The Biggest Ponzi Scheme on the Planet-The U.S. Government
"American Economic Exceptionalism Explained"                     USAPonzi                                      by John W. White   Mar 29, 2013

China Ponzi
May 2013


The economic development in China over the last 20 years or so has been nothing short of remarkable.  It has been fueled in large part by a highly educated population and a world class but low cost export focused manufacturing industry.  In the last few years (especially the last 10 to 15 years) the government has also invested heavily in an infrastructure buildup.  The manufacturing industry has in my estimation benefited greatly by the USA and EU Ponzi schemes which created an elevated consumption demand from the U.S. and Europe.  The infrastructure buildup has been financed to a significant degree by government debt but also by the investment funds of the emerging middle class.


I find it very interesting that for the last several years China has been building entire cities (12-24 per year with each capable of supporting up to a million people) most of which are still vacant.   Developers build the cities, middle class investors buy the condos/apartments, but no one moves into these new cities.  60 Minutes did a report on this China real estate bubble on Mar 3, 2013 that documents this issue.  You can find this report by Googling "60 Minutes China real estate".


It is my view that both the China manufacturing industry and the China Infrastructure build up will be facing some significant head winds over the next few years.  Manufacturing activity will likely be curtailed due to the pending collapse of the Ponzi schemes in the USA and the EU.   China Construction will likely be curtailed by the potential popping of the China housing bubble.   Millions of vacant houses/condos will only retain value if they are put to use and apparently most of the China population does not have the income to afford these high end accomodations.  Even though most of the properties have been sold, they were sold to the emerging middle class as investments and these investments can only pay off if there are financially capable users of these properties.


I therefore predict that the China economic miracle will slow rather dramatically as these two headwinds take effect.

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