Monday, January 06, 2014

Soros Scolds China

Soros is now talking about China. Soros may have been a Nazi collaborator but when he talks, I listen. Soros shot this essay out about how China is a problem on January 2nd, 2014. Soros wants you to pay attention to China, and to see it from the right angle (his angle). In other sources and from their leaders' mouths, China just wants gold for all, believes the West is suppressing gold's price to maintain the dollar's supremacy, and has imported over 2000 tons of gold in 2013 alone. This is not conducive to the dollar system continuing as it currently is set. This will not be tolerated by Soros and his crowd. Soros wants China to fully join the New World Order.

I sound like a broken record, but since the 2008 financial crisis, China has been creating bilateral currency arrangements, expanding the internationalization of the yuan and fostering an anti-dollar climate amongst rising powers like the BRICs. They have also been importing gold at rates higher than a ton a day for years, and the government is now purchasing all domestic production. They put up a front of a dual strategy of hovering up gold and claiming they want to see the dollar survive while scolding American policies and creating a yuan sphere. If China can align enough nations (some incredibly worried about their dollar reserves and the US in general) behind them, a yuan sphere could be formalized. If they cannot, at least they will have a massive gold hoard to be considered a gold superpower when the dollar is reconnected to gold. At those future, hypothetical conferences, China would have a central seat at the table. During the last eighteen months, Soros has commented on China's issues at conferences all while China has pushed these public strategies.


Beijing gold rush, Chinese gold demand 2013
They are not shopping for Iphones, only gold.
The Soros essay is different because it is organic and spontaneous. There is no conference interviewer with a microphone and two China questions for broad answers from Soros. His essay is a rose colored near inversion of reality. Soros writes of an America that is a candyland, a Europe that needs to come together with a treasury to face the threats posed by Syria and the Ukraine (and Russia), and a Japan that is heroically engaging in quantitative easing for the nth time. America was a nice middle ground politically until the evil GOP linked religious and market fundamentalists to dominate politics that forced the Democrats to catch up. Soros considers the Tea Party the zenith of polarization (obviously he has yet to hear De Blasio speak or saw President Obama campaign with "Revenge" on the podium), and bipartisan normalcy will return. The entire column is full of Whig history and "wrong", but it is the lead up to his section on China. Things are rosy because different regions are following the print money, consolidate power upwards and more democracy blueprint but China may screw it all up.

We do not know what lackey wrote this for Soros or if this is Soros writing, but I want to insert his exact passages about China,

"The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.
That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35% of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.
There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, the financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.
Aware of the dangers, the People's Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.
The Chinese leadership was right to give the precedence to economic growth over structural reforms, because structural reforms, when combined with fiscal austerity, push economies into a deflationary tailspin. But there is an unresolved self-contradiction in China's current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.
How and when this contradiction will be resolved will have profound consequences for China and the world. A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still widespread trust in the country's political leadership, resulting in repression at home and military confrontation abroad."
He ends it with a call for the world to come together at the United Nations and better global governance. Just about every criticism of China's reaction to the 2008 financial crisis was done by the US. The US re-inflated an asset bubble by expanding the FED's balance sheet by several trillion dollars without any structural reforms to the economy. Soros' claim that the US has deleveraged is a joke with the only deleveraging being mortgage debt write offs of foreclosed properties while debt has expanded to the remaining borrowers through the government's subprime auto and subprime college debt rackets. China may be restarting the furnaces, but how different is that compared to GM's inventory stuffing production that sits on dealer lots? Not much.

Soros is really calling on China to engage and come into the US led global fold. He sneaks in the note on the need for political reform to help the transition through this debt resolution. China has spent the last year stating that nations should respect the different forms of government without meddling, accumulating gold, tsk-tsking the dollar and US governance, and pouring billions into Africa. Soros sees all of these moves as a play by China to set the stage for a relinking with gold with China holding so much gold that they have to have a prime seat at the table. I wrote months ago that China could use SDRs, but reading one of the above China links, China does not see SDRs as stable like gold. Moving to gold and not SDRs, the world's financial web would slip out of the Anglo-American banker dominated hands and to a global game.

As far as timing, it has been a rough year for the USG system. Assad still stands. The rebels in Syria are in disarray, are Al-Qaeda controlled and now are making a mess in Iraq (I suggested they could do that in September). They even took over Fallujah after we destroyed the city with depleted uranium. Like Assad, Iran saw their regime legitimized just by direct phone calls and quasi-deals. Behind both of these regimes, their patrons Russia and China showed the rest of the world that it pays to have them as patrons. An alternative is possible to USG control. Ukraine sees it. Others see it as well. Entirely coincidental is that foreign central banks have reduced their Treasury holdings for two weeks in a row into the year end by $26 billion in total just as the FED began its taper. Whether clients or deficit funders, others have taken notice of the USG weakness. George Soros sees it as well.
The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.
That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35% of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.
There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.
Aware of the dangers, the People’s Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.
The Chinese leadership was right to give precedence to economic growth over structural reforms, because structural reforms, when combined with fiscal austerity, push economies into a deflationary tailspin. But there is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.
How and when this contradiction will be resolved will have profound consequences for China and the world. A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.

Read more at http://www.project-syndicate.org/commentary/george-soros-maps-the-terrain-of-a-global-economy-that-is-increasingly-shaped-by-china#y60JPs4lt5T3IBfk.99
The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.
That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35% of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.
There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.
Aware of the dangers, the People’s Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.
The Chinese leadership was right to give precedence to economic growth over structural reforms, because structural reforms, when combined with fiscal austerity, push economies into a deflationary tailspin. But there is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.
How and when this contradiction will be resolved will have profound consequences for China and the world. A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.

Read more at http://www.project-syndicate.org/commentary/george-soros-maps-the-terrain-of-a-global-economy-that-is-increasingly-shaped-by-china#y60JPs4lt5T3IBfk.99
The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.
That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35% of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.
There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.
Aware of the dangers, the People’s Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.
The Chinese leadership was right to give precedence to economic growth over structural reforms, because structural reforms, when combined with fiscal austerity, push economies into a deflationary tailspin. But there is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.
How and when this contradiction will be resolved will have profound consequences for China and the world. A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.

Read more at http://www.project-syndicate.org/commentary/george-soros-maps-the-terrain-of-a-global-economy-that-is-increasingly-shaped-by-china#y60JPs4lt5T3IBfk.99
The major uncertainty facing the world today is not the euro but the future direction of China. The growth model responsible for its rapid rise has run out of steam.
That model depended on financial repression of the household sector, in order to drive the growth of exports and investments. As a result, the household sector has now shrunk to 35% of GDP, and its forced savings are no longer sufficient to finance the current growth model. This has led to an exponential rise in the use of various forms of debt financing.
There are some eerie resemblances with the financial conditions that prevailed in the US in the years preceding the crash of 2008. But there is a significant difference, too. In the US, financial markets tend to dominate politics; in China, the state owns the banks and the bulk of the economy, and the Communist Party controls the state-owned enterprises.
Aware of the dangers, the People’s Bank of China took steps starting in 2012 to curb the growth of debt; but when the slowdown started to cause real distress in the economy, the Party asserted its supremacy. In July 2013, the leadership ordered the steel industry to restart the furnaces and the PBOC to ease credit. The economy turned around on a dime. In November, the Third Plenum of the 18th Central Committee announced far-reaching reforms. These developments are largely responsible for the recent improvement in the global outlook.
The Chinese leadership was right to give precedence to economic growth over structural reforms, because structural reforms, when combined with fiscal austerity, push economies into a deflationary tailspin. But there is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years.
How and when this contradiction will be resolved will have profound consequences for China and the world. A successful transition in China will most likely entail political as well as economic reforms, while failure would undermine still-widespread trust in the country’s political leadership, resulting in repression at home and military confrontation abroad.

Read more at http://www.project-syndicate.org/commentary/george-soros-maps-the-terrain-of-a-global-economy-that-is-increasingly-shaped-by-china#y60JPs4lt5T3IBfk.99

2 comments:

Anonymous said...

Curious how you think this bodes for the average American.

Anonymous said...

"Curious how you think this bodes for the average American."

lol