China re: "abyss, or collapse"
I get a lot of PM's that are misinterpreting my comments as China, or "Chinese" bashing.
Hopefully for the last time let me reiterate.
I have the absolute highest regard & respect for the Chinese History, Culture and people... however, that regard and respect does not extend to either:
- The Communist PLA Government
- Their Economic System
China is supplying High Tech Missle, Defense and Nuclear Technology to the 2 most dangerous Rogue Nations - North Korea & Iran. They are also escalating the expansion of their "offensive" Military capability as well as their Geopolitical aggressiveness towards Japan and Taiwan.
Former Clinton CIA Director, Adm. James Woolsley - is one of the few US Experts on the subject who is willing to cut across politics and "tell it like it is"... listen to and read what Woolsley has to say about the very real and very present China Threat - that is escalating. So the "Cold War" rhetoric is with valid reason imho.
As far as "collapse", or "abyss" are concerned, I realize that initially those terms may seem somewhat melodramatic, but in reality they are accurate.
When the Bretton Woods Agreement broke down in 1973, the "Dollar Standard" is what emerged, even if not "Officially Adopted."
Over the last 30+ years I think it's become pretty clear that this new age of Globalization in the era of the Dollar Standard has allowed the rest of the World to sell their Products to the USA on Credit. Unfortunately it (the Dollar Standard) has created some rather negative economic ramifications for the selling countries (see Japan).
- These selling countries built up huge foreign reserves and had their economies experience high inflation and asset bubbles that ultimately lead to Economic collapse - ie: Japan's Deflationary collapse.
- When these selling countries recycle those foreign reserves back into US Dollar demoninated financial assets - this led to massive misallocations of capital in the US and creation of asset bubbles in our Stock Markets and now Housing etc.
- The most dangerous ramification of the Dollar Standard in my opinion, is the creation of a Global Credit Bubble which led to over investment in Industrial Capacity and has created massive Global Deflationary Pressures.
We've now reached an unsustainable level of Global Financial & Economic "disequalibrium" as noted by everyone from Paul Volker and Robert Rubin to Warren Buffett.
Those countries with a substantial US Dollar surplus must either reinvest those Dollars into a less than desireable US environment of massive Deficits and a declining US Dollar, or convert those Dollars into their own currencies which causes their currencies to appreciate and their exports and economic growth to decline.
Nearly half of China's GDP is presently bad loans within a presently Bankrupt Banking System. Add to that China's Economic inefficiencies of having to spend 6 to 7 times on Natural Resources to create the same $1 of GDP as does Japan, or the USA...and in this era of escalating commodity prices, that assures the certainity of the ultimate collapse of the Communist Government, the Banking System and a Japan-esque Deflation as they are also forced to re-value their currency which will transfer much of their export business to the likes of Vietnam, Thailand etc. They will be left with excess over capacity and asset bubbles which will deflate as hot money exits and exports are lost - which will only be accelerated and amplified when, not if - the US Economy slows as well.
China was correct when they expressed doubts about revaluing their currency - ie: their Banking & Economic systems were not strong enough to handle a Re-Peg... as they are not strong enough to survive intact without one either...thanks to the great Fiat Fraud-Dollar Standard.
Gold sure looks like a winner... although the environment that we will ultimately find ourselves within, will taint much of that victory.
...just my .02 cents.
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