It wasn’t so long ago that both the establishment politicians and approved globalist economists were telling us that China would lead the world out of recession, an assertion based on highly improbable Chinese GDP results and forecasts.
This despite the only too obvious fact that China’s reported growth over the last few years has been, to be kind, more political wishful thinking than hard economic reality.
However the latest news from that country would seem to indicate that the wheels are starting to come off their economic bus and that a crash of some severity now seems inevitable.
This is bad news indeed for the struggling West, particularly so, coming as it does, just after the Federal Reserve “suggestion” that it may begin tapering off quantitative easing (QE) beginning this autumn.
That Chinese stock markets have fallen sharply is not what politicians want to hear – anymore than the news that stock markets in Britain, Germany and France have resumed their slide downwards as a consequence.
Tellingly it is reported that following the global financial crisis in 2008-09, that China unleashed a huge monetary stimulus in an attempt to boost economic growth, but is now concerned that too much cheap cash had flooded its financial system.
Observers claim that the markets expected the Chinese government to apply economic stimulus measures again, presumably to increase the “flooding” by issuing yet more cheap money. However Monday’s statement from China’s central bank has temporarily scotched any such expectation, hence the negative market reaction.
China, just like the West, appears trapped between a rock and a hard place.
On the one hand it needs economic stimulus in the form of money “printing” (which has bought time at a price, rather than resolving anything), whilst on the other hand it knows that it simply cannot carry on “printing” money forever without debasing its own currency, triggering serious inflation and risking financial meltdown.
QE to China (indeed, the West) is like a drug that an addict “needs” to function, even though it threatens his wellbeing.
Clearly, in an economic sense, China is in no position to save anyone – perhaps not even itself.
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Why are British nationalists always following the latest “alternative economics” doomsday theory? Remember when Peak Oil was all the rage? What happened to that? China has grown a lot recently so now it’s time to slow down a bit – to about 6% per annum, hardly a crash. I think we need to learn from the past 50 years that the economic collapse is not going to happen. It’s just a long cycle of peaks and troughs in a general upwardly direction.
Although it is true that we have experienced a long cycle of peaks and troughs the present situation is unprecedented in terms of debt, not just national but on a global scale. I have yet to hear a logical explanation of just how the UK, USA etc are going to manage sovereign debt long term – even less so in the event of rate increases where even the servicing of debt could become impossible. Sorry but we are in uncharted waters just waiting to strike a rock – unless, of course, someone can come up with a plan to save the developed world from the consequences of its stupidity.
Most of Britain’s economic problems stem from our balance of payments deficit. We import more than we export. In Poole in Dorset ‘we’ manufacture and mostly export, a fantastic range of power boats called Sunseeker. The company is the pride of the town and the biggest local private employer. The boats have featured in James Bond and Spice Girls movies. The company has gone from strength to strength for the last forty odd years. Now calamity! The British owners have sold out to a Chinese company. We do not know their plans but it is not impossible that the company’s production could be moved to Hong Kong. The effect on Poole and part of the Isle Of Wight would be devastating. All the jobs, including the local suppliers would be gone! The Chinese are selling Britain Billions of pounds worth of goods and then buying up Britain with the profits! The British Democratic Party’s policies would instigate the biggest period of manufacturing growth seen in Britain since the Victorian Industrial Revolution, when we lead the world! For common sense Nationalist economic policies in Britain , JOIN the BRITISH DEMOCRATIC PARTY TODAY.
The ‘Austerity’ programe so beloved of the Eurocrats cannot be helping China’s economy, as most of the goods bought in Europe are manufactured in China.If people in the West have no money to spare for non-essentials, trade with China must fall off, so it is hard to see what other result could be expected.
Of course we mustn’t forget that here we are talking about Germans, French, Belgians, etc., whose ideas about trade & business are not like ours, & in fact defy logic at times.
If a country runs a trade surplus to stimulate its own output (or to avoid unrest due to unemployment) that means it increases its claims on other countries.
It can either directly buy assets abroad (maybe property), lend to government (US bonds) or take in foreign currency in exchange for more local currency (expanding the money supply) but the latter may create bubbles.
That is China’s position. It’s a bit stuck. If it stops acquiring dollars that’s the same thing as making its trade suffer. China would probably like to get rid of all the US government debt it holds before it loses money but a sell off would lower the price so they’d lose anyway.
Trade surpluses and currency wars have stings in the tail.
Join the BDP , at last a sensible site of people who care for our country instead of griffin and his glory hunters who have destroyed a party that really was changing British politics. Shame on them all !
What Adam Smith has missed is the fact that we not in one of the usual ups and downs which have occurred during the last 50 years. That’s why recovery has not happened.
We are at the end of a super debt cycle as in the 1920s. Debt in the West has doubled in the last 30 years. There has been some fall but not enough to allow another big binge. That’s why people are already talking about another property crash.
Adam Smith is correct about cycles – but there are longer term ones as well as the usual ten year affairs. Goodness he says people make false predictions about calamity which does not really happen. We’ve just had the biggest calamity since the 1930s! Has he not noticed? Of course it all depends on how big something has to be to be to qualify as a calamity. Matter of opinion.