Fresh humiliation for eurozone as China says it will bail out debt-ridden nations … China has said it is willing to bail out debt-ridden countries in the euro zone using its $2.7 trillion overseas investment fund. In a fresh humiliation for Europe, Foreign Ministry spokesman Jiang Yu said it was one of the most important areas for China's foreign exchange investments. The country has already approached struggling European countries with financial aid, including offering to buy Greece's debt in October and promising to buy $4 billion of Portuguese government debt … China's astonishing economic growth has put it on track to overtake America as the world's economic powerhouse within two years, a recent report claimed. But experts believed still be some years before America's leadership role is really challenged – largely because Beijing has given no indication it is ready to take on the responsibility of shepherding the world' economy. This foray into the future of the euro could be a signal from Beijing that it is ready to change that perception. – Daily Mail
Dominant Social Theme: The Chinese prove concerned world citizens after all.
Free-Market Analysis: Like Hamlet, the elves of the Daily Bell have spilled a good deal of ink in the past months wondering if China's leaders themselves secretly back the world-spanning plans of the Anglo-American elite; in other words if the Chinese government has been co-opted by the Anglosphere's vision of a New World Order. This just announced news about Chinese leaders being willing to contemplate a general bail-out of the EU (we'll see what really happens) is further evidence that our soliloquizing was not merely wasted noise. It would seem, after all, that the great powers are in league with one another.
It is a disturbing phenomenon, if so. The EU is a thoroughly corrupt and illegitimate entity that was sold to its constituents falsely as a trade union and now has aspirations of empire. The Chinese Communist government is not any better in our book, and even worse as a matter of fact. As bad as the Napoleonic justice system is in Europe, (you are guilty until proven innocent) the Chinese system is even worse, with few safeguards for the many executions that take place – and the organ harvesting and other gruesome practices that go on after the fact.
But the corruption runs to the center of society so far as we can tell. For us the Chinese system is very similar to the South American one, which is ironically an elitist model. In many South American countries an elitist few animate the financial anatomy. The big banks, financial firms and large industries are owned or cross-owned by this tiny group while the other 99 percent of society trades cell phones on the street. Nominally, these countries are capitalist, or have a mixed economy, but in reality, the stratification is merely authoritarian.
We see the same pattern in both the EU and China. America, too, which used to have the broadest cross-section of control, has obviously centralized in the past decades as well. (The world is beginning to verge on the SA model.) In any event, it is evident and obvious that most if not all of the major financial interests of China are tightly controlled by the Communist party. But after 60 years of rule, it is also interesting to ask "who controls the Chinese party?" In a previous article – G20 Goes Wrong – we speculated as follows:
The "Li" family in China is commonly held to be the most powerful, with the Lis (or Lees) also seen as controlling Hong Kong and prominent in Korea and perhaps even Singapore. There are questions as to whether these disparate familial groups are linked or not and even how much clout the Li family exercises within China. The Lis are said to operate within the communist party as well as outside of it and were also close to Mao.
Our point was that if elite families had emerged in China (or been there all along) then the Western elites would have counterparties with whom they could do business. We found this somewhat speculative however because we believed Chinese society had undergone so much chaos that it would have been hard for pre-Communist elite families to survive.
The announcement that China is willing to provide virtually unlimited funds to the EU would seem, however, to go a good ways toward confirming that there is elite cooperation at the highest levels. It is in fact a powerful weapon that the EU can now deploy. China does not have to spend the money that it has at the ready (presumably American dollars). It merely needs to make clear that these are disposable dollars. That will surely provide a gut-check for bear raiders.
On a strictly practical level, China's potential aid is a clever move. No doubt there are all sorts of behind-the-scenes advantages that will accrue; plus the obvious ones of increased international clout. We have noted many times that sooner or later the Chinese central banking system is going to create a terrible crash in that great country. The Chinese leaders doubtless know it too. (They struggle with price inflation every day.) Right now the economy is still vibrant and the Chinese are doubtless doing what they can – before they cannot.
There is a Chinese crash coming, we believe. It may be large and deep. The artificial Chinese boom has been going on for at least 20 years, and more likely 30. It is evidently and obviously fueled by "hot" money – printed from nothing – that is flooding the country from overseas and increasingly coming from China's own over-generous printing presses. We have pointed to evidences of whole "ghost cities" – built but unoccupied – and the predilection for the entire Chinese middle class to buy shoddily-made, empty condos as "investments." Supposedly, there are over 60 million apartments (there are few houses) that lie empty in China right now; that translates to housing for some 150 million Chinese, or more than 10 percent of the population.
Whenever the Chinese crash does come, it may do a good deal to push the world into a deeper depression. The powers-that-be must be quite aware of the situation; they invented central banking after all, with its ruinous business cycle. They may even have designed the current downturn to consolidate power and set up the further rudiments of world governance. But because the downturn has proven so deep and intractable, the Anglosphere in particular (which is in overall charge) might have become worried about civil insurrection. Hence the efforts to restart economies and to generate some economic traction amidst all the "austerity." Enter the Chinese …
This latest announcement merely reconfirms what we call the "desperation of the elites." Their enterprises have been exposed by the Internet; Europe is aflame with disapproval over austerity; America is in the grip of a growing anti-establishment political movement called the Tea Party. We see plenty of signs that the Anglosphere, which hypothetically orchestrated this out-of-control Greater Recession, is suffering buyer's remorse and trying every way it can to inject cash into failing Western economies.
The elites, which we believe are possessed of almost inconceivable concentrations of wealth, cannot just pour money into countries. There are laws (generated by the elites themselves) and if these laws are contravened, the elites will find themselves in an even more dangerous situation – having made a mockery of the laws they count on for protection. Thus money must be delivered legally … somehow.
We believe the nutty saga of Foundation X, which went public with an offer to pay down Britain's banking imbalances, is possibly evidence of one failed gambit. Now someone at the top has got the idea that the Chinese hoard of American dollars (we presume) can be used to bail out Europe. What is just as fascinating is that the Chinese have gone along. These are very instructive lessons, in our opinion. The elite, panicked, begins to show its hand.
Does the Anglo-American elite really believe that a Red Chinese bailout of a failing authoritarian construct is going to keep the lid on potential civil unrest? The power elite, as we've pointed out, wants chaos – but the current environment, it would seem, is a bridge too far. The chaos must be controlled and moderated. It must be calibrated. This sort of operational methodology may indeed have worked well in the 20th century; but we would maintain that its implementation is far more questionable in the modern era of technological (Internet) truth-telling.
