Sunday, March 8, 2020

China faces its Biggest Economic Shock since the 2008 Crisis !!

China faces its Biggest Economic Shock since the 2008 Crisis !!

China’s economy was already imploding before this pandemic. China’s debt is 400% of GDP, debt-fueled infrastructure and the real estate bubble has ground things to a halt; overcapacity is contributing to job losses even in coastal cities, Forex reserves are all but depleted and direct foreign investment has been jumping ship for cheaper labor sources like Vietnam. This is already beginning to forestall many small business loans and will knock on to the mortgage sector and consumer economy in due time. Today, local governments in less-affected regions pushed companies and factories to return to work, typically by assigning concrete targets to district officials. Company insiders and local civil servants affirmed that, under pressure to fulfill quotas they could not otherwise meet, they deftly did what China always does when in a bind - cooking the books. This is how a very desperate China is scrambling to give the world the impression that all is well: leaving lights and air conditioners on all day long in empty offices, turning on manufacturing equipment, faking staff rosters and even coaching factory workers to lie to inspectors are just some of the ways they helped manufacture flashy statistics on the resumption of business for local governments to report up the chain. Local companies and officials are fraudulently boosting electricity consumption and other metrics in order to meet tough new back-to-work targets. The Chinese government is expelling foreign journalists ......instead of fixing BIG PROBLEMS, they worry ONLY about SAVING THEIR FACE. They are afraid of the party losing legitimacy. They are lying. They are cooking the numbers. The Whole of China is infected; they changed the method again; suspected and conformed to show little change. They know that the real numbers are 100 times worse. About 1000 dead a day, but it's early, if they send folks back to work, it will accelerate even faster. A 2nd wave may gut them like a fish. One thing they can't fake, though, is the realtime satellite sulfur dioxide emissions (cremations) over Wuhan. Even pollution has reduced too much because of the factories stopping. Seven hundred million quarantined, its either let the virus run its course or quarantine everyone indefinitely. The Chinese economy is done, and its gonna affect the world. Covid-19 will collapse China socially, politically, economically, and financially into the cultural revolution era. This is an example of how fast a modern urban society can collapse. Supply chains collapsing, and the healthcare system collapsing under the weight of gigantic demand. At some point, the survival instinct kicks in, and people start fighting. Welcome back to The Atlantis Report. Please take some time to subscribe to my back up channels. I do upload videos there, too, on a daily basis. You'll find the links in the description box. Thank You. Quote "Under the firm leadership of Xi Jinping, the epidemic is under control, and the market confidence is steadily recovering."End of Quote. With these few accompanying lines, the Chinese National Statistical Office released the worst economic data ever. In February, the country's manufacturing index marks 35.7, which is about three percentage points lower than the minimum reached in November 2008, in the midst of a global financial crisis. It does not go better with the service sector, which recorded a plunge of more than 24 points compared to the previous month to settle at 29.6. To be clear, these data take into account new orders, production, employment, deliveries, and stocks linked to the sector, and, in general, it can be said that value lower than 50 percent indicates a contraction, while a higher value indicates an expansion. Here, up to now the forecasts of the major economic, financial institutions of the globe, predicted that the epidemic in China would have produced a contraction of a few percentage points of the SMEs that would have reflected in one or two points less on the growth of the GDP of the first quarter 2020. Instead, it turns out that the calculations are all to be redone and strongly downward. Let's put together some indicators. From January 21 to February 9th, a large part of the Chinese population was not working. The Lunar New Year holidays coincided with the quarantine of around 60 million people, and in many areas, they were extended week after week until February 26th. Obviously different measures were applied depending on the places, but to get an idea of ​​the impact, we rely on a calculation by the New York Times. In the middle of the month, due to the epidemic, about 760 million Chinese, or more than half of the most populous country in the world, was subject to some form of limitation of the freedom of movement. Not in the best conditions to encourage economic recovery, therefore. And indeed. A drop of 80 percent of travel, 50 percent in the restaurant and retail sector, 75 percent in real estate compared to 2019. And the industry has not suffered less, on the contrary. Power plants recorded a minus 50 percent in the purchase of coal, a sign that the country's energy demand has suffered the same inflection. Pollution, another indirect indicator of industrial production, was 40 percent lower than a year ago. Not to consider the workforce, those 200 million migrants of which just half have returned to the factories, and only from this weekend. According to the multinational financial ANZ, in February, China worked at 20 percent of its capacity, so the recovery will be rapid and visible already in March. But there is also another fact to consider. The official data do not, by definition, include all those economic activities that have an annual turnover of fewer than 2.6 million euros and, according to the Ministry of Industry and Information Technology, have reopened only in 30 percent of the cases. And, it must be added; it is precisely these small and medium-sized enterprises that represent the heart of the so-called "bamboo capitalism." These are 90 percent of Chinese companies and alone account for 60 percent of GDP, 70 percent of the technological innovation sector, and over 80 percent of urban employment. It will not, therefore, be by replicating the massive stimulus package to state-owned companies that in 2008 saved the country from the global recession that a solution will be found. Even THE IMAGES OF NASA SHOW A REDUCTION OF POLLUTION IN CHINA due to a reduction in THE ECONOMIC AND PRODUCTIVE Activities. The virus drama has had at least one positive effect, in the wake of infections and deaths, due to pollution in China. The concentration of nitrogen dioxide in the atmosphere has collapsed impressively, just look at the photos released by NASA, which show the color change in the skies of the great country, from yellow to blue, from January 2019 to February 2020. Cleaner air is partly due to the economic slowdown caused by the epidemic, scientists from the US Space Agency said. The effect was caused by the temporary shutdown of Chinese factories in order to contain the virus. China has reached nearly 80,000 cases of contagion, with 2835 deaths at the time of making this video. Also influencing the improvement of pollution conditions was the blocking or, in any case, the reduction in the circulation of cars, which spread from Wuhan to the rest of the country, with millions of people in quarantine. "It's the first time I've seen this air cleaning effect in such a large area," said Fei Liu, a researcher at NASA's Goddard Space Flight Center, which specializes in air quality. He added that he had noticed a decline in nitrogen dioxide as early as the 2008 crisis, but it had been more gradual and still had fewer effects on the atmosphere. Local governments prioritize controlling the epidemic over the economy. Decentralized repression has made it difficult for companies to return to normal, and the available indicators show only a slight recovery in activity. Beijing has declared a "people's war" against the virus. Phased return to work has the potential to disrupt complex supply chains, as many workers have been unable to return to their normal place of work. The support measures have so far been extensions of existing programs because China has not yet engaged in a real recovery to support the recovery. Transport, construction, and technology supply chains most affected. The most serious economic impact will affect the transport sector. Tourism spending will suffer severe and permanent loss. The closure of trips to China will affect GDP growth in the first quarter as the authorities quickly moved to full mobilization with control measures applied down to the village level. The big question is, how long will the current control measures remain in effect ... The epidemic has led to a decrease in property sales. Much of the real estate and construction activity ends in January and February during normal years. Although the extended Chinese New Year holidays are now over, property transactions will not rebound quickly. The volume of property sales in the first quarter should, therefore, drop by 20 to 30% year-on-year. The loss of turnover strikes promoters who are already facing a sharp compression of available financing. Regulators have limited fundraising through parallel financing and the sale of bonds. All this means that construction activity will take longer to recover after the shock of the first quarter… Large companies can bypass disruptions in the technology supply chain. Large factories do not know if parts will arrive in time for assembly. Small businesses, on the other hand, may have to delay the launch of new products. The biggest obstacle at the moment is getting workers back. Almost 80% of the manufacturers surveyed do not have enough staff to return to full production. Apple is still expected to launch its new iPhone in the fourth quarter. No country can yet match the capacity of China as a manufacturing base, but it is becoming clear among China's large customers that they will need to increase the geographic diversification of their supplies ... There are five key points that make up the current market support. Point # 1: large parts of the world economy (Japan, eurozone, Switzerland) have no choice but to keep interest rates in negative territory. Point # 2: the US dollar is by far the least bad currency of all. Point # 3: with limited growth in emerging markets, global growth will remain poor. Point # 4: Without accelerating growth, inflation is hardly a risk for the financial markets. Point # 5: the only sector that still offers attractive growth is technology… Five long-term risks should worry investors. Regarding macroeconomics: 1) When inflation takes off, interest rates will “normalize.” 2) The evolution of demography means that too few producers face a lot of consumers. Regarding microeconomics: 3) Energy transitions will not manage to control climate change. For geopolitical evolution: 4) The American-Chinese rivalry will create a bipolar world in permanent conflict. 5) Inequality and disillusionment with regard to democracy will encourage nationalism and socialism… Five long-term risks shouldn't worry investors. In macroeconomics: 1) Macro policy will be paralyzed during the next recession because the monetary firepower is exhausted ... 2) The debt burden will trigger financial crises and crush global growth ... In microeconomics: 3) The level of life will stagnate due to low productivity, while robots and artificial intelligence will destroy quality jobs… In geopolitics: 4) The implosion of the European Union or the euro will cause political and economic chaos… 5) China will implode with the collapse of communism ... The exposure of the portfolios must be changed gradually. Fragile assets such as certain stocks must be replaced by robust assets such as cash in US dollars and short-term US treasury bills, as well as anti-fragile assets such as gold, government bonds, and Asia-Pacific bonds… This was The Atlantis Report. Please Like. Share. Subscribe. And please take some time to subscribe to my back up channels, I do upload videos there too on a daily basis. You'll find the links in the description box. Thank You.

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“Control oil and you control nations; control food and you control the people.” Henry Kissinger

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George Mason

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The few who understand the system will either be so interested in its profits or so dependent on its favours that there will be no opposition from that class, while on the other hand, the great body of the people mentally incapable of comprehending the tremendous advantage that capital derives from the system will bear its burdens without complaint and perhaps without even suspecting that the system is inimical to their interests.
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