Yesterday (24 Aug) was “Black Monday” on Wall Street. Within minutes after the opening bell, the Dow plummeted an unprecedented 1,089 points – the largest point loss ever, repeat “ever”, during a trading day. There was full-blown panic on the trading floor. And this was happening in Tokyo, London, Berlin, Paris, and Mumbai – in fact all over the financial world.
The crash was, of course, driven by deep fears about what is euphemistically being described as China’s economic “slowdown”, but which really should be called, at the very least, a “financial meltdown” or more bluntly “the collapse of the Chinese economy”.
Fortunately for the US, the Dow rallied a bit at the end of Monday. Wall Street opened sharply higher on Wednesday after data showed U.S. orders for durable goods rose more than expected. In China the fluctuations and chaos continues, but the leadership is carrying on in public as if nothing has happened. Speaking of leadership, within the wider CPC membership, party loyalty seems to be fraying and various factions are said to be preparing for hard times – “going to the mattress” to use a Godfather analogy. A recent gathering of Party bigwigs at the seaside resort of Beidaihe was reported to be “tumultuous”. Rumors are floating of the former Party boss Jiang Zemin (reputed to be the eminence grise of the Communist Party) and his two sons being placed “under control”. Capital flight rocketed to a rate unseen in China’s history. In July alone $190 billion left China for safer shores.
I’m not going on any further. I have bored readers enough with my attempts at “bullspeak” in “Rangzen Spring I & II”. This post is an urgent appeal to all Tibetans to wake up to the fact that events in China are moving rapidly, and no one, least of all Dharamshala, is prepared for this, not even in the most superficial sense. Kenneth Rogoff, professor of economics at Harvard speaking on China’s financial crisis quoted the German economist Rudi Dornbusch: “In economics, things take longer to happen than you think they will and then they happen faster than you thought they could.”
I have been waiting a long time for this moment. I was always certain that “Communist China must fall of its own contradictions” but I had been wary of making predictions. In 1989 I was tempted to try my hand at the game, but I hedged my bets:
We can see the cracks in the facade of the Empire, though when that vast ediﬁce will crumble and break up is difﬁcult to predict. The vastness of the country and its immense age gives its history a rhythm very different to that of other nations.
People are often exasperated by the slow toil of history. They assume that the lightning of cause will be swiftly followed by the thunderclap of effect. Though changes in China may not come about as swiftly as we would like, it will most certainly come.
(“Postscript” Illusion and Reality, 1989)
In 2005 I published a book, Buying the Dragon’s Teeth, a detailed exegesis of how business and consumers in the West and Japan were propping up the Chinese Communist Party’s authoritarian control of it citizens and underwriting its Laogai slave labor camps, its repression of religion, its military occupation of Tibet, its forced abortions and sterilizations, its psychiatric persecution of political prisoners, and so on an on. The book was a small one, only 160 pages but it helped provide information and talking points to labor, human-rights and Tibet activists and, I was told, helped to inspire other more substantial tomes as Death By China.
Near the conclusion of the book I laid out my arguments why the Chinese economic system was fundamentally flawed, “a bubble in the making”. That “its banking system was dysfunctional” and that the underlying official corruption, the CPC’s “Let the Good times Roll policies” were creating a dangerously overheated economy.
The book is out of print now and some of the information a little dated. But those interested can download pdf files of the English and German editions.
Download English edition Dragon’s Teeth
Download German edition Drachensaat
Let me leave you with the main epigraph from the book which provides an explanation for the somewhat dramatic title, Buying the Dragon’s Teeth, and my conviction that consumers, businesses and politicians in the West were buying into something that would in the end turn against them in a nasty way.
The Colchian king Ætes consented to give up the golden fleece if Jason would yoke to the plough two fire-breathing bulls with brazen feet and sow the teeth of the dragon which Cadmus had slain, and from which it was well known that a crop of armed men would spring up, who would turn their weapons against their producer.
… Jason next proceeded to sow the dragon’s teeth and plough them in. And soon the crop of armed men sprang up, and, wonderful to relate! No sooner had they reached the surface than they began to brandish their weapons and rush upon Jason.
— Thomas Bulfinch, The Age of Fable or Stories of Gods and Heroes