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Old 08-17-2018, 03:31 PM
Danny B Danny B is offline
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Join Date: Oct 2012
Location: L.A. Ca.
Posts: 4,326
Fallout from low wages

China moved 300 million + self-sufficient peasants off the land and, into the cities. This wasn't a natural, organic change. It had to be paid for with enormous State debt. Now, there is no looking back. If China wants to keep all these millions working, it has to create and maintain employment. China may dream of being a world power but, it must keep it's people employed. Jim Rickards says that China will sacrifice it's stock market to keep employment going.

China will continue to break all the rules just to keep going. State debt is way past 300% because organic growth just isn't there. It is all financed by State credit.
"Shen Weipeng is a 29-year-old trust manager in Beijing, working in one of the highest-paid vocations in China. His after-tax income last year was about 260,000 yuan (US$38,000)."
"Even as households have been borrowing more, data indicates they have been spending less. Banks’ outstanding loans to households jumped 19 per cent year on year in May and 18.8 per cent in June, but China’s overall retail sales growth rate dropped to a 15-year low of 8.5 per cent in May"

To get the most for your money, you must work where the wages & prices are high AND, spend where the wages & prices are low. The wages in China are just too low. Without foreign markets, China shrinks. The PBOC printed up more than the BOJ, ECB, and FED combined. Sovereign bonds are paid back with money skimmed off in taxes. China, like most of the world, was counting on a wage-price spiral to deflate away the pain of paying back the debt. As China's foreign markets shrink (from low wages), China must rely on money printing to support the sovereign bond market. Skimming taxes off wages just won't do it.
The trade wars are all about exporting unemployment.

8/17 China vows to control debt despite fresh stimulus for cooling economy – AFR
China must continue to print to keep jobs going.
China must stop printing to preserve it's bond market.
The ECB must stop printing to try to preserve it's bond market.
The ECB must continue to print to preserve it's banking system.
8/17 Bond default in Xinjiang the latest sign of stresses in China’s financial system – SCMP
8/17 Trump’s trade war is rattling China’s leaders – New York Times

Yeah, I'll bet. They are most worried about social stability.
Armstrong said that emerging markets go first. America will struggle along until the beginning of 2020. The emerging markets are definitely going.
Both China and Turkey are fighting the currency speculators. They will run out of ammunition unless they are willing to sell gold.
8/17 Turkey slashes capacity of banks to bet against struggling lira – CNBC
Erdogan has feces-for-brains. He can murder and incarcerate ANYONE inside Turkey. He has made the logical jump that he can control those outside Turkey. The bond markets have told him to GET STUFFED.
America won't sell him the F-35s because he just doesn't have the money to pay for them.
Time to update your scorecard. Turkey seemed to be sliding down the fastest. After Venezuela, of course. Now, there is a new contender. Keep in mind that Spanish banks will crater when Turkish debt defaults. Just the same, Italy is seen as the next blowout.
Now, Poland is a contender to be the crash du jour.
8/17 Poland, the next turkey? Spotlight on the zloty and external debt – Mish
You can well imagine that default contagion is coming from MANY sources.

8/17 Hyperinflation has destroyed Venezuela – Gold Telegraph
Actually, socialism destroyed Venezuela. Socialism seems to bring "leaders" with a peculiar brand of stupidity. Chavez fired experienced oil execs and put his cronies in. Oil production has crashed.

Globalism and the corporatocracy used regulatory capture to rig all markets in their favor. Naturally, the loser was the common man. Parasites can't suck rocks. They need to suck blood from an actual producer. The health of the host is of no concern until the blood stops flowing. The parasite is now printing up mega-tons of debt that it intends to load up on the host. The markets will eventually come to the conclusion that the host can't bear the burden. The latest pronouncement from the Italian GOV sent a shock through the markets,,,, by stating the obvious.
The corporatocracy is not about to give up power. The host has quit reproducing. In the coming default cascade, the corporatocracy will be reduced to a fraction that is commensurate with the earning power of the host.
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