you mean here appended below from zerohedge.com ?
my comments in BOLD
On the "China" question:
"I think the China situation, how¬ever, is profoundly obvious and profoundly simple. The idea that the free world is placing its hope in a repressive, communist [EDIT: GENERALLY ONE CAN STOP READING RIGHT HERE AS THE AUTHOR DEMO-ED HE HASN'T A CLUE OF WHAT HE WRITES] regime employing command and control economic management while violating trade protections and human rights everywhere is absolutely astounding, amazing. I would suggest that, in itself, should be a sufficient warning flag. [EDIT: IS THE AUTHOR TALKING ABOUT USA OR PRC?] But let's be a lot more specific. I actually see the situation in China as very analogous to the U.S. in 1929 and Japan in the 1980s....I'll just tick off eight similarities between China circa 2011 and the U.S. before the Depression. 1) Massive disparity of wealth, income, and education. [EDIT: DISPARITY OF WEALTH AND INCOME ARE BEING FIXED, THE POPULATION CAN TAKE MUCH FOR THE GOOD OF ALL, UNLIKE MANY/MOST SOCIETIES]. UNSURE WHAT HE IS TALKING ABOUT RE EDUCATION AS CHINA IS ONE OF THE MOST LITERACY INFUSED] 2) Rapid industrialization and displacement of labor. [EDIT: AND 'RAPID' IS BAD?] 3) Opaque and misleading economic and financial data. [EDIT: CHINA STATS LIES LESS THAN USA STATS, AND NO ONE IN CHINA BELIEVES IN CHINA STATS WHEREAS ALMOST ALL IN USA BELIEVES IN USA STATS] 4) Massive build-up of leverage across the "rising" class. [EDIT: WHAT LEVERAGE? WHO IS LENDING?] 5) Bubbles in both residential real estate and fixed asset/infrastructure development. [EDIT: CHINA IS UNDER-BUILT AND HAD BEEN FOR PAST 300 YEARS] 6) Accelerating and uncontrolled growth in disintermediated credit. [EDIT: FIAT MONEY INFLATION IN CHINA IS A GOOD PROCESS, MOBILIZING SAVINGS HOARD TO DO WHAT IS ESSENTIAL. WASTE UNAVOIDABLE] 7) Expected transference of economic growth to domestic demand. And, finally, an accelerating price/wage spiral. [EDIT: TRANFERENCE IS A POSITIVE, AND WAGE SPIRAL HELPS TO REBALANCE URBAN / RURAL IMBALANCE AND EAST / WEST DIFFERENCES] Nonetheless, to China's credit, they have a booming economy which has drawn the attention, admiration and certainly the economic aspirations of the world. The irony is, despite its hubris, China appears to have lost control — and has done so by doing everything it could to avoid that. Essentially, in its own zeal to placate its masses with rapid growth, China has created a tide of inflation that threatens it with wide-spread social unrest [EDIT: THE TIDAL WAVE OF INFLATION IS BENEFITING 70% OF THE POPULATION]. But if it crushes speculation and clamps down on credit, it risks a deflationary collapse that would also threaten social harmony. The upshot is that China no longer controls its own destiny [EDIT: WANNA BET?]. The free markets do [EDIT: EVENTUALLY, BUT NOT A NEGATIVE]. As an aside, I would suggest that in the not-too distant future, when this all unravels, there will be downside as well as upside for the U.S., particularly as it relates to what we were talking about before, the way the U.S. has benefited from the value of intellectual property versus scale. [EDIT: IP IS EVOLVING JUST FINE IN CHINA, AND IS ON TOP OF ITS SCALE ADVANTAGE, FOR WIN WIN POINT OF DESTINATION]
On China's Lewis Point (discussed extensively here):
If there was one thing that pushed us over the edge to publish it last November, it was our belief, now confirmed, that China and an increasing number of other emerging markets are caught in a price/wage spirals that they're not going to be able to control through monetary, fiscal or legislative policy. [EDIT: AUTHOR TAKES THE UNTHINKING REFLEX VIEW THAT WAGE / PRICE SPIRAL IS AUTOMATICALLY A BAD. AUTHOR IS A CRETIN] These are an inevitable result, not only of the credit boom, but of the manufacturing engine they're living by. This is the great differentiator between the U.S. and China. The reason a systemic inflation cannot happen here for a long time and why it is happening in China is simply this: When labor is in the business of manufacturing goods (as opposed intellectual property or services), labor has a call on rising finished goods prices. When commodities prices begin to increase and manufacturers attempt to raise finished goods prices, wage rates must go up or labor's value is necessarily diminished. This is the dynamic traditional U.S. manufacturing businesses faced decades ago, and now, in China, it has reached epic proportions. We've seen 20% to 30% wage increases by the government on the low end and by contract manufacturers such as Foxconn (FXCNF) [EDIT: YES, AND HOW IS 30% WAGE INCREASE BAD? DID FOXXCONN LOSE AAPL BIZ? WOULD THE AUTHOR HAVE POOPOO-ED FORD WHEN IT WAS MAKING THE MODEL T?], which does the Apple (AAPL) iPhone, on the high end. It has raised wage rates, almost 30%. China bulls believe this wage inflation is good for workers and so ultimately is going to help China accelerate consumer demand as an engine of their growth. Nonetheless, it hasn't and won't, for a couple of reasons. 1) Savings rates actually are rising in the major city centers. 2) China's consumer confidence numbers and research on the ground in China both show that labor has never been less secure than they are now, which seems paradoxical. One would think that China's new¬found international power, along with higher incomes, would make Chinese workers feel all is right with the world. The problem is that the cost of living is growing even faster [EDIT: LET'S SEE, ONE-OFF FOOD INFLATION IS 20-30%, CONSTITUTING 25% OF FAMILY BUDGET, AND ANNUAL WAGE INCREASE IS 25-30% ON 100% OF WAGE INCLUSIVE OF 30% ANNUAL SAVINGS RATE. REAL ESTATE VALUE GOING UP AS ECONOMIC GROWTH / REFORM AND SOCIAL STABILITY CONTINUES AS USUAL - WHAT'S THE PROBLEM?] Without getting too technical, China has probably crossed over what's called, in academic theory, the Lewis Point, where the movement of labor from agriculture into manufacturing reaches a peak and begins to taper off as manufacturing labor begins to reconsider whether life in fact wasn't better back on the farm."
BOTTOM LINE, THE CHINA SECTION WAS USEFUL ONLY AS A STARTING PREMISE TO THINK ABOUT RIGHT VS WRONG. THE AUTHOR STARTED OUT WRONG, AND ALL DOWN-HILL THEREAFTER.
CONCLUSION: AUTHOR MUST BE A CRETIN |
