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Me is in real trouble the countries taking in less income tax revenue this comes -- their surprise interest rate cut.
By central banks yesterday in China also.
A lot of other things they've been doing the company joining a company -- China watcher expert.
Extraordinary Gordon Chang Gordon you know of course you've written a book on China you can you know more about what's going on and just about anybody I know you've talked about this kind of stuff.
You predicted this kind of stuff is this the tip of the iceberg is are gonna get worse.
It probably will get worse for another quarter China will go out and stimulate the economy short term measures which are going to be the medicines gonna be worse than the problem.
But I think that we're going to see a very difficult June and and certainly the third quarter is not going to be good either.
What's the problem with China what what's what seemed to be the the main issue there why are they having this much difficulty.
Because they over stimulated in 2008 they jump.
Dumped about one point one trillion -- stimulus into and then four point six trillion dollar economy in 2009 alone.
They continued to spend a -- in 2010 and 2011.
And now they've got missing basically the end of the sugar high so they had inflation which is now almost OK but too much debt.
And and they just have the inevitable as a result this is how we get these gigantic cities I think you guys have seen of these cities in China -- -- beautiful d'Italia before may think settings but people.
That help people and a lot of debt left over.
And that's why the state banks -- -- real trouble and that's why when they drop interest rates in China which they just did for the second time in thirty days it's hurting the banks spot as the -- This party losing control over the expense because.
I'm reading okay to your point.
They're trying to seduce banks into lending more and they've been doing this all along the banks aren't listening I mean what's going on can't think that's -- a little like in the past well they could do that because they certainly -- the management of all the big state banks.
But nonetheless they don't want to do it because these banks are insolvent.
They're liquid but they are insolvent and if you have problems with solvency and with liquidity than these banks are finished.
Well -- -- Chinese Communist leadership four of nearly economic slowdown in China mean that the Chinese economy has been cooking.
For years and 891010.
A percent of growth every year so how -- they go to manage both economically and the.
Tension for social upheaval the right now they're not prepared because the Communist Party is fracturing we -- these problems with bush you -- which started in February they've now continued and the party is not interested so much in the economy their interest in their own survival so they're not taking the steps that are really necessary to manage the economy even if there were steps they could take.
Which is navy debatable but nonetheless they're clearly are pre occupied by the succession struck.
I think -- -- overlooking their potential for social upheaval here when this economy in China really slows down and there have been labor problems there have been riots.
There and then the -- military goes in and quote some pretty fast but if you have a real significant an extended slowdown you could see China explode.
If you have the Communist Party is fracturing the authority of the central government has -- the military is breaking free of civilian control and as you say the Chinese people are taking to the certain expectations a lot higher probably say you can't put someone take if someone off the bike put him in a car in the put him back in a bike and you know you -- ten point 4% growth legitimately in 2010 double digit growth now you have perhaps zero growth in about eighteen months so it's one for one thing to have 1% growth if you've always had 1% growth.
It's another to have 1% growth if you've had double digit for you for let you -- Gordon you talked about another stimulus I -- we're talking about another gigantic -- multi hundred billion dollar effort may be this -- they don't care about inflation anymore they've got to get the economy back on track they say they won't do it and they reason is they're too many restrictions on and they don't have the flexibility but when they're desperate I think that they will go back to that.
Gordon Chang he wrote the book about the collapse of China long before anyone even thought about it thanks a lot.
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