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Page added on February 2, 2016
Kunstler: Ground Control to Captain Zhou Xiaochuan
Why would anybody suppose that the Peoples Bank of China might want to tell the truth about anything that was within their power to lie about? Especially the soundness of any loan portfolio vested unto the grasp of its tentacles? Of course, most of what China has done in speeding toward the wall of financial crack-up, it learned from watching US bankers slime their way into Too Big To Fail nirvana — most particularly the array of swindles, dodges, and frauds constructed in the half-light of shadow banking to hedge the sudden, catastrophic appearance of reality-based price discovery.
When so many loans end up networked as collateral in some kind of bet against previous bets against other previous bets, you can be sure that cascading contagion will follow. And so that is exactly what’s happening as China’s rocket ride into Modernity falls back to earth. Like most historical fiascos, it seemed like a good idea at the time: take a nation of about a billion people living in the equivalent of the Twelfth Century, introduce the magic of money printing, spend a gazillion of it on CAT and Kubota earth-moving machines, build the biggest cement industry the world has ever seen, purchase whole factory set-ups, and flood the rest of the world with stuff. Then the trouble starts when you try to defeat the business cycles associated with over-production and saturated markets.
Poor China and poor us. Escape velocity has failed. Which raises the question: escape from what, exactly? Answer: the implacable limits of life on earth. The metaphor for all this, of course, is the old journey-into-space idea, which still persists in the salesmanship of Elon Musk, the ragged remnants of NASA, and even the nightmares of Stephen Hawking. Get off this messed-up home planet and light out of the territories, say Mars. Of course, this is a vain and stupid idea, since we already have a planet engineered to perfection for all the life systems associated with the human project. We just can’t respect its limits.
So now, that dynamic duo, Nature and Reality, the actual owners of the planet, have showed up to read the riot act to the renters throwing a wild party. The fourth and perhaps ultimate financial crisis of the last twenty years begins to express itself in terms that only the raptors and vultures can see from on high. George Soros, Kyle Bass, and the other flocking shadow banking scavengers prepare to short the living shit out of the old Middle Kingdom. The immortal words of G.W. Bush ring in their ears: “This sucker is going down,” and they are sure to win big by betting on the obvious. Trouble is, this sucker could go down so much further than they imagined, that whatever fortunes they gain from its descent will be foiled by the destruction of the very economic system needed for them to enjoy their gains.
For instance, when banking systems go down, governments usually follow, and when governments go down, societies often unravel. It doesn’t take a great effort of imagination to see China’s one party politburo leadership machine lose the respect of its governed masses, and then its control of events, followed by a Great Struggle among the regions and factions to restore some kind of order. And when the smoke clears there will a whole lot of nearly worthless concrete and steel, and a vast loss of notional wealth, and China will be lucky to land back in some approximation of the Twelfth Century.
It must be interesting for China to watch the horrifying disintegration of America’s political party structure currently on view, with the mad bull called Trump rampaging across the land and the designated inevitable Mz It’s-My-Turn hijacking her collective for the greater glory of Goldman Sachs. The last time China got the vapors politically — the so-called Cultural Revolution of the 1960s — the country went batshit crazy. Surely some of the ruling party remembers that with requisite terror.
Or maybe this is China and the USA’s Thelma and Louise moment. Pedal to the metal, they drive into the abyss of history holding hands. Remember, audiences loved that!
10 Comments on "Kunstler: Ground Control to Captain Zhou Xiaochuan"
Davy on Tue, 2nd Feb 2016 8:10 am
This has been part of my message since I came on this board 3 years ago. I have consistently focused on China and her roll in taking down the global system. I resisted the talk about the Brics taking over the world. Now I feel vindicated in my often lonely stance. I have all along said the US and the Fed is just as much a part of this. I linked the two to this global Ponzi. The Bricophiles dismissed any notion of the Brics being at risk. Now it is plain to see and the crowing is over.
China is the epicenter of the current crisis. This time around the Asian-flu will take the US and the rest of the world down. We skated by in 1997 but this time around Asia is taking the world down with her. This is what globalism does when economies connect and become one. The US and the Fed are just as much a part of this Chinese fiasco as China’s leaders are. China was where growth was the most extreme so it is natural that the unravel should happen there first.
This was a group effort of greed. It was a global moral hazard of private profit at the public’s expense. Now we will all pay including the rich which will be lynched financially and likely physically eventually. The poor of the world are going to be looking for perpetrators of this global Ponzi when they are hungry without work.
Everyone is going down but it will be a process and that process will be complete with events. The current event is Chinese currency and market carnage. The resource republics and the emerging markets are dying now with oil and commodities crash. The hugely overpriced and Ponzi US markets are next in line and it is going to be ugly. All those smug and arrogant Wall Street’ers have asses in a pucker as we speak. They know how overpriced they are. The US markets are going to likely fall 50% or more just on simple valuation parameters. That kind of fall will likely overshoot and destroy more.
This is the endgame of globalism. How long this will play out is a big question. The “powers that are” still have a lot of covert manipulation to use but this will be only a delaying effort. Nothing can fight nature and reality. The system is breaking and no amount of effort can stop it.
GregT on Tue, 2nd Feb 2016 9:29 am
If you don’t understand the concept of “order out of chaos,” then you’ll never understand a thing.
Hopefully, you have the sense to see how this works: problem, reaction, solution. Economic or physical war is launched between East and West, while the dollar is killed in the process. The masses react by demanding a fair and balanced replacement for the dollar as world reserve so that economic stability can return. The Americans blame Russia and the East for their fiscal misfortune. The East blames the hubris of the West for its own downfall. Neither side blames the banksters, who started the whole calamity to begin with. And the elites swoop in as saviors with a new Bretton Woods-style agreement to appease all sides and cement their global currency system, the system they had always wanted. And with a global economic currency and authority in place, global governance is not far behind — order out of chaos.
The end result of World War I was the creation of the League of Nations and the argument that sovereignty leads to disunion and catastrophe. World War II led to the creation of the United Nations and the International Monetary Fund. I believe that a third world war is nearly upon us, one that may involve weapons of monetary destruction more so than weapons of mass destruction. Each supposed disintegration of global unity has eventually led to greater centralization, and this is something the skeptics seem to forget. The progression of crises suggests that the next war will lead to total globalization under the dominance of a minority of elitists posing as “wise men” who only wish to bring peace and harmony to the masses. In the meantime, the skeptics will continue to mindlessly debate in the face of all reason that the whole thing was a fluke, an act of random mathematical chance, leading coincidentally to the one thing the establishment rulers crave: total global totalitarian micromanagement.
http://www.zerohedge.com/news/2014-08-15/order-out-chaos-doctrine-runs-world
Davy on Tue, 2nd Feb 2016 9:41 am
This is more than currencies anymore. It is structural decay at all levels. Currencies are just one of the symptoms as oil is. This will play out as systematic unwinds do. There will be decay with random consequences. We will see dysfunctional support systems with economic abandonment. We will see the powers that are try vainly to hold the house of cards together.
This will play out in its own time frame. Currencies troubles will be the highest manifestations of this process. The foreign exchange complex is so big no one country or group of countries can manage it once it is in disequilibrium. All that can be done is reactive.
China is now flying apart. Its currency is front and center to this unwind. The dollar is attached at the hip to China. The rest of the world is being waged by the Chinese American dying dog tail. There will be no salvation for the global system only decay. This may play out for a time but the descent process is clear. We are riding an energy gradient down. This energy gradient includes the economic side of energy. Oil is nothing without an economy.
GregT on Tue, 2nd Feb 2016 9:53 am
They don’t care about the economy, and they don’t give a rat’s ass about the country that they are currently operating their empire from.
“There will be decay with random consequences.”
In the meantime, the skeptics will continue to mindlessly debate in the face of all reason that the whole thing was a fluke, an act of random mathematical chance, leading coincidentally to the one thing the establishment rulers crave: total global totalitarian micromanagement.
tahoe1780 on Tue, 2nd Feb 2016 11:22 am
https://www.youtube.com/watch?v=brUY4F8riCg&feature=player_embedded
Davos
Davy on Tue, 2nd Feb 2016 11:44 am
“In the meantime, the skeptics will continue to mindlessly debate in the face of all reason that the whole thing was a fluke, an act of random mathematical chance, leading coincidentally to the one thing the establishment rulers crave: total global totalitarian micromanagement.”
I guess with everything collapsing around us we are supposed to believe there is a reason for it. Yea, behind the scenes this is all part of a plan by the evil ones. This is a self-organizing system that has been extended far beyond a stable operational zone by those who with pride and avarice think they are gods.
Nature is now going to exact her dues for our poor decisions. There is nothing going to come in and swoop up this mess and benefit from it. The “powers that are” will be knocked down hard. Of course they will have parachutes but parachuting into a swamp is wrought with dangers too. I see no evidence there is some force willing this global economic collapse into being. Some will win many will lose but no one is in charge of this mess.
GregT on Tue, 2nd Feb 2016 3:44 pm
“I guess with everything collapsing around us we are supposed to believe there is a reason for it. ”
In one word. Debt.
GregT on Tue, 2nd Feb 2016 4:45 pm
“Currencies troubles will be the highest manifestations of this process.”
Fiat currencies are claims on future production. AKA debt.
Davy on Tue, 2nd Feb 2016 6:40 pm
“The Global Economy Could Fall Farther and Faster Than Pundits Expect”
http://charleshughsmith.blogspot.com/2016/02/the-global-economy-could-fall-farther.html
“Systemic fragility doesn’t respond to central bank jawboning or Keynesian claptrap; unlike those “policy tools,” fragility is real.”
“We can summarize the dynamics of collapse in many ways; here’s one: collapse is latent fragility manifesting.”
“Actions and choices have consequences, and as resilience and redundancy are slowly stripped from complex systems, systemic fragility builds beneath the surface. At some difficult-to-predict point, a threshold is reached and the complex system fails.”
“In the financial realm, fragility builds as the system relies ever more heavily on marginal lenders, borrowers, buyers and investments for its “growth.”
“The problem for “growth” based on the fragile margins is that the entire system becomes fragile as a direct result of this dependence on fragile margins.”
“Conventional economists are entirely blind to system fragility.”
“I propose that the Global Recession of 2016 will trace the Seneca Cliff as described by Ugo Bardi. This application may not align with Bardi’s own work, and I want to make it clear this application is my own, not Bardi’s. But I think a strong case can be made that the global financial/economic system is primed for a ride down the Seneca Cliff:”
makati1 on Tue, 2nd Feb 2016 8:57 pm
This time, it will collapse beyond any means of “fixing” it with a “new system”. The “new system” will be barter and trade between neighboring tribes, if anything. Oh, they will try various other patches, but none of them will work for very long. Wait and see.