Sunday, November 30, 2008

Arrest of Billionaire in China

The founder of Gome, a well known Chinese electronics company, has been arrested.

From the BBC :

Police have confirmed that one of China's richest men, Huang Guangyu, is being held in custody while they investigate him for "economic crimes".

Mr Huang went missing last week and shares in his company Gome have been suspended from trading.

Officials gave no further details, but Chinese media point to alleged irregularities in the share price of a company controlled by his brother.

The billionaire electrical appliance tycoon is worth some $6bn (£4bn)

It is inevitable that the new wealth in China will begin to challenge the authority of the state and the military apparatus. History shows that whenever a new economic class develops, it seeks to gain political power. Consider, as an example, the bourgeoisie in pre-Revolutionary France.

I have no idea if Huang was trying to undermine the Communist Party on some level, but I would not be surprised. A state crackdown on the budding oligarchy would not be surprising.

Based upon conversations I've had , I think the status of the Chinese military has been reduced over the last decade. I wonder whether the old guard is happy about that.

About the Economy

The situation is worldwide, not just American. We will be first to feel the harshest effects, as our many forms of deficit spending have fueled worldwide growth for many years. We are first in the supply chain, so to speak. But, there are real estate bubbles throughout Asia, the Middle East, and Europe. And there is massive industrial overcapacity in East Asia.

The societies that emerge from this crisis the strongest, will be those with the most elastic government institutions.

Saturday, November 29, 2008

The Invisible

Despite the hype, or fear-mongering, the average person in Chinese is very poor by Western standards. It's the 3rd largest economy simply by having a really gigantic population. America's vision of China is too often shaped by what could be termed 'the success stories', the top ranked students we see coming over to attend our universities. Our overseas immigration admissions are very competitive, so people making it through have either a needed skill, good education, or high motivation - often, all three. The point being, the average Chinese peasant or factory worker is pretty much invisible to the West. We really don't know much about their thoughts or opinions, or how they will react to a prolonged economic slump.

Thursday, November 20, 2008

Great Depression II ?

We can call it the Great Unwinding.

A generation of financial speculation blowing up in real time.

Monday, November 17, 2008

Blog # Infinitum

Adding my voice to the peanut gallery - Purple