The Truth About China: An Economy On The Verge Of A Nervous Breakdown

TBI ^ | 10/03/11 | Patrick Chovanec

[TigerLikesRooster]

The Truth About China: An Economy On The Verge Of A Nervous Breakdown

Patrick Chovanec, An American Perspective From China | Oct. 3, 2011, 7:29 AM

I just returned from a trip to New York, where earlier last week I gave a talk at the Council on Foreign Relations. The topic was the question on everyone’s mind these days: the outlook for China’s economy.

Over the past several weeks, a number of news reports and market figures have caught my attention, which appear to indicate that China’s economy may be approaching a crisis. I use the word “crisis” in the traditional (or medical) sense, meaning a critical turning point when tensions or contradictions are resolved, for better or worse — sometimes in unexpected ways. One potential interpretation of this crisis is that China is entering the terminal stage of a bubble, and that what we are seeing are the early signs of a much broader collapse. But it may not be that simple. I have been saying since the year began that China is due for a correction, and just last week I told the Globe and Mail that such a correction could be a lot worse than most people expect. How exactly the situation will unfold, though, and whether we’ve already reached a tipping point or not, remains to be seen. For the moment, I’m reminded of that song: Something’s happening here; what it is ain’t exactly clear. But — and this is the real point — something is happening, and people both inside and outside of China are right to be nervous.

[TigerLikesRooster]

What the new downward market pressure on the RMB does indicate, however, is that China — for so long a no-brainer destination for investment — has turned into a big question mark. And it suggests that at least some domestic Chinese investors who have been inclined to sock their money into empty villas and condos — or big stockpiles of raw materials — are now looking for a way out.

Interesting time.

[TigerLikesRooster]

P!

[Psalm 73]

And they’re stuck with trillions in dubious US bonds....

[dog breath]

I will not grieve for the business owner who moved operations over there leaving their American workers shafted or the investors they took their risk. Life is a gamble. This will unfortunately impact everybody, lots of innocent Americans and Chinese citizens, for them I would grieve.

[The Working Man]

An interesting article and it does strike a chord in me. It appears that like so many other times and places a spiderweb of interconnected occurrences is happening in China. They and we cannot place our finger on any one thing and say “Ah ha! Fix this and your problems go away.”

So this spiderweb or house of cards depending on which metaphor you like is poised to collapse. Pull the right string, touch the right card and there you have it. Economic Collapse followed by societal collapse and ending up with a whole lot of people dead or injured.

[SeaHawkFan]

China’s efforts to maintain a low value on its currency is devastating them in the long run, and that time is close at hand.