– From Hard Landing To Train Crash, All Chinese Indicators Have Slammed On The Brakes (ZeroHedge, Aug 28, 2012):
As Robin might say “Riddle me this Batman”: how can an country, supposedly growing its economy at over 7%, with factory output up over 9%, manage all of this superlative production while rail traffic is shrinking at almost 5.4% annually?China Freight Traffic Volume – Railways:
Source: Sean Corrigan of Diapason Commodities
The world economy is collapsing. The people in power are keeping a semblance of activity going using smoke and mirrors. Until 2010, the US consumer was the #1 customer for Chinese goods……the ongoing collapse here has slowed spending to a trickle of what it was in 2000-2007. In 2010, the Eurozone picked up the status of #1 customer for China, the US consumer based economy being flat on it’s back….. but the fallout that now includes the past several months of ongoing bank runs all over europe has stopped that market cold. Nobody is going to buy Chinese goods when worried about their own survival, jobs, and daily well-being. China is in deep trouble. They have their own real estate bubble bursting complete with ghost towns…….why they could not learn from the west is beyond me.
China has depended on exports for their growth……and the western economy is dying. The only growth over the past 12 years has been debt, not the sort from honest exchange of goods and services….but debt created on paper based on money that never existed in the first place.
The LIBOR scandal ought to have taken the truth into the open for everyone. The entire world GDP (all the business of every nation) averages $50-65 trillion a year. That is value created for the whole planet.
LIBOR averages $800 trillion a DAY in funds borrowed and loaned…..the numbers are totally out of wack.
In 1929, we had a terrible economic collapse after leveraging funds 9:1. A person could take $100 and buy $190 worth of stock with it……….on margin. Once the market went south, people raced to the banks to pull out cash to save their portfolios after the margin calls started. When they got to the banks, the banks didn’t have the money either, and the panic (such as has been going on in Europe over the past 15 weeks) was on.
Today, standard business practice is to take $100 million and leverage it into $100 billion………..1000:1 rato.
It is unsustainable, it cannot be paid because that amount of money doesn’t exist……it is all on paper.
China is going to be hit hard, and the world has been expecting China to keep the world economy afloat…..it won’t happen. This misery will continue without end.