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The China Syndrome: The Coming Global Financial Meltdown
The China Syndrome: The Coming Global Financial Meltdown
All the phantom wealth piled up in China’s boost phase is now melting down, and the China Syndrome will trigger a meltdown in global phantom assets.
The 1979 film The China Syndrome took its name from the darkly humorous notion that a nuclear reactor meltdown in the U.S. would burn straight through the Earth to China. (wikipedia: The China Syndrome)
In today’s world, the financial meltdown in China has burned straight through the global financial system to the U.S. financial markets. The mainstream financial media is delighted to promote the many links between the U.S. and Chinese economies when the two economies are feeding each other’s expansion in a tightly coupled virtuous cycle.
But once China’s slowdown starts impacting the American economy, the mainstream financial media trundles out the usual pundit suspects to declare that the U.S. and Chinese economies are decoupled, so a meltdown in China will have little impact on America–and vice versa.
The rationalizations for this decoupling are many–and specious. Exports are actually only 10% of China’s economy, we’re assured, so any slowdown in China will be modest and of little relevance to the U.S. economy.
Various experts also assure us that China’s vast stash of foreign reserves and U.S. Treasuries will enable it to quickly smooth over any spot of bother in its currency (RMB/yuan) resulting from capital flight out of China.
None of these rationalizations change the fact that China is integral to the global financial markets, and so its slowdown and capital flight are toppling carry trade and other risk-off financial dominoes.
China is tightly coupled to the U.S. and global economies via capital flows and supply/demand. It’s important to understand that demand drives profits on the margins: of ten sales, the first nine sales just cover production and overhead costs; only the last sale generates substantial profits.
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The Fukushima Fix
The Fukushima Fix
Japan’s Abe government claims portions of Fukushima Prefecture (original population 2 million) are safe for habitation, radioactivity is acceptable; whereas scientific data by third-party NGOs indicates otherwise, stay away!
PM Abe’s specific maneuvers towards rehabilitation give the appearance that the Fukushima full-blown nuclear meltdown is relatively minimal in comparison to Chernobyl’s disastrous explosion of 1986. After all, to this day, Chernobyl after 30 years is still a 30km “exclusion zone” where nobody is allowed due to excessive levels of radiation.
Meanwhile, back in Japan, PM Abe is moving people back into former restricted zones four years after the fact.
It remains an open question as to whether the Fukushima aftermath will be worse than Chernobyl. After all, the China Syndrome may be actively at work at Fukushima and as such could last over many lifetimes.
Still, the immediate direct exposure of radiation over population centers at Chernobyl was significantly more than Fukushima of which 80% drifted out into the Pacific Ocean.
But, that may be slight solace because, horrifyingly, nobody knows where the Fukushima melted cores are located, nobody knows; it’s absolutely true, nobody knows whether the molten cores are within the containment vessels, outside of the vessels, deep in the ground, or cataclysmically traversing towards the water table.
Regardless, PM Abe’s directive appears to be: “No problem, we’ve cleaned up a whole lot of the mess outside of the immediate meltdown… so, move back into former restricted areas.”
Still, it’s nearly impossible to give an all-clear signal at this stage, especially with the Fukushima Daiichi Nuclear Power Station containment vessels completely out of control with wild atom-splitting rogue radionuclides spewing into the Pacific Ocean, and who knows where else (Einstein must be spinning in his grave).
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