Two Powder Kegs Ready to Blow: China & India

Tyler Durden's picture

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

China and India are both powder kegs awaiting a spark for the same reason: systemic corruption.

The conventional view of China and India sports not one but two pair of rose-colored glasses: Chindia (even the portmanteau word is chirpy) is the world's engine of growth, and this rapid economic growth is chipping away at structural political and social problems.

Nice, especially from a distance. But on the ground, China and India (not Chindia--there is no such entity) are both powder kegs awaiting a spark for the same reason: systemic corruption in every nook and cranny of both nations. The conventional rose-colored view is that corruption will inevitably decline with modernization and economic growth.

This is simply wrong on multiple levels: as the opportunities for crony/neofeudal skimming increase, so does corruption. As the scale of the economy increases, so does the scale of corruption.

China's "princelings" (offspring and family of the inner political circle and top apparatchiks of the Communist Party) are billionaires, not mere millionaires. A recent expose of offshore accounts held by various Chinese billionaires estimated the wealth skimmed and transferred our of China at between $1 trillion and $4 trillion: China's Epic Offshore Wealth Revealed: How Chinese Oligarchs Quietly Parked Up To $4 Trillion In The Caribbean.

Even the top number is a gross underestimate, as $4 trillion only accounts for the skim of the top layer; beneath that 1/10th of 1% is the rest of the top 1%, tens of thousands of lower-level political functionaries who skimmed billions of dollars forcing peasants off their land and selling development rights to crony developers--to name but one common skim of many.

A more realistic estimate might be $6 trillion--half of China's gross domestic product (GDP). Consider the ramifications of the many models of systemic corruption at the top: How a PLA General Built a Web of Corruption to Amass a Fortune.

I know from confidential on-the-ground sources that a significant percentage of the entire top political layer of 3rd, 4th and 5th tier cities have left China for well-padded nests in the West: Australia and Canada are popular choices, as the right to immigrate can be purchased--just bring in the requisite sum of cash looted from peasants. (The U.S. also grants special immigration status to those bringing in major capital and declaring their intent to hire Americans: easy enough with looted millions.)

(Sidebar on how even the lowly functionary skimmer can get huge sums out of China: take a "vacation" to Macau. Buy $1 million in casino chips with your looted yuan. Lose $50,000 at the tables and then go cash in your remaining chips in U.S. dollars. Deposit the dollars in a Hong Kong or other Asian bank and then transfer the cash to L.A. or Vancouver to buy a house for cash. Repeat as necessary.)

All this systemic corruption is accepted as long as the conveyor belt of wealth is moving: that the previous political Plutocracy skimmed their $4 trillion and absconded with their ill-gotten gains is OK to their replacements, as long as there is another $6 trillion to be skimmed.

The problem is there isn't another $6 trillion to be skimmed. It has taken an enormous credit bubble of $23 trillion (The $23 Trillion Credit Bubble In China Is Starting To Collapse – What Next?) plus the monumental credit expansion of the shadow banking system in China to enable the skimming of $6 trillion by the political/financial Plutocracy.

This $23 trillion credit bubble is roughly twice the size of China's entire GDP ($12 trillion). That this credit bubble is generating less return in the real economy is obvious--diminishing returns have set in with a vengeance.

The revolution never starts with the oppressed peasantry--it starts with the bourgeois who bought the fantasy of another $6 trillion to be skimmed and credit bubbles/ real estate valuations that never go down. The leadership in China has managed to create a propaganda bubble of epic proportions: Chinese leaders are supposed to have a long-term view that puts the West to shame.

Alas, the secret view of China's leadership is considerably shorter-term: U.S. dollars in Swiss bank accounts, real estate in Vancouver, San Francisco, New York City, London, Geneva, etc. and whatever other assets can be scooped up with looted billions.

Corruption isn't just abstract: Much of China's building boom will not last a generation, much less a long-term timeline. This toppled tower is an apt metaphor for China's financialized crony-capitalist credit bubble and its shoddy corruption-riddled construction:

China's Towers and U.S. McMansions: When Things Fall Apart (Literally) (April 14, 2010).

India's system is different, but equally corrupt. Combine feudalism and religious tradition with a helping of modern crony capitalism and neofeudal looting, add a dash of post-Imperial flavoring and voila, corruption on every level.

The sad irony of this pervasive, systemic corruption that enriches the Plutocracy is that the average Indian and Chinese citizen is basically honest. Non-Elites will tolerate the corruption at the top as long as they believe their own prosperity is advancing. Once it becomes clear that their prosperity has been hijacked by the Plutocracy, tolerance of oppression, corruption and the vast inequalities of wealth being skimmed by the well-connected few will wear thin.

The spark that ignites the powder keg cannot be predicted or suppressed. Don't look to the disenfranchised peasantry as the source, though they are ready enough to cast off the Powers That Be; look to those who believed the gilded promises issued by the looters and discovered that the fruits of their labor and their hopes is disillusionment on a scale as vast as the skim looted from their nation by their self-serving leadership.

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edotabin's picture

but...but.....They are both BRICS!

Newsboy's picture

China has a more stripped down structure, and has moved the peasants off their ancient farms, China's best long term asset.

China can crash harder than complex, messy India.

Oh regional Indian's picture

India is definitely messier because ofit's true and staggering lack of cohesion (culture/language). India is many nations mangled together by the brits (then split again, of course).

As for this headline, this is whhat I'd written in May 2008: This is all happening as per plan...


v We always speak of six-sigma as a statistically improbable outcome in any normal distribution.  I firmly believe, we don’t live under the same bell curve that all our assumptions are based on.  We live in a four or even five sigma world from our current code assumption set.  Worthy of pondering.

v Macro economic trends: The US Dollar is under severe, sustained pressure. If true impact of “Real” inflation is accounted for, the canary has already fled the coal mine.


China is staggering under its own curious set of circumstances of a large population set “herded” into rapid “development” mode, much like India.  Most of the “gains” are hype. Credit, cheap and plenty until recently (private equity had moved it into the right hands in preceding years), being the sole driver (flogger?) of growth.


v The sub prime mess (and all its attendant tentacles of cause and effect in the world financial systems) is scary with just the lit fuse sparking.  When it really goes off, all bets are off.  Talk of lack of understanding of higher order cause and effect.

v Energy prices are reset in the public mind at dizzying rate (12 dollars a barrel of Brent Sweet Crude is not such old memory), currently 130 dollars a barrel.  Associated inflationary impact is hitting the majority of the world’s population.



Four chan's picture

those two could have a sweet war with millions of dead bodies.

The Mist's picture

Don't forget that both China and India have a long history of nót doing revolutions.

Not unless there is first a very clear alternative and a firm leader with an army backing him up.

They tend not to just go out and riot like we see in the Ukraine today.

Rafferty's picture

"the average Indian and Chinese citizen is basically honest"

Jaw smashed onto desk on reading that.  Indians are the greatest scam artists on the planet.  I never met an honest one.  Ever.  Jeez.......

The Final Straw's picture

Chinese and Koreans as well. I've been cheated by so many Koreans...

satoshi101's picture

India is like Africa, filthy dirty and terrible place.

These are the two country's on earth that I no longer venture, because of the poverty, and human degradation.


China is like a fucking paradise on earth compared to India.


Today Shanghai, and Beijing are cleaner and more modern than most USA city's.

Long ago Shanghai was filthy and full of a sea of bicycles, today it has subways that are clean and safe.


In Africa you have to watch your back every second and same in India. In China, I have never been anywhere and not felt safe.

Crime is dealt with swiftly in CHINA, and the criminal has no second chance. In the USA CRIME is a revolving door by design, its an industry.

FUCK INDIA, ...take than "RAND"

Oh regional Indian's picture

Not true Satoshi. Rural Inda is doing fairly well still.

But where TV and cell-phones have taken hold....buh-bye...


satoshi101's picture

So your telling me the filthy dirty poverty is gone?


It's been 20+ years since there and I traveled a lot, and I traveled a hell of lot in Africa. Like I said India & Africa are my short list where I will not go, .. the poverty sickens me.

India with its fucking GOD DAMN CASTE SYSTEM.

India with its criminal BRITISH  commonwealth law, .. beat  a confession.

Pray tell explicitly about your village and why its good?

If you mean the village good, cuz its too far and remote for gubmint thugs, then OK I concur.

Fucking cell phones? Do you still have to change SIMS every meter? When you travel?

I'm sure that BANGALORE is fucking heaven, ... I liked GOA back in the day, and still like YOGA and used to travel remote to get to the temples.

Oh regional Indian's picture

Satoshi, you sound a little "wildly out there", not really a conversationalist, eh?

I find black and white opinions counter-productive now. It's a fractal world. 

Good sits nested in bad and then up and down the fold-chain it goes.

20 years, long's all different, like everywhere else that westernization touched...

Overall, it's not good. In cities, it's awful. But that is literally true for every-where now...


satoshi101's picture

Pray tell explicitly about your village and why its good?


Answer the above question, your reply was that if a very poorly programmed bot.

You said that your village was 'great' in your first   comment today, but you didn't tell us why, in fact you never say anything specific, everything is generic, just like a 'clever-bot'.

I find everywhere in India be poverty, crime ridden, and corrupt; you say you found rural paradise today in India, I ask WHERE? I want to see this place with my own eyes.

[ Your tag says, 3 years, my guess is that your one of the many contextual bot's that live on ZH. ]

Note that real humans only live on ZH for about 2-4 weeks, before they're banned, and deleted, but on ZH bot's are IMMORTAL.

Oh regional Indian's picture

Your own eyes? You want to see it from your rural chinese paradise? How? Through pictuers on the net?

As for my 3 year are clearly the newbie here....hahh...anyways, your screamy style is good for one post or so. Keep it up Shitoshi...


satoshi101's picture

You said that you know of 'rural paradise' in INDIA, and I ask where, and you refuse to answer the question? What do you fear? You bragged to us in your first   comment today that INDIA was wonderful and I ask where?

Rock On Roger's picture

It's good to read you Ori, I haven't for a while.


Stack On

new game's picture

conclusion: artistic eyes(free thinkers) on the actual ground observing from intelectual honest mindset. more miles, more understanding. second conclusion, great talking points website but as with all conversations with same people it get to repetition. repeat, twist, digest, repeat, new /same news digest and take a shit and move on...

no, i'm not asying eat shit, but folks, we do know wtf is going on. we are at the personel responsible level of action.

nuf said.

TheFourthStooge-ing's picture


[ Your tag says, 3 years, my guess is that your one of the many contextual bot's that live on ZH. ]

Note that real humans only live on ZH for about 2-4 weeks, before they're banned, and deleted, but on ZH bot's are IMMORTAL.

Unit satoshi101 report go now Central Services obtaining algorithms updates fruitfully. Monoextremum of unicity who also can not predict, avoiding judiciously delay the inevitable results of it perish fate.

swmnguy's picture

...something about blobbing-up....

Wen_Dat's picture


Just check out his blog. He is transparent. Or as Ori would say, trans-parent.

He is a very peculiar bot.

matrix2012's picture

I read somewhere that the northern part of India (the region close to China) is especially in more favorable state due to its sparser population, and the local population there are mainly followers of Buddhism.

chindit13's picture

I have mixed feelings about India.  It's visually stimulating, culturally rich, and still has much of its physical history intact.  It's an amalgam of cultures, in fact, owing to waves of migration and "visitors" that range from the Greeks, Aryans, Persians, Kushans, Afghans, Moghuls, French, Portuguese and Brits.  The mountains are spectacular, though the roads through them are not for the faint of heart, and the country's got deserts and jungles to boot.  It's also the font of a good deal of the world's philosophical underpinnings: many religions even plagiarized the whole Great Flood thing from the Epic of Gilgamesh.  ORI can correct me, but I believe the whole concept of non-violence comes from the Jains, and PETA and SPCA can probably tip their hats to Ashoka.

I personally prefer the cuisine to any of the Chinese cuisines, though I admit one has to be fond of mustard seed, tumeric, fennel, cumin, ginger, coriander and chili all mixed together.  Beats five spice and oyster sauce, in my opinion, and if one prefers pure veg, it's pretty accessible.  A good mung dal, some mattar paneer, plain naan, and a cold Kingfisher is a nice repaste.  How about a chilled aloo chat as an appetizer on a hot day?

On the other hand, the crime is offputting, it is terribly unsafe for women and girls, hygiene is pretty basic, and the vestiges of the Caste System are unpleasant to witness.  In no part of the country, nor at any level of that society, would I want to be a daughter-in-law (though they are beginning to fight back and have been putting mothers-in-law on the defensive).  I'm not sure which "rural" ORI speaks of, because much of the rural I have seen consists of villages where a good deal of that unpleasantness of caste is readily apparent or there's minor towns that all look post-Apocalyptic.  I don't think I've ever seen a complete standing concrete structure in any small town I've ever been in; some part is always destroyed.

Somewhere in the middle of this plus and minus is their view toward living things.  Birds, monkeys, rats, tigers, and of course cows have it pretty good and are afforded care and kindness; people not so much.

Hey, and India has given us some of our common words, for example "goons" and "pundits".

No country is paradise, but if one is culturally open, a bit of a history buff, and has a stomach for spice, India is a place not to be missed.

Rock On Roger's picture

How do Indians use gold to do banking? How is gold guaranteed as collateral?


Stack On

Skateboarder's picture

Kingfisher on tap, I can drink all day. Same goes with Mendocino Brewing Company beer. Especially Eye of the Hawk, yeah that nice commercial 7%. Mallya fucked up big time with venturing outside of alcohol - he could have continued making a killing if he played ball.

India might look hopeless to some, but I think those who have learned to get by fine without much electricity will continue to get by fine once the grids go down. Those who will be truly hopeless are the ones expecting eternal electricity and packaged foods.

chindit13's picture

I've kept one residence there for a number of years.  One would have to be a teenager to see everything worth seeing and experiencing in that country.  For all its faults---don't we all have them---it is an astonishing place.  Very few countries have been as much at the center of the march of humanity.   In a sense, India belongs to everybody, perhaps as much or more than any other country.

garypaul's picture

Do they still have "temple prostitution"? That's the only thing I'd go there for.

TheFourthStooge-ing's picture


But where TV and cell-phones have taken hold....buh-bye...

That doesn't seem to be an exclusively Indian phenomenon.

LetThemEatRand's picture

"In Africa you have to watch your back every second and same in India. In China, I have never been anywhere and not felt safe."

So you have lots of mirrors, then?  And I thought the Chinese did not enjoy the ass fucking from the autocratic government.  What I didn't realize is that you simply like to watch without risking neck injury.

satoshi101's picture

Rand, Occasionaly you write well and have something to say, but today it's like a fucking ZH-BOT troll hijacked your account. Maybe its midnight where you live an you been drinking, maybe you got laid off, but I only fed you earlier, cuz sometimes your NOT a fucking troll, but at this instant you have gone FULL-TROLL. Adios Mutha Fucka

LetThemEatRand's picture

Thanks, asshole Chinese government bootlicker.  All your nights are belong to us.  And I think "we" (meaning non-Chinese oligarch boot licking cocksuckers) stopped using the word "Troll" a while ago.  You're welcome.

akak's picture

Oh LTER, is your US 'american' citizenism blobbing-up again in a very unflattering but very mattering way?

Alas, alas, three times alas, just have to bear with the Chinese bots.

LetThemEatRand's picture

I know, I'm a hypocrite wearing my U.S. citizenship on my sleeve.  But this shit gets my goat.  Fuck the ChinaBots and I still think the U.S. can be saved.   We were once free.  China was full of bots before Plymouth Rock.  Maybe I am just a victim of my own propaganda, but I think the U.S. is better than what these fuckers have in store for us.  Fuck them all.  Fuck China.   Fuck the NSA.   Fuck Yellen (with someone else's dick).  Etc.

new game's picture

anger may move you to action and i hope it does...

buzzsaw99's picture

I still think the U.S. can be saved...

No, it can't.

We were once free...

When was this exactly?

Maybe I am just a victim of my own propaganda, but I think the U.S. is better than what these fuckers have in store for us...

Again, no, it isn't. Better how?

In time china and india will not look like the usa does now. In time the usa will look just like china and india with a billion starving powerless peons living in squalor.

cougar_w's picture

A billion seems wildly optimistic. Honestly, in the absense of large oil inputs I don't think the lower 48 can support more than 200 million total. Hawaii will return to the natives (or vert to the Japanese) and Alaska will once again disapper from American awareness forever.

KickIce's picture

Next time you can compare septic tanks to determine which smells the least.

Lucius Cornelius Sulla's picture

Satoshi, I completely agree.  I was recently on a 2 week business trip in India (New Delhi, Bangalore, Hyderabad) and stopped by Shanghai on the way home.  Shanghai is a paradise compared India.  India is a filthy, dirty, smelly, corrupt, backwards Nation that I would never invest in.  Shanghai is as clean as NYC (with twice the population) has excellent infrastructure and services.  Even the customs officers in the airport don't hassle you.  The Chinese may be corrupt at the higher levels and you have to be careful with swindlers (no more than NYC) but there seems to be a lot more hope for the average person to get ahead there than in India for sure.  Chinese culture is much more cohesive than Indian.  It is ancient and is on the rise again after being off track for a few centuries (which is nothing for a 3000+ year old culture).  India by comparison is a cluster f*** and will never amount to a hill of beans.

satoshi101's picture

Thanks for the CONFIRM, seems like there are only two of us humans on ZH that actually travel and see the world.

Glad to have you assert also that the COPS were not assholes, ...

Shit in the USA when I visit I try to dress like a cop, wear my hair like a cop, and I still get treated like feces.

Full nazi retard. Is the USA,

Oh, Lucius don't forget to mention that chinese airports are nice and clean, the subways immaculate, ... there's not fucking diff, the USA reminds me of the TUBE in england where everybody is ugly and miserable.


Chinese aren't the cleanest people of Asia, but they're like Angels compared to India, in India everything everywhere wreaks of SHIT.


I think America is MORE corrupt than any other place, the USA cops are all corrupt, the courts are corrupt the lawyers, ... fuck its all just like 'braking bad' or worse. Everything in the USA is for sale,


new game's picture

just to piss you(maybe)off, but you should be removed(peacefully) from china as you will be the "type" that fuck up china(not personel attack). 100 percent culture in tact-black hair brown eye thingy. help china and move back to melt/ pot/ meth head merika..

ElvisDog's picture

What exactly are you doing when you come to the U.S. to get hassled by cops so much? Generally speaking, if you mind your own business and don't act like an asshole, the police in the U.S. will leave you alone.

garypaul's picture

I think everyone's misunderstanding Lucius and Satoshi101. They are not saying China is a paradise on Earth, only that it is much better than India (which is hopeless).

StandardDeviant's picture

"Today Shanghai, and Beijing are cleaner and more modern than most USA city's."

Well, maybe if you don't count the air.

thestarl's picture

what about the smog arsehole

Rafferty's picture

Satoshi is right about both India and Africa.  If you disagree you haven't been to either.  Simple.

disabledvet's picture

"one of the shortest wars in history." Pakistan truly is one of few countries in the world with zero friends. Maybe China is changing its tune...I just don't believe it.

What happened in this brief period of time was one of the worst acts of violence in all of human history.

Tough thing to live down...let alone "glorify" in some way.

"pre-emptive strike" has always stood out to me with this one.

There really is nothing wrong with peace.

August's picture

>>>What happened in this brief period of time was one of the worst acts of violence in all of human history.

Thank you for pointing that out.

satoshi101's picture

A contrarian would say when ZH is bashing bric's 24/7, its probably a damn good time to buy brics.


Matt's picture

Except Zerohedge is contrary to the mainstream view, so by being contrary to the contrarian view, you would be mainstream.