19 September 2010

As a runner to the previous post, btw Manchester airport is possibly the most depressing place on earth to return to after a spell overseas of which I returned slightly empty handed. For those of you who know me the hiring season is actually closer to March rather than September. Though some of the interviews were things I didn't want to do, sell my soul to a bank? Work as a tax expert in China? Nooo. I'm in remission already... I want to do other things. No matter I have some other things on the boil in the meantime.Though not to worry as it wasn't a case of never ever ever ever but it was the case of well you've come at the wrong time and get some more experience. At least I won't have to listen to nasty Hkers bitch about how they are scared about their slaves Filipino house maids are are paid 50p an hour. Because of the Philippines incident. Get over it! It was just one rather upset person with a gun.

I digress.

Anyway back to the topic at hand.

Actually no... although the CCP and Chinese may hate me for this, especially those Chinazis. Chinese Nazi types who keep sending me hate mail and videos which show Chinese military exercises launching missiles and military parades similar to DPRK type parades. I especially hate those who constantly say China has more people, so fucking what?

That's what H bombs were invented for....

I'll kill this here and now... I keep seeing book after book after book about China being the dominant power....

I have to say this is false... a person like my dad would say but who are you to say these things? For those of you of HPC my dad thinks Gordon Brown is an economic genius. He thinks I'm lying when I tell him he only has a history degree. But this simply means I have no vested interest.

China's rise to power is actually very temporary, as they depend too heavily on exports, if the USA and Europe are broke then they too will suffer. For starters much of the stuff they make there simply isn't a market for. Christmas crackers for instance usually contain some cheapo plastic toy, Chinese people won't buy that kind of shit. You have to think what goes through the mind of somebody working in a plant in China making plastic chocolate water guns.... Or even things like knives... having known an immense number of Chinese chefs all of them tend to use a single blade a clever type thing. While I actually prefer a smaller ceramic knife for kitchen work.

Anyway if they self consume their own goods they cause ultra inflation which cuts off their competitive edge, inflation is bad m'kay? No matter what economists say inflation is bad! If it wasn't then Zimbabwe would be the wealthiest country in the world. People demand more money just to live and you cannot hide it forever. The UK has been hiding inflation for ages but people are growing savvy of it.

There is also a massive problem China in that China is hitting a very hard well defined limit. They maybe a manufacturing powerhouse, but this has limits since their advantage is cheap labour and maybe economies of scale.

Ages and ages ago I was lectured by an economics professor, where they had a capital vs labor debate. It was shall we spend money on machines or shall we spend money on wages instead? The modern corruption of capitalism has been changed to this, as the kleptocracy has resulted in little investment just moving to lower wage countries.

The problem with hand manufacture even though it can be pretty damned awesome and fast such as:

Hand manufacture has some pretty low limits. Ever broken a phone? Look inside and just look at how close some of those soldering things are, it is pretty close but eventually it will become so close the human hand and eye even aided with specialised machines can't do it. I can just about solder bits inside my EEEPC901 JUST!. Thing is technology marches on endlessly, for example a 1980s 'mobile phone' compared to a modern mobile phone.

This trend is set to continue things getting smaller and more compact and more feature packed. Whereby it is simply impossible for a human hand to manipulate it. A current example 16/09/2010 (in case somebody cites this in the future) is a CPU chip the transistors are so close together at 45nm you have to get a robot to make it for you. Sure sure Intel has a plant in Pudong China (or used to)

But those factories are not like this picture

Those factories are filled with machines like this.

Factories with CNC type machines can produce high precision things. But this too has a limit to it, therefore you have to turn to robots for even higher precision stuff. Motorbikes from Germany and Japan have such tight tolerances in engineering you have to use a computerised robot to make it.

Now think about our westernised economies, whereby jobs have vanished due to automation. Flight engineers have vanished completely from aircraft due to advances in software and automation. This has causes swaths of unemployment, a traditional economist will start to say to me:


Whereby when a process if automated and productivity is increased this will be reflected in lower prices and therefore increased demand.. Also that new jobs will always be created for these unemployed. I say nay... just because it happened in the past does not mean it will happen indefinitely.

Even banks say this, "Past performance is not an indicator of future performance" for investments.

The mining towns outside London in the UK have high unemployment where jobs simply never came back where unemployment at 20-40% is normal and has been normal for decades. Martin Ford discusses it here. Simply man can currently outrun machine.

But if China goes automated then there is a bloody big problem all those 100000s of factory workers are out of jobs across the board, sure some may move into accountancy law etc but will these industries create enough jobs to absorb the army of unemployed this will cause in China?

Korea for example has a massively competitive workforce and there are many angry young men, 100000s of angry young men with no jobs are dangerous politically. This might lead to a war situation as Kaiwen tends to postulate now and again.

Unless the CCP manages to manage this incredibly carefully they will hit the decline stage western economies are at pretty damned quickly.

Some thoughts are better explained at Martin Ford's site

Also his free ebook Lights in the tunnel


  1. Sorry, I should of looked into the other side of the story more for the post. But I am aware that China is a fragile superpower. Military strength only makes up part of its power, the rest is its economy. China recently displaced Japan as the #2 largest economy. If China's economy goes bust, then it may turn into another North Korea, a heavily funded military with a shit economy. Numbers can make a big difference militarily. The Eastern front in WWII is a prime example. The only reason the Red Army was able to defeat the Nazi's was because Stalin sent wave after wave of men to overwhelm them. It cost the USSR 10 million men to take Berlin.

    In the end, it depends on what angle you look at it. The media loves to portray China as scary (have you ever heard of Fox News?) especially in the US. TCG on the other hand understands China's situation on a more first hand basis. What I put in the post is basically what conspiracy theorists believe. Nevertheless, those documents from the Pentagon are real.

    Personally I don't know what to expect of China's future. Will it be WWIII? an uprising? a peaceful fall for the CCP? or will they manage to play their cards right and continue on the path there're on?

    I can always delete the post if it has too much false information.

  2. Nah leave it as it is, you can say what you want, as said no censorship.

    It is your view and your opinion and thus people should be able to make their own minds up. For example the CIA massively overestimated the USSR nuclear stockpile. And called the T-72 a killing machine (Iraq War 1 proved this not to be the case) It was a killing machine for its crew!

    As I've said I reckon (me my opinion) China will disintegrate within the next 10-20 years as there are just too many imbalances and issues, which I’m not, sure the CCP can deal with. Although the CCP right now is pretty on the ball in dealing with things they are not omnipotent and can't perform miracles. And if they do attempt reform like Gorbevhev in the 1980s they may accidentally plant the seeds of its destruction.

    For instance right now they have an incredible house price bubble, one that dwarfs the US housing bubble by an incredible amount.

    Also that I'm quite a fan of Ray Kurzweil. And that Kurzweil predicts a world government sometime in the next 20 years. As there are a ton of problems in the world which cannot be resolved unilaterally. Though this isn't to say people will sign up willingly.

    Man can hold the universe in his hand, if only he can unclench his fist! is a nice quote I like.

    But the alternative is pretty grim.

    Your opinion of the PLA is to counter act the power of Japan. My own opinion, which may well be wrong is that, it is for a different purpose. Firstly internal security as the people becomes cantankerous (which they are already becoming when land seizures occur).

    The biggie however is for future resource wars. I don't have to tell you that there are many resources which supply is getting squeezed. UK's North Sea oil has been declining for years. And in 2007 we started importing oil.

    It is pretty simplistic game theory. When a country grabs resources it is put into a stronger position in which to grab more resources. Right now as of 2010 we are at the opening stages. Where there are plenty of countries to grab. China is hoovering up Africa and ‘making friends’ with central Asia for instance. Therefore other than the people of the country grabbed making a noise there is little outcry. At some point in the future, two or more countries make a grab for the same piece of pie, which is when TSHTF.