WHAT DOES PANIC IN CHINA LOOK LIKE?
Lets GPS the landscape. The one economy in the world with a direct over 3 trillion dollar annual economic model with trillions more in total annual buying power is MOUNT EVEREST – fiscallying towering over all others by many many times economic capacity. Tied for second place as China sinks today in 2019 are Foot Hills 8000 miles away from Mount Everest and unable to from their peaks see even base camp on the real mountain. These puny economies by comparison include ties for total economic standing as financial foot hills to include in order and the tie is close to each:
- China and the EU
- India soon to pass China
- Indonesia fourth or fifth depending on the day largest economic foot hill under Russia
Now lets look at pre trade war. For ten years China growth has been declining. Draw a 10 year white board graph and show a red down ward flowing graph line that goes off the white board and travels to the floor. Got that in your mind?
Economically that is CHINA before the trade war China stated and Trump’s team who was not kidding around – as our blog noting TRADE RED INK TO THE USA IS A NATIONAL SECURITY FIRST PRIORITY OR WE EVENTUALLY GO BANKRUPT. The world is learning a TRUMP RED LINE ….love him or hate him….is solid as a steal wall…and predictable. China miscalculated suspecting another OBAMA red line was coming and then another red line and then another red line. Trump is BUSINESS NO LONGER AS USUAL.
Trump also ( if you read his books which I have ) suggests:
….my best more fair offer is always my first offer….in the deal….if you reject that offer…then fine…we move forward and every other offer always improves things on my side from the first offer you rejected…..and I hold a full house of cards in creating deal outcome and you hold two two’s in your hand….and finally I call….show me your cards…..Donald Trump birth to today
So Trump put forth trade deal after trade deal and noted is DEAL OR NO DEAL final time line – and stuck to that. Trade war became economic storm waves crashing an already slow downward SPIRAL of over TEN YEARS in Chinese economics to a SUPER CRASH in SLOW MOTION taking place in this moment of our lives.
The IMF and World Bank noted that China – operating a total national budget that like Russia is about the size of the budget for say the State of California for China and New York for Russia and they are close. These large nations execute budgets the size of one USA state.
Do not consider the contest here is among equals. The USA buys many many times more than it sells into China. In a negotiation with the LARGEST CUSTOMER IN THE WORLD BY FAR – THE ENGINE OF ECONOMIC ACTIVITY FOR THE ENTIRE WORLD….it is not a discussion among equals. The core damage for decades to China failing to end this trade war at micro wave time lines – is catastrophic. The compounding economic spiral is taking place today. Lets look at the pressures but first lets look at panic.
PANIC IN CHINA LOOKS LIKE THIS GLOBAL READERS:
….chinese central planners following IMF warnings to curtail their 300% annual debt borrowing to run their state level economics – in the red – for noting ten years of doing so was UNSUSTAINABLE COMMUNIST ECONOMICS so says the IMF and World banks. Last year following over a dozen dire warnings to China by the IMF and our own Fed – China relaxed versus tightened – lending reserves for its banks – encouraging massive more lending to stabilize an economy becoming unstable in 2018 as trade wars created an on going run of trillions of dollars out of the cement truck debt saddle now on China’s economic. Five times in 2018 the Communist lowered the cash their banks – already booking sums as bad debts as good assets – by ratios not allowed in other nations – and now in FULL ON PANIC the Chinese planners massively opened flood gates of new debts and lowered for the 6th time in 12 months the reserves for banks we believe are technically BANKRUPT nation wide IF those banks had to recognize non performing loans as bad paper and write them off….there are no reserves to manage this today. China consumers and savers lack economic education to appreciate their own danger or they would RUN their cash out of their banks before the other chap loeses all their money because the bank % of cash is too illiquid and shallow to manage TWO HOURS of a bank run in China…that is PANIC IN CHINA today…..you may have missed it but central bankers the World bank and IMF did not miss this 6th reduction of the reserves a healthy bank must keep in cash reserves for real rainy days and China is having a CYCLONE of economic bad news in 2019….the one and only solution to this pain is a COOPERATIVE TRADE DEAL that Trump will ink…...and Trump is no longer messing around as the absolute WINNER of the trade war with China….a lesson the EU starting with Germany built by USA compassion after World War II – and Japan both of whom are dragging their feet in the mud puddle tug of war…which like China will not end well for the FOOTHILLS in dealing with Mount Everest…the asset they all miss is the prosperity of the deal and its stability outcomes ….
NOW WHAT IS CRASHING CHINA INTO A FORWARD SUPER CRASH IF TRADE DEAL LAGS IN TIME?
- MASSIVE DEBT SUPER BUBBLE WHICH MAY BURST INTO DEBT DEFAULTING CASCADES GLOBALLY
- Crash of China equity markets creating margin call spirals the can work to preclude recovery from the spiral
- Crash of China bond markets as record borrowing flips are rising in cost and interest to crash bond levels
- Runs out of China by capital as a trillion dollars of investment into the future are canceled or on hold
- Runs out of China as a trillion dollars of hard money has already AI fled the nation in 2018 on going 2019
- Never seen before runs of manufacturing out of China to easier faster IP protecting nations nearby
- American changes in consumer trust moving out of MADE IN CHINA by numbers that are soaring
- Changes in Chinese consumers to not buy American staling investment job growth and stability foundations
- Global changes in trade that when taken as as whole create massive near term Chinese contractions seen now
- Communist Central Planner blind spot to an entirely new AI economy applying 40 year old rules that won’t work
China’s way forward and way out and way back up include:
- A comprehensive trade deal as an example of a COOPERATIVE CAPITALISM template for the entire world
- Reset to their sovereign debt current accounts with one 100 YEAR SUPER BOND via Roel Campos expert
- Fold new infrastructure into the one resetting SUPER BOND brought in tranches to markets globally
- Open new entrepreneur laws to click incorporate in nation and click permit removing all barriers to unicorns
- Allow Chinese Currency to be transparent – real time market based – with appropriate coordinated support to GNP
My father helped Mao and successors to modernize Chinese manufacturing TQM processes in the 1950’s forward in time and our family has a enormous emotional respect to honor and assists the Chinese prosperity to rise for centuries into the future. The RISK to system melt down and a SUPER DEBT BUBBLE CRASH is gynormous to policy errors by Chinese central planners.
As all this is flowing as part of an unfolding, real time, AI brand spanking new economic model no human has ever seen before – capacity for error using old economy tools in economics morphed by AI – can be fatal to error. Our fear is the planners educated in the old economy may fail to appreciate the new box top rules need to be developed by partnerships with the named names set forth above… first and the world next. Within a NO NATION LEFT BEHIND outcome to a new COOPERATIVE CAPITALISM – something new something better that with the correct information – we humans can improve and do better.
China is beginning to crash.
China may SUPER CRASH.
The outcome of a trade deal template for the world is prosperity forward in time for us all.
This weekend the Chinese issued the 6th bank accomodation to lower the cash they hold to massively lend hundreds of billions early in 2019. Why? Chinese economics are now rapidly deteriorating into full on instability overwhelming planners with the speed of the downward system wide DOWN BUBBLE the failure to deal with Trump to find a solution without trade war – not creates – as MOUNT EVEREST ECONOMICS is crushing to the foot hills in economic war with the mountain. It IS that simple and Trumps team knew all this on the SUMMIT of Mount Everest – AMERICA !
China is rapidly . approaching system wide instability. The worst outcome for the Chinese people. This condition occurs in economics whenever politics run economics versus economics running economics. 100% of all economic abuse in all systems world wide must eventually come back into balance or rebalance. That can be catastrophic in fact.
Berny Dohrmann – TRACKING THE CHINENSE FULL PANIC – THEY DO NOT “KNOW” WHAT TO “DO” NEXT !!!!
PS: President XI should call me for options…smile…don’t hold your breadth – but keep in mind this blog’s accuracy over decades of time…if your keeping score….and always you know FIRST on what IS really going on…out THERE !