News & Analysis
The West's Pending Paper Money Implosion
In China, a City With Lots of Buildings, but Few People ... Patrick Chovanec, who teaches business at Tsinghua University in Beijing, says the building boom is driven by frenzied investors — not the housing needs of millions of migrating workers. "People are using real estate as an investment, as a place to store cash — they treat it like gold," Professor Chovanec said. "They're stockpiling empty units. This is going on in cities of virtually every size." ... Property development here is so hot that last year, housing sales in Ordos reached $2.4 billion, up from $100 million in 2004, according to government statistics. ... "This is a city of the future," Li Hong, a government official, said during a recent tour of Kangbashi. But the future has not yet arrived, despite Mr. Li's best efforts to persuade a visitor otherwise. ... Only a few minutes earlier, Mr. Li escorted a reporter through an empty 500,000-square-foot convention center and a 12-story office tower that had dark hallways, locked doors and just a few scattered souls. – New York Times
Dominant Social Theme: All across the world, the kids are OK! And so are their investments!
Free-Market Analysis: We begin with China and its empty cities, but we want to mention Brazil as well. In a move that has not received much coverage, Brazil is dissociating itself from certain IMF deliberations regarding the nascent currency war. The Western elites, in their increasingly obvious desperation, had hoped to turn the IMF into a kind of global central bank, but Brazil's leaders seem not to go wish to along with that scenario. In fact, it is not 1945 and the Anglo-American axis cannot bully its way to a new economic order simply because it wishes too.
Brazil's top economic officials won't attend G20 ... Brazil's top economic officials will not be attending meetings of Group of 20 finance ministers and central bank governors in South Korea this week, the finance ministry and central bank press offices said on Monday. ... Reuters reported on Friday that Finance Minister Guido Mantega would not be attending the meeting and would unveil new currency measures aimed at containing a rapid rise in the real BRBY this week. (- Reuters)
Meanwhile, China's endless struggle with real-estate inflation was further emphasized yesterday when the Chinese central bank announced it was raising interest rates. This is a kind of one-two punch in our estimation. China is the most important economy in the world that has not collapsed yet. Once China collapses and the plan to further expand the wretched Western central banking system is revealed as unworkable, the 100-year old Western banking system may begin to implode in earnest.
The problem with free-market economic analysis is that it is impossible (usually) to get the timing right. The larger, macro business cycles may be apparent, but predicting when China's real-estate bubble is going to burst is a fool's errand. No one knows with any certainty. These bubbles can go on for years, decades even, though in China's case the bubble is likely long in the tooth, just as China's "expansion" is. China's entire economy is terribly distorted now. Even the New York Times has discovered this (see excerpt above). Surprisingly, Bloomberg has too. Here's Bloomberg on China yesterday:
China Hides Rampant Inflation in Money Binge ... Money, money everywhere. At least that's what it feels like at the moment in China. Awash in luxury cars, condos and expensive jewelry, the Chinese are enjoying what looks to be an unstoppable boom. But inflation figures due to be released tomorrow should give pause to those who assume China's economy is on sound footing. To an extent few fully appreciate, China's astonishing growth rates these past two years have been fueled by an even more astonishing expansion of its money supply, by more than 50 percent. Until now, the inflationary consequences have been largely camouflaged in the form of rising asset prices. (-Bloomberg/BusinessWeek)
The ruination of the Chinese economy will likely end the horrible communist experiment that the Anglo-American axis helped inflict on the long-suffering Chinese. The vicious ChiComs and their oppressive system are only tolerated today because they have managed to create a good deal of "wealth' of late. But when it evaporates, the poor Chinese who have been buying empty flats in unpopulated cities as "investments" won't know what hit them. It is obvious the Anglo-American axis has been patiently tutoring the Chinese. The system that the Chinese operate currently didn't spring out of the ground fully formed. It is a mimic of the worst parts of the Anglo-American free-enterprise system; almost all "enterprise" and little that is "free."
Once the system implodes, the Chinese likely will stop cooperating with the Anglo-American elite. This will be another change. Currently, the Chicoms are enthusiastic players in many of Western elite power promotions. The Chicoms can be found in Afghanistan eagerly making deals with the corrupt Karzai government to exploit Afghanistan resources. They pop up after meeting Eurocrats to claim they have confidence in the foundering euro and are willing to buy Greek debt. They speak out after IMF meetings to explain that the world does indeed need a global central bank and global currency. The ChiComs and the Anglo-American elite think alike. They are brethren. Intertwined. It is perhaps a kind of love-hate relationship.
If the West unravels any more rapidly or ruinously, it can take China down with it. Likewise, when China falls, (and it will) the crash will resound worldwide. India, too, is awash with money; one the country's wealthiest citizens just built an extravagant US$1 billion "house" (actually a serial apartment building) in the middle of impoverished Mumbai. Brazil is no different. Money is sloshing around the world, and the US and Britain have led the way with their insatiable and reckless money printing. It is a 'boom-time," yes, but a terminal one, and soon comes the bust for the countries that have not experienced it yet.
The Chinese crash, when it occurs, will be truly resonant, like Ulysses impaling of Polyphemous' single Cyclopean eye. Or perhaps it is better to compare it to a nuclear device, one unleashing the distortions of 20 years of relentless monetary stimulation with truly unbelievable 10% per quarter growth rates. And in the aftershocks, a significant percentage of China's real estate will prove worthless or unlivable in our view.
The huge Chinese banking system, which is merely a facade for governmental control, will begin to crumble. As will the country's rigged stock exchanges and some or much of its international industry. Whole cities may have to be razed (if there is the money to do so). Much of the government-built infrastructure, its roads, sewer systems, etc., will prove to be unreliable. The endemic corruption of the Chinese system will be revealed in all its ugliness as the money tide recedes.
The ChiComs, in our view, will not have the time, the patience or the wherewithal to print more money – to generate a Bernanke-Paulson style artificial boomlet to stabilize the financial system. When the economy begins to fail (and it is a huge economy) the Chinese state will begin to unravel as well. The fury of the Chinese people will likely spill over; especially those in the country who never participated in the boom. Starved in the 1950s and 1960s and oppressed since then in various authoritarian ways, the Chinese have kept quiet in return for government-provided wealth and security. When it turns out that once again the government again has failed, the social pact will be seen as abrogated and the leadership will not be able to recover. This is what the top level of the party grimly and correctly fears.
The coming failure of the Chinese economy could wipe away the current leadership and usher in a new form of government. Perhaps it will be a democratic one or perhaps it will entail radical democratic socialism. The Chinese protests at Tiananmen Square were actually socialist protests. The demonstrators may have wanted more freedom, but it was freedom that was to be used to demand a more extensive welfare state. So China remains a damaged and conflicted society with a historically authoritarian culture and little experience with sociopolitical freedom. It is not the United States (or at least what the United States was).
Even if China does not crash in the near future, the West's unraveling is likely to continue. Europe is already ablaze, as we predicted, and if observers believe the current protests are about "austerity," we think they are misinformed. A class war has started in Europe as we pointed out just yesterday. In America the class war has found its voice in Tea Party agitation. But once the Republicans (who will be swept back into office) return to the center and begin to "legislate" because "that is what the people want," the fury that is building in the US will become unstoppable in our view. There will come a European moment.
The Western elite wished to use the economic crisis (which we think is far-worse than expected) to create a significantly tighter global, financial system with one IMF-run central bank and a single currency as well. But the globalist aspirations of this familial Anglo-American conspiracy are increasingly shattered in our view. The shards of these insane manipulations are beginning to rain down upon them.
How did the Anglo-American elite anticipate that it would bully China, Brazil, India, etc. into going along with a system of world government in which the Anglo-American axis would take the lead? Colonialism is not a supportable strategy anymore, for the West. And then of course there is the truth-telling of the Internet, which has immeasurably complicated elite schemes.
Conclusion: We will close with our usual disclaimer that we are following elite promotions as best we can and that the Western elites comprise a very formidable group. It could be that they manage to create a more unified world economic system out of the current crisis. It could be that a Chinese crash is averted or that the powers-that-be will figure out a way to declare and uphold martial law throughout the West, as the more paranoid are now predicting. We would find it surprising.
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Posted by AmanfromMars on 10/25/10 12:14 AM
WuYeYouMin (????),
From "the latest sad story" we can read ...
"While the incident keeps spreading across the internet in various media forms, the Hebei University school authority started pressuring students to keep quiet." ...... which is nearly as bad and as mad as this in the West ....
"NOTICE: Within DoD, at least all elements of the Army as well as the Marine Corps Reserve have been given direct, unqualified, written orders not to access the Wikileaks site or read the Wikileaks document via any Government **OR** non-Government computer."
Click to view link
Although whether that is true or just propaganda, I do not know, but perhaps someone out there who has received such written orders can enlighten us.
Whenever you start trying to influence and control what information third parties see and hear, with a call upon citizens to remain ignorant and uninformed, are you a bully and tyrant who has lost and/or never learnt the Ancient Arts in Zen Control?
Reply from The Daily Bell
Thanks for the update. Hard to believe the arrogance.
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Posted by WuYeYouMin (æ— ä¸šæ¸¸æ°‘) on 10/24/10 01:32 AM
@Al Kyder
Thanks for the many good points raised.
Personally, I have no speculation as to what will replace the CCP. Neither have I paid much attention to party propaganda, a shortcoming on my part, no doubt. :-)
Thus far, I have been paying more attention to the sufferings of the common people (the '???') in the PRC, and I constantly wonder how much more they will endure.
Here's the latest sad story:
Click to view link
Best regards.
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Posted by Al Kyder on 10/23/10 02:27 AM
@ WuYeYouMin
Thanks WuYeYouMin This really is a guessing game, *sigh* But I have to err on the side of statistical probabilities. The centre still has the numbers, and will likely to hold them for at least another five years. If it were not for the one child policy, things would be different.
It is also easy to say that the centre will not prevail, but you must at least make a speculation as to what will replace it. If you can not answer that, then the centre will prevail, because, as I said, it knows nothing else.
I dont doubt that there is tension, but if you look at the recent party propaganda, we can see they are addressing this with gusto. The recent paper on the Sinicization Marxism shows they are ready for whatever is in store for the world economy.
So WuYeYouMin I would like to hear what you think will replace the CCP if it does not prevail, and I will add, if there is no viable replacement, then the west will prop it up for as long as needed.
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Posted by Victor Barney on 10/22/10 07:54 AM
Although America is the real Israel by the tribe of Joseph, as England(Gen. 48:16), America also is Marxist(Anti-Messiah)in doctrine! Unfortunately, I fear that it is America that will start the "cashless society" described in Revelation. Now, that America's women have put in office the forbidden foreigner(non-Israelite) described in Deuteronomy 17:15, I feel even a greater probability that this will become true, meaning that the Two-Witnesses described in Revelation will come to punish America and call-out only 144,000 people alive, 12,000 from each of the tribes of Israel, excluding Dan(Irish) as written in Chapter 11! Watch!
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Posted by AmanfromMars on 10/22/10 02:59 AM
In CyberSpace is the battle an opportunity virtually constant in the presenting of better ideals for a beta future. Grand IT Masters use Flowing Words and Civil Communications Command and Control of CyberIntelAIgent Networks .... for Elite Channeling of ProgramMING or Pogroms, although why the latter whenever there is the former immediately renders it in CyberSpace, a Lost Cause for Permanent Quarantine in Sub Prime Dark Matters.
The World is Run with Words and by Machines which interpret and multiprocess Binary Code into Digital Image and Novel Core Source into Binary Code for MultiProcessing. Thus does the beast provide its Needs to Feed ... its Feeds of Need.
A Sharing of Needs Indicates Immediately the Product and Service to Provide and bought and provided with paper currency, is it at practically zero cost in both the real and virtual plane, which does have one wondering why whenever the world is always awash with flash and fast cash and there's so much newly invented money about, there is no money about.
Where do the despicable and deplorable thieves reside and hide in their follies and ivory towers?
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Posted by WuYeYouMin (æ— ä¸šæ¸¸æ°‘) on 10/22/10 02:21 AM
@Al Kyder,
I am Han Chinese although not a citizen of the PRC.
Your theory about the Han Chinese standing behind the CCP in the event of an economic collapse makes for interesting reading except for the fact that it flies in the face of reality.
One just have to look at the actions of senior CCP officials in shipping their families overseas ('wai tao') to places like the US, Canada, Australia and Singapore to know what these guys think will likely happen to them when the system breaks down.
Furthermore, your examples from the '36 stratagems' assume some form of coherence within the CCP in its fight for continued survival. The question is whether, when it comes to the crunch, that centre will hold together, or not? Given the moral decadence in contemporary PRC society ('To despise the poor but not the prostitutes') where in all areas of life it is 'every man for himself', I would like to hazard a guess that the centre will not hold.
Reply from The Daily Bell
Thanks.
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Posted by 4irw4y on 10/21/10 08:26 PM
Kennet Hall,
Under "transportataion" is, in the given case, a process of moving military cargo (steel, lead, flesh) across the Pacific is understood. The cost of war will be so considerable that China is simplier to buy just some more corporations who will do the inside job. Not everyone interests with it, but the Chinese prefer exploiting the stratagem of a "silk worm" -- they invade friendly, by help, capturing the corporative trees and not the military bases. This is probably why there are so many scary talks about Chinese invasion -- it's a private/corporative fear-based promotion, not a civil one. And -- do you hear a call to "join, citizens, around the Congressman X, General Y, Captain O, meet new domestic private police".
I'd really like to hear a non-engaged Chinese about how he would imagine himself occupying US. You can also
Click to view link
to read from one of the promotion agents.
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Posted by Blinder on 10/21/10 06:25 PM
It is a fat monetary crisis-and all currencies are USD derivatives as they devalue against necessities over time (food, water, schools) and literally create false economies of "misallocated capital" as in the US housing market.
In the end, there is simply too much debt-at all levels, household, state and federal.
The only answer is a new currency and we've seen the meme's everywhere- from Ben Steils (CFR) "End of Monetary Sovereignty"-2007 defaulting to digital (read higher priced-such that you cannot buy anymore of it in physical form-and default
to an ETF)
While many bristle at the anti-Keynesian thought (Willem Buiter-calling for expiration dates on US currency) Petersen (sp?) Groups calling for SDR's or other Bancor's or other) the global markets seem to prefer gold.
Got gold?
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Posted by Kenneth Hall on 10/21/10 03:04 PM
"You are proposing that the Anglo-American elite is going to invite the Chinese to invade America? The Anglo-American elite is based in Britain and American, with America serving as the nuclear muscle. And you think it will be put voluntarily under the control of the Chinese?"
I'm saying it is a possibility if they are in harmony with the Chinese leaders in forming the world government. As they would still control most the nuclear mussel that is still their threat over the world. Yet at the same time create the fear memes, chaos, and conditions to bring us Homer Simpsons who are left back in line. Plus divide the US and merge it into the North American Union.
Bottom Line I wouldn't put it past them and can see logic for it if they lose control of us and they do have a working relationship with the other world body with enough nuclear threat to keep them honest. They could even let them try and take it and at the last minute bring out their super weapon to save the day if they have one we don't know about!
Or they are loosing control and the Russians and Chicoms see an opportunity to kill a lot of birds with one stone and profit at the same time.
I'm just saying don't get stuck in any one possibility but like chess see all the possible angels your threats can come from!
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Posted by Kenneth Hall on 10/21/10 02:55 PM
"How do we ensure ourselves of a return (Dividends) from our new foreign investments in order to pay our bills? Foreign banks require a large minimum deposit. Many foreign banks will not invest for US citizens and are loaded with fees (to the broker and the bank involved). Why all the talk about the coming implosion in China? I think this article is enlightening but mis-titled.
Sounds as though the ChiCom implosion will also affect investments in all Asia " Australia, Singapore, Japan?, Indonesia -which would directly affect U.S. citizens' investments in these areas " i.e. we should stay away from these areas. But where should the average US citizen safely invest out of the dollar and how should he go about it to avoid the coming dollar implosion? We need practical, doable advice and direction.
Buy all the guns and Ammo you can get, long term foods, heirloom seeds, anything you need to live that you can keep in your own hands. They have inherent value no matter what happens. Gold Silver coins to trade with after the implosion, more silver than gold by far as it is easier to use for smaller transactions, Find industries close to home that produce the things people will need to survive and invest in them if you can so you have local control and access to your assets. Think LOCAL LOCAL LOCAL because international will be difficult to say the least to move or retrieve your assets even from economic collapse more less war.
POSSESSION IS 9/10 OF THE LAW! Especially in times of crisis do you think someone on the other side of the world is going to care about your claim on anything if there hungry!
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Posted by Kenneth Hall on 10/21/10 02:47 PM
"@ Kenneth Hall 20 10:48 PM "
"etc and then invade the Midwest" --
Which meat is @stake, Kenneth Hall? Nicaraguan, Mexican? Transportation, gentlemen, transportation."
Don't think I get your question but I'll attempt to respond to what I think your asking.
What would China gain by invasion?
How about a colony rich with natural resources.
Ready made houses for the conquerors at least those still standing.
Slave labor for their new found colony. Abundant water resources via the massive Midwest ungrounded aquifer and lakes. which would not be contaminated from limited nuclear strikes on the costs and a couple key Midwest cities.
Massive coal deposits, oil, natural gas out the wazoo. not to mention the Meat, grain and potatoes that survived and the ability to grow them and spread out their population from the motherland to their new found colony. I'm sure Russia would settle for Alaska, and Hawaii don't you?
Mexico would get New Mexico, Arizona, Texas, California etc. They already have millions of ready made insurgent allies in our borders ready for a chance to get their stolen land back.
Could this be a part of the elites plan to neuter the US? Maybe or maybe they are just screwing up and losing control as mentioned by DB.
But don't think for a minute the days of war for plunder are over! It could be fatal!
As far as transportation and how do they get here. How about the half million Chinese troops in the panama canal for a start, And if anyone has the shipping capacity to overwhelm us with numbers on the beaches it's China, Thus the reason to neutralize our fleets with nuclear strikes. Which may happen from Pakistan or Iran soon on a carrier group over there. Via the spy plane we let fly within 1,000 yards of the USS Eisenhower!
And I repeat millions are already in our borders waiting for the green light!
WE are far more vulnerable than I would like to believe so I know its hard for others to accept. But we are in deep doodoo folks. SO why I do see signs of light it could be lightning!
Reply from The Daily Bell
You are proposing that the Anglo-American elite is going to invite the Chinese to invade America? The Anglo-American elite is based in Britain and American, with America serving as the nuclear muscle. And you think it will be put voluntarily under the control of the Chinese?
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Posted by 4irw4y on 10/21/10 12:10 PM
Latest Real Life newsbrief -- Russia offered Canada to repeat the 1972 4x4 Ice Hockey Super Series.
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Posted by 4irw4y on 10/21/10 11:48 AM
re MET --
_we_? Whom do you mean?
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Posted by MET on 10/21/10 11:44 AM
the West's pending implosion of paper money is really not discussed. How and when will this implosion occur? What will be the results for US citizens and the stocks etc that we now hold? Will we still get dividends to support ourselves?
And, what will happen to the international stocks we hold in dollar currency? Will we all suddenly nothing and our dollar investments will evaporate and we will be left broke? If so, how do we get our money out of the dollar currency beforehand and into a safer currency. How do we invest in this safer currency?
How do we ensure ourselves of a return (Dividends) from our new foreign investments in order to pay our bills? Foreign banks require a large minimum deposit. Many foreign banks will not invest for US citizens and are loaded with fees (to the broker and the bank involved). Why all the talk about the coming implosion in China? I think this article is enlightening but mis-titled.
Sounds as though the ChiCom implosion will also affect investments in all Asia " Australia, Singapore, Japan?, Indonesia -which would directly affect U.S. citizens' investments in these areas " i.e. we should stay away from these areas. But where should the average US citizen safely invest out of the dollar and how should he go about it to avoid the coming dollar implosion? We need practical, doable advice and direction.
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Posted by JOSEPH M CASILLI on 10/21/10 08:25 AM
IN THE END, WHO EVER CONTROLS THE FRESH DRINKING WATER WILL RULE.
Reply from The Daily Bell
Right. Water scarcity. (Sarcasm off.)
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Posted by 4irw4y on 10/21/10 07:56 AM
@ Kenneth Hall 20 10:48 PM "
"etc and then invade the Midwest" --
Which meat is @stake, Kenneth Hall? Nicaraguan, Mexican? Transportation, gentlemen, transportation.
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Posted by Acudoc on 10/21/10 04:07 AM
Just want to post a link on this topic that deserves wide-spread dissemination IMHO...especially for those we encounter who have not been studying central bank manipulations for as long as most DB readers:
Click to view link
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Posted by AmanfromMars on 10/21/10 02:26 AM
China's Root Policy appears to be one of Leadership with Enlightened Meritocracy in Control of Function and Utility. Bravo China. With IT Control, is it a Shining Path with Peace.
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Posted by JOHN ROSSI on 10/21/10 01:55 AM
VERY DANGEROUS TIMES FOR EARTH'S INHABITANTS, DO WE SEE A "DARKNESS", MASS DEPOPULATION OF THIS KIND EARTH, SUCH WONDERFUL ADVANCEMENTS OVERSHADOWED BY THE FEW EVIL ONES THAT USE THIS BURST OF INTELLIGENCE TO PRODUCE THE KILLING MACHINES, REDUCING THE SCALE OF HONOR, STATESMANSHIP, MORALITY, VALUE OF HUMAN LIFE, VALUE OF THE CHILDREN, THE ELDERLY, FOR EACH OTHER???
Reply from The Daily Bell
Caps off, please.
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Posted by Al Kyder on 10/20/10 11:30 PM
We absolutely disagree with this statement. You also believe that Wall Street supported the "White Russians" against Lenin and the Reds?
Ah No, But we must remember that before WW2 America was ranked 17th in terms of world power, behind Portugal, and had no Air force.
The support for Mao, was because Chang KI Shek would not unite against the Japanese. America who was supplying oil to countries Like Germany (The Standard oil company of Essen gmbh or Esso Brand name Esso lube and Gargoyle) were in serious danger of losing control of the Panama canal, to Japan, and very nearly did.
They required the help and support of the Chinese, at that time, whatever the stripe. The history of the Flying tigers AVG is interesting, But I think it has more to do with European powers.
If you have anything that shows the flying Tigers AVG had any formal ties with the communists I would love to know, But if what you assert was true, then why does North Korea exist?
Reply from The Daily Bell
But if what you assert was true, then why does North Korea exist?
There is no doubt that Wall Street funded the USSR. There is information to be found that power elite element funded Mao as well. Authoritarian cultures need large enemies. And in the USSR and China, the US found two adversaries that added up to a single, formidable opposing force. We shall look for supporting information and post links in this thread.
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