Monday, January 6, 2014

Globalization for Idiots

When all of this collapses like a cheap tent, people will probably want to know why...

A Fake Economy for a Fake Society
As we see below, it's clearly nothing more than history's largest ever circle jerk. Attendant with medieval sweatshop conditions for the wage slaves, mega-yachts and McMansions for the ultra-wealthy, shopping sprees on Thanksgiving for the Idiocracy and corporate zombification for everyone in between. Archaeologists will want to know how so many people could sell out to something this immoral, fake, and unsustainable. I honestly don't know.

Supply is Demand: Separating Supply From Demand Was Never Going to Work Long-term
These fiscal and capital flow deficits are merely side effects of imbalanced trade flow. China best illustrates Ponzi capitalism's abject failure: that country has now achieved and in many ways surpassed the capabilities of many developed nations. At this stage they make almost everything, and if they put their minds to it, they could make anything. Imagine a world in which the Chinese can make everything we make but MUCH cheaper, and corporations have free choice where to source from - that's the world we live in.

Therefore, apologists for the status quo have yet to explain why China's industrial ascension hasn't led to a large and growing Chinese middle class. And the answer of course is obvious:

1) The total size of their population is too large

2) The relentless Multinational arbitrage between First World and Third World labour, inflates profits while deflating wages i.e. the same arbitrage constantly undermining the developed world's middle class

3) The sheer lack of available resources preventing the consumption-oriented lifestyle from scaling across billions of additional people

China (stock market) with All Commodities (CRB)
It doesn't matter which line is which. Resource prices are highly sensitive to the second derivative in China's economy aka. "growth" 

Again, this all highly intuitive and obvious, however, even at this extremely late juncture, having expended every device known to man to inflate this bogus global economy, STILL it's just widely ignored.

When the Ponzi borrowing ends, the trade imbalances will end; then the fiscal deficits will end for smaller sovereigns and eventually for the debt monetizers as well. At that point, the Developed world will experience the exact same resource constraints that the rest of the world has been experiencing throughout this entire era. The playing field will be leveled for the first time in decades. The consumption-oriented lifestyle will be a buried artifact of a corrupt and bygone era. Multinational profits will melt like a snowball in the sun, a casualty of collapsed revenues and self-destructing  "leveraged recapitalizations". At that point, the terms deflation, output gap, and outsourcing will be in extreme disfavour among the stoned masses, but as usual it will be a day late and many dollars short. 

In the meantime, with the economic keel already at 90 degrees, the rearranging of the deck chairs continues.