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I've been preaching for a long time... that China's meteoric economic rise intrinsically contains its own self-limitations. I've noted that set of limits exists as a near "inevitability"... as entirely tied to the reality that China's economic "miracle" was almost entirely built out of the pairing of sustained flows of foreign capital and domestic wages being sustained at lower than global wage costs. The two factors together... capital and low cost labor... enabled massive dislocations in the global economy, beginning with the destruction of manufacturing elsewhere, as lower cost wages meant lower cost manufacturing in China... which has enabled a profitable trade, for some... enabling China to modernize, and become the world's leading exporter...
However, that situation, as I've noted for as long as I've been posting here... is intrinsically unstable. That's true because Mercantilism is inherently unstable... and pairing the restructuring of the bulk of global manufacturing and the mass of global trade into a model based in Mercantilism... ensure it inherits every element of that intrinsic instability... and more... because of the unique amplification applied in the case.
That view was proven correct in dramatic fashion, when Covid arrived, and resulted in the near total disruption of global supply chains... almost exactly as I'd predicted was inevitable.
It was possible, of course, prior to Covid, that China and its partners in the west, might be able to change course in time, and encourage a "soft landing" in global trade, as a response to the re-emergence of "other factors" dominating choices in trade, as would of needs occur as China achieved wage parity...
That parity having been achieved... is not only a result of China's wages rising... but also a result of a very long period of wage suppression in the west, essential in enabling China's emergence... but enabled almost entirely at the expense of improvements in western workers wages and living standards, which have been frozen for decades, and, more recently, are declining steeply in relation to others. That "practical" result ties with the financial impacts... as American "inflation" has been exported to China for a generation, along with the wages and capital required to foster China's growth. And, now... the capital flows stop... the transfers of technology and entire industries to China stops... the trends in industrial relocation and trade dramatically reverse... and, along with them... the reality that inflation cannot continue to be exported as it has been... so that the impacts of (errors in) fiscal and monetary policy, both, can no longer easily evade accountability as they have done, for the last 35 or 40 years.
That's a long re-hashing of my prior opinions, as have been collected here... and from which I've been pretty clear about resulting impacts in "inevitability"... Chinese real estate's massive bubble was obvious... and obviously unsustainable... to any sober analyst... of which there were only few in the west, essentially none in China... before "inevitability" became "timely". And, that bubble is still not being sufficiently unwound to enable "markets" in removing the guillotine that prior excess has built as a massive blade hanging over China's economic neck. And even still... problem solving, if it were allowed, can easily enable corrections that might solve such problems. But, solving problems requires first identifying them correctly... and that brand of awareness is something that neither the WEFfers in the west, nor the Biden Administration, nor the leadership in China are willing to allow... So, instead of truths, today... we get propaganda and "fake news" fostered by the supposedly "free" media cabal... imposing fraud as truth by repetition and denial, while requiring the line be toed... or the errors they intend to impose will be defended at the cost of your rights... or your life... as the drivers of the global policy are in agreement on the moral imperative of their own righteousness in doing wrong being an essential good.
So, the global economy continues to experience increasing risks... as those wholly incapable of understanding, much less leading or following... persist in refusing to get out of the way.
None of that is new in my retelling of it. If there is any error I've made in any of it... it might be in the expectation that better decision making in the west (or, at least, a greater inability to impose flagrant error), in the U.S. in particular, portends lesser impacts. But, as is true in China, bad decisions make for bad outcomes, and persisting in bad decisions, makes bad outcomes worse. I have yet to see real evidence of decisions made in the U.S., that easily could and should be made, being made... in a way that would enable avoiding the easily avoidable in the "worst" outcomes possible. Still true, I expect, that the more pain we manage to inflict on ourselves... the more that pain will be amplified in others experience of it.
All of that merely by way of introduction, today... to a video I happened across... that I think does a brilliant job of presenting most of that... if still missing much in terms of global impacts that are made inevitable when... the global banking system suddenly realizes the fact of its insolvency... and, with or without that... "it all just stops"...
