start war(s) when they pulled the lever for him? I doubt it. And to some extent the press and other groups kept him somehwat in check, or at least exposed.

Now obama OTOH, now there's real snake oil job. Could anyone who voted for him really think he would be WORSE than bush on civil rights, the Patriot Act, drones? As far as "he didn't promise not to initiate a program of assassination of u.s. citizens by executive order", I sincerely hope that was a joke. If presidents need to promise not to assassinate US citizens, then we are under a dictatorship already. Last time I checked, assassinating us citizens was a crime.

And that's what really bothers me about the so-called pacifists, civil libertarians, etc. As soon as "their guy" gets elected, they stick their fucking heads in the sand and pretend all is well. I have news for them: there will come a time, very soon, when "their guy" won't be in office, it will be another bush but worse, and the seeds of tyranny they have willingly and knowingly sown will be reaped.

 

Mon, 01/28/2013 - 21:32 | 3193392 MrTouchdown
MrTouchdown's picture

China has demonstrated a complete lack of ability to invent anything. They just copy and manufacture. The US was inventing all kinds of stuff before becoming a super power. I haven't seen one China-phile explain how China could possibly sustain itself without the EU or US leading the way - let alone thriving.

Mon, 01/28/2013 - 21:56 | 3193426 guinea
guinea's picture

They did invent paper money and printing press, and inflation.

China had GDP of Zimbabwe in 1950 and then had three intellectual purges since. I'm not so quick to write them off on the inventions front just yet. It always bothered me that utterly average people like yourself who have made zero contribution and invention to humanity feel like they know what that is about through vicarious association.

Tue, 01/29/2013 - 01:39 | 3194061 Totentänzerlied
Totentänzerlied's picture

"They did invent paper money and printing press, and inflation."

They invented movable type. Not the press as Europeans would come to know it, per se. The other two things are not "contributions" to humanity is any way, shape, or form, they are weapons of mass deception and destruction.

Tue, 01/29/2013 - 23:57 | 3197702 MrTouchdown
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Alright, "invention" wasn't the right word. "Implementation" is. Another commenter brought up the ships thing. They invented triple masted ships WAY before the west, but then made it illegal to build or use them.

As to the rest, correlation is not causation and same to ya buddy.

Mon, 01/28/2013 - 22:08 | 3193477 Marge N Call
Marge N Call's picture

They invented the clock, and the ship pretty much. I think they invented the hooker, but that's up for debate.

Mon, 01/28/2013 - 22:17 | 3193507 Dr. Sandi
Dr. Sandi's picture

Hookers are constantly inventing themselves. Then re-inventing themselves to remain marketable.

Tue, 01/29/2013 - 01:52 | 3194079 MrPalladium
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In the past few years more patent applications have been filed in the U.S. patent office by Asians resident in Asia than from U.S. residents.

China has submarines that can sneak up on our carrier groups undetected.

After adjusting for wage rate differentials, China invests as much on R&D for defense and new defense equipment as the U.S. and spends almost nothing on maintaining obsolete equipment.

I don't know where my fellow Americans get the idea that the Chinese live in some sort of dark age.

Tue, 01/29/2013 - 07:46 | 3194293 mckee
mckee's picture

"I don't know where my fellow Americans get the idea that the Chinese live in some sort of dark age."

TV?

Tue, 01/29/2013 - 09:12 | 3194404 Its_the_economy...
Its_the_economy_stupid's picture

They sneak up on US carrier groups with propeller technology sold to them illegally by GE or some such US corp. No perp walk on that one either.

Sons of  bitches.

Tue, 01/29/2013 - 23:55 | 3197696 MrTouchdown
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Indeed they did! In the case of the shps: they promptly outlawed them and it wasn't until westerners showed up using them (having invented them independantly much later) that they could be used.

It's a theme with them.

Tue, 01/29/2013 - 00:38 | 3193954 Freddie
Freddie's picture

The US voted for OBa and he stole it in 2012 and probably 2008 too.   The chinese are not that stupid - actually they own him.

Tue, 01/29/2013 - 00:39 | 3193958 WillyGroper
WillyGroper's picture

Glass, gunpowder.

Mon, 01/28/2013 - 21:42 | 3193418 Rustysilver
Rustysilver's picture

Things look a lot worst between 1958-1962 in China. An estimated 25-40+ million Chinese died of famine.

Now, you just have to learn how to breath polluted air and drink dirty water.  So you see, the communist system have a capacity to improve.

Mon, 01/28/2013 - 22:00 | 3193451 sbenard
sbenard's picture

Two excellent books on the subject of debt calamities:

This Time Is Different -- Carmen Reinhart and Ken Rogoff

Endgame -- John Mauldin

I got both at the local library (I recommended them both).

Any others I should read? Thanks for the recommendation(s)!

Tue, 01/29/2013 - 01:50 | 3194080 stacking12321
stacking12321's picture

great historical account by adam fergusson

When Money Dies: The Nightmare of Deficit Spending, Devaluation, and Hyperinflation in Weimar Germany


Mon, 01/28/2013 - 22:12 | 3193490 Gold Dog
Gold Dog's picture

How Long is a Chinaman's name

Mon, 01/28/2013 - 22:17 | 3193511 Dr. Sandi
Dr. Sandi's picture

What kind of asshole still uses that epithet?

Mon, 01/28/2013 - 22:23 | 3193537 akak
akak's picture

How is the word "Chinaman" any more insulting than the words "Englishman" or "Frenchman"?

Or are you one of those politically-correct idiots who uses the overly broad word "Asian" to refer strictly to Orientals?

Tue, 01/29/2013 - 01:57 | 3194087 Dr. Sandi
Dr. Sandi's picture

No, I'm one of those assholes who has heard so many stupid assed 'Chinaman' jokes that you almost seem intelligent.

Take your 'politically correct' fuck you's to your day job and blow them up a sailor's dick.

And thank you for playing Fight Club.

Tue, 01/29/2013 - 02:56 | 3194147 akak
akak's picture

Huh.  Myself, I can't recall EVER having heard any "Chinaman" jokes.

Now, if you want to discuss Chinese citizenism jokes ....

Tue, 01/29/2013 - 09:19 | 3194422 Ghordius
Ghordius's picture

LOL, please, no more Chinese Citizenism rhymes!!

actually a "Chinaman" was one of those big sailing ships made for the trade routes between China and Europe

as they started to land in California it became a name for both the ships and the people disimbarking, and was not particularly offensive, more one of those "beefy arrogant" attitudes nobody takes too seriously

at that time Californians kept their pet hate against Chileans anyway

--------

that's actually a big issue I have with internet-based knowledge: it's very, very superficial

Tue, 01/29/2013 - 21:12 | 3197169 Marge N Call
Marge N Call's picture

Dude, the Chinaman is not the issue here.

Mon, 01/28/2013 - 22:59 | 3193612 Gold Dog
Gold Dog's picture

Obviously an asshole like me...you douchebag.

EDIT- What the fuck ever happened to Peking anyway? Did it melt from all the panface pollution?

Tue, 01/29/2013 - 02:05 | 3194097 Dr. Sandi
Dr. Sandi's picture

Apparently Beijing sounds more like the way the Chinese actually say the word than Peking, so people started trying to appear less ignorant by changing the way they say it.

Not that the fear of appearing ignorant is a big deal here at ZH.

This is not to explain why we still call Deutscheland 'Germany' in English. Some traditions die harder than others I guess.

Tue, 01/29/2013 - 05:46 | 3194238 PhilofOz
PhilofOz's picture

Just to be annoyingly pedantic..... it's "Deutschland" 

Mon, 02/04/2013 - 18:37 | 3214612 Dr. Sandi
Dr. Sandi's picture

I looked it up first, and they go both ways. Try it yourself.

Mon, 01/28/2013 - 22:48 | 3193584 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

+1 if it's a reference to "Heist" Otherwise -1

Mon, 01/28/2013 - 22:24 | 3193531 SDRII
SDRII's picture

Lets see,

 

IMF warns on shadow liabilities

&

 

GS dumping its china bank shares

Mon, 01/28/2013 - 23:17 | 3193538 silverdragon
silverdragon's picture

John Aziz,

You will never understand China by looking at it from a western perspective. If your company is going to write about it and not "look like simpletons" you really need some smart people on the ground in China.  Your own on the ground guys will then burst out, with hysterical laughter, when you get them to proof read what your US based analyists write. It will take time for your team to understand that they "know nothing". A kinda scary realization for people in the business of selling info.

Please show some professionalism. Fire the plebs that wrote this and hire some China based guys.

Have some self respect!

Tue, 01/29/2013 - 00:29 | 3193914 Aziz
Aziz's picture

Do you have any substantive disagreement?

Mon, 01/28/2013 - 22:38 | 3193569 silverdragon
silverdragon's picture

Akak,

Using the term Chinaman is like calling an American an Americaman, it is just incorrect. It would only be used by someone that doesn't know anything about China. It kinda badges you as ignorant.

Mon, 01/28/2013 - 22:46 | 3193582 Simplifiedfrisbee
Simplifiedfrisbee's picture

Nicely shown by willfully incompentant words. I prefer to look and give encouraging words to those cliff diving with a hand full of pride and a pocket full of assurance. Move along now. No need to spoil a jolly good time.

Mon, 01/28/2013 - 22:56 | 3193607 joego1
joego1's picture

China is an experiment to see how much toxic waste humans can endure.

Tue, 01/29/2013 - 00:29 | 3193916 kareninca
kareninca's picture

And how many baby girls can be killed, before an ethnicity goes extinct.

Tue, 01/29/2013 - 00:37 | 3193852 CheapBastard
CheapBastard's picture

78,000,000 empty apartments there will suddenly fill with peasants when things blow. Who is going to stop the masses? ...the 1.299 Billion who don't own second houses in California will be happy to get their hands on those empty flats?

Tue, 01/29/2013 - 01:48 | 3193931 kareninca
kareninca's picture

I would go long, so to speak, any product that increases or purports to increase Chinese male organ size.

I've never dated a Chinese guy, but I've read, and been told by friends who have dated them (none of them ever married one), that they are microscopic.

That is one reason why the zillions of Chinese guys who won't find Chinese wives (since they killed them all in the womb, or just afterwards), won't find wives elsewhere.  Prospective brides will just fall over laughing, and then find someone else.

Tue, 01/29/2013 - 02:00 | 3194089 Dr. Sandi
Dr. Sandi's picture

Judging by the results, no matter the size of their dicks, the Chinese seem to have very functional equipment.

Tue, 01/29/2013 - 02:04 | 3194096 Joe moneybags
Joe moneybags's picture

Karen, please refrain from posting your thoughts about African male genitalia.

Tue, 01/29/2013 - 02:06 | 3194100 Dr. Sandi
Dr. Sandi's picture

Judging by the results, no matter the size of their dicks, the Africans seem to have very functional equipment.

Tue, 01/29/2013 - 03:48 | 3194126 Ham-bone
Ham-bone's picture

A couple thoughts occur for me here...

1- US gold reserves went from 20k tons to 8K tons from '46 to '73 when gold window closed...any reason this trend wouldn't continue under the radar afterwards given accelerating trade budget deficits?

2- China and Japan both hold in excess of $1T in treasuries...this at todays price would mean each could only transfer about 1/4 of Treasuries for gold given the $1600 price and 8k tons...we'll buy your crappy treasuries but behind the scenes real payments are made?

3- anybody wonder why Chinese and Japanese would continue to willingly buy an asset with little and now literally no yield paid in inflationary dollars denominated T's...seems completely possible the gold has already been passed along to buy time, keep those with power in power, and extend and pretend.  Allow East to build and strengthen and allow West to be cored.

4- any reason we shouldn't believe Fort Knox and the Fed gold has already moved East?

Has the war already been waged, winners determined, and just a matter of time before what is already done is understood?

I don't know this...I only want to know why it couldn't be or would be very unlikely??? 

Tue, 01/29/2013 - 03:27 | 3194165 silverdragon
silverdragon's picture

Aziz,

Firstly, "Things don’t look so good for China:" Why not pop over to China and note the economy ticking along at a nice pace. Only someone not in China could conclude "Things don’t look so good for China:" Did you not note the whole, USA and Europe are broke thing. China is the only game in town.

"Will we see a Chinese financial meltdown in 2013? Or 2014? Or 2015?" Why not come over to China or have China based analyists that do more that look at charts? If you had been to the top twenty cities or had staff that had been to the top twenty cities and were shown around it would be pretty obvious meltdown is laughable.

"With global GDP growth on a definite trend downward, with such a tepid Western recovery, and with global geopolitical tensions still high, the last thing the global economy needs is a financial crisis at the heart of the BRIC growth engine. But the data implies that that may just be what we get."

You can not discern anything from analyzing data about China, all you can learn, is about yourself. China is too complex for anything to be learned via data.

"To those who believe that China is immune to such a thing, recall that America suffered the Great Depression immediately previous to becoming a global superpower. China’s economy has undergone a rapid transformation in recent years:"

Only people that do not understand the basics of China would suggest that anything can be learned by comparing Great Depression USA and China today. Stop grasping at straws.

Conclusion

You have a great opportunity to make money sellimg information about China as most commentators have absolutely no idea. To do this you will need a team in country and not based in Shanghai or Beijing.

 

Tue, 01/29/2013 - 03:41 | 3194173 walküre
walküre's picture

Problem with China is pretty straight forward. There are too many Chinese. Impossible to advance the entire population. System is already at its limit and more of the same is only going to make things worse. Chinese government knows this. Let's hope they're not planning to fight the US in order to decrease their population base.

Tue, 01/29/2013 - 04:03 | 3194185 luckylongshot
luckylongshot's picture

What rubbish...financial crises require an extra factor the author was probably paid to overlook- Private banks owning the right to create money- This was pointed out by Milton Friedman, who blamed the great depression on private bankers. Without them owning the right to create money there is not much chance of a crisis and so China is not such a concern.... America and Europe are much more worrying.

Tue, 01/29/2013 - 06:14 | 3194252 falak pema
falak pema's picture

the difference between China and first world, from what we learn here at ZH, is that although CHina has crony capitalism bigtime, shadow banking gone wild, RE bubble in huge explosion and RM hoarding that makes it cyclically very vulnerable, it has CASH fiat AND it generates SUrpluses and not deficits thru trade.

So it has a double plus where most  of first world has deficits and NO credit surpluses. All that first world has is pension funds and consumer savings to throw into the bonfire of Oligarchy banksta print to infinity mayhem. All those corporate and Oligarchy hoardings in Caymanista is NOT for reinjection into the first world economy. That is the very reason why this neo liberal model was created; to protect that money pile from first world welfare state histrionics and wealth redistribution...

Ahem....we are not in a position to teach them lessons; not in a month of sundays. Having said that, Communist crony one party China has the ills of a top down stratified society, where the bottom can fall off suddenly and create great social strife.

Vaguely familiar chimes there again, like in Club Med...

Tue, 01/29/2013 - 09:06 | 3194392 orangegeek
orangegeek's picture

Love the references to capitalism and china in the same sentence.

 

China is a communist country folks and will likely fail like all other communist countries.

 

The commies don't understand capitalism - they're centralized planning dictators.

Tue, 01/29/2013 - 10:12 | 3194566 Shizzmoney
Shizzmoney's picture

China : 2015 :: Venzuela: 1960

Do NOT follow this link or you will be banned from the site!