Inflation Calls BS on the
China “Miracle”
http://albertpeia.com/inflationinchina.htm
{ For the first
time I’m constrained to label a piece by Mr. Summers wishful thinking and a
u.s. government propaganda piece at best. While aptly pointing out chinese
corruption and fraud as is particularly pervasive in america, he conveniently
ignores the success of their primitive, basic, simplistic capitalist business
model of low costs (primarily labor, materials, etc.) fueled particularly ab
initio by american greed. Go to any store and pick up nearly any product and
the likelihood of ‘made in china’ is upwards of 95% (then as well, as with
apple, taking into account components). Clearly, Mr. Summers lacks depth
concerning costs of tooling, retooling, and manufacturing generally. As regards
their nominal communist system, I remain staunchly opposed to the invariable
lie of communism, although the meaningfully lawless (‘too big to fail or jail’)
and corrupt, oligarchical crony faux capitalist welfare dependent failing
system in america is hardly a laudable alternative. http://www.albertpeia.com/112208opocoan/ricosummarytoFBIunderpenaltyofperjury.pdf
http://www.albertpeia.com/112208opocoan/PeiavCoanetals.htm http://albertpeia.com/fbimartinezcongallard.htm }
‘The following is an excerpt
from the latest issue of Private Wealth Advisory. In it, we outline in stark detail the
single biggest threat to investors’ wealth today. Over 99% of investors fail to
grasp these issues. But the consequences for those who miss this, will be catastrophic, possibly a
30%+ loss of portfolio.
Not subscribers. We made money during 2008
and throughout the Euro Crisis. And this next implosion will make us money to.
To join us… Click
Here Now!
As noted previous
issues of Private Wealth Advisory, the global central banks have begun
to realize that the success of their reflationary efforts has resulted in yet another
speculative bubble in asset classes, specifically stocks and real estate.
Nowhere are these
issues more evident today than in China.
Many commentators
have spent a great deal of ink proclaiming China to be the next great economic
power. While it is true China has seen dramatic improvements in its economy
over the last 30 years, my view has been and remains that most of the “growth”
of the China “miracle” is just a debt-fueled bubble built upon a loose
foundation of Government corruption and fraud.
The reason 99% of
investors fail to see this is because:
1) They
believe Chinese economic data as gospel.
2) They fail
to understand China’s economic policies from a political perspective.
Regarding #1,
Chinese economic data is absurdly gimmicked to the point of making the US’s
look clean in comparison (no small feat). Indeed, back in 2007, no less
than current First Vice Premiere of China, Li Keqiang, admitted to the US
ambassador to China that ALL Chinese data, outside of
electricity consumption, railroad cargo, and bank lending is for “reference
only.”
Put another way, one
of the top-level Chinese politicians admitted in private that China’s
economic data is a total fiction. However, the reality is even worse
than this admission. The truth is that even China’s electrical consumption data
is dodgy at best as it has become a political tool for the Chinese Government to
illustrate its “growth” much like China’s GDP.
The reason for this
economic gimmicking pertains to #2 above: the political perspective of China’s
economic data. As a communist regime, China’s government has one focus and one
focus only. It’s not economic growth for growth’s sake, nor is it improving the
quality of life for China’s population.
No, China’s
Government is obsessed solely with remaining in power.
The reasoning for
this is that a Government job remains the easiest, cushiest means of becoming
wealthy in the People’s Republic. Case in point, last year Chinese officials are
known to have stolen at a minimum the equivalent of $157
billion.
The CDIC report,
which was obtained by the Economic Observer newspaper, suggested that nearly
10,000 luxury homes had been sold by government officials in Guangzhou and
Shanghai alone last year.
It also claimed
that an astonishing $1 trillion (£630 billion), equivalent to 40 per cent of
Britain’s annual GDP, had been smuggled out of China illegally in 2012.
Economists and
experts cast doubt on the figure, but said the flow of money from China was
dramatic. Li Chengyan, a professor at Peking University, suggested that a
total of roughly 10,000 officials had absconded from China with as much as £100
billion.
To put the above
numbers in perspective, this theft is equal to roughly 2% of China’s total GDP.
On a per official basis, we’re looking at roughly $15.7 million… not over the
course of a decade but in ONE year.
In contrast, the
average college graduate in China makes $2,500 per year. So you’re talking
about an average theft equal to over 6,250 years’ worth of work for a college
educated Chinese civilian.
A few other
indications of just who is getting ahead in China:
Immediate family members of Premiere Wen Jiabao control assets
worth at least $2.7 billion.
Gong Aiai, a deputy chief of a county bank, (not even a major
bank) was found to have assets worth $160.2 million.
Zhang Xiuting, an anticorruption official,
is currently under investigation for amassing 19 properties along with his
former wife.
In simple terms, many if not most of
the people who have gotten wealthy in China over the last few decades were
corrupt Government officials or those close to them. In this light, you can see
that China’s Governmental policies are all really aimed at one issue: keeping
the Government in power by keeping the Chinese population content enough not
to demand real change.
All other issues (economic growth, improved air quality, stimulus
projects, etc.) are secondary to this issue. And the single biggest threat to
Chinese officials’ abilities to live high on the hog is inflation.
throughout the globe in the coming months.
History has shown us countless times that you cannot print money
without prices soaring. There is not one single instance in which currency
devaluation has not done this. And the US Federal Reserve is now printing
$84 billion every single month.
I’m sure you’ve noticed prices have begun rising already. This is only
going to be getting worse going forward. Which is why now is the time to be
preparing ourselves and our portfolios for this. Inflation can take its time to
arrive. But once it does… things move very very quickly.
If you’re concerned about inflation… and want to learn more about
simple bit highly effective ways you can shield yourself from it…’
Best Regards,
Graham Summers