China’s goose is cooked - and dim sum!
The world is focused on the U.S. economy, and worried about our housing crisis, the credit crisis, and the stock market crisis. While no one is paying attention to the China crisis.
The China crisis? The conventional wisdom, is that China has been supporting the U.S. economy and our wars, through the purchase of our government (and it appears sub-prime as well) debt. That without China’s continued support, the U.S. economy will collapse, and in essence China controls the U.S. economy and our foreign policy.
Hah! China’s goose is cooked - and dim sum! Who made China what it is today, an economic juggernaut, producing lead toys and poisoned dog food? You did. The American people.
And when you stop buying Chinese goods, because the U.S. economy collapses and you lose your jobs, who gets hurt? That’s right - China.
That’s why a Chinese bank recently invested billions of dollars, into Bear Stearns, the folks who brought you the hedge fund mess. It’s why China has poured many billions more into our bond market. China can’t afford the United States to collapse.
If you lose your job, how many Chinese lose theirs, think about it?
If you think there was tremendous housing speculation in San Francisco, check out the real estate in Shanghai, China’s economy is over inflated.
Where did much of the money from our housing boom go? China. Who bought much of our government and corporate debt? China. Who owns the title to a worthless U.S. economy? China. Shall I go on? Yeah, I think I shall.
The reason the U.S. economy is worthless, is because its foundation has completely eroded, the slightest financial tremble can collapse the entire structure. Witness how, a relatively minor problem in sub-prime mortgages, caused the credit market to close. The world, and the smart money knows this, it’s why the Euro has taken off the last few years. No one, besides our deluded selves, has confidence in the U.S economy.
The foundation of the U.S. economy (any industrial economy for that matter) is built on four cornerstones, Resources, Manufacturing, Technology, Education. We have depleted our resources, out-sourced our manufacturing, given away our technology, and our education is sub-par. There is nothing left to support the U.S. economy. Now back to China…
China’s economy has been growing for some time now. It all started when U.S. corporations, sold out the American middle class, and moved their manufacturing to China. The Chinese left their farms, moved to the cities, and began working in factories.
The Chinese economy grew, our C.E.O’s got rich, the American middle class got screwed. But wait, it’s the American middle class who buys all the lead toys and poisoned dog food, Wall Street we’ve got a problem! Problem? What Problem? There’s a solution to shrinking middle class incomes.
Your house is an interest free credit card! Great news, you can borrow hundreds of thousands of dollars, and buy all the lead toys your heart desires.
The relaxation of credit standards in the U.S., and the subsequent housing boom, led to astronomical growth rates in the Chinese economy. Tremendous profits for our C.E.O.’s. But, you know, eventually all good things must come to an end.
All that growth, and high energy prices, is very inflationary. Plus, throw in massive government borrowing, to support a losing and illegal war, and you get higher interest rates. Which leads to higher house payments, which leads to a housing crisis, and well you know the rest of the story.
China is faced with a dilemna. Allow the U.S. economy to collapse, and go down with us, or bail us out by pouring money into our stock and bond markets, and give up their surplus. It’s really that simple. Either way, China get’s hurt, that’s the China crisis.
Most probably, China will choose the middle road, keeping our economy on life support, while their economy cools. For China it’s probably a good thing. Hyper economic growth, is un-manageable, corrupting, and causes tremendous social changes. Meanwhile, China can work on developing trade with Russia, Central Asia, and other developing countries, to replace its dependence on the U.S. economy.
In the meantime China won’t allow the United States economy to collapse, in the meantime we can figure out how to rebuild our economy, in the meantime we can stop lying to ourselves.