Communist China in danger of economic collapse

China is obviously desperate and using N. Korea as a diversion.


North Korea just warned that it would launch a "merciless" attack if provoked by the US and its allies, hours after President Barack Obama described the state's nuclear and missile programs as a "grave threat" to the world. North Korea is a puppet of China and China probably had Jong-il put to death last week. It is also highly likely that the nuclear test recently staged in N. Korea was actually a Chinese weapon detonated by the Chinese because China pulls the strings and does not tolerate unstable neighbors. However, being able to appear to contain the raving lunatics of N. Korea makes the lunatic socialists in China appear pragmatic and wise in comparison.

Yesterday, North Korea denied Japanese media reports that Jong-un had flown to Beijing earlier this month to meet the Chinese president, Hu Jintao and get instructions. China is at serious risk of imploding now as Russia did after experimenting with capitalism and therefore they are using N. Korea to divert attention while they make preparations for a crack down and massive default/confiscation of foreign investments. The pre-text for the confiscation has to be believable and accepted by American Democrat-Socialists. China's exports have collapsed but China's demand for commodities has been artificially maintained to reap a financial buffer and recover cash for the "free lunches" they served to garner western currencies. A "great Depression" in America and Europe is now economically desirable to China to reduce the risk of a revolution in China by keeping the value of the US dollar high and using western currencies to carry China into another five-year plan.

Using their N. Korean puppet, Communist China could now have N. Korea launch a small nuclear attack in the vicinity of S. Korea to obliterate any attention being given to the clamping down on economic freedom and default/confiscation of foreign investments in Communist China.


Warning: Recession (at best) to continue flat until 2010 elections:
A top Federal Reserve official warned not to take recent gains as proof the U.S. economy is on the verge of a strong recovery. Federal Reserve Governor Kevin Warsh said, "The panic's hasty retreat should not be confused with robust recovery. The rather indiscriminate bounce off the may be more indicative of a one-time reset, which may or may not be complete." "The global economy runs the risk of being mired in a period of slower growth for several years to come."

Warsh said private demand; the true arbiter of economic performance, "remains weak" even while government spending has surged. He said, "I would expect business capital expenditures and consumer spending to continue to disappoint for the next several quarters."

Looking forward, the Fed "will not ... compromise price stability" by monetising large U.S. budget deficits, he said, warning that "higher interest rates were a risk." if fiscal authorities are unable to demonstrate a credible return to sustainable budgets."

Warsh did not foresee the fast end to the recession that many economists now anticipate, but looked for the huge fiscal and monetary stimulus to finally kick in before the 2010 November elections.

Market forces June 17

Market Outlook
We continue the countdown and go far out on the limb to estimate that the current market rally has at most one business day of life remaining. The socialist Obama administration and its redistribution of the American worker's wealth to the corrupt, the indolent socialist voters, and 12 million illegal immigrants could easily create a hole deep enough to take America 20 years to get out of. China is using N. Korea to prepare the world for a major diversionary crisis and to protect China's recently accumulated foreign wealth by unleashing world wide deflationary forces as Communist China prepares to launch a new five year economic plan.

We now have zero confidence in Red China, India, or other emerging socialist markets. The risk of enormous investment losses in emerging economies is now very high. The risk of a collapse in western stock markets being orchestrated by Red China through N. Korea is now very high. It is unlikely that N. Korea detonated a nuclear weapon but much more likely Communist China detonated a weapon to increase the world crisis to diminish/hide the perceived threat of what China will be doing next.

Last night most Asian markets were down again. China was up 1.2%, Hong Kong down -0.5%, S. Korea down -0.6%, and India down -2.9%.

European markets are down sharply today in a range of -0.6% to -2.6% mid way through their day.

US futures indicate the American markets will be starting slightly lower today. Over the next three months we could see a sell-off of 28% as investors realize this Obama crisis of socialism will get deeper and will last at least another one or two years. If Communist China launches their new five year plan and confiscates all foreign investments as is now indicated by their nuclear diversion and execution of the N. Korean dictator last week then world wide deflation would protect China's wealth and China would indeed appear the wisest leader of the world and maintain their domestic tranquility.