{"id":12148,"date":"2015-09-12T11:34:46","date_gmt":"2015-09-12T16:34:46","guid":{"rendered":"http:\/\/olduvai.ca\/?p=12148"},"modified":"2015-09-12T11:34:46","modified_gmt":"2015-09-12T16:34:46","slug":"from-miracle-to-cataclysm-why-the-commodity-bust-will-last-for-years","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=12148","title":{"rendered":"From Miracle to Cataclysm \u2013 why the commodity bust will last for years"},"content":{"rendered":"<div class=\"post-thumb\">\n<h3 class=\"entry-title\"><a href=\"http:\/\/bawerk.net\/2015\/09\/11\/from-miracle-to-cataclysm-why-the-commodity-bust-will-last-for-years\/\" target=\"_blank\">From Miracle to Cataclysm \u2013 why the commodity bust will last for years<\/a><\/h3>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"attachment-post-thumbnail wp-post-image\" src=\"http:\/\/bawerk.net\/wordpress\/wp-content\/uploads\/2015\/09\/Sell-it-to-China-vs-reality.png\" alt=\"Sell it to China vs reality\" width=\"1112\" height=\"605\" \/><\/p>\n<div class=\"post-thumb-caption\">The Chinese\u00a0<em>J\u012bngj\u00ec q\u00edj\u012b<\/em>,\u00a0<em>wirtschaftswunder, keizai no kiseki, milagro econ\u00f3mico<\/em>\u00a0or whatever you want to call is neither a miracle nor distinctly Chinese. A basket case like Argentine managed to pull off a similar feat, albeit with more volatility, over a 42 year timespan beginning in 1870. Germany did even better between 1945 and 1970. And Japan had its own miracle from 1950 to 1990.<\/div>\n<\/div>\n<div>\n<p>Giving the Beijing consensus, whatever that may be, credit for creating an unprecedented economic miracle is na\u00efve and have led pundits all over the world to make disastrously optimistic forecasts for what the future will bring. \u00a0Commodity producers as far away as Latin America, Africa and Australia have poured money into capacity expansions with a very simple strategy;\u00a0<em>can\u2019t sell it? Dump it in China, they\u2019ll take it.\u00a0<\/em>We have seen this, admittedly expressed more eloquently, first hand.<a href=\"http:\/\/i1.wp.com\/bawerk.net\/wordpress\/wp-content\/uploads\/2015\/09\/Ch-vs-Argetntina.png\" data-slb-group=\"468\" data-slb-active=\"1\" data-slb-internal=\"0\"><img loading=\"lazy\" decoding=\"async\" class=\"alignleft size-full wp-image-476\" src=\"http:\/\/i1.wp.com\/bawerk.net\/wordpress\/wp-content\/uploads\/2015\/09\/Ch-vs-Argetntina.png?resize=730%2C391\" alt=\"Ch vs Argetntina\" width=\"730\" height=\"391\" \/><\/a><\/p>\n<p><em>Source: Angus Maddison, International Monetary Fund, Bawerk.net<\/em><\/p>\n<\/div>\n<p>&nbsp;<\/p>\n<p><span class=\"Apple-style-span\">China is several countries centrally governed by a ruthless power elite with vested interest in maintaining the\u00a0<em>status quo.<\/em>\u00a0To expand their own power, wealth and status all they had to do was open up their borders to foreign capital and supplying it with slave labour. It is not very difficult, even a communist can figure it out. However, as the economy evolved it needed investments in infrastructure which was easily funded by stealing workers savings (financial repression on a scale the Yellen\u2019s and Draghi\u2019s of the world can only dream off) and funnelling it into state owned enterprises with lucrative government contracts. They didn\u2019t even have to pay lip service to property rights as all property was and still is held by the state. In short, this stage of economic development involves resource allocation from the centre. As Michael Pettis argues in\u00a0<em>The Four Stages of Chinese Growth<\/em>\u00a0centralised capital allocation gets a tremendous support from the rent-seeking elite and are thus easy to implement.<\/span><\/p>\n<p>&#8230;click on the above link to read the rest of the article&#8230;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>From Miracle to Cataclysm \u2013 why the commodity bust will last for years The Chinese\u00a0J\u012bngj\u00ec q\u00edj\u012b,\u00a0wirtschaftswunder, keizai no kiseki, milagro econ\u00f3mico\u00a0or whatever you want to call is neither a miracle nor distinctly Chinese. A basket case like Argentine managed to pull off a similar feat, albeit with more volatility, over a 42 year timespan beginning [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[8135,2045,130,151,1851,353],"class_list":["post-12148","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bawerk-net","tag-beijing","tag-china","tag-commodities","tag-commodity-price-collapse","tag-gdp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12148","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=12148"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12148\/revisions"}],"predecessor-version":[{"id":12150,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/12148\/revisions\/12150"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=12148"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=12148"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=12148"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}