www.henrymakow.com
Mish says: "China is a basket case waiting to blow up" February 19, 2010 China's Pump & Pending Dump Chinese industry has continued to overproduce for export despite shrinking demand from the EU. To support this they're overprinting money supply at a 30% increase per year, fastest rate of money supply pumping in the world currently. China's domestic building boom continues unabated. Building entire cities, 'upwardly mobile' housing, malls, office buildings which are sitting empty. Does this sound familiar? Part 1 http://www.youtube.com/watch?v=UbZ3k8phxn8 Part 2 <http://www.youtube.com/watch?v=VNZn8OXR0Fo> http://www.youtube.com/watch?v=VNZn8OXR0Fo The current situation in China is what MISH calls a "deadly embrace," where US pressure to revalue their currency upward is causing more speculative money to flow into China, which will cause a larger crash when that speculative money exits after China's currency is revalued upward. We are moving toward a huge crash of the Chinese currency, with a consonance of Global economic problems all coming to a head at the same time. Below are bullet points taken from the following videos, which present Mish's thesis for what he describes as a "Massive Deflationary Scenario", with the next leg-down pending. There is no recovery coming. - China Importing Commodities at too high level; - Chinese overproducing: too many good & services that chinese consumer can not afford & cannot be exported (export demand is shrinking); - China printing money, money supply growing 30% annually (fastest growth in the world). - Constructing cities, malls, residential and commercial buildings that no one can afford (remain vacant); - China is maintaining high level of production in hopes that global economy bounces, but consumers [internationally] are not willing to increase spending; - Trillions in bank loans are now in default ; - Banks internationally are insolvent; - Market sentiment is that Chinese command economony will continue to support current level of growth indefinitely (Chinese banks forced to lend by state rule, irrespective of investment quality); - China economy is overheating and they will have to cut back, causing serious political unrest; - International capital continues to flow into China due to it perceived high GDP (but China includes ALL spending & money printing in GDP, so it's artificially inflated) ; - Hedge Fund have poured massive amounts into China, which is sitting in Chinese banks . - US putting pressure on China to revalue its currency upward, the Renminbi (RMB), but China is resisting; - If China were to float the RMB on the Int'l markets, there is no guarantee the RMB would rise; - Hedge funds and International investors are waiting for RMB revaluation, at which time these investors will remove their investment at a profit (assuming RMB is revalued upward); - China is forced to retain massive reserves in US Dollars in order to protect against a possible pullout of foreign investment capital from Chinese banks ; - "Beggar thy Neighbor Scenario" happening globally - US, China & Japan, & Europe all want to weaken their resprective currencies to increase their own exports. - Japan has an aging population and demographic, and therefore they have expunged their savings, as they are servicing the cost of caring for the aged. (Japan is now net sellers of Japanese treasuries) ; - Huge property bubble in Australia & Canada that is ready to blow up ; - Spain property bubble burst causing 20% unemployement there ; - 10-11M unemployed in USA who are actively seeking employement but cannot find employment ; - Massive union and pension problems in the USA that are starting to make USA resemble what is happening now in Greece. - Gov'ts promised the public adequate retirements without the need to save, which is most severe in the USA where pensions made enormous financial committments to future retirees, especially union retirees ; - Taxes are increased in order to support pension committments to [union] retirees; - Non-pension fund retirees who thought they had sufficient savings or house value to retire, are now unable to retire and therefore have re-entered the job market, competing against young-adults (with enormous college loans) for jobs ; - Young-adults are not able to obtain employement, so are moving back home, and therefore apartment rents are falling. *** exposing the hidden truth for further educational research only *** CAVEAT LECTOR *** In accordance with Title 17 U.S.C. 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