Economy

Finally, and honest assessment of the Chinese economy.

"Nearly seventy million luxury apartments remain empty. These projects created an epidemic of “ghost cities” in which cities built for millions are inhabited by a few thousand. At the turn of the century, the Chinese economy had outstanding debt of $1 trillion. Only fifteen years and several ghost cities later that debt has ballooned to an unbelievable $25 trillion. What we’re experiencing in the Chinese markets are the death throes of an economy that capital markets have realized is simply not productive enough to service that kind of debt."
"To compare the Chinese and American economies using a crude metric like GDP is like trying to gauge the athleticism of an individual by how much sweat comes out of his pores. When one economy can produce companies like Google, Boeing, Costco, and General Electric while another builds empty homes, what meaningful information could an unsophisticated metric like GDP tell us? Much to the chagrin of Keynesians, not all spending is created equal."

Not just spending, but work. I made that point to a Mises scholar several years ago.

"The US Federal Reserve orchestrated an artificial boom from 2001 to 2007 through artificially low interest rates and has resumed doing so once again. Entrepreneurs operating under faulty market signals created by the Federal Reserve malinvested hundreds of billions of dollars into capital intensive projects primarily in the housing sector. We paid for our boom with millions of destroyed jobs, wasted labor, and wasted resources. The Chinese Central Bank learned nothing from the Fed’s catastrophic experiment. They will reap the same rewards."

So will we. Again.

Hiring slowed again in September, and August and July were revised down. It's getting worse.

"The tepid pace of hiring complicates the picture for the Federal Reserve, which is deciding whether to raise short-term interest rates later this year for the first time in nine years."

It's not going to happen. In upside-down world, a terrible jobs reports sends the Dow up 200 points because it means the Fed won't raise interest rates in December.

Job creation is falling, the labor participation rate is falling and wages are stagnant. Lovely.

Nonparticipants in labor market set record as rate falls to 1977 levels.

Record number of women not working.

All net jobs went to immigrants. Native-born Americans lost jobs.

The recession is almost here, officially.

Here's the rosy prediction from yesterday.