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Authoritarians Aren’t “Winning”

By David Stockman  |  October 1, 2019

There’s no one reason to explain why the Dow Jones Industrial Average is off nearly 300 points today.

Is it impeachment? Is it unrest in Hong Kong? Is it WeWork?

Well, that flurry of headlines about the Donald, Ukraine, Xi Jinping, China, Adam Neumann, and the WeWork IPO that wasn’t is all about the coming end of Bubble Finance.

So, yes, there are monumental macroeconomic and geopolitical issues in play.

And, as Chris Scott notes in his Tuesday commentary, things are heating up in the Middle Kingdom.

President Xi Jinping, speaking at the site where Mao Zedong announced the Peoples Republic of China on October 1, 1949, declared, “Today, a socialist China is standing in the east of the world and there is no force that can shake the foundation of this great nation.”

It’s a delusion as fraught as MAGA. Of course, the Tweeter-in-Chief weighed in with this, doubling down on his authoritarian creds and establishing, for once, a decent juxtaposition with his GOP colleagues who generally denounced this day of “celebration”:

Indeed, the Red Ponzi may be even more vulnerable than the U.S.

For example, export demand is weak and getting weaker, with orders sliding for the 16th straight month. That’s another ominous sign for China’s export-heavy economy.

That’s not all.

There are, ironically, more fundamental differences being revealed under present leadership, as Chris illustrates with a particularly personal look at this day’s events…

A Death in Hong Kong

 By Chris Scott

Momentous events are unfolding in front of our eyes in these heady days.

As David points out, you have to look behind the curtain of the theater of the absurd that is Imperial Washington to appreciate the tectonic shifts taking place.

When it comes to America’s relationship with China, the talk of a trade deal is also just a superficial sideshow to the consequential confrontation that is building.

Two contrasting scenes played out in the Far East on Tuesday, one in Hong Kong, a symbol of China’s connection to the rest of the world, the other in Beijing, a symbol of the Middle Kingdom’s inward turn.

“Day of Mourning”

As President Xi Jinping loomed over a massive show of military pride in Tiananmen Square – the scene of horrific crimes perpetrated by the Chinese Communist Party precisely 30 years ago – a high school student protestor in Hong Kong was shot in the chest at point-blank range by Beijing-backed police.

Unrest exploded in Hong Kong 17 weeks ago, and, as I’ve noted, it all bears a striking resemblance to the pro-democracy movement that engulfed mainland China’s capital city in June of 1989. The glistening hypersonic missiles gliding down the Avenue of Eternal Peace on Tuesday under the gaze of General Secretary Xi, however, represent the deletion of the Tiananmen Square massacre from the collective memory of mainland Chinese.

For Hong Kongers, the massacre 30 years ago has never been forgotten or excused. The protests organized today in Hong Kong were dubbed a “Day of Mourning” to lament the founding of the communist People’s Republic of China, as the official celebrations took place in massive cities elsewhere across China.

But for those who do not share the Hong Kong experience, the alluring promise of China once again becoming wealthy and powerful has proven too hard to resist.

It’s tempting to expect that the fight for liberty roiling Asia’s most iconic financial capital might spread across the communist country. That is certainly the greatest fear of policymakers in Beijing, and it is one potential outcome should the “Red Ponzi” completely collapse.

The Unlikely Chinese Nationalist

Unfortunately for advocates of democracy, something frightening has happened in the minds of China’s youth that’s setting up a global tribalism, as fractious as our own domestic discord.

Beijing was, until recently, my favorite city, the closest thing I have to a home away from home. I’ve roamed nearly every corner of the sprawling megalopolis, oftentimes exploring its character with my closest Chinese friend, a man who was a hopeless idealist just 10 years ago.

At the time, this towering and charismatic aspiring filmmaker – we’ll call him An Li – would spend sweltering and smoggy Beijing summer nights discussing ways to subvert the Chinese Communist Party. The security at Tiananmen Square made performance art there a dangerous gamble.

But in one production of the postmodern German play “Hamletmachine,” he and the director slipped in footage of the aftermath of the Tiananmen massacre, projected on the backdrop behind actors on stage. Meanwhile, members of the audience – who, incidentally, included Academy Award winner Cate Blanchet – were handed slips of paper that read “404 page not found,” a reference to China’s censored internet.

The stunt prompted a tense question and answer session with the theatergoers, many of whom were clearly forced to question their government publicly for the first time in a while – or ever.

A Sea of Kool-Aid

An Li, along with other Beijing intellectuals at the time, created a motto for living in a censored world: “Stay sober.” In other words, don’t drink the Kool-Aid.

That was before Xi Jinping took power. Since then, China’s strongman decided to pump more Kool-Aid into the drinking water. And it’s worked. Chinese social media, television, film, newspapers, and every other form of media you can think of has become significantly more controlled.

My friend An Li is no longer sober. He supports the government in Beijing, and he is critical of young Hong Kongers who are fighting for the same things he wanted to fight for just a few short years ago. If there was one demographic in Mainland China that we might hope would stand up to communism, it would be his.

The shooting of a boy in Hong Kong today will prompt outrage in Washington, London, Berlin, Paris, Tokyo, and Seoul. It will push these capitals further away from Beijing. It will be “heard ‘round the world,” if you will.

But An Li will not hear it. In his world, it’s been drowned in a sea of Kool-Aid.

After “Peak Trump”: Charting Uncharted Waters

It’s my pleasure to be delivering the Keynote Address at the 2019 Irrational Economic Summit October 10-12 right outside Imperial Washington.

But you don’t have to dare the Swamp, folks, because you can watch the videos… read the transcripts… view the presentation decks… all at your fingertips… wherever you are.

Click here to learn how to learn more about the Full Access Livestream Pass.

The stakes are already high heading into 2020. The U.S. presidential campaign is already underway. And the Tweeter-in-Chief is tied up in the day-to-day movements of the major stock indexes like no president before him.

And the increasingly desperate incumbent will do anything he must to hold the White House.

That’s why I’ve titled my Keynote Address, “After ‘Peak Trump’: Charting Uncharted Waters”.

Leviathan gets bigger, Wall Street gets richer, and Main Street… well, Main Street gets more and more little every day.

We’re rapidly approaching the end of the oldest, weakest economic “recovery” in American history. At this major tipping point, there’s no telling what the Donald’s great disruptions could do to your wealth.

The 2019 Irrational Economic Summit is fast approaching too. To reserve your spot today, simply click here, email our team at conferences@dentresearch.com, or call 866-765-7506.

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David Stockman

David Stockman is the ultimate Washington insider turned iconoclast. He began his career in Washington as a young man and quickly rose through the ranks of the Republican Party to become the Director of the Office of Management and Budget under President Ronald Reagan. After leaving the White House, Stockman had a 20-year career on Wall Street.MORE FROM AUTHOR