- Written by Duncan
Financial markets are reeling over the collapse of most of western Europe, which is pushing the global economy further down the toilet. First Greece, then Italy, Spain and Portugal. By the time the dust settles, be prepared to see China to go under, which will flush the remains of the economy past the U bend and past the point of no return.
China's central bank said this month it would raise banks' reserve requirement ratios again, for the third time this year to slow down inflation, which is so out of control it will make your head spin. Chinese workers are struggling to get their weekly paychecks to the stores and buy food before the price goes up past the point where they can afford. In some provinces there are widespread reports of hoarding and looting driven by the bad economy.
As it gets more crazy out there, people are afraid to go to work because others will loot their homes while they are out. This could cause manufacturing to miss deadlines and delay exports of products to large buyers such as Walmart. As part of their disaster recovery plan, most large buyers will switch to alternate suppliers, and cancel orders from Chinese sources. As orders get canceled, factories will lay off workers, which will give them more time for looting.
This financial disaster impacts the Chinese economy, which is teetering over the edge. It is a kind of vicious cycle that continues until every citizen is staying at home, sitting on a pile of slowly rotting food, afraid to go out lest they lose the little they have.
But there is more. China's economy is so tied to the global economy, that it creates a perfect storm condition. For example, a lot of resource-rich countries supply China with raw materials. As orders get cancelled, there is a trickle down effect as China pulls down many countries like a concrete life preserver. If this happens while Europe is under water, you can expect to drown with everyone, just like in that Water World movie, only worse.
The Communist Party Politburo put out a statement to the press, that they are going to send in the military to affected areas to enforce a reverse curfew. Citizens are required to show up for work or face being arrested. Of course they plan to start with soldiers and prison guards, who seem to be significantly absent.