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Thread: Charting China's Imminent Implosion

  1. #1

    Charting China's Imminent Implosion

    Debt is money spent in the present and an obligation to be repaid in the future. Given this, I thought I'd contrast China's population of young versus their obligation to be repaid in the future.
    The chart below shows the 0 to 24 year old Chinese population (green line) versus Chinese debt (red line) and GDP (black line). The 0 to 24 year old Chinese population swelled by over 300 million from 1950 to it's ultimate peak in 1991. Since that peak, the total population of young in China has fallen by 176 million, or a 30% decline in the number of children across China. Moving forward, the UN medium estimate hopes the formal elimination of the one child policy will simply slow the rate of decline in the population...but by no means will China's fast declining childbearing population (those aged 15-44) nor disproportionately young male population potentially be offset by a slightly less negative birth rate. Contrast that with the quantity of debt being forcibly injected into a nation that faces a massive imminent population decline.

    To put that debt into perspective, the chart below shows that total debt and annual GDP each divided by the 0 to 24 year old Chinese population. As of 2018, every child and young adult in China under the age of 25 is presently responsible for over $100 thousand dollars in debt while the annual economic activity (GDP) created by all this debt continues to lag ever faster.
    And the coming decade only worsens as the young population continues its unabated fall and debt creation (absent concomitant economic growth) continues soaring... building more capacity all for a population that is set to collapse?!?

    China's predicament and reaction to it are not particularly unique...but given China's size, the ultimate global impact of China's slow motion train wreck will be unprecedented... particularly as their 15 to 64 year old population is now in indefinite decline. Chart below shows annual change in Chinese 15 to 64 year old population, in both millions (green columns) and percentage (blue line).

    Massive overcapacity (thanks to over a decade of government mandated mal-investment) versus a ever swifter declining base of consumption does not add up to a burgeoning middle class or a happy ending.
    * * *

    More at: https://www.zerohedge.com/news/2018-...nent-implosion
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

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    Give a man an inch and right away he thinks he's a ruler

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  3. #2
    The Mandate of Heaven will be withdrawn, and the autocratic regime overthrown.
    The absolute confidence that China's political structure is permanent and forever is reminiscent of the absolute confidence in the 1980s that the USSR's political structure was permanent and forever. But the social contract that undergirds the Communist Party's absolute power in China is fast-eroding, and those who understand Chinese history sense the winds of change have shifted and the next revolution in China is already darkening the horizon.
    The story starts in the Song Dynasty, which reached its zenith in the mid-1200s.
    I've been pondering the excellent 1964 history of the Southern Song Dynasty's capital of Hangzhou, Daily Life in China on the Eve of the Mongol Invasion, 1250-1276 by Jacques Gernet, in light of the Chinese government's unprecedented "Social Credit Score" system, which I wrote about in May 2018: Kafka's Nightmare Emerges: China's "Social Credit Score".
    The scope of this surveillance is so broad and pervasive that it borders on science fiction: Inside China’s Dystopian Dreams (NY Times)
    China has turned Xinjiang into a police state like no other (The Economist)
    In the Song Dynasty, arguably China's high water mark in many ways (before the Mongol conquest changed China's trajectory), social control required very little force. The power of social control rested in the cultural hierarchy of Confucian values: one obeyed the family's patriarch, one's local rulers and ultimately, the Emperor.
    Author Edward Luttwak made the distinction between force and power in his fascinating book The Grand Strategy of the Roman Empire: From the First Century CE to the Third: power is persuading people to cooperate, force is making them obey.
    Power is people choosing of their own accord to comply, for reasons they find sound and that serves their self-interest; there is little need for the application of force.
    Power is highly leveraged; a relatively small police/military and judiciary is all that's needed. Force, in contrast, doesn't scale: it's enormously costly in capital and labor to monitor an entire populace and impose control and obedience.
    While the Song Dynasty had a police force, a judiciary and an army, the populace generally managed itself via an internalized secular religion that placed the father, civil authorities and the Imperial state at the top of a natural order that enabled the harmony of Heaven and Earth. To disobey would be to threaten the harmony that served everyone.
    In the early days of the Communist revolution (1949 to 1965), the majority of China's populace embraced the values and authority of the Communist regime, despite the hardships and setbacks of the Great Leap Forward (millions dying needlessly of starvation) and other centralized incompetencies.
    But the Cultural Revolution that was launched with Mao's blessing in 1966 was only embraced by the youthful Red Guards. The rest of the society had to be monitored and forced to comply with the mercurial injustices and arbitrary nature of the Cultural Revolution, which imprisoned millions of China's most accomplished citizens in various forms of forced deprivation: house arrest (the most mild); forced relocation to rural labor, re-education (i.e. torture) and imprisonment. Many were killed without even the semblance of a judicial process.
    In broad brush, the Cultural Revolution broke the power of the Communist Party and the government. Thereafter, the Party and the state only had force at their disposal.
    The rise of broadly distributed prosperity (Deng's "to get rich is glorious") replaced the failed power of Communist ideology with a new social contract: obey the party and the state and you'll become prosperous.
    If this new contract was rock-solid, why would China's government need the vast surveillance system they're putting in place for fine-grained control of the populace? Clearly, the leadership (Xi and his cabal) are aware that the prosperity is not permanent, nor is it being distributed evenly enough to harmonize Heaven and Earth.
    Sensing their lack of social power, they are turning to technology to create a vast system of coercion (force).
    Force is not a substitute for power. For this reason, the "Social Credit Score" system smacks of desperation. Xi et al. see the storm clouds on the horizon and are moving quickly to install an autocratic system of Total Information Awareness and Control.
    But China's history is clear: the culture and the people prefer a system in which power is maintained through social norms, not force. With Communist ideology a dead force, and prosperity about to wither, what's left? A system of autocratic obedience backed by Orwellian technology and gulags.
    The Mandate of Heaven will be withdrawn, and the autocratic regime overthrown. Perhaps the replacement social contract and political structure will still be called "Communist," but it will be a very different social contract and political structure than the current version.

    More at: https://www.zerohedge.com/news/2018-...lution-horizon
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  4. #3
    For close to 30 years, we’ve been told that China is going to overtake the US and the ‘West’ and become the largest and most powerful economy on Earth. Supposedly, the best the West can hope for is to ‘manage’ China’s rise and hope it liberalizes on the way to the top.

    It is clear why that sentiment continues to be so prevalent. China has been the fastest growing large economy in the world for decades. Since 2000, China’s economy has grown over 325%. That compares to 33% in the US and just 1% in Italy. Since 2008, China has been responsible for a stunning 54% of all global GDP growth (pdf). China has become the second largest economy in the world, roughly two-thirds the size of the US, the world’s largest manufacturer, the largest consumer of industrial resources, and the largest exporter. For decades, China has outgrown the US and the West in virtually every economic metric one can think of.
    Accordingly, the mythos of the ‘Chinese Model’ has emerged: so called ‘Capitalism with Chinese Characteristics.’ Yet no one can articulate exactly what ‘Capitalism with Chinese Characteristics’ means beyond platitudes about the ‘genius’ of China’s leaders and an even vaguer sense of ‘long term’ planning and ‘wisdom.’
    In truth, the secret to China’s economic success is simple. It is built on the largest and fastest growing debt bubble in modern history. Today, the ratio of Chinese banking system assets to GDP (a measure of financial system debt) is higher than it was in the EU on the eve of the 2011 European Sovereign Debt Crisis and nearly six times that in the US before the 2008 Housing Crisis.


    Looking specifically at corporate and household sector debt, China is reaching levels last seen in Spain before their financial crisis in 2011 or in Japan at the peak of their economic growth in the 1990s.

    What’s more, as we first explained here on The Sounding Line, the Chinese government likely ran a bigger deficit than the US last year when local government debt is included in the calculation. The whole world critiques the US government (quite justifiably) for its unsustainable spending, yet we hear very little about China’s similarly large government spending problem.
    Considering that most of these figures exclude China’s massive $10 trillion shadow banking system, notoriously lax accounting rules, and penchant for completely making up economic statics to create the illusion of growth, China is likely in the midst of the largest debt bubble in modern history.
    Much of China’s debt has gone into massive infrastructure projects throughout the country. Accordingly, China is now spending nearly 90% of GDP to build infrastructure despite persistent overcapacity problems and numerous ghost cities that still remain essentially empty years after they were built. Perhaps the most remarkable thing about China’s economy is that it is ‘only’ growing at an official rate of 6.7% despite such massive over construction and exaggerated economic numbers.



    More at: http://thesoundingline.com/taps-coog...rose-in-china/
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  5. #4

  6. #5
    Edwards' argument revolves around the claim with China's policymakers having had a very Ďgoodí crisis in 2008 (which was papered over only thanks to trillions in new debt, as Kyle Bass' tweet above shows), "since then, naysayers, such as myself, have been consistently wrong in projecting that policymakers would lose control and that a grotesque credit bubble would burst and lay the economy low."

    And yet, just like in late 2015, with the sharp swoon that followed China's devaluation and the bursting of its stock bubble, once again fears are growing about the Chinese economy slowing rapidly, even if few fear a bust. Instead, Edwards contends that as President Trump exerts mounting pressure on the Chinese economy via tariffs, "the worry is that a Chinese policy response will send the global markets into a tailspin, just as the August 2015 devaluation did."
    Which, in turn, reminds the SocGen strategist that, as we reported back in August, China just unveiled its first ever current account deficit, marking a seachange in the direction of China's capital flows, and making Chinaís policymakersí job even harder, once again bringing up the question: "Is luck running out?"


    Of course, the current account is just a symptom of an greater malady affecting China: namely a rapid slowdown in Chinese growth. Referencing the recent work of SocGen China economist Wei Yao, Edwards notes that the swing into current account deficit shown above is likely to be permanent. The result will be increased fragility in the renminbi "at a time when economic growth is slowing sharply, led by the industrial (secondary) sector (see left-hand chart below). And with export growth to the US only temporarily buoyed to avoid tariff hikes, this slowdown is likely to intensify."

    Even more troubling than China's brand new current account deficit is that as Yao highlights, the Chinese economy has slowed to the point that employment has begun to fall, most visibly in the slump in the latest employment component of the PMIs (both official and Caixin). And while the decline in manufacturing jobs has been apparent for a few years now (ie sub 50), but it is also the services sector that is now also shedding labor, making China's economic slowdown a "really serious" issue for policymakers.

    Meanwhile, the traditional response Beijing has activated in such situations - namely blowing a massive credit bubble, no longer appears to be an option as Chinese policy seems "to swing from feast to famine as policymakers grapple with the increasing instability of the credit bubble they have created."

    The main reason cited by the SocGen economists for the policymakers' reluctance to blow yet another bubble is concerns about how it will affect China housing market, where the issue is that Beijing's credit policy swings about so violently it destabilizes a housing market that is constantly prone to bubble tendencies (see chart below). This, Edwards believes, is due to few alternative investment opportunities - especially after the 2015 H2 equity market collapse.



    And here Edwards makes a bold assumption: "after the aggressively expansive monetary and fiscal policy of 2015/16, the authorities remain determined not to reignite the credit bubble." Perhaps, or perhaps Beijing simply has not had a reason to pull out all the debt stops just yet in the past 3 years, ever since the Shanghai Accord of early 2016 unleashed another debt tsunami across China, whose aftereffects have kept the economy afloat.
    Still, one can argue that Edwards is correct, especially when one looks at the overall public sector deficit which is already at 2009 crisis levels of 11% of GDP, as creation of China's shadow credit - the deus ex machina for the past decade - continues to be "strangled."


    As a result of these trends, the SocGen strategists describe Chinese policy easing in the face of the current sharp slowdown as only "half-hearted" and demanding for more stimulus from Beijing to avoid a sharp economic contraction.

    Which in turn brings us back to the start of this post, and the lesson from 1987, because whereas everyone is focusing on an entirely different set of problems, Edwards cautions that "no one expects a [Chinese] hard-landing" and asks "Why not?"
    If he, and Kyle Bass are right, we'll get the answer to this question very soon.


    More at: https://www.zerohedge.com/news/2018-...e-hard-landing
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  7. #6
    https://twitter.com/Jkylebass/status...56440353169408

    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  8. #7
    So basically China's fretting over its population grown and implementing draconian policies to combat it combined with a ponzi scheme social safety net will be its demise? That's the Cliff Notes version?
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.

  9. #8
    Quote Originally Posted by jmdrake View Post
    So basically China's fretting over its population grown and implementing draconian policies to combat it combined with a ponzi scheme social safety net will be its demise? That's the Cliff Notes version?
    That and other central planning caused economic problems.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



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  11. #9
    Quote Originally Posted by jmdrake View Post
    So basically China's fretting over its population grown and implementing draconian policies to combat it combined with a ponzi scheme social safety net will be its demise? That's the Cliff Notes version?
    Wait, you read all of that crap?

    It's sorta odd to read how China is allegedly imploding yet our own government, with our savior Trump at the head, is working very hard to emulate their social control culture.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

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  12. #10
    Quote Originally Posted by devil21 View Post
    Wait, you read all of that crap?
    Naw. Just the stuff in bold and the figures. You can ace a lot of university classes with that simple formula.

    It's sorta odd to read how China is allegedly imploding yet our own government, with our savior Trump at the head, is working very hard to emulate their social control culture.
    Have you read Animal Farm? It's like we're living the last chapter where the pigs start looking like humans and the humans start looking like pigs and nobody can tell the difference.
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.

  13. #11
    Quote Originally Posted by jmdrake View Post
    Naw. Just the stuff in bold and the figures. You can ace a lot of university classes with that simple formula.

    Have you read Animal Farm? It's like we're living the last chapter where the pigs start looking like humans and the humans start looking like pigs and nobody can tell the difference.
    Be careful. Shillsmyth highlights various lines for that exact purpose but leaves out the important metrics, knowing that you'll only skim and take away the points he wants you to take away.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  14. #12
    Quote Originally Posted by devil21 View Post
    Be careful. Shillsmyth highlights various lines for that exact purpose but leaves out the important metrics, knowing that you'll only skim and take away the points he wants you to take away.
    I didn't highlight anything in these posts, feel free to follow the links and see the original articles.
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  15. #13
    Quote Originally Posted by devil21 View Post
    Be careful. Shillsmyth highlights various lines for that exact purpose but leaves out the important metrics, knowing that you'll only skim and take away the points he wants you to take away.
    Noted. But in this case I actually agree with the takeaway points. China is indeed facing a problem of their own making from a self created population implosion to massive debt from building "ghost cities" for said dwindling population.
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.

  16. #14
    Quote Originally Posted by jmdrake View Post
    Noted. But in this case I actually agree with the takeaway points. China is indeed facing a problem of their own making from a self created population implosion to massive debt from building "ghost cities" for said dwindling population.
    The ghost city narrative is so 2010. China has removed the one child policy (it's now two and for ~1.3b people!) and is moving toward a consumer economy. Those cities were built to bring in the outlying farm worker's kids as they reached maturity. Where is the evidence that they are still ghost cities?
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  17. #15
    Quote Originally Posted by devil21 View Post
    The ghost city narrative is so 2010.


    Quote Originally Posted by devil21 View Post
    China has removed the one child policy
    China's one-child policy, and now two-child policy, has conditioned the population to shun large families.
    In a generation that grew up without siblings, a one-child mind-set is deeply entrenched. Maternity-leave policies have been expanded but some women say taking leave twice is a career impediment. An All-China Women’s Federation survey found 53% of respondents with one child didn’t want a second.
    Even without birth limits, China’s economic development would have reduced fertility rates, says Martin Whyte, a Harvard University Chinese-studies expert. That has been the pattern elsewhere in the world: When incomes rise, the sizes of families tend to go down. -WSJ
    If the nation drops birth policies now, says Whyte, “China will learn what many other countries have learned—that it is much more difficult to get people to have more babies” than to force them to stop having them.

    More at:
    China's Low Fertility Rate And Birth Restrictions Set Stage For Disaster



    Quote Originally Posted by devil21 View Post
    and is moving toward a consumer economy.
    Even more troubling than China's brand new current account deficit is that as Yao highlights, the Chinese economy has slowed to the point that employment has begun to fall, most visibly in the slump in the latest employment component of the PMIs (both official and Caixin). And while the decline in manufacturing jobs has been apparent for a few years now (ie sub 50), but it is also the services sector that is now also shedding labor, making China's economic slowdown a "really serious" issue for policymakers.
    Quote Originally Posted by devil21 View Post
    Those cities were built to bring in the outlying farm worker's kids as they reached maturity.
    LOL

    Quote Originally Posted by devil21 View Post
    Where is the evidence that they are still ghost cities?
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  18. #16
    Quote Originally Posted by devil21 View Post
    The ghost city narrative is so 2010. China has removed the one child policy (it's now two and for ~1.3b people!) and is moving toward a consumer economy. Those cities were built to bring in the outlying farm worker's kids as they reached maturity. Where is the evidence that they are still ghost cities?
    From June 2018.

    https://www.abc.net.au/news/2018-06-...y-debt/9912186

    As for removing the 1 child policy, after that has been so culturally ingrained through government force it's not going to automatically reverse itself just because the numbers are raised.
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.



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  20. #17
    Linked article claims clearly that the cities are slowly being inhabited. Perhaps not all of them...yet...

    But not all ghost cities stay ghost cities.

    Ghost Cities of China author Wade Shepard — who has been documenting the existence of ghost cities since he first stumbled across a sprawling vacant metropolis in 2006 — sees these cities as simply in a phase between construction and inhabitability.

    "A lot of these cities that got their start in 2000, 2003 — they are pretty much developed — if you go there now you will not know that they were a new city," Mr Shepard said, citing a number of examples including some of China's most economically viable cities.

    "If you look around, you will think this is a normal city and just assume this is the way it always was, not knowing that 10 years ago people were calling it a ghost city, 20 years ago it was just apartments and villages."

    Mr Shepard said the same kind of construction phase had been seen throughout global history when developed nations first expanded, just not on the same excessive scale as in China.
    Last edited by devil21; 10-25-2018 at 10:22 PM.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  21. #18
    Quote Originally Posted by devil21 View Post
    Linked article claims clearly that the cities are slowly being inhabited. Perhaps not all of them...yet...
    I never claimed otherwise. Do you think that building megacities when the plan to fill them decades later in some cases and keeping power running in empty buildings is a viable economic strategy?
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.

  22. #19
    Quote Originally Posted by jmdrake View Post
    I never claimed otherwise. Do you think that building megacities when the plan to fill them decades later in some cases and keeping power running in empty buildings is a viable economic strategy?
    Depends on what their future economic plan is. China is at the beginning of their economic expansion and the early stages of becoming a super power. You can't compare it to our situation as a declining empire at the end of an economic cycle, even though that is the frame of reference that we know. Take the narratives of "China's implosion" with a grain of salt. Hell, take everything Shillsmyth posts with a grain of salt. He's got an agenda.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  23. #20
    Quote Originally Posted by devil21 View Post
    Depends on what their future economic plan is. China is at the beginning of their economic expansion and the early stages of becoming a super power. You can't compare it to our situation as a declining empire at the end of an economic cycle, even though that is the frame of reference that we know.
    LOL

    Quote Originally Posted by devil21 View Post
    Take the narratives of "China's implosion" with a grain of salt. Hell, take everything Shillsmyth posts with a grain of salt. He's got an agenda.
    And you don't?
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  24. #21
    Quote Originally Posted by devil21 View Post
    Depends on what their future economic plan is.
    So you think centralized economic planning is a good thing? Because I don't.
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.

  25. #22
    Quote Originally Posted by jmdrake View Post
    So you think centralized economic planning is a good thing? Because I don't.
    What China does with their economy isn't my concern and none of us have any impact on it, any way. I just comment with observations and forecasts on topics like this.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  26. #23
    Quote Originally Posted by devil21 View Post
    What China does with their economy isn't my concern and none of us have any impact on it, any way. I just comment with observations and forecasts on topics like this.
    I wasn't asking if you were concerned with what China does as opposed to if you thought it was a good idea economically. I think it's a good idea that China is investing in Africa, for example, instead of trying to dominate it militarily like the U.S. is doing with AFRICOM. I don't think building ghost cities under a plan to fill them later is a good idea. .And it's certainly not a good idea if your population is not growing. Yet...bring in rural people to the ghost cities. And...who grows the food? Anyway, in 10 years we will see if it was a good idea or not.
    9/11 Thermate experiments

    Winston Churchhill on why the U.S. should have stayed OUT of World War I

    "I am so %^&*^ sick of this cult of Ron Paul. The Paulites. What is with these %^&*^ people? Why are there so many of them?" YouTube rant by "TheAmazingAtheist"

    "We as a country have lost faith and confidence in freedom." -- Ron Paul

    "It can be a challenge to follow the pronouncements of President Trump, as he often seems to change his position on any number of items from week to week, or from day to day, or even from minute to minute." -- Ron Paul
    Quote Originally Posted by Brian4Liberty View Post
    The road to hell is paved with good intentions. No need to make it a superhighway.
    Quote Originally Posted by osan View Post
    The only way I see Trump as likely to affect any real change would be through martial law, and that has zero chances of success without strong buy-in by the JCS at the very minimum.

  27. #24
    According to the latest data from China's SAFE, net FX outflows from China picked up to US$21BN in September (vs. US$11BN in August) and the highest since mid-2017 with Goldman noting that "outflow might have increased moderately further in October, but has unlikely reached the level seen in late 2015/early 2016 in our view."



    It may not have reached the furious outflows from the peak of the post-depreciation period, but as Goldman concedes, this risk will rise over time if the authorities continue to resist interest rate differential-driven depreciation pressure.
    And, to counter the risk of a return to China's dramatic outflow phase, Reuters writes this morning that China is likely to resume selling some of its vast $3 trillion currency reserves to stop any precipitous fall through the psychologically important level of 7 yuan per dollar "as it could risk triggering speculation and heavy capital outflows."
    Indeed, as noted in our morning wrap, on Friday the yuan hit a fresh 22-month low of 6.9641 against the dollar. Additionally, earlier in the session the offshore Yuan tumbled as low as 6.9769 after the PBOC fixed the onshore Yuan north of 6.95 and weaker than consensus expected, at which point however Beijing intervened, when at least one big China bank sold the US dollar in the afternoon, prompting the yuan to reverse loss, and triggering stop-loss orders by short-sellers of the yuan.

    And with the Yuan just inches away from the key level of 7.00 vs the dollar, dropping 6% against the dollar so far this year, reflecting its slowing economy as well as pressure on exports due to an ongoing tariff war with the United States, Beijing is starting to sweat.
    According to Reuters, to counter any potential spike in outflows, "a defense of the yuan at 7 per dollar would be mounted to show investors that the authorities wouldn’t allow a runaway market."
    “If the yuan falls through 7, there could be a rapid depreciation of the exchange rate”, said one policy insider. “In order to avoid such a passive situation, the authorities are likely to step in the market to stabilise the yuan.”
    And, according to a second Reuters source, should the Yuan hit 7.00 against the dollar, the PBOC would make a stand, rather than allow any sudden break through a psychologically important level to feed pessimism among investors.
    “The central bank will intervene - intervene directly or indirectly. It’s necessary. The central bank has many policy tools. We cannot let the yuan fall past 7, as it would have a psychological impact on people,” the second source said.
    That said, China is now juggling two opposing tasks, with Beijing’s priority now to ward off a sharper slowdown in the economy, which grew only 6.5% in the third-quarter, while at the same time it is worried about the impact of the weaker currency on capital outflows.
    To address the slowing economy, the central bank has cut reserve requirements for lenders four times this year, and is expected to ease monetary policy further, while on the fiscal side the government has pledged more tax cuts next year to support growth. Those actions, however, have caused the yuan to weaken to just shy of a decade low.
    Should the PBOC loosen monetary policy further to depreciate the yuan more in order to bolster sagging economic growth, policymakers will be on guard against spooking markets as the exchange rate nears 7 per dollar, a third Reuters source said.


    And now that China has set an intervention "trigger" bogey, FX traders will quickly test just how serious Beijing truly is. Expect the USDCNH to hit 7.00 in days, if not hours. What happens after could set the tone for risk returns for a long time.

    One glimpse at the last two days price action suggests the PBOC is already stepping in as traders test Chinese officials mettle...


    More at: https://www.zerohedge.com/news/2018-...rops-below-700
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment



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  29. #25
    Quote Originally Posted by jmdrake View Post
    I wasn't asking if you were concerned with what China does as opposed to if you thought it was a good idea economically. I think it's a good idea that China is investing in Africa, for example, instead of trying to dominate it militarily like the U.S. is doing with AFRICOM. I don't think building ghost cities under a plan to fill them later is a good idea. .And it's certainly not a good idea if your population is not growing. Yet...bring in rural people to the ghost cities. And...who grows the food? Anyway, in 10 years we will see if it was a good idea or not.
    No, I don't like central economic planning in general, but that doesn't mean I haven't studied it and understand what they're doing in order to know what to anticipate. In a lot of ways I'm kind of past the stage of having opinions yay or nay about what governments decide to do within their own borders. My opinion isn't going to change it so I'd rather spend time and energy being able to anticipate what is to come. I don't like surprises

    My thought on the ghost cities is simply that China (like many other countries) was running up their debt bubble while they still could to fund infrastructure that will be needed in the future, before the whole debt system implodes (by design) and a global monetary policy reset occurs. That has been something of a global trend, not just China. The Fed and QE, ECB and BOJ buying up bonds, deficits galore everywhere. It's been a rush to fund whatever each region thinks will be important in the future. Unfortunately, our own hasn't been used to build up a lot of infrastructure, except in Agenda 21/2030 target cities, and has instead been used to build the surveillance state. Do remember that China plays the long game. The lifting of one child policy will have an effect as their government "encourages" their population to breed more and the emergence of their own middle class leads to the same population boom the US had back when we had a strong middle class. The bankers run the same playbook no matter where they are, since populations are generally the same easily programmed entities no matter where they are. As for food production, again, the emergence of China will very closely resemble our own history with much of the manual labor being replaced by automation and machinery, not people in wicker hats hoeing fields by hand. They will also increase food imports. "Food" for thought here....why do you think the push to get Americans to go more to a plant based diet? The idea of "bug protein" being floated? And emerging "Americans eat too much protein" narratives? It's because our own breadbasket areas that supplied high quality meat and crop products to Americans will instead be shipping those products to CHINA.
    "Let it not be said that we did nothing." - Ron Paul

    The entire internet is the domain of paid shills and bots. If you don't know this by now....

    Israel, under control of the Crown and, ultimately, the Vatican, own the USA. If you don't know this by now....

    Talk to people about liberty. You won't find it on websites, you won't find it in politicians.

    Visiting the Outer Banks of NC?
    Outer Banks NC Fishing Boat Rentals

  30. #26
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  31. #27
    Hong Kong homeowners who bought flats in the last several months have seen their value decline as much as 20% in a matter of weeks, according to HSBC, sending values into negative equity which had only left the region in early 2017, reports the South China Morning Post.


    Hong Kong’s famously expensive property market has started to feel the strain lately from a fall in demand caused by rising interest rates, a struggling stock market and fears about the impact of the US-China trade war.
    Negative equity occurs when a home loan exceeds the market value of the property, and has not been seen in Hong Kong since early 2017. -SCMP
    "Theoretically, buyers who obtained a mortgage of 90 per cent of the flat’s value will fall into negative equity once home prices have dropped more than 10 per cent," said Chief Vice-President at mReferral Mortgage Brokerage Services, Sharmaine Lau.

    The largest losses are likely to be flat owners who paid sky-high prices for tiny apartments in older tenaments, according to industry watchers, who add that banks tend to become very conservative in valuing such properties when the real estate market takes a turn for the worse.


    "Lower valuations will first apply to flats that have less marketability. Banks’ valuations, which are supported by surveyors, are made in line with market conditions," said Cushman and Wakefield head of valuation and advisory services for the Asia-Pacific region, Chiu Kam-kuen.
    Meanwhile, SCMP was able to find apartments at older housing developments which are now valued at HSBC far below their recent selling prices.
    A 234 square foot unit at 36-year-old Lee Bo Building in Tuen Mun, which was sold for HK$3.82 million on October 8, is now valued 20 per cent lower at HK$3.08 million. In North Point, a 128 square foot unit at 41-year-old Yalford Building, sold on August 29 for HK$3.1 million, is also valued a fifth lower now by the bank, at HK$2.48 million.
    In Kowloon, a 210 square foot unit at 34-year-old Hong Fai Building in Cheung Sha Wan sold for HK$3.87 million on June 20 is already down about 13 per cent, according to HSBC, at HK$3.38 million.
    The spectre of negative equity is only going to get worse, according to Louis Chan, Asia-Pacific vice-chairman and chief executive for residential sales at Centaline Property.
    “More homeowners will fall into negative equity next year as flat prices may decline by 10 per cent,” he said. -SCMP
    The precipitious drop may force companies such as the Hong Kong Mortgage Corporation (HKMC) to adjust their mortgage insurance program in light of market developments.

    More at: https://www.zerohedge.com/news/2018-...egative-equity
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  32. #28
    As Chinese markets began to wake, yuan just broke below 6.98/USD for the first time in this downswing, despite PBOC liquidity withdrawals sending money market rates spiking (to squeeze yuan shorts).

    This has the distinct smell of capital outflows...



    It has been a one way street since Golden Week...


    More at: https://www.zerohedge.com/news/2018-...pital-outflows
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  33. #29
    Overnight, China revealed the latest confirmation that its economy is slowing more conventional wisdom realizes when the National Bureau of Statistics reported that the manufacturing PMI fell to 50.2 in October - on the verge of a sub-50 contraction - down from 50.8 in September and below the 50.6 estimate. It was also the lowest number since July 2016 with almost all sub-indexes showing weaker growth momentum. The NBS non-manufacturing PMI also missed, printing at 53.9, and declining from 54.9 due to the weaker services PMI.


    Commenting on the report, Goldman said that "growth faced increased downward pressures in the manufacturing sector" and highlighting the continued decline of trade-related indexes, noted that "weaker external demand has possibly weighed on activity growth in the manufacturing sector." Meanwhile, weaker auto sales also translated into soft auto manufacturing activities and dragged on overall manufacturing growth.
    Goldman also blamed "slower property transactions" for the drop in the services PMI, which was further impacted by the the drop in the stock market : the NBS observed that the October PMI reading for the securities industry was the lowest this year, excluding the Chinese New Year months.
    But most importantly, Goldman - as well as most China watchers - took the report to indicate further accommodative policy would be ushered in by Beijing to support contracting economic growth (Goldman expects one more RRR cut before the end of this year).
    Perhaps hearing this request, on Wednesday China’s leadership vowed that further stimulus is being planned to prevent the broad slowdown from taking hold. Admitting that Beijing's cocktail of fiscal and monetary stimulus has been behind the curve, a Wednesday Politburo meeting chaired by the president said that "downward pressure" is increasing, and the government needs to take timely measures to counter this.
    "Changes are happening even though the economy is still stable. Downward pressure on the economy has grown, some companies have a large number of operational difficulties, and some risks and hazards that accumulated over a long time are revealing themselves" the Politburo statement said, promising to take preemptive action "in a timely manner."
    "The leadership is paying great attention to the problems, and will be more preemptive and take action in a timely manner," according to the statement. The Politburo reiterated that China will maintain a proactive fiscal policy and a prudent monetary policy, while trying to find solutions to help private businesses.
    And yet, despite its reluctant promises, China finds itself in a dilemma: any further monetary easing will devalue the Yuan below 7.00 against the dollar, a critical level to both the PBOC, and to the Trump trade hawks, who will see breach of this key level as confirmation of currency war and react appropriately. Meanwhile, further fiscal stimulus would mean even more debt in a nation which already has over 300% debt/GDP, will record a record number of corporate bond defaults in 2018, and has been grappling with periodic on again, off again deleveraging campaigns which have so fair in reducing China's debt load.
    And just in case stabilizing the economy was not enough, China has been grappling with a plunge in its stock market in recent months. Meanwhile, China's economy continues to contract and Beijing needs to respond, or else suffer the worst possible outcome: social insurrection as millions of angry, unemployed workers find themselves without a job for an extended period of time.

    In response, earlier this month, the government and central bank introduced a raft of measures to stabilize sentiment, adding to steps to boost liquidity in the financial system, tax deductions for households and targeted measures aimed at helping exporters. Alas, those measures have yet to have much effect.


    More at: https://www.zerohedge.com/news/2018-...ge-contraction
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

  34. #30
    Earlier this week, first China's official PMI and then the small-company focused Caixin PMI report confirmed that while China's economy was slowing, it had yet to contract, as the (famously goalseeked) indices printed just above the 50-level which separates expansion from contraction.

    Not so according to a third, and more objective measurements of Chinese manufacturing. According to an index based on satellite imagery, China's manufacturing output contracted in October, refuting the official narrative of modest but persistent expansion.

    The China Satellite Manufacturing Index compiled by the U.S.-based firm SpaceKnow, which uses satellite imagery to track activity levels across thousands of industrial sites, slipped below 50 in October for the first time since June 2017 according to Bloomberg. As with the official purchasing managers index, 50 is the dividing line between expansion and contraction.



    More at: https://www.zerohedge.com/news/2018-...racted-october
    Never attempt to teach a pig to sing; it wastes your time and annoys the pig.

    Robert Heinlein

    Give a man an inch and right away he thinks he's a ruler

    Groucho Marx

    I love mankindÖitís people I canít stand.

    Linus, from the Peanuts comic

    You cannot have liberty without morality and morality without faith

    Alexis de Torqueville

    Those who fail to learn from the past are condemned to repeat it.
    Those who learn from the past are condemned to watch everybody else repeat it

    A Zero Hedge comment

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