China Recession: Unrest and Instability

The global downturn is having severe political implications.

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Economic analyst Ed Yardeni is also noticing Big Trouble in Little (Economic Growth) China:

So this is not an auspicious time to beat up on the Chinese as currency manipulators. Yet, that’s the first thing incoming Treasury Secretary Tim Geithner did just after paying some of his back taxes. Millions of unemployed people are going back home to the Good Earth of their rural homes for the Chinese New Year of the Ox. This time, many won’t be going back to work in the urban areas. They will be walking behind a plow pulled by their oxen, instead of assembling cell phones in a manufacturing plant in Guangdong Province. They won’t be happy farmers now that they’ve seen the bright lights of Shanghai. They will be disgruntled, increasing the odds of social and political instability. The Chinese authoritarian authorities must regret that they didn’t do more to stimulate domestic demand, and relied too much on exports, particularly to the US. The Chinese are not the only ones facing the political consequences of financial and economic turmoil. There have been demonstrations and riots recently in Greece, Bulgaria, Russia, and Latvia.

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