China's out-of-control Inflationary Boom

America and China appear to be locked in a financial embrace turned toxic. If America is running perennial trade deficits and if American consumers are running dire savings deficits, then China appears to be wrestling with the opposite peril: a worsening inflationary spiral caused by a tsunami of incoming ever-cheaper dollars.
I won't pretend to be an expert on China's stock or bond market, but then again finding such discussion of financial conditions in China seems to be just about impossible. What I do know a little about is financial history, and what conditions in stock and even moreso bond markets can tell us about where an economy is going.

With that in mind, it is worthwhile to look at China's markets and ask ourselves, "If this was the US, where would the economy be heading?" The answer (while enviable compared to America's condition) ain't so pretty.

The Economic Slowdown is Global

For those who claim that China, India, et al. will bail out the US slowdown by picking up the slack, I bring you this chart of China's Shanghai A shares:

The index reached a high of 6430 back in October 2007. This morning it finished at ~3590. That's a 45% decline in 5 months! If it reminds you of the Nasdaq in 2000, it should. This is the chart of a bubble popping. Large numbers of Chinese "investors" opened brokerage accounts in the last year. Just how many? This is from the February 19 edition of USA Today:

Manufacturing Jobs - US Wages Dramatic Decline

Along with the loss of -3.3 million Manufacturing jobs over the last seven years, a report just released by the BLS shows average hourly compensation for US Manufacturing jobs fell from the world’s 4th highest in 2000 to the world’s 14th highest in 2006. Japan’s Manufacturing jobs were the 2nd highest paid in 2000 but plunged to rank only 16th in 2006.

United States Universities Subsidizing The Competition

The below video exposes the University of Michigan recruiting and educating foreign nations in fields where companies are now laying off Americans. The video points out this is paid for by the US taxpayer, which begs the question, why is the US taxpayer subsidizing it's own economic destruction and why are our Universities, that we pay for, promoting this?

Further reading:

Are Our Universities Ours?