The Chinese Data Speaks For Itself

[wp_admin]

[article]358[/article]

[Golden Oxen]

Hi Ashvin, If China does truly implode it would no doubt cause a total and horrific collapse in all commodity prices, including oil.

At first blush that would appear to be extremely negative for world wide economies and stock markets. Having second thoughts about that however as I ponder what a sharp drop in oil prices as well as the other commodities and it’s resultant deflationary impact would have on the Western economies. Could it possibly be construed as bullish for them as it takes the strain off the western consumer and simultaneously allows the Fed and ECB to crank up the stimulus much more than is now possible? I realize it would seem an unlikely outcome, but the US stock market, manipulation by the Fed and all that, has been acting very well, remarkably so, when one considers the background music such as China and the European mess.

Your informative and superbly written comments are missed by many of us at the Diner, and we hope to hear from you again soon. Regards, GO

[Tao Jonesing]

The Chinese “economy” is a truly scary thing. The whole edifice seems patterned on the type of control fraud that the S&Ls of the 1980s made famous in Bill Black’s Book “The Best Way to Rob a Bank Is to Own One.”

The sad fact is that the power that be are fully aware of the farce that is China’s economy, but all the world is a game of musical chairs where there are no chairs. What the markets need is music– sweet, sweet music– and as long as the music is playing, nobody that matters is gonna sit down (and as individual investors exit stage right, algo bots fill the void). China is the only musician left, the W. Axl Rose of the neoliberal globalist paradigm. Welcome to the Jungle, you won’t find Paradise City or your Sweet Child here.

[ashvin]

Golden Oxen post=4897 wrote: Hi Ashvin, If China does truly implode it would no doubt cause a total and horrific collapse in all commodity prices, including oil.

At first blush that would appear to be extremely negative for world wide economies and stock markets. Having second thoughts about that however as I ponder what a sharp drop in oil prices as well as the other commodities and it’s resultant deflationary impact would have on the Western economies. Could it possibly be construed as bullish for them as it takes the strain off the western consumer and simultaneously allows the Fed and ECB to crank up the stimulus much more than is now possible?

Hey GO,

The problem (from the system’s status quo perspective) would be the massive losses that result to investors, banks and businesses, which would also lead to massive layoffs and increased debt burdens for those who still owe money, which are a lot of people. Any marginal gains the consumer gets from lower prices would be greatly offset by the loss of income and debt servicing costs.

You could be right, though, that it provides the opportunity for central authorities to step in with more stimulus, and, THEORETICALLY, they could even direct much of that to the people. As Dr. Keen would suggest, they could do a QE for the people that allows debtors to pay down their debts and also gives a windfall to those who don’t owe anything. However, it’s much more likely they fall back on bailing out the big boys and salvaging what they can of the status quo.

Meanwhile, they can also use the renewed crisis as an opportunity to expand the police state, justify new war efforts, override state/national sovereignty and generally take control of the world-system. It’s unclear to me how much resistance will be put up by the masses during these times of extreme uncertainty. TPTB will certainly have to throw them a few bones in order to convince them that this is all necessary for the “greater good”.

[nrauhauser]

There are just no happy endings to this with a decision making process tied to quarterly earnings reports. Our global economy is like that jet that lost both engines climbing out of LaGuardia a few years ago. The pilot flew gliders as a hobby and he got them all down safely to a smooth landing in the Hudson.

We are still at a point where most people believe we are going to resume our upward climb. Only a small portion of the population grasp what is going to happen for the next two or three generations as we slide back to the solar maximum for this planet.

China already does a dance of too many people and not enough fresh water. They have 92% of the fresh water the U.S. has and 433% of the population. As the Himalayas dry things are going to get very sketchy for them, India will take a double hit with the loss of glaciers and a disrupted Monsoon season, and Pakistan is in a similar fix.

I don’t even think there is much point to trying to educate and inform on this stuff any more – if the general populace got a credible notice to the effect that we are overpopulated about 7:1 for the Earth’s carrying capacity we’d likely make an even bigger mess than what is already in the pipeline.

I want nothing more than a little plot of land back home and a sturdy house I can weatherize to death, but this is not my life.

[acomfort]

I wonder if a big loss in demand for oil would cause a big price drop in oil? The EROEI of oil is not what it used to be and corporations frown on loosing money. Isn’t the cost about $80 a barrel for most oil?

[AndrewP]

How can a property collapse in China make exports collapse? US demand for cheap goods isn’t going to go down just because Chinese property prices crash. If anything, export volume will go UP, especially if the Renminbi plummets relative to the dollar, and makes Chinese goods cheaper.

[Author]

Posts