Posted on 05/14/2012 12:41:11 AM PDT by bruinbirdman
All key indicators of China's money supply are flashing warning signs. The broader measures have slumped to stagnation levels not seen since the late 1990s.
Chinese ghost city
Narrow M1 data for April is the weakest since modern records began. Real M1 deposits a leading indicator of economic growth six months or so ahead have contracted since November.
They are shrinking faster that at any time during the 2008-2009 crisis, and faster than in Spain right now, according to Simon Ward at Henderson Global Investors.
If China were a normal country, it would be hurtling into a brick wall. A "hard-landing" later this year would already be baked into the pie.
Whether this hybrid system of market Leninism with banks run by Party bosses conforms to Western monetary theory is a hotly contested point. The issue will be settled one way or the other soon.
What seems clear is that China's economy did not bottom out as expected in the first quarter. It is flirting with real trouble. Yao Wei from Societe Generale says a blizzard of awful data "screams out for easing".
China's electricity output watched religiously by bears slumped in April. It is up just 0.7pc over the last year. State investment in railways has fallen 44pc, with an accelerating downward lurch over recent months. Highway construction has dropped 2.7pc. "The data shows extreme weakness in the Chinese economy," said Alistair Thornton from IHS Global Insight in Beijing.
The Yangtze shipyards tell the tale. Caixin magazine said eight of the 10 largest builders in the country have not received a single new order this year. "A wave of closures in the shipbuilding industry has yet to begin. A hurricane is approaching," said one official.
Housing sales slumped
(Excerpt) Read more at telegraph.co.uk ...
We owe the Chinese lots and lots of money. Just Friday it was announced that the Green River oil shale had about as much recoverable reserves as the entire rest of the world. http://www.freerepublic.com/focus/news/2882771/posts?page=41
The United States currently has 20 million people unemployed as a consequence of these processes. We'll probably end up with another 20 million unemployed from the same processes in just a decade.
We have to figure out how to keep folks employed and paid.
The biggest item in most people’s budgets is a place to live. While homes could deflate still further, rental costs will likely inflate.
How about the Post Office?
;^)
Now what do you imagine news like that does to the price of gold?
If you wanted to do a study on DEFLATIONARY PRESSURES AND THEIR CONSEQUENCES you could start at USPS.
Since the early 1970s they had a 700% increase in productivity per workhour. I was one of the first of the budding young employees at Headquarters to come up with a device that would displace one employee for every one device purchased. That became a goal or ambition of others as well, and they worked it to the bone.
That would enable you to pay off the mortgage before you'd exhausted the depreciation.
BINGO!!
The dynamite (CRF) was already in place, but Gramm-Leach-Bliley (1999) put the match to the fuse.
Those spare billion would not, even with a doubling or tripling of income, be able to capitalize on their newfound wealth. Rather, fewer would starve, or die young, or be slaughtered as babies.
More hootches would be built, but they'd be the same mud-walled tarpaper augmented roof designs everybody else has. Pig breeding would not be done in a more elegant fashion ~ that being limited to the amount of food available, and no more fields would be put to the plough than they are now able to work.
The ducks would quack, the noodles would slurp, green onions would pop up in protected window boxes ~ and China ~ the real China ~ would slumber on into the immedate post neolithic future!
I mean, it's worked for so many decades....
;^)
We got rid of that stuff years ago. Nobody just stands around looking disinterested. They were incorporated into the operation of the Great Machine at the heart of the planet (or which will be eventually).
And those savings were used to back the construction of those “ghost apartments” pictured above
I knew something was up when gold dealers on TV started advertizing selling at dealer cost with little or no commission. That told me that the smart money was selling their hoard or at least a lot of it.
I don’t know if it is still going on, or even what the details were (minimum purchases?)but I saw some ads a few months ago where dealers were offering $250 cash or so to first time gold buyers.
I am also unsure if MSM covered Soros and Buffet predicting a *gold bubble*, but when I mentioned it to a friend who is heavily invested in physical and miners, she was scathing that the fundamentals didn’t support the term *bubble*. That’s true, but all I could think of was that in a manipulated market, none of the old methods still operate. She eventually agreed.
I mentioned those two predictions to an extreme liberal and she turned absolutely bloodless. I thought at the time that it was interesting that even die-hard supporters of zerO and Co. were hedged with gold.
And yet: still another friend works for an international manufacturer with a lot of infrastructure in China. They are actually all over the world and our friend spends half his time in a plane going to Saudi, Japan, China and a couple of places here in the USA. His employer is doing alright to the point where the employee is putting off retirement as long as possible.
There just may be a lot of denial out there or people are expecting enough government intervention to change the predicted outcome. Or the predictions are overwrought to begin with. I just don’t have enough real information to judge, however, I expect bi-flation and would not be surprised to see price controls at some point.
The worst of all worlds, in other words.
I sold my NoVA house in 2006 when the market was at its peak. Prices have about halved since then. According to my old neighbor, the guy who bought my house would like a word (or more) with me. But, hey, no one put a gun to his head. That’s what homes were selling for at the time.
All the stuff we bought at Walmart provided a bunch of the money too. My guess is the biggest threat to the ordinary Chinese citizen's savings will be inflation, not those buildings but I could be wrong.
The banks that loaned out the money will collapse taking the investors with them.
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