CHINA IS HAVING LIQUIDITY ISSUES 6-22-2013

China is an interesting place to do business. Chinese officials have an ingrained habit of covering up what is really going on. They have done so with the H79 virus for instance.
China has also released economic statistics that are questionable at best. Again, the US government has been faking unemployment and inflation numbers for almost two decades now. Given the NSA fascist mindset this is nothing new and is not limited to China.

Still, the level of what is called transparency in China leaves a lot to be desired. China is now reaping the results of official corruption, easy money and poorly allocated spending priorities. They are seeing their banking system lock up.
Many years ago, Doomer Doug did tractor maintenance work that included lubrication. This was back in the 1970s when you had to manually lubricate what were called zierks. The economic equivalent of a zierk relates to cash flow and liquidity in the system. If you don’t lubricate a tractor it will freeze up. If you don’t lubricate the banking system it will also freeze up. This is what is happening in China right now.

It is unclear how much longer the Chinese authorities will let the economic lock up continue. The structural issues facing China in both the political and economic areas are massive. We shall see how this plays out.
The global stock markets had “rallies” in the past 48 hours. It is unclear, at least to Doomer Doug, why that is. They obviously expect the easy money spigot to stay open. Doomer Doug is not sure why the global markets assume that is the case. The stock markets are now operating on rumors and assumptions. These are based on psychological criteria that have no link to objective economic reality. It is true that this kind of psychological fantasy can mean powerful moves to the upside. it is also true they can be shattered easily. We have seen what happens when the markets feel the powers that be won’t continue the easy money flow.
This will play out the way it will play. Doomer Doug has been writing about all this since 1998. The ability of the powers that be to manipulate the markets is not to be underestimated. They have repeatedly shown the ability to delay systemic economic collapse on a global basis. The pump monkeys have shown an amazing ability to rig the system and keep all the juggling balls in the air. Still, the fundamental amount of debt now involved means somebody will be left standing when the dance finally ends.

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