Archive for December 28, 2010

Either America Or China Will Crash In 2011

December 28, 2010 Comments off

Andy Xie’s latest sees the liquidity war getting worse in 2011.

America will continue to pump the financial system with liquidity via tax cuts and quantitative easing. China will keep the yuan cheap and avoid clamping down on inflation.

The tense equilibrium can’t last for long, as either sovereign debt or inflation gets too heavy to bear. Whoever lasts longer, wins.


The most likely candidates to trigger the next global crisis are the U.S.’s sovereign debt or China’s inflation. When one goes down first, the other can prolong its economic cycle. China may have won the last race. To win the next one, China must tackle its inflation problem, which is ultimately a political and structural issue, in 2011. If China does, the U.S. will again be the cause for the next global crisis. China will suffer from declining exports but benefit from lower oil prices.

On the other hand, if China has a hard landing, the U.S.’s trade deficit can drop dramatically, maybe by 50 percent, due to lower import prices. It would boost the dollar’s value and bring down the U.S.’s treasury yield. The U.S. can have lower finacing costs and lower expenditures. The combination allows the U.S. to enjoy a period of good growth.

Xie notes that China may have the advantage here. While America has committed to a liquidity hose, Beijing still has the opportunity to crack down on inflation:

China’s inflation problem stems from the country’s rapid monetary growth in the past decade. That is due to the need to finance a vast property sector, which is, in turn, to generate fiscal revenues for local governments to finance their vast expenditure programs. Unless something is done to limit local government expenditure, China’s inflation problem is likely to get out of control…

There are two ways to limit local government expenditure. One is to cut their funding source. Their main revenue sources are land sales, property taxes, and bank loans. The last source is drying up a bit, as banks are saddled with high exposure to the sector already and are trying to decrease it. This change isn’t biting yet because local governments haven’t spent all the money they borrowed before.

China needs America to consume their goods. This is the only way to keep its 1.3 billion people working and prevent protests and cause social instability. America has lost it manufacturing bases. They have only the printing press to print fit currency. America needs cheap imports from China to keep the illusion of high standard of living that they are used too.

Read more:

Zimbabwe Hyperinflation comming soon to AMERICA?

December 28, 2010 Comments off

In November 2008 inflation in Zimbabwe hit 89.7 sextillion percent – that is 89 700 000 000 000 000 000 000%.

To get a rough idea how much that is – a sextillion is a billion trillions.In addition to the staggering hyperinflation, unemployment in Zimbabwe also went up to 85% and over the third of the people left the country. Check out the pictures below to get an idea how was life in Zimbabwe during the hyperinflation.

Zimbabwe’s inflation is hardly history’s worst — in Weimar, Germany in 1923, prices quadrupled each month, compared with doubling about once every three or four months in Zimbabwe. That said, experts agree that Zimbabwe’s inflation is currently the world’s highest, and has been for some time.  Could this happen to America in the near future?

Fact: Hyperinflation has occurred in 30 nations within the last 100 years.

What can you buy with 100 billion dollars? Well… it’s not enough for 4 eggs but you can get 3…

Are you prepared for a emergency?

December 28, 2010 Comments off

The Council for Excellence in Government and American Red Cross conducted a poll that found that Hurricanes Katrina and Rita did not motivate a plurality of Americans to prepare for an emergency. Only 12 percent say they’ve done a great deal to prepare for a natural disaster, terrorist attack, or other major emergency.

The poll shows that most Americans yawned and went back to sleep (Table 1).


We are our own first responders, and it is up to each of us to create a family communication plan, put together emergency supplies, and practice evacuation plans. We are an optimistic, generous nation, which opened its hearts and wallets to those whose lives were turned upside down. We are willing to help others. Now we’ve got to help ourselves.

Patricia McGinnis is president and CEO of the Council for Excellence in Government (

Table 1. Is It Time to Wake Up?

It won't happen to me.       More than half say that one reason they
                             have not done more to prepare is because
                             they do not think another disaster is
                             likely to happen to them. We seem to
                             believe that the tragedies of Katrina and
                             Rita were terrible events with horrific
                             consequences--but the devastation was
                             someplace else--not in my community,
                             home, or business.

I don't mind inconvenience   Since the 9/11 attacks, we have given our
as long as I don't have to   leaders wide latitude to protect our
do anything.                 Nation. For the most part, we have been
                             more than willing to sacrifice some
                             privacy for safety and preparedness.
                             After July's London subway bombings, a
                             Fox News poll found that 85 percent would
                             not mind a bag search before entering
                             public transportation, which would not
                             require any extra effort on our part.

I don't know what to do.     Two months after Katrina, the Americans
                             who said they hadn't prepared because
                             they didn't know what to do actually
                             increased by 9 percent. We saw and heard
                             the desperate pleas of family members
                             separated by Katrina, yet most of us
                             still have no plan on how to communicate
                             with family members during or after a
                             disaster. Just 36 percent report that
                             they have prepared a communications plan
                             to contact loved ones in an emergency if
                             they get separated. Only one-quarter have
                             established a specific meeting place in
                             the event that they or their family are
                             evacuated or cannot return home. Only one
                             in three have stored extra food or
                             bottled water for emergencies.
Some Americans have gotten   More than half of Southerners say that
the wake up call.            the hurricanes gave them motivation to
                             prepare for a disaster. But others are
                             still hitting the snooze button: just 35
                             percent of people in the West, 31 percent
                             of people in the East, and only 21
                             percent of Mid-westerners have been
                             motivated to prepare.

We demand that our leaders give us better and more effective emergency
plans for our communities, yet only 18 percent of Americans are
familiar with their city or town's emergency plan. Even fewer are
aware of their state's plan. We know significantly more about plans
for our workplaces (45 percent) and local schools (28 percent), but
we're nowhere near ready.

The Home Survival Kit

Store everything here in sealed plastic bags or containers, and keep in a place that is fairly accessible. This probably won’t cost as much as it might seem, and you probably have most of it already. Still, if price is an issue, buy this stuff a little at a time (maybe when it’s on sale?) and eventually you will have a truly epic survival kit.

1. Water: 1 gallon per person per day. For a family of 4 that makes 12 gallons. The best way is to buy gallon jugs of drinking water, because they are pre-sanitized and sealed to prevent any nastiness from getting in. If you decide to fill your own jugs, read this for instructions on how. Also, keep a bottle of non-scented bleach – 12 drops in a gallon of water makes it drinkable, and tea bags can make it taste better.

Word to the wise: As a last resort, there is a handy backup reserve of water – in your hot water heater. Open the drain valve at the bottom to get some water of last resort. Don’t forget to sterilize it with bleach!

2. Food: Go ahead and plan out 3 days worth of meals, using non-perishable food that does not need to be heated. Canned tuna, veggies, and fruits are great, as well as canned beans and potatoes, and dried fruit and nuts. They may not taste great cold, but they will work. Peanut butter is a high-calorie food with a long shelf life. Freeze dried camping meals and MRE’s are nice too, but they can get a little pricey. Stay away from foods that will make you thirsty, like high-sodium crackers or soups, and go for whole grains as much as possible. Don’t forget to add in some comfort food. You may be stuck inside for days, and a little candy or other snacks can go a long way.

Word to the wise: Don’t forget to pack a manual can opener!

3. First Aid Kit: You can buy one for about $25, (here is a good one from the Red Cross) or you can make your own. Check out this list of suggested first aid items. Don’t forget to include any prescription medication!

4. Clothes: A full change of clothes, including warm outer layers and sturdy comfortable shoes, for each person under your roof.

5. Flashlight: A crank powered led light with a built in emergency radio is my personal favorite, but a cheapo dollar-store version will work. Don’t forget the extra batteries!

6. Plastic Sheeting: Fiber-reinforced, laminated polyethylene film, 0.006 inches thick. You can buy 1,200 square feet of Dura Skrim DS2 for about $100. Or get a tarp — for covering broken windows or roofs.

7. Zip Ties and Duct Tape: These DIY favorites are great for attaching the aforementioned plastic sheeting, or even making compression bandages or splints.

8. Protective Wear: Waterproof and cut resistant Kevlar gloves and N95 face masks. Get one face mask for each person, at least.

9. Tools: A crowbar to pry debris that might stand between you and a loved one. An adjustable wrench. Screwdrivers. A staple gun. Rope. Fire extinguisher: small canister, ABC type.

10. Matches: Strike-anywhere, waterproof, and windproof. Keep them in a plastic bag. In another bag, hoard some dryer lint for kindling.

11. Sanitation: Toilet paper, soap, liquid detergent, feminine supplies, personal hygiene items (travel-sized, please), plastic garbage bags, ties (for personal sanitation uses), plastic bucket with tight lid, disinfectant, household chlorine bleach.

12. Radio