China Vice Finance Minister: Mainland eyes boost from ‘superpower’ Federal Reserve

China continues to shudder and it appears to be increasingly fearful. With the Saudis rattling their debt sabers, Europe looking at another summer of crisis (of various kinds), and just a general sense of instability in world economy and geopolitics, China hopes that the Fed will take the Red Dragon “into consideration.”

There is no doubt that China will be and is considered as Minister Zhu knows very well.

I’d love to know what the minister knows about the real Chinese economy.

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Ignorance reigns on Twitter yesterday, #Resistcapitalism trends, Cluelessness abounds

If you are “resisting capitalism” you are “resisting human progress.” You are resisting the voluntary exchange of goods and services. You are resisting opportunity for people to make a better life for themselves through hard work. You are trading that opportunity for a system which rewards the uncreative and unambitious. (And perhaps you understand this.) You are fundamentally resisting FREEDOM and LIBERTY, because “economic liberty,” the right to do what you want with that which you own, is not separate from social FREEDOM and LIBERTY.

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The Panama Papers Leave Red Faces Among China’s ‘Red Elite’

That’s not the Communist Manifesto. It’s a bank book.

China is the Ultimate Crony Capitalist State. There is the ruling class (a “communist” ruling class) and there is the rest of the country. Graft is built on graft. Bribe begets bribe. In a country of 1.3 billion that’s a lot of shadiness. And such a situation contributes to instability, economic and political.

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A Desperate China Begged Fed For “Plunge Protection Playbook” As Its Market Crashed

Back when the market was a market.

We are in the midst of a giant, and unprecedented experiment in monetary policy. Central banks around the world have inflated asset prices in an effort to create a “wealth effect.” What they have created is a situation where those with assets, the rich, have done extremely well while the non-asseted have had to watch while life has gotten harder.

This asset inflation is not sound however and the “wealth” it has created is illusory.

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China developing tech which will predict ‘crimes’ using consumer data Etc. (Welcome to the hive mind)

Statism, the religion which sometimes passes for secular socialism/crony capitalism/fascism is about the collective. It is about control of the collective. It is about creating a hive mind in many respects.

And if one strays from the hive, if one thinks for oneself, one suddenly becomes an enemy of the hive. Soon after the dissident is vanquished and the swarm swarms on.

China is about the hive, not the bee. And the same might be said for this country if we are not very careful.

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Faith in ‘healing’ central banks has faded says “central bank of central banks”

“We may not be seeing isolated bolts from the blue, but the signs of a gathering storm that has been building for a long time,” Borio said.

The above comes from the Bank of International Settlements in Switzerland.

In mid December we asked;

Are we feeling the first winds of the next large economic storm right now?

The winds sure did start to whip at the beginning of this year.

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China (The Ultimate Crony Capitalist State) to lay off five to six million workers

Without knowing the specifics it is probably pretty safe to say that laying off 5-6 million state workers in China, the Ultimate Cony Capitalist State is probably necessary. Saying that, one has to consider the disruption to these people’s lives and what that might mean politically. Even in a country of 1.3 billion people 5-6 million workers is a pretty big chunk. What do these people do? Presumably many bought living quarters in the great Chinese property bubble.

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China is a “monumental doomsday machine”

Remember THESE are the guys making many of the economic decisions in China.

It looks like David is tracking right with us on the China question. The economic Jenga game which exists in the Ultimate Crony Capitalist State has begun its crumble. Right now world central banks are hoping, like in 2007-2008 with subprime housing, that China can be walled off. That contagion won’t spread any more than it already has.

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Recession sign is in play and has 81% accuracy

In December as junk bonds began being really buffeted we asked whether a recessionary storm was on the way. Now even the guys on TV are openly talking about a recession.

It’s funny. No one ever wants to say “recession.” But what is happening in oil and in China reminds me very much of the rumblings and tumblings in the US housing market in 2007-2008. I can remember screaming at the TV as the real estate bulls were trotted out back then.

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“The largest macro imbalance the world has ever seen.”: China banks may lose 5 times US banks’ subprime losses in credit crisis

Consider that according to Bass (one of the few investors to win big during the last recession) the exposure of Chinese banks (and others) to their domestic property bubble is 5 times that of US banks during our recent bubble. China’s economy is still 2nd to the American in terms of size. Consider the impact of a property bubble 5 times the size of ours in an economy which is smaller than ours. Consider also that China is run by a Communist Party which is very keen on staying in power and has a history of using extraordinary force in times of crisis.

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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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