Replies

A "Broken China" Update.

If you want on or off the ping list send me a FReepMail.

The pace of events in the breakdown of the Middle Kingdom is accelerating. I do not believe that there is anything that the CCP can do to hold on to power long term. What remains to be seen is who replaces them, the the timing. and the body count.

As I said to our awesome MoD last night, "My Spidey Senses are screaming at me again." If I had to put money on the thing that brings down the CCP I would have a long list to choose from. Ultimately, I think it will be the immorality of the Communist system Mao and the CCP imposed on China. All else flows from that. This will take several posts to explain.

Part One:

The more immediate cause for the demise of the CCP involves their breaking of the Social (economic) Compact with the people. In China it is referred to as the 'Mandate of Heaven'. When the ruling dynasty becomes immoral and fails to protect or actively harms the people they are said to have lost the 'Mandate of Heaven'. It is then acceptable to rise up and replace them. Every time this has happened the ruling dynasty has been replaced. And make no mistake, the CCP is just another dynasty to the Chinese people.

Tightly coupled with that is the demographic collapse brought on by a combination of rapid industrialization and the 'One Child Policy'. If the CCP had relaxed the OCP after only about ten years they might have survived. That they didn't has turned a hard squall into the Perfect Storm.

The next bit is going to be a bit heavy on Economics. I apologize for that. There is a reason Economics is called the 'the Dismal Science'. The moniker is well earned.

Once a nation begins to industrialize there are three paths they can take. The early industrializers, Britain, the US, France, & Germany (pre-WW2) took the Demand (consumption) Driven path. People need or want stuff so production gets built to provide it. This is about 70% of the US economy. Growth is slow and societal problems work themselves out with minimal impact.

The second path is Export Driven. You build stuff and sell it to someone else in another country. This is represented by Japan, Germany (post-WW2), and South Korea. This is all well and good until the people you are selling to either don't want or can't pay for what you are making. An alternative Export Driven path is resource extraction. You mine or pump a resource, sell it and then buy what you need. Think Russia (USSR), Africa, and the Arab Middle East. This path is made possible only by the Bretton Woods System brought to you by the United States and the US Navy after WW2. Without world-wide freedom of navigation enforced by the only Navy in the world with a global reach, this choice is just not possible.

The third path is investment driven. Here you borrow money to build stuff. Exactly what doesn't matter that much. Jobs are created, your people get their stuff and you can hopefully sell the excess to recoup some of what you borrowed. This is what the CCP, and more broadly other east-Asian countries, chose because it is FAST. It also gives the government at least some control. Control is what the CCP is all about. The government directs the economy into things they think should be built, roads, rail, bridges, ports, etc. Do this too much and you distort the economy. Britain industrialized over seven generations, the US five, Germany and Japan three. China did it in less than one. I was already out of college when the CCP began its industrialization in earnest.

Do this long enough and you get empty cities, roads & bridges to nowhere, etc. You also get rapidly diminishing returns. It takes more and more investment to get the same or even less Yin for the Yuan. It also means that you are out of options when it stops working.

The CCP can't shift to a demand driven economy. It lacks the people. Worse, it now lacks the people to grow the people to shift to a demand driven economy twenty-five years from now. The crisis is here NOW. It can't shift to an export driven economy. Most of the countries they would sell to are having their own demographic issues. China is no longer competitive from a low-cost wage perspective and they are too far down the value added sector to follow Japan or South Korea.

So where do they go from here? Stand by for Part Deux.

WWG1WGA

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)

Been trying to dig more on the Hobbs situation but there sure seems to be a media blackout going on. This person below seems to think Hobbs is stuck in DC. Unless she's having surgery there, what would be the reason to hand over temporary power.

Then you have the next in line of succession in AZ, SOS, and it appears he's in AZ at a dem event so why not him? Next in line is the AG but it goes to the next in succession, the Treasurer.

The top 3 dems in AZ are AWOL with a total news blackout as to why. I will just speculate that maybe they have been detained by the military. That would be a good reason they might be AWOL and had to give up temporary power.

Plus, there are reports out there the AZ senate is building a RICO case against Hobbs & the dems. Many outlets are saying this is false so who knows.

#######################################################

Where is Gov. Hobbs, SoS Fontes, and AG Mayes?

Hobbs seems to be in DC (flight issues?), but Fontes appears to be in Scottsdale.

But Treasurer Yee is currently Acting Governor. pic.twitter.com/hz4YFGgBVq— Cameron Arcand (@cameron_arcand) September 28, 2023

I would not be surprised, since some Anons from time to time have stated so, to find that certain Families in China are working towards defanging the CIA in the United States, are friendly towards POTUS Trump’s fair and reciprocal trade and foreign policy, where Trump has been unafraid to seek strengthening the US war machine, to see other countries experience prosperity and to develop their own defense without our heavy hand on the scale.

Some may be surprised to learn that Xi is not immune to this alignment of thought for favoring peace and prosperity. Trump has alluded to the world being a better place, Q referred to world events.

Obviously, infiltration works both ways, like FISA. so given a crisis is very much a part of the eQuation, the beating up on Russia may prove poorly placed. We will see how China falls. Xi is a Poo Pah over a deadly clan throughout his government and must be more cautious than does popular Putin.

At any rate, it is Biden who has set the jaws of sovereign nations in fiery rallying cry against a meddling USA out-of-control Agencies and this Marxist administration.

A "Broken China" Update.

If you want on or off the ping list send me a FReepMail.

Part Deux:

Japan hit its wall in the mid-80s. They had a declining population and a mountain of debt equal to about half their GDP. It took them thirty plus years to work it out. That's thirty years of economic stagnation and the relocation of most of their industrial plant outside Japan. It worked but the cost was high. The PRC has neither the time nor the mental/political flexibility to pull this off.

South Korea took a different turn. They invested more but they moved up the value-added chain. It worked but at the cost of an economic blood bath to companies and their management teams as they worked things out. This generated great surges of unemployment and credit risk that the government had to step in and assume some of the risk itself. Korea was only able to do this because the had a highly educated work force and the political flexibility to do it. These are things the PRC lacks.

China is already farther down the road to ruin than either Japan or Korea were when they took action. The CCP has already tried bits and pieces of both solutions. Chinese corporate debt has doubled since 2010 and it was at an unsustainable level then.

What the population of Japan and Korea had that the Chinese population doesn't have is the freedom to move their capital overseas if the local economy isn't meeting their needs. The Chinese are always looking for ways to get their money out of China. Every time they find a way the CCP changes the law. This means that the people are forced to finance this insanity. They are increasingly unwilling. The people's search for somewhere to park their money leads to massive speculative bubbles (the what is immaterial) which leaves most Chinese worse off than before. It doesn't stop them from investing in the NBT (next big thing) whatever it is. The biggest option available to Chinese investors is Real Estate.

This is why China has an ERON-style housing bubble on steroids. There is enough unoccupied/unfinished housing units to house 100-200% of the Chinese population. Hard numbers are impossible to come by here. Suffice it to say it's a lot.

At the height of the sub-prime housing crisis the US had less than 5%, probably closer to 3%, excess housing. We got out of it by bundling the really questionable loans with higher quality loans to spread the risk. The crisis lopped 5% off of GDP but we got out of it. You can see where this is going. The PRC is suffering from in excess of a 100% overbuild in a country in the advanced stages of population collapse.

Japan and Korea were able to survive largely because the difficulties didn't directly threaten the well-being of the average citizen and there was sufficient national cohesion to weather the storm. That is not the case in China. Investment in Real Estate is the primary, for many the ONLY, means of saving for old age. A broad swath of PRC population is sitting on assets that are worth, at best, a quarter of what they paid or are still paying.

When people are under economic stress they react in different ways. I want to shift gears a bit and list some things I am seeing that leave me very troubled. All of these things will make it harder for the PRC to pull out of their economic.
1. In an Investment led economy, you need for borrowing to go up or at least stay the same. Companies are NOT borrowing to take on new projects.
2. The incidence of unpaid wages to workers is accelerating. This includes municipal, county, and provincial workers. I saw one report where police were starting to get stiffed. There are an increasing number of protests against companies for unpaid wages. This includes protesting municipal workers. Commies protesting commies.
3. Stores are closing. In major cities with major shopping districts there are shuttered shops and few shoppers. Walmart has closed sixty major stores in the PRC this year alone.
4. Ticket sales for travel during the upcoming Autumn Festival, aka Golden Week, are down as is sales of gifts and food stuffs for traditional feasts. Think of it as Christmas in the US but people are shopping like it's the first week of February and their credit card statement had just come in.
5. The publishing of Public Records in just about all sectors of the PRC economy is halting. This includes things like unemployment statistics, patents, doctoral dissertations, import/export statistics, etc. How can a nation get where it wants to go if the only map they have is full of holes and what is there is untrustworthy?

On top of all this the CCP is cracking down on dissent everywhere it sees it. In 1962 John Kennedy said, “Those who make peaceful revolution impossible will make violent revolution inevitable." I think he nailed it. The CCP would do well to listen but I know they won't.

If anyone has specific questions, or if something I write doesn't make sense, just ask.

WWG1WGA

An alternative Export Driven path is resource extraction. You mine or pump a resource, sell it and then buy what you need. Think Russia (USSR), Africa, and the Arab Middle East. This path is made possible only by the Bretton Woods System brought to you by the United States and the US Navy after WW2. Without world-wide freedom of navigation enforced by the only Navy in the world with a global reach, this choice is just not possible.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

This is outstanding analysis as usual, firmly rooted in the global economics and geopolitics (especially, U.S. Navy control of seas vs. China aspirations).

I have been conscious of the fundamental economic importance of U.S. Naval operations for a long time, especially its ties to the U.S.-OPEC bargain and petro-dollars, and the crucial strategic importance with respect to China in particular.

This ability of the U.S. Navy (and Brits, originally) to interdict shipments of oil and other natural resources was of course deployed against Japan, virtually forcing them into WWII; and, is our primary leverage against China now...leading directly to their efforts to break the implicit blockade of South China Sea and other choke points. This has been the obvious driver of their military buildup for decades.

So I have always wondered...and you are the first person I know to ask...what is the specific protection of trade offered by the Navy? Is it against piracy? Against local blockades and attempts to extract fees? My knowledge falls short of understanding what would be the alternative if the U.S. were to cede this dominant position and role.

Thanks again. I want to express how much I appreciate your bringing this knowledge and insight to the FReeQ thread via your Broken China series.

WWG1WGA