Strangewalk

Seven Notes on the China Wildcard

While this post may seem off topic, the point is that investing in China now is like playing craps in Las Vegas, and you'd probably have better chances there.

How did China accumulate such massive foreign reserves? Is it because the government imposed the world's highest corporate tax rates on its export manufacturers while pursuing aggressive, unfair, deceptive mercantilist policies in foreign trade along with massive copyright/patent infringement and piracy? Factories were limited in ability to pass profits on to workers as higher wages, which preempted the development of a domestic, consumer driven economy, while ensuring continued CCP control of the purse strings. China lost its golden opportunity, the death of globalization has begun with a bang and Smoot-Hawley will certainly be repeated in some form. Now all the Chinese government can do is play monetizing, speculation and bubble games while buying time from the certain inevitability of disaster that it actively participated with the Americans in making. Also, I don't think the Chinese have nearly the same ability to sustain their bubbles as the Americans did, especially in the current global atmosphere of extreme volatility and fear.

International ETF Update: China, India

As the consumer driven Euro and Dollar zones continue to severely weaken, havoc will visit China's export sector--a full 75% of its economy, with massive layoffs occurring even now in the prison factories sprawling over the Pearl River Delta. I'm also wondering how enthusiastically the denizens of Beijing will welcome a return to normal, after they've actually been able to breath air that's only rated 50% carcinogenic for three weeks. Of course, you can always follow Mr. Roger's lead and invest in the world's most technologically advanced counterfeiting, illegal copying and copyright infringement infrastructure--good returns there indeed.