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China Is Spending 11.6 Million Annual Incomes Per Day Propping Up Stocks
For years now China has been heralded as an economic miracle that will drive the global economy towards growth and eventually eclipse the US as THE superpower in the world.
This theme was driven by the view that somehow China had obtained the magic balance between free-market capitalism and Central Planning. Globally analysts breathlessly talked about China’s insatiable demand for commodities as its economy grew by double digits for three decades straight.
Unfortunately all of this overlooked basic common sense… that China was actually just one giant debt-fueled fraud in which the politically connected got rich skimming off the top of an endless sea of loose money funneled into dodgy investments and projects.
For example, let’s say that China built a city. Regardless of whether any of the buildings are ever purchased or leased, China will count the entire city in its GDP growth. As one can imagine, this has highly incentivized China’s government to build “bridges to nowhere” or economic projects that are never actually used.
Indeed, at one point Chinese bureaucrats even resorted to detonating buildings for the express purpose of then building another one… all in the name of generating that magic GDP growth… and generating additional bribes and under the table deals for the officials who signed off on the projects.
Throughout this period, Chinese officials who were “on the take” fled the country with their bribes and Indeed, between 1991-2011, it’s estimated that between 16,000-18,000 Chinese officials fled China taking 800 BILLION RMB (roughly $125 BILLION) with them. Bear in mind China’s entire GDP was just 2.1 trillion RMB in 1991.
As the Chinese economic miracle increased in size, so did the pace of fleeing officials.
The CDIC report, which was obtained by the Economic Observer newspaper, suggested that nearly 10,000 luxury homes had been sold by government officials in Guangzhou and Shanghai alone last year.
It also claimed that an astonishing $1 trillion (£630 billion), equivalent to 40 per cent of Britain's annual GDP, had been smuggled out of China illegally in 2012.
Economists and experts cast doubt on the figure, but said the flow of money from China was dramatic. Li Chengyan, a professor at Peking University, suggested that a total of roughly 10,000 officials had absconded from China with as much as £100 billion.
To put the above numbers in perspective, this theft is equal to roughly 2% of China’s total GDP. On a per official basis, we’re looking at roughly $15.7 million… not over the course of a decade but in ONE year.
In simple terms, China’s Government signed off on serial bubbles in shadow banking investment vehicles, real estate, and stocks because they:
1) Kept the populace from rioting by creating the dream of wealth and prosperity
2) Were the easiest means of getting rich for corrupt officials.
Fast forward to today and all of China’s bubbles are imploding.
To deal with this China has announced that it will:
1) Halt all IPOs.
2) Ban short-selling in some companies.
3) Arrest those involved in undermining stock market stability (anyone it wants to arrest).
4) Create a “balance fund” backed by the Central Bank, 21 brokerages and the Chinese sovereign wealth fund. The fund will be used as a kind of Plunge Protection Team for China.
5) Issue a number of small bailouts of brokerages and financial firms.
Regarding #3, yes, China is now arresting short-sellers… because somehow they are responsible for the bubble bursting. Obviously Chinese officials didn’t pay attention to what happened to US financials back in 2008 when the SEC banned short-selling them: they rallied for about a week before they continued to fall an incredible 73%.
China also engaged its own version of the Plunge Protection Team and is now spending $29 BILLION per day to prop up its market.
The state-owned China Securities Finance Corp. has been spending up to 180 billion yuan a day ($29 billion) to try to stabilize stocks, a person familiar with the situation said earlier this week.
http://www.wsj.com/articles/in-china-stocks-late-jolts-are-new-normal-1438284814
The average income in China for a college graduate is $2,500 per year. So the Chinese Government is spending the equivalent of 11.6 MILLION people’s annual incomes per day.
Most analysts seem to think that China’s stock market problems can be disconnected form the Chinese economy. They cannot. China’s economy is growing at 3.5% at best and at worst is flatlining.
According to official forecasts, China was to be responsible for 33% of global GDP growth going forward. What do you think will happen when the financial world wakes up and realizes that China is in fact imploding?
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That is entirely sustainable. They can keep going without problem until the Fed starts QE4.
Phoenix capital is owned by Jamet Yellen.
Amen
Phoenix capital research can eat a bag of dicks
So WHAT! It is money created from nothing.
Why?
Because it can.
All this talk about the market "crashing" in China. In the last few weeks, the Shanghai Composite Index has dropped 21%. In 2007 it dropped 71%, and recovered nicely. China went on to kick the world's ass. They don't care what all the Calamity Jane alarmist writers have to say. They look at the long haul.
Jew bankers are somehow behind this
Will you just stop that nonsense?
And all that money that flowed out of China flowed into real estate in the US, Canada, Australia etc, which these Governments were very well aware off and welcomed with open arms to the severe detriment of their own populations, I remember the US pumping 45 Billion a MONTH into their own markets, eg: FREE money for the rich at the expense of the 99% not very long ago and has pushed interest rates down to 0% for, how many years now? to benefit their rich mates, so come again, which countries have the most corrupt Politicians?
After living there for 3 1/2 years I can tell you exactly how it works in China.
The local governments own most of the land - as a matter of fact large tract privately owned land in China is very very rare thing. The government leases the land for 70 years in which time it is supposed to revert back to the government but that is a problem that is only waiting to happen and the local governments will deal with it at that time.
The local governments sell the land to developers for a tremendous profit because they paid nothig for the land to begin with.
The developers kick back large sums of money to government officials so they can get to develop the land and make money.
The real kicker is that just about 70 - 72% of everything being built will remain unoccupied.
The building practices are among the worst on the planet and the buildings actually decay from shoddy building methods and neglect .
The government doesnt care because they are making sure 10's of millions of workers are brought in from all over China and are employed
Thats how it works in China
Okay wait a minute, that sounds good but were does the developers get the money for all these unoccupied buildings, cities.?
Are these ghosts cities just large FEMA camps. I'm serious, mega cities empty.... Lot of slaves can be stationed there ... Escape for new York, escape from quandzxooksjdu
And it will work until it doesnt. Just like in USSR. Goodnight comrads.
I blame the banks. They suckered the Chinese government into running the Chinese economy Rothschild style.
Satan is chuckling at the stupidity of the Chinese.
The didn't sucker them, they PAID them ($15M each!?) just like they do here.
I blame the SYSTEM, the one that promotes perpetual growth on a finite planet. The banks only operate based on this flawed premise: we all have the power to kill the premise, but we don't want to, it's easier to blame the byproducts of this flawed premise than to challenge the premise itself.
Gimme a break. Who is System if not the government?
Who could possibly have foreseen that the exponential function would hold true in China?
Who could not have foreseen that the BIS banks would not have suckered in China the way it suckered in Japan 30 years earlier.
If China wants to be free, then they need to nuke Basel.
Perpetual growth is going to eat up everything that it can before it collapses.
Yes, China may have been suckered, but as long as they were promoting growth they were going to step in, and get caught in, the "trap."
This is all simple math and biology. Just amazes me that so many "intelligent" people aiming to "fix" things utterly fail to understand such fundamental and simple concepts.
The fact that "environmental economics" is a "new" endeavor just blows my mind. But happily, there is some really interesting work going on in the area:
"Industrialization is . . . the hammer with which nature is smashed for the sake of capital."
Joel Kovel
See e.g.: "Salmon Economics"
http://www.centerforneweconomics.org/publications/lectures/kimbrell/andr...
Do not underestimate them they will face huge difficulties but they will raise again.
Eh ? Downvotes for saying the truth com'on boys !
Who cares! It's just paper.
so if we stop buying their shitgum, they will crumble . . .
All wealth in Chana is derived from the US trade surplus, about $500B a year, it's US debtor consumers R propping up China's market.
Take it a step further.
What have been the patent flows? What have been the flows of the sensitive? What have been the flows of the secured?
Funny thing is, within that play there is another outflow to another section.
They are shooting for a Japanese economy with government on both ends of the trade and won't that work well......
But they don't know shit about anime, so they're triple fucked.
there's only one agenda,
proceeding accordingly.
Hai Ang Xi Teh
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