THE RECENT BURST OF "BUBBLE" CHINESE THREATENING THE WORLD ECONOMY AND TAKE IT TO DEPRESSION CONFIRMS WHAT'S PRESENTED IN OUR ARTICLE “WORLD ECONOMY TOWARDS THE DEPRESSION IN 2015” PUBLISHED IN 15/12/2015..

1. THERE IS BUBBLE IN CHINA, IT WILL BURST AND EFFECT WILL BE LONG,
SAYS EXPERT
The bursting of the Chinese stock market bubble and the crisis in Greece will
increase risk aversion of international investors, further complicating the
situation of emerging countries such as Brazil. This is the opinion of Stephen
Roach, a professor at Yale University and a leading expert on the Chinese
economy. He said the recent rebound in Chinese stocks does not mean that the
situation is under control. "When bubbles magnitude of Chinese burst, they take
their own life, it's hard to stop them," said Roach, who was chief economist at
Morgan Stanley for decades.
Source: http://www1.folha.uol.com.br/mercado/2015/07/1654964-ha-bolha-na-
china-ela-vai-estourar-e-efeito-sera-longo-afirma-economista.shtml
WORLD ALERT: BUBBLE BURST CHINESE! WHAT WILL BE THE RESULT
THAT?
The great financial crisis of 2015 has begun, and it will only get much, much
worse. "The day of judgment is at hand". The eurozone will break and be
reconstituted in a new way eventually. We will see tremendous inflation
throughout the world. So what's next?
What Phoenix Capital Research is predicting:
1) Many emerging market countries going to default and most emerging market
equities lost 50% of its value.
2) The Euro will fall below parity before the euro zone be divided (perhaps some
new version of the Euro will enter and remain below parity with the US dollar).
3) Japan will go into default and most likely enter into hyperinflation.
4) The US stocks lose at least 50% of its value and possibly fall as much as 400
points in the S & P 500.
Source: http://www.verdade.in/2015/07/bomba-bolha-chinesa-estourou-qual-
sera.html and http://dcvcorp.com.br/?p=1637
THE RECENT BURST OF "BUBBLE" CHINESE THREATENING THE WORLD
ECONOMY AND TAKE IT TO DEPRESSION CONFIRMS WHAT'S
PRESENTED IN OUR ARTICLE “WORLD ECONOMY TOWARDS THE
DEPRESSION IN 2015”.
WORLD ECONOMY TOWARDS THE DEPRESSION IN 2015
Fernando Alcoforado *

2. In the article, published on the website <http://outraspalavras.net/posts/economia-
global-rumo-a-grande-tempestade/> under the title Economia global: rumo à grande
tempestade? (Global Economy: Towards the big storm?) written by Jack Rasmus,
Ph.D., professor of Political Economy at St. Mary's College in Moraga, California and
Labour Economics and Economic History of the United States at the University of
California at Berkeley, the author identifies three phases of the economic global crisis:
the first phase of the global economic crisis had at its core the US economy from 2007
to 2010. The second phase of the global economic crisis was centered in Europe,
following the strong US decline in 2008-09 in addition to face a second recession in
2011-12. The third phase of the global economic crisis began in 2014 with the financial
and economic instability that is happening and advancing in emerging markets such as
Brazil, including China where economic growth is slowing. Thus, the epicenter of the
global crisis, which first occurred in 2008 in the United States and moved to Europe
between 2010 and 2013, is now focusing on emerging market economies, including
China.
According to Jack Rasmus, before the global financial crisis and the recession of 2008,
China's economy was growing at an annual rate of 14%. Today, the rate is 7.5%, with a
strong possibility of an even lower rate of growth in 2014. Since 2012, China faces a
growing problem with global shadow banks that destabilize the housing market and the
debt market local public. On the financial side, total debt (public and private) in China
rose from 130% of GDP in 2008 to 230% of GDP, with the participation of the global
shadow banks rising from 25% in 2008 to 90% of the total in 2013. The share of global
shadow banks in the total debt nearly quadrupled and represents virtually all the
increase in the ratio between public and private total debt to GDP since 2008. As a
result, the global shadow banks are the driving force behind the growing problem of
debt and Chinese financial fragility.
Much of the increase in Chinese debt was directed to a housing bubble, accompanied by
a local public debt bubble, since local governments led to limit the real estate projects,
new business loans and infrastructure projects. The increase in private sector debt is
approaching critical proportions in China. An important event of global instability can
easily arise in the event of a default of a bank or financial product. In a way, the current
situation of China seems, according to Jack Rasmus, increasingly with real estate
markets and local and American state public debt of 2006. In other words, China may
be approaching its moment Lehman Brothers.
Jack Rasmus says that the growing financial instability of the local markets of China is
a possible serious problem also for the global economy, since China and the world
economy began to slow down in 2014. In early 2014, the real estate bubble seemed to
gain strength again, while the real Chinese economy showed signs of slowing. Other
factors that contribute even more to the slowdown of the Chinese economy in 2014 is
the industrial sector, an important source of economic growth, specifically the export
industry, which is slowing. The causes of the slowdown of the Chinese economy are the
internal changes of its economy and increasing problems in the economies of the euro
area and emerging markets whose demand is falling. In addition, China is dealing with a
general pay increase and an exchange rate increasingly unfavorable to its currency, the
Yuan. These two factors are driving up production costs and, in turn, making their
exports less competitive. The increasing production costs are causing to an exodus of
global multinational corporations in China, towards economies with even lower costs,
such as Vietnam, Thailand and other places.

3. Most of China's exports go to Europe and emerging markets, not just to the United
States. And as the emerging market economies slow, demand for products manufactured
by China and exports decrease. On the other hand, while China itself economically
slows, it reduces its imports of commodities, semi-finished products and raw materials
from emerging markets (and on key markets such as Australia and Korea). Now, the
massive influx of cheap capital that migrated to emerging markets like Brazil after 2008
(running from near zero interest rates in the center of the system) is coming back
quickly to the United States, Europe, Japan and the West. As the capital leaves
emerging markets, their currencies are being increasingly at risk of collapse. From the
end of 2013, in a matter of months, the major currencies of emerging countries devalued
10-20%. The decline scenario of currencies, capital flight and slowdown in emerging
economies promises to become a spiral of dangerous degradation and self amplifying
for the world economy.
Jack Rasmus summarizes, in his article Global Economy: Towards the big storm?,
saying to be three global significant global economic trends that began to intensify and
to converge in recent months: (1) China's economy slowing along with increased
financial instability in its shadow banking system; (2) a collapse of the currencies of
emerging markets (India, Brazil, Turkey, South Africa, Indonesia etc.) and their
respective economic downturns; (3) a continuous shift towards deflation in the
economies of the euro area, driven by an increase problems in Italy and the economic
stagnation that reaches to France, the second largest economy in the euro zone.
This picture described points in the sense that, in 2015, humanity will continue to be
faced with the huge threat posed by the global economic meltdown if nothing is done to
restructure the world capitalist system. When is subject to "fluctuations", as occurred
after the crisis that erupted in 2008 in the United States, a dynamic system as the world
capitalist system inexorably leads to a bifurcation point from which the system should
be restructured in search of a new dynamic stability or collapses. In other words, in the
bifurcation point, the system has to be restructured or collapse. This is the situation
faced by the world economy and that of many countries, including Brazil, which, after
the global crisis that erupted in 2008, there was no restructuring of the world economic
system and national economic systems.
Immanuel Wallerstein, American sociologist and university professor, says in his article
Crise dos “emergentes” ou do Sistema?, published on the website
<http://outraspalavras.net/posts/wallerstein-crise-dos-emergentes-ou-do-sistema/>, that
"few seem to admit that global effective demand was the real problem. But it is clear
that, below the surface, the longer detected. That's why they are in a panic, because then
all its emphasis on "growth" - a crucial faith - will be undermined. In this case, the crisis
is no longer cyclical and becomes structural: cannot be solved with palliative, but with
the invention of a new system. This is the famous fork in that there are two possible
outcomes - a better and a worse one than the existing system. A game in which we will
all be involved".
Instead of adopting national and global coordinated strategies aimed at overcoming the
global economic crisis with the restructuring of the world capitalist system and of each
country, everything was done to keep the bankrupt economic structure and outdated
policies that led to the outbreak of the 2008 crisis. The neoliberal model that ruled the
world in the last 40 years died and there will be depression that will last for many years.
Given the existence of chaos that dominates the world economy, the hour of each

4. country and mankind provide themselves as urgently as possible instruments needed to
have control of their destiny. To have control of their destiny, humanity needs to
exercise governance of their economic systems and the world economy. This is the only
means of survival of the human species.
*Fernando Alcoforado , member of the Bahia Academy of Education, engineer and doctor of Territorial
Planning and Regional Development from the University of Barcelona, a university professor and
consultant in strategic planning, business planning, regional planning and planning of energy systems, is
the author of Globalização (Editora Nobel, São Paulo, 1997), De Collor a FHC- O Brasil e a Nova
(Des)ordem Mundial (Editora Nobel, São Paulo, 1998), Um Projeto para o Brasil (Editora Nobel, São
Paulo, 2000), Os condicionantes do desenvolvimento do Estado da Bahia (Tese de doutorado.
Universidade de Barcelona, http://www.tesisenred.net/handle/10803/1944, 2003), Globalização e
Desenvolvimento (Editora Nobel, São Paulo, 2006), Bahia- Desenvolvimento do Século XVI ao Século XX
e Objetivos Estratégicos na Era Contemporânea (EGBA, Salvador, 2008), The Necessary Conditions of
the Economic and Social Development-The Case of the State of Bahia (VDM Verlag Dr. Muller
Aktiengesellschaft & Co. KG, Saarbrücken, Germany, 2010), Aquecimento Global e Catástrofe
Planetária (P&A Gráfica e Editora, Salvador, 2010), Amazônia Sustentável- Para o progresso do Brasil e
combate ao aquecimento global (Viena- Editora e Gráfica, Santa Cruz do Rio Pardo, São Paulo, 2011)
and Os Fatores Condicionantes do Desenvolvimento Econômico e Social (Editora CRV, Curitiba, 2012),
among others.