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WORLD

the global crisis will resemble closely the Indeed, it is China’s very dependence on
Great Depression with massive write-offs a weary and wary US consumer which spells
in the values of equities, across-the-board its doom when the American music stops.
crumbling of entire banking systems, and Once it does, China’s investment-driven
mounting, two-digit, unemployment rates economy will revert to crippling overin-
everywhere. vestment, overcapacity, hidden unemploy-
ment and underemployment. In one word:
How to reconcile this doomsday prog- history’s worst deflation (or, worse yet,
nosis with China’s uninterrupted string of stagflation.) We have seen it all before with
decades of stellar (often two-digit) annual Japan. The only difference being that Japan
growth figures? had a real and thriving private sector while
China doesn’t: its “private” sector – albeit
By seeing China for what it is: the world’s officially accounting for three-fourths of
greatest-ever Ponzi scheme. Behind the its GDP - is mostly foreign-owned, export-
hype, spin, propaganda, and outright con- oriented, or immersed in non-productive
fabulations, China’s economic miracle is operations (read: speculation.)
founded in its entirety on a simple premise,
a breathtakingly audacious prestidigita- Large swathes of China’s economy – in-
tion: a large (equal to two-fifths of GDP) cluding and especially the mission-critical
and steadily soaring balance of payments financial sector - are in the incompetent
(current account) surplus (mainly with the and venal hands of China’s decidedly un-
USA, its addict-partner in this danse maca- civil service and are “managed” (misman-
bre) serves to disguise and directly under- aged rather) by bumbling and provincial
write the fetid outcomes of an all-perva- party apparatchiks. To this toxic brew one
sive state. These include a mountain-range should add a devastated environment, a
of rotting credits in the state-owned banks dysfunctional judicial system, shoddy ac-
and local government; neglected sectors counting practices (including by Western
of the lopsided economy; and egregiously multinationals), stunted capital markets,
misallocated economic resources (main- an obliterated countryside and dying ag-
ly in the construction and retail sectors riculture, and a demographic time bomb:
and via huge stimulus packages.) In many owing to the “one child” policy, China’s
countries government spending translates population is ageing faster than any other
into GDP “growth” – but China is a special major country’s. This is not to mention
case: most of the seemingly inexorable political risk in an age of Facebook-driven
mushrooming of its GDP had been faked Tweeted revolutions.
this way in 2007-9.

The second phase of the global crisis will resemble
closely the Great Depression with massive write-offs in
the values of equities, across-the-board crumbling of en-
tire banking systems, and mounting, two-digit, unemploy-

ment rates everywhere

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