The Macro­eco­nom­ics of Chi­nese klep­toc­racy

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John Hemp­ton from Bronte Cap­i­tal expands on the theme of  sys­temic chal­lenges cur­rently fac­ing the Chi­nese econ­omy that we touched on last week with The End of the Com­mu­nist Dynasty

The Macro­eco­nom­ics of Chi­nese klep­toc­racy China is a klep­toc­racy of a scale never seen before in human his­tory. This post aims to explain how  this wave of theft is financed, what makes it sus­tain­able and what will make it fail. There are sev­eral China experts I have chat­ted with – and many of the ideas are not orig­i­nal. The syn­the­sis how­ever is mine. Some sources do not want to be quoted.

About Craig Tindale

CEO in the software and technology industry qualifications economics and computer sciences well read on Minksy, Marx, Fisher , Schumpeter , Veber and dozens of of others
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  • Aaron Lanni

    I find these posts on China a lit­tle extreme but there is truth to them. I would sug­gest read­ing these two arti­cles from The Econ­o­mist for a more fact/data based view on the mat­ter:
    http://www.economist.com/node/21552555
    http://www.economist.com/node/21554234

  • CTin­dale

    Claim­ing “things are not all that bad” “no need to worry” “those ideas are lit­tle extreme ” “we need fact based views” is a the­matic qual­ity of the GFC since 2008 . The real­ity in China is “extreme”, the west­ern memes that are reflected in our media are mostly untested, most of the broadly accept ” truths” about China are sim­ply CCP pro­pa­ganda themes unsup­ported by data or facts, repeated with­out crit­i­cal review and now accepted with­out ques­tion. There is a deep psy­cho­log­i­cal need in the com­mu­nity to believe in sta­bil­ity no mat­ter what the facts or data tell us, in Aus­tralia this man­i­fests itself in the “best econ­omy in the world” themes we hear so often. The real­ity that is unfold­ing though is dia­met­ri­cally opposed to those broadly accepted beliefs about the future , this real­ity is not shap­ing up as some diluted mid­dle path, it is shap­ing up as a cri­sis of gar­gan­tuan pro­por­tions.

    Fraud infects every level of the Chi­nese econ­omy, every sin­gle sec­tor is impacted , for exam­ple nearly all the steel traders who hold nearly $400 B in debt face immi­nent col­lapse

    http://in.reuters.com/article/2012/06/07/china-steel-loans-idINL3E8H53R620120607

    The wheels are falling off and this fact/data based real­ity will flow through to resource economies like Aus­tralia very quickly.

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