China’s 2022 deflationary bow-wave

Biggest market crash since 1929 in 2022-23

In astrology the key planetary cycle for economic forecasting in mundane matters, is that of Saturn and Uranus. These conjunct every 45 years (last in 1988, next in 2032.) But the pair clash at 90 and 180 degree angles too, every 11.5 years and 22.5 years too (Asian financial crisis 1998 see.)

Recessions and depressions in economics correspond strongly to variance in credit availability. How credit is (or is not) controlled by Central Banks is a key modulator of the economic cycle and of inflation v deflation. Jupiter rules inflation in astrology and Saturn rules deflation. So Jupiter has an influence on the interaction of Saturn and Uranus, roughly every 11.6 years, which is a cycle of Jupiter around the Sun.

Just as we are getting used to inflation numbers rising and being told they will rise further and as they start hitting records not hit in 30 years, it may seem unlikely that the real story in 2022 (after April) will be deflation - that is, FALLING prices, including falling asset prices.

Briefly I will explain why. I give due credit to Wolf Richter (USA) and John Mauldin (USA) for economic insight and to Andre Barbault for his tremendous contribution in this field of astrological endeavour, from the 1950s to 2019.

Central Banks and governments piled on spending and debt in 2020-21 to try to prevent collapse of their economies as CV19 forced revolving lockdowns doing a conga across the developed world. This pushed their demand curve into the stratosphere, like an exploding cork from a bottle. These corks and what powered them, are now falling back to their original late 2019 start points, or below, as stimulus is withdrawn and reduced. But the supply chain across the world could not cope with this, having been stopped in early to mid 2020. Hence massive inflation in the stuffed pipelines.

That inflation will continue to rise until the Jupiter Neptune conjunction on April 12th 2022. Meanwhile central banks will be raising interest rates. But at the same time a bigger threat lurks, which is emerging in China right now and stems from their imploding property Ponzi scheme.

The Chinese Communist Party is the ultimate representation of Saturnine power on Earth and its leader, Xi Jinping, is attempting to deflate the Chinese property development bubble using legislation and regulation. This started 14 months ago with restrictions applied to how much these development bodies in China could extend their debt. As many have heard, one developer, the biggest, (Evergrande) is bankrupt and defaulting on $300 billion of official debt (and a further $150 billion “off books”.) Some of this default is “official” from October 24th 2021.

Property sales in China are currently dropping like a stone (36% lower than a year ago in September for instance.) Millions of apartments are still being built but existing ones are being sold off half price to produce revenue for Firms facing bills and margin calls they cannot meet and who cannot borrow further under the new rules.

So, massive deleveraging of debt is underway and this will have substantial impacts on Chinese growth and how well off investors in China feel. Chinese Real Estate is worth $62 trillion and this “value” is being deflated, a process that will go on for 2.5 years from this point.

Manias, bubbles and excess (extremes) are ruled in astrology by Uranus and this planet is being squared (3 times) in 2021, by Saturn, which basically governs the principle of restraint and restriction. So, Uranus is “GO” and Saturn is “STOP.” And the CCP has decided the mania has to stop. Uranus also rules internet and computer Firms, which have also been under the cosh from the CCP in 2021. Amusingly, the CCP referred recently to its drive to “eliminate difference.” That difference or capacity to deviate, is precisely what Uranus rules.

Essentially, Uranus has been given its head and Saturn been de-commissioned, in world economic circles and decision making, since 1976, when the British PM told the Labour Party conference that the party was over and you cannot spend your way out of recessions. Meanwhile private debt was allowed to explode post 1980, as regulations were put on a bonfire. Governments largely helped the bottom 50% of the population in the OECD countries, from 1933 - 76. Thereafter they helped business predominantly and said there was no alternative.

Since CV19 however, government and Central Banks have been intervening against the established dogma (ie non-interference by government in the “market”which has come to mean anything government did do, it should no longer do) by borrowing huge amounts on top of already hugely over-extended debt. Underneath this we also have the continual reduction of interest rates since 2011, in most OECD countries, which has resulted in housing and stock market bubbles.

his 45 year cycle has now ended and rates are on their way up, alongside inflation at levels not seen since the 1970s. Even the Federal Reserve is having to admit that rates need to rise in 2022 (give me chastity, but not yet, has been their mantra since 2008.) So now it’s no more sugar hits for the diabetic economies hooked on debt to replace falling real incomes (again since the mid 70s) of the bottom 50%.

Stagflation is now on people’s lips, as inflation rises at same time as demand is falling (and is in turn eroded by prices rising faster than wages.) Just as we get used to stagflation, deflation is at our shoulder. We will again be subject to articles citing “experts” surprised at what is happening.

his deflation will depress house prices and stock markets across the world from April 2022 onwards

(see my Coming stock market crash blog.)

China has been the growth engine of the world economy since 2001 and it saved world demand in 2010-11 by massively increasing State spending as rest of OECD was cutting it. But now Chinese growth is stuttering. Xi is re-orienting his economy towards domestic consumption and rewarding the working classes more, as he reins in private capital and billionaire spending. The speculators will not be bailed out, as the West did for its asset owning class in 2008-10.

This represents the greatest economic shift in the world since the internet took off in 1993 and will see the biggest decline in house prices and stock markets since the Great Depression.

China had been following a “capitalism with Chinese characteristics” model since late 1978. This focused largely on producing for export to bring the country enough resources to re-tool industry and build a modern society. But, driven by the State, there have been substantial mistakes and overblown projects. At present, according to Wolf Richter this week, the property developers have land purchased (with debt) sufficient to build 108 million apartments.

Interest on that borrowing is funded by pre-sales and 87% are bought by people who already have a home. This is “investment saving.” A lot of people are going to lose a lot of money when these investments lose value (as they are, right now.) When that hits home to those millions, they will stop spending due to reduced confidence. This is called “value destruction” and is the inverse of speculative appreciation the mania was built on. Mania is a Uranian word and Saturn (Xi) is seeking to crush such mania.

The knock on effect this will have on world real estate is currently totally unappreciated. Of course most commentators in this field, concerned to maintain “confidence” do not want to warn people what is coming. Just as in 2005-07 they continued to insist in USA that house prices never go down.

History does not repeat but it sure does rhyme, as Mark Twain is alleged to have written. A 45 year cycle waxes and wanes and has an “orb” leading up to a major turning point (signalling dramatic change) of about 2.5 years. When Mao died on September 9th 1976 it would be 27 months before the CCP “officially” changed course. Here we are 45 years later, and 3 years after Xi was made leader for life. He is accelerating his change programme and shocking a few myopic folk.

The deflationary Bow-wave

The changes to the Chinese property market (30% of their GDP by the way) and its rapid descent from the crest of a huge pumped up splurge of speculation, will cause a bow-wave of deflationary deleveraging that will cascade across markets for assets like real estate and stocks, over the period April 2022 to April 2024. 

At that point the descent will be arrested by a Jupiter conjunction to Uranus, signalling a redirection and more wealth creation, risk taking and invention. But for 2 years, it’s risk off market: many people will lose money and see house equity shrink.

With Uranus being in Taurus and Pluto in Capricorn (Earth signs related to money and value), the period March 2019 to July 2025 was always likely to prove tumultuous. 2022 will be the eye of the storm and the point of entry to that storm was October 18th 2021, as Mercury stationed at 10 Libra at the same time as Jupiter stationed in Aquarius (ruled by Saturn.) 10 degrees Libra was the point of a huge conjunction on the day of Mao’s death, 45 years ago.

The 18th of October 2021 closed that cycle and opened another, entirely different one. China and the world needed to stop and reconsider (Saturn principles) and this process does not, like the oil tanker metaphor says, turn on a dime. Hold on tight, it’s going to be a rough ride. But after its over, we have the opportunity to learn from our mistakes and re-define what we “value”, what we want and how we decide what society will look like in the new world. This is the crucible, in which we can be remade and reborn. 

Abstention and indifference or engagement and responsibility? This is a Uranus-Saturn split. We have had Uranian tools since the industrial revolution (inventions and tech) but we have allowed them to control us, as if directing them was beyond our control. 

The issue of control is a Saturnian one. We have given up the prospect of choosing progress defined democratically, in exchange for an ideology (since 1976 roughly) which dictates a narrow field of choices societally, benefitting a minority and impoverishing the majority, in the West at least. That blind alley has led us to where we now find ourselves. 

We have choices. But to exercise them the crucial first step is imagining that they exist. There are alternatives and different lifestyles and we are not dictated to by fate or economic neo-liberal catechism. It’s time to wake up, stand up and build a better world. A fitting goal for a Saturn-Uranus synergy.

(See also: The Coming World Stock Market & Housing Crashes, on my website blog)

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