The Dragon that Blows Bubbles

Dragon Blows Bubbles http://thechildrensillustratorstudio.blogspot.com/2013/04/a-dragon-blowing-wind.html

Dragon Blows Bubbles
Children’s Illustrator


China projects an impressive image of strength, discipline, and complete control of its domain and surroundings. How much of the latest iteration of China is real, and how much is whole-spun fantasy?

If you are intelligent and discerning, you will look beneath the surface layers of propaganda, to the layers of existence where things get done, needs are met, and emotions are fulfilled, frustrated, managed, or allowed to run riot.

Corrupt tyrannies such as China and Russia are built upon multiple layers of propaganda, strategically constructed statistics, censorship, corruption, and brute bloody force. So what is the reality behind the dragon’s facade of strength, discipline, and total control?

Everything You Know About China is Wrong — Especially if You Live There!

If one is aware of the widespread corruption and the deep legacy of byzantine incompetent mismanagement, the way things are done in China strikes most knowledgeable, objective persons as self-defeating.

“Nearly everything we are told about China’s rise is wrong …in fact, the very core of China’s supposed might—how China makes things—is riddled with risk,” Haft says in the preface.

… Chinese companies are quite casual in their business practices. It’s typical in China for a firm to keep multiple sets of books—numbers for your investors, numbers for the taxman, numbers for the local government, and still other numbers for your partners.” What would land you in jail in the United States or EU is normal business practice in China.

The rule of law, the foundation of a capitalist economy, is not the same in China, where enforcement of its many laws is “extremely spotty, and often depends on whom you know and how much you are willing to pay.” The rule of law is far from perfect in America, but at least the players can count on contract enforcement and protection of intellectual property.

… In China, it typically takes two or three times as many firms as in the United States to make or bring a product to market. Several firms are required to do a job that should just take one, which in business parlance is called a fragmented supply chain. Plus in China there are the myriad number of middlemen to “glut the chain at each node,” he writes. In a globalized supply chain, a product may move through twelve, eighteen, or even more hands in China, he writes.

“Lacking the most basic elements of a modern, well-run company, China’s most advanced shipyard revealed itself to be a fly-by-night operation,” he writes.

… a lot of economic activity in China is useless, such as the “ghost cities,” and “glutting China’s property market with empty house and malls, excess infrastructure and manufacturing capacity.” This work also adds to the GDP.

__ China Myths

The weakness grows

This growing national fragility makes China more hazardous to the rest of the world, rather than less, of course. A desperate dragon could easily move from blowing bubbles, to blowing nuclear flames. China is good at espionage, sabotage, cyber-war, and mischief-making of all kinds — but it is not very good at building a strong foundation for a solid global future.

More on clarifying China:

China’s capital allocation system has been so highly politicized that hundreds of billions of dollars in precious, irreplaceable funds have gone to investments that will not pay for themselves. Sometimes it is state-owned enterprises or local governments getting access to huge amounts of credit for political rather than economic reasons; sometimes it is private sector loans that are driven by policy rather than fundamentals (China regularly tweaks the cost and availability of credit to prop up housing prices by luring more investors to buy real estate); as we see here, it can be through a system that fails to screen IPOs properly.

China is more of a bubble kingdom than a Middle Kingdom. We’re seeing housing bubbles, manufacturing bubbles, infrastructure projects that can never pay for themselves, malls that will never bring in enough revenue to cover the cost of construction, and whole regions (like the Northeast) where rust belt industries are on life support and state-driven lending for the construction of buildings that have no real commercial or residential use are the only things keeping the economy from tanking. There are so many bubbles, and they are so vital to the prosperity and thus to the political tranquillity of the country, that the government seems to have reached a place where it is equally unsafe to stand pat or to move.

China is at a political and economic impasse. The steps required to overcome the economic impasse worsen the political crisis and so, at the moment, China, despite its competent technocrats, its ambitious and activist president, and the extraordinary wealth it has created over three decades of astounding, world-changing growth, is paralyzed in the face of unfolding events. __ http://www.the-american-interest.com/2016/01/30/dithering-as-the-shadows-grow/

China – Land of Incompetent Corrupt Autocratic Ideologues

It is easy for most ordinary persons to maintain absurd myths about China and Russia, because they never think to look deeply enough. Even if a person lives in China or Russia — or even especially if they live in China or Russia — they will generally find it difficult to see beneath the surface layers surrounding them, to the more meaningful existential layers that support bubble worlds and bubble world views.

After the 2008 global credit collapse, China was forced to move from its massively lucrative export economy to its more shady, edgy, frothy and incestuous “stimulus economy” — the famous bubble economy of China today. An entire global supply chain was built up to feed the insatiable appetites of the expanding “bubble China.” In that way, “Bubble China” created a “Bubble Globalism” delusion that fed into the expectations of fools, doomers, politicians, and financial analysts the world over.

Here at Al Fin, we spotted China’s bait and switch almost immediately as it happened, and have in the years since been accurately pointing out the likely consequences of the “China Economic Miracle 2.0” that wasn’t. Most analysts have yet to begin to understand in 2016 what Al Fin analysts saw right away in 2008 – 2009. But that is to be expected. 😉

Demand for global oil & gas, and demand for global commodities, have followed the rough trajectory that we have been sketching out, as a direct result of China’s inability to credibly sustain its Ponzi-like scheme of bubble-within-bubbles.

http://www.marketwatch.com/story/us-hedge-funds-betting-big-against-chinas-yuan-2016-02-01

http://www.moneycontrol.com/news/world-news/china39s-currency-becomestargetspeculators_5231081.html

China’s woes are actually “much larger than the subprime crisis,” … the country’s currency could plummet by as much as 40 percent.

Elsewhere:

China’s leaders don’t even have to think about this — their own power takes everlasting precedence.

Investing in bubbles

Energy markets fail to respond to Russian head fake

Russia’s crisis without end and without solution

Just as in the third world, the people pay the price for their leaders’ corruption and lavish lifestyles

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2 Responses to The Dragon that Blows Bubbles

  1. jccarlton says:

    Reblogged this on The Arts Mechanical and commented:
    China is one big bunch of bubbles, all inside a bigger bubble. With the exception of the South coastal region from Shanghai to Hong Kong, much of the country still acts like it was back in the empire. Still hundreds of millions of people have tasted modernity and the potentials of the free market. If the ruling clique could let go China’s problems would disappear under a massive entropic growth the likes of which the world has never seen. But like ruling cliques in all of time the CCP won’t be able to let go. A cautionary tale for the US.

    • alfin2101 says:

      Thanks.

      The recent history of China is full of massive turmoil. Just like Russia, China has been through hell over the past century. Famine, civil war, multiple government collapses . . .

      The “end of history” myth lulls people into thinking that the bad times of the last century are past and gone for the dragon and the bear. Sadly, the addition of nuclear weapons and advanced delivery systems is likely to tell a different tale for those uneasy, fragmentation-prone empires.

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