AuthorTopic: Official Chinese Toast Thread  (Read 204007 times)

Offline Surly1

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Re: Official Chinese Toast Thread
« Reply #645 on: September 10, 2015, 02:47:19 PM »
Surly, you crack me up  :emthup:

The system we live "under" was not designed for us to prosper.
This system is like a noose. Not so bad at 1st, until it's tightened !
We are living in the last days & the air ain't so good and easy to breathe now.

There is little doubt that the parasites are killing the host.

As luck would have it, I read Pam Marten's (Wall Street on Parade) review of Michael Hudson's eponymous book. It is reproduced below.
I may just get it, expect we probably all know the ending.

Michael Hudson’s New Book: Wall Street Parasites Have Devoured Their Hosts — Your Retirement Plan and the U.S. Economy

By Pam Martens: August 31, 2015 

Author and Economist, Michael Hudson

Michael Hudson

The riveting writer, Michael Hudson, has read our collective minds and the simmering anger in our hearts. Millions of American have long suspected that their inability to get financially ahead is an intentional construct of Wall Street’s central planners. Now Hudson, in an elegant but lethal indictment of the system, confirms that your ongoing struggle to make ends meet is not a reflection of your lack of talent or drive but the only possible outcome of having a blood-sucking financial leech affixed to your body, your retirement plan, and your economic future.

In his new book, “Killing the Host,” Hudson hones an exquisitely gripping journey from Wall Street’s original role as capital allocator to its present-day parasitism that has replaced U.S. capitalism as an entrenched, politically-enforced economic model across America.

This book is a must-read for anyone hoping to escape the most corrupt era in American history with a shirt still on his parasite-riddled back.

Hudson writes from his most powerful perch in chapters describing how these financial parasites have tricked our society into accepting them as a normal, productive part of our economy. (Since we write about these thousands of diabolical tricks four days a week atWall Street On Parade, poignant examples came springing to mind with every turn of the page in “Killing the Host.” From the well-placed articles in the Wall Street Journal toa front group’s pleas for more Wall Street handouts in a New York Times OpEd, to thedirty backroom manner in which corporate speech was placed on a par with human speech in the Supreme Court’s Citizens United decision, to Wall Street’s private justice system and the Koch brothers’ multi-million dollar machinations to instill Ayn Rand’s brand of “greed is good” in university economic departments across America — America has become a finely tuned kleptocracy with a sprawling, sophisticated public relations base.)

How else to explain, other than kleptocracy, the fact that Wall Street’s richest mega banks collect the life insurance proceeds and tax benefits on the untimely deaths of their workers – all codified into law by the U.S. Congress – making death a profit center on Wall Street. Or, as Frontline revealed, that two-thirds of your 401(k) plan over a working lifetime is likely to be lost to financial fees.

Hudson writes: “A parasite’s toolkit includes behavior-modifying enzymes to make the host protect and nurture it. Financial intruders into a host economy use Junk Economics to rationalize rentier parasitism as if it makes a productive contribution, as if the tumor they create is part of the host’s own body, not an overgrowth living off the economy. A harmony of interests is depicted between finance and industry, Wall Street and Main Street, and even between creditors and debtors, monopolists and their customers.”

What has evolved, says Hudson, is that Wall Street banks have “become the economy’s central planners, and their plan is for industry and labor to serve finance, not the other way around.”

To gloss over the collapse of this depraved economic model in 2008, Hudson says these Wall Street central planners simply depict “any adverse ‘disturbance’ as being self-correcting, not a structural defect leading economies to fall further out of balance. Any given development crisis is said to be a natural product of market forces, so that there is no need to regulate and tax the rentiers.”

Similarly, when citizens rise up en masse to demand a realignment of their economy, as happened with the Occupy Wall Street movement, first the public relations masterminds dismiss them as an unhinged gathering of smelly hippies, followed by their violent eviction in the middle of the night, with military precision, by the Praetorian Guard of the kleptocracy. In Manhattan, the Praetorian Guard (NYPD) has a high-tech surveillance center mutually staffed by cops and Wall Street personnel – and mainstream media find nothing unusual about this.

Hudson correctly calls 2008 a “dress rehearsal,” writing that “Wall Street convinced Congress that the economy could not survive without bailing out bankers and bondholders, whose solvency was deemed a precondition for the ‘real’ economy to function. The banks were saved, not the economy.” Hudson adds that the “debt tumor” was left in place. (This is the nightmare we are presently watching unfold.)

The result of the systemic disabling of regulations on Wall Street has resulted in the following, says Hudson: “…the wealthiest One Percent have captured nearly all the growth in income since the 2008 crash. Holding the rest of society in debt to themselves, they have used their wealth and creditor claims to gain control of the election process and governments by supporting lawmakers who un-tax them, and judges or court systems that refrain from prosecuting them. Obliterating the logic that led society to regulate and tax rentiers in the first place, think tanks and business schools favor economists who portray rentier takings as a contribution to the economy rather than as a subtrahend from it.” (But, of course, those business schools are financially incentivized to think that way.)

The outgrowth of these tricks to make parasites appear to be a natural appendage to a well-functioning economy results in a “veritable Stockholm Syndrome.” Hudson explains:

“Popular morality blames victims for going into debt – not only individuals, but also national governments. The trick in this ideological war is to convince debtors to imagine that general prosperity depends on paying bankers and making bondholders rich – a veritable Stockholm Syndrome in which debtors identify with their financial captors.”

Hudson has much to say on the perversity of corporations buying back their own stock. In one chapter, Hudson writes:

“In nature, parasites tend to kill hosts that are dying, using their substance as food for the intruder’s own progeny. The economic analogy takes hold when financial managers use depreciation allowances for stock buybacks or to pay out as dividends instead of replenishing and updating their plant and equipment. Tangible capital investment, research and development and employment are cut back to provide purely financial returns.”

On the timely debate over wealth and income inequality, Hudson writes that “Asset-price inflation is the primary dynamic explaining today’s polarization of wealth and income. Yet most newscasts applaud daily rises in the stock averages as if the wealth of the One Percent, who own the great bulk of stocks and other financial assets, is a proxy for how well the economy is doing. What actually occurs is that financing corporate buyouts on credit factors interest payments and fees into the prices that companies must charge for their products.”

Where this leads, says Hudson, is that “Paying these financial charges leaves less available to invest or hire more labor. Likewise for the overall economy, the effect of a debt-leveraged real estate bubble and asset-price inflation is that interest payments and fees to bankers and bondholders leave less available to spend on goods and services. The financial overhead rises, squeezing the ‘real’ economy and slowing new investment and hiring.”

Hudson is clearly on to something. The U.S. seems to be crashing like clockwork every 8 years with the crashes gaining in intensity. The 2000 dot.com crash wiped $4 trillion out of investment accounts while, 8 years later, the 2008 crash brought down the whole financial system, the U.S. and global economy, and it’s still producing a dead weight on economic growth. Next year will mark the eighth year since the 2008 crash and if last week’s market convulsions were any indication, we’re in for some very rough sledding.

Chapter 8 of “Killing the Host” begins with this quotation from John Maynard Keynes: “When the capital development of a country becomes a by-product of the activities of a casino, the job is likely to be ill-done.” Hudson expands further:

“Instead of warning against turning the stock market into a predatory financial system that is de-industrializing the economy, [business schools] have jumped on the bandwagon of debt leveraging and stock buybacks. Financial wealth is the aim, not industrial wealth creation or overall prosperity. The result is that while raiders and activist shareholders have debt- leveraged companies from the outside, their internal management has followed the post-modern business school philosophy viewing ‘wealth creation’ narrowly in terms of a company’s share price. The result is financial engineering that links the remuneration of managers to how much they can increase the stock price, and by rewarding them with stock options. This gives managers an incentive to buy up company shares and even to borrow to finance such buybacks instead of to invest in expanding production and markets.”

The net result of this, says Hudson, is an effective “debt-financed takeover from within.”

Hudson writes about the revealing September 2014 Harvard Business Review article by William Lazonick, who noted:

“Consider the 449 companies in the S&P 500 index that were publicly listed from 2003 through 2012. During that period those companies used 54% of their earnings—a total of $2.4 trillion—to buy back their own stock, almost all through purchases on the open market. Dividends absorbed an additional 37% of their earnings.”

“This management strategy created financial wealth by elevating the stock price,” writes Hudson,  “not by producing more goods. Earnings per share rose not because companies actually earned more, but because there were fewer shares outstanding among which to spread the earnings. Many of the companies downsized and outsourced their employment and production. The immediate beneficiaries were corporate officers exercising their stock options.”

Hudson quotes another prolific writer on the subject of our bankster-controlled society, Paul Craig Roberts, who has noted the following about corporations buying back their own stock: “The debt incurred will have to be serviced by future earnings. This is not a picture of capitalism that is driving the economy by investment.”

Hudson says that what is happening today in corporate America is very different from the corporate raiders of the 1980s who used leveraged buyouts to gobble up companies. Today, says Hudson, “corporate executives raid their own company’s revenue stream. They are backed by self-proclaimed shareholder activists. The result is financial short-termism by managers who take the money and run. The management philosophy is extractive, not productive in the sense of adding to society’s means of production or living standards.”

Make no mistake about it: this is a dangerous book to the status quo. It is truth-telling at its finest in America’s darkest age of entrenched lies. Michael Hudson has clanged the alarm bells over more continuity government from the likes of Hillary Clinton and her fellow Wall Street Democrats. He’s also scuttled the chances that Donald Trump will be able to reengineer America from “Give me your tired, your poor, your huddled masses yearning to breathe free” to the evil fortress that kicks out infants by directing hatred and blame for America’s woes to impoverished immigrants running from their own leeches.

Hudson’s masterful book comes at the perfect juncture of stock market convulsions and an early election season when Americans are turning out by the tens of thousands to hear what the candidates for the Oval Office plan to do to return the wealth and the soul of America to the people.

“Killing the Host” is available as an e-book at CounterPunch and in print atAmazon.com.

"It is difficult to write a paradiso when all the superficial indications are that you ought to write an apocalypse." -Ezra Pound

Offline Petty Tyrant

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Re: Official Chinese Toast Thread
« Reply #646 on: September 10, 2015, 03:38:16 PM »
50 year low! The gummint sez so! UNcle Bob sez so!

I did not say that. U posted a quote that unemployment is at a 50 year high. That means the last time it was this high was 50 years ago,  1965. I say that is wrong,  that i am told there was full employment then,  not by the govt but by former factory workers. 1965 no unemployment,  2015 high unemployment.

What i do suspect is unemployment is getting around as high as the1930s great depression. Call it a 75 year high. Just as the 1930s depression ended with a world war,  if the market watchers are to be believed its 1929 right now,  and I believe the result will be 1939 again. These moves toward war between usa and allies vs russia and china are happening already in covert proxy shadow boxing style. But there will be no post war recovery,  it will be a 'wipe clean event' as azozeo said,  after that it will be as Rome in 475, the govts ability to control anything will be nil.
« Last Edit: September 10, 2015, 03:41:43 PM by Uncle Bob »
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Offline Palloy

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Re: Official Chinese Toast Thread
« Reply #647 on: September 10, 2015, 04:18:30 PM »
Quote
The riveting writer, Michael Hudson ...

Huh?  Hudson's writings are long-winded and very dense.  Riveting? - hardly.  Not that there is anything wrong with that, but it does limit the audience. 

The reviewer is likewise afflicted - 1,829 words for a book review!   Obviously being paid by the word. 
"... economists who portray rentier takings as a contribution to the economy rather than as a subtrahend from it.”  Hands up all those who have ever used the word subtrahend, or even know what it means.  Why not use the common word "subtracting" instead of "as a subtrahend"?

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Offline Eddie

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Re: Official Chinese Toast Thread
« Reply #648 on: September 10, 2015, 04:30:22 PM »
Hands up all those who have ever used the word subtrahend, or even know what it means.

Not me. I'm a victim of the New Math.

https://en.wikipedia.org/wiki/New_Math
What makes the desert beautiful is that somewhere it hides a well.

Offline agelbert

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Re: Official Chinese Toast Thread
« Reply #649 on: September 10, 2015, 04:55:46 PM »
Hands up all those who have ever used the word subtrahend, or even know what it means.

Not me. I'm a victim of the New Math.

https://en.wikipedia.org/wiki/New_Math

Don't quit your day job for stand up comedy.  ;)

Quote
The riveting writer, Michael Hudson ...

Huh?  Hudson's writings are long-winded and very dense.  Riveting? - hardly.  Not that there is anything wrong with that, but it does limit the audience. 

The reviewer is likewise afflicted - 1,829 words for a book review!   Obviously being paid by the word. 
"... economists who portray rentier takings as a contribution to the economy rather than as a subtrahend from it.”  Hands up all those who have ever used the word subtrahend, or even know what it means.  Why not use the common word "subtracting" instead of "as a subtrahend"?



You may be a mathematician, but if you don't respect Hudson as an accomplished economist you don't know BEANS about economics. Surly can give you chapter and verse on how Hudson (and Black too, by the way) warned about very fuck up our Fed was involved in and what the results would be for the last 15 years or so.

It is ironic that you, that fine fellow that is rather long winded (and dense  ;D) in his posting pedantry, considers Hudson's lengthy articles as "long winded".  ::)

Hudson knows his economics. YOU don't. 




Leges         Sine    Moribus      Vanae   
Faith,
if it has not works, is dead, being alone.

Offline Eddie

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Re: Official Chinese Toast Thread
« Reply #650 on: September 10, 2015, 05:33:39 PM »
<a href="http://www.youtube.com/v/ZCVR_ajL_Eo&fs=1" target="_blank" class="new_win">http://www.youtube.com/v/ZCVR_ajL_Eo&fs=1</a>
« Last Edit: September 10, 2015, 05:38:08 PM by Eddie »
What makes the desert beautiful is that somewhere it hides a well.

Offline agelbert

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Re: Official Chinese Toast Thread
« Reply #651 on: September 10, 2015, 05:37:28 PM »
Az, I think Surly is painfully aware of that. However, he has difficulties agreeing with me, or you, about the "design". Every time I bring up how this SYSTEM was DESIGNED to make it LOOK like a democracy in which people "vote" for stuff, he goes into hyperventilating mode.

You will have great difficulties convincing Surly that voting, at least since the CORK was put on the maximum Rep count by TPTB at the beginning of the 20th century (an Amendment to the Constitution that was NEVER legally ratified as the Constitution requires, by the way), is futile.

I've stopped trying.  :(

AG, it's more complicated than that.

You have written well and at length on the "design" issues. Truth be told, I vacillate. I'm old enough (and suspect you are too) to remember when our civil society was just not so damned... rotten. Whether the fix has always been in from 1789, I am not competent to judge. But you may well be right. Which is a wholly different argument from the one that goes that the US has been operating as a corporation under maritime law since the 1880s...

But you make really interesting points. I go back and forth in my own mind.

I look at the stupendous amount of money that wealthy backers are prepared to throw into races in 2016. The mind fucking boggles contemplating the tsunami of Citizens' United/Buckley v. Valeo cash that will be sloshing through the media systems next year. Broadcasters and cable operator' CEOs are doubtless already planning how to spend their 2016 performance bonuses based on the torrents of political money gushing in.

Those bankrolling this effort will be spending their money on something.

In the same way that I can't prove that God exists, but can readily demonstrate 100 different ways that evil exists, and posit God by inference, I do the same with voting. Not sure it makes a difference or not, but some of the worst.people. on. the. planet are prepared to spend Croesus' fortune influencing the outcome. That's good enough to convince me to get off my dead ass.

Besides, if we agreed on EVERYTHING one of us would be redundant. And we can't have that.

By the way, thanks for the kind words, and to K-Dog, AZ and others who weighed in. I was going to respond to Alan's earlier demurrer of my characterization as a "cornucopian" by pointing out his reliance of the next technological deus ex machina, but there is no need.

To your other point, AG: the exercise is to examine issues, posit solutions, and save as many as you can. Who knows whether we can save anyone, even ourselves? Who knows whether all the renewable devices you write about with such ardor will prove to make a gnat's eyelash of difference? But most of us have children/family who will inherit the whole mess, and we owe them our best effort, futile or not.



Ya better watch yerself, bro. if you keep talking like that, we won't have anything to argue about!    ;)  :icon_mrgreen:

Left unsaid in WAY TOO MUCH of the discourse here is that there is a TSUNAMI of propaganda that has hit all of us since we were knee high to grasshoppers. This collection of ingrained brain damage is then peddled as the "common wisdom" by BOTH ignorant people and propagandists.

It pisses me off to have to wade through this junk yard of bullshit half truths even before an objective premise is stated. Certainly, it's part of the MO of those who benefit from this crap to relegate to "Conspiracy theories", or worse (see pedantic mockery), any statement about history or corruption that has "insufficient evidence" to support it.  :evil4:

The DEMAND from the defenders of the corrupt status quo (see: "best of all possible worlds") that there are no century old (at least!) roots  to our situation is breathtaking. But they constantly do it, as if we got to where we are by muddling along as humans do until we ""seem to have a problem now".  ANY solutions presented are rejected if identifying, rejecting in the present and making reparations for, past errors in human history is presented as CORE to solving the present problems.

The PAST is so morally inverted (in our propagandized perception) that some really horrendous history is CELEBRATED and CHEERED by many here!  :emthdown:

We are NOT going solve jack shit until we deal with how we got here. ANYTHING else is superficial. THAT is why propagandists like MKing (he isn't alone here) don't want to question/touch the honored past with a ten foot pole.

First Part  of a Three part article coming tomorrow:  ;D

The 1783-84 Laki Eruption: A Catastrophic Volcanic Eruption that Changed the Course of Human History
« Last Edit: September 10, 2015, 05:43:06 PM by agelbert »
Leges         Sine    Moribus      Vanae   
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Offline Ashvin

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Re: Official Chinese Toast Thread
« Reply #652 on: September 13, 2015, 04:51:37 AM »
Watson, if I responded to all of A21's "points", I wouldn't have any time left over to manage this website .  I leave it to the rest of the Diners to go point by point with him if they also wish to waste their time this way.

That's fine, I'm just saying it then doesn't make sense for you to criticize Alan for choosing not to respond to ONE of K-Dog's posts (and he made clear why he wasn't responding).

Quote
You also ignore plenty.  I just posted up Hepp's article The Long Road, and his experiences in Denmark and Sweden months ago, prior to the current big brouhaha about refugees.

I generally respond to everything directed at me, and sometimes things that I feel are very misleading when I have an informed opinion on them.

Quote
Good Grief man, this is "Normal BAU"?  Motorways in Denmark full of pedestrian Syrians living in tents?

You're only in your 20s, but I can tell you in my nearly 60 years of living, thousands if not millions of people migrating is hardly BAU.  Mega Cities like Sao Paolo running out of water is not BAU.  Starfish Melting in the ocean is not BAU.  Currencies Collapsing right and left is not BAU.  50% Youth Unemployment in EU countries is not BAU.

To you and Alan though, this is not a sign of Collapse.  ::)  Its just the way the world works, nothing to see here, please move along.

30, actually.

Come on man, you know that neither I nor Alan has claimed this is BAU. The only thing I have questioned is the extent/timing of collapse and the level of certainty we ascribe to it.

Offline Palloy

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Re: Official Chinese Toast Thread
« Reply #653 on: September 13, 2015, 05:57:50 PM »
Now the west wants to be able to tap in to China's strategic oil reserves in the event of a crisis - presumably Japan, Taiwan and South Korea would at the front of the queue.

http://www.bnn.ca/News/2015/9/9/IEA-Seeks-Chinas-Cooperation-on-Emergency-Oil-Stockpile-Use.aspx
IEA seeks China’s cooperation on emergency oil stockpile use
Grant Smith and Javier Blas, Bloomberg
September 9, 2015

The International Energy Agency, which advises industrialized nations on energy policy, wants to coordinate with China on using oil stockpiles in the event of a crisis, its newly-appointed chief said in Beijing.

“China is the most important player in the global energy market” and should become “a full participant” in the IEA’s work to secure supplies, said Fatih Birol, who became the agency’s executive director on Sept. 1. While the Paris-based organization’s 29 members can collectively tap emergency oil inventories to cover supply disruptions, China’s growing buffer is separate from this system.

IEA members are required to store enough crude and refined oil products to cover 90 days of imports. The stockpiles were last tapped in 2011, when Libyan exports were disrupted by a civil war. China accumulated 49 million barrels of crude in emergency inventories in the first half of this year Citigroup Inc. estimates. It may fill two new sites with a combined capacity of 50 million barrels in the second half, according to the IEA.

“Simply having oil reserves is not enough,” Birol said at the Chinese Academy of Social Sciences, according to a text of his speech. “If they are to be effective in dealing with a global supply disruption, there needs to be some mechanism for their coordinated release. We must make room for China under the IEA umbrella.”

EMERGENCY EXERCISE

The IEA plans to hold a joint emergency-response exercise next year with China, Birol said in an interview. The agency held its first such event in the country in January.

“Only IEA and China cooperation can have a major effect on the markets,” Birol said in the interview.

Oil prices near US$50 a barrel are providing “welcome relief” to consumers and the current global surplus “will take time” to disperse amid surprisingly robust supplies from the U.S. and Iraq, Birol said in the speech.

Investment cuts in oil and gas projects worldwide in 2015 will exceed the US$100 billion the agency had projected earlier this year, Birol said. With spending at least 20 percent lower than last year, there’s a risk that further reductions could trigger “another period of market tightening and higher prices down the road,” he predicted.
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Second China State Entity Default As Aussie Leading Index Plunges, PBOC Devalues
« Reply #654 on: September 16, 2015, 12:35:39 AM »
CALL ALAN!  :icon_mrgreen:

http://www.zerohedge.com/news/2015-09-15/asiapac-quiet-too-quiet-aussie-leading-index-plunges-pboc-devalues-yuan-chinas-80000

RE
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A 'Sense Of Crisis' Now In A Chinese Boomtown Gone Bust
« Reply #655 on: September 18, 2015, 05:41:41 AM »
Can U Spell T-O-A-S-T? ::)

RE

http://www.npr.org/sections/parallels/2015/09/16/440822077/a-sense-of-crisis-now-in-a-chinese-boomtown-gone-bust

A 'Sense Of Crisis' Now In A Chinese Boomtown Gone Bust

September 16, 2015 3:41 PM ET
Luliang is in recession, but developers continue to build apartment blocks even though demand for real estate is drying up.

Luliang is in recession, but developers continue to build apartment blocks even though demand for real estate is drying up.

Frank Langfitt/NPR

A $5 billion business and financial district for the coal city of Luliang was scheduled to open next year. But today, the area, which was to house at least 300,000 people, remains mostly grass and cornfields. A few workers are trying to finish what would have been the district's main boulevard — which is now a road to nowhere.

What went wrong?

The mayor who pushed for this new district was fired for corruption — a common fate in Luliang — and the government ran out of money.

China's economy is a mixed bag these days. Consumers keep spending, but overall economic growth is slowing. The rise and fall of Luliang helps explain why.

Luliang is a modest-sized city by Chinese standards. It's located in Shanxi province, southwest of Beijing, and is home to 3.6 million people spread over more than 8,000 square miles. Government leaders here doubled down on the country's old industrial model that emphasized investment in things like coal mining, infrastructure and mile after mile of apartment buildings. Eventually, overcapacity so outstripped demand that it crashed the local economy, which is now among China's worst.

The failed new district has had ripple effects across the city, beginning with thousands of farmers like Liu Yihu, whose house was demolished by the government to make way for the now-failed project.

The home of farmer Liu Yihu, 63, was among thousands destroyed to make way for a new business and financial district that was shelved after the mayor was fired for corruption and the city ran out of money. The government says it will house some of the farmers in apartments, but Liu is skeptical. i

The home of farmer Liu Yihu, 63, was among thousands destroyed to make way for a new business and financial district that was shelved after the mayor was fired for corruption and the city ran out of money. The government says it will house some of the farmers in apartments, but Liu is skeptical.

Frank Langfitt/NPR

"There used to be irrigation ditches, but those were blown up for the construction of the new city," says Liu, 63, who wears a worn suit coat as he sells tomatoes and peppers by the side of a road. "Without water, ordinary people can't grow crops. The yield isn't even half of what it was in previous years."

About an hour's drive from where Liu hawks his vegetables sits the Chuandong cement plant. The factory had banked on orders to help build the new district. Today, it's largely abandoned. Workers' dorm rooms are strewn with trash, bunk beds sit empty and dust and mud blanket the floor of an office building.

Among the survivors is a low-level manager named Gao, who's sitting on a bed in a dorm room, watching a rerun of a huge, recent military parade in Beijing. Gao says when plans for the new business district collapsed, his plant – like others in town — was caught with way too much capacity.

"The economic situation now is very bleak," says Gao. "The construction industry, the entire real estate market is bankrupt. Our company can't survive, so the workers were laid off. They went home to plant crops."

When coal prices were high and the government could still afford to pour money into infrastructure, Luliang's economy boomed. As recently as 2010, GDP growth was a staggering 21 percent, more than twice the national rate, and Gao's factory was pumping out 700,000 tons of cement annually.

The Chuandong cement company is nearly abandoned. When the bottom dropped out of the cement market, most workers left their dorms and returned home to the countryside to plant crops.

The Chuandong cement company is nearly abandoned. When the bottom dropped out of the cement market, most workers left their dorms and returned home to the countryside to plant crops.

Frank Langfitt/NPR

Last year, though, GDP here shrank by 2 percent. And this year, Gao's cement plant only produced 30,000 tons. The company's employment fell from a high of 1,000 workers to just 100. Gao says no one seemed to see the crash coming.

"We didn't worry," says Gao, whose wages have been decimated and had to borrow money to pay his son's college tuition, room and board. "We felt in our hearts that things would always be good and there would be no problem. Now we have a sense of crisis."

Gao is a low-level manager at a cement factory. He says a slowdown in government infrastructure spending and an over-supply of apartments have devastated the cement business. The company he works for went from a high of 1,000 employees to about 100. i

Gao is a low-level manager at a cement factory. He says a slowdown in government infrastructure spending and an over-supply of apartments have devastated the cement business. The company he works for went from a high of 1,000 employees to about 100.

Frank Langfitt/NPR

Gao blames government officials for ignoring the basic law of supply and demand. Instead of managing supply, Gao says, officials pushed to open more coal mines and build more housing developments to boost GDP numbers on which their promotions were based. Those projects also generated lots of bribes.

"When applying for a business license, a company needs to go through layers of bureaucracy for approval," Gao explains. "Officials took kickbacks. So this is why there are so many coal companies. Actually, some shouldn't even have opened."

Many of the empty apartment towers that now litter Luliang's skyline shouldn't have been built, either. One residential development, China Culture Garden, has just been completed — but there is no sign of tenants, furniture or potential buyers.

When I ask a manager how many of the 800-plus apartments he's sold, he refuses to answer, saying it's a "secret." The rental market here doesn't seem much better. Walking the halls of the city's top luxury compound, I found many empty apartments as well. A man renting a 2,000-sq.-ft. penthouse on the 32nd floor said he's paying just $156 a month.

The city's skyline is littered with empty apartment complexes like this one. One real estate agent said none of the compound's 800-plus apartments have been sold. i

The city's skyline is littered with empty apartment complexes like this one. One real estate agent said none of the compound's 800-plus apartments have been sold.

Frank Langfitt/NPR

Wu, a real estate agent, says overcapacity has led to job and salary cuts and nobody seems to have much spending power these days. Luliang is trapped in a vicious cycle.

"There are many people in the city just sitting around. They have nothing to do," says Wu. "People have no place to work. There are more homes under construction than the number of buyers. How can they sell? They can't."

Wu didn't want his full name used because the city's recession is politically sensitive. Many officials in addition to the former mayor have been detained for corruption, and Luliang's industrial collapse has dented the government's reputation for strong economic management. Not surprisingly, Luliang officials declined to discuss the city's woes with NPR.

As incomes shrink, other sectors of the economy are getting hammered as well, including restaurants and retail. Lei Lili, who owns a home appliance store, says business is so bad she's offering a free refrigerator to each customer who buys a TV.

"I am definitely worried. If the people can't make money, they certainly will not have money to buy my home appliances, right?" says Lei. Businesses like hers depend on big sectors such as housing. "If the big river has water, small streams will have water, too," she says. "If the big river dries up, what can fill the small streams?"

Perhaps the biggest river in Luliang is coal. China consumes more of it than any other country in the world. But as the government spends less on infrastructure like roads and bridges, it needs less coal, which is crucial for steel production. That leads to much lower coal prices and more money-losing mines.

A manager at the city's Big Earth River Coal Company says demand for coal has fallen so much that one-third of the coal companies nationwide need to shut down.

A manager at the city's Big Earth River Coal Company says demand for coal has fallen so much that one-third of the coal companies nationwide need to shut down.

Frank Langfitt/NPR

Wang Wenliang, a manager at the city's Big Earth River Coal Company, says about one-third of the nation's coal operations need to close. But he doubts the government will allow anything so dramatic.

"The government will prop you up, not let you go bankrupt," says Wang. "It won't dare to let so many workers go. If people have no place to feed themselves, the society will have problems."

In other words, Wang thinks the government will chose political stability for now over fixing an old industrial economy that no longer works. Many fear delaying that reckoning will create an even bigger drag on China's already slowing growth.

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Offline jdwheeler42

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Re: A 'Sense Of Crisis' Now In A Chinese Boomtown Gone Bust
« Reply #656 on: September 19, 2015, 03:54:59 AM »
"The economic situation now is very bleak," says Gao. "The construction industry, the entire real estate market is bankrupt. Our company can't survive, so the workers were laid off. They went home to plant crops."
That one line speaks volumes.  That is why I think China has a really good chance of faring much better than the US in the collapse; they may only experience Great Depression levels of economic malaise, but they still are close enough in time to have the knowledge and the will to "go back to the land", both of which are majorly lacking in the US.
Making pigs fly is easy... that is, of course, after you have built the catapult....

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Re: A 'Sense Of Crisis' Now In A Chinese Boomtown Gone Bust
« Reply #657 on: September 19, 2015, 04:13:46 AM »
"The economic situation now is very bleak," says Gao. "The construction industry, the entire real estate market is bankrupt. Our company can't survive, so the workers were laid off. They went home to plant crops."
That one line speaks volumes.  That is why I think China has a really good chance of faring much better than the US in the collapse; they may only experience Great Depression levels of economic malaise, but they still are close enough in time to have the knowledge and the will to "go back to the land", both of which are majorly lacking in the US.

We'll find out what the SURVEY SEZ!  It's my next poll.  ;D



DON'T FORGET TO TAKE THE CURRENCY SURVEY!  CLOSES MONDAY!
RE
« Last Edit: September 19, 2015, 04:18:03 AM by RE »
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Offline RE

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China: Who's running the Toaster?
« Reply #658 on: September 25, 2015, 06:44:49 PM »
http://www.zerohedge.com/news/2015-09-25/who-calls-shots-china

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Offline RE

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China capital flight hits record high as yuan plunges
« Reply #659 on: September 26, 2015, 04:48:12 AM »
http://www.rt.com/business/316561-china-record-outflow-devaluation


 China’s capital outflow hit a record $141.66 billion in August as a result of the country’s biggest currency devaluation since 1994, according to data compiled by Bloomberg.

The pullout of money from the country exceeded the previous record of $124.62 billion in July, Bloomberg’s so-called “hot money” gauge showed. It is an estimate of the sum of foreign exchange purchases by banks and the change in foreign exchange deposits to measure flows into and out of the country.

READ MORE: China stages biggest currency devaluation in 20 yrs to revive exports

The outflow accelerated in August following China’s shock devaluation of the yuan. The Central Bank of China has cut its daily reference rate by 1.9 percent, its biggest downward adjustment in 20 years. The aim, it said, was to revive faltering exports.

Beijing has ramped up efforts to support the slowing economy and an almost 40 percent stock market drop since late June. The government cut interest rates for the fifth time since November and pledged to support the market by buying shares. However, the measures did not stop factory activity contraction, which hit a six-and-a-half year low in September, the worst result since March 2009. Concerns over the world’s second biggest economy slowing down made investors turn to safer assets.

Meanwhile, experts have different forecasts on the issue.

"My worry is that, given the relatively large economic downward pressure, as China is opening up the capital account, it means more money will leave China," a PBOC adviser and Peking University economics professor Huang Yiping was cited as saying by Bloomberg. "If there’s an overall capital outflow in the future, it will bring depreciation pressure."

"The current capital outflow is just a temporary market reaction," said Sheng Songcheng, head of the PBOC’s statistics and analysis department. He claimed that China’s economic slowdown, rising debt level and stock market swings all can cause short-term panic for investors, adding that the yuan will not depreciate continuously.
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