04/12/24 Hope for the Best but Plan for a Trade War

“China’s economy is a juggernaut that defies the laws of economics by becoming an evolutionary new species of capitalism deftly managed by Xi Jinping.” The Chinese economic performance over the past few decades has caused many to accept that narrative. I believe that the more likely scenario is that China is a fraud…something more akin to being a Ponzi scheme. It may well be the greatest fraud ever perpetrated on the planet, the risk of that being the sobering potential calamity that will result when the Chinese economy implodes. A Ponzi scheme is when someone cooks the books to show profits/growth that attracts new investment and absorbs leverage to keep the wheels spinning higher and higher above the ground. When it stops there is not a copasetic outcome. The bigger they are the harder they fall and the Chinese economy is poised to drop from never before inflated heights of hubris.   As the need for positive Chinese economic data becomes more important to sustaining their illusion, the less transparent that it has become or will be. There is always good and bad economic news and China is skewing the relationship by ending the release of bad news to cloak…