What is really going on in China? 

As I have argued many times over the last two years, the Chinese real estate bubble was on the verge of blowing up. The implosion started in 2021 with Evergrande and has since gathered speed. In Japan, we call this "Hi no Kuruma", a fire wheel. Every year in late winter, now more or less, the farmers make a huge wheel of straw, lit a fire in the middle and throw it on the slope of a hill. Two minutes later a huge ball of fire rushes down the slope. A good harbinger for what is coming out way! 

The problem is that the Chinese economy is now so large and intricately imbricated in the global supply chain that its implosion will quickly reverberate in the world economy, with the risk that it may (will?) topple over the Western financial ponzy system. Then what?

 The Covid pandemic did not happen in a vacuum. It took place weeks after the explosion of the Repo market on Wall Street, following years of preparation. The global financial elites were not going to have another 2008. They were ready this time. Trillions of US dollars of subsidies were showered on the economy, together with a sharp slowdown of demand which bought us time. Two years exactly, to be precise.

Now the two years are passed and the next crisis is looming on the horizon. As for Covid, the Ukrainian crisis has been on a back-burner since 2014. World conflagrations usually happen by accident as in 1914 and the assassination of the Archduke Franz Ferdinand, but not before enough "firewood" is piled up for the fire to blow up. We are now witnessing this dreadful process.

Ukraine is not worth to fight a World War for. But the opposition between the US which wants to protect its hegemony and China (and Russia) who want to build a multi-polar world is. Amazingly, the final say is on the shoulders of the rather weak German coalition government and its decision to go ahead with the North Stream 2 pipeline. Would they decide to give the green light to the pipeline, we will still have to rebuild the world financial system, a new Bretton Woods 2.0 scale agreement would take place in late 2022, early 2023. if conversely, they decide to nix the pipeline. The Russian, and the Chinese will conclude that they are in the line of fire and no agreement is possible. In which case, taking over Ukraine, but more fundamentally, decoupling their economies from the West becomes the safe option. 

Would we go down this road, which unfortunately is the most likely option at this stage, we may be just months away from another black swan assassination and the beginning of a third world war. Let's hope the German chose wisely and find the strength to say no the the Americans. It won't be easy though as the stakes are so high.