Saturday, April 11, 2009

China: Going To Fall, HARD(er than us).

China's customers are in a depression.

Their boom was made up of lots of credit to build capacity and then using that capacity to make half of everything that was made in the world's markets last year. They were building for increasingly good boom times. There is oversupply in every sector of their economy.

And

China's customers are in a depression. ALL of us.

So what does China do? They get out the shovels and start digging themselves deeper into a hole

Their economy is slowing into low single-digits of growth. For any other country, that would be great, but for China it's a hard-core recession seeing they need around 6-8% GDP growth anually to keep up with the influx of workers from the fields.

The workers are going to be back in the fields soon, and for a long time, or China is going to have another revolution. The fiscal policy in China is going to do to them, there, what the same policies did to us, here. We will have to find someone else to make our stuff for a while, a couple of years from now, if they are not very careful with the economy in China. It looks like they are being as reckless as possible.

We'll see.

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