Bold statement: “China is now heading to catastrophic failure.”

china cronyism

China has been very loose with its monetary policy historically but especially since the Crash in 2008. Its economy is also run (fundamentally) by cronycrats who think they can manipulate the economy to prosperity. (Sound familiar?)

They of course can’t and when the house of cards comes down it’s going to come down that much harder because of years and years of price obfuscation. There is no free lunch. There is no free credit. There are no free prices in China, and that is dangerous.

Click here for the article.

123 comments
Krikorian Vahe
Krikorian Vahe

Thanks Brian Vaughn, I did not know about the trade rate.

Rennie M Elliott
Rennie M Elliott

Even if tehy have no money, they have a great big military, and will just tell them they have to go take wealth from someone else, sort of like Putin and Crimea, or Obama and Ukraine's gold.

Rich Ngawang Namgyal Pearcy
Rich Ngawang Namgyal Pearcy

I think that this is what happens in the long run when china invaded Tibet This is karma this is law of cause and effect

Dan J. Wachter
Dan J. Wachter

Thank God there is no problems with our Government.

Eric Crawford
Eric Crawford

If they go broke , who are we going to borrow from next? The world is finished with China and the US .

Bob San Socie
Bob San Socie

Bush and conservatives...........try using facts not FOX Zimmerman

Billy Williams
Billy Williams

If they go broke then we don't have to pay them!

Todd Bonenberger
Todd Bonenberger

With the amount of debt china has bought they can easily drag us down into the abyss with them

Oakborn Victorious
Oakborn Victorious

If the ruling caste actually believes this, they will use their military assets to attack. Never corner a mad dog.

Ankit Dialani
Ankit Dialani

i was expecting , innovating enviornmental policy from CHIna as communist country...but they are doing just reverse...., saying yes to GM crop ,,looks they are heading towards catastrophic failure

Don DeLong
Don DeLong

We have our problems, they have theirs.

Larry Barker
Larry Barker

Not good! What if they want back all of the money weve been borrowing from them! Quick! Somebody run to Cash Advance--were going to need it!

Brian Vaughn
Brian Vaughn

How does that help if your currency devalues? If you buy a US treasury bond for 8 yuan (trade rate is 8 yuan to 1 dollar) but your currency devalues. Now the trade rate is say 12 to 1, but when you go to trade that bond in you are going to get the original trade rate. That represents a net loss in the value of the of the treasury bond.

John Reikowsky
John Reikowsky

oh please forgive me i won't be able to sleep tonight knowing i've let you down

Gom-capt Dave
Gom-capt Dave

one solution to that is to get the Chinese people to start to demand freedom and for them to want a real, LIVING wage. That will completely change the dynamics of the "cheap" production in China.....they will demand our products that we mfg here in the US.... and then they will have enough internal problems we will not need to worry about it so much.

Sandy Graham
Sandy Graham

obama's plan, he really is the anti Christ

John Sullivan
John Sullivan

I have a hard time taking seriously the absurd political implications suggested by someone who doesn't know how to spell "Missile".

John Sullivan
John Sullivan

So, according to the article, this should act as a pressure valve, and the partial default will be healthy.

John Sullivan
John Sullivan

This is just one nit in a complex system, the risk to the larger economy is exaggerated. These are risky investments, and all but the least savvy investors know that. The fact remains that China is a nation where the populace is growing more wealthy, and there is a shift from a saving culture to a spending culture happening. Right now, the wealth is concentrated on the coast, and the vast inland sections of the country are relatively poor. Every politician wants to improve the lot of their constituency, so the poor in the interior will get more wealthy over time, which will drive consumerism. If the catastrophe that the article's author describes is ever going to come to pass, it is far into the future. (I clicked through and read the Forbes article that the summary referred to, and I was just on a con-call with a senior macro-economic analyst last week that discussed the intermediate and long-term future of the US, European and Chinese markets.)

Jason Luther
Jason Luther

If China crashes what you will likely see is more money come back to the USA markets. The USA can then purchase Chinese money that loses value with a strengthened dollar thereby saving money on debts owed to the Chinese. The influx of money bought cheap will ultimately keep them afloat and absolve debts to them at a discount. Not sure why this would be Fear mongered by ACC. It only helps the rest of the world and punishes the manipulators.

ByronShutt
ByronShutt

The Chinese are used to these disasters of Central Planning and are tough enough to survive. Are we?

Chris Citton
Chris Citton

Miss Piggy obammy is there on vacation, so their economics will improve by a couple trillion dollars

Boo Black
Boo Black

Also the U.S. owes 730 trillion in obligations.....globally

John Reikowsky
John Reikowsky

the chinese billionaires have stashed trillions off shore and when the ship starts sinking they will bail, and leave the nation in a state of anarchy and who will be in charge of the missals then ? should be interesting

Krikorian Vahe
Krikorian Vahe

Brian Vaughn, I just want to understand this. If China had bought US treasury, wouldn't that help China. It would be a safe haven for China?

Damian Bloodstone
Damian Bloodstone

Soon everyone will realize that their core value "money means everything" should have been "money means nothing, people mean everything."

Jay Mastrud
Jay Mastrud

But who will finance our welfare crony capitalist state now????

Joseph A. Cummins
Joseph A. Cummins

Exactly! This was predicted a couple years ago. Warned ya!!! Yes!!! It's gonna get real ugly now. Yes!!! Our economy is gonna suck even worse.

Chris Fretwell
Chris Fretwell

Being communist they can easily hide any problems

BrianTucker1
BrianTucker1

One might want to reflect on the past behavior of authoritarian regimes who became unstable, I believe the last time it happened it took 3 armies to match the numbers in the PLA, and most people refer to that dust up as WWII.

Jessy Kondou Zapanta
Jessy Kondou Zapanta

It is getting really tiring to see anything Asian being referred to with "rice" or "lotus". You're not being poetic, just ignorant.

JonPOgden
JonPOgden

It is not the number of men in uniform it is the force multipliers that matter. In the Korean War they flooded the field with troops, but only the first row was armed. The second row was supposed to pick up the weapons of the first when they were killed.  


Saddam Hussein had the 4th largest army in the world, complete with tanks, mortars, etc. It took the US-led allies less than 100 days to utterly destroy it. There are videos on YouTube of what happens when a platoon of Hussein's tanks come up against a squad of Abrams Tanks. They are...educational.

RyanAlexanderCamire
RyanAlexanderCamire

This makes him a shitty leader, but I'm not sure how that makes him Anti-Christ.

JonPOgden
JonPOgden

@BrianTucker1  The question is not how many uniforms they have filled, but how many force multipliers they can field and how many of their cannon fodder would actually fight.