Just how bad is the Chinese economy?
China’s most powerful military leader, in an unusual public statement, last week ordered military forces to prepare for combat, as Chinese warships deployed to waters near disputed islands and anti-Japan protests throughout the country turned violent.
Protests against the Japanese government’s purchase of three privately held islands in the Senkakus chain led to mass street protests, the burning of Japanese flags, and attacks on Japanese businesses and cars in several cities. Some carried signs that read ‘Kill all Japanese,’ and ‘Fight to the Death’ over disputed islands. One sign urged China to threaten a nuclear strike against Japan.
Where is this going? Who is paying attention? I know it’s a hopeless idea that the American government would get involved and try to sort things out, but is anyone?
If you want to really scare yourself: Antipodean in the comments has kindly put up this article ending with the following conclusion which is genuinely the culmination of what has come before:
We now know that this has been happening in China with the most critical component of its economic growth miracle: steel. We will soon discover that all other assets: stocks, bonds, commodities (including gold and silver) and finally cash (think deposits) have been comparably rehypothecated and criminally commingled. The end result will be the most epic bank run in world history, which incidentally is precisely what the central banks are attempting desperately to delay as much as possible by generating excess inflation to ‘inflate’ away the debt, leading to rematching of finite assets and virtually infinite liabilities. Alas, in a world in which credit-money liabilities are in the quadrillions, and in which the real assets are in the tens of trillions, only hyperinflation can seal the deal.