We normally don’t excerpt blocks of copy as large as the one in this story, but we’re making an exception in this case.
Zhou Ruijin is the former editor of the official People’s Daily. He’s a powerful pro-reform elder in the Chinese Communist Party. So it seems wise to pay attention to his words when he warns his cohorts about the potential “loss of government credibility and disintegration of popular support.”
The China Media Project translates Ruijin’s dire warning:
Lately I’ve had a deep sense of anxiety as I’ve watched one occurrence after another of tensions between governments and people at the local level, which have become more an more acute. A number of officials at the local government level have abused their powers, again and again trampling the human rights, right to life and rights of property of ordinary people. Those affected turn to petitioning, make contact with the media, or go online to report their stories. If they turn to legal proceedings and other like methods in an attempt to protect the legitimate rights granted them in the constitution, they find that these channels for voicing their interests are blocked. What’s more, local governments will level such charges as “slander” (诽谤) or “extortion of the government” (敲诈政府) to go after them, “arresting them across provincial borders” (跨省抓捕) or simply locking them away in mental hospitals claiming that they are “psychological unsound.” Not long ago, Wuhan petitioner Xu Wu (徐武) was lucky enough to escape from a “mental hospital” after being locked up for four years, but then was openly dragged away by Wuhan police from the courtyard of Guangdong’s Southern Television (TVS) and again committed to a mental hospital. There was a buzz of public opinion around the country, but authorities in Hubei simply responded by suppressing media reporting.
Administrations in the United States always release bad news late on Friday afternoons after most reporters have taken off work a little early and lined up at their local watering holes.
Apparently Saturday morning is the Chinese equivalent.
Today China announced that inflation in June his 6.4%, solidly above the 6.2% analysts had expected, clocking in at a 3-year high (according to Bloomberg).
This is one of Beijing’s big worries, and it contradicts recent comments from Premier Wen Jiabao that inflation in China had been whipped.
If the Chinese act quickly, they can probably get a good deal on a warehouse full of “Whip Inflation Now” buttons and bumper stickers left over from the Ford administration.
On the other hand, we might want to hold on to them because it’s pretty sure that we’re going to need them soon, too.
Between checking the health of patients who have already achieved room temperature in Europe and trying to peer through the smoke and mirrors obscuring China’s economic health, these are very busy days for the analysts as Moody’s.
“China may have understated the debt load of local governments by Rmb 3,500bn ($541bn), a hole in public finances that is likely to inflict damage on banks, Moody’s Investors Service said on Tuesday.”
Earlier in the year, China reported that provinces, cities and counties owed Rmb10,700bn. Analysts dutifully praised the government’s authoritative reportage and nodded in agreement that the debt levels were manageable.
But now Moody’s is having second thoughts. The rating agency upgraded China’s sovereign rating just last year, but now says its audit may have missed a swath of highly “problematic” loans.
“We conclude that the potential scale of problem loans at Chinese banks may be closer to our stress case than our base case. This is clearly a negative trend for creditors,” said Yvonne Zhang, one of the authors of the report.
Business Insider has done a great job of exposing the mystery of the Chinese ghost cities. They earned that appropriate name because they are new, modern cities without a living soul in residence.
This week BI was at it again, publishing the latest satellite images of new ghost cities that have popped up since they first covered the story a year ago:
We paraphrase. That’s not quite how the President worded his offer to bail out the Greeks, but that sums it up in language that’s been stripped of all the political gobbledygook.
CNBC reports on the President’s generous offer to bail out the Greeks by digging our own hole a little deeper:
Gravity seems to be exerting is inexorable force on the U.S. currency. What once went up is now reaching new lows.
The dollar fell to a one-month low against a basket of currencies on Tuesday and a record low against the Swiss franc after a Chinese official said the greenback would continue to weaken versus other major currencies.
Remember that old Chubby Checker record from the early 60s called Limbo Rock? One of it’s lyrics asked the musical question, “How low can you go?”
The dollar index fell to a low of 73.601, the lowest since May 5, while the greenback fell to 0.8328 Swiss francs on trading platform EBS a record low.
“China has been growing its share of U.S. securities quite aggressively in the past, and the threat that they will be selling these holdings has always been there,” said Adam Myers, senior forex strategist at Credit Agricole.
“But this is not a credible threat as a sell-off will lead to a steepening of the U.S. yield curve which will hurt the U.S. and the Chinese, who are dependent on the U.S. economy. But I do agree that the dollar is headed lower in the long term.”
The Chinese and American economies are like Siamese twins who don’t get along. They’d really like to be separated, but they both know they can’t survive the drastic surgery the separation would require.
There are at least two certainties concerning addictions. One is that they can only be sustained by escalation. The other is that escalation is ultimately unsustainable.
As a nation we are beginning to find this out. Currently we have an addiction to cheap goods and even cheaper money. And it just so happens we can get both of these from the same place. That place is not called the great wallet of China, but it would be rather funny if it were, and not entirely inaccurate.
According to the “experts” China’s booming economy will surpass that of the United States. Possibly, according to those same experts, by as soon as 2025. It’s a juggernaut that cannot be stopped.
Of course, there’s an alternate point of view that gets very little play in the media. And that point of view is that the Chinese economy is built on equal measures of high technology, cheap labor, smoke and mirrors.
CNBC exposes some of the cracks that are starting to appear in the facade:
Stocks are up, the VIX is down and Dear Leader is in charge of America. What is hell could there be to worry about?
Gary Shilling, author of The Age of Deleveraging, has a few things troubling him. Things like coming trade and current account deficits in Japan, a hard landing in China, a continuing housing crisis that will see another 20% fall in prices, an oil shock and the European sovereign debt crisis. He never gets to the latter in the video, but we know it’s #5.
Next Media Animation, a Taiwanese company that creates animation and animated news has created new cartoon mocking President Obama as a lapdog of sorts to Chinese President Hu Jintao.
It’s disgusting that Barack Obama has brought our nation to this level. The appeasing, the bowing, the poor negotiating, the “respect” given to statist regimes, has caused leaders of other nations to disrespect him, as a man and as a president.
This nation is crumbling from within, economically, and in the view of the world’s nations. Hopefully 2012 will deliver a president with some backbone.
Citizens Against Government Waste has created a video that’s that depicts a Chinese professor, in the year 2030, lecturing to students on why the United States of America collapsed. The reasons are the ones we are now fearing, yet not reversing: stimulus spending, health care policy, government intervention into private industry, high taxation and government debt. The professor ends his lecture with “Now they work for us,” and the students laugh. And laugh.
It’s no laughing matter.
Here is the transcript of the video:
[Bejing, China 2030 A.D.]
Why do great nations fail?
The Ancient Greeks…
the Roman Empire…
the British Empire…
and the United States of America.
They all make the same mistakes,
turning their back on principles that made them great.
America tried to spend and tax itself out of a great recession.
Enormous so-called “stimulus” spending,
massive changes to health care,
government takeovers of private industries,
and crushing debt.
Of course, we owned most of their debt…
so now they work for us.
R. Arthur Beckles: Barack Obama is President of all Americans, not just of African-Americans! It’s difficult for all working class Americans – black, white, brown, etc. African-Americans who don’t want to vote for Obama, can feel free to do so. But do they think that their lot...
keith: wow. Whos got the bigger stick, My @!(k is bigger than yours, your country my country, my countries poor is richer than yours. the truth of it is that in the end the civilians are going to feel the brunt of this economic downfall. i live in the U.S. and there are over 200 multi...
Anonymous: I agree with many of the above. I know people from both the US and Europe that are on disability because of health problems and the one person in Europe is receiving much more help than are the US citizens.
Sunday: BTW, before you ask why two adults only received $240 a week for unemployment, just remember that you can only receive unemployment if you were laid off. If you were fired or quit, you cannot receive unemployment. In my case, I got ill, and FMLA only applies to people who have worked at a...
EriktheRed: I like how it’s “fortunate that the crisis is confined to the E.U.”- what’s unemployment in the U.S. right now? How about the millions of foreclosures you’ve had already? Tent cities, anyone? Deficit spending at $3.5 bn a DAY? HMM!
David, Self Defense Retailer: Really? Why in the world are they doing that for Gitmo detainees? A whole soccer field? Outrageous! Maybe the EU really won’t last.
David, Stun Gun Supplier: It’s the next bubble. I wonder what Romney has to say about this. Obama’s made himself clear in his typical way. It’ll probably be worse than housing when it does.
See I told you: Who didn’t see this coming . Put a communist organizer in the White house and just wait. To bad the American populace lacks true intellect or is it just that the dummies out number the smart 20 to 1. Probably the latter. Obvious who controlls the vote with those kind of...
James: After a seriously obese person has had fat removal procedures, his/her flesh sags where excess fat used to be. World population should never have risen this high. It will be reduced. Through lower birth rates; or by more traditional means: war, disease, famine, cannabalism. I’m not a...
JoAnn: I have a real problem with Obama borrowing money to send to Greece when so many people in this country who have lost long term jobs,lost homes,living on the street, little or no food. I vote to take Obama and his family if they want to go and DROP them on a desert island some where just so...
Arkansas Slim: Update. Oil hit 105 per barrel yesterday, 2 20 12. Gas US Avg => 3.50 per gallon. Cloward Piven Theory of Economics: Tipping point of US Electorate => 51%. Nevada odds for Obama RE Election 6/10 on thier sport boards. EU/Greece set to collapse, dominos arranged. Socialistic...
kkl: America is now turning mediocre no more fun no more trips or vacations 100 bucks to fill gas tank and pasta and ramen noodles for life for usa there is no more hope no more fun just work go home work go home fill up gas tank eat shit and work no more fun thanks for nothing nobama i hope you...
Chris Marshall: Hi Janice, I just wanted to know, how would you be able to get a good investment out of the Whole Life Insurance if it costs really high? The projections usually given out by “Financial Advisors” that 12% is the usual earnings specially if it is invested in TSX or NYX...
Agent: Walt Disney funded Disney World by using the cash value in his whole life policy. You can’t say that was a mistake. Buy term for a specific need/period and buy whole for a permanent need or if you need your life insurance past age 65.
Forex Agent: As a financial advisor what I tell clients is that the main purpose of a life insurance policy is to provide a death benefit. Whether term, some sort of permanent life insurance, or a combination of the two is most appropriate depends on a number of factors including the...
Cindy: Before long they will, if not already, invade and keep track of everything you do including the privacy of your own home exploiting you and demanding that you worship them. You will be powerless to control it so you will have two choices…… ;kiss butt or commit suicide.
Space Cadet: don’t be rediculous. Glass Steagall is a red hearing. This problem is much farther reaching, from before the Nixon Administration. He took the US off the gold standard which was the pillar of the US dollar, and the reason it is the world currancy. He did that because the US...
Hervy: Very good advice, same as I give when talking to people. Clark Howard and Dave Ramsey are both good sources of information that is inline with what is written here at EC. Another good website that i tell people to go to in order to get an easy calculation of how much insurance to buy is...
BenP: This is part of the cannon fodder that will be used against Obama in 2012 and his administration. It’s not that he is horrible (he is) or worse than any other President (about the same), its that examples like these can be used to show the devil you know has got to be worse than the...
Lauren: Personally I think you sound like an idiot. The NIH spent 55,000 to promote a vacine that does not exist and, one of which, they would not fund to discover in the first place(yes, it’s ture look it up). If someone lives in an area with a lot of storms they already understand the...
Matt USA: I know I’m a little late to this discussion, but I think that the economic collapse scenario has changed somewhat in recent weeks. It appears that Europe will go first, followed by the United States who has gambled and lost on a TARP style European bailout. The real question for...
Kim: Marcy, Rep. Alan Grayson said in the attached youtube video in 2010 that Fannie Mae and Freddie Mac both own stock in MERS. How much stock and when did they own it? Would this explain their current actions? Did they move loans out of MERS and into Fannie Mae for the tax payers to bail out?...
China: @Serban Enache , You Are Wrong We are In Lot Of Trouble and you Know This , Starting In 2012 We will have Many Many Different Problems , We The Government Is Paying For All This Building , We Know Our Own Citizens Can’t Afford This Type Of Live Style , but we are building it Any way...
City On a Shining Hill: “The problem with socialism, i.e., the failed economic system being adopted by so many nations in the world today, is that in funding entitlement programs voters want in their politicians and having governments fund retirement, health care, education, etc, is that...
Rider I: How the US has historically used mineral rushes to get it out of Deficits and stop foreign economic take over. In the US’s historical past the Druids have used and impressed upon the US leadership to use mineral resources to stop economic warfare, along with military take over....
Financial Collapse: Everyone needs to get this correct… (REPOST ON TWITTER, FACEBOOK) America is controlled by the 3 privately owned states (district of columbia, the city of london, and the vatican.) Each has it’s own flag, pays no taxes and has it’s own laws. All 3 are part of...
Tm Newman: I graduated with my B.A. in psych/soc a year ago. Interned teaching math and English to fourth and seventh graders. The school shut down due to lack of funding. All the kids got shipped off to public school. I can’t find a position in my field, and there are no teaching jobs in...
hefsmaster: Been a slow couple weeks since the downgrade. News wise that is. But it gave me more time to coin a phrase. You’re a true libertarian when you piss everybody off. Which explains why everybody thinks were nuts and relegated to being a third wheel in politics. Well call me and...
PeacefulPatriot: The worst is yet to come in the realm of austere measures to keep up appearances on the global markets. The truth though is quite obvious to the sane members of society, we have reached a break point and it is the Systemic collapse of the post-industrial globalization bubble. All...
Serban Enache: Pearl Harbos was orchestrated as an operation years before WW2, by the British empire in conjunction with Imperial Japan. The japanese elite didn’t surrender even when they did not have any hope of wining, let alone after Hiroshima, though I don’t agree with the two...
hefsmaster: No, despite these guys obvious failings. He is exactly right. You think japan would have attacked us without any allies. Pearl harbor is an effect from a cause. Without hitler, point is mute. By the way lee, you haven’t copied anything in a while. You a congressman?
Serban Enache: This Larry Summers has some nerve. Is he trying to say that Hitler attacked Pearl Harbor?
Gordon Shumway: Two questions: 1. Why is it a felony for an individual to print money, but evidence of a keen insight into the arcane world of macroeconomics when a bankster does the same thing, only on a vastly greater scale? 2. Since those who are running the Fed and Treasury are supposed to be...
tim: i for one will not pay a single dr bill my sickness is caused by our government let’s take it back already raped and brusied lady liberty is not what she stood for so many years lets scrap the statue that means so little any more freedom is prison in america try being disabled for 20...
tim: well about time someone in power noticed what wool us seniors have to face daily after food shopping go to my drug store same tricks and and cost is up 25 percent then dr co-pays up another 20 % what will we do when money social security doesnt go far enough to keep us healthy
Space Cadet: Does it matter how we got here? The people in charge ‘think’ they are so smart that they will finesse our way out, while staying in power and making a ton of money for their pals. We will be left to pick up the tab and clean up the mess, as usual. My neighbors just got...