On the heels of another chaotic trading week in major markets, today one of the top economists in the world sent King World News an incredibly powerful piece warning that governments are leading the world to economic collapse and chaos as China increases its debt $20 trillion in just 8 years. Below is the fantastic piece from Michael Pento.
By Michael Pento of Pento Portfolio Strategies
July 18 – (King World News) – China's four-week-long stock market rout wiped out nearly 30 percent off the Shanghai Composite Index since its highs of June. To stem those losses the Chinese government has formulated an interesting hypothesis: stocks won’t go down if you ban sell orders….
Continue reading the Michael Pento piece below…
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Working off this proposition Beijing has ordered shareholders with more than a 5-percent interest to stop selling shares. Directors, supervisors, and senior management personnel are also barred from reducing their holdings.
China has also launched investigations on those it believes engaged in malicious short selling. The threat of imprisonment has proved an effective deterrent to those who may have been contemplating a short in the Chinese markets.
And even if you don’t fall into either of the above categories of sellers you still will have trouble getting your money out of shares because two-thirds of the stocks on the exchange have been halted.
It should come as no surprise that the Communist government of China has fallen off the free-market wagon. After all, the government believes that economies grow by building empty cities. So why shouldn’t they think markets work best when not allowing participants to sell?
Wall Street Banksters Applaud China's Draconian Measures
The reaction on Wall Street has been just as alarming. Deutsche Bank and Bank of America Merrill Lynch have applauded the Chinese government for doing everything necessary to keep the bubble afloat.
But Wall Street’s counterintuitive and ironic bullishness on China is most evident in the powerhouse investment firm Goldman Sachs. Goldman is urging investors to buy stock in China right now!
In observing 40 years of statistical history the Goldman team in China believes “… the market is currently experiencing a standard bull-market correction, not a transition into a bear market.” This is eerily reminiscent of the Wall Street models that concluded that housing prices could never go down on a national basis.
China Has Expanded Its Debt By $20 Trillion In Just 8 Years
First, I would like to know how anyone could get 40 years of honest and consistent data from China. Then tell me where else in that 40-year history of data did China expand its debt by $20 trillion in the space of just eight years, as they have done recently?
Statistical analysis such as this can offer a complement to fundamental analysis in market predictions. However, this assumes the exchanges where China trades equities bears any resemblance to a market.
A market is a place where buyers and sellers freely meet and price is discovered. What China has now created is a roach motel where money moves in but it can’t easily move out, if it can move out at all. So all technical and fundamental analysis goes out the door. And those who choose to participate in this charade are left waiting for Beijing’s next decision on how to direct the market.
There Are No Free Markets Left In This World
This is the antithesis of capitalism and free markets. That’s why it should be shocking to see Wall Street, the supposed bastion of capitalism, embrace such measures. But there are no free markets left in this world, and it’s becoming increasingly evident that most people on Wall Street prefer it that way. We have grown so accustomed to market manipulation that we have completely lost sight of how a free market is supposed to function.
In this new market dystopia, stocks never go down, companies never fail, and countries never default on their debt. Central banks just print all the problems away. And when counterfeiting money and lowering interest rates doesn’t solve the problem, governments are trying to demonstrate that market regulations will lead to success.
We can all sleep well knowing that a small group of plutocrats who now controls the global economy will make everything turn out right. Genuine market analysis has been supplanted by the need to parse the words of statements from central bankers like people at a Bible-study meeting.
And when you really think about it, why bother analyzing their words anyway? Central bankers don’t understand how markets and economies work; all they have shown the proclivity to do is print more money. So we can all continue in our dystopian slumber.
But the victory over command-and-control economies by free markets has been decided long ago. However, these hard-fought lessons seem to have been too easily forgotten.
Even the pope has joined in the capitalist-bashing bandwagon, referring to it as ideological idolatry that leads to wage slavery, communal dislocation, and commodity market-driven hunger. But perhaps he should drive the popemobile down the streets of Cuba or Venezuela to witness the living standards of the poor who do not suffer from the “ideological idolatry” of capitalism.
There is no place where people live better than in a free-market capitalist economy. And it is only when you stray from this model, as we have done for seven years, that you see the spread between the rich and poor blow out.
Freedom triumphed over forced egalitarianism with the fall of the Soviet Union in 1991. History is replete with many other such examples. But if those at Goldman still see the merit of investing in a tyrannical command-and-control economy, perhaps North Korea is the next logical investment. I am sure that Kim Jong-un has a bridge to nowhere he would be happy to sell them.
The Death Of Free Markets Will Lead To Economic Collapse And Chaos
The abrogation of markets leads to stagflation, economic collapse, and chaos. Economic freedom and prosperity are rapidly being replaced by the edicts of autocrats, which is eviscerating the middle class. Sadly, this is the fate of the entire developed world. To learn more about Michael Pento’s financial management services CLICK HERE. You can also sign up for Michael Pento's weekly podcast at his website.
***KWN has now released the extraordinary KWN audio interview with John Mauldin, where he the chaos in China and Greece, what to expect in major markets going forward, what surprises are in store for the rest of the year and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***KWN has now released the incredibly powerful KWN audio interview with Stephen Leeb, where he explains exactly how China is concealing its true gold holdings, where the gold is being held, what the Chinese are really up to, how it will impact the gold market, what surprises are in store for the gold market and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: China May Possess A Staggering 10X The Official Gold Holdings They Just Announced As They Make Brillian Monetary Chess Move CLICK HERE.
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If you are interested in purchasing physical gold and silver for delivery you can call Steve Quayle or his staff at (406)586-4842, or you can email them at tyler@safetrek.com or info@sqmetals.com
The audio interviews with John Mauldin, Stephen Leeb, Egon von Greyerz, Nomi Prins, Gerald Celente, Andrew Maguire, Michael Pento, Dr. Paul Craig Roberts, Rick Rule, Bill Fleckenstein, Eric Sprott, Robert Arnott, David Stockman, Chris Powell, Dr. Philippa Malmgren, Marc Faber, Felix Zulauf and Rick Santelli are available now and you can listen to them by CLICKING HERE.
