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China's "Illusion Of Prosperity" Exposed: Forget Ghost Cities, Meet Ghost Factories
Having exposed the 20+1 charts of China's demise previously, we move to Exhibit (a) in the "illusion of prosperity" that keeps the dream (looking) alive to the outside (mostly Western get-rich-quick fast-money) world - China's Zombie Factories...
“There are large numbers of companies across China that should go bankrupt but haven’t done so,” says Han Chuanhua, a bankruptcy lawyer at Zhongzi Law Office, a Beijing legal practice.
“The government doesn’t want to see bankruptcy because as soon as companies go bust, unemployment spikes and tax revenues disappear. By stopping companies from going bankrupt, officials are able to maintain the illusion of local prosperity, economic growth and stable taxes.”
Here's Reuters from earlier last year...
This 'pretense' is occurring everywhere across the vast expanse of China, as The FT reports, similar experiences are playing out, with thousands of companies in heavy industrial sectors plagued by chronic overcapacity that should be going bust instead being propped up by local governments.
In the shadow of a group of enormous smokestacks and abandoned foundries, a peeling sign welcomes visitors to the Wenxi Steel Industrial Park.
But in the nearby village, the working-age men and many of the women have gone, leaving only the elderly and the very young.
“If you cut down the big tree, all the small trees around it will die,” says 69-year-old Wang Peiqing, referring to the collapse of Highsee Iron and Steel Group, which operated the foundries before its recent closure devastated the economy of a once-prosperous corner of Shanxi province in central China. “The entire region relied on the steel mill; now the young people have to go and look for work across China.”
Highsee stopped paying its 10,000 employees six months ago. Local officials estimate the plant supported indirectly the livelihood of about a quarter of Wenxi county’s population of 400,000. Highsee was the biggest privately owned steel mill in Shanxi, accounting for 60 per cent of Wenxi’s tax revenues. For those reasons, the local government was reluctant to allow the company to go out of business, even though it had been in serious financial difficulties for several years.
“By 2011 Highsee was already like a dead centipede that hadn’t yet frozen stiff with rigor mortis,” says one official who asks not to be named because he was not authorised to speak to foreign reporters.
“More than half the plant shut down, but it was still producing steel even though its suppliers wouldn’t deliver anything without cash up front and it was drowning in debt.”
It was only last month, four years after Highsee began to flounder, that the company was finally allowed by the government to initiate bankruptcy-proceedings.
“The government’s plan is to sell off the plant quickly and restart production just like before, even though the steel market is in such bad shape,” says an official who asks not to be named.
“The problem is that it owes at least Rmb10bn [$1.6bn] and probably much more than that. We don’t know where we’ll find someone who can pay all that off.”
* * *
Some of the zombie factories... (Source: Reuters)
In the past month alone Chinese media have reported on at least nine large steel mills that appeared to be suspended in limbo after halting production but which are forbidden from going formally bankrupt.
The outstanding volume of non-performing loans in the Chinese banking sector has increased 50 per cent since the beginning of 2013, according to estimates from ANZ, the Australian bank, but the sector-wide NPL ratio remains extremely low, at just over 1.2 per cent.
In private, however, senior Chinese financial officials admit the real ratio is almost certainly much higher, obscured by local governments trying to prop up companies.
* * *
But apart from that... sure buy Chinese stocks, because well, they are going up...
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Once you have left town does one really worry that much about going tits up?
"which are forbidden from going formally bankrupt."
Yeah that will work. Like COMEX controlling demand by lowering prices.
Yeah, it's the old plants, they just didn't bother to demolish it. Could always start it up again for World War 3 productions.
The rich Chinese Government has it's peasants building whole cities that no one in their country can afford to live in, and using debt to do it.
America just pays it's citizens directly to stay home and uses debt to do it.
Neither side will let it's peasant population get out from under it's fiat thumb.
Cancel all world debt just cancel it now.
US citizenism is spreading in China so yes, it has consequences.
Chineses are turning to US citizenism and adopting it. The Chinese are copying a country like the US of A, the mecca of US citizenism, where very few things are real. They are going to display imagination.
Going to be hard for US 'americans' to admit they no longer face different people in chineses but fellow 'americans'...
That's pretty accurate IMO. I no longer see adifference in the ideals of either population. The peoples' of both republics have effectively become almost identical in their lifestyles and their limited ability to think out of a myopic global vision.
Work, buy, consume, die.
"Work, buy, consume, die."
You're on the welfare program? You know you're supposed to still be contributing after you die, like everyone else.
the industrial revolution was a flawed business model. making shit in factories stole the soul from humanity. creation is the breath of living on this planet. within two years all that surrounds me will be hand made.
I'm not sure what these pictures prove. Nine out of ten things I pick up have "Made in China" stamped on them, so they can't be doing that bad in manufacturing. How much American decay has Reuters covered? That's definitely real. I can feel that.
And I don't trust FT as an unbiased source either. Some of these pictures seem to show derelict factories; of which you can find examples in most countries
Those aren't ghost factories.
That is China's attempt at making a Detroitworld Amusement Park.
It reminds me of those doom articles of commercial real estate where it shows an abandoned 80,000 sq foot Walmart, because a brand new 160,000 sq ft Walmart Supercenter opened up a quarter mile down the road.
Yellow Journalism at its finest.
"You furnish the pictures and I'll furnish the War." William Randolph Hearst
9 out of 10 things made in China are crap and
break in a week or so. Made in China is as bad as
made in Japan was in the 50's and 60's.
I always look for something made elsewhere. Its usually
worth the extra.
I don't disagree in spirit, just in practicality. I make a lot of my own stuff. I have the skills to fix a lot of things most people would just throw away. But it is almost impossible to make everything by hand.
My wife is a weaver and a spinner. She can take raw wool directly from a sheep, wash it, card it, spin it, and weave it into cloth for clothing. It sounds easy, but it is an incredible amount of work, and takes an incredibl long time to do it al from raw material to finished product.
Here are two salient facts: Before the advent of the industrial revolution, all manufactures were incrediby expensive. Before the industrial revolution, or more specifically, before the advent of petroleum fuel, slavery was a global institution.
Some things can't be built by hand. How are your microchip making skills?
Robot hands are the future I think.
I was just outside watering my crop of Quad-2-Input NAND gates. Should be a bumper harvest of 64-bit processors by spring ...
If society can just keep going a little longer, we may be able to just print whole computers on a sheet of paper soon. Not as fancy as an industrial mass produced unit, but maybe compareable to a commodore 64. May have to use lite brites for a display, though.
What do you use for fertilizer? Are these organically certified?
Fertilizer? I talk to my plants. That seems to help!
=P
Not sure if that was too subtle.
Substitute organic buffalo chips.
"iSmell inside."
A couple of months ago I threw some engine mounting bolts on my compost heap. Came back a few weeks later and noticed it had sprouted a few model aeroplane engines, and blow me down! One of them had already flowered into a fully grown, ripe V8!
as long as majority believes their money is worth something the illusion goes on.
by keeping is scarce to the majority it lives another day.
and there is no alternative, for now...
faith, baby faith, ha...
The real tragedy is that people who can't afford to buy stuff are still expected to work so hard. If you can't have much stuff then you should have most of the week off. Don't tell me there is no better way.
Welfare.
All week off and you have more disposable income than most poor working chumps.
And gubbmint cheeze.
It's just a Fox News talking point that you can go down and say "Gimme Welfare" and then go live for free.
Unless you are a single mom with kids it's actually really hard to qualify for much of anything beyond food stamps.
People almost universally want to work. It's just that they want a job that treats you like a human and pays you a livable wage.
Trouble is our rich masters have been shredding these kind of jobs as they pile up their additional billions.
Yup. Some of those pictures remind me of Detroit.
Yup, we take best, leave you rest, round eye!
https://www.facebook.com/pages/Paris-of-the-West/97559376631
With the difference that four of the six pics show the same factory, the fifth shows a broken window and the sixth also shows nothing.
So in fact they show one abandoned factory in China. Now I ask myself, if there are so many, many, many, why do they spread four pics of the same factory as being four different factories? Could there be an agenda behind it? I am shocked: since when do Western news agencies not report the truth?
Once the Chinese saw their exports declining, their only choice was to go American and "stimulate" domestic consumption, as per Bernays. Creating demand from desires, not actual needs. The problem is that the Chinese are too close to their origins that understand the difference between true needs and the "created" desires of emotional needs. America has been transitioned over a period of a hundred years or more. The Chinese are in a much more compressed timeline and it may just not work so easily. We are all corruptible, but some more than others. Our faith in the better side of man is under assault. Lets see how the Chinese people do.
I'm guessing that, as was true in much of the collapse of US industry, if the Chinese govt allows these businesses to go belly up, one would find that much of their debt was taken to fill the pockets of those glorious "one million new millionaires" that are buying up high end real estate worldwide.
Call it human nature, if you want to represent the most base instincts of the most greedy and corruptable among us as the measure of us all. There is a reason, however, that it is so predictable that those are the very type that make it to the top and successfully screw the common man most of the time . . . and I don't buy the proposition that it's because they are "winners" in any positive sense of the word.
It looks much like what has happened here, with vultures of the Mitt Romney mold who have made untold millions by gutting not only companies but worker pension plans before discarding the bankrupt carcasses of the enterprises and moving on in some profoundly twisted perversion of the notion of "creative destruction."
I'm missing the critical distinction between the Chinese govt directly supporting the companies prior to formal BK and American govt's handing out unjustified tax abatements like candy on halloween, fraudulant capital markets that support massive unecessary and unfounded debt fed by the Fed "liquidity" spigots, mark to myth accounting, wage squeezes that--in this country's cost of living structure--leave the govt to pick up the costs for basic living expenses like food and medical care, massive tax exemptions that leave the govt issuing "refunds" to major corps that make them tax recipients rather than payers, govt picking up the tabs for pension funds that go unfunded while managers fill their pockets and stock holders celebrate the return of the roaring twenties markets, etc, etc, etc.
Its all redistribution. There is no greater power than one gets from the backing of a mob demanding justice. They create the rules that incentivize corruption and then use this blatant corruption as an excuse to steal, and seldom do they steal from the actual thieves, but from those of us who cannot fight back.
Yup
he's Mitt Romney to us
He has a asian cousin named Ming Wongly
China wants to emulate the US. But times have changed and that prosperity opportunity is gone.
A good majority of the ghost cities are being built by investment firms for the average Chinese worker. The Chinese save a large portion of their salaries and they wanted to invest in real property. So they built these empty housing blocks as investments. So even though the government is allowing this to happen it is really average Chinese who stand to lose billions in savings when the bubble bursts.
They are propping up these ghosts to temporarily prevent a huge crash when the savings account of millions collapse and unrest begins.
empty units worth ??? vs shares of s and p worth ???, or head in sand w/cash , home, and gold on sidelines, hmmm...
The local Chinese officials have all that central gubmint loan money tied up in their California RE; no way they're gonna spend it on ghost factories and their workers.
here are some images of closed factories:
https://www.google.com/search?q=detroit+closed+factories+images&es_sm=12...
and GM and Chrylsre any different?
I love asian titties.
But back on topic, I see a great opportunity here. These empty factories are located right next to Japan, which is in dire need of Depends and caskets.
Print yen, buy shit from China. That's the global economy in 6 words ... currency may change but the theory is the same.
Agree, Smegley, my good man.
These miscreants here will be left holding thier willies, when all captial moves to the only gold-backed reserve currency on the planet....
Then there will be thoese who snap up "ready-made" factories and office HQs...then those who laughed in 2014....and now.....
Dorks are classic....they never change era after era....
Chinks lie...everybody knows that.
Americans never lie or bullshit.
And their military never starts a war, never invades and on the extremely rare occasion when they have to, they always withdraw and decommission their overseas bases. The US does not have hundreds of oversea bases and installations. They only have a few, and at the adamant insistence of the host country.
Everybody knows that. Happy?
In contrast to an ever present world-wide US military, china has taken all those $US earned making cap for us and bought tangible assets (mining companies, famland, oil supplies and more), bought 'friends' and influence all over the place. Hell they damn near own half of Africa (the resource rich part) and Australia is something of an economic colony for them.......
They saved a fortune NOT deploying their military all over.
Keep in mind that the Chines have VERY long memories - they view the usurpation of China's role as the center of civilization as a temporary and short lived one. The barbarians had their fun but their time is ending...... and you can bet they plan on payback for the Opium Wars and failure to return all that was looted from China during WWII. They did play it brilliantly in managing to industrialize without borrowing - the West GAVE them an industrial base - and loads of technology - in exchange for cheap labor. They killed a few birds with one stone - putting millions of surplus ex-peasants to work as well - raising their standard of living (even at the lousy level it's at for factory workers it's better than the starving peasant's lot) while earning trillions for the state.
But sooner or later - after the collapse of the US Empire, you can bet they'll fall into the same old pattern - but by then there may not be anything worth ruling.
Anything left worth ruling indeed. Paul Craig Roberts is not the only guy saying that a Chinese and Russian "First Strike" financial war is the the only hope the world has to escape the otherwise inevitable dystopia America will impose upon the entire planet's population (except for a few oligarchs):
http://www.paulcraigroberts.org/2014/12/29/outlook-new-year-paul-craig-r...
The viral scuttlebut is, however, that China and Russia have pretty much consumated a shotgun wedding and are aggressively moving forward with their own plan . . .
http://www.mediafire.com/view/08rzue8ffism94t/China-%20Russia_Double_Hel...
Sounds like a Chinese copy out of the FED playbook regarding housing, CDS etc.
Those factories look like something out of Detroit.
WORLDWIDE PROTEST DAY AGAINST DANGEROUS ECONOMIES. Spread the word
http://pneumatikeconomist.wordpress.com/2015/01/03/worldwide-protest-day...
If you want dead centipedes, you can have dead centipedes.
Confucius say: Don't fuck with eagle unless you know how to fly.
Um... how do I put this?
The dragon has wings.
Buy gold because it's going up..
Buy gold because it's going up..
Especially in Japan and Russia!
Exaxtly why it was the second best currency last year (but in reality we know the best by far once the cartel loses control).
Patience. Wait till it hits 1100 or 1000.
Keep your powder dry, as Cash is King in the commodity deflation spiral that we are seeing.
Hard to keep your powder dry when you're already underwater. And if you're managing to float in this environment, why do you need extra powder?
To power your hydrofoil?
Does this mean my iPhone 9 will be cheaper? I'd like to eat real bread and drink good water, once in a while.
Governments and ruling class folk love bread.....for you. It's actually pretty goddamned unhealthy, being a blood sugar spiker that carries with it all sorts of miscreant proteins humans are not designed to deal with very well. But being cheap it is good for civilisations, not for their individual members. If you can afford to, stop eating this original frankenfood, this first soylent green, and you'll probably live a longer healthier fuller life. Bread is bad for you.
Are you a Commie?
What good is a nice hot tube of pink slime without a bun?
I suppose mustard and relish aren't health foods too?
Congrats TBT.. you're one who gets it re bread. Don't forget the biggest problem with bread though is the bromine which is used in place of iodine (bromine is cheaper) and the damage done by bromine to your thyroid making people lethargic and fat. Our diets have way less iodine that we used to get (all processed food uses non-iodized salt) so our thyroids can't produce t3/t4 and so our risk for cancer increases, our metabolsim slows down, people get fatter are tired easily. Bromine (and chlorine and flourine) are heavier than iodone and displace iodine in the thyroid which all blood passes through every 17 minutes.
ZH knock it off! You're destroying the fantasies of countless commenters by exposing China for what it really is. Don't you know that fraud and corruption are only an American phenomenon?
We only want the truth when it fits within the narrative of our confirmation bias and other forms of wishful thinking. None of this objective stuff please, the cognitive dissonance is way too uncomfortable.
But Martin Armstrong says China is the future! HE also says everything is destabilizing and we are going towards a war of all wars. He also says the stock market is "winning" and will go to the moon.
I think martin is selling stuff.
If you cut down the big tree, all the small trees around it will die
If you stopped the Fed manipulating stocks higher and interest rates lower, the entire US economy will begin to wither away.
If the Chinese have virtual factories, the US has HFT computers, virtual economic data, virtual cheerleading media and virtual printing presses.
Every country does economic fraud in its own way.
Correction:
If you cut down the big tree, sometimes, hey, even often, the little trees will experience a growth spurt and more rapidly grow to themselves become big trees.
The analogy doesn't fit. In most rainforests and even in scrub light and open access to rain is precious, removing a big tree creates much growth.
Definitely so
Remove tbtfs and be amazed, how quickly the niche would be colonialized and nobody wanted those good old ogliopoly days back.
With the big powers it all comes down to which has the most integrated and most comprehensively developed national lie-support apparatus. China is clearly behind the curve.
The Chinese have decided to up the anti in the game of Bullshit Poker of Casino Capitalism.
Macau has more casinos than Vegas, so they're not gonna fall for Wall St. bullshit, without doing the same.
"Fut you, Wall St."
"Ghost cities"...what a bizarre thing, to build cities for no people...
You'd think even the most die-hard capitalist Rothschildian Bilderbergian would go, "Whoa...THAT is really fucking creepy...Knock it off China!"
As a member of Prepper Central, I thought you'd recognize a Bugout City for when TSHTF, due to a Pandemic.
well at least they are investing thei fake money and debt into hard assets, granted rapidly depreciating ones.
There is something like 700 million chinese still living in shacks. The government can tax through inflation and use money borrowed into creation to move vast amounts of people into the empty cities if they choose to do so.
I still find it hilarious we take any financial data from China seriously. This is the country that melted their cooking pots to boost steel production figures under Mao, as well as ripping up wheat from one field and planting it in another to boost crop yield per acre figures so the world would be amazed by the communist geniuses.
I know, the west does it too, but not at such a childish level.
I know, the west does it too, but not at such a childish level.
+1... about as suave as "you buy now"FT should report about the steel industry in the UK.
Fox can do the same about the US.
Pennsylvania and Pennsylvania Avenue have something in common, rust.
All governments are trying to float their sinking ships with fiat. Its all they have and are desperate. I would not fault them for this so much if it wasn't so apparent that it is only enriching a select few in the process, while leaving the rest of us in progressively worse shape.
Where have I seen this story before? Anybody ever been to Detroit?
:-)
ha ha ha . true true
They actually used the buildings in Detroit for something productive at some point.
I was in China during the early 90's and they were building empty building shells one right after the other even then. It was bizarre to see and we wondered how long they could keep it up at that time, but I'd love to see one of these ghost cities now.
I love Orientals. They're so damned afraid of failure they'll work for nothing for the rest of their short lives to avoid admitting it. Every number is invented out of thin air. Every stat is corrupt to the point of worthlessness.
You think the Fed's reflation of the equity markets (while reality crumbles) is a world-class smoke screen? We're pikers compared to the Chinese. Everything they say is a lie. Every number they print is a lie. Their social standing depends on it.
Just imagine how good Africa will look on paper once Mr. Lee does the books.
And Twitter is worth about 30 billions.
Uber is worth $40 billion and Farcebook worth $219 billion which is more than Chevron, more than twice of McDonalds, and more than 4 1/2 times Target.
tulips
I heard Tulip Bulbs are on the way up
Yes, and so are black truffles from what I have been reading. Might as well move to Italy and hunt truffles, at least the f-kers can't push the price down like they do with metals.
Silver is going to $1,500 a troy ounce.
/sarc
What does it matter when it's all officially been given a mark-to-make-believe nudge and a wink in the entire FIRE sector since early 2009? How can anything be a real marked value from that point? The entire market has been an official crock ever since. And all mark to model did was to formalize the imposition of the illusion of a 'market' with a price floor, that was actually already long gone in reality, as derivatives had made 'value' a farce many years if not decades prior.
There is no coming back from mark-to-model, nor from mainstream banks that for many years can't give you or anyone else a balance of their accounts, and their liabilities, ever!
So how does an investor, sorry, a 'depositor', know when the bank is already broke and their term deposit funds inevitably doomed then? ... as it yields negative interest ... within an epic global QE shit-fight ...
At least we get a bonus chuckle at this purist absurdism.
so true the inferiority/superiority complex the chinese have is queerly similar to israels....but small minds think alike...one can't buy innovaion and the other believes innovation like soda machines will save the world..... lol....well Nietzsche said it best...... "There are horrible people who, instead of solving a problem, tangle it up and make it harder to solve for anyone who wants to deal with it. Whoever does not know how to hit the nail on the head should be asked not to hit it at all."
See? He had a lucid moment every now and then.
The Chinese and the Jews have been (and will continue to be) around a lot longer than the rest of us.
what books have you been reading....... no one really even knows where Europeans come from...only theories...with LITTLE DNA correlation....study harder...or ignorance is bliss....whichever floats your boat
A quick fix for all these economic woes would be to destory a major country and then rebuild it. Kinda like WWII. History never repeats but it does rhyme.
Dear Leader Obama has already begun this approach. Only problem is that the country he has chosen to destroy is the U.S.
Not that Bush did much better, mind you...
I was a wondering where ghosts were made...
...in the belly of Demi Moore. It is a story of financial fraud.
You knew it was only a matter of time before the manufacture of ghosts and zombies was offshored to China.
We'll offshore burgers. Then pill manufacturing. Then nuke building..oh wait..
China is screwed, but will have gold, friends, a manufacturing base, and few, if any, of the Amongst running things for their overseas partners.
The DC US is fucked, and with no gold, enemies a plenty, no manufacturing base, and a multitude of the Amongst picking over the corpse.
The banksters need to repay us.
This says it all -
http://www.globalsecuritieswatch.org/special_report_on_the_future_of_chinese_economy.pdf
The Chinese traded those factories for a large portion of NYC thanks to Jamie Dimon and Lloyd Blankfein.
But the BRICs are going to save us...is that meme officially dead now?
It's not dead it's resting.
No, the meme has been the BRICs are going to bury us. They might end up buried on top of us.
Ghost factories = supply-sider's wet dream!
Build overcapacity with tax cuts and subsidies. Let the "job creators" get a fat pay day. Then let the same guys build moar. And moar.
That way wealth will treeckle down while incomes stagnate.
"It was only last month, four years after Highsee began to flounder, that the company was finally allowed by the government to initiate bankruptcy-proceedings."
lol they were allowed to fail by the government cant wait till the morons in DC start passing laws like that, reminds me of a book about altas somethong or other only this time we will have something way cooler than a glutch it should be a space fortress.
Fail is not an option. No really. The apple cart ya know
"they were allowed to fail by the government cant wait till the morons in DC start passing laws like that"
Already done! Remember the TBTF banks? How about the failures of GM and Chrysler? WDC has been propping up many failed businesses. GE was also bailed out during the 2008 crisis. Most US airlines recieved some form of bailouts after 911. Chrysler was also bailed out in the 1980s. The problem with bailouts (as you probably know) is that it never clears out the deadwood. The people that caused the failure stay in control and repeat the process, but usually take bigger risks since they know they are TBTF.
" glutch it should be a space fortress."
Nah, They decided purchasing MRAP's, a few billion rounds of ammo, and other miltarily hardware for use in US Cities instead.
"reminds me of a book about altas somethong"
Did you mean the book "when atlas shrugged"?
Not to mention Dodd Frank which empowers government to take over ANY entity, in America, or anywhere else, that it perceives as a threat to our economy. To nationalize them in practical effect. They did not repeal that part, only that which allows MORE taxpayer liability from banking fraud.
Let's take a minute off in remembrance of Glass-Steagall ...
Ghosts hate Reardon Steel.
Nice! Looks like Detroit.
Yeah, but I bet they don't have the feral dog problem that Detroit does!
Possibly because a feral dog is a food source?
I love McRibs.
A lot of the older, dirtier factories have been shut down in an attempt to clean up the air. It's easy for a muck-raking, china-hating, tabloid report to take photos of them and write this article.
That crippled piece of crap can't produce steel Game over!
It would seem as though this article holds weight.
Never have I seen a rush to sell manufactured goods, at 'discount' like I have this year. Every street corner has every major brand of sports apparel, every social network is recruiting people to sell-on 'factory priced' warehoused goods, like never before. Every holiday is a major attempt to get anyone to buy anything that's maufactured in China. Apple phones and german cars as bait for people to spend more.
Apart from that, there seems to be a protectionist trend, and a drop in the sale of imported goods within China, from steel to sneakers, it's all on discount, 2f or 1 and low low prices for a limited time only!
thanks, I needed that this morning!
Reminds me of an old apartment in my younger days
Those are prison cities and prison factories built to house fat Americans after the take-over.
Chinese Git ‘Mo.
China does many complicated things in their economy. One big mistake Americans make is applying our economic ideals to what they are doing.
China has four big STATE banks, and they issue their credit and often JUBILEE it. They forgive loans. I cannot over emphasize that this is the secret to the Chinese economy kicking our ass.
Example: China issues loans to attract Solar Industry. Remember that: Americans invented that industry not too long ago, and now it is gone.
China issues loans into Channels that gain strategic advantage and employ labor. Solar cell technologists leave America with their taxpayer funded education, and then they land in China. China gives loans to several of these new companies’ with yuan loans, and they compete with each other. The State Banks then prune the losers, and forgive the loans. Most efficient company is then allowed to enter export markets.
Solar cells are sold for dollars on world market. Said dollars then find their way back to Chinese industry. State Banks swap Yuans for Dollars.
These now former Chinese dollars find their way back to the U.S. to buy TBills. The U.S. Government spend the dollars on Military/Industrial/Security complex, and also on unemployed.
Unemployed take their dollars and buy more Chinese Crap, so the cycle can renew.
U.S. Government loves this, but the downside is that debts mount and American Industry is hollowed out.
Goods transfer to U.S. at Chinese price, just undercutting American price. Skiff is paid to dock workers to keep them quiescent, Skim is paid to merchants. Both of these groups are in on the Chinese price, hence WalMart and the like getting wealthy.
Wall-street wants to take wage arbitrage in this game, thus sending American knowledge built up over centuries, to be monetized in China for today’s rental gains. Wall Street becomes a hero, while labor in America becomes a Zero. Captains of Industry in America cannot wait to lift industry to China to then export back to the U.S. This forms Oligarchy in America, teaches China our secrets, and screws over American labor.
As an aside, this is why the Chinese debts i.e. TBills they own, are fraudulent and by all rights can be canceled. We already paid our debt to China many times.
Why is china efficient? 1) They are given the knowledge and know how 2) Overall efficiency in the Chinese economy is helped greatly by Forgiving of loans, which effectively makes debt free money. 3) Debt Free money grows in supply at a rate to match economic increase. 4) Coastal Industry has efficient transportation by ship, and now interior is becoming linked by rail and airplane. 5) U.S. taxpayer subsidy in the form of transportation as U.S. Navy protects trans-shipment.
Don’t believe the B.S. about Ghost Cities. In War Time we blow up all kinds of wealth, yet come out of it ok. Think of the Ghost Cities as blown up war material. China simply front loaded their supply chain.
The real question is how much in the way of private banker debts were hypothecated to create the ghost cities? This is the American premise, which does not naturally translate as China’s money system is different. Their money supply has a large component of debt free sovereign money.
Man, you are smart. You should be in the US Government.
But then there are not enough intelligence there to listen to you.
Probably because their campaign funds come from the Corporations which seek permission to move to China to abuse cheap labor there and suck the life out of American economy. But then what?
Are Chinese going to replace American way of life and consume more? Don't bet on it. India, China, Indonesia and the whole host of Eastern countries do not believe in distribution of wealth. They seem to believe in stability through equal poverty. That disease seems to be catching up in western world. Too bad.
Wild, watch this movie "Princes of the Yen."
It shows how a credit window, meaning directed credit into channels can create a worldbeating economy.
What Japan did, Post WW2, is not that different than what China is doing now.
China is using state power to direct credit.
War Time economies do the same thing! War time economies can take lots of losses. Think of Human labor along with machinery as a dynamo ready to produce. This dynamo can produce much more than what we need.
Money and pricing systems simply direct and distribute that power. Labor + Machine + Earth is the root of all economics. Money is mostly a control and distribution system.
Also, all the whining about Japan today is a function of BOJ subordinating itself to the BIS an other Wetern Capital Means. The movie explains how that happened. Dig a little deeper into Japan, and you find she owes her debts to herself. This again, is similar to China.
https://www.youtube.com/watch?v=p5Ac7ap_MAY
This movie will take about 1.5 hours of your time. ZH's do you really want to learn things, or do you just want to whine and complain?
One of the reasons I started commenting here is because it seemed like an echo chamber of people running around in a circle. The Tylers themselve were just throwing meat to the crowd, and not really providing elucidation. Some good articles they produce though, but always short of the mark.
Re "ZH's do you really want to learn things, or do you just want to whine and complain?" ... :
+++++++++++++++++++++++
Thanks for your efforts, always looking for usweul insights. I am amazed at how many of my lifelong assumptions and understandings I have in the past few years found to be completely wrong.
I am not a young man and consider myself to be well read.
Jubilee still results in someone losing money. Going broke. Going to jail. Being executed.
No one throws money down a hole, forever. Even in China people are tired of the housing pump game.
If you force me at gun point to buy your sovereign debt to re-finance your Nth jubilee and SEO, eventually people won't do it.
Ya think all those jubilees might have SOMETHING to do with the global ponzi winding down, eh?\
Ye cannot escapes maths.
YES. China cannot command what global markets think/act. The decays beneath the facades are where markets call Risks and eschew. They are tipping towards implosion.
Lest we forget, there is greater censorship of bad economics and more propaganda of good news under State Capitalism. So less noises than the woes of US/EC in the airwaves.
Jubilee still results in someone losing money. Going broke.
Where did the money come from to begin with? Money isn't permanent, it's created for temporary use, that has always been the case. Use it or lose it.
All true but none of it possible without the full compliance of American people who blindly buy cheap imported goods with absolutely no thought given to its effects on their jobs and community. The majority of people are sheep who at best complain of the problem of wolves.
We see the visual proof of this in our obesity, while our government sees solutions in the publication of our food's contents, like anyone gives a rats ass about reality. We reject reality and if to do so requires we surrender our ability to read, so be it. It is the people's unwillingness to make hard choices that defines our problems. Our willingness to elect leaders with simplistic solutions always pointed at others being the perpetrators rather than our own actions.
The further removed we become from the cause of our effect, the easier we are to control. The easier it is to blame the wolves rather than to look at our own behavior that puts us at risk.
Stop buying foreign made goods
Stop electing people who's only solutions are to force other people into some compliance rather than tell us how WE change our circumstances.
Grow some balls and stop blaming others for our stupidity and laziness. We are our own victims. Our politicians and corporations work for us, and until we take note of how what we do, what we buy, who we elect and what we expect from ourselves change, nothing else will.
Hehe,
China builds ghost cities and we give our grandkids the bill for a bankers house in the Hamptons.
Both use select loan forgiveness.
“The government doesn’t want to see bankruptcy because as soon as companies go bust, unemployment spikes and tax revenues disappear. By stopping companies from going bankrupt, officials are able to maintain the illusion of local prosperity, economic growth and stable taxes.”
The above statement is misleading. Probably wrong too. I mean about Chinese Government. Such thinking is actually is prevalent only among western educated economist.
To input money into a system that is bankrupt and prop it up with artificial demand with more easy money for better terms of payment. In return get a paltry tax. This is western economic ideas. Not China.
"To Turn it around" as western economist propose for a Corporation is only applied for Government Corporations that serve a specific purpose. If any company goes Bankrupt, in western world, you can declare bankruptcy and restructure the finances. But in Eastern world, bankruptcy mostly means you can never be trusted to run another company ever.
China is not going to repeat the ASEAN disaster recovery with bailouts as in 1998. Chinese leaders have repeated this position many times before. Chinese Government has been getting ready for such disaster for a long time. When shit hits the fan. Chinese Government is going to let every one of the Factory based on western investment to die.
Chinese Government has been constantly telling people to go back to their original village. There are professors and even some doctors moving to towns and working as waiters in restaurants serving westerners as it pays more than their measly income back in their village. But Chinese Government is not supporting or encouraging such activities. And surely is not going to protect this situation against collapse.
Do not bet your money on China following western economics. They are smart enough to let millions lose jobs. They will not bailout a company to help workers. Chinese Government have already been preparing the ground with massive media blitz about western corruption and lack of care for the workers. All the blame for the collapse will be on western finance.
You make China sound like Cuba
China is a lot like Cuba. Communist, Socialist, strong central Government.
China for some reason (most likely to jump start their production technology base) has been pretending to be capitalist. They are clearly not. Most of their top leaders and in fact a large portion of their people, do not believe in God too.
They are pragmatic bunch of people.
We can all pretend that everyone around the world is the same. and prevent such thinking by calling it names like racism blah blah.
But the facts are simple, isolated communities always form certain values as primary for survival. Hope of a better life makes some let go of some of those values. And when life gets worst, they go back to original values. Be prepared.
It all comes down to greed, a human survival trait born into every person.
The Chinese need a strong economy to keep their people happy, they let capitalism into their culture and there is no easy way to remove it, Pandora's box has been opened.
"Communist, Socialist, strong central Government."
You make China sound like Cuba sound like the Dear Leader Obama regime.
There is no such thing as Western Economics or Western Medicine.
It is Economics and Medicine.
China is not special, it is not different, cancer is cured in China the same way it is on the rest of planet earth.
Money behaves the same way in China as it does everywhere else. People can lose money in China, too.
China is not special, is not different.
I really do wish you were right. Everyone is the same. My Father believed that too. But sorry.
There are really different economics and also different medicine. Cancer is not cured the same way in all countries.
Western medicine is targeted at symptoms, eastern medicine is targeted on well being (or so they keep saying).
Korea, China, India all have their own unique type of medical practices, which western scientist may reject or deride. But they do work for millions of people. You should learn more before assuming your complete knowledge about such matters.
I did not say, China is special or they cannot lose money. Chinese, Russians, Indonesians and most eastern cultures prefer to Hoard the money in gold. They do not even deposit them in banks. Simply hoard. They believe in savings.
They cannot understand why we need to invest in improving the lives of common people. India loves to keep their poor to remain poor. That is the fact.
Chinese Government has enabled a few western Corporations to setup up shop and make more money. That is all. They did not improve Chinese people's standard of living. They only improved Chinese Government coffers and increase military power.
For 30 years under President Suharto, western corporations actually made life better for 100 million Indonesians. seriously. But once he was deposed, the country has now reverted back to elite rule. That is eastern way.
You can't impose western values on eastern people. It does not compute.
That is the propaganda that you in the West have sold yourself about the oh so enlightened and inscrutable Asians.
You have only read about Asia, you have clearly never lived here - your statements are typical of an ''educated'' Westerner who has read about, but never experienced, Asian culture.
Sorry, I beg to differ on interpretation.
Do not forget that China is a corrupt Communist state; AKA a fascist state as developed by Mussolinni.
These empty factories garnered big Yuan for the people who controlled this project. Just like swindle-mills in the UK.
The economioc advantage of effective slave labor is immense. At some point in the future, the effective slaves will rebel, then you will see global disorder.
I look at US (and its vasal province Canada) as a fascistic state, run by oligarchs. It started in US much earlier and has much bigger and dangerous dimensions in US, than in the Peking.
The fascism is entrenched in the unions and the politicians who are dependent on these communist groups.
An intrinsic part of communism is fascism, they are coexisting parasites.
I disagree with your last statement.
the only thing fascizm and comunism have in common are the jews, who pull strings from behind in both cases.
otherwise there is no a single bit ....
Fascism is a part of communism, government controlling corporations is the definition of fascism.
If China is Communist then why are those 64 million apartments empty?
"You have a house with 14 empty rooms while these 14 families don't even have a room." - early "advertizing" for "Communism". (Actually a line from an old movie that is trying to quickly explain why people were willing to embrace Communism. See Doctor Zhivago )
A little bit like, "If USA is Capitalist then why does it have so many empty homes?" - Aren't the prices supposed to be adjusted so that they can be sold to people who can afford them?
You are correct that what we really have is Fascism. Sometimes that Fascism dresses itself up as "Communist", and sometimes that Fascism dresses itself up as "Capitalist", but in both cases TPTB will continue to use whatever suits them at the time and call it what they need to call it in order to achieve their aims.
Yeah, because the Jews faired so well under both systems...oh wait.
Happy fucking new year World.
zombie GDP numbers
zombie Statistics
zombie BRIBOR manipulation
zombie Gold Futures manipulation
zombie FX manipulation
or
zombie Factories.
I do not see any difference.
And they going to bail out Russia how exactly?
'They' are not bailing out Russia. The terms of the two agreements signed are risk free for 'they' and Russia will become an extractive economy ( if you have read the agreements). However face must be preserved (as well as border security). 'They' have even sent out directives via the Ministry of Truth not to criticize the deals and only parrot the talking points about 'Sino-Russian Friendship'. However everyone knows 'friendship' means something different than what westerners mean. All in the talking points.
This looks like China prior to the reforms of '78/79. The Shanxi gang has come under attack from the anti-corruption campaign by Xi against his adversaries, Ling Zhengce and his brother who have now been detained. It's a family affair.
In other news, China Unicom, one of the three major telecom carriers (and a SOE), shares have dropped as it's Chairman unloaded 7.1 million (HKD) of his stake in his company. Beijing ordered all senior executives to hand in their passports as one of the executives went overseas for 'medical treatment' and is now considered 'at large'. Probing for graft. How selective.