Monday, July 29, 2013

India’s Central Bank Steps In To Stop Rupee’s Slide And A Trillion Yuan Flee China’s Banks.

First off, I wanted to note some very heartwarming news that I’m sure most people saw since it hit the headlines of every website in this nation yesterday.  That is, 4 in 5 Americans deal with poverty, welfare, joblessness, etc at some time in their life.  This at a time when American corporations are reporting record profits or record wealth.   At the same time I think it’s important to note that Marie Antoinette, err Obama, obviously has no problem with 4 in 5 Americans eating cake while he lives like royalty off of other people’s money and labor.   What is that again about moochers and looters?  Given 4 in 5 Americans deal with poverty some time in their life, he and others in the self-appointed ruling class live like kings and queens off the backs of people who are, or have been, impoverished or are living paycheck to paycheck.  And that poverty is created by the self-appointed ruling class.  Does anyone actually listen to what Obama or anyone else in Washington says anymore?   I don’t think so.  At least no one outside of the bubble.

It’s newsworthy that the Bank of India has stepped in to the foreign exchange markets to try to stem the slide in the rupee.  Most likely, because if they didn’t the rupee may collapse.  Something to consider when contemplating the future of the yuan.   The rupee is a quasi-pegged currency.  China’s currency is also pegged in the foreign exchange markets.   The rupee has dropped substantially in recent months and at some point the yuan is likely to drop as well for the exact same reasons.  The reality is every currency in the world would collapse were it not compared to something else.  But, that’s not how the system works. 

It’s fair to say all of the BRIC nations are now in economic crisis to varying degrees.  And it will get much worse.   I wrote this outcome would happen for the BRICs years ago when the supposed experts would have laughed at such a future.  This outcome was guaranteed and if one understands economics, it was predictable. 

All of those corporations who moved various business processes and software businesses to India just saw their investment fall by a substantial percentage in the last handful of months.  Remember, one of the long term theses on here is that this cycle can be defined as the end of big.  And with the move in the rupee, big just got a little bit smaller for those corporations. 

China is most certainly the biggest Ponzi scheme ever.  And it was created mostly by American and European capitalism in cahoots with the communists.  Corporate capitalists love communism and fascism or any other ism that allows them to only be subservient to the state.  As noted on here many times, European and American corporations loved the Nazis up until World War II.  Some even loved the Nazis during World War II.  Any form of state violence or any ism  is embraced by private for-profit capital because then all they need to do is bribe the state rather than deal with labor aka democracy and all of those fussy things like living wages, environmental protection, employment opportunities for all of democracy, safe working conditions, poverty, benefits, community investment, etc.   That is why democracy in America is dead.  Corporate capitalism killed it.   If we want democracy back………..

China’s bad debt and banking problem has been ongoing for over a decade now.    Today the number of nonperforming loans is certainly almost as large as GDP and larger than their foreign exchange reserves.  No one can really prove anything given the lack of transparency but regardless, as noted on here for many years, China is broke.  They just don’t realize it.  Yet.  But China is starting to realize the yuan is headed south against the dollar, something discussed on here for years even though financial, economic and political “experts” told us the yuan is headed higher.   The economic crisis in China has reached such massive proportions that the shenanigans used to mask them are so hilarious they almost aren’t even believable.   It’s arguably a bigger shell game than Wall Street.  Well, but Wall Street is still the biggest financial bubble in history. 

This reporting by Gordon Chang makes the US look like Camelot.  And the dollar comparatively looks like the best investment out there.   I said comparatively.  And that is how this system works.  It’s not about virtue, it’s about which pile of dung smells better.   Too many people don’t understand this concept of neoliberal’s deregulated capital and trade.

It appears China has exhausted the largest stimulus package in history. (as a percentage of GDP)  And now once again they are at a tipping point - their capital bubble crashed years ago and it appears their consumption bubble has finally crashed.   So, what is now the biggest crisis facing the communists?  Civil unrest, which I wrote was coming many years ago.  What’s going to happen if there is no demand for all of those goods they are producing?  They are being boxed in every time they try to dump goods at below production costs by both the U.S. and Europe.  Essentially, capitalism is a continuous trade war.   Now, it’s in the open and states are slapping each other with tariffs, quotas and fines. 

If you are China, how do you stimulate employment and create jobs to deal with prospects of civil unrest?  Well, there is only one thing left.  And for that we look to the Nazis, the British, the Japanese, the Soviets and the U.S.   That would be military production.  What better way to guarantee employment and economic opportunity than the endless overproduction of centrally-planned military expenditures?  Unlike an economy created by demand for goods and services by citizens, centrally-planned military overproduction has no limits.  That is, until the rot of repressive, corrupt central state control collapses.  The state can produce, produce and produce some more when it comes to weapons.  Because the state guarantees an endless demand for violence.  Look at the U.S. today.  We spend more on our military than the rest of the world combined.  We have police armed like paramilitary storm troopers.  We spend untold billions spying on our citizens.  And then we have the crux of the issue.  We have the largest air force in the world.  And we have the second largest air force rotting in the desert because we have overproduced so many planes that we can’t begin to even use a fraction of them.   Ditto with the navy and army.  You know, like the Nazis, the British, the Japanese and the Soviet did.  Well, and the British and Russians still do. 

We shall see if China takes the same route thus guaranteeing the U.S. military-industrial complex its next boogeyman needed to maintain its power.  Or so it thinks.  It’s obviously the easiest way for the communists to maintain power while dealing with the prospects of rising civil unrest and unemployment.  Or so it thinks.

Remember, one of the long term theses in here is that we are in a war cycle.  And I wrote that before any of these shenanigans by the U.S. were unleashed upon the world.  Truth transcends time.  Some things are predictable. 

posted by TimingLogic at 11:54 AM

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