AuthorTopic: Official Chinese Toast Thread  (Read 227457 times)

awesome-0-5000

  • Guest
Re: Official Chinese Toast Thread
« Reply #135 on: June 05, 2014, 10:36:01 AM »
New great depression on the cards???

http://www.off-grid.net/2014/05/02/housing-global-economy/


So now we know what China’s biggest property developer really thinks about the Chinese housing boom and its consequences for the rest of the economy.
A leaked recording of a dinner speech by Vanke Group’s vice-chairman Mao Daqing more or less confirms what the bears have been saying for months. It is a dangerous bubble, and already deflating. In the year when China’s economy was set to overtake the USA in size, China may instead decide to get the trauma over and done with sooner rather than later. But the rest of the world should be under no illusions as to what this means.

A policy decision to deflate – should President Xi stay the course – is equivalent in global scale to the decision by Fed chief Benjamin Strong to pop the US speculative bubble in 1928, causing a commodity slump that was transmitted worldwide through the dollar based currency system (Inter-War Gold Standard) and which later snowballed into something far worse.
The US was then the world’s rising creditor power, with foreign reserves above 6pc of global GDP, almost exactly the same as China’s holdings today. When China sneezes … you will catch a cold, wherever you are.

Prices in Beijing and Shanghai have reached the same extremes seen in Tokyo just before the Nikkei boom turned to bust, when the (quite small) Imperial Palace grounds were in theory worth more than California, and the British Embassy grounds (legacy of a good bet in the 19th Century) were worth as much as Wales.
Li Junheng from JL Warren Capital has translated his comments:
“In 1990, Tokyo’s total land value accounts for 63.3pc of US GDP, while Hong Kong reached 66.3pc in 1997. Now, the total land value in Beijing is 61.6pc of US GDP, a dangerous level,” said Mr Mao.

“Overall, I believe that China has reached its capacity limit for new construction of residential projects. Only those coastal Tier 3/Tier 4 cities have the potential for capacity expansion.”
“I don’t see any possibility for a rise in home prices, especially in cities with large housing inventory, unless the government pushes out another few trillion. Beijing and Shanghai have already been listed among the most expensive cities in the world in terms of the medium central city property prices.”

Mr Mao said China’s house production per 1,000 head of population reached 35 in 2011. The figure is below 12 in most developed economies “even when the housing market is hot; no country has a figure of greater than 14”.
“By 2011, housing production per 1000 people reached 30 in Tier 2 cities, excluding the construction of affordable houses. A persistently high figure such as this should cause alarm,” he said.
China’s anti-corruption campaign is spreading terror through the Party cadres. They are frantically trying to offload properties in the top-end range of 40,000 – 50,000 yuan per square metre in case their ill-gotten wealth is exposed by spot audits.
The numbers of flats and houses for sale has suddenly doubled. “Many owners are trying to get rid of high-priced houses as soon as possible, even at the cost of deep discounts. As a result, ordinary people who want to sell homes in the secondary market must face deep price cuts,” he said.
“In China’s 27 key cities, transaction volume dropped 13pc, 21pc, 30pc year-on-year in January, February, and March respectively. We expect the trend to continue in April. The drivers behind the fall in price are credit tightening from the banks.”
“Most cities have seen an increase in the ratio of inventory to sales. Among the 27 key cities we surveyed, more than 21 have inventory exceeding 12 months, among which are 9 greater than 24 months. The supply of residential buildings is rapidly increasing month-on-month.”
Mr Mao said 42 new projects for elite homes in Beijing will be finished in 2015, hitting the market with an extra 50,000 units that “can’t possibly be digested”.
As for the demographic time-bomb, he said China will have 400m people over the age of 60 by 2033. Half the population will be on welfare by then. “If China fails to develop technology as a driving force for its economic growth, the country will be in trouble.”
So there we have it. Vanke Group say the comments do not reflect the view of the company or indeed Mr Mao – which is odd – but they do not dispute that the recording is authentic.
His words compliment recent warnings by Nomura’s Zhiwei Zhang that the problem is even worse in the smaller cities in the interior, as we reported last month:
“We believe that a sharp property market correction could lead to a systemic crisis in China, and is the biggest risk China faces in 2014. The risk is particularly high in third and fourth- tier cities, which accounted for 67pc of housing under construction in 2013,” he said.

Nomura said residential construction has jumped fivefold from 497m square metres in new floor space to 2.596m last year. Floor space per capita has reached 30 square metres, surpassing the level in Japan in 1988.
Land sales and property taxes provided 39pc of the Chinese government’s total tax revenue last year, higher than in Ireland when such “fair-weather” taxes during the boom masked the rot in public finances.
There is a huge problem in all this. The International Monetary Fund says China is running a budget deficit of 10pc of GDP once the land sales are stripped out, and has “considerably less” fiscal leeway than assumed. The state finances are not what they seem.
This does not necessarily mean that China will spiral into crisis. David Li Daokui – former adviser to the Chinese central bank – told me the nuclear trump card of the authorities is the Reserve Requirement Ratio, currently 20pc. They can inject up to $2 trillion into the banking system if need be by slashing the RRR to single figures. It was 6pc in the late 1990s.
The question is whether President Xi Jinping wishes to take his lumps now by pricking the speculative bubble and forcing capitulation – hopefully in a controlled deleveraging – or whether he will blink as his predecessor famously did in the summer of 2012 and let rip with another round of stimulus.
Blinking stores up greater trouble later. Credit has already grown to $25 trillion. Fitch says China has added the equivalent of the entire US and Japanese banking systems combined in five years.

awesome-0-5000

  • Guest
Re: Official Chinese Toast Thread
« Reply #136 on: August 24, 2014, 09:21:17 AM »
http://www.bloombergview.com/articles/2014-08-15/has-china-lost-its-magic-wand


THE SPELL IS BROKEN. PHOTOGRAPHER: BRENT LEWIN/BLOOMBERG
Facebook
Twitter
LinkedIn
Google+
CHINA
Has China Lost Its Magic Wand?
160 AUG 15, 2014 11:40 AM EDT
By William Pesek
Is China losing its magical economic powers?

To many, Beijing's success in steering around the 2008 global crisis was nothing less than supernatural. That the world's biggest trading nation, one perilously reliant on exports, fared so well seemed better explained as some paranormal event than a B-school case study. China pulled off the feat with an otherworldly onslaught of stimulus and credit, one that has continued until very recently.

That's why a recent plunge in credit expansion has many China watchers wondering if the jig is up. It may very well be.

Aggregate financing, a broad measure of liquidity in the economy, was just $44.4 billion in July -- the lowest monthly reading since late 2008. Even more worrisome than the figure itself, the liquidity environment contrasts with signs that China loosened monetary conditions last quarter at the most frenetic pace in almost two years.

The explanation could be one that's hinted at in other recent data: China's stimulus machine is losing traction.

On Aug. 5, we learned that China’s services industries are stagnating despite government stimulus efforts. The decline in the Purchasing Managers’ Index to 50, the dividing line between expansion and contraction, from June’s 53.1, suggests policy makers are failing to conjure up growth outside of manufacturing. Since then, small companies that dominate China’s private market for high-yield bonds have faced rising default risks. Their debt obligations are breaking new records even as national growth is the lowest in more than two decades.

China's property glut also is getting renewed attention. An Aug. 7 Bloomberg News story really turned my head. It explored China's fast-growing home glut and how developers are reluctant to sell units at prices lower than they could fetch just months ago. That means that as China's growth slows, conditions in the property market will get exponentially worse and exacerbate the slide in construction activity, a sector that's already a drag on growth.

In 20 large Chinese cities, the inventory of unsold new homes was the equivalent of more than 23 months of sales in June. Imagine what it might be by, say, September, when growth loses even more altitude. Also in June, the floor space of unsold new apartments around the nation jumped 25 percent from a year earlier. Could China's notorious ghost towns soon morph into ghost provinces and municipalities?

There's good news and bad in China's loss of traction. The good: It will compel President Xi Jinping to end China's addiction to easy credit and local-government debt, a recipe that's now causing more bubbles than growth. The bad: Global markets may not be ready for the ugly data about to emanate from an economy they thought could defy gravity forever.

In 2008, China altered its economic model in ways that aren't widely appreciated. Before then, exports were everything. Post-financial crisis, China hitched its fortunes, in the words of analysts at Stratfor Global Intelligence, to an "intimate bond between government-led credit expansion and housing and infrastructure construction -- one that the Chinese government is now struggling, against time and at the risk of crisis, to escape."

Back in 2010, James Chanos, the New York hedge-fund manager, began warning that China had stepped onto “a treadmill to hell.” Four years later, it's no mystery what he meant. The trick is getting off without crashing the economy, and the global one.

To contact the writer of this article: William Pesek at wpesek@bloomberg.net

To contact the editor responsible for this article: Nisid Hajari at nhajari@bloomberg.net

Plus number 1 rated comment :)

velocitybox • 4 days ago
I am a Chinese working as a China analyst at a think tank. It is becoming more and more apparent to many people, that the ruling Chinese Communist Party (CCP) knows it is on its last straw of survival.

The party is facing severe and increasing systematic stress on all fronts:

1. Increasing external oppositions from all other countries in the world including all of China's neighbours. They are forming more and more alliances and becoming more outspoken with rising strengths against China, in addition to increasing anti-China sentiment from people in all other countries. Even on these casual internet message boards, when you look past the paid Chinese propaganda professional commenters, you notice rising general anti-China feelings from all over the world.

2. Increasing internal severe and massive violent social unrest and anti-CCP mutiny from people of all Chinese living places e.g. mainland China, Hong Kong, Taiwan, Xinjiang, Tibet, Macau etc. To beat down internal dissent, the CCP every year is forced to spend even more money than on its massive military budget. This is continuously worsened by the free flow of information, with Chinese people knowing more and more from traveling abroad and learning about truths from jumping beyond the "Great Fire Wall" on the internet.

3. Its own economy never able to develop to higher level beyond mass skill-less manufacturing, due to complete absence of law and common morals. High technology and innovations and scientific development all require many citizens working together long term in a system they trust, with things like rule of law, no censorship on knowledge, no restrictions on speech and expression, copyrights, patents, common morals when collaborating and trading with each other etc. These qualities are all destroyed in modern China by the CCP. When was the last time you heard an announcement of technology development or innovations or scientific breakthrough coming from a Chinese organization / company / university? You haven't because there ain't any. The only way modern China gets these things is from stealing and spying from all other countries, but that has become much more difficult since the whole world has caught on to their act. It is also why there is not even one Chinese brand or company that can compete in the international market in any industry of the human race.

4. China's mass skill-less manufacturing itself is going away to other countries due to increasing costs and openly hostile and unfair business environment full of frauds and sanctioned protectionism and government robberies. The labor force is endlessly more demanding both in wages and benefits expectations and working conditions, especially since all of today's Chinese workers are single sons or daughters used to coddling and indulgement by their families. It is further worsened by the rise of robotic automatic manufacturing and 3D printing. This situation is a death knock to the "growth-based legitimacy" of the CCP, which is the only thing CCP can rely on for continuing ruling power. For sure Chinese people tolerate the CCP when the economy seemingly explodes, but when one day it crashes and the country's hopeless bad shape hit them in the face the people's "support" for the CCP will turn on a dime.

Since six months ago, all the major economic indicators for China have gone on a nosedive - including manufacturing orders, export volume, commercial investments, corporate credits, foreign capital inflow, domestic consumptions, real estate prices, Chinese tourist numbers and spendings, luxury goods demand, HSBC Service PMI, survey of business sentiments etc. The CCP is on its last resort of printing literally trillions of worthless renminbi to dump into the economy, causing way more long-term harm than short-term help, and when that is over there is nothing else the CCP can do to prop up the failing economy. China currently ranks 82nd on GDP per capita and that is the highest it can go before falling sharply in the coming near future.

5. Fierce unstoppable purges and mutually-destructive infighting among different factions within the party, who are imprisoning and killing each other every day. This power grab goes on under the thin guise of "anti-corruption drive" when everyone knows all officials in china are corrupted.

6. Its many suppressed fatal problems have all grown too big to be contained all breaking out at the same time e.g.

- severe carcinogenic poisonous pollution everywhere in air and water and soil and their own food etc
, with the WHO issuing warnings on Chinese population having the fastest cancer growth rate in the whole world
- skyrocketing unrepayable bad debts of all kinds everywhere, its true scope unknown because all data from China are faked
- biggest housing bubble in human history, in addition to innumerous crumbling "ghost cities" and shoddily-built infrastructure that cannot and will not be used
- rapidly aging and gender-lopsided demographics (from one child policy, culture of "leftover women", and many Chinese families killing their own daughters so as to chase boys)
- world's no.1 wealth inequality, with a Gini coefficient rivaling 18th century France just before the French revolution
- complete absence of soft power / cultural influence / social attraction, one result of which is minimal and sharply dwindling number of foreign professionals and tourists and students going to China
- all Chinese chasing foreign-brand goods and services while ditching low-quality poisonous Chinese-brands, dashing CCP's hope to build domestic consumption economy
- corruptions and fraud throughout the whole rotten core of a system
- desperate mass exodus in all levels of Chinese society to escape the country using emigration or study abroad or marriage to foreigners or plain old human smuggling, resulting in all able Chinese leaving taking huge amounts of talents and money out of the country
- the law of large numbers and the "middle-income trap" all work against the "growth-based legitimacy" CCP desperately needs for its survival

Most importantly, the CCP knows that if 1.4 billion Chinese learn about basic human qualities such as morals, truth, fairness, human rights, rule of law, freedom, universal values etc the CCP will be toppled very quickly. Therefore its state-controlled brainwashing education and propaganda machinations ensure a complete lack of morals and regard for laws in all Chinese growing up and beyond. This results in failure in all basic aspects of human interactions with every modern Chinese, whether it is business trading / personal dealings / technology development / creating innovations / human communications / scientific research / artistic expressions / teamwork collaborations / academic exchange etc. Another propaganda brainwashing technique used is that the CCP has made Chinese people pathologically nationalistic, so they can always create and point to some "foreign enemies" so as to hide all the domestic malmanagement and government robberies going on. This attention-diverting technique is the same trick magicians have used for more than a thousand years to fool their audience.

An interesting example would be the Chinese reaction to this report - they are expected to dismiss this report as total rubbish, accuse me "unpatriotic" for speaking the truth, shout China will only become richer and stronger than all other countries, yet they will give no counter-arguments and they will make no acknowledgement to the horrible conditions and complete lack of basic human qualities listed above in modern China. Ironically, the longer Chinese people deny or refuse to acknowledge the CCP problem, the longer they are only digging themselves into the sand and hurting themselves for any chance of recovery. Consider Google, Facebook, Wikipedia, Twitter, Instagram etc - these services are all completely blocked in China while at the same time the rest of the planet are on these services every second communicating ideas with each other, making friends, exchanging knowledge, working together, improving science and technology and arts, and advancing humanity.

Some people say China economically developed a lot in past 30 years, but the truth is this "development" is actually debt borrowed against the future. After the 1989 Tiananmen Square massacre of their own students, in order to stay in power and rob from the country, the CCP has essentially taken the country into hostage and made China into a place with no law, no morals, no system for future scientific or economic or social development, no spiritual belief apart from money, no trust or cooperation among Chinese, no trust or goodwill from foreigners, no other country as friends, all resources sold away cheaply, entire environment and air and water and soil and food fatally polluted, only social recognition is to make a lot of money for "face", no creativity or personal development for Chinese young people, a populus not allowed to know the truths and not allowed to say the truths.

The end result is that majority wealth of this "debt borrowed against the future" has gone to the 0.0000001% elite ruling class "princeling" CCP families (about 250 of them) who have already smuggled trillions of dollars abroad along with their U.S. passports and their own children (all Politburo members hold foreign passports, with U.S. and U.K. being the most sought after choice). For the CCP in 1989, 1.4 billion people is great asset when the country start from nothing and you order them to do backbreaking mass manufacturing repetitive work 20 hours a day without workers protection of any kind. But in the 2014 borderless knowledge economy when that no longer works, 1.4 billion immoral and uncooperative and selfish and undeveloped and angry Chinese contained in a lawless system without any hopes of growth is very, very dangerous liability for the CCP.

All debts against the future have to be paid back - China is no exception. That moment may arrive a bit later than expected but it surely will come, as it has on 100% of occasions in human history. For China the moment has arrived to suffer the consequences for all its own chosen actions in past 30 years. All the festering fundamental systematic problems listed above and much more, are only getting worse and worse everyday until one day when the system can suddenly no longer bear.

Think USSR in 1989.

Offline Karpatok

  • Contrarian
  • Sous Chef
  • *
  • Posts: 1427
    • View Profile
Re: Official Chinese Toast Thread
« Reply #137 on: August 24, 2014, 02:50:26 PM »
   What a shocking garbage pile of hypocritical schadenfreude made possible by the prostitute press of former mayor Bloomberg who through his deformed blindness could never find the mote in his own eye much less in his very own chauvinistic press. Just another case of covering up your own sins by pointing the finger at some one else and laughing at their misery. How about starting with a good look at the completely unmoral rot and decay right here in the Fascist Limping Stinking Smelly Shitpile of your home you think is so superior to all other countries in trouble. Just Stuff It until you can acquire a pair of glasses!  Karpatok

Offline Petty Tyrant

  • Cannot be Saved
  • Sous Chef
  • *
  • Posts: 4573
    • View Profile
Re: Official Chinese Toast Thread
« Reply #138 on: August 24, 2014, 08:44:52 PM »
I really wanted to see things for myself and so i went there this year. Overall it was obvious they are the new superpower if they can keep on feeding themselves, which I dont believe they can. Facebook and google and u tube etc work just fine in china, i used them. I spoke to chinese, indian amd european businessmen and women in hong kong, macau and beijing. They do have all the skills in all the trades that we have here. u think they dont have programmers, plumbers and pieceworkers of very high quality and specializations? They do. They work hard and take pride in their work, the foreign executives in charge told me this. coddled useless only childs? hahahah! They are actualy SPOILED for choice of being poached by other employers with better offers. The average wage in a factory is 200-250 U$/week  and climbing. Their neighbors who this analyst says are against them, are where the cheap labor components of the manufacturing is going, vietnam malaysia phillipines etc, or they bring the cheaper owrkers from those places.  Anyone under 30 speaks english and you get that people are proud of the progress of their country from the central govt, because they believe they can have a decent future, its only the local county level corruption they hate.

Every neighbor lining up with the US is dependent for their economy on china, including australia. The only imports most of the world does with usa is weaponry, what could go wrong. This analyst like all the other western experts you hear ignores the sco and briics.

What a joke to say they have no brand names, all the top brands of everything is made and has the major market there, I never dreamed of seeing so many rolexes and rolls royces on display. They make the genuine articles as well as functional fakes that cant be told the difference. On top of that they are focussing on domestic market consumption and chinese own name brands are coming into it in a big way. Many of the formerly filthy factories are being made modern and clean. Pointing fingers for printing money is plain hypocrisy as everyones in it, even worse all the piety about 'morality'.

Sorry to say this think tank analyst must be nothing but a stooge. I would like to see what it is called and what its funding is. The real problem is they have billions of people and hardly any flat and farm land, relying on billions of bottles of drinking water they say was shipped from the Great Lakes. If that is true it means their own toxic slime is too polluted to be filtered. Its a very fragile food chain, and theres no way they could feed all the people without shipping in food after the farms are all covered by factories.
ELEVATE YOUR GAME

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Chinese Toast: Hong Kong Riots
« Reply #139 on: September 27, 2014, 10:21:51 PM »
Bullish for Wall Street.  A LOT of Hedge Funds need to evacuate the Hong Kong market, YESTERDAY!

RE

This Riot Is Not In Ferguson, It Is In Hong Kong

Tyler Durden's picture



 

Update: the Occupy Central campaign has officially begun, which likely means even more violent reprisals by the local police:

 

No, this is not Ferguson: it is, according to many, the world's most capitalist city, Hong Kong, where over the past few hours, around 50,000 students are said to have massed on late Saturday, demanding more democracy, as tensions grew over Beijing's decision to rule out free elections in the former British colony.

According to Reuters, the crowds swelled less than 24 hours after riot police used pepper spray to disperse protesters around government headquarters, arresting more than 60 people opposed to the Chinese government's tightening grip on the city. The unrest underscores the obstacles China faces in Hong Kong as a restive younger generation challenges its influence over the densely-populated financial hub.

More:

 
 

Tempers flared and there were scenes of chaos before dawn on Saturday when protesters used umbrellas to shield themselves from the pepper spray. Those who got hit used water to rinse their eyes. "I paid my highest respect to every soldier who defends till the last moment... Civil disobedience - it continues to happen," said student leader Lester Shum on his Facebook page.

 

Hong Kong's Education Bureau appealed to parents and teachers on Saturday not to allow underage children and students to take part in unlawful activities to avoid risking their safety.

 

Leaders of the local Occupy movement arrived to show their support for the protests. They plan to blockade the financial district on Oct. 1, a holiday, hoping it will escalate into one of most disruptive protests in Hong Kong for decades.

 

The latest clashes were the most heated in a series of anti-Beijing protests. Police arrested six people overnight, including teenage student leader Joshua Wong, who was dragged away by police, kicking, screaming and bleeding from his arm, after he called on the protesters to charge the government premises.

 

"Hong Kong's future belongs to you, you and you," Wong, a thin 17-year-old with dark-rimmed glasses and bowl-cut hair, told cheering supporters before he was taken away.

One thing is certain: the youth protest movement can hardly be any more ineffectual than America's own OccupyWallStreet farce.

 
 

One protester said she had joined the protests to secure a better future for her five-year-old son, who was by her side wearing swimming goggles to protect him if the police fired more pepper spray.

 

"If we don't stand up, we will be worried about his future," said the 33-year-old woman named Li. "He can't choose his own future."

 

The demonstrators broke through a cordon late on Friday and scaled perimeter fences to invade the city's main government compound in the culmination of a week-long rally to demand free elections. The Hospital Authority said 34 people had been treated in hospital by Saturday evening as a result of the clashes.

 

The protesters were removed one by one on Saturday afternoon, some of them carried away.

 

"The police have used disproportionate force to stop the legitimate actions of the students and that should be condemned," said Benny Tai, one of the three main organizers of the pro-democracy Occupy Central movement.

 

Hong Kong returned from British to Chinese rule in 1997 under a formula known as "one country, two systems", with a high degree of autonomy and freedoms not enjoyed in mainland China. Universal suffrage was set as an eventual goal. But Beijing last month rejected demands for people to freely choose the city's next leader in 2017, prompting threats from activists to shut down the Central financial district in a so-called Occupy Central campaign. China wants to limit elections to a handful of candidates loyal to Beijing.

Which, maybe just maybe, could explain our post from May showing "Stunning Images Of Chinese Riot Police Training For A "Working Class Insurrection." Here is a sampling, via Ifeng.com, captions google translated:

May 11, heavy rain, the Shenzhen Municipal Public Security Bureau
 carried out emergency disposal operations training activities.
 Participating in the training team for a variety of different
 emergencies riot synthesis disposal training.

"Demonstrators" prepare to impact SWAT.

"Demonstrators" armed with sticks toward the SWAT

"Demonstrators" conflict with the SWAT occur.

"Demonstrators" ignite gasoline SWAT throwing bottles.

Special police armed with riot shields are ready, surrounded by "demonstrators."

SWAT are quick to reach "emergency scene."

"Demonstrators" rushed SWAT.

SWAT are quick to reach "emergency scene."

Shenzhen police using ground and air linkage way to quickly reach "emergency scene."

More "thugs" armed with machetes out of the bus.

"Demonstrators" ignite gasoline bottles toward the bus.

SWAT team members quickly surrounded the bus.

Emergency mobile teams to participate in emergency disposal operations team training sudden rain rushed to the scene

Emergency mobile teams to participate in emergency disposal operations training team.

Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Re: Chinese Toast: Hong Kong Riots
« Reply #140 on: September 28, 2014, 01:26:19 PM »
<a href="http://www.youtube.com/v/w4q8fs8gTIs?feature=player_embedded" target="_blank" class="new_win">http://www.youtube.com/v/w4q8fs8gTIs?feature=player_embedded</a>


Great Livestreams over on ZH!  I can watch them for a change since I am at the Cafe.  :icon_sunny:

Should be interesting to see how this affects the Hong Kong markets tomorrow.

RE

"Disperse Or We Fire"- Hong Kong Police Shoot Tear Gas At Protesting Students: Live Webcast

Tyler Durden's picture





 

Yesterday we reported that the biggest riot over the weekend was not in Ferguson (although things there are hardly stable after a local police officer was shot in the violent town overnight) but in Hong Kong, where students and other mostly young people are protesting the recent loss of their democratic vote powers and thus "the loss of their freedom." Since then things have gotten from bad to worse when late last night Hong Kong declared the start of the Occupy Central disobedience campaign, leading to violent skirmishes with the police, which over the past hour have included the use of tear gas by the police as well as the first outright warning by the cops demanding that the student protesters disperse or risk being fired upon.

From WSJ:

 
 

A standoff between police and pro-democracy protesters intensified near where thousands have converged in the past days to demand free elections.

 

Around 6 p.m., police moved to clear the area, using tear gas against protesters near Hong Kong government buildings that had been blocked off. Protesters streamed away trying to wave away clouds of smoke and holding handkerchiefs against their mouths and noses. Many were running; others were raising their hands above their heads in an indication of nonviolent intent.

 

Crowds of thousands had gathered in the area through the afternoon, with protesters attempting to build barricades against police. At one point, a few police cars were surrounded by a sea of protesters. "Hong Kong police, you have been surrounded, please leave," protesters shouted over a sound system.

 

Police showed red signs urging the activists to stop charging or force would be used. Riot police in helmet shields and face masks were at the site.

 

After the tear-gas spraying, many protesters who had dispersed regrouped in the Tamar waterfront park where a stage and rows of chairs had been erected ahead of celebrations for China's National Day on Wednesday.

And from AP:

 
 

After spending hours holding the protesters at bay, police lobbed canisters of tear gas into the crowd on Sunday evening. The searing fumes sent protesters fleeing down the road, but many came right back to continue their demonstration.

 

Students and activists have been camped out on the streets outside the government complex all weekend. Students started the rally, but by early Sunday leaders of the broader Occupy Central civil disobedience movement said they were joining them to kick-start a long-threatened mass sit-in to demand an election for Hong Kong's leader without Beijing's interference.

 

Authorities launched their crackdown after the protest spiraled into an extraordinary scene of chaos as the protesters jammed a busy road and clashed with officers wielding pepper spray.

 

The protesters were trying tried to reach a mass sit-in being held outside government headquarters to demand Beijing grant genuine democratic reforms to the former British colony.

 

The demonstrations - which Beijing called "illegal" - were a rare scene of disorder in the Asian financial hub, and highlighted authorities' inability to get a grip on the public discontent over Beijing's tightening grip on the city. The protesters reject Beijing's recent decision to restrict voting reforms for the first-ever elections to choose Hong Kong's leader, promised for 2017.

 

Earlier Sunday, thousands of protesters who tried to join the sit-in breached a police cordon, spilling out onto a busy highway and causing traffic to come to a standstill.  Police officers in a buffer zone manned barricades and doused the protesters with pepper spray carried in backpacks. The demonstrators, who tried at one point to rip apart metal barricades, carried umbrellas to deflect the spray by the police, who were wearing helmets and respirators.

 

Police had told those involved in what they also call an illegal gathering to leave the scene as soon as possible, warning that otherwise they would begin to clear the area and make arrests.

 

The use of the tear gas angered the protesters, who chanted "Shame on C.Y. Leung" after it was used, referring to the city's deeply unpopular Beijing-backed leader, Leung Chun-ying. To many, it also seemed to mark a major shift for Hong Kong, whose residents have long felt their city stood apart from mainland China thanks to its guaranteed civil liberties and separate legal and financial systems.

« Last Edit: September 28, 2014, 01:29:30 PM by RE »
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Re: Chinese Toast: Hong Kong Riots
« Reply #141 on: September 29, 2014, 02:17:51 AM »
Basically quite predictable as far as the Hang Sei Index is concerned, but not so predictable far as the NYSE or DAX is concerned.

A run for the fire exits on the Hang Sei could be bullish for the western markets.

Monday will be entertaining and volatile.  I am shorting Ali-fucking-Baba today.  Hopefully I got that one pegged right.

RE

Hong Kong Stocks Tumble Erase 2014 Gains, Volatility Soars As Protests Freeze City: Full Summary

Submitted by Tyler Durden on 09/29/2014 02:10 -0400

    Apple
    China
    Hong Kong
    ratings
    Standard Chartered
    Volatility
    White House

The Hong Kong protests, which we covered over the weekend, and which took a dramatic turn for the worse overnight when thousands of students camped out and demand universal suffrage on the city streets and were in turn tear-gassed and arrested en masse by the local riot police demanding students disperse or else, and where the leader of the student protest, Joshua Wong - who had been previously arrested and was released on Sunday night - has openly called for the resignation of Hong Kong Chief Executive Leung Chun-ying in an interview with Hong Kong Cable TV, have done the unthinkable: they have impacted financial markets and the "wealth effect" transmission mechanism of the local billionaires.

Here as a summary of the latest market activity via Bloomberg:

    Hang Seng Index declines 2.25% after falling as much as 2.5%, most since Feb. 4; erases YTD gains
    MSCI Hong Kong Index drops as much as 3.2%, most since Nov. 2011
    HSI Volatility Index surges as much as 27%, most since Aug. 2011
    HKD weakens as much as 0.09% against USD to HK$7.7648, most since Dec. 2011
    Hong Kong 1-yr rate swap rises 3 bps, most since June 2013
    Chinese Yuan falls 0.24%, most since March 20, to 6.1415 per dollar.
    Yuan 12-mo. forwards drop 0.25% to 6.2596 per dollar after falling by as much as 0.34%, most since March 12
    Fitch says events in past 24 hrs won’t significantly affect ratings;
    says unlikely that protests will be on wide enough scale and last long
    enough to have material effect on H.K.’s economy and financial
    stability: Fitch’s Colquhoun

SECTORS, COMPANIES

    Galaxy Entertainment leads decline in Macau casinos
    Luk Fook leads drop in retailers, developers amid protests; Luk Fook shuts 4 stores, Chow Sang closes 6 stores
    Protests will have negative impact on retailers: UBS
    Wharf tumbles most in 16 months amid protests
    Swire Beverages workers strike to support protesters
    Ctrip sees mainlanders’ travel to HK unaffected by protests
    36 bank branches closed as of 10:30 HK time: HKMA
    Quicktake: Hong Kong Tries to Cut Path From Liberty to Democracy: QuickTake

PRE-MARKET ANALYST REACTION

    H.K. dollar will “inevitably” be under pressure on weakened investor confidence amid political instability, says Daniel Chan, analyst at Brilliant & Bright Investment; interest rates could spike amid potential fund outflows
    “Sentiment will be bad,” said Arthur Kwong, HK-based head of Asia Pacific equities at BNP Paribas Investment Partners. “Unfortunately, the macro fundamentals are weak already.”
    Retailers and tourism-related cos. may be among most affected on speculation protests will deter mainland tourists from visiting H.K. during National Day holidays, said Gavin Parry, managing director of Parry International Trading
    Financial shares may also come under pressure, said Ronald Wan, chief China adviser at Asian Capital Holdings
    Dickie Wong, executive director of research at Kingston Financial, said HSI may fall to about 23,000, or 2.9% below its last close, in the “short term”
    “The markets were not counting on anything extreme to happen,” said Govert Heijboer, HK-based chief investment officer of True Partner Advisor. “Whether it immediately moves or not, implied volatilities will rise in Hong Kong given this additional uncertainty.”
    Protests may deter mainland investors from buying Hong Kong shares when the exchange link starts, said Daniel Chan, analyst at Brilliant & Bright Investment
    “If this concludes in a few days, impact on markets and the economy will be limited, especially with a few holidays ahead,” says Mari Oshidari, strategist at Okasan Securities Group. “But this will make it hard for people to buy in a market that’s lacking positive news to begin with. People in Hong Kong are serious about this issue, and there’s a political risk this may happen again.”

In fact, the threat to the wealth effect is so big, the local central bank had to step in. From the FT:

    Hong Kong’s quasi central bank implemented emergency measures on Monday morning as the battle between Hong Kong democracy activists – many of whom spent the night camped on the streets – and police made itself felt on the territory’s businesses and markets.

     

    The Hong Kong Monetary Authority acted after a tense night that saw tear gas and pepper spray used in a failed bid to clear tens of thousands of protesters from a central business district.

     

    Several banks, including HSBC and Standard Chartered, shuttered a handful of branches. The Hong Kong dollar weakened 0.07 per cent against the greenback – to which it is tightly pegged – in early trading, bringing it to a six-month low. The benchmark Hang Seng Index opened 1.4 per cent down at 23,359.

The locals appear undaunted by a possible Beijing crack down. At least undaunted for now:

    For most of Sunday, the situation inside the barricaded area had been peaceful. Martin Lee, the founder of the Democratic party, and Jimmy Lai, the media tycoon who owns the anti-Beijing Apple Daily, joined the thousands of students present.

     

    “We don’t expect them [Beijing] to back down but we have to persist with our civil disobedience,” said Mr Lai. “If we don’t persist or resist, then there’s no hope.”

     

    While people in Hong Kong frenetically used social media to spread news about the protests, there was much less reaction on Weibo as the Chinese government blocked any mention of “Occupy Central” on the Twitter-like service.

     

    During the afternoon, it was difficult to use mobile phone services in the protest area, leading to speculation that the government had blocked networks to prevent reporting from the scene.

Finally, while the US was quick to share in its punditry when Ferguson happened in Ferguson, when it moves to China and any word out of place can put US-Sino relations back years, suddenly the White House is all too quiet on the topic of human rights:

    So far the US and UK have said very little about protests. Many people believe that the UK wants to avoid hurting trade relations with China. The Foreign Office said it was “important for Hong Kong to preserve and exercise them [rights and freedoms] but it needs to be done within the law”.

     

    Rory Stewart, the Conservative chairman of the cross-party defence committee, said: “We have a special relationship with Hong Kong and we need to find a way of putting as much energy as we can, politically and diplomatically, into supporting them.”

Yes, yes, now... how does one say BTFD in Hong-Kongese(sic)?
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Chinese Shadow Banking Collapse
« Reply #142 on: November 17, 2014, 12:53:01 AM »
As Leading Indicators go, this is a pretty big one.  Without all the sloshing liquidity over in China, even Da Fed will have a hard time reflating markets.

RE

China's Shadow Banking Grinds To A Halt As Bad Debt Surges Most In A Decade

Tyler Durden's picture



 

It is probably not a coincidence that just as we learn that "China’s bad loans jumped by the most since 2005 in the third quarter, fueling concern that a cooling economy will be further weakened as banks limit lending to avoid credit risks" that we also learn that in the month of October, China once again slammed the brakes on credit creation, with total new loans dropping to RMB548 billion from RMB857 BN, below the RMB626 BN expected, the lowest monthly expansion in 2014...

... and with the broader Total Social Financing aggregate also tumbling from RMB1050 billion to RMB663 BN, and well below the RMB888 BN consensus estimate.

 

As the following chart shows the main reason for China's relentless slowdown in its growth pace, which only two years ago was expected to rebound back into the double digits soon (at least according to the IMF), is the ongoing contraction in credit formation, which rising at 13.2% for new loans and 15.4% for TSF outstanding, was the lowest credit expansion recorded in China also since 2005.

So what is the main culprit for the contraction in China's all important credit formation? In two words: shadow banking. As Bank of America summarizes "shadow banking is being tamed" because "the changing structure of TSF suggests that Beijing’s efforts in controlling some types of shadow banking have made some achievements. Two major drivers for the steep decline of TSF from Sept to Oct were the falling of non-discounted bills (down RMB241bn) and falling trust loans (down RMB22bn). By contrast, new corporate bonds were at RMB242bn, a sharp rise from RMB151bn in Sept."

Breaking this further down:

  • New trust loans posted a negative RMB22bn in October compared with a fall of RMB33bn in September. New entrusted loans declined to RMB138bn in October from RMB161bn in September.
  • Non-discounted bankers acceptance (BA) decreased by another RMB241bn in October after decreasing by RMB669bn between July and September. The new deposit deviation ratio regulation has significantly restricted those manipulations via BA issuance, which may boost balance sheet.

In other words, China's shadow banking not only ground to a halt, it actually continued moving in reverse!

A better explanation comes from JPMorgan:

 
 

The monthly Chinese money and credit figures released this week showed continued contraction in the share of shadow bank intermediation in new credit creation. Figure 6 shows that the share of shadow banks, proxied by the ratio of monthly total social financing over monthly new bank loans, has been on a downward trajectory since the end of 2013, experiencing its fourth episode of slowing since 2010. As of October this year, our smoothed trend in the share of shadow bank intermediation (blue line in Figure 6) stood at its lowest level since 2009. The previous episodes of slowing in shadow bank intermediation during the first halves of 2010, 2011 and 2013 did not see such a sustained pace of contraction. This likely reflects the impact of regulatory tightening on shadow banking activity. With the ratio in Figure 6 approaching 1.0, the picture we are getting is of almost all of new credit creation in China being intermediated via traditional rather than shadow banks currently.

 

In other words, as China finally reveals little by little the true extent of its gargantuan bad debt problem (which is far worse than ever in history, although Beijing is taking its time in making the necessary revelations: and after all Chinese banks are all SOEs - if needed they can all just get a few trillions renminbi in in liquidity injections a la the "developed west"), it is also slamming the breaks on the shadow banking system that for years what the sector where marginal credit creation, and thus growth as well as bad debt formation, was rampant.

And as Japan showed so clearly just 48 hours after the end of America's own QE3, reserves, like credit and money, are infinitely fungible in the global interconnected market. And infinitely, no pun intended, in demand, because if one central bank ends the goosing of risky assets, another has to immediately step in its place.

So while it has been widely documented that Japan is doing all in its power to crush the Japanese economy and in the process to send the Nikkei to all time highs, little has been said about a far greater slowdown in domestic (and indirectly global) credit creation using the "China" channel, where shadow banking has just slammed shut.

Finally recall: it was the epic collapse in America's own shadow banking liabilities in the aftermath of the Fannie and Freddie, and shortly thereafter, Lehman bankruptcy, which wiped out $8 trillion from the US shadow banking peak, that was the main reason for the Fed's relentless intervention and attempts to reflate systemic funding since then.

If the shadow banking collapse virus has finally jumped to China, there is no saying just how far Chinese GDP can drop if it is now constrained on the top side by surge in bad debt. One thing is certain: Japan's paltry, in the grand scheme of things, expansion in its own QE will barely be felt if the record Chinese credit creation dynamo is indeed slamming shut.

Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Re: Official Chinese Toast Thread
« Reply #143 on: December 11, 2014, 12:26:48 AM »
The Chinese are...



Deflation...Chinese Toast, I am fucking Batting 1000 here!  EVERY prediction I made on Peak Oil in 2008 is coming to pass!  Took a bit longer than I thought it would though.

RE

FX Traders Are "Fighting The PBOC" As Yuan Tumbles

Tyler Durden's picture



 

For the first time in almost 3 years, the 'market' is fighting the PBOC in the FX markets. The last month has seen USDCNY rise almost 9 handles to as high as 6.21 (the weakest CNY in 5 months). At the same time, the PBOC's official 'fix' of CNY has been strengthened to below 6.12 (the strongest CNY in 9-months) diverging by the most in six months from the market. "The market is staying cautious and even bearish on the China macro outlook," notes Morgan Stanley, but as HSBC explains, "China doesn't want to join the currency wars [and wants to stall any speculation on trend] and that explains the fix movement." Simply put, markets doubt the PBOC and believe it will eventually be dragged into the currency war or just fundamentally deteriorate enough to warrant capital flight.

 

The lower pane shows the divergence between the CNY weakness in the market rate and strength in the Fix...

 

As WSJ reports,

 
 

A battle in China’s currency markets has emerged in recent days with traders pushing the yuan weaker while the central bank has been attempting to guide the tightly-controlled foreign-exchange rate stronger.

 

That tension was on show Wednesday when the yuan opened 1.1% weaker from where the central bank fixed the morning reference rate, the biggest drop since June.

 

The slide of the currency accelerated in December after the central bank cut interest rates in November, leaving it 2% weaker for the year so far and on track for its first annual loss since 2009.

 

Investors have been focusing on an almost daily deluge of weak data out of China with reports this week showing inflation softened to a five-year low in November while the country’s exports fell well below expectations in the same period. A broadly stronger dollar on the back of a recovering U.S. economy has also hurt sentiment on the yuan.

 

The volatility picked up this week after Beijing curbed risky lending in the bond markets, sparking heavy declines in the stock and bond markets Tuesday and a record two-day tumble in the yuan.

 

But China’s central bank has been fighting the market, setting the yuan’s reference exchange rate, or “fix,” stronger against the dollar. The currency’s daily trading is limited to a 2% band above or below this “central parity” rate.

 

Analysts say Beijing is eager to prevent one-way speculation on the currency and squeeze out those betting on the currency to decline further.

 

“China doesn’t want to join the currency wars and that explains the fix movement,” said Ju Wang, a currency strategist at HSBC in Hong Kong, referring to some country’s efforts to push their currencies lower to stay competitive against one another. “But markets see it as China will eventually be dragged into the currency war or just fundamentally, growth and exports will weaken so much that will trigger the markets demand for the U.S. dollar.”

 

With a broadly stronger U.S. dollar since July this year and diverging monetary policies between the U.S. Federal Reserve and the central banks of Japan and Europe, currencies across the board have suffered significant losses, especially the Japanese yen, creating competitive challenges for many economies.

 

Analysts also point to China’s balance of payments data that in recent quarters has shown falling trade financing and short-term loans as possible evidence of outflows of speculative money, also pressuring the currency weaker.

 

Plus, as the difference in interest rates between the U.S. and China narrows and the returns on a higher-yielding currency fall, the yuan is expected to adjust to a weaker level.

 

“The market is staying cautious and even bearish on the China macro outlook,” analysts from Morgan Stanley wrote in a note. The currency market “is the most liquid market to express such a concern.”

 

To add to the pressure, the Bank of International Settlements in a report released Sunday noted China had become the largest emerging market borrower, with outstanding cross-border claims on China totaling $1.1 trillion at the end of June this year.

 

“Concern at growing debt levels in China are only compounded by the BIS data. Combine that with fears over the slowing of activity and investor caution toward Chinese assets and the [yuan] has its validation,” Patrick Bennett, currency strategist at CIBC World Markets wrote in note.

*  *  *

We suspect this will end badly as the pBOC changes some rules ad hoc and squeezes the trend chasers...

« Last Edit: December 11, 2014, 12:28:51 AM by RE »
Save As Many As You Can

Offline roamer

  • Global Moderator
  • Waitstaff
  • *****
  • Posts: 907
    • View Profile
Re: Official Chinese Toast Thread
« Reply #144 on: December 11, 2014, 02:59:01 AM »
Got a record of your 2008 prediction RE?  Don't think even if you are spot on that making predictions of doom are anything to brag about.  Been realizing myself just how toxic and self reinforcing it can be to actively predict collapse.  I'm preparing my backup plans for the worst but very much hoping for the best.  For all you or i know this point in history could go down as the turning point for the solar distributed future, a breaking point from centralized nation state powers and accompanying narratives towards the coalescence of an increasingly rhizomatically networked solar powered information based economy with an integrated non commodified integrated agroecosystems base.   Point being you do not know, and if you do dig up your track record and prove it.

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Re: Official Chinese Toast Thread
« Reply #145 on: December 11, 2014, 09:35:37 AM »
Got a record of your 2008 prediction RE? 

In fact I do, although the earliest I could dig up was from 2009 on Reverse Engineering.  ;D

The Peak Oil website doesn't search very well, though I know I wrote similar to this there in 2008.

Anyhow, here ya go from July 13, 2009

https://groups.yahoo.com/neo/groups/reverseengineering/conversations/messages/1142

Popping the Inflationista Bubble Theory

One of the pervading fears many people have is of the Hyperinflation they believe will come as a result of the non-stop printing of Funny Money by Helicopter Ben and Turbo Timmy. The images of Weimar Germany and Zimbabwe are fixated in many people's minds as the inevitable outcome of this explosion of debt based fiat currency.

What the Inflationistas fail to consider is the fact that MOST of the money in the money supply of Dollars is NOT in the form of FRNs. It is MOSTLY in the form of debits and credits lodged on the computers of our biggest banks. Though the Fed is creating money to drop onto Banks to keep them numerically solvent and able to resolve the transactions you do with your debit card, the US Mint is not insofar as I know currently printing up an equal supply of FRNs to the amount of digital money they are loaning out through the discount window to the Banks.

What is happening to all that money? Well a large part of it is just sitting on the disk drives of these banks as part of the Capital Reserve they are required to hold here. However, with the exception of Goldman and to a lesser extent JP Morgan Chase all these banks continue to bleed red ink as fewer of their mortgages are serviced and fewer of their investments of all types pay interest. The result here of course is the interest they pay out to YOU these days for keeping your FRNs in their "safe" keeping is virtually non-existent. Maybe you get 1% annualized if you will lock up your money in a 90 day CD. Forget interest on Checking or Savings accounts, its well below 1% now. What is the benefit to J6P other than some perceived "security" of having your money held by a bank now? Keeping a months worth in the bank to facilitate your bill paying makes sense, but beyond that I can't see why anyone would leave money in the hands of the banksters these days.

So anyhow, the banks will continue to push more digital bits around in a big circle jerk, but there aren't that many more FRNs out in circulation now than there were 2 years ago before they ramped up QE. Beyond that, more Digital Bits are not being deposited into J6Ps account either, in fact quite a few less are going that way as J6Ps all over the place lose their jobs. Since an economy that is based at least 70% on consumer spending requires all those J6Ps to have money to spend, such an economy HAS to deflate here. It cannot inflate in the sense most people think of wheelbarrows of money to buy a loaf of bread unless you find some way to actually GET the wheelbarrow of money out there somehow. Such a means has not yet made itself apparent. When Da Goobermint puts EVERYBODY on the Dole and starts handing out Stimulus payments on a monthly basis, THEN you could get price inflation, but that solution is not yet on the table.

What will happen here is the debts will eventually be resolved through Bankruptcy of all parties involved, Creditors and Debtors alike. MOST of the recently created money will disappear from existence in these bankruptcies. The Trillion or so we owe the Chinese and Japanese is basically toast. They are never going to get back most of that money, and they can't spend it either because trying to do so will just push down the value of the money all that much quicker. They have much more ability to flood the market with Dollars than the Fed does, but in their case also it doesn't help them unless that money gets into the hands of Consumers who will then again recycle it to buy more worthless Chinese Toys.

After all is said and done, in the absence of a Revolution and dissolution of the US Goobermint, you'll still have FRNs being used as Money. The Dollar never went away in the Great Depression, it just became very scarce and hard to come by. Many people lost their life savings because they had their FRNs stored in Banks which shut their doors one day and they were SOL. Right now, the FDIC continues to backstop banks, but they will become insolvent also, and in the end unable to ship FRNs to every person with an Insured FDIC account.

My guess is that for about a year or so after the banking system of Credits and Debits collapses, the FRNs will continue to work in local commerce, at least for whatever is actually available to BUY in local commerce, mostly people selling stuff in Garage Sales. The Food Economy is another story entirely, if you actually HAVE a Twinkie would you sell it for an FRN?

My guess here is the Food Economy goes off the grid as Da Goobermint grapples with a complete loss of faith and function in Banking. The industrial food apparatus will be Nationalized, along with the Transportation system. In the Great Depression this came in the form of Soup Kitchens, in today's world I imagine they will utilize the Walmarts as Food DCs, and you go to the Walmart with your weekly allotment of Food Stamps to buy some seriously rationed food. There also will be Gas Coupons for your seriously rationed Gas. Black Markets of course will develop here in both areas, and fraud will be a problem as well. Even more insidiously evil things will occur, as some J6Ps will trade away food coupons for their children to get one last 6-Pack. If you have a Victory Garden going though, you might actually be able to save up Food Coupons, and then use them for trade for other things you need.

In any event, I am firmly in the Deflationato Camp, and I believe the Inflationistas are quite wrong here. The inflation they are worried about ALREADY OCCURRED, it occured in the inflation of housing prices and the inflation of goods and services that for the most part we do not really NEED. Asset Values became OUTRAGEOUSLY inflated, for Assets that are essentially quite WORTHLESS, such as McMansions, Malls, Auto Factories....the WORKS here in terms of assets that are ALL dependent on the availability of cheap energy. All of this was fueled on Fiat Money in the Debt Game, but it is collapsing here as we speak, and you cannot inflate it anymore. The mere printing of money is NOT inflation. It can only inflate an economy if the surface of the bubble still has enough integrity to hold the air. Our economy no longer has such integrity, there are too many places where the air leaks out as soon as it is put in. Obama can Stimulate from now till the Cows come home, but the money disappears as quick as you print it. Its not inflating ANYTHING here, just look around you at the closed Biznesses, the Unemployed and the Foreclosed on Houses.

Inflationistas have their heads up their collective assholes IMHO. Even if eventually the Fed finds a way to print up enough FRNs so you would need a wheelbarrow to buy a loaf of bread, there will be no Trucks on the road to ship those FRNs out to the population to spend. We are in a Deflationary Depression, or rather the endgame of that which is a Monetary Sytem Collapse. 300 years in the making since Master of the Mint Sir Isaac Newton and the Bank of England came up with this scheme, now the End is upon us. We are not going to inflate our way out of this one with any bubble. Game OVER.

RE


Here's one on China from2011.  Note the closing line:

Realities of Exponential Growth

    Dec 26 8:59 AM

    While all eyes remain focused on Europe, the next "wave" of the Crisis looks more and more like it will come from Asia and the Chinese.  Of course, some of this may be the usual Zero Hedge Hyperbole, but one thing is for certain, China's "growth" miracle is a fucking Ponzi that makes Subprime Mortgages all over the rest of the world look like ants from the top of the Empire State Building.

    "Money", in the form of rehypothecated DEBT from the West has been flowing steadily into Asia for the last decade.  The chinese, "honest" bizmen that they are proceeded to take the Trillions in worthless debt thrown at them and leverage THAT up a few dozen times at least.

    So now the Chinese, having just a bit of trouble meeting coupon payments on all the bonds they issued to build vacant cities, bridges to nowhere and Halloween Lawn Ornament Factories are looking to borrow money from their oh-so-flush neighbors, the fucking JAPANESE.  Yes, that's the same set of islands currently at a 200% Debt to GDP ratio not INCLUDING the Off Balance sheet costs of basically waiting until one or all of the Fuk-U-shima reactors goes Supercritical.

    Apparent to anyone now who is not completely BRAIN DEAD is that the Money Masters are Circle Jerking themselves around the world, with one Insolvent Nation-State after another buying up ever more irredeemable debt at positively EXPONENTIAL rates, with absolutely NOBODY wanting to be the first one to CRY UNCLE and call it quits on the game.

    Now, thing is here, exponential math has a way of blowing up into INCREDIBLE numbers very fast, once you reach a critical point, which we passed a while back here ont he monetary level.  The thing is also, that its not until the very LAST of the Doublings that people tend to recognize the problem, because of real ignorance of exponential math.

    Here's how it works.  I'll reference Albert Bartlett here for those of you who have not watched his vids, Google them up.

    Right up until the last doubling time, there seems to be PLENTY of energy/money to go round.  In just the last MINUTE though of the Clock when the next doubling occurs, all that you consumed in the prior time put together is consumed in the very last MINUTE.

    This is a metaphorical "Minute" of course, since Doubling Times can be in the years here, and around a 7% increase translates to about a 10 year doubling time  this wa the case for Oil per capita consumption right up until around 2010 or so.  At this point, the growth STOPPED far as per capita energy consumption was concerned, but it did NOT stop the legacy of such doublings in money supply.  For without that, you also do not keep up with the increasing population, also a lagging indicator here behind the collapse of Oil production doubling rates.  You must continue to increase Money supply to the population at eqaul rate to population increase, elsewise of course everyone has less money to work with.

    The "Crash" as it were comes when you no longer have the rate of doubling in the per capita energy supply you do in the population, at which point the CB tries to KEEP inflating the money supply to keep pace with population, but of course less energy is available to buy.  The value of the money created relative to the energy supply drops, no matter how much money gets created.

    This is where we are at NOW on the "curve".  If the CBs do keep trying to inflate the money supply to match the population, it will decrease in value relative to the per capita energy available.  If they do not increase the money supply, then not only will money become very scarce to buy energy, but beyond that legacy debt based on future production will all implode.  So in the last "minute" or so of the doubling time, on a monetary level either you will get a MASSIVE Hyperinflation or a Hyperdeflation.

    There are a few Caveats to this on a Global Level.  First off, both Hyperinflationary and hyperdeflationary events can be Localized.  Essentially this is Triage, as some areas are CUT OFF from energy distribution, and if those are high population zones then this leaves a lot more per capita energy for remaining zones not so cut off.

    Second of course, any increase in the Death Rate globally will slow the doubling time on per capita energy expenditure, so long as the energy harvesting remains constant.  Also, conservation of energy on any large scale will slow the doubling time.

    In real terms globally, to maintain the value of money in any individual location, it has to shrink into the envelope of the available energy for that community.  So as long as say the FSofA can keep available energy from rapidly disappearing per capita, the Dollar will hold value UNLESS it is produced at a rapid clip to stave of BKs of the TBTF and so forth.

    Globally also though, all nations are in competition for the last Minute's worth of fossil fuel energy, which means there is no great assurance the FSofA can even keep this constant, though TPTB will no doubt try to do this by drilling anywhere some geologist says there might be some positive EROEI Oil still in the ground.

    The end result here is that at least at the Beginning, the Die Off will come in the most overpopulated regions with the least amount of available energy they can acess locally. India and china with large populations and low energy reserves locally seem destined for the largest by percentage and in absolute number Die Offs. Africa is also likely to be hit hard here, since they will have their Oil stolen from them.

    Once this threshold is crossed over, its not Doubling times you are concerned with, but Halving times. In the Contraction phase, as the remaining energy reserves deplete, you'll see the remaining population halve in size at some periodic rate probably on a similar 10 year timeline for the doubling that occurred for a few decades, until such time as the total population only uses the energy that is avaialble each day from the Sun, as opposed to  using Fossil fuel energy.

    All of this is just Math, and not subject to Political issues which will crop up along the way.  No society will quietly go into the Good Night without trying every last means available to them of not being the first to DIE.  When the problems really start to hit the big population zones of India and China, these folks will strike out in some way, and both of course have NUKES.  It just remains to be seen how these weapons get used along the way.

    At least at the moment though, despite the rapid descent into Fascism, the FSofA still looks to be amongst the best places to be situated as the Die Off commences.  I definitely would trade it for China, regardles of china Bulls who think they are the next great Empire in waiting.  IMHO, the Chinese are TOAST.

    RE
« Last Edit: December 11, 2014, 09:47:55 AM by RE »
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Chinese Toast: More from the Reverse Engineering Archives
« Reply #146 on: December 11, 2014, 10:34:21 AM »
There is just a CORNUCOPIA of stuff over there!  LOL.

RE

1479 Dollar Devaluation

    reverseengineer77
    Oct 14, 2009

    The more I read various armchair assessments of the impending "Dollar Crash", the more ticked off I get at the narrow view most folks take of this monetary crisis. Clearly various policies are bein pursued here by Da US Goobermint to devalue the dollar and in so doing "rob" the citizenry of whatever wealth they might have accumulated in dollars. One of the MOST obvious thins just occurred, with the Fed purchasing some $50B in SDRs, which themselves are a manufactured currency of a basket of currencies including Gold of course.

    The problem here seems obvious enough to me, but perhaps its not so obvious to everyone? All the currencies are mathematically connected, and the so-called "basket" that constitutes the SDR reflects the value of all those currencies. Thing is, all those currencies are just the same thing as the Dollar is, abstract value notations. Is there any inherent reason why a Yen is more valuable than a Dollar or a Gold Coin either? None at all really, especially when the obligations they represent cannot be met by any country issuing their currency.

    The policy the Chinese are following right now is to blow a bigger credit bubble than we did, but they can't sell any of their products to anyone, especially not to anyone who has a currency devalued against the Renminby. Our armchair currency pundits are VERY provincial intheir thinking, they focus entirely on the incredibly stupid policies being followed by the Fed here in the US, while entirely IGNORING the fact that every other CB and Nation-State on EARTH is doing precisely the same things at the same time, in some cases going even further off the cliff of mathematical logic, the UK for instance.

    What about the DEBT!?!?!? is the Clarion Call here for the Audit the Fed Lemmings. Lemme bring this down to a smaller situation we can understand better. What about YOUR CC debt? Are YOU worried about this debt now? I sure wouldn't worry about it much. Run it up so long as you have a credit line, you'll never pay it back of course. In agregate, this is what is going on EVERYWHERE. NOBODY is ever oing to pay back on this debt, which really is just a mathematical abstraction of obligation. I loan some money to my brother in law. He is broke and can't pay me back. I am bummed I won't get paid back, but that's how it goes when you loan money, its a risk you take.

    Of course TPTB aren't quite so forgiving here, mainly because they use the obligation of debt as a means to enslave populations. Its really quite simple, en masse you just repudiate the debt! Of course also, they won't let you repudiate it, they use the force of "law" and the military to tax it out of you if you won't willingly cough up the interest on your Option ARM Mortgage. Unfortunately, if your population isn't actually making ANY money or producin anything, there is nothing here to TAX. System Implosion.

    The underlyin REASON for this type of collapse comes from compound interest, which persistently accrues more debt obligation than you can actually produce. Its a function of Capitalism and a function of the Banking system which supports it. As long as you pay Interest and then Interest on Interest, in a fairly short amount of time by Geologic standards the monetary system will implode, that is even WITHOUT the restriction of a planet with diminishing resources and expanding population. Add those into the mix, and the monetary system is just TOAST no matter WHAT you do.

    Devaluation of the currencies involved here is inevitable, and mainly its a race to the bottom and some folks are playing a carry trade between the currencies betting on which one is the last to fall here. IMHO, betting on the Dollar as the last one to fall is a bad bet.Too much of the world wealth is denominated and held in dollars, so some value must be maintained here in that currency. The Pound Sterling could go down the Toilet and only a few Limeys would get their clocks cleaned. A whole lot harder for the wealthy of the world to sell off all their dollar holdins here and maintain wealth and power. The dollar will devalue, but it won't TANK entirely. Some other currencies will. The Renminby is likely to be one of them, for the simple reason that the Chinese have 1.3B mouths to feed in a country with serious water shortage problems. Buying Chinese is an exercise in financial suicide IMHO.

    Disclaimer: I am not a registered Currency Trader and hold no position in Remnimby. LOL.

    RE
Save As Many As You Can

Offline roamer

  • Global Moderator
  • Waitstaff
  • *****
  • Posts: 907
    • View Profile
Re: Official Chinese Toast Thread
« Reply #147 on: December 11, 2014, 09:53:49 PM »
Fair enough that does back up your claim on chinese being toast and your deflationary stance.  In truth i am having a knee jerk reaction not so much to your assessment of the situation but the conclusions (die off, possible NTE ect) that you have drawn. 
I'm going to hold out hope for best possible mitigation of the situation until the end and when the end comes hopefully meet that too with a sense of mystery and awe. 



Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
Re: Official Chinese Toast Thread
« Reply #148 on: December 11, 2014, 10:17:04 PM »
Fair enough that does back up your claim on chinese being toast and your deflationary stance.  In truth i am having a knee jerk reaction not so much to your assessment of the situation but the conclusions (die off, possible NTE ect) that you have drawn. 
I'm going to hold out hope for best possible mitigation of the situation until the end and when the end comes hopefully meet that too with a sense of mystery and awe.

Well, I too hope for a better outcome than NTE, but even there I am not in the NEAR camp, but more a Medium Camp on the order of a couple of centuries if it plays out that way.

It does seem likely to me though that there will be a significant shrinkage in total global population of HS though over the next 50 years.

This to me just makes it more important to make people aware so that they can prepare for a lower per capita energy future.  Even if we do get more renewables online, its still going to be a lower per capita energy world.

Unlike the Deflation & Chinese Toast predictions though, if Extinction occurs, nobody will know when it happens, not even the last person left on earth alive since he or she won't know if there is anyone anywhere else alive, the internet will have long since gone dark.  I certainly won't witness it from this side of the Great Beyond, since my years left walking the earth are limited anyhow.

So in the meantime, regardless of what the Final Outcome is, you operate the same way, which is to do what you can to stay alive, because the purpose of living is just to live.  The purpose behind observing what is going on with collapse is to be able to better negotiate it as it occurs.  I don't consider myself negative and I don't really get too depressed over the situation either.  It's really a very interesting thing to observe overall.

The next chapter is to figure out exactly how the society will reconfigure as the money becomes either ever more scarce or ever more worthless, or both.  That is a very challenging question, much harder than predicting Deflation or Chinese Toast.

RE
Save As Many As You Can

Offline RE

  • Administrator
  • Chief Cook & Bottlewasher
  • *****
  • Posts: 41627
    • View Profile
THE GREATEST BONFIRE OF PAPER WEALTH IN ALL OF RECORDED HISTORY!
« Reply #149 on: December 12, 2014, 04:06:52 AM »
I dug up the thread from 2008 on Peak Oil in which I initiated this phrase, it was with respect to the Chinese issue, and Marxism as a solution.

Quote from: Reverse Engineer

Re: Credit Crisis near an END

Postby ReverseEngineer » Sun 26 Oct 2008, 23:45:07

    americandream wrote:As long as there is work and exchange, there will be value in money. So long as that exchange process has a latent surplus and I think its evident to all that there is a vast surplus in the growing Asian economies, there is ample room for recovery. I suspect that the current threat to confidence, the overvalued Western housing sector will shift to a rental model as tptb oversee its transferance into ownership by funds in these Asian economies.


Not evident to me AD that there is a surplus in "growing Asian economies". Rather I would suggest they are just delayed in suffering the effects of the global meltdown because their economies were built as a labor force to serve the west.

The issue for them would be that with reduced demand, their labor suplus is RIDICULOUS. Far too many people in China for China to self sustain. they are in more desperate straights than anyone else, per capita.

Any surplus the Asian countries might have had they loaned out to the West, its Irredeemable Debt that never will be paid back. As a Banker, the Asians are as Bankrupt as Lehman or Bear Stearns.

Labor is of course the true source of money, but the fact is that due to Overshoot the value of Labor is depressed below the substence level. Enough people have to DIE here to make the labor worth enough to keep a person alive. Until that happens, no Marxist solution will work. Sorry.
Reverse Engineer

The whole thread is quite entertaining, and open to read.

http://peakoil.com/forums/credit-crisis-near-an-end-t47320.html

Remains amazing they got the bubble reinflated this long.  Here we go again though...

RE
Save As Many As You Can

 

Related Topics

  Subject / Started by Replies Last post
9 Replies
4503 Views
Last post July 28, 2014, 12:02:37 AM
by RE
7 Replies
1746 Views
Last post June 11, 2015, 11:56:21 AM
by azozeo
0 Replies
1230 Views
Last post April 26, 2016, 05:56:46 PM
by RE