Arizona Bankruptcy Attorney Blog

There are those who are cheerleaders for Communist China, and the "Chinese Economic Miracle".

Me? Not so much.

I'm not wild about the acid rain they're sending out of their country, and the massive pollution that China spews into the air and water (lung cancer is the primary cause of death in China these days, I hear).

Mostly I don't like it that so many U.S. jobs have been exported to Red China, and that the United States feels comfortable borrowing from a country that has frequently made policy statements about the destruction of the United States.

And I suppose the easy-going, humorous attitude about trademarks and patents shown by Chinese manufacturers also makes me a little uneasy.

But China has its own problems.

As trade slows down, unemployment is skyrocketing in China. You don't hear about it much because the statistical measures of unemployment in China don't count employees who voluntarily quit; and employees are pressured to quit, rather than be fired.

So the numbers coming out of China are cooked to a remarkable level.

Then there are the loans to businesses made by the Chinese banks.

The bubble associated with those loans will make the bubble in the United States look like...a bubble!

And inflation in China is now running at breakneck speeds, particularly in key areas like food.

But one of the upcoming comeuppances for China is going to be the sort of early-warning signal that we've seen in the United States: a credit downgrade for China is in the works!

Now, I don't wish the Chinese any harm. As long as they send back the jobs they swiped from the U.S., and clean up their country so that the rivers don't run black with sewage and their cities are no longer invisible under a cloud of coal smoke, all is forgiven.

Actually, I guess that I have a Challenge for China.

Go Green, Guys!

We'll be happy to send you our EPA to help you out!

And, actually, that might be the fastest way to build jobs here in the United States.

p.s. the Chinese Economic Miracle is coming to an end, some experts believe. I tend to agree, even without a Doctorate in Economics. There's one simple reason: governments can't run businesses, and when they try, they fail. Every single time. See the country formerly known as the USSR. And the U.S. Post Office.

This is an interesting video concerning the economic troubles of cities and states; if you have too much month left at the end of your money, bankruptcy will at least cross your mind.

And, apparently, it also crosses the minds of folks who are running cities and other municipal entities.

You'll hear these commentators talking about the fact that bankruptcy for cities and municipalities is "bad", because of the effect that it will have on bondholders.

On the other hand, it seems to me that at the point that the bondholders aren't getting paid, Chapter 9 Bankruptcy Cases will get filed, like the one in Central Falls that was filed yesterday!

Various countries have gotten great press for economic development over the years.

Since I'm more Irish than not, I was happy when Ireland was the "Celtic Tiger" of Europe.

Now, of course, the Irish are doing what they've done for centuries; being forced to leave the old sod and travel in search of jobs.

The Irish seem to do very, very well in both business and politics. Everywhere but Ireland.

Another country that has gotten remarkable levels of publicity for its dramatic economic growth is China.

And, like the Soviet Union before it, China is apparently about to demonstrate exactly how well a Communist Government can manage an economy from the top down.

And this article from Bernama discusses the specter of bankruptcy cases from one end of China to another.

It will be interesting to see how that plays out.

There is a concept in economics called "elasticity".

For instance, if the price of drinking water goes up, the consumption of drinking water will stay about the same, since the demand for drinking water is highly "inelastic".

On the other hand, the demand for many products and services is highly "elastic". Think about it for a minute: if your hair-cutter started charging ten times as much as she does now, would you get as many haircuts?

Now let's look at the demand for holiday travel. Is that more like drinking water (which you gotta have, after all) or more like haircuts (which are far less life and death sorts of issues, unless you live in AZ and need to get out of the 117 degree heat!)?

So if the cost of holiday travel goes up, will we see less of it?

Absolutely! And we can check our reasoning in the real world, and we'll see that there is less holiday travel when the price of gas is higher.

Now, the price of gas is somewhat interesting in the economic universe, because it drives higher prices for everything.

And it, along with excessive printing of money, is part of the reason for the stealth inflation that's starting to sap your wallet.

But you knew that, right?

And will higher gas prices and stealth inflation work to force more hard-working Americans to file bankruptcy?

Uh. Lemmie think about that.