http://delusionaleconomics.blogspot.com/2011/01/china-with-foot-on-brake-pedal-may-use.html Quote............... Today we note a very worrying development for Australia. Ominously, outrage is growing in the People's Republic over rising prices, writes Malcolm Moore. China could be hit by inflation of 7-8 per cent in the next two months, panicking Beijing's policymakers into dramatically raising interest rates, economists have warned. The prospect of at least four further interest rate rises in the world's second-largest economy is likely to alarm global markets, which tumbled in shock at China's decision to raise rates on Christmas Day.
But don't worry, China will keep the Australian economy afloat forever. Because.... it's different here?
I saw another item - perhaps via The Age - with the same message, alongside an article pointing out a 15 percent drop in tourist numbers due to dollar parity. It pointed out that China was verrrry concerned about inflation - last time it raised the 'democracy' issue as the people became disgruntled at around 20 percent inflation. Hence this year's targets. The issue as I see it is that China is using its domestic markets to absorb production that was previously exported to the now depressed West - leading to a slow down. Can any SS experts expand on this?
Not an expert, but I read a few items on this topic recently. One in Charles Hugh Smith (often has a China focus), here (June 2010) http://www.oftwominds.com/blogjuly10/china-capital-trap07-10.html And one in Leith van Onselen's blog, here: China Bubble: Now the Locals are Worried (latest post), excerpt: And one in Financial Follies, scroll to Dec 31 entry...excerpt: There are two points I think are helpful to contribute. Firstly, the present Standing Committee, Politburo and to an extent the greater administration is dominated by engineers, the intellectual crucible of the "Four Modernisations" (agriculture, military, science and manufacturing) which has taken China from a backwater to nascent superpower. I've read that some of the next generation elite inner circle of China's political cadres come from a pool of Western trained financiers, though I'd realy like to hear a perspective from Chinese stackers here (time to stop lurking guys, we know you love PMs!) For those interested, here is an article from September 2010 on Chinese politics from a site many of us frequent: http://www.marketoracle.co.uk/Article22759.html I don't know enough to offer an opinion about the implications for a top down command-control economy governed by Western trained financiers with Chinese characteristics other than to say that they have a strong heads up on the pitfalls. Secondly, a point about relational dynamics in the Middle Kingdom. Young women are in undersupply in China, due to culturally selective pressures to have male children (to the point that antenatal ultrasound screening is banned to prevent abortion of females). China is also a society where marriage may be largely for the family connections (guanxi) that result. So, a young woman in such a society has the upperhand. It is said that, (note deliberate weasel), the two most important criteria of marriageability for young women are whether the male owns a property (unit or home) and has a good income. This is especially the case in the more narcissistic cities such as Shanghai. This places the male under undue pressure to own a home. The deposit requirement is quite high - I've read 50%, but I'd like to be corrected if this is not the case. It may actually be the case for a second property (ie an IP). However, enabling factors such as family connections, as well as the concentrating effect of the 'one child policy', mean that money can often be sourced to purchase the property for the bridegroom, which is just as well, considering the median incomerice ratio can be 40-80 in the big cities. (It is historically 3.5 here and presently around 10 for our biggest cities, at my most recent read).
So, in summary, the pressure to own a home is very high for a young man wishing to marry, at a time when ladies are in short supply. Furthermore, this appears to be occurring at a time of transition in the upper echelon from a background in hard science to finance. Ironically, in traditional Confucian society, role was stratified into four occupations. At the top were scholars and teachers; Next were the peasant farmers; Then artisans (I wonder if this group is analogous to the masters of industry and fabrication which seem to dominate the inner circle of the present Chinese elite) And finally, the merchants (which presently dominate the Western elite) http://en.wikipedia.org/wiki/Four_occupations Note that the Confucians were spot on, the financiers should be rightfully regarded as the the lowest of the low.
I suspect we'll see inflation in China before we see it here. I've read recently that food prices have in some cases more than doubled in the last few years. Here is one source about eggs: http://www.smh.com.au/world/chinas-rising-food-prices-a-sign-of-deeper-concerns-20101122-184a8.html It does look as though there will be another big spike in commodities. Volatility makes big money going long on the upside and short on the downside, so it is not surprising to see more credit money enter the system to stimulate this sort of market activity. However, when it comes to food, that is when people riot. This is also well known to TPTB AFAIK.
Yeah, I saw something similar with a paragraph explicitly linking 25% inflation with the riots in Tianamen (sp?) square! :/
There was an article not all that long ago about TNMN SQ, explaining it in terms of one of Sun Tzu's 36 Stratagems from the Art of War, namely: The principle was explained in terms of an analagous Chinese proverb, "Kill (strangle) the rooster (chicken) to (frighten) tame the monkey", meaning to subdue the stronger enemy, kill the weaker one. An explanation on the web is given as: "Years ago in China, when a monkey did not obey, the trainer would kill a rooster in front of the disobedient monkey. Witnessing the poor rooster's death in the hands of the trainer, the monkey immediately gave up any resistance to control and became totally submissive. The students slaughtered in Tnmn Square served as the rooster for the Chinese government and the people of China as the monkey that the government wanted to control." An alternative explanation is that fingering democracy was used as a smokescreen to distract the West (the monkey) from the true reason for suppression: I can't vouch for the truth of this. Also, the article's thrust seems quite rabid, leading to the possibility of there being another Sun Tzu tactic at work: As a tangent, anyone familiar with the streets of Melbourne would be familiar with this strategem: http://chinesewarstrategies.blogspot.com/ Let's hope our own PTB are using this one:
I never knew that about Tiananmen 'till now. I guess it's like how everyone 'believes' lemmings throw themselves off cliffs .... no matter how illogical it sounds. Can you lead me to any links with credible reports/articles?
