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Posted on 10/21/2011 6:25:35 AM PDT by TigerLikesRooster
By Andy Xie 10.14.2011 14:52
Underground Rumblings, then a Financial Quake
Private, real economic activities are on shaky ground as high-rate loans, speculation and the state sector surge
A real business does not go bankrupt simply because it can't borrow money. But a money-burning speculator does.
This fact explains why it's wrong to blame the recent wave of private company bankruptcies in Wenzhou on China's monetary tightening and credit squeeze. The real story is that the companies speculated with borrowed money, and lost.
Excessive monetary expansion from 2008-'10 rewarded speculation through asset inflation. The Chinese government's economic stimulus, launched in the wake of the global financial crisis, fueled this growth.
The stimulus decision doesn't look smart today. It worsened the nation's inflation problems enormously and, due to a dearth of opportunities in the real economy interwoven with a blue-collar labor shortage and state-company dominance, most of that money growth went into the bubbly property market and other speculative activities. China today faces tremendous difficulties because of unwise stimulus policy back then.
It would be extremely unwise for the government to loosen up and stimulate growth again, as some have suggested. If that happens, the economy could experience even more excesses than during the last stimulus period. Easing the liquidity crunch now would only benefit speculators – from loan sharks to property flippers – and do enormous harm to the economy.
Indeed, a new round of government stimulus could trigger hyperinflation and hyper-speculation in China. The consequence could be far more serious than just another bubble burst: It could lead to wholesale political changes.
Another wave of excessive monetary expansion would also magnify speculation, proving once again that speculation, not honest business, is what's profitable in China.
100 Percent
(Excerpt) Read more at english.caixin.cn ...
P!
The last thing China lovers and those use fear of the ChiComs to advance their causes/businesses want to hear is China could be on the brink of financial disaster.
Below is one of recent serious looks at China on the brink of financial disaster:
China may be in a worse economic situation than we are.
This link discusses the coming ChiCom economic burst, and it was written by socialists.
Fears of an economic meltdown in China
By John Chan
7 October 2011
Mounting instabilities in the Chinese economy have provoked fears among international analysts that world capitalism is about to be hit by another shock.
A clear indicator of global concern over a crash in China is the rising net value of outstanding credit default swaps (CDS) on Chinese sovereign debt—a type of insurance against a Chinese government default. This now stands at $US 8.3 billion—the world’s 10th largest total, ahead of Portugal and the Bank of America. Just two years ago, the CDS total for China was $1.6 billion and ranked 227th in the world.
http://www.wsws.org/articles/2011/oct2011/chin-o07.shtml
The fear is a manifestation of the change in process. The end result will be a rise like the phoenix of Chicaps
This isn't exactly breaking news. China's Growth has been wonderful for many years... but they still have an overbearing (and startlingly childish) government constantly meddling in their economy, they have some stark geographic economic inequality issues to grapple with (overcrowded cities pay up to ten times as much as rural areas, but since they're already overcrowded, moving to the urban centers is "discouraged"), their per capita GDP is still less than 1/3 of the US, and their reputation for (often criminal) unreliability in business is well-established (both in the US and in China).
Anyone that has traveled throughout China, and I have extensively on business over the last four years should have clearly seen the potential for a meltdown. What many haven’t realized is that the growth was artificial, being produced by the government throwing money around and then cooking numbers.
Anyone that has traveled throughout China, and I have extensively on business over the last four years should have clearly seen the potential for a meltdown. What many haven’t realized is that the growth was artificial, being produced by the government throwing money around and then cooking numbers.
China should be what America is focused on.
Not Lindsay Lohan, or Libya.
China... and Russia if Putin’s plan to recreate the USSR bears out.
Our rivals are growing. We are distracted, and fighting among each other economically, politically and sometimes even personally.
Both sides, engaged in policies and practices which are harmful to America.
Liberals crippling our economy through massive bureaucracy and taxation. Deliberately tearing down everything which is good and right about America, simply because it is good and right.
Extra-national, no allegiance free-trade indoctrinated “conservatives” sending our factories and jobs to other nations as fast as they can tear them down and move them.
Neither of those trends do one thing, good for the United States - and both provide aid and comfort to our adversaries. Who are most certainly paying attention while we pretend and imagine things are just fine.
America first.
I remember the same horse feathers about the old USSR as it was crumbling in front of us.
The buildings throughout Russia were falling down, people rode in buses to take a weekly shower, and common clothing was not in the USSR.
About a year before the USSR crumble from inside, a young relative and a friend took an unapproved tour of Russia. They paid for their trip by selling/bartering their extra Levi’s they wore one pair over the other and the ones in their back pack.
They took pictures beyond the outside paint from south Russian to up north. We got copies of those pictures to some friends outside of DC in N Virginia.
They were home spreading the word of the internal decay and lack of consumer goods throughout Russia, when the USSR folded.
The Russians like the Chicoms had been cooking the numbers and books while their people took the shortages.
Of course the Party and the PLA fear collapse. Hell they fear anything less than 7% GDP. Because the Chinese people will rise up and kick 100% of their ass when they have to riot for food...
I haven’t seen any stories of shortages in Chinese markets, have you?
The difference between your example of the crumbling Soviet system, and that of the communist Chinese:
Back during the Soviet build-up: Walmart was not selling things “Made in the Soviet Union” to provide the funding.
Now, we are FUNDING China’s military.
I try not to buy ChiCom products, and the anti Walmart bs re China is just bs by Walmart haters.
My grandkids before they could really read learned that if they went shopping with Grampa Dave at Walmart, Target, Kohls, the local toy store or wherever, not to ask me to buy anything with these 5 letters on the item C-H-I-N-A.
7 years ago, I figured if my 5 year old grandaughter and her 3 year old brother could figure that out, any American with a pulse should be able to figure that out. Apparently a lot of Freepers are reading impaired and don’t have the ability to recognize these 5 letters C-H-I-N-A. So they preach the anti Walmart bs like the marchers in our cities today.
We probably spend about $400 per month at Walmart, and 99/9% of those purchases do not come from the land of the murdering ChiComs. We save about 25% with those purchase each month. Since we are on fixed incomes that is important. Also, we are anti union and feel that our purchases at Walmart don’t fund union thugs and their thug bosses.
In closing, I am not a fan of any communist country and in particuliar the ChiCom serial killers. So if I post what many of us feel is the coming reality of their financial position, I’m not giving them any cover.
“I haven’t seen any stories of shortages in Chinese markets, have you?”
Shortages of capital water, electricity, gasoline, diesel, copper, coal, labor and a young population might count:
http://www.bing.com/search?q=shortages+in+Chinese+markets&form=MS8TDF&pc=MS8TDF&src=IE-SearchBox
Food shortages might count: Worst Drought in a Millenium Creates Severe Food Shortages in ...
... ease supply shortage in local markets ... food shortages can trigger inflation in China also because Chinese people are savers so they can put their savings into market.
www.marketskeptics.com/2010/03/worst-drought-in-millenium-creates.html
I think when you are comparing the USSR with China you mistake the USSR not being able to produce anything the world wants. China is able to produce many of the products the US demands.
The comparisons are not mine re the current ChiCom China.
There are reports from Asia and around the world indicating that China is facing a possible severe financial abyss.
Their problems have really nothing to do with exports but their internal problems. China reminds me of our nanny states like NY/Califonia and other blue states/blue cities, where they try to manage everything instead of letting capitalism and free market choices determine the economy.
Russia’s demise came from their over centralised control of everything from farming to manufacturing and defense spending as Reagan put their necks into their collective nooses. China has a lot of that centralised control going on in their pseudo capitalism.
Note: this topic is from 10/21/2011.Thanks TigerLikesRooster.
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