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Tag Archives: China

China likely to drag the world into global recession, Citigroup says

China is, as we say, The Ultimate Crony Capitalist State. Business and government are an amalgam. Long a crony paradise where a premium was placed on compliance and government favor and not on real pricing.

It looks like reality is finally starting to hit however.

About 6 months ago I was talking to a China energy markets analyst and he explained the complexities of implementing a carbon tax regime in the country to me. One bit I found particularly interesting. He explained that no one knew what the real price of energy coming from a particular plant actually was. A mandate from Beijing had been handed down, that energy would cost X amount, and that was the number used for “business.” Everyone knew the official price was way below the actual market rate but it sounded like no one really knew what the market rate was.

One can’t keep running a country like this. One must have real pricing for long term prosperity. The problem is that real pricing can create problems for the political establishment, anywhere, but particularly in China.

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Pheonix Capital: China’s is the First Central Bank to Lose Control… It Won’t Be the Last

It’s hard to overstate how important it is that despite massive, massive, intervention from the Bank of China and huge political pressure from Beijing the Chinese market continued and continues to sell off. This is the first instance of a central bank post-2008 really losing control. And this is happening in the world’s second largest economy and arguably the world’s chief engine of growth.

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Short-seller Chanos on China: ‘It’s worse than you think’ (Video)

The point we’ve made with China, The Ultimate Crony Capitalist State, is that much of the “growth” the country has seen has been driven by central planning, which in the end is doomed to fail. One can not centrally plan an economy the size of China’s over the long term.

Self dealing. Fiat declarations from on high. Accounting which probably barely passes for accounting. The problems are immense. The Chinese “miracle” isn’t looking so miraculous.

Are we saying that China is now going to revert back to the 3rd World? (Though much of China is still very much 3rd World.) No, definitely not. But we are saying that China faces a systemic crony capitalist problem and that the gaps within the Chinese economy which are filled with lies will and must collapse if China is to go forward in the way China wants to go forward.

Please note that I say how CHINA wants to go forward, not how the Chinese Communist Party wants to go forward.

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“Mystery” Cyanide Foam Covers Streets In China After Tianjin Storms As “Massive Fish Die-Off” Photographed

The worst instances of pollution the world has ever seen have been in highly managed and regulated economies. The Soviet Union, East Germany, India, China. (Not that the West hasn’t had plenty of disasters.) Yet many environmentalists (and we consider ourselves environmentalists) insist that if things were just regulated more a green utopia would emerge. Problem is that in a centrally planned economy the cronies are in charge and get to cheat whenever they want. There is no feedback mechanism because the state won’t allow it.

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The Secretive Beach Retreat Where China Leaders Plot World Domination

China’s crony confab.

To be fair, if one is going to plot world domination one might as well do it at the beach. Get some rays. Consider currency moves. Get some sand between one’s toes. Drink a mai tai. Ponder whether the Spratly Islands are really worth starting a war over. Then maybe some miniature golf.

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‘Ghost bank’ spooks Chinese savers

OK. So you go to the 1st Bank of Bankertown or whatever. You deposit a check. Take a little cash out. But you wake the next day to find – surprise – the 1st Bank of Bankertown isn’t actually a bank at all. Granted some would argue that banks aren’t really “banks” at all anyway in the Fed system. But you get the point.

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