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Wall Street Tries Again To Blame Its Collapse on China

Sept. 14, 2015 (EIRNS)—As virtually every Monday for months, Wall Street media were again today blaming collapsing oil and commodity prices, and stock markets, on "economic slowdown" or "collapsing data" from China. The trans-Atlantic banking blowout which is being prepared by the Federal Reserve, ECB, Bank of Japan is guiltily attributed instead to the BRICS and particularly to China.

The reports which the Chinese government issued Monday include, most importantly, labor productivity, which is growing at a 3.3% annual rate. That is comparable to American labor productivity growth in the 1960s, and the U.S. average for 40 years to 2000 was 2%/year; but in 2015 U.S. labor productivity is growing by 0.5%—and that is a big increase from the previous four years. The Brookings Institution on Sept. 10 held a symposium featuring senior economics fellow Barry Bosworth, who said, "Productivity growth has come to a screeching halt in America since 2012, and economists are really worried."

They should be. More real measures of labor productivity, including the effect of technological progress, show that in the United States it has been falling, not rising at all, while in China it rose by 6% on average from 2008-2013.

This is the basic reason U.S. real wages fall and China’s rise: Total labor costs (including benefits and social insurance) rose in 2014 by 20% in China; by just 3% in the United States. Real wages in the United States have fallen by 4.7% since 2009 for the lowest quintile of earners; by 4.7% for the second-lowest; by 4.0% for the middle quintile, and by 2.6% even for the highest earners.

Other economic reports issued by China included that real capital investment was 10.8% higher than one year ago (the comparable U.S. figure is up 0.5% in 2015 over 2014); industrial output is up 6.1% year-to-year (the comparable U.S. figure is 2.1%); retail sales up 10.8% from one year ago; and GDP is growing at a rate of 6.85% in the third quarter and 6.9% for the year to date (in the United States economy, the Atlanta Federal Reserve says GDP is growing at a 1.5% annual rate so far this year).