Developing World’s Market Bubble Set to Bring Global Depression
In China, ghost cities are starting to pervade the landscape like some kind of cancerous growth, void of human presence … They are not abandoned towns reflecting ghosts of the past. Instead, they are large abandoned cities reflecting ghosts of times that would never come. – TopSecretWriters (5/1/2012)
China cuts reserve requirements as economy slumps … The People’s Bank of China will cut the reserve requirement ratio for banks as it moves to stabilise growth. China’s central bank said it would cut banks’ reserve requirements on Friday, after a set of disappointing trade data. Effective May 18, it will cut the reserve requirement ratio for banks by 50bp to 20%, which it hopes will free up lending and stimulate a recovery — or at least avert a hard landing. – Finance Asia (5/14/2012)
Beware Of The Massive Bubble In Emerging Markets … Amid the excitement over the rise of China, investors and economic commentators have been eagerly scouring the world for “The Next China” – or at least the next country to supply the raw materials that China needs for its boom (and construction of empty cities!) … Soaring asset prices and easy money is creating “luxury fever” as emerging market nations copy the spendthrift ways that led to the West’s downfall just a few years earlier. In its essence, the emerging markets bubble is a derivative of the commodities and China bubbles and is highly vulnerable to their inevitable popping. – Seeking Alpha (5/13/2012)
The world is facing outright depression.
The US remains mired in unemployment and price inflation. Europe, already in chaos, is on the verge of losing the euro. And most importantly, the third leg of the world’s economic stool – the BRICs – is beginning to fail.
India is in the grip of an enormous inflation. So is Brazil. China continues to slump toward the dreaded “hard landing” as its bureaucrats litter the land with enormous, empty cities. The monetary cycle has turned.
The proximate cause of the current, about-to-blossom, full-on slump is the turning of the business cycle in 2001. Gold and silver began to appreciate then. Gold was in the very low triple digits and silver was in the single digits.