CHINA THE WORLDS WILD CARD !!!
What could go wrong?
Well let me tell you what has already gone wrong.
China is a commuist economy. That means transparency as known in western market space does not exist- at all. Is Chinese currency worthless. That is the ultimate end game question.
Today we have a ten year recovery from the worst melt down and recession since 1929. The recovery is FRAGILE and not strong yet.
China had to devaluate its currency to stay Ihe game at all.
To sustain order and growth the two communist respected agenda’s they infused untold money following the crash into infrastructure. The problem is the Chinese system is opaque and outside customs of tradition and regulations.
So the loans developed from thousands of banks and tens of thousands of shadow bank lenders. Today 500,00 billion is known to be bad loans not repaying their principle and interest. This number however is a tip of an ice berg in China financial sectors.
The 20 TRILLION DOLLAR shadow banking industry is murky to say the least. In recent years the banks have packaged their crap loans and sold those as good performing real assets to shadow bank syndicates and banks around the world own those note packages today.
The problem – which I keep writing about related to the DEBT BOMB is liquidity. If the musical chairs of passion these bad loan packages around comes home to roast – meaning economics always rebalances from system abuse – banks will have to write off the bad loans.
Which many experts believe is untold TRILLIONS of Dollars. This sum is not manageable by communist central bank planners educated at Cambridge and Harvard. It has gotten away from the central planners.
Today the growth in CHINA is 300% borrowing over what they ear in GNP output. A year for ten years piling up.
The bad loans to build out infrastructure are not being repaid. The IMF has warned about all this 15 times in 24 months – which we report right here on this blog.
The musical chair game has stalled any rebalancing. The tipping point economically is a whisper away now.
A TRADE WAR is the tipping point and AI software knows that. IT is that smart – say – smarter than I am with more data than I have.
You GOT TO KNOW WHEN TO HOLD THEM is a blog I wrote on this topic – did you scroll and read it.
So here is Trump at the poker table. He sells 130 billion to China each year.
China and XI at the poker table sell to the USA over 500 billion each year. That is 20% of the entire Chinese economic system by itself. Just that. And we influence another 30% among our allies.
Trump has a full house at the poker table – five to one we buy from China more than they buy from us.
Who negotiates from strength of the DEAL? Really ?
Five to one.
XI gets this.
The USA in a real trade war sinks China. China goes bankrupt in.a cascade of debt defaulting and a market roar out of CHINA with trillions in capital leaving CHINA. A trillion has already left folks. The RUN on China is part of today’s market space.
Liquidity in China is drying up even before the USA pushes its chips onto the table ( all of them if needed ) and says WE CALL.
You got to know when to FOLD THEM.
FULL HOUSE ( 5 to 1 ) over say XI and communist holding two two’s. Trade WAR?
China can’t pay its garbage removal – water clean up – or basic services. The military crashes into the dust in China Trade Wars.
No one wants this for the Chinese People. Or the World overall.
No one. Especially Trump who understands all this and respects XI trying to lead his nation out of the mind field of debt and the 10,000’s of institutions that drive debt to support the economy over all.
All that is required is FAIR TRADE. A reciprocity trade where trarriff’s are opened versus closed to each side. China will prosper in FREE OPEN TRADE not decline. America trade accounts will balance and re-balance slowly over time and the markets will go WILD. Which is what we expect.
But in POKER folks your tells give you away.
The facts and who holds what are known.
USA Full house.
China two two’s.
Trump and XI have audiences all around the table to please. Politics versus economics while the tipping point is a whisper into the future. Any mis fire and the tipping point is RIGHT NOW.
Trump has to bet.
XI has to match.
Trump has to keep those chips moving to the center of the table.
Xi has to match.
Trump has to be careful when to CALL.
When he calls ( trade war ) China falls. The Tipping point.
If XI can fold into long term free trade and fair trade the outcome is mutual prosperity for a new cooperation between all players.
XI has powerful forces that want to “go against AMERICA” now feeling ( falsely ) they have capacity economically they in fact lack.
The USA has powerful forces on TRUMP suggesting the time to PUNISH CHINA is now – which is actually a huge recession and market risk for the USA as we lack capacity to do that step without consequences that are horrific for the world buying all those bad debts – wipe out could span the globe as the IMF warns. The entire system is at risk here – says the IMF in 2018. The entire system.
On miscalculation at that poker table.
Not in the press is all the moves each sides is telegraphing in private to the other to moderate through the POWERFUL FORCES who lack all the information. Powerful on both sides non the less.
The IMF warned this week the critical card in the game is TRUST. If TRUST which XI and TRUMP have together as leaders – can be built upon to slowly impact the POWERFUL FORCES influencing the game daily – outcomes could be MAGIC.
If not – the tipping point is a whisper away. In all outcomes the USA wins but not well and not as if we have magic and a miracle from the poker game.
5 to 1.
We hold ALL the CARDS.
That is a fact.
Now the issues is – can China save herself?
New policies are required.
As there are no alternative options we have to wait.
Imbalanced trading – 5 to 1 – is not sustainable economics for the USA. WE are at the end of economic subsidy to China. We have to now have economic parity to continue. SO rich and positive for China moving forward.
In politics one must draw on the 11th commandment ….
…never assume leaders will do what is their own best interest – say see Hitler or Stalin or others history has marked for GPS today…..
IT all boils down to Kenny Rogers in America folks – regardless of your position over money today….
….you got to know when to hold them and you’ve got to KNOW when to fold them…….
Timing is everything in the art of the DEAL’s today.
Iran is getting a boast and Saudi is getting a kick in the knee’s today. Another set of cards here.
Folks – we have time. But time and the tipping point are coming to a point in tomorrow no one would wish for. We are that close.
Berny Dohrmann – THAT IS WHAT IS GOING ON OUT “THERE”