Money is Fleeing the Ultimate Crony Capitalist State, China, and it is Destabilizing

“Even I keep my money in Switzerland these days.”

China is not such a good place to keep money medium to long term as it turns out. The wealthy in China are “deeply distrustful” of policy makers. As such many are getting out of China if they can. Beijing is concerned, probably panicking in light of all of the money which is flowing out of the country. And as China is in many respects a black box (perhaps a grey box) people with money can only assume that things are bad and so that compounds the Chinese “problem.”

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Trump Predicts U.S. Economic ‘Bubble’ Could Soon Burst

There is more economic nastiness out there right now than many in this country think. We’ve had a massive papering over of a very tenuous economy during the Obama years. Now the Fed has moved to slightly raise rates (seems reasonable to us, but we’d prefer that the market set all rates of interest) while much of the rest of the world is slowing – again. China, Brazil, much of Europe, many if not most the commodity driven developing countries,

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Nearly All US Economists Don’t Trust China’s GDP Numbers: Poll

We’ve been saying the numbers weren’t to be trusted in China for years. (We certainly weren’t the only ones.) Looks like the world is also coming to this realization, or more likely is just acknowledging that the jig is up. Or maybe both. Whatever, we hope that you had a good ride if you were investing in China on the long side, and hope that you saw the writing on the ghost city walls before things got ugly.

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Tricked out student housing equals big developer profits (Of course it’s funded by student debt largely)

Meanwhile at High Point University

Funny how things are sometimes on this website. In the prior post we heard Peter Schiff warn of the student debt bubble, something we’ve long been focused on here, and now this little article comes along.

What do you remember of living arrangements in college? Bunk beds perhaps? A shared sink and bathroom with suite mates? Bookshelves made from cinder blocks and plywood?

Not anymore. In some places student housing resembles a cruise ship more than it does a dormitory.

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The Ultimate Crony Capitalist State struggles with reality, “The beginning of a much larger turndown with China” (VIDEO)

It should be noted that when aspirational countries hit economic brick walls they often do not react well. Suddenly power shifts, as do markets and political perspective – in policy circles and in the general population. This creates instability, which threatens the powers that be. The powers that be then react.

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Memo to China: Your Market Moves Are Doomed to Fail

From a Chinese market

When an economy is built upon dishonesty, and dishonest prices most importantly, an economy’s reckoning is only a matter of time. The further the charade goes on, the worse the reckoning. China’s been going on for a long time.

Now the Chinese government is trying to save its market with more central planning and knob turning. And don’t forget about the guns it has too.

But ultimately the system will erode. It isn’t built on real prices.

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Billionaire investor Icahn, We are in a bubble, could be “very very destructive.” (Video)

Yeah, the reckoning has been coming for a very long while. The Fed is out of control and lost. The stock market as it is is not sustainable. Many other markets are in the same boat.

Any market which reflects the wants and desires of the rich (aka those closest to newly “printed” money) is pretty much in a bubble. Art, wine, etc. Even residential real estate in places like London and New York are bubblicious.

It isn’t going to keep going.

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A Tale Of Two Bubbles: China vs Nasdaq

New Chinese condo.

Sometimes 2 trends will look eerily similar for a good long while and then the 2 trends will diverge. We’ll see in this case.

However there is a very good case to be made for a Chinese stock bubble, hell, a Chinese country bubble in many respects.  China is the ultimate crony capitalist state.

That China is rattling its saber with such vigor lately may be a symptom of a Communist Party which is seeking to focus attention away from domestic economic issues.

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MARK CUBAN: This is just the start of the college implosion

My wife and I were just talking about how we hoped the student debt bubble would hurry up and deflate. We have kids to put through school in the not too distant future and the sooner things settle out the better. The current situation cannot continue. Tuitions are unsustainable. Student debt has fueled a bubble in the University system and it is going to end. Perhaps badly.

This week we may have gotten a glimpse of things to come.

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The world is headed for another debt ‘heart attack’

Debt is addictive. Once one gets on the stuff it is nearly impossible to get off of. And like all hard drugs, sooner or later debt will extract its toll. It certainly did in 2008. But instead of getting sober and real after that fateful year the world went on a binge instead. Not a very healthy thing to do. There will be pain, likely quite a lot of pain when the debt stops “working.”

When will reality come calling?

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2015: Now That the Fed Drove Everyone Into Ruinously Risky Bets….

We’ve featured Charles Hugh Smith a number of times at ACC. He’s one of my favorite economic commentators. If you don’t have his site Of Two Minds bookmarked you should consider it.

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Is the Last Great Bubble bursting? (The central bank bubble)

If it does, and eventually it will, watch out. We will enter completely new economic territory. You think things have been wild since 2008? If people truly call out the emperor as naked, if that becomes the consensus, holy moly, are things going to get interesting.

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