📷Opinion 👽
Part 2/2
EDIT: PART 1 WAS REMOVED FROM SS, AS IT WAS PURELY HISTORICAL CONTEXT, A LEAD-UP TO PART 2 AND NOT SPECIFICALLY ABOUT GME. I'M IN NEGOTIATIONS WITH THE WISE & BENEVOLENT MODS TO GET IT PUT BACK UP.
Link to 1/2 - https://www.reddit.com/r/Superstonk/comments/ptwy8m/china_may_have_won_world_war_3_without_firing_a/?utm_source=share&utm_medium=web2x&context=3
The Black Hole of Opportunities
With Huawei executives still traipsing from studio to studio trying to execute a PR plan they’d clearly had no training in and exhibit charm they were clearly never born with, some began to wonder whether Deng may have made a slicker job of calming world jitters than his successors. After reading the room for a while, Xi Jinping stood, made eye contact with every single Chief Executive worldwide, then began to calmly and patiently explain the concept of ‘capitalism with Chinese characteristics’ by taking a wrecking ball to his own economy. In he stepped to quite deliberately dynamite Jack Ma’s $38 billion Ant IPO, which had $3 trillion in orders. In he stepped to quite deliberately eviscerate the perfectly viable Didi, fresh from a $68 billion valuation. Macau, a great deal more valuable than Las Vegas in terms of revenue and a taxation goldmine, saw $18 billion wiped from casino stocks as the government vowed harsh new regulations and licensing laws. More regulatory, tax, and social clampdowns came thick and fast. Kids are now restricted to two hours of videogames a week by law, tanking associated stocks, including the vast Chinese interests. Children now have to login through police fucking databases to play Fortnite. And you know who designed and manages that system? The nice people at Tencent. Who, by the way, also own a huge chunk of Fortnite that we decadent Westerners allow to rot our children’s synapses for a lot longer than 2 hours a week. And you know what? I spend a lot more time talking seasons and skins with my kids than discussing authoritarian regimes and investing for their futures. Pow. One more in the win column for Xi. Private education companies – patient zero, the original ‘skirmish’ – were told to re-register as non-profits or face ‘de-listing’, wiping billions from going concerns like TAL and Yuantiku, fresh from raising those billions in the US to inflate values which were then used as collateral for loans from US banks. See how the game works?
Here’s the rub; the Chinese government restricts videogames for children, whilst at the same time making extra online schooling free. What is any right-minded parent going to make their child do with all that extra free time and bandwidth? Yup. This was Deng’s 863 Program for the TikTok generation. But at the same time, the companies who implement and monitor this are buying up vast amounts of shares in US videogame developers to keep our kids quiet, happy, and stupid.
Then there’s Ali-fucking-baba. Apart from openly facilitating the sale and distribution of the estimated 70% of counterfeited goods worldwide that originate in China, Jack Ma, one of the world’s richest Communist Party members is alpha testing his own system of social security. Supposed to be up and running last year, the Chinese government is mashing together data like your shopping habits, friends, credit score, criminal record, and fingerprints to generate a user ID, “a single scoring system assessing Chinese citizens’ economic and social reputations, which can affect travel allowance, school choices, work, etc.” The number assigned to you – not your name, you no longer have a name – can then be entered into a national database that will produce a forensically detailed record of your entire existence and how fucked you are because of it. If that doesn’t sound like some cold-blooded Orwellian shit to you, then you, my friend, might be a sociopath and/or a Risk Manager. Due to Covid, status unknown, but Jack Ma is not shy in talking about his belief that data capture by Alibaba can help his government ‘deter crime’.. With the exception of counterfeiters, probably.
Why did Xi kill the Ant deal? Ma had the temerity to suggest, in a roundabout fashion, that ‘regulators’ – the PolitBuro – might be a little old to really understand youth markets. Perhaps without even realising how radically he’d gone off the reservation, Ma was summoned and forced to watch as Jinping put a gun to his newborn’s head and coolly pulled the trigger. $3 TRILLION in orders. The IPO’s suspension is estimated to have personally cost Ma $3 billion; a loyal Party member, a servant of the cause. Don’t try and bend the spoon, Jack. That’s impossible. Instead, realise the new fucking truth: you, money, the whole fucking market, is just a tool, a means to an end in a much larger plan. Now get the fuck out of my office.
What did Didi do wrong? In all likelihood, not much. In fact, they probably did everything right. They took tens of billions of dollars from the likes of Uber and SoftBank, with the stroke of genius being that, having already cost the Japanese firm $4 billion, SoftBank then also dumped their shares in Uber to cover the losses on Didi. But wait, there’s more! Uber had handed over their entire Chinese business in exchange for equity in Didi, with the mainstream media crowing that Jinping was punishing Chinese companies for US IPOs. Communists so stooopid LOL. Look at the facts; lots more money, no more Uber. Ride hailing apps. Biiiiig fuckin data.
Tencent? Well, their expertise is writing the adaptive algorithms that power Chinese state censorship, the Great Firewall that’s scanning this and everything else written about China on Reddit, amongst some other very shady shit. But they’ve also been tasked with playing a different string on the zither entirely. CEO Ma Huateng’s job is to spot the next generation. He’s scouted and executed strategic investments in what some estimate is anything from 800 to 1000 startups, each and every one of them now in hock to the government. Jack Ma was on stage with a mic, hyping the crowd, Xinping’s Flavor Flav. Didi CEO, Cheng Wei, is ex-Alibaba, a company man and expert administrator. Huateng’s the dude in the skinny tie and Raybans, cross-legged in a leather armchair, smoking, watching. Nouveau champions, nouveau riche.
And then there’s Evergrande. The real estate behemoth is now insolvent, has suspended trading of bonds, and is expected to default imminently on many of its vast obligations. This is where contagion can burst like a supernova, as there are nearly 300 institutions on the hook for Evergrande’s debt, including BlackRock, UBS, Ashmore, and Legal & General. The majority of those are Western banks and pension funds, but literally no financial institution worldwide is outside the event horizon. Notwithstanding Evergrande’s debts being $300 billion, a staggering 2% of China’s GDP, the company also has a permanent staff of 200,000 and hires over 3.5 million contractors a year, so this outfit alone will be responsible for some sizeable blips in not just China’s but the world’s employment numbers. But here’s the thing; Xi Jinping very, very deliberately caused this by enacting corporate debt restrictions for real estate companies that he knew full-well many of China’s largest developers were already trading irretrievably in excess of. As of now, the government, possibly needing a sit-down and a protein shake after their sustained bloodletting, remain impassive, saying there will be no bailout of the stricken corporation, even though it will likely crater the entire housing market; residential and commercial. And this must be stated loudly; the Chinese were really getting into buying off-plan, so the first money to evaporate will be the deposits of hard-working individuals, not corporate slush funds. If CPCG and SOHO China are the next dominos to fall, particularly after SOHO switched from a build-to-sell to a build-to-hold strategy – and how unlucky is that timing, right? – this could mean their huge portfolios of real estate, much of it ultra-prime, could potentially be rendered worthless.
See, some commentators are saying there is no conspiracy here, that this is simply the cyclical result of overspeculation. The Shanghai stock market had surged 150% in the 12 months leading up to the crash. It was too hot. This was iiiiinevitable. Others are asking why the authorities aren’t doing more to arrest the panic, as, at the time of writing, more than 1000 shares and bonds have been suspended to stem the sell-off and avoid loan defaults calculated against sky-high valuations. Sure, they cut interest rates and spread a little bailout money around, but 80% of investors in China are retail, and they’d been ‘encouraged’ to take out loans to play the markets for years, consumer credit that the government allowed to be cheap and barely regulated. The third camp is asking why on earth the Chinese government would deliberately pull the pin on this and then calmly walk the grenade into a missile silo. Nothing is accidental.
The Rug Pull
Now, my opinion, for whatever it’s worth, does require a little tinfoil work. But here goes: A large cadre of hardened Marxist-Leninist revolutionaries fight tooth-and-nail for a century for the Communist cause, a struggle that sees millions of their comrades die in wars and famines. They are mocked and marginalised for decades after suffering a hundred years of military defeat, national humiliation, invasions, foreign control, and atrocities. Then this most controlling of regimes permits the coronation of an alleged economic reformer, despite twice purging him in the early days for not being radical enough. Not purged and imprisoned for life or purged and murdered like the others, but purged only to be repeatedly re-invited to the top table. His open doors/open arms policy and stunning early returns start to suck money into a centrifuge that is gaining momentum. More foreign money goes in. Even more Chinese money comes out. The institutions are convinced, and the money centrifuge is approaching black hole status. The Chinese government watches, taxes, calculates.
A new helmsman, Xi Jinping, takes the wheel. Over this period, cyberattacks worldwide rise to unprecedented levels and large data breaches are daily occurrences. It’s no secret that the NSA and GCHQ are tracking a large number of these back to well-funded hackers in China. What if China intended this crash all along? What if letting their market fall by 30%, real estate by more, insurance and financial services by still more, is just the beginning, because the short term simply doesn’t matter to them? The losses are predicted, within tolerable ranges, and all part of a plan. Then, when things are at their bleakest, the Chinese government appoints state-run administrators for each and every one of these distressed entities, these smoking, bullet-riddled hulks. They casually amble around the assets with their clipboards, puffing out their cheeks like decorators pricing up a job, then offer dollars – possibly cents – on the square foot for what Evergrande and SOHO paid thousands on the square foot. They shuffle off to make the same offer to manufacturing, automotive, finance. They say that the state rescue offer will be equity based. They’ll own the land again and they’ll own large chunks of companies dragging themselves back to profitability.
Let’s go further than that. Let’s say that the brutal repression we’ve seen in Hong Kong is not the end of this British-built bastion of the international free market, but the beginning. Draconian new laws are seeing nonviolent protestors arrested, the free press shut down, sinister military units and plainclothes secret police violently dragging away protestors, dissidents jailed for decades, for life. Running for the Executive Council as a non-Communist Party member and hardcore loyalist is now impossible and religious clampdowns on the former colony have begun with cold, frightening efficiency. What if the Chinese government has a plan to underwrite loans to the companies crying out for credit? Not just in China, but worldwide. They now have equity and a large share of the corporate and consumer credit market. What if the Chinese banks with large domestic exposure ends up being subsumed, trillions in seized assets of foreign origin then coming under the control of the government? The Chinese government, remember, have one of the most awesome financial weapons on earth at their disposal; the ICBC. The Industrial and Commercial Bank of China doesn’t function as a central bank; that’s the job of the Party. The biggest bank in the world, with $4 trillion in assets, is a state-owned commercial lender. Before Brexit, people said financial institutions didn’t have to leave London. What if those same institutions simply can’t leave Hong Kong?
By this point, Western banks are caught in a terminal whirlwind of sell-offs and write-downs, desperately trying to cover their now-worthless positions in China with a fire sale of US and European equities, bonds, and commodities. Pension funds are having a collective aneurism, the futures of millions mortgaged not against the failure of China – that ship has sailed – but now invested in the rebirth of China under the total and absolute control of the Party. They’re locked in. Maybe for generations. Possibly forever. Debt is downgraded and downgraded, B to CCC to D, descending to junk status. Once-mighty corporations are humbled. Lenders become borrowers. Time horizons might just be very different concepts between East and West.
Once in a Lifetime Opportunities
These are the catalysts I’ve talked about before for GME MOASS; a series of large international crises in quick succession that pull focus – and cash – away from a battle to keep downward pressure on the price of one stock (or at least a TRS basket), and into a more existential battle. I believe this will then make GME stand out as a safe haven and money will begin to flow inwards while the SHFs are looking away, another front opening up where the existence of a greater number of larger institutions are at stake with bigger players calling the shots. Shiller P/E, inflation, reverse repurchasing, (un)employment, stimulus tapering, and thus the mathematical probability of FTDs is made certain.
In fact, frighteningly, a large redistribution of wealth in the West might not only be a welcome bonus in Xi’s game, it might just have been the game all along; sucking all the lifeblood out of Wall Street – perhaps Frankfurt, Sydney and the City, too – and rebuilding Hong Kong in his own image, with thousands of experienced financial professionals, now unemployed and feeling betrayed by central banks, who could quickly migrate to Asia and begin trading as soon as they’re at a desk. Better than that, Sotheby’s, Christie’s et al set up in Hong Kong precisely because of the vastly inflated prices that the champions were willing to pay for art, jewellery, and antiques. Sooo, basically anything you’d crack open the safe and tear up the floorboards to sell in an emergency is already gone? And you invested the returns in China? Fuuuck. Everything is deliberate.
Your Capital (Market) is at Risk
Everyone knows that the next epoch belongs to China. What nobody knew was that legally and illegally – ethereal concepts to the Party – the Chinese government has been concreting in the inevitable by funnelling billions into cyber attacks and datamining on a global, industrial level, whilst positioning themselves to be in total control of world credit markets from a financial HQ hand-built for imperial control then gifted to them by the UK, a state Chinese leaders have considered ‘hostile’ for centuries. They’re not interested in learning the same lessons as the West from Enron or Lehman or Credit Default Swaps or Iceland or Black Monday/Wednesday/Sunday. They were watching closely and calculating how they could be the ones pulling the strings, collapsing the pyramid of playing cards built by disparate foreign and domestic money managers before building it back on their own terms, no negotiation.
The timing is perfect. Europe has been weakened by a generations-long campaign undertaken for them by Russia, their thuggish, money-hungry henchman-in-chief, at a time when the EU was perhaps the only potential candidate to counter the onslaught. The US has failed to learn lessons from 2008, leaving markets fragile and corrupt. COVID has left thousands of institutions scrambling to claw back losses, desperately looking for energetic markets that demonstrate any immunity whatsoever, particularly since Chinese-led calls for cryptocurrency regulation, having long ago banned it from domestic markets, have again made the West wary of DeFi and evaporated huge chunks of crypto mining. There’s simply no point in citing the international treaties, WTO rules, or legal statutes in place to counter this campaign, because those are a collective irrelevance to Jinping. The Leninists had a saying about the West; “They will sell us the rope with which we will hang them.” That’s Jiangxi Soviet. That’s Mao. That’s now.
Still don’t believe me? Okay, look at the ‘other’ coming crunches; semiconductors and lithium. Oil was yesterday’s war, so China has taken a lot of that sweet foreign investment and heavily subsidised the entirety of its semiconductor industry whilst vastly outstripping the competition in mergers & acquisitions deals in the sector. The other three players in Asia, of course, are Japan, Taiwan, and South Korea, and China’s got major beef with all of them. None of these age-old foes can compete forever against massive state subsidisation.
Lithium? China is the world’s third-largest producer and is estimated to be sitting on the fourth-largest reserves. You know what doesn’t need a battery and silicon chips? Toys your grandparents played with.. Fruit.. Not much else. But national footprint be damned. China’s Belt and Road Initiative, an undertaking requiring vision only gifted to cinematic supervillains, is not designed for school buses and commuters, it’s designed to move heavy plant machinery to those neglected parts of the world that have either been abandoned by the US, forgotten by the Europeans, or in whom the Russians have lost interest. Ask an Uzbek or a Tajik, and they’ll tell you that a whole bunch of airstrips and highways have been appearing, almost overnight and seeming to serve no purpose. Many shopkeepers in Mongolia have lithium, not tourism, to thank for foot traffic. Lithium/opium. But these things are not for now. They’re for soon. For later. For whenever the next unlucky explorer triggers the next fatal boobytrap.
See, here is a plan coming together that’s been thousands of years in the making. By learning from hot wars in Europe, the Pacific, Korea, the Middle East, and the Cold War with Russia, Xi now knows exactlywhat it would take for the West to drop bombs – particularly nuclear-flavoured bombs – and financial and cyber crimes simply don’t pull triggers in London, Brussels, and Washington.
The Chinese government know the people won’t mind being poor again because they’ve been poor before. Not historically, but in their own lifetimes. To them, it doesn’t matter if you’re the CEO of an e-tailer, or one of their packers; wealth comes and wealth goes. Only the cause is eternal. As a populace and as a government, their history – their ancestry – is taken very, very seriously in China. They also know that poverty, famine, and war are transitory in a way that will never be understood in the West. If the populace seems relatively indifferent to the despicable human rights abuses being committed against the Uyghur Muslims, Tibetan Buddhists, and practitioners of Falun Gong, it’s because, again, pain is transitory, and the State doesn’t permit them to be anything but indifferent. The government fosters the idea that these oddities and outliers simply haven’t made the rational decision to let the State decide for them yet. It’s just what happens when leaders have never been freely elected, and the West is misguided in thinking that this system, deep down, is not what the poor foreigner wants. We’re projecting our pathological hand wringing and worrying into an echo chamber. We’re hearing our own spectral, disembodied voices emanating from the depths of the cave and mistaking them for cries for help.
The emperor’s mindset becomes a simple question of how he can require history to remember his dynasty as superior to those that have gone before. The body count is irrelevant. If empires have an average lifespan of 250 years, then 2026 marks the 250th anniversary of the birth of America. The British had a good run, so too the French and the Spanish, but the two World Wars put so many empires to the literal sword in making the typical error of overreaching in their quest for power that the lesson to learn was not to go searching for riches, but have others, with death knells tolling, deliver the riches to you.
Sweet tinfoil hat, bro. Care to join me in my bunker?
Soo.. Buy gold, right? On an exchange? Why? I’d be willing to bet that the commodities markets will be the most resilient to the new world order, but that’s only because commodities tend to be clunky, unwieldy, slow to ship. The ‘smart’ money is selling gold, and these sales will increase exponentially, making any gains temporary and resistance finite. Be-caaaause guess who’s doing all the buying? China! At a rate of about $3.5 billion a month since you ask. They’re shipping more that 900 tons a year to the mainland, because leaving it in some Swiss vault would be short sighted, and short sightedness is not their bag.
Cryptocurrency? Decentralised things, particularly currencies, don’t sit right with Xi, and mischievous scamps playing super-fun games claiming Japanese origin alone could have added Bitcoin to Xi’s lengthy and largely inherited shit list. But not liking something is not a good reason to not want to control the world’s markets of something. There’s a very serious question of how much Tether is underpinning and/or manipulating the world’s crypto markets. Tether is owned by Bitfinex. HQ: Hong Kong. Registered Office: the Caribbean. Besides, the core components required in crypto are semiconductors and lithium, and soon we won’t have those. Not cheaply, anyway. Buuut.. you bought some NFTs, right? Cool. Go see the guy with the clipboard and he’ll quote you for the resale value.
Now All Your Bases Are Belong to Us
Xi’s predecessors were stone cold killers who built fearsome reps and unquestioning loyalty by leading chariot charges, bayonetting Japanese troops, and garrotting nationalists. Xi is a stone cold killer of a different grain, but the emperor’s purpose remains singular, and the message remains the same: Your entire economic structures, your national identities, the systems on which you rely, are totally and utterly meaningless. Sun Tzu, the famed general and strategist, said “The supreme art of war is to subdue the enemy without fighting”, and he was doing his best work during the Zhou Dynasty, the MVPs I was discussing earlier. Lesson learned.
Douchebags from [insert fund name] keep asking in the financial media how serious these problems are for China. My question is how serious problems in China are for everybody else. Because problems in China and Chinese problems are very different things. But, by asking why anyone would want their growth to shrink back to 5 or 6%, they’re again projecting their own concerns, magnifying the weakness in their strategy. Not empathising. Not learning lessons.
It’ll be in the comments that I’m some kind of Maoist shill. I’m not. I’ve lived my life as a decadent free marketeer, and I’ll die as one. What I’m pondering on is whether that will be on an island paid for by MOASS and the VIX, in a house I’m hopelessly upside down on with a weak set of spectacularly non-transferrable skills and unable to fund my flight to Lap Kok, or in a cave, trading my 1st edition Lugia holo for a hogshead of diesel and grading my potatoes B for battery and A for alcohol. Some will say that I’m not Chinese, I don’t understand. You’re right. And that’s exactly my point. Others will say I’m paranoid and dead wrong. One of those is true. One of those I hope is true.
What can you do about this? Fuck knows. Learn Mandarin, I suppose. Personally, my money is in the certainties; GameStop and bear funds.
The Chinese government may have won World War 3 without firing a single shot. Genius, probably.. But I’m not sure I want to be on the winning side.
