The Last thing anyone should do, is invest in a failing institution or in a company denominated in failing currency. The media is full of the ‘fact’ that China’s exports are down by 20%, but that their economy is still booming at a 6.5% a year increase. This is while ours in the last calendar year was but 3.8% and under Obama barely 1% a year. Do you believe all this ‘news?’ I don’t, and I am going to tell you why.
A book entitled “The Coming Collapse of China” was published in 2002, and I read it then, as well as re-reading parts of it for this column. A nation’s economy, if it is well run, will keep that nation’s debts, credit, currency, and reputation intact. If it isn’t well run, a collapse is probable. Russia’s communist party and the entire Soviet Union collapsed in bankruptcy, and I feel that China’s may also, just as has Venezuela’s. I must remind you that a nation which is not free, and no socialistic-communist nation is free, cannot invent, improvise, or do what free minds can do. China has been stealing America’s trade secrets, technology, intellectual properties, and inventions for decades, and without that theft, China would be back as it was under Chairman Mao, a poverty ridden, slave state, unable to even feed itself. The book I refer to was written in 2002, and this is 17 years later, but Venezuela’s fall began close to 25 years ago, when a socialist was voted in. It has gone downhill since, and now even the lights went out last week. East Germany was a classic socialistic-communist, slave state, which was incapable of invention, freedom, and prosperity. The East German commies were building the absurd ‘Trabant,’ while West Germans were building Mercedes and BMW’s. Our Mexican border is not to keep American out of Mexico, but to keep slave state refugees out of America.
China has state owned banks, state owned factories, and businesses, with virtually all of them unprofitable and poorly run. The “SOE’s” (state owned enterprises) borrow from state owned banks. A few direct quotes from the book: “There is no deposit insurance system in China, and the authorities are in no hurry to put one into place.” “State owned enterprises are the pride of Chinese socialism.” “SOE’s are sick. The only difference is that banks are as well. It was a financially transmitted disease.” “ldquo;A substantial portion of the “Assets” in the banking system are loans to the SOE’s.” “No liquidity and the system will collapse. This is the first lesson in banking 101.” “Few in the state sector want to, or feel they should, pay back their loans. Among borrowers there is a philosophy that “It’s better to repay late than repay early, and it’s better not to repay at all than to repay late.” “And why should anyone repay? Courts,” (state owned too of course) “generally won’t decide against a state enterprise, and even if they do, court orders generally go unpunished.” “Few in the state sector want to, or feel they should, pay back their loans.” The book has 345 pages with 56 pages of notes and direct quotes. My quotes are from one chapter on economics.
Now think about it. If a nation owns banks and enterprises and banks loan to them and are never repaid, isn’t this an ‘economics 101’ menu to collapse, and similar to other socialistic-communistic nations’ downfalls? A downfall which will come from within, since the whole shebang is state owned. Since the Chinese state owns commercially and agriculturally, most of everything, as is true under socialistic-communism, it may take longer, but is unavoidable, for the simple ‘economics 101’ reasons. Those basic reasons are that since the state owns banks, industries and currencies, they can manipulate for many years before the eventual collapse occurs because of the resultant impossibility of trade with other nations. When the German Reichsmark went from 25 cents to taking a wheelbarrow full to buy a loaf of bread, trade with any outside nation became impossible, and even normal business transactions also. Venezuela now is approaching the wheelbarrow full to buy a loaf of bread situation.
I believe that China’s obvious lying about its situation, and unquestioningly carried along by the media, as whitewash on Tom Sawyer’s picket fence, will have its eventual timely end, and it won’t be pleasant for those who have invested in it. China has foolishly built many cities which are uninhabited, there are hundreds of SOE’s, and has spread its shaky wealth all around the globe. Ports in Greece, many commitments in Africa, as well as huge military expenditures. I think China is supporting North Korea, and is owed $20 billion by Venezuela. Who knows the full extent of China’s innermost economic situation? We can only guess, but judging by her thefts of our inventions and technology, which she is incapable of originating, in spite of Trump’s efforts to stop it, it may already be too late.
In past columns, I have mentioned many, many items America’s free men and women have invented, be they mechanical, medical, agricultural, or manufacturing. Be it going to the moon, first to fly the Atlantic, inventing the production line, or our God given Constitution, which also has been plagiarized by other nations, we are the greatest. If we can’t plug our borders though, we may not last very long. don@coloradogold.com