It isn't really that much of a surprise when you learn how astronomically screwed their current economy really is, and the Yuan is in line with the Euro and Dollar to fall hard in the near future. Due to the way they don't let citizens invest their money the way we can, they all went hip deep in funneling their new found wealth into housing as an investment, which has caused a bubble so big it escapes rational thought. Unfortunately these people bought into these ghost cities where no one lives. They have all wasted their life savings and don't even know it yet.
http://www.cnbc.com/id/100533574http://www.forbes.com/fdc/welcome_mjx.shtmlLots more articles like these around predicting the worst. This is not the housing boom of the US where they just overbuilt residental neighborhoods and business buildings.
They are mass manufacturing entire citites at a debt. These cities add zero to their economy as they are just rotting in the sun now, useless.
Their entire economy is 100% fake, driven by frequent mass capital injections that keeps them building completely empty cities on credit (they build 12-24 new cities
per year!) to keep the economy moving. Their middle class can't get enough credit, and the banks can't wait to give it to them. They are doing what the US did, but about 50% faster on the road to failure, it can't go on indefinitely. If China's economy tanks that little tantrum in 2008 will be a tiny footnote in history compared with the consequences of such a collapse of the world's second largest economy. Since the commodities markets would be wiped out along with it (that has been feeding China the materials for all of their insane building), all of the other major bubbles will implode immediately after around the world, causing a shockwave of systemic failure across the board, eventually burning down already shaky banks that are all hiding massive risky derivitives bombs of unfathomable amounts of money (Estimated at around $1.5 Quadrillion, 20x the worlds GDP, no one really knows since banks are not obligated to report to anyone). That means game over for the old economy and fiat currency. There is no amount of money anyone could print to fix it.
Grim, I know, but this is how the world really is right now. It's a house of cards. If you don't believe me I encourage you to start doing your own research and be shocked and disgusted by what you find like I was. We're on borrowed time as they keep inflating currency everywhere to stem the tide.
If/When (pretty sure it is
when at this point) fiat falls what do we do then? The problem can't be fixed with the problem. We will need a new money economy. Luckily, we already have one. Thy name is Bitcoin.
I have theorized as the economic damage gets worse that Bitcoin and its brethren could possibly overwrite the damage and the debt as it occurs. It is very easy to deploy and 100% free for the general populace to use, rapid adoption is totally possible. I'm prepared to watch BTC skyrocket when the next major bank or even a whole country bites the dust. Cyprus was just a taste of that scenario.
A point on mining that seems to escape many: even if the coins are a lot harder to mine in the future, even a slice of one when they are valued at say $1000 or more is still a significant sum. It won't stay at $100 forever while the difficulty and network hashpower ramps up with the Asicocalpse. Mining will still be profitable, possibly even more so if the price increase outpaces the network hashpower increase. We'll just have to wait and see what happens. The mining market and network will stabilize on its own, there is just a lot of hype built around these new ASICs and everyone wants in on the initial rush. It will pass. Those early to the table stand to make a small fortune, but won't be indefinite as ASIC tech becomes readily available.
To imagine the impact if 1/4 of the Earths population hopped on Bitcoin...I really can't wait to see where this is all going. It would be a smart move on their part to dump the Yuan before it dumps them.
