Tokyo investors wary of China, geopolitical tensions

Just like in America, the financial pundits in Japan blame China's stock market fall for their own fall, but when the Chinese market rises, and Japan or US markets go up, they never say, stocks are up because the Chinese market is up. If you're going to claim a 100% correlation, it has to work both ways; up and down.

In reality, the US, by printing over $4 trillion an keeping interest rates near 0% over 7 years, and other central banks, particularly the BOJ, have inflated a financial asset bubble in stocks, bonds and real estate. But that's just the tip of a quadrillion dollar derivatives bubble. In other words, leveraged credit over a quadrillion dollars, hinges on the repayment of credit, which has been created by debt both private and public. Private sector debt can easily be rectified through bankruptcy. However public debt, in particular the United States, can be resolved by printing more money (paper), and hoping the creditors take it.

Bubbles don't slowly deflate. They pop.

In sweat-wet desperation of avoiding a market crash, the PBoC was able to ‘lift’ the market today by a massive injection of reserve wealth. However, the government’s power to keep on doing this is rapidly diminishing at the rate of $100 billion a month. Yes, we’re speaking of absolute “wealth destruction” simply to keep up appearances. And, of course, the CPC will try to deny and ignore that, as naked emperors are wont to do.

China’s weakening economy is sick to dying, and everyone knows that. Despite communist party propaganda expectations for 6.5% GDP growth, the economy is no longer growing at all but is in the midst of a rapid contraction, which will soon reveal itself as the “Great CPC Depression of 2016.” With a shrinking economy which can no longer service China’s massive debts, prepare for the worst. It’s coming.

As you may not know, China's debt bubble rose from 160% of GDP 10 years ago to 250% of GDP today. Expect nothing less than a 2008-style Chinese financial crisis that will consume the last of China's reserves...down to the last yuan. Let’s not forget that, in order to keep the economy from flatlining, the CPC has been spending and/or stealing China’s reserves at the rate of $100 billion per month.

Where else are China’s reserves disappearing, if not into a rabbit hole? Three times this past week, the PBoC pumped over $20 billion (each time) of China’s fastly dwindling reserves to keep the stock market from crashing. It is this exact same fact that triggered waves of selling of foreign investments held by China's sovereign wealth funds.

Yes, China’s economy has the look of a Ponzi scheme. China’s $25 trillion of debt, whose funds were spent on useless industries simply to feed overcapacity, far surpasses China’s remaining small reserves, disappearing at the rate of $100 billion a month. And, don’t we all know what inevitably happens with Ponzi schemes? Yes, they crash!!! And every Chinaman loses his pigtail.

I do not want to waste your time. I want you to realize the concept of free market only works in free world of democracy. Free market and Democracy go hand in hand.

"Private sector debt can easily be rectified through bankruptcy. However public debt, in particular the United States, can be resolved by printing more money (paper), and hoping the creditors take it."

And yet the dollar and yen remain the world's most favored currencies, which often strengthen during global crises, particularly the yen, home of the world's most fiscally indebted developed country.

If your assumptions were anywhere near the mark, the opposite would be true.

Indeed, it was private sector debt that caused 2008. You've got everything backward.