2015 crash part 4 of 4

2015 CRASH part 4

What was different this year was China.  Their economy had been in trouble for some time and they had tried all the various wallpapering tricks we pioneered.  But China doesn’t have a true central bank, as per the Bank Of England plan.  They have a bank which serves at the pleasure of the Communist Party.  Their economic manipulation is curtailed ( NOT having a private party- such as the Rothschild’s-own your central bank isn’t a bad thing as you don’t lose control of your economy that way.  The “bad” news is you stay a regional power.  I think, wishful rhetoric aside, this serves the Chinese well.  It is a historical model that can work for them, rather then embracing overreach.  Western writers lament the Chinese recall of the vast fleet sailing the oceans prior to the Europeans, but they are imperial cheerleaders and wouldn’t embrace isolationism even if it came in hooker-with-blow form ).  Not having our central bank, not only is their manipulation curtailed, but their band-aids to combat a crash are more rudimentary and inefficient.  In short, their contraction happened faster and couldn’t be arrested as well.  I’m not a Chinese Expert, nor do I play one on TV, but when your economy is exports, and exports contract wildly ( due to other countries economies crashing ), your economy is crashing.  Just as when our manufacturing economy crashed from tripling oil prices ( still cheap, but NOT dirt cheap and plentiful which is the ONLY way the American economy ever was ), theirs crashes from lack of demand.  Factories are run on the growth paradigm.  That is how they are built and operated.  Not on stagnant shifts, falling demand or anything else.

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“What is good for GM is good for the country” long ago turned into “what is good for China is good for our economy”.  Cheap and plentiful, remember?  Well, more properly, “cheap and plentiful and more of it all the time”.  Interest must be paid on loans, and everything we have, investment or consumer grade, is financed.  Joe Bob’s selling deep fried Yak testicles and corn syrup fizzy drinks is financing his restaurant, his home, his car and his wife’s chesticles.  If Yak are dying off from drought, or his customers income was cut to pay for medical insurance, he can’t make his interest payments.  A company with a workforce of a hundred is indirectly paying 100 mortgages and 100 car payments and 100 trips to Joe Bobs Fried Yummy Yak.  If everyone takes a 10% cut rather than have layoff’s, because the companies heath insurance went up or because its customers had 10% less income from job loses, rather than growth the economy now sees contraction.

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Every innocent looking person you see on the street, or as a co-worker, each of them has multiple interest payments to meet.  Any income interruption cuts the growth paradigm the central bank needs to survive.  Chinese contraction ( or crash ) signals a global demand contraction.  Central banks everywhere are in trouble ( quantitative easing had a prior effect of artificially creating “growth”.  But that was at the macro level.  Now, the micro, individual consuming units-consuming debt, essentially-are out of jobs and so the macro level is useless.  The stimulus has run its course, as evidenced by falling consumer demand effecting the Chinese industrial sector ).  We knew the crash could happen any time.  And it already has.  Chinese factories in freefall demand signals the globes inability to pretend growth anymore. 

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Here in Elko, that friendly little northeastern corner of the Great Basin, our economy is doing better than most ( meaning demand and growth are only marginally in decline ), and yet signs of unrest are abundant.  All the venders at the grocery stores are complaining of unsold product.  Not a drop in demand necessarily but an increase in product placement.  Stores are seeing declining profit ( still profit, but declining profit is growth destruction which doesn’t pay the interest ) and panicking, doing the only thing their minute pea brains are capable of, repeating the mantra “full shelves mean more sales, full shelves mean more sales”.  Any corporate lackey worth their salt has drank the grape Kool-Aid of Growth Uber Alles.  They ONLY know growth.  Recessions are the literal end of the world for them and they really think they can weather just one more storm by battening down the hatches.  They have no concept they hit an iceberg.  But more product on shelves is NOT increasing sales because consumers are tapped out, even in marginally better performing local economies ( and, of course, this incessant idiocy on the part of stores overstocking is going to have a ripple effect up and down the economy.  In a zero sum game, one’s gain is another’s loss and losing in one spot has ripple effects through the whole pond.  Which eventually effect the “winner” store.  But when a pink slip is two weeks away in the next paycheck and quarterly profits are all corporate types think about, and when growth is the only reality you know, you don’t concern yourself with ripple effects or butterfly effects or really even think about anything at all- you ONLY think short term.  The Japanese are one of the few that think long term, but what the tsunami flooding the nukes started, global demand destruction will finish off economically.  Their long term is untenable ).

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Am I instructing you to panic and run out and stockpile more freeze dried yak?  Of course not.  Why panic?  The crash ALREADY happened, remember?  All this is, is a heads up time has already started running out.  You already knew this day was coming, but you secretly hoped for longer.  No, time is short, that’s all.  If you still follow certain blogs advice that Peak Oil is in 2025, well, you are screwed.  I can’t change your mind.  But if you assume the worse, assume it has already happened ( economically speaking.  I’m leaving be nuclear fallout from upcoming wars and other annoying hindrances ).  Personally, I’m pretty happy with all this.  I can’t do another Christmas like this, donation days of five or six thousand pounds rather than the customary two ( I kid you not-these are the new insane numbers.  Not every day, but every week ).  I need at least one if not two major stores to shut down.  And our corporate types in charge at the food bank are absolutely no help.  Solidly stuck in growth mode, they can only fathom happy thoughts at my impending heart attack.  Humpers.  Personally, I NEED local contraction.  Plus, it gets some surplus out of town prior to real collapse.  Here’s hoping!

END

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