The US economy has been slowing down and economists are predicting that a major economic collapse is coming. In a recent interview, Guggenheim’s Global CIO Scott Minerd said that the cognitive dissonance in the stock market is stunning as reflected by the ever rising prices and credit spreads. He expressed that this is not a buy the dip market but don’t try to catch a falling knife markets because prices have been plummeting for weeks. The stock market collapse has already begun!
I have been warning for years that the greatest and final economic collapse in this century, would be China. Now that cracks in the great red dragon’s economy are widening, it’s time to prepare for the China’s Yuan crash and The Great Depression In China.
The Chinese economy has in recent years undergone a series of boom and recesses making it increasingly difficult for investors to realize substantial profits margins due to complexity in differentiating the boom and recesses. The past 30 years have seen China’s economy massively grow by triple figures to be among the world’s leading economies despite being merged with fraud, enormous wastage of resources in addition to theft of public resources by powerful individuals in the government.
The tremendous Chinese economic growth has come with numerous employment opportunities with hundreds of millions of the Chinese population being employed in manufacturing industries found across all major cities across the country. The overall effect of increased employment in China is that the poverty levels have increasingly dropped in addition to massive infrastructural developments were state-of-the-art transportation hubs, high-speed trains, sophisticated telecommunications systems have been launched. The rapid advancement of infrastructure has also significantly contributed to economic growth.
The new tariffs proposal by U.S president Donald Trump has intensified the trade wars between the two nation, but the chances of China cutting its trade surplus with the US in response to the new tariffs is absolutely nil. The 25% increase in trade tariffs proposed by Washington puts China in a debt crisis and cutting trade surplus would not be a suitable option to help the situation.
The imposition of new tariffs on low-value exports involving Asian value chains is seen as a strategy employed by the U.S to cut down on the trade of cheap imports rather than leveling offshoring. The 25% increase in trade tariffs is also a means of reducing the country’s account deficit which is currently lower than 6%. The effects of the increase in trade tariffs are already caused an economic crisis in China evidenced by the current exchange rate which is at 6.725 to the U.S dollar, the lowest rate this year.