Baltimore — Who do you trust more, the Chinese government or the politically connected folks at the helm of Goldman Sachs?

For years, the Street has looked at any Chinese economic data with a weary eye. Without the checks and balances of a democratic government, Beijing had plenty of reasons to manipulate its growth figures.

Even though all signs point to a strong, stimulus-fueled recovery, most pundits refuse to believe the country’s tales of double-digit GDP growth.

But the folks at Goldman Sachs are taking the disbelief in a different direction. According to reports from the banking behemoth’s analysts, China likely grew by 13.1% last month.

It is a bold claim in a year when Chinese officials estimate domestic growth of a much more moderate 8.5%. It is also a bold claim for a company whose “book” is filled with Chinese investments. After the action of the past two years, Goldman is obviously just as adept at using its shaky “research” to its own advantage.

But why is China’s GDP debated so ferociously? And more importantly, why do we care how fast the country expands?

It’s all about the currency. Without a yuan that freely floats against the dollar, it is in China’s best interest to put its best foot forward. Right now, with such a large gap between American and Chinese economic growth, it is strategically important for China to appear weaker than its foreign competitors.

Weakness means strength.

For Goldman, perceived strength equals stronger trading profits.

Believe who you want. They’re all liars.

*** It is a different story a third of the way around the world in Iceland. For the country that has become the punch line of banking circle jokes, the government’s recent decision to repay its obligations to the Netherlands and Britain was an important step in the recovery process.

If it were not for the Icelandic president’s veto, the country would be cutting a check for $5 billion to the Dutch and British.

With nearly a fifth of the economically ravaged country’s citizens signing a petition stating their disdain for getting stuck with such a sizeable bill, President Grimsson was compelled to veto his government’s legislation for just the second time in the country’s 66-year history.

Now it is not his constituents Grimsson has to worry about. It is his European brethren.

Obviously, London and The Hague are none too happy. The International Monetary Fund, with its plans to send the troubled country a bailout check worth $4.6 billion, is downright confused. And the European Union doubts whether Iceland will maintain its fast track to joining the pact.

All in all, this is a no-win situation in Iceland that proves even the most expensive of government bailouts and stimulus programs will not erase the far-reaching effects of a global financial meltdown.

What these two stories should tell investors is there is one thing controlling the markets these days… greedy, selfish, economically retarded governments.

China is lying about its economic growth. Iceland is realizing why its government up and walked out. And Goldman is raking in money like never before.

All of the conniving and manipulations adds up to volatility and, more importantly, unpredictability.

By traditional measures, market volatility is on the decline. But let me ask you, do things feel any safer than a year ago? Is the future really that much more clear? Absolutely not.

We’ve got guys trying to blow up planes with their underwear and a congress trying to skirt the democratic process to pass legislation that will rewrite a huge chunk of the nation’s economy.

It is far from safe out there. That’s why gold remains above the $1,100 mark, the dollar remains historically weak and it is why few businesses are willing to seek out growth.

The situation is as bleak as ever.

I am not saying we are going back to Dow 6,000 anytime soon, but all this nonsense about the recession being over and a straight road to recovery awaiting us is pure junk.

I’d rather believe in global warming than a safe and secure economy. And we all know how Al Gore is feeling these days.

*** Since China is a hot topic today, you can add Australia to the list of countries not so happy with Beijing’s antics.

After entering a $20 billion deal to buy liquefied natural gas from Australia’s Woodside Petroleum, China has announced the contract’s deadline has passed and it is backing out of its previous decision.

As natural gas prices have plummeted over the past two years, thanks to massive efforts in drilling technology and recovery techniques, China now realizes the figures in the proposed deal are no longer viable.

This is good news for gas investors across the globe.

If you recall, over at TFN Strategic Trader, we recently locked in gains of 400% by playing the industry’s moves. China’s indecisiveness and a recent surge in prices have created yet another profit opportunity.

The LNG market is on the ropes. With the help of economic recovery, gas exporters may be able to gain enough strength to re-enter the fight. But if traditional fuel sources begin to pay off like they are expected to, there may be no reason to endure the hassle and expense of compressing gas and shipping it across the globe.

This is going to be an interesting industry over the next year. Contrarian investors will be wise to pick up any of the “apparent” losers on dips. What is a loser today is likely to be a winner tomorrow. At least until it’s a loser again.

Got it? That’s trading for you.