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oftwominds-Charles Hugh Smith: Two Powder Kegs Ready to Blow: China & India
oftwominds-Charles Hugh Smith: Two Powder Kegs Ready to Blow: China & India.
China and India are both powder kegs awaiting a spark for the same reason: systemic corruption.
The conventional view of China and India sports not one but two pair of rose-colored glasses: Chindia (even the portmanteau word is chirpy) is the world’s engine of growth, and this rapid economic growth is chipping away at structural political and social problems.
Nice, especially from a distance. But on the ground, China and India (not Chindia–there is no such entity) are both powder kegs awaiting a spark for the same reason: systemic corruption in every nook and cranny of both nations. The conventional rose-colored view is that corruption will inevitably decline with modernization and economic growth.
This is simply wrong on multiple levels: as the opportunities for crony/neofeudal skimming increase, so does corruption. As the scale of the economy increases, so does the scale of corruption.
China’s “princelings” (offspring and family of the inner political circle and top apparatchiks of the Communist Party) are billionaires, not mere millionaires. A recent expose of offshore accounts held by various Chinese billionaires estimated the wealth skimmed and transferred our of China at between $1 trillion and $4 trillion: China’s Epic Offshore Wealth Revealed: How Chinese Oligarchs Quietly Parked Up To $4 Trillion In The Caribbean.
Even the top number is a gross underestimate, as $4 trillion only accounts for the skim of the top layer; beneath that 1/10th of 1% is the rest of the top 1%, tens of thousands of lower-level political functionaries who skimmed billions of dollars forcing peasants off their land and selling development rights to crony developers–to name but one common skim of many.
A more realistic estimate might be $6 trillion–half of China’s gross domestic product (GDP). Consider the ramifications of the many models of systemic corruption at the top: How a PLA General Built a Web of Corruption to Amass a Fortune.
I know from confidential on-the-ground sources that a significant percentage of the entire top political layer of 3rd, 4th and 5th tier cities have left China for well-padded nests in the West: Australia and Canada are popular choices, as the right to immigrate can be purchased–just bring in the requisite sum of cash looted from peasants. (The U.S. also grants special immigration status to those bringing in major capital and declaring their intent to hire Americans: easy enough with looted millions.)
(Sidebar on how even the lowly functionary skimmer can get huge sums out of China: take a “vacation” to Macau. Buy $1 million in casino chips with your looted yuan. Lose $50,000 at the tables and then go cash in your remaining chips in U.S. dollars. Deposit the dollars in a Hong Kong or other Asian bank and then transfer the cash to L.A. or Vancouver to buy a house for cash. Repeat as necessary.)
All this systemic corruption is accepted as long as the conveyor belt of wealth is moving: that the previous political Plutocracy skimmed their $4 trillion and absconded with their ill-gotten gains is OK to their replacements, as long as there is another $6 trillion to be skimmed.
The problem is there isn’t another $6 trillion to be skimmed. It has taken an enormous credit bubble of $23 trillion (The $23 Trillion Credit Bubble In China Is Starting To Collapse – What Next?) plus the monumental credit expansion of the shadow banking system in China to enable the skimming of $6 trillion by the political/financial Plutocracy.
This $23 trillion credit bubble is roughly twice the size of China’s entire GDP ($12 trillion). That this credit bubble is generating less return in the real economy is obvious–diminishing returns have set in with a vengeance.
The revolution never starts with the oppressed peasantry–it starts with the bourgeois who bought the fantasy of another $6 trillion to be skimmed and credit bubbles/ real estate valuations that never go down. The leadership in China has managed to create a propaganda bubble of epic proportions: Chinese leaders are supposed to have a long-term view that puts the West to shame.
Alas, the secret view of China’s leadership is considerably shorter-term: U.S. dollars in Swiss bank accounts, real estate in Vancouver, San Francisco, New York City, London, Geneva, etc. and whatever other assets can be scooped up with looted billions.
Corruption isn’t just abstract: Much of China’s building boom will not last a generation, much less a long-term timeline. This toppled tower is an apt metaphor for China’s financialized crony-capitalist credit bubble and its shoddy corruption-riddled construction:
Nine held over Shanghai building collapse
The Chinese authorities are holding nine people in connection with the collapse of a 13-storey block of flats, raising fresh questions about corruption and shoddy practices in China’s construction industry.
China’s Towers and U.S. McMansions: When Things Fall Apart (Literally) (April 14, 2010).
India’s system is different, but equally corrupt. Combine feudalism and religious tradition with a helping of modern crony capitalism and neofeudal looting, add a dash of post-Imperial flavoring and voila, corruption on every level.
The sad irony of this pervasive, systemic corruption that enriches the Plutocracy is that the average Indian and Chinese citizen is basically honest. Non-Elites will tolerate the corruption at the top as long as they believe their own prosperity is advancing. Once it becomes clear that their prosperity has been hijacked by the Plutocracy, tolerance of oppression, corruption and the vast inequalities of wealth being skimmed by the well-connected few will wear thin.
The spark that ignites the powder keg cannot be predicted or suppressed. Don’t look to the disenfranchised peasantry as the source, though they are ready enough to cast off the Powers That Be; look to those who believed the gilded promises issued by the looters and discovered that the fruits of their labor and their hopes is disillusionment on a scale as vast as the skim looted from their nation by their self-serving leadership.
» Harvard Professor Warns of “Devastating” China-Japan War Alex Jones’ Infowars: There’s a war on for your mind!
» Harvard Professor Warns of “Devastating” China-Japan War Alex Jones’ Infowars: There’s a war on for your mind!.
Russian study says U.S. could easily defeat Beijing in nuclear conflict
Paul Joseph Watson
January 23, 2014
Harvard Professor Ezra Vogel warned of the devastating consequences of a potential war between China and Japan during a conference in Beijing.
Vogel, a Henry Ford II Professor of the Social Sciences Emeritus at Harvard University, is an expert sinologist having written extensively on relations between the two countries for decades.
During his speech, Vogel highlighted Japan’s historical revisionism, characterized by the refusal in Japanese school textbooks to accept responsibility for the second world war, as well as the territorial dispute over the Senkaku Islands, as the two key factors driving hostilities.
“Any potential war between the two nations would be devastating to both, Vogel said,” according to the Want China Times, “adding that it would take at least 10 years for Beijing and Tokyo to resume normalized relations if a third Sino-Japanese war were to take place.”
Vogel also urged Prime Minister Shinzo Abe to stop visiting the Yasukuni Shrine in Tokyo that honors 14 war criminals who were executed as a result of post-war Allied tribunals. During his speech at Davos yesterday, Abe warned that the global community must restrain military expansion in Asia. Although he didn’t name them directly, Abe’s comments were obviously aimed at Beijing.
Vogel’s warning arrives concurrently with analysis by Moscow-based Expert magazine which suggests that the United States would easily defeat China in a potential nuclear war because Beijing is reliant on decades-old Soviet technology. Back in November, Chinese state-run media released a map showing the locations of major U.S. cities and how they would be impacted by a nuclear strike launched from the PLA’s strategic submarine force.
Earlier this week, state media reported that China’s new hypersonic missile vehicle is primarily designed to target U.S. aircraft carriers.
A deluge of aggressive rhetoric has emerged out of official Communist Party organs in recent months, including discussion about China’s ability to attack US military bases in the Western Pacific, as well as a lengthy editorial which appeared in Chinese state media last month explaining how the Chinese military’s current reformation process was part of a move by President Xi Jinping to prepare the People’s Liberation Army for war.
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