In the World. Due to lack of growth on the part of the Japanese economy, and coupled with the Chinese policy of abusing it’s workers and paying zero attention to international copyright agreements, the Chinese economy has now outstripped every other economy in the world, in size at least, save 1, the good ole U.S. What troubles me about this is not the fact that the Chinese are slowly encroaching in on the U.S. That’s been going on for quite some time now and I’ve been worried enough about that already. No, what troubles me is that China is probably about to cause the second descent we’ll see in this global recession.
Second descent, you ask? Yes, second descent. As bad enough as the first round was, with U.S. unemployment figures soaring above 10% in some areas (Which is scary as hell if you know anything about unemployment figures), there is going to be a second round and it will be worse. The second shoe will drop at about the same time that real estate starts to dive in China. I mean, it’s already hit the stall point – aka they’ve built too many houses/apartments/complexes and people aren’t buying them anymore. The next step is that the investors and real estate companies start dying because they can’t turnover the property they need to, to cover the loans they took out to build up said property. Once they start dying, the banks start having to call in other loans to cover the defaulted loans from the internally drowning real estate investment firms. Anyone want to guess where those “other” loans are gonna come from?
You guessed correct if you said “Us”, or “U.S.” for those that don’t live in the good ole U.S. of A. Remember the Chinese own a rather substantial portion of the country’s debt, not to mention a rather substantial portion of the country’s banking and brokerage firms. You could say that the Chinese are heavily investing in the U.S. And that investment is about to bite us in the ass. Once the Chinese start pulling money out of the U.S. economy in order to save their own, the banks over here start their tailspins again.
Couple that with the fact that while we’ve thrown trillions of dollars into the banking industry in order to keep it afloat, we haven’t really done anything, law making wise, to keep what happened the first go-around from happening again. Sure there were a bunch of banking reform laws but those were intended to keep the banks from putting themselves into situations like they were in before, and I would argue that the “reforms” didn’t really do that. But now the troubles aren’t going to start at home, it’s going to come from an outside source. Something we’re utterly un-&*%$ing prepared for because we’ve been the leading economy in the world since WW2 (Yeah, yeah there was that brief period during the 80’s with the Japanese, but who really counts that?) And we haven’t had a situation where another major economy was tied so very very tightly to our own that it’s failure would screw us as much as our failure would screw them.
I’m most interested in two things at this point. 1. When all this will go down, and 2. What our government’s “solution” to the problem is going to be. I’m expecting shotgun toting warlords to take over some cities, but hey I’m an optimist. Who knows, maybe another war with Germany will get us out of the slump.
