The Empiricist

Here’s a riddle:  What happened last time Australia sold huge amounts of iron to a rising power in Asia?

Answer: Japan turned that steel into weapons and thus began the Asia-Pacific part of World War Two.

Here’s an interesting, totally unrelated fact. China has a 120 million tonne stockpile of iron. They’ve now stopped stockpiling, with a massive store of iron and other metals that they have purchased from Australia, the US, and other places. Why?

So this leads me to riddle number two: Why have China been paying top dollar for commodities such as coal and metals and stockpiling them, during a global recession?

Update: The answer may be that China is simply implementing poor economic policy. The West is continually impressed by their 8 per cent growth rate, but China seems to be implementing a “grow at any price” policy, which ignores the financial reality in the US and the rest of the developed world. As a result, their banking system is straining and is at real risk of a meltdown.