News & Analysis
China Runs Out of Money
Companies' cash is drying up, with dire consequences for their workers ... Unpaid wages in China ... Efforts to curb inflation in China are having some painful side-effects. A squeeze on bank lending has prompted some businesses short of cash to stop paying wages to blue-collar workers. Even the much-vaunted state sector is feeling the pinch. Work has all but ground to a halt on thousands of kilometres of railway track, and many of the network's 6m construction workers have been complaining about not being paid for weeks or sometimes months. – Economist
Dominant Social Theme: One thing is for sure, the Chinese communists know how to run a capitalist economy and have done a helluva lot better job than Europe or America! Something about socialism really gives people the "smarts."
Free-Market Analysis: The editors of the Economist "newspaper" – who never met a tin-pot dictatorship or dictator that they couldn't find some way to praise – have apparently "hit a wall" when it comes to China. That great hope of capitalism (Communist China) is broke and heading for a hard landing.
After singing the praises of China and its vibrant "free market" for years, the Economist editors have now run smack into reality, giving rise to this squib of a story that indicates the ChiComs are hitting the proverbial brick wall when it comes to their hyperactive and impossibly stimulated economy.
We're not supposed to understand this, of course. It's an elite dominant social theme, after all, that the ChiComs' murderous command-and-control economy has much to recommend it that the West's anarchic and "free" economies (sarcasm off) do not. Here's some more from the article:
Migrant workers from China's vast countryside are usually the first to suffer when employers find themselves strapped for cash. In February a revision to the criminal law made it illegal for a company to withhold salary if it had the means to pay. This has done little to protect the more than 150m rural migrants who perform most of the country's manual labour ... The $600 billion stimulus launched in 2008 is all but spent. Indeed, the central government has urged state banks to cut back on lending in order to curb inflation, which in the year to July reached a three-year high of 6.5%, before dropping to 6.1% in September.
In recent weeks a credit crisis in the eastern city of Wenzhou has led to the flight of dozens of businessmen, leaving thousands of workers at private companies unpaid. State firms are little better off. After two record years of track-laying, the problems now facing the railway-building industry are severe. The government has had a change of heart about rapidly expanding the high-speed rail network following a fatal crash of two high-speed trains in July.
But bank credit drying up has also played a big part. China Daily, an English-language newspaper, says many of the industry's migrant workers have not been paid for months. Complaints have been growing. A senior railway official quoted in the state media said workers at China Railway Engineering Corporation, one of the country biggest civil-engineering firms, had submitted more than 2,000 petitions to the authorities since July. Another newspaper, Economic Information Daily, said wage arrears and protests by rail workers had "alarmed" top leaders in Beijing. Only a third of railway construction projects were continuing normally, it said.
The power elite had evidently and obviously hoped to contrast China's "vibrant" quasi-controlled economy (their description) to the West's chaotic and uncontrolled one (their description). But China appears to be unraveling faster than expected. The Chinese central bank (state owned) doesn't seem to managing that ole "soft landing" very well.
In fact, as we've been pointing out for several years now, there's not going to be a Chinese soft landing. The rotting, empty Chinese cities and shoddy, tipsy skyscrapers, profligate and corrupt Chinese central bank, entrepreneurial flight (see yesterday's article) and rising civil violence across the country (so bad it's not being reported formally anymore) should be red flags (no pun intended) that explain what one needs to know.
The Chinese miracle is dead. It never existed anyway, anymore than the West's late-20th century consumer mania was a product of Anglo-American "genius." No, the story of modern directed history is the story of elite-controlled money stimulation and central banking largess. Control tens of trillions and you can control the world. And they have. Not just in the US but in China, too.
What is "real" in China? The current state of development? Or is it Money Power? The central bank, like Western central banks, has tens of trillions to float the pretense of the Chinese Miracle. Sure, the Chinese people constitute an ancient, wise and powerful culture. But you don't develop an entire country in 30 years. Do you?
Not in our opinion. Not without central banking super money you don't. But we are supposed to believe it anyway. Just as we are supposed to believe the big-brain central banking technocrats of the Chinese central banking authority can bring that large and populous country in for a "soft landing." Whatever that means. Would the elites lie to us? Would they?
When the bust comes – and it is coming – all three legs of the stool will have been knocked away. America, Europe AND China will be no longer capable of firing the cylinders of the modern central banking economy. The world will sink into the deepest depression it has ever known. Chaos and worse will sweep across the world. And what then?
Conclusion: Are the elites waiting in the wings with their next fancy project? And what will it be called? World government?
Posted by TPaine on 11/13/11 04:34 AM
"But you don't develop an entire country in 30 years. Do you?"
How long did it take for japan to become the second economy on the planet?
Posted by TPaine on 11/13/11 04:33 AM
Looks like you don't read the 'economist' much.
The economist never praises china. The stupid brits foam at the mouth every time they mention china. You see, china is likely to become the most powerful country on the planet while england is now an ex-empire and a second rate fascist/socialist monarchy.
As to your comments on china, they don't impress me much either. You sound just like the brits. True, there's no free-market in china. But as you know there's no free market in the stinking 'christian' west either. Yet at least the chinese don't pretend to be 'democratic' - unlike good old amerikkka.
Reply from The Daily Bell
Sorry we don't impress you As for the Economist editorsw, whether they foam at the mouth or not, they've been talking up the Chinese miracle for years. They never meant a demand economy they didn't take a shine to. The whole magazine is focused on the power of the state and state leaders. The political precedes the rest ...
Posted by nithsdale on 11/03/11 01:07 AM
Here you go again! The elites run everything. Christ sure left a heritage when he drove the money changers out of the temple and even when his apostles ran, deserted him and a money changer and taxer called Paul, had a roadside conversion and changed the direction of Christ's message to one of universal love for all people, the first impression could not be erased!
China never embraced capitalism, it purchased a veneer from its overseas people, hordes of workers they had expelled because they never would give up being busy little accumulators for themselves and families. That's right, the old emperors called them criminals because they hid their savings from Peking and succeeding regimes kept expelling them because they would not knuckle under. They took to boats, small and large and headed anywhere they could find next to no government, made themselves useful and prospered enough to continue whole dynasties all over the world co-operating with each other in a common purpose... no one was going to take from them what they had worked and earned! The Oversea Chinese for at least two thousand years! The Chincoms promised a new beginning if they went home and helped make China a nation among nations. Israel was used as an example.
Those who took the chance, took cash for their effort, up front. they built, made, collected and transhipped the goods all over the world... they had the network to do so and in twenty years, they stripped China of anything valuable that could be transported. When the Chincoms began acting like the oppressors of old, the OCs up and left and China is left with infrastructure and few who know what to do with it!
This is not a failure of capitalism but a victory. Chincoms said China needed it, wanted it... we, the OCs did it and then you thought you could subject us again and we left. The greatest Libertarians in the world are the OCs. When are you going to get that through your indoctrinated minds! You had better because the jews, the elites you flagalate continually, the other capitalists are like the OCs. They arrive, they do your bidding, give you what you want and when you show signs of wanting more, their life blood, they decamp! You have to take over and do it yourself. I hope you are up to the task!
Reply from The Daily Bell
Nithsdale, thank you for exposing us to this paradigm. It is a most peculiar and interesting one, that Overseas Chinese somehow run the world. From our observations, this is not true, but you are welcome to continue to believe in it, and again thanks for sharing ...
Posted by RF on 11/02/11 11:49 PM
The elites countries are bankrupting themselves with indebttedness .., this current human crisis is the result of global centrist thinking and promotion.The Chinese culture can survive without the fantasys money provides, Ours ( western global centrists) cannot, the elite , waiting in the wings will only distance themselves from the chaos with isolation, effectivly ending thier power to control the world.. The sound something makes if there is nothing to hear it..is none..There may not be enough left after the fact to govern... .
Posted by NAPpy on 11/02/11 10:57 PM
Are you suggesting that global central planning will work better than national central planning? If you are, then color me skeptical.
Posted by RF on 11/02/11 08:49 PM
Yes the new middle class will be angry at thier loss, but if they're not careful about thier feelings, they will join the previous middle class excecuted by Chairman Mao in post war China- life matter little in China's history... ..
Posted by rossbcan on 11/02/11 04:13 PM
"globalism" is a bad marriage, too much "compromise" to alien forces, interfering with correct choice, voluntary cooperation in areas of mutual self-interest and thus, survival.
Solution: Peacefully trade with all, entanglements with none. Collapse of global "governing" structures. National sovereignty, then, "we, the people" will assert "personal sovereignty" over our rightful affairs and property.
And states? They will either be our employees, focusing solely on common interest (all equally benefit and PAY), subject to free market discipline, competition for "services" or, wither and die by reason of "unfit to survive".
Posted by Nightcrawler on 11/02/11 02:57 PM
DB. And what then? This problem is global therefore it requires global solutions.
Posted by Mountainview on 11/02/11 12:31 PM
Who is running out of money? Some Chinese companies, but definitely not China Inc. Their current account surplus is ticking around a $ 30 bn monthly surplus, about half of the US deficit. So the title is a mis-namer. I would even say the squeeze is a sign of success of their "Volckerian" monetary policy.
Reply from The Daily Bell
Well, we disagree. We think the ChiComs are having a good deal of trouble with their "soft landing."
Posted by asparagui on 11/02/11 12:12 PM
It looks like the time I was using has inflated ever so slightly, to keep within the elves' time targets. Who are we to determine what exactly one minute is?
Posted by rossbcan on 11/02/11 11:51 AM
"The Chinese central bank (state owned) doesn't seem to managing that ole "soft landing" very well."
... what do they expect? Without "boots on the ground" in a particular environment, evaluating REAL price signals, REAL opportunities / pitfalls, REAL facts, risking their OWN resources (having a personal stake in correct choice), what you get is: garbage in, garbage out:
Click to view link
The chorus for "more freedom, more self-determination, less control" is planetwide, slowly but surely, becoming INSISTENT.
Posted by RF on 11/02/11 10:51 AM
A country that built a stone wall- walkway across it's entire country can survive without money again.. They have lived in a poverty for millinimums, it matters not to them.
Reply from The Daily Bell
Maybe ... or maybe those who have climbed painfully into the middle class will be very angry ....
Posted by Hoss on 11/02/11 10:02 AM
Ha, you dog, you!
Posted by Hoss on 11/02/11 10:01 AM
They are cutting and pasting passages right out of "Atlas Shrugged" in documenting the unraveling of the world.
The only way a worldwide depression can be forced upon us is if we continue to accept paper money (promises to pay the proceeds from slavery sometime later on) in exchange for real value. Will the world endure it another time?
Posted by asparagui on 11/02/11 09:58 AM
Just posting before Hoss. :-P
Here was an interesting article from Canada yesterday, about the 'necessity' of embracing R2P:
Click to view link
Posted by Hoss on 11/02/11 09:53 AM
Haha, the elves are time-warping.
Posted by Hoss on 11/02/11 09:51 AM
How fitting that sports is elevated from its usual place as a metaphor to an actual example in order to cover up the smell of the vomit spewed forth in that article. This has graduated from the cruel amusement of adolescents torturing a helpless animal (the clueless, helpless sheeple) to pure sadism.