Tuesday.....International.....China And You

The Rooney name is synonymous with Pittsburgh. Art Rooney Sr. was the founder of the Steeler football team, way back when, and more recently his five sons have owned equal shares of the team, keeping control of the Pittsburgh Steelers in the hands of the Rooney family. Then a problem came up. Two of the brothers owned racetracks with gambling. The NFL said that the gambling must be divested of but the brothers did not want to do that. To make a long story, short, and it was an extended period of time that Dan Rooney tried to keep the Steelers in the family, a deal was worked out. Any one of the four other brothers could have put the kibosh on the deal. One of the articles mentioned on the cover of the December 28, 2009 issue of Forbes magazine is described this way CHINA MELTDOWN, Be Very Scared and the article is titled Ponzi In Peking. I've mentioned before, as I have tried to follow this, that China is in a very precarious position, to put it mildly. Their economy is growing rapidly but the nature of this particular beast is that it must continue to grow just as rapidly. It has a dollar tapeworm. This is the outside looking in. The inside view is much worse. The Forbes article gives warning signs and is very serious about them. A speculative frenzy has produced an asset bubble that could bring their economy down. From the article-Signs of the times: government bureaucracies funding themselves by foisting debt on state-owned business enterprises; local governments raising capital by selling land at sky-high prices to corporations they own; and a People's Bank of China lavishing liquidity on the entire system in a way that makes the Federal Reserve Chairman Ben Bernanke look downright stingy. They are churning out more office towers and luxury malls than can be leased for years to come (even if the economy does continue to grow at this rate.) They are artificially depressing the value of (their) currency and making it difficult for locals to invest abroad thus inflating property and stock prices. This is not just another potential economic crisis. I don't believe that China would settle for a lost decade such a Japan experienced, for they could not. They would effect other nations of the world more than Japan's problems did and hyperinflation in China could rock an already unstable political climate and encourage China's political leadership to follow through on military solutions. David Smick's The World is Curved, Hidden Dangers to the Global Economy (now in paperback) had the most impressive list of blurbs than I had seen for a while including Alan Greenspan's comment an essential read. I recommend this book because the news headlines might accurately be able to describe the relationships in ownership of a football team but cannot relay, on a daily basis, the relationship of China's speculative frenzy and your family.