What the heck is going on INSIDE China? The answer is that HISTORY is going on inside China. In the past the government central planners could isolate and control information. This led to a central control of information. Data was opaque or filtered by Government Communist Party Leadership.
In 2015 22% of the nation are members of the communist party. The vast 78% of the nation is not a member of the communist party. As one may surmise the minority ruling party, has become fear based, concerned that instability will result in their imprisonment or death. Mismanagement of the national economic interest is high on the list.
The nations currency has not been market based, in which the currency worth and value is determined by the free market place. China’s currency has been printed as paper money, and controlled by inside communist planning teams, who manipulate the free market and attempt to peg or set the world price for its own currency.
To an greater extent China central planning, has attempted to secure release of economic data, environmental data, virtually all data – to filter the data and release it to effect stability inside the nation starting with political stability. Instability is death with by the military with extreme measures.
In 2015 market forces stripped the antique opaque system of its powers. Central planners could not longer peg the price of stock markets and currency markets. Trillions of dollars from all around the world began to protect themselves from the opaque information that was inaccurate and incomplete. The free market is able to develop its own realistic projections of more accurate data on any market irrespective of how central planners seek to dish out opposing facts and data. Manipulation of economic data is no longer a stabilization policy but rather a policy for enormous market volatility as stability is lost. Trust in the rock solid information arriving from open free markets is the only stable way to conduct world affairs in 2015.
China reformers are slow to moderate transparency over older models that worked in the past in the opaque and filtered system. The questions before world markets include:
* Is the Chinese Government stable or about to experience yet another historic REVOLUTION so common to Chinese history. All having nothing to do with affairs and nations outside China.
2. Is the aging demographic in China and the 4 to 1 male to female population requiring WAR as a way to focus attention of the community award and off the inward view?
3. How much of a GAP between the Chinese Communist Party statement China is securing a 7% growth in 2015 when in fact the world free market is betting growth in China is far far below that number. Lack of integrity in reality based data opens markets to crash and wild volatility. Trillions invested by China to stabilize its markets has not stopped the downward free market slide, as over one TRILLION DOLLARS has left China investing in only 120 days and TRILLIONS more is pulling out right now. The last out loose the most. In the opinion of a growing number of economists.
4. China’s Currency is seen as funny money. The Currency main worth and value is the US DOLLAR holdings that China possesses. The commodities China devoured as a hedge, are now a glut on the free market, as commodity prices plunge where China is now loosing TRILLIONS of dollars having bet on the wrong side of free markets, China tried to manipulate in commodities. Both in short positions and forward contracts as well as high priced assets held in China, the portfolio of China wealth has crashed and is still crashing. The deflation spiral in China is worse than the 20 year two generation crash for JAPAN and the resulting long decades of deflation to follow. Delivering in China has just started and the bottom of its currency true value may require issue of an entire new currency model to reset trust and confidence. The flight out of China includes stocks, bonds, currencies, commodities and partnerships. The bet is risk off in China and that does not appear likely to change inside the still opaque manipulated information, no one trusts or believes any longer. The free market has buried China in 2015. We predicted this hard crash starting in the post 9/11 market space and for a decade to follow. For the reasons set forth here.
5. Market Erosion. China has seen surrounding nations taking a % of its manufacturing business. The future belongs to robotics where virtually every single job performed by a human can be better performed by unfolding robotic technology at a fraction of the price. Already up to a third of Chinese business of the past decade has permanently and forever left China for nearby neighbors. In 2020 India will pass China as the leading number two economy of the world. Dealing in other nations presents customers with options on price, quality and ease to get business down. China with rising labor and overall costs, has suffered quality consistency, increasingly complex terms of engagement, and rising prices. Options presented by nearby nations will take up to 50% of China’s business over the coming decade – permanent shifts in buying patterns, that will never return. Robotics will retire China labor advantage globally. The model of “manufacturing your way up and your way IN ” is unlikely to favor nations who forge their policy on such strategy long term. National policy to rapidly develop entrepreneur class in Nation ( hopefully using CEO SPACE INTERNATIONAL ) as the policy tool, is the most stable way to reforge long term economic stability and growth.
Transparency in free market reporting is required to secure stable economic forward platform agenda’s. Opaque reporting is harshly punished by the world markets, and no nation can today or any longer manipulate against these free market forces. They lack the resources to compare to the power of the market place itself. Failure to appreciate these facts positions a nation on a spiral downward, with a crash that is followed by deflation for decades. Social unrest almost always follows failed economic policy. War is often a distraction to keep the minds of the people off holding central leadership and policy makers responsible. WAR however no longer repairs failed economic policy. WAR makes such policies worse. No one wins in war. No one. Policy makers choosing such an option do so in extreme short sightedness and selfishness itself now so transparent to the market place. There is no longer any where to hide from failed policies.
Nations with epidemic public corruption, have a foundation of quick sand and will not rise up a future structure of economic vibrancy. Transparency, free press, and independent judiciary supporting rule of law, with corruption regulated, breed substantial national policy for growth. Lacking these tools nations stand on quick sand and are sinking in plain sight.
China is in REVOLUTION. Will the REFORMS from old failed policy to full transparency, honorable and integrity driven reporting, free market and open market policies, be fast enough and with ethical sufficiency? Lacking such reforms the deflation spiral, the hard crash, the massive unemployment, the winding down of a short term boom, into an environmental and declining economic consequence to failed policy over decades, will result in what ?
We predict and have predicted war. We see now reason for the communist party to reverse course, tell the people the true accurate and full information, to reform fully and really, and to rebuild China all over again. We feel China planners will stretch the recent gains painting pictures that any downturn is strictly temporary and China’s growth over 20 years ( a short time in historic terms ) was a a “one off” never again to be repeated. If that is in fact true factually, WAR seems to be the way to stimulate economic gain, reset China failed birth policy and demographics, expanding territory, population, and new wealth acquisition as spoils of war. How else would planners move forward in a crashing market space? The option is riots and to be held accountable and killed. Killing millions they rebalance population and stay in power. Historically leaders always take the low road.
We want a bright better future for China. The one option is reform and systemic upgrading that is massive and immediate. Without transparent new systemic reporting modeling, the free markets will continue to pound China markets into what may lead to WAR.
In our opinion.
We have suggested exploring with licensed insurance representatives moving from market investing and into safe harbor insurance diversified investing. Read GAME PLAN by KEVIN FREEMAN for other options you may be well advised to know about and explore.
Thank you for updating your information from one retied investment banker economists opinion. If only that.
Berny Dohrmann – Chairman CEO SPACE INTERNATIONAL