Thursday, December 11, 2008

Are consumers and investors ahead of the curve?

The Chinese Communist Party announced two economic jaw-droppers which hint that the consumers and investors of the world are wising up on the regime, even if the politicians haven't.

First, exports fell for the first time in seven years. While the global economic travails certainly had a hand in that, I'm surprised that neither the Economist nor the Los Angeles Times made note of the melamine fiasco having an effect on consumer preferences.

If you ask me, however, the bigger news was buried (although Bloomberg caught it): "foreign direct investment fell 37 percent from a year earlier" (emphasis added). In other words, foreign investors are fleeing.

Now, we all know that the Communists' human right abuses (Between Heaven and Earth and Epoch Times) wouldn't be enough; nor would national security issues (Washington Times); nor would the Korean colony (One Free Korea and Washington Post - the latter is an especially moving piece about a prison camp escapee).

As a former campaign operative once said sixteen years ago: "It's the economy, stupid." At long last, the rest of the world seems to have figured out the mirage behind the Beijing "miracle." Already the cadres' solution (devalue their currency again to stimulate exports) is being panned (Epoch Times). If Wall Street and their various counterparts are no longer falling for the Communist line (and that is still a large "if"), it won't be long before the political leaders start to turn as well.

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