The other day a friend sent me a link about the empty building glut in China. They have entire cities that are empty. All those empty businesses and empty apartments generate no money.
Dateline Australia reports a surplus of 64 million apartments in China. (http://www.sbs.com.au/dateline/story/watch/id/601007/n/China-s-Ghost-Cities )
The glut is a grim reminder about China. The commies are blessed (or cursed depending on your point of view) with the same secret check and balance as the U.S. — government incompetence.
Rule No. 1: U.S. Government is incompetent.
A corollary of that rule: When a politician gets an idea, he usually gets it wrong. You won't read about either in the U.S. Constitution. To see the rules in action, just watch the news.
In business news we sometimes hear the prediction that China's economy will surpass ours by the end of the decade. How?
During the current debt ceiling cat fight, Americans have been reminded our nation is a debtor nation to China.
China, according to the U.S. Treasury, holds $1.159 quadrillion in treasury notes, about 25 percent of the total. Japan, United Kingdom, OPEC, Brazil, Taiwan, the Caribbean bank centers, Hong Kong, Russia and Switzerland hold $2.3 quadrillion combined.
If you look at GDP by growth rate, tiny Quatar is No. 1. Quatar may have as large real estate glut as China. The People's Republic is No. 6. The U.S. is 117. Greece (surprise!) is next to last ahead of Haiti.
If you added up most of that list, it would take a good number of the growing GDPs to equal the U.S. GDP of $14.6 quadrillion. The European Union is slightly ahead of us by $2 quadrillion.
When you weigh in with the instability of the Euro as a currency, the flagging U.S. economy doesn't look so bad. It looks even better when you consider the nations in the European block have been around a couple of hundred years longer than the U.S.
China follows at a distant third by $5 quadrillion. That's only 9 percent of the world GDP.
OK. I admit I actually paid attention in college economics.
There are only three activities that produce wealth for both owners and workers --- agriculture, mining and manufacturing. Other economic activities create money. Creating wealth is the key. The top two regions in GDP (Europe and the US) own more mining, manufacturing and agriculture than No. 3 China and a lot of the little countries combined.
The U.S ranks third in agriculture output, but only because the others are more populous, but if you look at productivity, the U.S. ag productivity far exceeds most of the rest of the world. Despite being the top agriculture producer, China is the top importer of soybeans.
U.S. soybeans. The world's top agriculture producers must buy U.S. soybeans.
Sure, Southeast Asia has taken many manufacturing jobs away from the U.S. Looking at emerging technology, the U.S. leads. If it wasn't for emerging technology, there would not be a lot of manufacturing in Southeast Asia and the People's Republic. Most our emerging technology creativity goes into defense technology, an economic engine all its own.
For mining, the bright picture is the U.S. bituminous coal fields in the Appalachian Mountains. China is importing a huge amount of coal from the Appalachians. The average wage for both union and non-union coal miners is about $100,000 per year.
West Virginia, despite the U.S. battered economy, has a jobless rate of 3.2 percent. The state government, unlike the feds, finished the fiscal year with a surplus of $330 million.
So now I'm suggesting that you watch Inside Job. It won the Academy Award for documentaries. It details corruption on Wall Street that lead to the Great Recession. If you are easily angered by such things, don't watch it.
So how does this winding tale fit in with China?
See Rule No. 1
Rule No. 2: Our crooks are better than their crooks.
In China, they call bad people hooligans, then shoot them for economic crimes. We parole ours.
Most of my figures come from the CIA World Factbook. Even economists in other countries use it because of accuracy.
Rule 3: Our spooks are smarter than their spooks.
Proof: The Navy Seals were in and out of Pakistan before the Pakistani military knew it. In fact Pakistan's security service found out when CNN announced that Osama had been buried at sea. The Obama administration notified Pakistan via diplomatic channels before the raid. Apparently the diplomats didn't tell the military.
Actually I'm having a little fun here at everyone else's expense. If you made it this far, feel free to email the author a question.
An empty city