Written by Daily Bell
China's Economy Grows 9.5%, Exceeding Estimates ... China's economy and industrial production expanded more than analysts predicted, indicating the nation is maintaining momentum even after interest-rate increases to cool inflation. Gross domestic product rose 9.5 percent in the second quarter from a year earlier, the statistics bureau said in Beijing today, after a 9.7 percent gain the previous three months. The median estimate was for a 9.3 percent pace in a Bloomberg News survey of 18 economists. Industrial output advanced 15.1 percent in June, the most since May 2010. – Bloomberg
Dominant Social Theme: See, things are good! China is in a good shape, Europe is recovering and America has the political will to deal with its problems. Recovery is on the way. No problem!
Free-Market Analysis: We are not convinced by the endless stream of happy talk that emanates from the mainstream media these days. Our view is less benign. From what we can see, the world is descending into a kind of controlled (or uncontrolled) Great Depression. It's taking time but the arc is clear.
This article will illustrate yet again how mainstream media covers the world – China in particular – and why the reality is so much different. We regularly observe that the world's conversation is organized via the Anglosphere elites' "dominant social themes." These fear-based promotions are intended to strip wealth and prosperity from the middle class in order to increase control of globalist institutions. But the Anglosphere elites also work via OMMISSION. That is, in addition to advocating fear, they actively encourage ignorance.
We are well past considering it to be coincidence. The world's economy is a kind of planned madhouse. Those in power have inflicted upon it scores of central banks – all busily printing/creating money from nothing at the push of a button. Those who run these central banks are well aware of their ruinous disposition. They understand fully the boom bust cycle that brings bankruptcy and hopelessness to so many. But one does not ever acknowledge this. If one works within the system, one is not supposed to.
In the upside-down world of modern finance, central bankers who print money are "hawkish inflation fighters." Politicians who endlessly create the distortive price fixes, called "laws," are "public servants." Corporate leaders who generate profits by linking their companies to the great, grinding machinery of Western legislation are "entrepreneurs."
Mainstream media coverage provides us with a disparate view: Each element of the puzzle is treated incidentally. Sometimes the news is good, sometimes bad. But ... somehow ... the Western world's economic situation continues to erode.
What is the result? Sooner or later, planned or not, the conclusion shall be reached. It will presented as a coincidental fait accompli, a solution that has occurred quite by accident, an evolution that seems inevitable but was not in any sense (so we are to believe) preordained: What is to be the apex of all this? A shiny new world order, perhaps, complete with a global currency.
In the meantime we are not supposed to notice the truth. Not ever. And what are the over-riding sub-dominant social themes when it comes to the world's non-existent economic recovery? In no particular order ... Europe's crisis is being dealt with; America is on the rebound; the BRICS are healthy and China continues to expand at a rapid pace while controlling inflation. If you believe this, dear reader, we have a bridge to sell you in downtown Brooklyn, NY.
There is ample evidence that none of this is as it seems. The US is broke. Involved in an ever-spreading war on terror, American political and corporate elites can't agree on how to confront an impending national default. In Brussels, powerful Eurocrats are meeting for the umpteenth time to deal with a sovereign crisis that never seems to go away.
Price inflation? China and the BRICS generally continue to announce that price inflation is under control: Every month the leaders of these countries assure it is so, while continuing to put into place Draconian price-fixing policies to control what is already controlled. It IS controlled. They tell us so.
In fact, America is staggering; it is finally retreating from its horrible wars not because the military-industrial complex wants to, but because it has to. The Pentagon, like the rest of the country, is broke. Europe is broke, too. And China has printed so much money that it has had to forbid people from buying and selling real estate.
There are more problems. Japan is reeling from a devastating earthquake. Russia is collapsing into a morass of corruption leavened only by additional "terrorism" and Africa faces devastating drought accompanied by "food insecurity" that threatens starvation for tens of millions.
Listen to the mainstream media and none of the above is placed into perspective. The reporting is serial and disconnected. In many cases it is determinedly optimistic. It wouldn't do for elite media to admit the truth. The idea that the Western dollar reserve system basically died in 2008 and only the injection of some US$50 TRILLION around the world has saved the system from complete collapse is not an acceptable epiphany.
The elite – in aggregate – needs to keep on spinning its promotions. They are hiding the collapse. They never tell the truth. In this case the operative plan seems to be top put on a happy face until the damage is so widespread and people are so miserable that they will agree to anything, including world government.
The mendacity is breathtaking. If people don't know what's going on, how can they plan? If they are being lied to by their most "trusted" mainstream media sources, how can they create valid strategies for themselves and their loved ones?
Most recently we came across a Bloomberg article (see excerpt above) that trumpeted yet another terrific quarter of growth from China. The Bloomberg article hews directly to the mainstream meme that while China – a great and sprawling economy – is having some growing pains, the nation's animal spirits are healthy and its longterm prospects are good. There are glitches of course, but the wise leadership knows how to deal with them.
In fact, the ChiComs in their wisdom have now required of China's central bank that it boost lending rates five times since mid-October. Bank reserve requirements are at a record high. Clearly, liquidity is being reduced. "Premier Wen Jiabao said yesterday that stabilizing prices remains the top priority, after food costs soared more than 14 percent in June."
Fourteen percent! And the price of pork, we learned the other day, had gone up by 50 percent. When is hyperinflation not hyperinflation? When it happens in China, dear reader. Here's some more from the Bloomberg article, much of it comfortingly clinical, soothingly numeric:
The government "can remain focused on inflation, given that growth was pretty strong," said Dariusz Kowalczyk, a senior strategist at Credit Agricole CIB in Hong Kong. The data "will encourage policy makers to maintain tight policy settings," he said. The economy expanded 2.2 percent in the second quarter from the first three months of the year, the statistics bureau said, picking up from 2.1 percent in January to March.
Fixed-asset investment, excluding rural households, rose 25.6 percent in the first half from a year earlier, today's report showed. Retail sales expanded 17.7 percent last month from a year before exceeding a median analyst estimate of 17 percent. The expansion in industrial output compared with the median 13.1 percent gain in a Bloomberg survey ... The People's Bank of China has raised the one-year lending rate to 6.56 percent and the one-year deposit rate to 3.5 percent, announcing the latest increases on July 6.
The nation's biggest banks are required to set aside 21.5 percent of deposits as reserves, up from 17 percent in November, locking up cash that could fuel inflation. Ding Shuang, a senior economist at Citigroup Inc. in Hong Kong who previously worked at China's central bank, said last week that he expects inflation to slow after this month. UBS AG, sees price gains remaining above 6 percent in July before moderating toward 4 percent at the end of the year.
And now here, unvarnished is the antidote: "Notes From the Field" courtesy of The Sovereign Man newsletter. The "Man" is traveling in China; what he's found confirms yet again what we have been suggesting in evermore emphatic terms for the past two years ... that the Chinese economy is a farce, a Potemkin Village; that the numbers cannot be trusted; that the "expansion" is built on the flimsy foundation of make-work. But don't take our word for it:
Reporting From: Chongqing, China ... By some accounts, Chongqing is the largest metro area in the world with a population of some 32 million. They ought to call it the largest construction site in the world. This is a place that, if you believe the official numbers, posted 17% GDP growth in 2010. It doesn't take too long to figure out how that happened. Driving around town, I found that Chongqing is in such a building frenzy, they're actually tearing down perfectly good (and reasonably new) buildings and infrastructure, and rebuilding them.
To give you an example, next to my 45-story downtown hotel was a building site where the constant drone of jackhammers signaled to me that there was some breaking of concrete going on. The new tower under construction had reached the 11th floor, but then they decided to tear it down and start all over again with something even bigger (102-stories).
[There are a half-dozen other such towers in Chongqing. Most of them are officially "on hold," signaling to me that China is getting ever closer to facing its bubble reality – that demand simply cannot support such investment.] Then there are the pavement workers... half of them digging up the road, half of them putting it back together. It is the literal equivalent of digging ditches only to fill them back up, all in order to create employment.
The government certainly hopes that actual businesses will come to Chongqing to mop up all the excess productive capacity that they're building (and then tearing down and rebuilding). Chongqing is, in fact, at the epicenter of the "Go West" drive in China, whereby manufacturers along China's coast are being encouraged to move their production facilities inland to take advantage of the untapped labor pool and cheaper all-around costs of doing business.
Curiously, Ford Motor Company is one of the region's cornerstone investors. The company's biggest concentration of production plants outside of Detroit is in Chongqing. Ford aims to use the city as its beachhead in China where its market share currently languishes at a paltry 2.6%.
Perhaps in the years and decades to come, dozens, even hundreds of businesses will relocate to Chongqing. Maybe the Chinese have it all figured out and are thinking 25 years in advance. But today, it's hard to see how ripping down buildings and roadways (and replacing them with ghost towers and the exact same roadways) could prove to be a worthwhile investment.
A half-built building is a liability. A completed building sitting empty is an even bigger liability. These aren't signs of clever planning, but of wasteful misallocations that are starting to crack the facade of the Chinese economy. So much superfluous construction did create temporary economic growth... but now you can see the visible signs of unemployment rising. The sheer volume of downtrodden and destitute Chinese on the streets, coupled with rising consumer prices and declining output, all suggest that deep instability is looming.
The Chinese have an old proverb: "Keep your broken arm inside your sleeve." They have been telling lies to the world and masquerading as an economic miracle for years, but the signs of stress are showing. Yes, China does have the right kind of potential with over a billion people, substantial productive capacity, and a high savings rate. But these dizzying growth rates have been a total illusion. With so much of the world's economic hopes pinned on the continued fantasy of 10% growth, it's going to be a hard landing for everyone once China's reality sets in.
This is the miracle! This is what the world is counting on to stave off a generalized inflationary depression! This is the reality of Chinese progress since it took a "capitalist" turn. It seems to us, in fact, a great deal like Europe and America – a planned system of government that mandates growth from the top down and produces results commensurate with the insanity of the strategy.
There is something very strange about all of this. The lack of truth-telling is willful in our opinion. Nothing stops Bloomberg or other Western organizations from traveling through China to report on what is really going on. Instead we get torrents of numbers – statistics that tell us nothing ; numerical conclusions that are false the instant they are issued.
Conclusion: Is that a great Depression knocking? Leave the door shut. Guard yourself and your loved ones. You are being lied to; it is a conscious campaign, a Dreamtime, lulling you. Lift the blinds and look outside. Trust your own vision, not what you're being told.
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