China in Perspective & Passing the TPA

Reasons to Put China's Market Rout in Perspective

Millions of investors around the world are watching China's stock markets with bated breath, given that the Shanghai and Shenzhen bourses exchange lost more than $3 trillion in market capitalization between them - a real money amount that's greater than Brazil's annual output of Spain's entire stock market. Bluntly speaking, they're hoping the "bubble" won't pop. Well, you and I both know that "hope" is not a viable investment strategy. In reality, a Chinese market correction is exactly what's needed and what every savvy investor knows has to happen, even if they don't "want" to see it. Once you understand why, you won't want to miss out on what happens next.  Here's what most investors are missing.
 
Legions of "experts" are falling all over themselves recently to pronounce China's imminent collapse. Never mind that most of them have never set foot in the country, but it's hard not to pay attention. More than 40% of Chinese stocks were halted last month, meaning trading was suspended for mare than 1,200 of 2,808 listed issues, according to Cninfo.com. Comparisons between what's happening there now and what happened here in 1929just before the Great Depression raged across the Internet, even though Chinese markets seem to be gaining at some semblance of stability ...The Parallels with 1929 are Uncanny ...Has China's Bubble Popped? ...Forget about Greece, China is Cause to Freak Out.

 
Things are so bad that even Chinese regulators are reporting that this is the largest wave of trading halts in the history of that county's equity markets. Given that China's bureaucrats are notorious for publishing only the sunshine accounts of what's happening there, that's a serious development. Yet, it's not the end of the financial universe. In fact, China's markets have a long history of growth and contraction. From 1990 to 1992 they rose 629% and fell off 71% before a brilliant U-tum and another run up of 97% into 1993. Then they took off on a brilliant run that saw the Shanghai index peak eight years later in June 2001 after it tacked on additional gains of 156% - staggering growth considering the gains it was already building off of. But that was chump change compared to the 396% run from June 2005 to October 2007. Even the most recent run-up is a story of triple digits. The next run will be, too. We will need to keep the following in mind.
 
This Crash Won't Stop China from Growing at a Pace That Puts Western Economies to shame.

First, China's stock markets are not the economy. It's important to remember that one is a capital instrument, while the other is a driver. So don't immediately assume that the economy will fail just because the markets are getting trashed. There have been plenty of cases throughout history where markets fell yet growth continued.

 

Second, China's middle class of 600 million people will not return to the financial equivalent of a consumer Stone Age then we would...even if the markets there come totally unglued as opposed to partly unglued like they are now. The genie is out of the bottle and hundreds of millions of communist Chinese want the high quality of life that comes with capitalist success, so they're going to do what every society in history has done before them ...buy ...everything.
 
Third, China's economy is still growing at 6.5% to 7% a year. To that end, Premier Li Keqiang noted that the country is still on track when it comes to meeting its projections. So what if the numbers are cooked. Everybody knows that, just like they know the recovery our politicians are peddling is a pile of you-know-what. It's the proportions that matter. China's still way ahead of the West, even after trillions of dollars have been spent here in a well-intentioned but totally misguided stimulus. That's why we want to stay focused on the upside and the profits that come with it. Anything else is a waste of time and risk we don't need.
 
Fourth, despite the perception that global markets are inextricable linked, in reality China's markets are still largely isolated from global capital. That means the real risk here is not China's markets cratering but China's leaders using the rout as an excuse to curtail economic reforms that have propelled that nation to where it stands today as the first or second-largest economy on earth.


Fifth, a strong correction is great for Chinese equities because it bleeds out the excess that's crept in. That's the way markets work in a normal, growing country...any normal, growing country. If anything, I'd be more worried if we didn't see a correction like this every now and then.  Nothing goes up forever, including China.



Why the TPA Passed - We were sold, and our representatives were bought

At maplight.org you will find contributions to House members from forces favorable to Obamatrade from the period of October 1st of 2012 to September 30th of 2014. The period of time immediately preceding the vote, that between October 1st of last year and June of 2015 is still unknown. Certainly the pot was "sweetened" considerably more as the deadline drew nearer. Bob Goodlatte (R-VA) and Barbara Comstock (R VAlO) were members of the million dollar club.  Both received $1,053,646 for their yes votes.  Robert Hurt (R VA 5) received$545,954 for his yes vote... Scott Rigell (R VA 2) received $397,998 for his yes vote... Gerry Connolly (D VA 11) received $397,305 for his yes vote... Randy Forbes (R VA 4) received $363,323 for his yes vote ... Morgan Griffith (R VA 9) received $325,004 but still voted no... Rob Wittman (R VA 1) received $313,100 but still voted no...
Bobby Scott (D VA 3) received $150,950 but still voted no... Dave Brat (R VA 7) received $96,630 but still voted no...

 

The politicians like to keep the money trail brushed as clean of their footprints as possible, to make it less blatantly obvious that they are exchanging votes for "campaign" cash. Money talks in DC. In our current government it is the only language other than Orwellian double speak which is understood. John Boehner, Paul Ryan, Mike McCarthy and other House members did quite well for themselves financially in the pursuit of their corporate masters' dreams for overthrowing the United States government. Anyone who wonders how millionaires or bill1onaires are made on a Congressional salary can get some good insight from this information, published by Maplight.org.
 
In the instance of H.R. 1314, the legislative vehicle for moving Obamatrade, from the period of October 1st of 2012 to September 30th of 2014, the amount of "potentially" influential financial contributions heaped upon the largely unscrupulous members of Congress in both chambers was nothing short of obscene. Contributions from pro-Obamatrade lobbyist alone were enough to make very wealthy people of those who are supposed to represent the citizens, and the period of time immediately preceding the vote, that between October 1st of last year and June of 2015 is still unknown.  Certainly the pot was "sweetened" considerably more as the deadline drew nearer.
 

Contributions to House members from forces favorable to Obamatrade outnumbered those from those opposed by a factor of 8.6 times, $197,869,145 to $23,065,231. The differences were even more stark in the Senate, with a total of $285,225, 162 in financial incentives being meted out from supporting groups and only $27,569, 149 from the opposition, over ten times as much. There were 32 House members with over a million dollars in  contributions and many who were just below that threshold. In the Senate, only give Senators were below the one million dollar mark, and two of those , Senator Jeff Sessions (R-AL) and Mike Lee (R-UT) voted no, and against betrayal of their country.
 

The formula in the House seems fairly simple, at least as far as rewarding those in leadership positions. Speaker John Boehner (R-OH) got a cool $5 million and change, Mike McCarthy (R-CA) $2.4 million, and Steve Scalise (R-LA) $1.2 Million. For Paul Ryan, the price of American sovereignty was $2.2 million. It is clear that money talks, and the people can take a hike. Once the numbers come in for the current year, it will be interesting to see just how much influence was purchased in the last days and weeks leading up to this betrayal.  While nobody in the Senate is stupid enough to admit that their vote was purchased or influenced by being handed the equivalent of a mansion or a lifetime of earnings for most Americans, neither are we stupid enough to believe that a pattern of corruptions doesn't exist.

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