The Chinese government continues to pump out false economic propaganda on a scale that our BLS could only dream of. These wily orientals want you to believe the Chinese economy is growing at 7% to 8% per year. That is hysterical. China makes cheap rubber dogshit for the rest of the world using their slave labor and ships it by boat to the U.S. and Europe. Everyone knows that Europe is in a spiraling depression. People can barely scrape up enough money for a chocolate croissant and an espresso, let alone buy rubber dog shit from China. The U.S. keeps putting out press releases saying we are in the midst of a growing economic recovery, even as Bernanke announces his 400th QE today. Countries always add 600,000 people per month onto their food stamp entitlement program when the economy is booming. Our retailers aren’t selling the cheap Chinese crap, so our ports are running on empty.
It is all reflected in the Baltic Dry Index, which shows how well world trade is humming. It reached a 17 month low today. It is now approaching the panic lows on late 2008/early 2009.
If an economy was really growing at 7% or 8%, wouldn’t the companies making the rubber dog shit be making gobs of dough? When companies make gobs of dough, their stock price goes up. Right? The Shanghai index is just above the panic low of 2008. China implemented a stimulus plan so big, it would make Krugman blush with pride and send a tingle up Larry Summers’ leg. But the Chinese stock market is now down 40% from the stimulus induced high of 2009 and down 70% from the 2007 bubble high.
So you have world trade at 2008 lows, the Chinese stock market at 2008 lows, Europe in depression, and the U.S. in recession, but the Chinese economy supposedly growing at 7.7%. If you believe that, I guess you’ll believe the imminent fiscal cliff compromise will actually cut our deficits.
Whatever you do, don’t think. Just believe your owners. They know what’s best for you.
Today’s chart illustrates the overall trend of the increasingly important Chinese stock market as measured by the Shanghai Composite Index. Today’s chart illustrates how the Chinese stock market went parabolic from mid-2005 until late 2007. China’s boom was immediately followed by a financial crisis induced bust with the Shanghai Composite Index plunging 72% in a little more than one year. Unlike what occurred stateside, China’s post-financial crisis rally was relatively short-lived (only nine months). Over the past two years, the Shanghai Composite Index has traded within the confines of a relatively steep downward sloping trend channel. Over the past week, the Shanghai Composite has worked its way higher as Chinese stock market investors anticipate the introduction/extension of stimulative government policies after this week’s Central Economic Work Conference. This recent rally, has brought Chinese stock prices right back up to resistance (red line).