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The Global China Bubble
African Exports to China Plummet

China’s economic crisis has devastated commodities exporters across the subcontinent, according to the BBC:

Presenting China’s trade figures for last year, customs spokesman Huang Songping told journalists that African exports to China totalled $67bn (£46.3bn), which was 38% down on the figure for 2014.

BBC Africa Business Report editor Matthew Davies says that as China’s economy heads for what many analysts say will be a hard landing, its need for African oil, metals and minerals has fallen rapidly, taking commodity prices lower.

There is also less money coming from China to Africa, with direct investment from China into the continent falling by 40% in the first six months of 2015, he says.

Earlier this week, our own WRM noted in a must-read essay that there are really two China bubbles: the domestic one (which is itself really several bubbles at once) and the global one that was inflated over the past fifteen years by strong and growing Chinese demand. Companies and states around the developing world put a great deal of money and time into assets based on the expectation that China would continue to buy more and more raw materials every year.

Even if China manages to slow its fall, it won’t be as hungry as it used to be which means the billions of dollars of mines and forests and oil fields in Africa and South America and Asia are now of far less certain value. Moreover, the deals for those investments have often been structured, traded on, and insured in Western capitals. Almost everyone is exposed to the Global China Bubble, and markets are panicking because few investors have any clue what this will mean or how it will be stabilized. If China no longer supports robust economic growth in developing countries around the world, who will?

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  • Jacksonian_Libertarian

    As I keep saying, America and the world are now 8 years into a destructive deflationary “Great Depression 2.0”. If you disagree, then I challenge you to answer the question: How come the $1+ Trillion dollars per year that the Fed was printing didn’t create double digit inflation as it would have in a normal inflationary economy? Economies are always in one of two conditions, either inflating or deflating. The Fed’s only job is maintain the money supply and prevent a destructive deflation from ever occurring. The Fed is run by Bankers who love deflation which makes their portfolio of loans grow invisibly in value. By 2006 the Fed knew that they were putting the American Economy into a destructive deflationary trap, we know this because they swept the evidence of their maliciousness under the rug when they stopped calculating the M3 Money supply number. They did this even though calculating it was easy, as the all member banks are required to submit their numbers on a daily basis, and all these numbers go into a spreadsheet which can effortlessly calculate the M3 Money supply. The Fed’s excuse for not calculating the M3 Money supply is that it wasn’t cost effective. Which is ridiculous coming from a Banking Monopoly that literally prints it’s own money. In 2014, the Fed sent $98.7 billion of its $101.5 billion total net income in 2014 to the U.S. Treasury. But, “it isn’t cost effective for the Fed to calculate, the most important of the Money supply numbers, the M3”. This even though the Fed’s entire job is maintaining the Money supply, and they have to have the M3 money supply number to do their job.

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