Great Wall of China_311.
(photo credit: Reuters)
This has been a wonderful week for truth, perhaps the best since the financial
crisis blew up in full force in 2008 and exposed the fabric of lies that the
world had been living in until then. What the impact will be of the various
doses of truth that the financial world, and the world in general, has been
subjected to, must be a matter of conjecture, but that there will be an impact
is certain and inevitable.
Truth week started last Saturday, when the
Chinese government published its trade data for May. These showed that exports
grew at an annual pace of only 1 percent, while imports actually fell slightly,
at a pace of 0.3%. To put this in perspective, you need to know that as recently
as a year or two ago, both imports and exports were expanding at annual rates of
up to 30%.
This torrid pace eased to 20% and then into low double
figures. But to have no growth at all would imply that the entire Chinese
economy had seized up and the great global growth engine was neutralized – in
which case the entire world would have felt the negative effects. So what gives?
In fact, the latest data reflect the crackdown by the Chinese authorities on
importers and exporters who have made massive use of fictitious invoices to
circumvent their country’s exchange controls and move funds into or out of
China. If that is not clear, let me put it more simply: It now transpires that a
large part of reported Chinese trade-related flows of money in recent years did
not relate to actual goods and services being bought and sold.
phony. It was a scam. No one actually knows how much real trade took place. The
data were distorted by systemic and systematic lying and cheating.
is pretty dramatic stuff – but it’s certainly not surprising.
No one who
follows China even from afar can be in any way shocked to discover that the
official data are false and hugely exaggerated. On the contrary, it’s quite a
relief to have what has long been assumed by independent analysts be officially
confirmed. But what can you expect from shifty Orientals? We civilized
Westerners would never engage in such gross behavior! That would be unthinkable
for gentlemen, certainly in the governing elite.
Get this, then: “Let’s
be clear. We’ve intentionally blown the biggest government bond bubble in
history,” Haldane said. “We need to be vigilant to the consequences of that
bubble deflating more quickly than [we] might otherwise have wanted.” The
Haldane being quoted in the Guardian on Wednesday as having said this in the
course of testimony to a House of Commons committee – he couldn’t possibly be
Andrew Haldane, the director of financial stability at the Bank of England,
because, after all, the idea of a senior official at the one of the world’s key
central banks admitting that he, his colleagues and their peers around the world
had systematically distorted the global financial markets for years on end and
thereby created the risk of a disastrous financial collapse – well, it’s just
unthinkable, isn’t it? Er, no. It is thinkable, and is was that same Andrew
Haldane, and he also said the Financial Policy Committee, of which he has been a
member since its creation in 2011, had not been “entirely free” of political
interference over the way the bailed out banks Royal Bank of Scotland and Lloyds
Banking Group had been forced to raise more capital.
Of course, you don’t
have to believe the Guardian
’s version, but Haldane has not retracted a word,
and the Bank of England made do with a statement saying that what he said was
only his “personal view.” So that’s fine, then.
Haldane happens to think
that the Bank of England is not independent and is conducting a hazardous policy
with potentially disastrous consequences – but you, or Mrs. Edith Johnson of
Chipping Norton, Oxfordshire, might think differently, and you and she are
certainly entitled to your personal views, too.
If you are fortunate
enough to live in “the home of the free,” aka the United States of America, then
your government knows, or can quickly find out, what your views are on anything
from monetary policy to nuking North Korea. That’s because it can, and often
does, monitor your electronic communications as well as your phone (remember,
some people use a phone for verbal communication with other people – awesome,
This uncomfortable reality was known, and indeed published in
leading newspapers, for years before Edward Snowden blew the whistle on the full
extent of surveillance being conducted by the vast, endlessly growing security
apparatus of the US – of its own citizens.
But for whatever reason,
Snowden succeeded in hitting a nerve in the American public, sparking, inter
alia, a boom for Orwell’s 1984 and a storm of outraged commentary in both
mainstream media and the blogosphere.