About two and a half years ago when I started to tell people that we were going to see the worst economic collapse this world has ever seen people laughed and told me that even IF America were to collapse there would always be China.
I told them that they were delusional and here is why: China is like a bar keeper in a bar with only one real customer, America. America drinks and eats like a Templar and while at the beginning he always paid his bill the last couple of decennia he has been putting his out of control consumption on the tab. In the mean time China has been doing the same with all the other countries because he needed to keep stocked up to cater to his customers rapacious appetite.
So now that America is collapsing as I was predicting years ago China is waking up to the fact that America is never going to be able to pay its humongous tab and while it tries to keep going by extending loans and bailouts to its local population the writing is on the wall. Unrest is rising in China and will likely increase.
When inevitably America defaults so will China and the rest of the world. There is just no other way out.
Here is how Washington’s blog puts it:
It was tempting to believe that China was different.
With its command and control economy with some of the trappings of free market capitalism, trillions in reserves, and abundant natural resources, many thought that China would “decouple” from the Western world’s problems and sail into a prosperous future.
However, despite its long history, exotic names and seemingly strong position, China cannot avoid the rules of economics which have applied to all countries throughout history.
Corruption and Phony Bookkeeping
Corruption and the failure to follow the rule of law is one of the main factors which has dragged down the American economy.
The fact that – according to the Chinese central bank – Chinese officials stole $120 billion and fled the country does not auger well for China.
Scandals among various Chinese companies are not helping, either.
And then there are the made up statistics. As Warren Hatch of Catalpa Capital Advisors notes:
As Li Keqiang, the vice premier and heir-apparent to Wen Jiabao, laconically remarked to the US ambassador a few years ago, most of the statistics in China are “for reference only.”
And Charles Hugh Smith argues: