Free Money Thursday – Chinese Stimulus To The Rescue!

MORE FREE MONEY!!!

China gave the markets a big boost this morning by announcing an immediate $25Bn program for railway construction and another $50Bn a year for "more stuff."  That sent the Nikkei flying to 15,150 but then Chinese Non-Manufacturing PMI fell to 54.5 for March and the Nikkei gave back 75 points while the Hang Seng closed just 0.2% over flat and the Shanghai fell 0.75%, back to 2,043, just 5% over the lows they've been testing all year at that critical 2,000 line.

Now to some extent we could say "what's the difference where the money comes from, as long as they keep giving it to us?" and that would be the correct attitude, if we were 8 years-old and had no concept of consequences!  As adults, we should wonder – WTF are all these Governments so afraid of that they can't even allow a small correction before jumping back in with "emergency measures"?

China's House of Cards

The simple answer is that IT'S A GIGANTIC CON, like the time they built a fake town in Blazing Saddles - it looked good, as long as you didn't look behind the facades.  If you actually tried to touch it, it would fall over like a house of cards.  That's what happens when you prop up an economy with stimulus – you haven't built a foundation – it's all a facade, so the Central Banks that built it are terrified to see it tested….

The con depends very much on people BELIEVING that the house of cards is a real house.  Without a constant inflow of investment Dollars, the slightest breeze can knock the whole thing over and we'd be right back to the wreck we had before.  And, of course, it's not just China that's built a house of cards.  The US, Europe, Japan – pretty much all the Central Banksters are participating because, rather than let the banks fail in 2009, they pretended everything was OK and went about trying to back-fill the $15Tn Global hole in their balance sheets by printing money and, not so subtly, handing it out to them.  

That's over $5Tn in debt (now, this chart was 3 years ago!) that we, the people, have taken on to bail out the Banksters.  None of it stimulates the economy, they already lost that money.  Of course you could argue that the money they lost was OUR savings deposits, which they were entrusted with and which they gambled away so, if we had let the banks go under – then we would have lost our deposits as well.  That would not have been good.  Still, the new debt is ours, not theirs and here they are – back to all of their old tricks again.

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